By Mariana Mazzucato
- The Value Of Everything; Makers and Takers in the Global Economy (2018)
- Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth (2016)
- The Entrepreneurial State; Debunking Public vs. Private Sector Myths (2013)
According to conventional wisdom, innovation is best left to the dynamic entrepreneurs of the private sector, and government should get out of the way. But what if all this was wrong, Mariana Mazzucato asks in The Entrepreneurial State. What if, from Silicon Valley to medical breakthroughs, the public sector has been the boldest and most valuable risk-taker of all?
Table of Contents
- Introduction: Thinking Big Again
- From Crisis Ideology to the Division of Innovative Labour
- Technology, Innovation and Growth
- Risk-Taking State: From 'De-risking' to 'Bring It On!'
- The US Entrepreneurial State
- The State behind the iPhone
- Pushing vs. Nudging the Green Industrial Revolution
- Wind and Solar Power: Government Success Stories and Technology in Crisis
- Risks and rewards: From Rotten Apples to Symbiotic Ecosystems
- Socialization of Risk and Privatization of Rewards: Can the Entrepreneurial State Eat Its Cake Too?
TEDx Talk on The Entrepeneurial State
Matt Herring on The Economist wrote:
"A major shortcoming of The Entrepreneurial State is its lack of analysis of the social conditions of innovation. Westlake (2014) criticizes Mazzucato for focusing exclusively on the invention of new technologies rather than their development or the other investments needed to make them useful. [...] Mazzucato, moreover, does not address the structural inequality shaping the employment relation, and sees workers as investing their own capital – that is labour, time and effort – in the innovation process. [...] Embedding the innovation process in capitalist production and labour relations would raise questions of ‘who controls’ the innovation process and for ‘what purposes’. These questions, much more radical than simply ‘who gets the return?’, have been addressed not only by thinkers such as Ricardo and Marx, whom Mazzucato only mentions cursorily, but in the history of economic thought at least since the time of the Luddites [...]. Mazzucato brushes away entire chapters of the history of political economy and offers a very limited review of current literature on the relationship between innovation, inequality, and production transformations. [...] Mazzucato’s lack of proper social contextualization of innovation – and of the interests and goals behind it in a capitalist society – is also reflected in her unilateral discussion of the ‘green industrial revolution' [...] Embedding the ‘Entrepreneurial State’ within capitalist society, and its contradictions, would certainly complicate the analysis and policy proposals offered in Mazzucato’s book. However, this would force us to look for different answers to the timely questions she poses, and it would also allow us to elaborate more realistic alternatives to the economic, social and ecological crisis the planet is facing."
Stian Westlake on The Guardian wrote:
"Economists have long recognised that the state has a role in promoting innovation. It can correct market failures by investing directly in public goods such as research, or by using the tax system to nudge businesses towards doing so. But Ms Mazzucato argues that the entrepreneurial state does far more than just make up for the private sector’s shortcomings: through the big bets it makes on new technologies, such as aircraft or the internet, it creates and shapes the markets of the future. At its best the state is nothing less than the ultimate Schumpeterian innovator - generating the gales of creative destruction that provide strong tailwinds for private firms like Apple. [...] However, Ms Mazzucato omits to acknowledge how often would-be entrepreneurial states end up pouring money down ratholes. [...] Ms Mazzucato laments that private businesses are too short-termist. But governments also routinely make investments on the basis of short-run political calculations rather than long-term pay-offs. [...] The book offers only hints, rather than a complete answer, to the central practical question in all this: why are some states successful entrepreneurs while others are failures?"
"for all the importance of its headline message, when one looks into Mazzucato’s arguments in more detail, they seem more problematic. Consider first of all the central problem that the book identifies: the idea that the public sector takes most of the risks in the modern innovation process, but gets little of the reward. The first part of this problem, the fact that the state takes the big risks, is exemplified by a memorable case study of Apple. [...] The Apple case study has become something of a meme, but it’s far from clear that it proves the book’s point [...] The Entrepreneurial State’s also complains that businesses hog the rewards of innovation. [...] just as it’s wrong to suggest that the state takes all the risks of innovation, it’s also wrong to say that shareholders get all the rewards: the public (as consumers) and the state (as tax-collector) do very well too. [...] The book’s policy recommendations are something of a mixed bag [...] Many of these make good sense [...] But the book’s most novel and prominent policy proposal seems more problematic. This is the idea that the state should be entrepreneurial by participating in the upside of its innovation funding. [...] I’ve explained before that this has several problems. [...] The headline argument of The Entrepreneurial State - that government has a role to play in backing new technologies - is surely correct. And the book is a superb piece of argumentation [...] At a time when government action of any kind is ideologically suspect, and entrepreneurship is unquestioningly lionized, the book’s importance cannot be understated."
About Mariana Mazzucato
Mariana Mazzucato (PhD) holds the Chair in the Economics of Innovation and Public Value at University College London (UCL), and is Founder and Director of the UCL Institute for Innovation & Public Purpose (IIPP). She is winner of the 2014 New Statesman SPERI Prize in Political Economy, the 2015 Hans-Matthöfer-Preis, and the 2018 Leontief Prize for Advancing the Frontiers of Economic Thought. She was named as one of the ‘3 most important thinkers about innovation‘ by the New Republic.