Mariana Mazzucato

In her polemic “The Value of Everything: Making and Taking in the Global Economy,” Italian-American economist Mariana Mazzucato takes a well-deserved swipe at the financial services industry for perverting the cause of capitalism.

The financial services industry is akin to the rentiers of the ancien regime of France: they take, but they do not give.

They are leeches on the economy.

So far she has my attention.

What Adam Smith meant by free markets and what the neo-libs mean are two entirely show more different things, says Mazzucato. For Smith it meant ridding markets of the non-productive forces of the economy; for the neo-libs it means government.

Mazzucato is pretty clear in her assertion that government is not among the unproductive in the economy and for that she relies on Karl Polanyi and to a lesser extent John Maynard Keynes.

She focuses on the evolution of the idea of value in the economy and follows the history of National Accounts to show how this is manifest in our assumptions of what in the economy counts and what does not.

Originally, financial services didn’t count, but as the leeches fed the tax base, and the coffers of politicians, and the GDP figures, they counted more and more.

Her argument is that public sector investment has driven innovation in the past and that to a large extent it will drive innovation in the future. She looks to the development of the Internet as the biggest example of public investment that paid off big time for society, but one where the rewards continue to be reaped by Silicon Valley and their financial leeches, and government gets denigrated.

The successes of Bell Labs she attributes to public investment, where I would have thought it would be a great argument for the monopolists.

If innovation drove the economy in the 20th century, a fair argument could be made that paranoia drove innovation, something that abounds in America. In some cases the paranoia was justified — Hitler, Stalin, and Mao were not pussycats, remember — but did America really have to go to the moon to defeat the evil Soviet monster?

I think not.

Patents, and non-disclosure agreements, and user agreements all protect the high tech capitalists and I would heartily agree that this stuff goes a little too far.

But I would not go as far as to say that unexamined public investment is a good thing.

We have plenty of government, and a lot of it is a good thing. But we refuse to admit that micro managing everything is good. Does America need 50 states that all do pretty much the same thing? Does Canada need 10 provinces each with their own hobbled energy policies?

Do all the little municipalities dotting the landscape need their own payroll systems, their own public health policies, their own school boards?

My own meagre experience in municipal, provincial, and federal govt leads me to believe there is a lot of pruning to be done. School board trustees don’t set curriculum, Provinces do. School board trustees don’t set working conditions for teachers. Unions and Provinces do in Canada.

Public participation in rule-setting is a good idea, but an extra layer of administration in this age of automation is of questionable use.

America has tied itself in a knot over public health priorities during a pandemic. Must I wear a mask? Should my kids go to school? Can I go to the gym safely? You don’t need four levels of government to tell you what the right thing to do is. You need a cooperative mentality in the electorate.

As I’ve said above, in America paranoia is a big motivator. Common sense and cooperation not so much in the ascent.

Striking forward on international priorities such as climate change, international crime and tax havens, the rise of artificial intelligence, the discoveries of biotech, the concentration of wealth, and the decline of our oceans will take less sovereignty and more sobriety. show less

Interesting exploration of the hidden choices that make neoliberal economics seem inevitable. Is changing a diaper productive? Only if a paid worker does it—but that’s a choice, and so is treating government as merely an expense and not a source of productivity. Mazzucato explains in detail how mainstream economics as a discipline socializes risk and cost, attributing them to government, while privatizing gain, attributing it to corporations.

We had it and we lost it. According to Mariana Mazzucato, the USA showed precisely how to energize and motivate an entire country and its economy in the 1960s. Today’s USA shows no signs whatsoever of that spirit. It is everyone for themselves, and public institutions have become liabilities instead of levers. Mazzucato’s The Mission Economy is a delightfully positive, thoroughly thought through, universal solution to what ails capitalism. It is an object lesson in solutions hiding in show more plain sight.

It was President John F. Kennedy who, fearing the USA was falling behind the USSR, suddenly pledged to land Americans on the moon before the end of the decade. He acknowledged this would be risky and expensive, but he knew in advance it would send the US economy in all kinds of new directions. Some 400,000 people worked on the project. It led not only to major advancements in information technology and computers, but even to management methods as companies found they needed to communicate freely with competitors and their own employees. The economy boomed. And men walked on the moon.

Today, Mazzucato says, we desperately need a mission like the moon landing to not only give the economy a focus, but also to solve major overhanging problems the country cannot address through individual or corporate action. It/they would leverage the intellects and creativity out there, take the country in bold new directions, improve productivity by inventing new processes, and also create whole new industries and markets along the way.

Basically, there is no downside to remaking the economy through missions of moon landing scale.

She gets right down to business; it’s one of the things that makes this book great. Usually, there is a long, hundred page history of the issue for those new to the planet, followed by a short, pie-in-the-sky conclusion that will not work. The Mission Economy dispenses quickly with the single story of the moon mission, and gets right into the mechanics of replicating that success in numerous fields such as climate change, healthcare, ending poverty and several others. It is a pleasure of positive vibes. From an economist, not a dreaming-in-Technicolor futurist. Make that a superstar economist.

Mazzucato uses government agencies (horror!) to manage various aspects of the missions she describes. Government agencies have the talent and the money to give the economy the boost it needs. They have the bench strength, the institutional memory and the network connections to coordinate major missions across numerous fields and sectors of the economy.

It has been government, after all, that continually funds risky bets, creating new industries where none existed, and bailing out companies as needed.

This, she says, reveals a large problem America didn’t use to have: the socialization of costs. In America, if a business fails, the government eats the loss. If it succeeds, it shares none of the profit. Profits are privatized, losses are socialized. If the government were to share in the success of its investments, it could invest more often and in bigger projects. Instead, the conversation is now always about budgets, interference in private affairs, and incompetence. And as always, freedom. Despite all the evidence to the contrary.

At the same time, business leaders rely massively on government aid. She points out that Tesla, the poster child for private industry innovation, got $465 million in loan guarantees to get itself launched, and its founder, Elon Musk, has since obtained $4.9 billion in public subsidies for his various companies. Musk is off and on now the richest person in the world. But the American government is not participating in his success. Mazzucato says “Instead of government going to the moon, it’s more as if in recent decades it has been taken for a ride.” She calls instead for the socialization of investment.

Since the Reagan-Thatcher era, government has become the problem, not the solution. But as succeeding administrations have slashed government budgets and outsourced more and more activity, the results have been dismal at best. The outsourcing has cost far more rather than saving any money. Government employees get paid less than private contractors, and private contractors also require a profit. Private enterprise cannot perform as effectively as government agencies. Going private means the achievements of government have fallen to essentially nothing.

Instead of building on the success of the moonshot to create a permanent, virtuous circle of talent in government agencies, the US has discouraged it, stripped it, crippled it, and then blamed it for not performing. Eloquently, Mazzucato says “a government that lacks imagination will find it more difficult to create public value.” An understatement visible to all who live in the country.

Another problem is capitalism itself. Mazzucato says there are four reasons capitalism has led to the crippling point: 1) the short-termism of the financial sector 2) financialization of business, 3) climate emergency, and 4) slow or absent governments. She says markets are focused on the next quarter, on investing in financial products not major new developments. Companies are all about pleasing shareholders with stock buybacks, a dead end investment of its funds instead of expanding its business. Only bold government could mobilize a moonshot in this choking atmosphere.

America is all about freedom from government. It should only be there to bail out markets when greed leads to a crash. It’s only there to correct market failures, but it should be about shaping markets and creating new ones, like an outer space industry in the 60s.

Instead, Americans must wait for rich individuals to start new businesses. The result is slow going: “Our lethargic transition pace, globally, is a lesson in what can happen if government leaves the market to sort out problems and abstains from assuming its entrepreneurial role in society,” she says.

This is of course, not news. She says John Maynard Keynes wrote of it in his “1936 magnum opus The General Theory of Employment, Interest and Money. There, he identified three major tasks to be undertaken in order to save capitalism from its own demise: ‘parting with liquidity’, ‘euthanizing the rentiers’ and ‘socializing investment’.”

Throughout the book, Mazzucato draws on her own rich and varied experience advising governments around the world. She has refined the concept into mission maps that lay out the approaches needed to tackle various moonshot scale problems. Because nothing is simple or straightforward. Relationships need to be defined and refined. The direction of communication, process and production is interconnected and needs to be reversible. Unintended consequences, side issues and peripheral developments all need to be accounted for, preferably in planning. It’s laid out clearly in her mission maps.

She doesn’t lack for ideas, either. Mazzucato has mission maps for climate change, plastics remediation, health care, poverty- everything government is not addressing, when it is really the only entity that can. A green new deal could employ millions while finally solving pollution issues. That is, if government stepped up to drive it. Because industry can’t.

The Mission Economy suffers from nothing. It demonstrates clear thinking, straightforward language, actionable points, roadmaps, and results where it has been tried. It is a lovely, uplifting and positive experience to read. Yes, we can tackle these intractable problems. And yes, we can actually thrive in doing so rather than suffer with austerity for doing nothing but destroy the government – the very agent that can lead these massive efforts. Mazzucato’s reputation for straightforward thinking and explanation of complex economic principles is fully on display in The Mission Economy.

“Mission-oriented thinking cannot be based on the status quo. The mission attitude is not about picking individual sectors to support but about identifying problems that can catalyse collaboration between many different sectors. It is not about handing out money to firms because they are small or because they are in need, but structuring policies that can crowd in different solutions (projects) by multiple types of organizations. It is not about fixing markets but creating markets. It is not about de-risking but sharing risks. It is not about picking winners but picking the willing. And it is not simply about setting the ‘rules of the game’ but about changing the game itself so that a new direction can foster change – change towards a green transition and/or the digitalization of a population.”

David Wineberg show less

Explains the actual good in innovation that government is responsible for and the way in which the private sector takes up those goods and runs with them. A good symbiotic relationship that is spoiled when people refuse to acknowledge the first order good of basic r&d that government initiatives provide, blame them unreasonably for failures (while not putting same unreasonable view on private failures) and then using all that ignorance to pretend they (private sector companies) are wholly show more responsible for risks and rewards, emphasis on rewards. This ultimately justifies working towards favorable tax codes in order to avoid paying back the original government risk and basically being good citizens working to build good governmental bodies. Excellent book. show less