Thursday, April 16, 2015

Mariana Mazzucato — The Creative State

The conventional view in mainstream economics today is that governments have little capacity to spark innovation. The state should play as limited a role in the economy as possible, the thinking goes, intervening only in cases of “market failure.” This is far from the truth.
In fact, governments can and do play a critical role in spurring innovation – actively creating new markets, instead of just fixing them. To be sure, advocates of a limited economic role for government believe that market failure justifies some funding of infrastructure and basic science. But such limited intervention can hardly explain the billions of public-sector dollars that have flowed toward downstream applied research, even providing early-stage financing for companies. Indeed, in some of the world’s most famous innovation hubs, the state has played a key “entrepreneurial” role, envisioning and financing the creation of entire new fields, from information technology to biotech, nanotech, and green tech.…
Project Syndicate
The Creative State
Mariana Mazzucato | Professor of the Economics of Innovation at the Science Policy Research Unit of the University of Sussex and author of The Entrepreneurial State: Debunking Public vs. Private Sector Myths

2 comments:

Anonymous said...

The importance of this conception is that even a fiscal policy that doesn't further expand the deficit can spur growth and progress. If the state makes better, more dynamic and more creative use of certain capital resources than the private sector, then taxing them away from the private sector is worth it.

Tom Hickey said...

Right. There is a financial component to fiscal policy, that is, in MMT terms, accommodating changing nongovernment saving desire, and there is an investment component related to providing public goods needed for a thriving economy and supplementing where the private sector is either unwilling or unable to invest in enterprise. These are not intrinsically related to each other, so one should not dictate the others.

Marianna Mazzucato seems to compromise on this point at the conclusion of her piece, but that may simply be for the political reasons she suggests. People have a psychological need to see inevitable losses by government in innovation "made up by" revenue from gains even though operationally it has no bearing.