The Entrepreneurial State: Debunking Public vs. Private Sector Myths (Anthem Other Canon Economics) Info

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This bestseller from leading economist Mariana Mazzucato �
named by the �New Republic� as one of the �most important
innovation thinkers� today � is stirring up much-needed debates
worldwide about the role of the State in innovation. Debunking the myth
of a laggard State at odds with a dynamic private sector, Mazzucato
reveals in case study after case study that in fact the opposite
situation is true, with the private sector only finding the courage to
invest after the entrepreneurial State has made the high-risk
investments. Case studies include examples of the State�s role in the
�green revolution�, in biotech and pharmaceuticals, as well as
several detailed examples from Silicon Valley. In an intensely
researched chapter, she reveals that every technology that makes the
iPhone so �smart� was government funded: the Internet, GPS, its
touch-screen display and the voice-activated Siri. Mazzucato also
controversially argues that in the history of modern capitalism the
State has not only fixed market failures, but has also shaped and
created markets, paving the way for new technologies and sectors that
the private sector only ventures into once the initial risk has been
assumed. And yet by not admitting the State�s role we are socializing
only the risks, while privatizing the rewards in fewer hands. This, she
argues, hurts both future innovation and equity in modern-day
capitalism. Named one of the �2013 Books of the Year� by the
�Financial Times� and recommended by �Forbes� in its 2013
�creative leaders� list, this book is a must-read for those
interested in a refreshing and long-awaited take on the public vs.
private sector debate.


Average Ratings and Reviews
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Reviews for The Entrepreneurial State: Debunking Public vs. Private Sector Myths (Anthem Other Canon Economics):

4

May 27, 2016

Check out the one-star reviews for this work and you'll quickly get an idea of why it is so very, very good. (G)libertarians and free-marketers are hyperventilating as Mazzucato Mariana surgically dissects their treasured myths about the desirability of a small and feeble State and the power and dynamism of unfettered capitalism, stretches their entrails out across the landscape, and leaves their corpses on public display.

The core myth that Mazzucato methodically skewers, punctures, deflates, Check out the one-star reviews for this work and you'll quickly get an idea of why it is so very, very good. (G)libertarians and free-marketers are hyperventilating as Mazzucato Mariana surgically dissects their treasured myths about the desirability of a small and feeble State and the power and dynamism of unfettered capitalism, stretches their entrails out across the landscape, and leaves their corpses on public display.

The core myth that Mazzucato methodically skewers, punctures, deflates, shreds (pick your preferred metaphor here) is that business is innovative and dynamic, the driver of economic progress, while the State is passive, inert, or even a hindrance. Far from it. Although innovation is not the State's main role, Mazzucato demonstrates in well-researched and -argued chapters that a courageous and entrepreneurial State has often played the leading role in technological innovation and creating the foundations for major economic transitions and breakthroughs.

Most tellingly, she highlights that every single technology that make Apple's iPhone "smart" were government-funded or developed directly by organs of the State or consortiums convened through State brokerage – the internet, GPS, touch-screens display, wi-fi, and voice-activation.
Such radical investments – which embedded extreme uncertainty – did not come about due to the presence of venture capitalists, nor of 'garage tinkerers'. It was the visible hand of the State which made these innovations happen. Innovation that would not have come about had we waited for the 'market' and business to do it alone – or government to simply stand aside and provide the basics.
She pushes beyond the role of the State in providing the basics or fixing "market failures" and demonstrates that there is an active and visionary role for the state in directing economic development in particular sectors, recruiting expertise, mapping the landscape, coordinating public and private actors (including businesses, academics, research bodies, and others) – to make things happen that otherwise would not have.

In contrast, she demonstrates how entrepreneurs are generally developing or finding business applications for technologies which are already available, and that venture capital – far from funding dynamic, early-stage, innovation – generally hangs back until public funding has created enough certainty to attract their investment. The biotech and renewable energy revolutions are cases in point.

Along the way, she murders the notion that businesses do best when there is low tax or weak regulatory environments. She argues firmly that – given their risk leading role – States need to become more assertive against rent-seeking businesses. "In so many cases," she writes, "public investments have become business giveaways, making individuals and their companies rich but providing little (direct or indirect) return to the economy or to the State."

Rigorous and refreshing. And one to share (and argue over) with your favourite right-wing friends. ...more
5

Oct 19, 2013

I have been very much impressed by the Entrepreneurial State but I also have some major doubts and even some disagreements. Maybe I have been brain-washed in the last 20 years of my life but my experience in Silicon Valley and venture capital and also my less than satisfying experience with planned innovation by the State convince me that entrepreneurship is crucial and maybe more important than the State role in the innovation part (not the research or even the R&D).

Now I fully agree that I have been very much impressed by the Entrepreneurial State but I also have some major doubts and even some disagreements. Maybe I have been brain-washed in the last 20 years of my life but my experience in Silicon Valley and venture capital and also my less than satisfying experience with planned innovation by the State convince me that entrepreneurship is crucial and maybe more important than the State role in the innovation part (not the research or even the R&D).

Now I fully agree that seed funding by the State of innovation through research and the taxes to be paid by companies are essential. I also agree that VC is less and less risk taking and that corporate R&D is just a D and the R has disappeared both in IT and pharma.

A great book about why innovation is in crisis and how the State might contribute to solving what the private sector stopped doing. ...more
5

Aug 12, 2013

A really interesting essay about innovation, the role of the State and the myths surrounding the risk-taking in the private sector, venture-capital (VC) or SMEs. Studying how Apple built its innovative products using State-financed innovation, or how Big Pharma is only expanding the existing public-based research, Mariana Mazzucato convincingly demonstrates how public policies should be focused on investments and innovation in the long run, creating a stable regulatory environment and sometimes A really interesting essay about innovation, the role of the State and the myths surrounding the risk-taking in the private sector, venture-capital (VC) or SMEs. Studying how Apple built its innovative products using State-financed innovation, or how Big Pharma is only expanding the existing public-based research, Mariana Mazzucato convincingly demonstrates how public policies should be focused on investments and innovation in the long run, creating a stable regulatory environment and sometimes creating markets which the private sector will not launch on its own (renewable energies for instance). Finally, she also underlines the importance of inclusive growth, and in that context, of better rewarding public risk-taking, establishing symbiotic innovation ecosystems to replace the current parasitic ones.

A very good read, written in a simple and engaging style. Highly recommended! ...more
1

Aug 31, 2013

This is a long review so stick with me. But I need to point out why you should not read this book or anything else this author writes pertaining to economics (maybe she knows something about art, who knows).

The author claims "there is a danger when
a general desire to reduce the size of the state translates into weak and non-ambitious economic policy." As though reducing the size of the state somehow makes the economy non-ambitious. Or the reverse, that increasing the size of the state would make This is a long review so stick with me. But I need to point out why you should not read this book or anything else this author writes pertaining to economics (maybe she knows something about art, who knows).

The author claims "there is a danger when
a general desire to reduce the size of the state translates into weak and non-ambitious economic policy." As though reducing the size of the state somehow makes the economy non-ambitious. Or the reverse, that increasing the size of the state would make the economy more ambitious (try telling this to those that had to live in the Soviet Union) But this shows a very poor understanding of economics on the part of the author because, as should be obvious to anyone, the state doesn't exist without siphoning funds away from the private industry in the first place.

She says that "over the last three decades in the development of the computer industry, the internet, the pharma biotech industry,and many more including today's nanotech industry. None of these technological revolutions would have occurred
without the leading role of the state." But the government did not invent the internet, the computer industry or any of these. She somehow thinks that if the government steals money from these industries then gives a little of the money back to politically connected businesses, that it is then responsible for the success of any of those businesses (but not for the failures).

She repeatedly claims the government (DARPA) invented the internet. But the internet was not invented by any one person or group. It started with hackers then with other groups along the way, and at some point DARPA had internet technology that it did nothing with for over 20 years other than make TELNET. She makes these same claims for the computer industry! How incredible that if the government gives google or apple a $5000 grant but venture capital and private investment gives them millions that the government is somehow responsible for the entire computer industry. She also claims the government created google's search algorithm. This is such a stretch of the truth. Google used a simple algorithm developed by government researchers that it combined with many other developments from others and their own to create what they have today! This is like saying the government came up with the theory of relativity because they taught Einstein arithmetic when he was a kid. That is absurd.

But she repeatedly points out DARPA, and holds it up as a shining example of government achievement. What is not mentioned, is how much money DARPA has wasted to achieve so very little. The other important point is that the few useful things DARPA has managed to create that the private sector can use are then given to politically connected businesses that didn't share in the cost of the technology they're now using.

She points out what Keynes and Polyani say about the free market not being stable, but fails to see that the economy was far more stable before implementing their centralized plan of government and monetary policy. The great depression happened after centralization of the banking sector!

Her claim is that the government is the only one willing to take the risk of long term investments. But reality flies in the face of this. The Wright Brothers created the airplane with less than $1,000 of their own money, meanwhile the government gave Samuel Pierpont Langley $50,000 to build an airplane and he couldn't do it! The Wright Brothers then offered to sell their plane to the war department who refused and told them they were just crazy kooks. Does the government sound like someone you want "investing" your money in R & D?

What the author fails to understand is the basic principle of cost effectiveness. Meaning that when people invest their own money in research they analyze the cost benefits of such an investment. The government on the other hand has no incentive to do so because they don't care how much money they lose. Why should they? It's not their money anyway. The government instead, takes money from the private sector then gives it out to "research" in companies that have political connections such as Solyndra. Yet the author points out these "investments" by the government as successes, even though the majority have either filed bankruptcy or can't make a profit and are still lining up for more taxpayer dollars.

Alongside DARPA she points out the NIH and their research. It's true that "two thirds of new molecular drugs in the past ten years were discovered with government spending" but 1. that money came from the private sector to start with. 2. the large politically connected pharmaceutical companies get to decide how that money is spent. and 3. the patents filed as a result of that research are handed over FOR FREE to those same politically connected large companies. On top of this the NIH conducts research fraud in many cases to discredit competitors of the large pharmaceutical companies as they did with Dr. Burzynski. Smaller companies continually get the shaft because they don't have the political connections to get the NIH to fund their research and hand them patents. Taxpayers are funding the research of these large companies, only to see the NIH hand a patent over to the large companies that then gouge the medical patients for all they can. If the government is so benevolent and cares for our well being then why isn't it dissolving the patent and allowing generic drug producers to provide the taxpayers that funded the original research with affordable drugs??!!

She points out the huge costs of developing drugs that pharma companies have to deal with. This is her rationale for government picking who wins and loses. But why are the costs so high in the first place? Look no further than the government itself! The FDA has mountains of rules and regulations. They even have a pay to play policy that favors the largest corporations that can afford to effectively bribe FDA officials. They also do all they can to ban competition from unpatentable drugs and natural alternatives further driving up our healthcare costs. How can the author ignore this? How can she complain of the high costs of drug development (a government created problem) and then say the solution is more government!

What these examples of the NIH, DARPA, and so many others indicate is a fascist policy of corrupt interbreeding between government and large politically connected companies.

The author realizes that if these government agencies fund research then they should get some of the reward when profits are made, but what she doesn't understand is that's not how government works. Oddly enough, that is exactly how private investors work!

The bottom line here is do not read this book! The author does not understand basic economics. She stretches the truth on purpose in many cases and sometimes flat out lies (saying the government invented the internet). Her misunderstanding of basic financial concepts such as cost effectiveness is astounding. I hope any reader that believes what this author wrote will eventually take the time to learn economics and finance so they can understand the folly of this author's writing. ...more
5

Mar 06, 2016

What a ripper. This is a magnificent book. Based on a DEMOS report and now expanded, this book should be read by every politician and policy maker who describes the private sector as exciting, innovative, profit-leading and dynamic and the state as boring, risk-averse and damaging to entrepreneurship.

Mazzucato makes a case and a powerful argument that for the big risks - the seriously innovative research that can enable leaps in business, technology, agriculture and industrialization - 'the What a ripper. This is a magnificent book. Based on a DEMOS report and now expanded, this book should be read by every politician and policy maker who describes the private sector as exciting, innovative, profit-leading and dynamic and the state as boring, risk-averse and damaging to entrepreneurship.

Mazzucato makes a case and a powerful argument that for the big risks - the seriously innovative research that can enable leaps in business, technology, agriculture and industrialization - 'the market' is risk averse. Businesses want easy profits. The real innovations take time, persistence and doggedness to accomplish. Shareholders are too impatient for such innovations.

It is important to remember - and a key chapter in this book - that the innovations that emerged from Apple via the iPod to the iPad were based on state-based and funded research. In other words, Apple made a profit and reaped the rewards of being 'innovative' yet these innovations were developed in state-based and funded organizations.

The ideology post the GFC, that the state is the problem and only has a role in mopping up the mess when markets 'go to far,' is destroyed in this book. It is impossible to read Mazzucato's book and not be transformed. Any time anyone mentions the innovations in private business and the importance of keeping the state out of economics and business, send them a link to this book. Make sure they read it. ...more
5

Aug 21, 2013

This is an important book that shows how the state plays a crucial role for innovation at different stages of their development and implementation. It also debunks several myths about companies and VC propensity to take risks and their ability to carry out research leading to innovation.
2

Apr 23, 2015

The book made some good arguments in regard to the state having an important role in fundamental research. I approached the "Green" chapters with much trepidation which was proven do be justified. The author had indeed drunk the Green Koolaide by quickly dissing any research into nuclear power and quoted the installed capacity of renewable energy sources rather than their actual output. The criticism of the role of the state in picking winners has often been illustrated by such things as The book made some good arguments in regard to the state having an important role in fundamental research. I approached the "Green" chapters with much trepidation which was proven do be justified. The author had indeed drunk the Green Koolaide by quickly dissing any research into nuclear power and quoted the installed capacity of renewable energy sources rather than their actual output. The criticism of the role of the state in picking winners has often been illustrated by such things as Concorde. The authors explaining away of this is not helped when she accepts bio fuels as being a positive rather than realizing that they are an environmental and economic disaster promoted by green and agricultural interests. What could have been a good book was eventually rather under whelming. ...more
1

Apr 08, 2019

Terrible reading experience. Just numbers and cold interpretations. The message is very simple: governments must spend more money on research and development and that's it!
3

Mar 12, 2018

OK, so you have these books that claim they will change the way you view the world. And then you have these TED talks where the charismatic author of the book indeed tells you amazing and unknown facts that are discussed in the book and that make you want to find out more. But then, you're fifty, and you've read your share of books that were widely acclaimed and turned out to be mainly waffle, and you have a sneaking suspicion that most of the book's contents have been discussed in the TED OK, so you have these books that claim they will change the way you view the world. And then you have these TED talks where the charismatic author of the book indeed tells you amazing and unknown facts that are discussed in the book and that make you want to find out more. But then, you're fifty, and you've read your share of books that were widely acclaimed and turned out to be mainly waffle, and you have a sneaking suspicion that most of the book's contents have been discussed in the TED talks, but then you have a colleague who is willing to lend you the book, and you're still curious, and then you read it.
OK, so what's the verdict of the jury?
Well, I have to admit that the book does contain some interesting and challenging points. Mazzucato offers some detailed case studies of products that were huge commercial successes but who were to a large extent combinations of the outputs of fundamental research that was undertaken with taxpayers' money. In itself, this is hardly a secret. Everyone who knows something about the subject understands the importance of fundamental state-sponsored research in fields such as computer science and pharmaceuticals. What is rather surprising, is the scale of the public contribution in certain cases.
But Mazzucato goes much further than that. She claims that government sponsored research plays a key role in society, and that the private sector (including the hallowed venture capitalists) only steps in once the major risks have been taken away. According to her, extraordinary profits in the private sector have been realized because the government does not appropriate the financial returns to its own investments. Moreover, thanks to international tax optimization, the returns do not even flow back to the public purse under the form of taxes. Mazzucato provides an activist agenda for government involvement in research, and for mechanisms to ensure that the real risk takers (the government, this is) will indeed enjoy the returns when things go well (instead of just taking the blame when things go wrong).
The problem is that Mazzucato seems to be a real believer for whom the book's main objective is proselytism. This does not feel as the major opus of a scholar who, after a life of pondering the pros and the cons of an argument, is communicating her tentative conclusions. This feels as a book of someone who has seen that conventional wisdom is wrong, and has assembled all the facts that she can use as evidence for her case.
The problem is the quality of the evidence is very mixed. In certain cases, her arguments are based on peer reviewed scientific literature (these are the more convincing sections in the books). But a lot of arguments are based on findings that have not been peer reviewed. And sometimes, the argument is just an endless repetition of passionately stated opinions. That's probably what you need when giving a TED talk, but it is a shaky foundation for policy advice/
It would all be so much more convincing if one didn't have the impression that Mazzucato has cherry picked the evidence. What about other industries than computer science and pharmaceuticals, for instance? Has she tried to identify the conditions under which R&D can successfully be undertaken by the private sector? Has she analyzed examples of government failures and tried to understand the reasons for these failures? She spends a lot of time arguing that innovation should be analyzed as an ecosystem (well, I don't disagree with that) but she doesn't really explain how we should analyze the key success factors for setting up such an ecosystem.
This book would have been so much more interesting if Mazzucato had tried to be more balanced (well, maybe it would have drawn less attention). Because, you see, there really are interesting points in the book - for instance, her debunking of the arguments in favour of supporting small enterprises just for the sake of their size is really interesting, relevant and concrete. It's just that the book would have been more credible if it had been less far-reaching in its ambitions. If you don't have a friend who has bought the book, maybe watch the TED lectures first. She really is quite charismatic, you know.
Addition 1 on 13 March: I only read other reviews after having finished, in order to avoid being influenced by other people's opinions. I observe that opinions on this book are very divided. I should add that I think that some of the most negative reviews use straw man arguments. For instance, Mazzucato does never claim that Apple has made no major contributions of its own. She repeatedly acknowledges Steve Jobs' genius in combining technologies to deliver a commercially successful product. Her point is about the distribution of the financial returns. But she never claims that Apple has no contribution of its own. Someone who pretends she has, has not carefully read the book.
Addition 2 on 13 March: And, oh yes, Marx was a classical economist. At least according to the "history of economic thought" courses that I took. ...more
3

Jan 15, 2014

Could not be reading this book at a more appropriate time. Last week Merck announced they are firing some 7.500 scientists. This week it's Alcatel firing another 5,000. That's not any company, Alcatel, it's owned by Lucent, previously known as Bell Labs.

One of the main theses of the book is that business these days concentrates its efforts in bidding up the share price through buybacks, that it puts more emphasis on returning money to its shareholders rather than fostering the research that Could not be reading this book at a more appropriate time. Last week Merck announced they are firing some 7.500 scientists. This week it's Alcatel firing another 5,000. That's not any company, Alcatel, it's owned by Lucent, previously known as Bell Labs.

One of the main theses of the book is that business these days concentrates its efforts in bidding up the share price through buybacks, that it puts more emphasis on returning money to its shareholders rather than fostering the research that benefits all stakeholders and society in general. Government, on the other hand, can be and has been a patient long term investor.

My problem with the book is that it moves freely from facts to theories, from theories to conjectures, from conjectures to opinions, from opinions to pure ideology and from ideology back to facts. There are no clear demarcations here.

Example of a very powerful fact from the book: The NIH spends USD 30 billion per annum on research. To which my reaction is "wow, shame on me, I had no idea, that's massive"

Example of a well-accepted theory from the book: There are times when the government is best placed to step in. Market failures (example: lighthouse, air traffic control), national interest (the military springs to mind), externalities (example: curbing pollution, getting everybody to learn how to read and write). Few people dispute this.

Example of a conjecture in the book: The state is capable of kickstarting a green economy through 1. fostering the right collaborative environment for researchers in universities and the private sector and 2. through backing early initiatives with patient capital. (You'd have to agree, is my view, the question is what else that money could have gotten for you, of course.)

Example of an opinion from the book: Companies should not pursue profit maximization first and foremost. (For the record, I find the alternatives appealing, but ultimately romantic dead ends. There! How's that for an opinion?)

Example of (implicit) ideology from the book: Bottom of page 187 the author starts a sentence as follows: "While the classical economists (such as David Ricardo or Karl Marx) studied innovation and distribution together..." and it's a good thing she tucks that in so deep in the book rather than at the beginning, or I would have put the thing down. I genuinely don't think "classical economist" is the first description of Karl Marx that springs to anybody's mind.

Don't mean to subvert here, just to point out that the book definitely has an angle and plays around with facts, theories, conjectures, opinions and ideology.

I am a former entrepreneur, have suffered in the hands of the VCs the author has so little time for (the accusation is they find the ready work of government and jump in at time epsilon before there's any money to be made) and I'm extremely sympathetic to many of the arguments she makes. I really really wanted this book to be awesome.

It falls short.

The weakest part of the book is the case against Apple. I really could not care less that the government invented/fostered/supported technologies such as 1. The DRAM cache, 2. Lithium-ion batteries, 3. Signal compression 4. Liquid Crystal Display 5. Micro Hard Drives, 6. Microprocessors, 7. Click-wheel, 8. Multi-touch screen, 8. GPS, 9. The Internet, 10. Cellular technology, 11. SIRI.

I credit my wife with being an excellent cook. She goes to the same supermarket that's available to me. She can make a dinner to truly entertain ten people; I am merely qualified to poison them. It took a mad (and mad he was) genius to take all these technologies and put them in the palm of my hand. Perhaps I know this (and the author does not) because I'm a former entrepreneur:

Mariana, my friend, IT'S IN THE DOING. Steve Jobs did it. Thousands failed. So did he, at first. Ever played with an Apple Newton?

It gets better. Apple made millions, but others are now catching up. Pretty soon, unless it innovates again, Apple will be making "normal profits" on the devices it pioneered. Rich fellows like me paid 700 dollars for an iPhone, but in ten years' time everybody will be able to buy an iPhone equivalent for ten bucks, if the phone company is not already giving one away with the contract.

The other thing I found a bit disingenuous is the following: The ten inventions mentioned above were all fostered by the Department of Defence. Forgive me, but as far as I'm concerned, there is no worse den of inefficiency on the face of the planet. I know, this is ex-post. If we had the red flag flying here my feelings would be very different. We'll never know, because we don't have the "what-if" world to compare with.

But I've read the book and I'll be damned if the author disagrees with me that the DoD wastes tons and tons of money. They HAD BETTER be getting some type of dividend from their work. I don't think this can all be presented as some sort of triumph.

Moreover, if we spend on energy what we've spent on defence, I bloody hope we solve the energy problem forever. Funnily enough, the amounts the government has spent on defence since the end of the war are similar order of magnitude to the amounts the US has spent on energy.

China is presented as some kind of poster-boy for fostering green energy, except the very company the author decides to make an example of has gone bankrupt.

Don't get me wrong. Ultimately, I share the author's view that there's something fundamentally wrong with capitalism in 2013 versus capitalism in 1960. I also share the author's view that there is a clear role for government in innovation. The paper lists today who works for government because we're in the middle of the 2013 US government shutdown as I'm reading this. Away from the military, it looks bloody lean to me (and stop pelting me with rotten tomatos before you look at the numbers for yourselves!!!!)

There's one more thing here that's of interest. The author is an expert in mathematical models of growth and innovation. She refers briefly to the various "endogenous models" for innovation, but merely to mention they exist. Why not dedicate a chapter in the book to how these models work? Give us some credit, maybe we could read them and stay with you. I don't bear Stephen Hawking any grudge for that book I bought once, and he lost me pretty early on!

In summary, this is not a book that has served me a great deal of ammunition to fuel my prejudices. Which is a shame.
...more
5

Sep 20, 2016

Professor Mazzucato does a wonderful service by illuminating the important vanguard role the state - especially the U.S state - has played in the technological innovations and inventions of the 20th and 21st centuries, especially the IT and internet revolutions and the biomedical industry. In so doing she challenges the narrative which is all too popular that the great technological innovations from the internet to the iphone to pharmacological breakthroughs are the result of the independent Professor Mazzucato does a wonderful service by illuminating the important vanguard role the state - especially the U.S state - has played in the technological innovations and inventions of the 20th and 21st centuries, especially the IT and internet revolutions and the biomedical industry. In so doing she challenges the narrative which is all too popular that the great technological innovations from the internet to the iphone to pharmacological breakthroughs are the result of the independent private sector 'entrepreneurs' and that in order for progress to continue, the state needs to keep its interference to a minimum. She shows us how most of these innovations are the result of direct state financing and direction, and how private capital (venture capital) has been unable and even unwilling to fill the role which the state has taken. The last chapters deal with the implications of this reality whereby the public largess has led to very little collective benefit - the socialization of cost, privatization of profits - and what needs to be done to change this. An eye opener and a must read. ...more
5

Apr 11, 2016

A stellar debunking of the idea that most major scientific breakthroughs in the last 100 years have come from private business. The reality is that the state funded most of the foundational work which was then successfully and rapidly exploited by private corporations often with little return to the state. This is vital for understanding economic growth and re-balancing strategies for better economic performance. It also suggests the US stimulus of 2009 would have been better spent on science. A stellar debunking of the idea that most major scientific breakthroughs in the last 100 years have come from private business. The reality is that the state funded most of the foundational work which was then successfully and rapidly exploited by private corporations often with little return to the state. This is vital for understanding economic growth and re-balancing strategies for better economic performance. It also suggests the US stimulus of 2009 would have been better spent on science. Well written, data supported and interesting. ...more
3

Jan 27, 2019

Mazzucato's book flips the narrative about the dynamic and innovative private sector on its head. It argues that the entrepreneurial state has been, and should continue to be, a vital player "not only in fixing markets, but in creating them."

The book applies the neo-Schumpeterian insights of evolutionary economics and innovation research to argue for a state-centric viewpoint on how innovation breaks new ground. Mazzucato correctly points out that radical innovation is subject to uncertain Mazzucato's book flips the narrative about the dynamic and innovative private sector on its head. It argues that the entrepreneurial state has been, and should continue to be, a vital player "not only in fixing markets, but in creating them."

The book applies the neo-Schumpeterian insights of evolutionary economics and innovation research to argue for a state-centric viewpoint on how innovation breaks new ground. Mazzucato correctly points out that radical innovation is subject to uncertain risks and rewards, and the initial risky investment for it is often hard to come buy in the private sector.

For Mazzucato, the short-sighted and risk-averse preferences of private venture capitalists prevent them from acting as the guardians of systemic long-term innovation. This allegedly means that the only reliable source of funding for technoindustrial revolutions comes from the deep and risk-loving pockets of governments.

There is much to admire in and agree with Mazzucato's thesis. The government clearly can play an important role in fostering innovation. In particular, the book's history lesson is an important reality check. It highlights the contributions of various government-backed research institutions in the United States, such as Bell Labs, DARPA, NIH, and NASA, to the growth and development of new technologies (and subsequently new markets). It also raises the important question of who should reap (privatise) the benefits of such distributed innovation - Silicon Valley or the public?

That said, the book reads too one-sided. It does not properly explain the dangers of relying on heavy-handed and tax-funded government investment, nor the potential benefits of developing non-coercive and bottom-up alternatives to them. Many such arguments come from the very same evolutionary economics and innovation research literature that Mazzucato uses to cherry-pick the conclusions that support her argument. Her conclusions are therefore inadequate and undersupported by the available data.

Secondly, it fallaciously argues from the historical fact that the big government has played an important role in innovation research to the normative conclusion that a big government is therefore an indispensable part of all future innovation research. It could be that innovation research tends to take place in universities and research labs, whether or not these are tax-funded or privately funded. She 1) fails to consider how government has crowded out non-governmental alternatives; 2) conflates any government involvement with the government deserving credit for everything done with its help; 3) and
completely ignores the possibility of charitable or otherwise privately funded institutes that are NOT driven by the profit motive but modelled on not-for-profit principles, such as the old Oxbridge model of research excellence based on the disinterested pursuit of knowledge.

Overall, Mazzucato's broader case falters on selective scholarship and rhetorical hyperbole. The weaker thesis about the historical and continued importance of government finance in fostering innovation remains valid, however. When combined with a more nuanced recognition of the pitfalls of government involvement in its myriad forms, and a better recognition of the need for the private sector as a system of innovation, the innovation systems perspective can play an important role in guiding public policy discussions going forward. ...more
4

Jul 11, 2013

As the intro says: 'this book...challenges the widespread idea that the State cannot pick winners, that it is clumsy, bureaucratic and incapable of entrepreneurial risk taking'

Essential reading for a more rounded view of the role of the state than is usually promulgated by much of the media.
5

Mar 27, 2019

So I'm giving this 5 stars not because it's an exhilarating read, but because I think it's important. Every legislator and policy maker should be familiar with this material. That said while the first/introductory portion of the book can be a little repetitive and dull, it actually picks up once it gets into the details a little. Also, its more than just a history lesson regarding the role public/government research and investment plays in economies around the globe, it also presents some So I'm giving this 5 stars not because it's an exhilarating read, but because I think it's important. Every legislator and policy maker should be familiar with this material. That said while the first/introductory portion of the book can be a little repetitive and dull, it actually picks up once it gets into the details a little. Also, its more than just a history lesson regarding the role public/government research and investment plays in economies around the globe, it also presents some interesting policy ideas. ...more
4

Mar 24, 2019

A big star currently in the innovation space, Mazzucato has succeeded in piercing the general opprobrium we are expecting any good economist to have against the intervention of the State in the economy, especially through industrial policy. Well not all of course.

She succeeded by demonstrating that the State has been a major driver of innovation in the US economy by being a risk-taker and playing an entrepreneurial role. She also rams the venture capitalists out there as being short-termists, A big star currently in the innovation space, Mazzucato has succeeded in piercing the general opprobrium we are expecting any “good” economist to have against the intervention of the State in the economy, especially through industrial policy. Well not all of course.

She succeeded by demonstrating that the State has been a major driver of innovation in the US economy by being a risk-taker and playing an entrepreneurial role. She also rams the venture capitalists out there as being short-termists, mostly rent-seekers instead of wealth creators and risk-averse. And that’s why VC was not able to take up the tap and support innovation and R&D adequately as public founding has declined in the past decades. Therefore, let’s bring back the State, she claims!

The most interesting proposition of the book is around the necessity to re-balance benefits-sharing between the private and public sectors considering the latter takes a lot of risks too. Unfortunately she doesn’t detailed how at all.

Generally, I found the book poorly written. A better edition job would have been expected considering the US edition was published years after the UK original one. ...more
4

Jan 26, 2019

A must read book if you have a left-wing vision of the mission of the State. And if you dont have it and you are open to new ideas, perhaps it would make you think about your own convictions. Because this book, as its subtitle said, is oriented to debunk some myths about the role that the public and private sector has historically played in making fly innovative ideas. Through a compilation of examples mainly from the digital economy, Marina Mazzucato put some prejudices upside down, showing A must read book if you have a left-wing vision of the mission of the State. And if you don´t have it and you are open to new ideas, perhaps it would make you think about your own convictions. Because this book, as its subtitle said, is oriented to debunk some myths about the role that the public and private sector has historically played in making fly innovative ideas. Through a compilation of examples mainly from the digital economy, Marina Mazzucato put some prejudices upside down, showing that public sector has been behind of the inception of the more profitable innovations around us.

We can call the author´s theories as post-keynesians, as she does not only reivindicate the role of the State in economy as the one that makes counter-cyclic investments. The State should have also a role as the sponsor of those projects that the private sector does not dare to tackle due to its high initial investments. The author shows that this have been the case of renewable energy devices or the Internet (both as a network and some of the most succesful applications such as the WWW or the iPhones).

But the book tackle also one of the topics more cheerished by the letf-wing policies: the need of a more fair distribution of benefits. In spite of the economic success of the innovations mentioned above, few of this profits has returned to the State for promoting new innovations (some succesful and some not) or providing services to the citizens, particularly to those affected by the disruptions caused by the innovations. The author points to this failure of the innovation system and calls for the development of mechanisms to solve the problems (including some examples).

However, some times you may feel that the book is longer that needed. I also have that feeling. But thinking over it twice, I think that the lenght is fully justified: Without plenty details it would be an impossible mission to debunk the myths. The book is written not only for those convinced of the need of an entreperneurial state, but also for those who believe in the prevalence of the private sector over the public sector.

To sum up the author thesis that I fully share, "if governments are willing to take the big risks that business will not take, they are bound to fail sometimes and suceed others. But if they do not do it, they will not succeed at all". State has already playes this role and should continue that way. However, we should solve that "risk taking has been a collective endeavour while the returns has been much less colectively distributed". ...more
3

Feb 09, 2014

A glimpse of how the imperial state operates

[Through my ratings, reviews and edits I'm providing intellectual property and labor to Amazon.com Inc., listed on Nasdaq, which fully owns Goodreads.com and in 2013 posted revenues for $74 billion and $274 million profits. Intellectual property and labor require compensation. Amazon.com Inc. is also requested to provide assurance that its employees and contractors' work conditions meet the highest health and safety standards at all the company's A glimpse of how the imperial state operates

[Through my ratings, reviews and edits I'm providing intellectual property and labor to Amazon.com Inc., listed on Nasdaq, which fully owns Goodreads.com and in 2013 posted revenues for $74 billion and $274 million profits. Intellectual property and labor require compensation. Amazon.com Inc. is also requested to provide assurance that its employees and contractors' work conditions meet the highest health and safety standards at all the company's sites].

The books concentrates on state investments in innovation/R&D, revealing the hidden 'visible' hand of the state behind many 'cutting edge' corporations and industries (Apple, Google, pharma at large). While the narrative is impressive in setting the investment record straight, the flimsy, almost naive post-keynesian stance of the author makes her case for a fairer reward of the state innovation efforts totally unconvincing.

The 'State' here is taken as a sort of theological entity, whose unity and benevolent agency remains unquestioned. What do we talk about when we talk about the state? Governmental agencies with huge budgets ($30.6 bn spent on pharmaceutical research in the US in 2012) and no accountability to any elected body? The alleged scandal of the public protection of national industries can be hardly understood as such if not in light of the neoliberal double standard. And the role of the state in promoting the international hegemony of the national economy is not advertised not for fear of a right-wing backlash, as the author holds, but because - being right-wing driven - it would reveal the hypocrisy of the Jeffersonian (as opposed to Hamiltonian)/neoliberal official position that the state should not interfere with the markets.

The neoliberal apparent contradiction is solved when the state unity is broken down into its potential functions, complementary or alternative based on the institutional framework (the constitution, usually). Neoliberalism attacks the state in its redistributive role as provider of public goods to its citizen, funded via progressive taxation, but appropriates it in its 'imperial' function of defender of the national industrial and financial interests, using military power when convenient.

Confusing the imperial state - mainly concerned with global hegemony - with the redistributive keynesian state, primarily interested in the defense of internal social peace, is a major logical shortcoming of the book's argument flow.

From a fact finding perspective, the theological unity assumption prevents the author from investigating the decisional processes, the fine agency and the institutional mechanism that allow - in the face of rhetorical 'austerity' - to keep the levels of imperial spending so high.

The case of the missing public investments in the reneweable energy sector is particularly interesting, as it confirms that in the current ancien régime "leave it to the markets" is the new "let them eat cake". When elites want something to happen, they use the state to achieve it. When they have no interest - as in the case of the fabled transition to a low carbon economy - the answer is 'the market'.
...more
5

Jan 15, 2020

Excellent book about the role of the different actors within an innovation system. In times of austerity measures and need of innovative solutions to wicked problems, a must read to anyone interested in economics
4

Aug 28, 2019

Really enjoyed it. Mariana Mazzucato argues very convincingly that the state has a pivotal role to play in terms of directing innovation-led growth that creates high quality jobs and raises productivity. She painstakingly deconstructs the myths of the free-wheeling Silicon Valley VC-backed entrepreneur, and points out that all the key technology innovations of the 20th century had some level of state backing. Taking a close look at the iPhone, she points out that all its important component Really enjoyed it. Mariana Mazzucato argues very convincingly that the state has a pivotal role to play in terms of directing innovation-led growth that creates high quality jobs and raises productivity. She painstakingly deconstructs the myths of the free-wheeling Silicon Valley VC-backed entrepreneur, and points out that all the key technology innovations of the 20th century had some level of state backing. Taking a close look at the iPhone, she points out that all its important component technologies - the internet, touch-screens, microprocessors, compact hard drives and so on - emerged either from government/military agencies or from state-funded university research. On this basis, she believes that economic policy should enable an enhanced role for the state in not just funding but _directing_ innovation, and receiving a fair return from that investment. Mazzucato notes that the prominent tech firms have all too readily taken up state investment and leveraged state-funded research, but have been highly reluctant when it comes to sharing the profits (or even paying their taxes).

The author notes that China's state-owned enterprises and development banks have had an unprecedented impact in terms of driving innovation and high-quality growth that benefits employees, the state and the wider public.

As we face potential climate breakdown, it's urgent these lessons are learned and that the understanding is turned into policy so that the next few decades become the era of green development.

Mazzucato's framework is limited in the sense that she assumes capitalism to be the only economic system worth talking about. Once you broaden the discussion to include socialist models of development, things get more interesting. Nonetheless, 'The Entrepreneurial State' is a valuable contribution. ...more
2

Apr 01, 2019


2.5 Stars!

If the rest of the world wants to emulate the US model they should do as the United States actually did, not as it says it did.

Mazzucato illustrates why many companies in the health and energy sectors have benefited greatly from the support of the State, But all we hear in the media is the one-sided myth of the lone entrepreneur. She cites plenty of examples, talking about the US Small Business Innovation Research (SBIR) program, offering high risk financing to companies at the crucial
2.5 Stars!

“If the rest of the world wants to emulate the US model they should do as the United States actually did, not as it says it did.”

Mazzucato illustrates why many companies in the health and energy sectors have benefited greatly from the support of the State, “But all we hear in the media is the one-sided myth of the lone entrepreneur.” She cites plenty of examples, talking about the US Small Business Innovation Research (SBIR) program, offering high risk financing to companies at the crucial early stages, a lot more than most private venture capital funds do, “It funded Compaq and Intel when they were start-ups.”

The author gives special attention to the current batch of 21st Century robber barons, we learn that Google which was developed thanks to funding by National Science Foundation, and shows its gratitude by lowering its tax bill and funnelling much of its profits through corporate facilitator Ireland. Of course they are far from alone in doing that, Amazon, Apple, Facebook et al. all exploit byzantine tax loop-holes to do exactly the same, pocketing billions of dollars.

We discover that the likes of the microprocessor, micro hard drive, SIRI and the Internet all have their roots in DARPA (Defense Advanced Research Projects Agency). She gives many examples of how the State has been a huge help to Apple over the decades, like the public schools which were a critical market for Apple, particularly in the 80s when products like Apple III and Lisa flopped.

She makes a great point when she states that, “In biotechnology, nanotechnology and the internet, venture capital arrived 15-20 years after the most important investments were made by public sector funds.” Worthwhile points are made elsewhere, but there are some confusing ones too, like comparing aspects of Japan and the USSR’s economy, contrasting national systems of innovation during the 1970s, which seems a little ridiculous seeing how the USSR during the 70s was a largely closed communist state, with much mis-information and opacity surrounding anything it did.

Overall Mazzucato has written a fairly accessible and informative book, though it does get a little sluggish in the second half and lacks clarity at times. She is prone to too much repetition which gets irritating with every increasing instance. She also seems to have the distracting habit of telling us what is coming up in the following chapters again and again, and feels the need to tell us what she told us in the previous chapters too. This did have the whiff of a heavily padded out article about it and as a result it has a jagged, patchy and overwritten feel to it.
...more
5

Dec 22, 2018

Billing itself as a political pamphlet, rather than a book-length policy memo or academic publication, Mazzucato's explicit call to action (repeated throughout the book) is for the reader to recognize the important role of the state in technological innovation. I became aware of this book from this tweet (https://bit.ly/2QKvEVn) which got retweeted around Bernie campaign alumni twitter and from hearing Mazzucato's name being cited in discussion around a Green New Deal. While this book certainly Billing itself as a political pamphlet, rather than a book-length policy memo or academic publication, Mazzucato's explicit call to action (repeated throughout the book) is for the reader to recognize the important role of the state in technological innovation. I became aware of this book from this tweet (https://bit.ly/2QKvEVn) which got retweeted around Bernie campaign alumni twitter and from hearing Mazzucato's name being cited in discussion around a Green New Deal. While this book certainly made the intellectual underpinnings of a Green New Deal clearer, I was only partially convinced by Mazzucato's call to action and left wanting for more clarity on many points. Nevertheless, it warrants five stars because it served as an excellent introduction to the progressive literature on innovation, pushing me to take the rare step of following citations to other sources, and expanded my conception of economic thought and policy.

Arguments that I found convincing:
-VC funding is too short-term (~5 years) and large companies have slashed R&D budgets (partially made possible by 'surfing' off of government R&D) necessitating an increase in government R&D funding
-Financialization of private sector is a big problem
-We must change our narrative about the role of the state in innovation from that of a passive market-failure fixer to an active courageous risk-taker and pioneer in new fields both to be in accordance with historical fact and to foment political support for the state's role in innovation (most strikingly, 75% of New Molecular Entities (NMEs) come from publicly funded labs like NIH, rather than biotech/pharma firms - partially due to an important act I hadn't heard of: the Orphan Drug Act)
-The state's power as a buyer (procurement) has been immensely important in furthering innovation (microprocessors and LCDs made it through crucial de-risking stages with Apollo mission and DARPA respectively as their main/only customers)
-The public sector should get a greater share of the rewards from the risks it takes. A state development bank, as suggested in Green New Deal (see first link at the end), might help with this

Arguments that didn't convince me/I need to read more about:
-The implicit assumption that the riskiest and worthiest work in innovation is to create new technologies (rather than to scale existing technologies up, integrate multiple new technologies, market new technologies, etc.)
-Protectionary policy, like high tariffs, for new industries is the best way to develop new industries (this worked with Denmark allowing Vestas to re-structure post-bankruptcy, maybe worked with China allowing Suntech to avoid dissolution, and probably didn't work with First Solar/Solyndra). I need to read more on this
-State has done a good job at 'picking winners'/shaping the direction of innovation (I'm particularly unconvinced by Mazzucato using university research funding as an example because it doesn't seem that the state is really doing much active choosing of who gets money with stuff like NSF grants)
-That the DARPA/put a man on the moon model can work for other industries like climate change where you don't have a cost-insensitive and guaranteed government consumer

For more, I'd recommend the following two articles.
-Some coverage on what a Green New Deal might include which seems to directly take from Mazzucato's playbook: https://www.eenews.net/stories/106010...
-The Cato Institute's rebuttal (which I think misses the point on the consumer as a crucial actor (perhaps understandably so because of Mazzucato's manifesto-like style), but importantly points out that the public sector also makes decisions involving tradeoffs): https://bit.ly/2zaVk4O ...more
4

Mar 13, 2017

In "The Entrepreneurial State", Diane Mazzucato fleshes out a cogent and encompassing argument for the necessity of State-led intervention and direct financial investment within the realm of technical "innovation" (and related technological development).

To form her argument, Mazzucato first lays out her idea of the 'alternative hypothesis', or the traditional argument, that the best role of the State is to stay out of the free-market and to avoid "picking winners". This position, which is built In "The Entrepreneurial State", Diane Mazzucato fleshes out a cogent and encompassing argument for the necessity of State-led intervention and direct financial investment within the realm of technical "innovation" (and related technological development).

To form her argument, Mazzucato first lays out her idea of the 'alternative hypothesis', or the traditional argument, that the best role of the State is to stay out of the free-market and to avoid "picking winners". This position, which is built atop 'Classical Liberal' ideas related to deregulation, decentralization, and the "free market-driven" economy, is a staple within laizes-faire economic schools such as those of Austria and Chicago. In this traditional view, the State is a barrier to entry for innovation, and functions little more then as a hurdle or regulatory 'check' to the outgrowth of technological progress.

Mazzucato, however, believes that story of the "innovative Private Sector" and the "slow, meddling State" is an oversimplification of a more nuanced, complex reality. In her book, Mazzucato attempts to shut the argument against State investment down by citing a wide-range of statistical and anecdotal evidence in an attempt to show the importance of active state intervention in the domestic marketplace, which the author views as "more entrepreneurial then the private sector" (p. 77).

According to Mazzucato, some of the most important (and broadest reaching) technological developments result from state-led initiatives through agencies like ARPA (Advanced Research Projects Agency) and the DoE (Department of Energy). Because of the State's position and high level of leverage, it is able to act as an early stage investor for research and development initiatives with high levels of risk and/or uncertainty. As a result, State-driven funding often precedes that of its venture capital (VC) counterpart, which Mazzucato describes as "impatient". In addition, R&D funds from the Private sector may have some level of an implicit contract to not "bite the hand that feeds them" by 'canabalizing' an industry through a Schumpetarian act of "Creative Destruction". This leads the author to conclude that "investment in basic research is a typical example of 'market failure'" (p. 66) because in the "innovation game", the relationship between risk and return is not fairly distributed (p. 179)

In "The Entrepreneurial State", Mazzucato describes multiple instances of government success in creating cross-industry, general purpose technologies (GPT's). Ruttan (2006) argues that large-scale and long-term government investment has been the engine behind almost every GPT in the last century. Examples of these GPT's include the US 'mass production' system, aviation technologies, space technologies, information technologies, and energy (nuclear) technologies. In my view, the most important example of state-led innovation which Mazzucato cites is ARPA's role in creating the ARPAnet – which grew into today's 'world wide web'. The author's argument that the iPhone would be impossible without the development of standards resulting from state-led investment in "high-risk" technologies is also thoroughly fleshed out and backed by historical evidence.

Before concluding, Mazzucato argues cogently for the intervention of the State in the energy market, calling for a 'push' rather then a 'nudge' into the creation of a "Green Energy" infrastructure. She argues for the creation of a 'symbiotic', green innovation system as a way to offset the current externalities which result from carbon emissions. According to Mazzucato, the future of energy lies in wind and solar, rather then in nuclear-based power (as some 'energy experts' point towards).

Mazzucato wraps up her argument for the necessity of State-led market intervention by restating and finalizing the assertion that "market-failure" lies in the uneven "reward-from-risk' distribution in which failures fall on the public sector (by means of increased debt), and the fruits of success goes to private industry (Ch. 9). In Mazzucato's view, in order to create an 'innovation ecosystem', it is important to understand the key differences in the roles of State and Private actors, and especially "what each actor brings to the system" (p. 207). After reading this book, I have come to agree with Mazzucato's emphasis on the importance of State's role in creating deep institutional links between research and enterprise – and in the internalization and absorption of the risk involved in this process. ...more
3

Jan 22, 2020

When I was a post-doc at Berkeley in the mid-1980s, I wrote a paper titled "Public Entrepreneurs and Private Bureaucrats". My focus was more on local government and the risk-taking behavior that government officials were taking to attract new businesses, and contrasted that with stodgy, slow-to-change corporations that were being put out of business by refusing to accept innovations. The paper was rejected for journal publication--with some justification--and I abandoned the project along with When I was a post-doc at Berkeley in the mid-1980s, I wrote a paper titled "Public Entrepreneurs and Private Bureaucrats". My focus was more on local government and the risk-taking behavior that government officials were taking to attract new businesses, and contrasted that with stodgy, slow-to-change corporations that were being put out of business by refusing to accept innovations. The paper was rejected for journal publication--with some justification--and I abandoned the project along with academia. However, I never gave up on the hypothesis that governments can be a force for innovations and the private sector can stifle it.

Mazzucato has a similar take, but she looks at through the lens of Big Government, Big Business and Big Science. It is also a somewhat Euro-centric book, with her writing from the UK about EU innovation policies. She is skeptical of "Small is Beautiful" and the EU's emphasis on small and medium enterprises (SMEs) as the primary targets for government support. Drawing from Isaacson's /The Innovators/, she documents how many innovations were developed mainly or even entirely by governmental support. Corporations have commercialized government-led innovations, but they have not directly paid back the government for their investments and are in some cases--like Apple--legendary in their creative tax avoidance. She shows the data that Apple invests very little in actual research. Most of their cash has been going to stock buy-backs, not new technologies. She makes a convincing case that the iPod, iPhone and iPad were mostly developed from existing technologies developed by government programs.

So governments take great risks investing in the basic research and development, and even some applied R&D, and spread those risks across a broad tax base. Companies that profit from the innovations that emerge don't pay their fair share compared with average taxpayers.

She gives the much-maligned Solyndra case consideration. While acknowledging mismanagement at Solyndra, she argues that the real problem was political harassment from the opponents of renewable energy and pressure from venture capitalists to start producing profits before they were ready. Those ideologically opposed to governmental investment and guaranteed loans called it "picking winners" as if that were a bad thing. Yet that is precisely what venture capitalists also do, but on a much shorter time-horizon. Contrary to popular belief, venture capitalists basically want to bet on sure things and avoid risks whenever possible. They want to pick certain winners.

She compares Solyndra with the Danish investment in wind power, where there was an understanding that innovations needed a longer time horizon for a positive cash flow than the private investors and venture capitalists were willing to take. The result of playing a long game was Danish leadership in that product category.

Another criticism I have is that she barely mentions Bayh-Dole, and when she does, it is largely praise for how it has benefited the pharmaceutical industry in the US. She overlooked some of the problematic issues it has created with intellectual property rights, although she does mention and document that the vast majority of patents issued under Bayh-Dole have been unprofitable. A few, however, have been enormously profitable.

She offers a few solutions that are interesting and deserve consideration. One is the creation of a National Innovation Fund that would be paid into by the corporate beneficiaries of the technology transfer from the public to the private sector. This could be related to a green investment bank that would fund long-term investments in technologies that are consistent with sustainable development goals. Another is income-contingent loans to provide governments a return on long-term investment in innovative technologies. A wealth tax on venture capital would also provide some return to the government for their long-term investment.

The book is dense in spots, a little uneven, and sometimes redundant. However, it doesn't take a Ph.D. in economics to be able to read it. On the whole, despite its flaws I found it to be a thought-provoking work that deserves serious consideration by those interested in the economic drivers of innovation, particularly those who are ideologically blind to the crucial role the public sector plays. ...more
5

Feb 27, 2020

Government: We invented this.
Private company: Can we have it?
G: Sure. Just remember to pay you taxes.
P: Lol, our what?

The Entrepreneurial State is Mariana Mazzucato's detailed effort to debunk some of the often claimed myths about government's role in innovation. Her argument is that it is the public sector, not the private sector, that is often the innovators, risk-takers, and entrepreneurs in the economy. And because ideology has pushed for the state/government's role to be smaller, we run the Government: We invented this.
Private company: Can we have it?
G: Sure. Just remember to pay you taxes.
P: Lol, our what?

The Entrepreneurial State is Mariana Mazzucato's detailed effort to debunk some of the often claimed myths about government's role in innovation. Her argument is that it is the public sector, not the private sector, that is often the innovators, risk-takers, and entrepreneurs in the economy. And because ideology has pushed for the state/government's role to be smaller, we run the risk of not having the next generation of innovations/technologies.

I recently read Mariana's The Value of Everything and wanted to read this earlier work. Similar to her arguments about how we measure the economy, Mariana's arguments about innovation are well made, have plenty of references, piles of evidence, some great examples, and leave you with the head-scratching amazement that we need this book.

I'm sure that anyone who has worked in the public or private sector would read some of the examples in this book and be immediately reminded of some from their own field. Whether it be the government contract their company was gifted, or the publicly funded research that is commercialised, or the public infrastructure support given for that new project, we can probably all think of examples where entire industries or technologies wouldn't have happened without governments taking the first step.

So how is it that myths (listed below) about the economy and who the entrepreneurs are persist?

Myths about Drivers of Innovation and Ineffective Innovation Policy
Myth 1: Innovation is about (private) R&D
Myth 2: Small (government) is beautiful
Myth 3: Venture capital is risk-loving
Myth 4: We live in a knowledge economy—just look at all the patents!
Myth 5: Europe’s problem is all about commercialization
Myth 6: Business investment requires ‘less tax and red tape’

There is only so much ideology that can stand in the way of reality. Unfortunately, I suspect that there is plenty of ideology floating around like an iceberg during a maiden voyage.*

An excellent book that is well worth reading.

"We live in an era in which the State is being cut back. Public services are being outsourced, State budgets are being slashed and fear rather than courage is determining many national strategies. Much of this change is being done in the name of rendering markets more competitive, more dynamic. This book is an open call to change the way we talk about the State, its role in the economy and the images and ideas we use to describe that role. Only then can we begin to build the kind of society we want to live in, and want our children to live in, in a manner that pushes aside false myths about the State and recognizes how it can, when mission-driven and organized in a dynamic way, solve problems as complex as putting a man on the moon and solving climate change. And we need the courage to insist—through both vision and specific policy instruments—that the growth that ensues from the underlying investments be not only ‘smart’, but also ‘inclusive’."

* You only have to read some of the 1-star reviews for this book to find evidence of this ideology in action. ...more

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