A book excerpt and interview with Mariana Mazzucato, author of “The Value of Everything”
THE ECONOMIC reforms of Ronald Reagan in America and Margret Thatcher in Britain in the 1980s unleashed the power of the private sector for economic growth. The deregulation and privatisations that followed not only perked up their own economies, but became a template for reform in many other countries around the world, from Mexico to Russia.
In each of these cases, government had to have a vision for the future, and make the necessary investments that later crowded-in more risk-averse private firms. But the key question is “what is being created”? Is it war machines, or tools for an economy that is more sustainable and inclusive? Even fracking initially came from government investments. Once we admit the state can be transformational, the key question is how and what.
The Economist: If society attributes too much value to sectors you regard as unproductive, such as financial services, is that not merely an expression of our collective priorities?: There are strong narratives about value creation that have also enabled more extraction to happen. While there was plenty of value extraction by landlords in the 17th century, they did not pretend to be productive, creative or innovative. They just said: give me your money.
I have been a strong advocate for a mission-oriented approach to address the key challenges of our time—from climate change to healthy living. But key here is that the missions themselves should be co-created. No so much of a Kennedy-style moon-shot but more of different types of actors defining what a green transition might look like and then government using all it has at its disposal—from procurement to prize schemes—to crowd-in multiple solutions to “get there”.
Starting with the French physiocrats, economists found that government was required for the orderly functioning of society and thus for setting conditions for the production of value. But in itself, government was not inherently productive; rather, it was a stabilizing background force.
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