The Entrepreneurial State

 In her important new book “The Entrepreneurial State” which got a rave review from Martin Wolf in the Financial Times, University of Sussex economist Mariana Mazzucato attacks the conventional view that the role of the state should be largely confined to promoting free markets, correcting market failures, and maintaining a low spending, pro free enterprise climate to facilitate private sector entrepreneurship. However, she goes far beyond progressive advocacy of occasional Keynesian interventionism to counter recessions and support for redistributive policies in arguing that state entrepreneurship plays a pivotal role in successful modern economies which has been neglected and, indeed, “hidden in plain sight”.

In a nutshell, she agrees with the famous Austrian economist Joseph Schumpeter that innovation is key to a dynamic capitalism, with the twist that the state is absolutely central to creating a dynamic, innovative – and environmentally sustainable – economy. As she puts it, the state must push and not just nudge.

Here is my review published in the Globe Economy Lab.

3 comments

  • I am not a fan of the title of the book, as the popular notion of being an entrepreneur is not how I would model my public infrastructure- i.e. it seems to suggest for profit and innovation are hand in hand- that said- the innovation component is quite relevant and many of the readers on here know that is what we have mentioned in the comments and blogs of this site for quite a long time. the Key factor being- innovation and the actors modalities that push for it. Government have a huge role and always have, when it comes to state sponsored R&D, innovation dissemination, skills development, and several components that make up Innovation. In fact I would argue, if these are the facets that feed into the capacity of innovation, then broadly defined, public resources have always been that which has more of role in terms of innovation than private interests

    It also comes down to relevancy and innovation as quantified in terms of outputs and where and how the investment for innovation is made. If one wants to monetize the aspects of innovation in terms of creating profits, then I am sure there is no match for private entrepreneurs under a deregulated shroud of public space. However, if we want an innovative delivery of traditional public goods and services, I am not so sure the traditional profits motives or innovation theories will bring us to the summit of Schumpeter’s grand theory. The question is, what can? What is the mix of planning and self interest? What is that formula for success and I do like that this books opens that space up for debate.

  • too bad the “state” has over and over and over again proven they are terrible at cost effective innovation. The only time I can see in modern history where governments were any good at innovation and development was during extreme war time. Where the innovation and development were an immediate need due to the continual loss of life. You have to look no further than medical advances and communication advances in WW2 and Korea to prove my point.

    The best intentions of the current OLP for green technology is definitely admirable, but have been rolled out so costly that they have turned so many people off the initiative that the ultimate goal of cleaner environment has been lost for them.

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