Innovation and exaggeration

Mazzucato's book flips the narrative about the dynamic and innovative private sector on its head. It argues that the entrepreneurial state has been, and should continue to be, a vital player "not only in fixing markets, but in creating them."

The book applies the neo-Schumpeterian insights of evolutionary economics and innovation research to argue for a state-centric viewpoint on how innovation breaks new ground. Mazzucato correctly points out that radical innovation is subject to uncertain risks and rewards, and the initial risky investment for it is often hard to come buy in the private sector.

For Mazzucato, the short-sighted and risk-averse preferences of private venture capitalists prevent them from acting as the guardians of systemic long-term innovation. This allegedly means that the only reliable source of funding for technoindustrial revolutions comes from the deep and risk-loving pockets of governments.

There is much to admire in and agree with Mazzucato's thesis. The government clearly can play an important role in fostering innovation. In particular, although narrowly USA-centric, the book's history lesson is an important reality check. It highlights the contributions of various government-backed research institutions, such as Bell Labs, DARPA, the NIH, and NASA, to the growth and development of new technologies (and subsequently new markets). It also raises the important question of who should reap (privatise) the benefits of such distributed innovation.

That said, the book reads too one-sided. It does not properly explain the dangers of relying on heavy-handed and tax-funded government investment, nor the potential benefits of developing non-coercive and bottom-up alternatives to them. Many such arguments come from the very same evolutionary economics and innovation research literature that Mazzucato uses to cherry-pick the conclusions that support her argument. Her conclusions are therefore inadequate and undersupported by the available data.

Secondly, it fallaciously argues from the historical fact that the big government has played an important role in innovation research to the normative conclusion that a big government is therefore an indispensable part of all future innovation research. It could be that innovation research tends to take place in universities and research labs, whether or not these are tax-funded or privately funded. She 1) fails to consider how government has crowded out non-governmental alternatives; 2) conflates any government involvement with how the government should get credit for everything done with its (major or minor) help; 3) and completely ignores the possibility of charitable or privately funded institutes that are not driven by the profit motive but modelled on not-for-profit principles, such as the old Oxbridge model of research excellence based on the disinterested pursuit of knowledge.

Overall, Mazzucato's broader case falters on selective scholarship and rhetorical hyperbole. The weaker thesis about the historical and continued importance of government finance in fostering innovation remains valid, however. When combined with a more nuanced recognition of the pitfalls of government involvement in its myriad forms, and a better recognition of the need for the private sector as a system of innovation, the innovation systems perspective can play an important role in guiding public policy discussions going forward.

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Insightful

Mazzucato elegantly dispels myths on the State's role in funding innovation. Excellent narration and enjoyable audio book.

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Very worthwhile

For a book on Economics, this is pretty easy to understand even if you aren't involved in the subject area or particularly academic, although inevitably some things have to be looked up to understand it all.

I've often wondered about this area and what I took from the book is there is nothing wrong with government taking a significant role in the economy as long as it is done well and with care and attention.

Government involvement, such as in Germany with investment in targeted areas has put them far ahead of the UK in some regards. Some things done there are regarded as 'extreme left-wing' in this country, yet are simply actions to manage things effectively in everyone's interest.

There remains of course the problem of government 'capture' by vested interest or ideology, which may be why some left wing approaches have been seen to fail. Work and investment by government must be based on evaluation of facts, free from influences that would destroy its effectiveness.

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strawman and hubris

This is a story of why government is better than merchantilist mega corps. it treats capitalism as the system that Dmith wrote against in defence of the small business. in typical socialist form, the author redefines terms in a manner that Orwel would understand explicitly.

The aim of the author is the controlled totalitarian state.

Redefines public / private role in wealth creation

loved this expose of the narrative we have been brainwashed into as regards who is really creating value for the world and who is extracting it.
sometimes laboured the point a little bit that could have been down to the sheer volume of examples available where "global entrepreneurs" have risen off the back of extensive research paid for by the public purse. Yet the public purse gets very little return for their crucial input.
Good suggestions on how this can be rectified.

Incredible

Please can we make it mandatory for all Politicians, policy makers, and journalists to read this book?