Mariana Mazzucato

In this presentation based on her new book, “The Value of Everything: Making and Taking in the Global Economy” (Public Affairs, 2018), renowned economist and public policy expert Mazzucato analyzes where true value comes from in our economy, and reveals to business leaders why the amount of money generated by companies is not an accurate measurement of their long-term ability to produce, innovate and thrive. The problem, she believes, is that by accepting the conventional wisdom that delivering value for shareholders is the same as delivering value for the whole economy, we have confused value creation with value extraction. Mazzucato argues it is not just the public sector and taxpayers, but the private sector as well, that stands to lose from an economy whose real foundations are being continually eroded.

In this presentation, based on her best-selling book, “The Entrepreneurial State: Debunking Public vs. Private Sector Myths,” Mazzucato illustrates how contrary to popular belief, the private sector has generally been timid in putting up the money for groundbreaking technology, only doing so after public funds paved the way forward, and provides evidence and a practical framework for rethinking public-private partnerships. If policymakers and entrepreneurs alike do not acknowledge and embrace such a role for the state, the innovative breakthroughs of the past are unlikely to be repeated.

The notion that innovation can help deliver economic growth for everyone without increasing inequality is a popular one with business theorists, economists and politicians. But in practice – where public funds are used by private companies to subsidize risk-taking – the rewards are generally reaped by companies, while the risks are borne by taxpayers. Mariana Mazzucato, who sees a vital role for government in risk-taking and innovation, says the key is not to withdraw the state as an actor in the economy, but to develop a new framework which socializes both risks and rewards.

In a modern, globalized economy where tax rates are far lower than they once were, devising a way to give government equity in innovative companies is essential to ensuring funds for the public welfare are not depleted. Based on her research and real-world involvement in such enterprises as the Scottish National Investment Bank, in this presentation, Mazzucato emphasizes the need to give the state, and by extension the taxpayers, a stake in the innovation they help fund, so the public at large (rather than just the private actors) can benefit from economic growth and dynamism.

Bringing about the next generation of green technology is a perfect example of an undertaking that needs both public and private sector support. But simply pumping money into renewable energy and other environmentally friendly technologies can distort incentives, acting as a public subsidy for private industry. What was to be a public good can become yet another instance of rent-seeking at the taxpayers’ expense.

In this presentation, Mariana Mazzucato outlines how government can move from subsidization to a goal-oriented approach to investing in green technology, focusing on how particular countries specialize in certain niches of the green economy. By building legitimate public/private sector partnerships – and emphasizing the quality of investment over the quantity of funds – policymakers and entrepreneurs can ensure taxpayer money is invested wisely in a program of inclusive growth and innovation, all while helping stem the tide of environmental degradation.