The State is not just a market-failure fixer, it has to be active in investing in innovation
Mariana Mazzucato is a professor of economics of innovation at SPRU in the University of Sussex, UK. She presents her research in an internationally known book called The Entrepreneurial State: Debunking Private vs. Private Sector Myths. She is an eloquent advocate of the importance of public investment to guarantee innovation-lead growth. “You need active and strategic intervention from the state to shape and create markets,” she told EuroScientist, setting herself vehemently against the vision of a State as a market-failure fixer.
She gave an energetic talk at the Falling Walls Conference, in Berlin in November 2014, where EuroScientist met her. The speech was introduced by a cartoon, similar to the old signals at the Berlin Wall’s borders. The cartoon stated, very appropriately, “You are entering the public sector.” Mazzucato believes that we have to change the economic narrative. “The role of the state is not just to de-risk the private part, but actually share the risks, and hence also share the rewards,” she explained.
According to this Italian-born economist, the “narrative continues to pretend that all the innovation and the dynamic bit is on the private sector” and that the State is only “boring, inertial, and bureaucratic.” Nothing could be further from the truth according to her essay. “The advent of all the important technological changes of the last century, all the high-risk and high-capital investments came from the State.”
Her favourite example is the smartphone. “The technologies that make it smart were all state-funded: internet, GPS, touchscreen, Siri…,” she pinpoints. “Of course Apple was important – but we know that. We are told that every single day.” She wants to balance the story: the private company Apple “has been able to surf a massive wave of state-funded technologies that they were able to put together.”
Governments should become places where the smartest graduates should aim to end up working, says the economist. But how do we get to that stage? “Given the fact the salaries in the public will never be as high as in the private sector,” she explains, “you have to make it an honour to work in a government,” just as the US government does; as in the case of 1997 physics Nobel Laureate Steven Chu, who run the department of Energy from 2009 to 2013. And you do that because it is an honour for people like Chu to be seen as someone who “creates the new energy landscape” – and is not just “fixing market failures,” she concludes.
Featured image credit: Kay Herschelmann, Falling Walls
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