When you argue that the role of the state in the economy is more than a ‘facilitator’, a ‘de-risker’, a regulator, a spender or an administrator–you will get a big reaction. After all, these assumptions have been at the heart of economic policy in countries around the world for the last half-century or more. We like to pretend that the state is at best useful for fixing different types of market failures – an idea that justifies the need for the state to fund basic science, a classic ‘public good’.
But the reality, as I explain in my work on The Entrepreneurial State: debunking public vs private sector myths, the state has actively shaped and created markets, not just fixed them. It has done so by being an active investor along the whole innovation chain: not only in basic research but also even in downstream areas like applied research and early stage financing of companies. Ignoring this key market shaping and market creating role (not only market fixing) is having today two effects: (1) it is hurting future innovation possibilities (making some countries think they can simply use public money to indirectly incentivize private sector investment), and (2) it is contributing to the increase in inequality.…Must-read.
Evonomics
Everything You Should Know about Government, Innovation, and Entrepreneurship
Mariana Mazzucato | RM Phillips Professor in the Economics of Innovation at the University of Sussex, SPRU
1 comment:
kryptonite for libertarians...
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