Telling a new story about capitalism
Mazzucato on mission to change how we think about economic value
Mariana Mazzucato was freezing. Outside, it was a humid late-September day in New York City, but inside — in a Columbia University conference space full of scientists, academics and businesspeople advising the United Nations on sustainability — the air conditioning was on full blast.
For a room full of experts discussing the world’s most urgent problems, this was not just uncomfortable but off-message. At a break, Mazzucato dispatched an assistant to get the AC turned off. How will we change anything, she wondered aloud, “if we don’t rebel in the everyday?” Mazzucato, an economist based at University College London, is trying to change something fundamental: the way society thinks about economic value. While many of her colleagues have been scolding capitalism lately, she has been reimagining its basic premises. Where does growth come from? What is the source of innovation? How can the state and private sector work together to create the dynamic economies we want? She asks questions about capitalism we long ago stopped asking. Her answers might rise to the most difficult challenges of our time.
In two books of modern political economic theory — “The Entrepreneurial State” (2013) and “The Value of Everything” (2018) — Mazzucato argues against the long-accepted binary of an agile private sector and a lumbering, inefficient state. Citing markets and technologies like the internet, the iPhone and clean energy, she says the state has been an underappreciated driver of growth and innovation.
“Personally, I think the left is losing around the world,” she said in an interview, “because they focus too much on redistribution and not enough on the creation of wealth.”
Her message has appealed to an array of politicians. Sen. Elizabeth Warren, a Democrat and presidential contender, has incorporated Mazzucato’s thinking into several policy rollouts, including one that would use “federal R&D to create domestic jobs and sustainable investments in the future” and another that would authorize the government to receive a return on its investments in the pharmaceutical industry. Mazzucato has consulted with Democratic Rep. Alexandria Ocasio-Cortez and her team on ways a more active industrial policy might catalyze a Green New Deal.
Even Republicans have found something to like. In May, Sen. Marco Rubio of Florida credited Mazzucato’s work several times in “American Investment in the 21st Century,” his proposal to jump-start economic growth. “We need to build an economy that can see past the pressure to understand valuecreation in narrow and shortrun financial terms,” he wrote in the introduction, “and instead envision a future worth investing in for the long-term.”
Formally, the U.N. event in September was a meeting of the leadership council of the Sustainable Development Solutions Network, or SDSN. It is a body of about 90 experts who advise on topics like gender equality, poverty and global warming. Most of the attendees had specific technical expertise, but she offers something both broad and scarce: a compelling new story about how to create a desirable future.
Mazzucato takes issue with many of the tenets of neoclassical economic theory: its assumption that the forces of supply and demand lead to market equilibrium, its equation of price with value and its relegation of the state to the investor of last resort, tasked with fixing market failure. She has originated and popularized the description of the state as an “investor of first resort,” envisioning new markets and providing long-term, or “patient,” capital at early stages of development.
“In theory, I’m the ‘Mission Muse,’ ” she joked. Her signature reference is to the original mission to the moon — a states-purred technological revolution consisting of hundreds of individual feeder projects, many of them collaborations between the public and private sectors. Some were successes, some failures, but the sum of them contributed to economic growth and innovation.
Emphasizing to policy-makers not only the importance of investment, but also the direction of that investment — “What are we investing in?” — Mazzucato has influenced the way American politicians speak about the state’s potential as an economic engine. In her vision, governments would do what so many economists have long told them to avoid: create and shape new markets, embrace uncertainty and take big risks.