## ECONOMICS AGITATOR

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**Canonical URL:** [ECONOMICS AGITATOR](https://www.imf.org/-/media/files/publications/fandd/article/2020/september/economics-agitator-mariana-mazzucato.pdf)

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### Profile and personal background
- Mariana Mazzucato is a 52-year-old Italian-American professor of economics focusing on innovation and public value at University College London (UCL).
- Founding director of UCL’s Institute for Innovation and Public Purpose; team of 30 in a six-story Russell Square building.
- Family: married to Italian filmmaker Carlo Cresto-Dina; four kids ages 20, 17, and 14 (twins).
- Education and career path: born in Rome; moved to the United States at age five; undergraduate at Tufts University; doctorate in economics at the New School for Social Research; has worked in the United Kingdom most of the past 20 years, assuming her present position in 2017.
- Media and advisory roles: regular commentator (BBC, CNN, PBS), TED talks, opinion pieces in Financial Times and the Guardian; advisor to South Africa, Italy, the Vatican (COVID-19 task forces), the Scottish government, the Organisation for Economic Co-operation and Development (on growth), Norway (on research policy), and the European Union (on research and innovation).

### Core thesis on state-led innovation
- Main argument: governments should set big goals, define missions, encourage and invest in innovation, and govern the process so that the public benefits.
- Contrasts with the conventional view that government should only fix market failures and otherwise get out of the way.
- Emphasis on a market-shaping (not market-fixing) policy approach: state provides direction, makes necessary early investments, and governs to ensure public benefit (e.g., preventing patent abuse, aligning medicine prices with public funding).

### Evidence, examples, and key claims
- Government role in innovation:
  - US government funding underpinned pharmaceutical research and technologies behind Apple’s iPhone.
  - The American government’s 1960s moon mission cited as an example of a goal-driven innovation wave.
  - Defense Advanced Research Projects Agency is described as a 62-year-old agency set up to take risks; its research laid foundations for much of today’s information technology and the internet.
- Pandemic response and state capacity:
  - Governments that invested in state capacity (examples cited: Vietnam, southwest India’s Kerala state, New Zealand, and Denmark) managed the COVID-19 crisis more effectively than the United States and the United Kingdom in terms of lockdown measures, providing protective equipment, and inspiring citizens’ trust.
- Public contribution to medical research:
  - In 2019, over $40 billion went to medical research (public contribution cited in vaccine-pricing discussion).
- Economic valuation and wages:
  - Observation: American economy has tripled in size while wages adjusted for inflation haven’t budged in four decades.

### Criticisms and Mazzucato’s responses
- Critiques:
  - Arthur Diamond: government-led direction resembles centrally planned industrial policy; argues entrepreneurs, serendipity, and trial and error drive innovation.
  - Alberto Mingardi: in a 2015 23-page critique (with a 32-entry reference list), argues Mazzucato’s evidence is shaky and that she fails to prove government interventions were purposefully directed to achieve specific outcomes.
- Responses:
  - Mazzucato contends critics ignore governments’ record of supporting risky early-stage technologies and that firms like Apple and Microsoft built on government-funded advances.
  - Example rebuttal: GPS investment by the US government preceded its commercial applications (e.g., supporting businesses like Uber).
  - Reiterates that she does not advocate central planning but directional public investment with governance to ensure public returns.

### Policy recommendations and proposals
- Use government leverage when bailing out businesses:
  - Attach strong conditions to grants and loans (example: require airlines to lower carbon emissions in return for bailouts).
- Public returns and governance:
  - Citizens’ dividends and government equity stakes in businesses linked to government funding; government as “investor of first resort.”
  - Vaccine pricing should account for public-private partnerships and public-funded research; patents around COVID-19 vaccines should be shared in a common pool and the vaccine made universally available and free.
- Institutional capacity building:
  - Train civil servants in innovation, public policy, and public value (Master of Public Administration program at Mazzucato’s institute) to apply mission-based, market-shaping approaches.
  - Institute has helped: Scotland set up a national investment bank; the European Union adopt a mission-based research and innovation policy; the United Kingdom develop an innovation and industrial strategy.

### Institutional impact and recognition
- Publications: The Entrepreneurial State (2013); The Value of Everything (2018).
- Public profile: frequent media appearances; profiled by Wired, the Times of London, the New York Times, the Financial Times, Quartz, and Fast Company.
- Awards and advisory roles: multiple economics awards; advisor to several governments and international organizations.
- Academic endorsements: Gregor Semieniuk and Carlota Perez praise her reframing of government’s role and reconnection of theory and policy practice.

### Risks, trade-offs, and future concerns
- Warning on austerity:
  - Despite large fiscal support during the pandemic, Mazzucato warns “don’t assume that means that we won’t have austerity.”
  - Notes talk in Britain of “burden sharing,” which could require local governments to repay central government funds, potentially leading to cuts in services deemed “essential.”
- Political economy challenge:
  - Anticipates “a huge battle ahead” over protecting and sustaining public investments and services highlighted during the pandemic.

*Bob Simison, Finance & Development, September 2020.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2020/september/economics-agitator-mariana-mazzucato.pdf_