Economics Agitator: Mariana Mazzucato – IMF F&D

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Economics Agitator: Mariana Mazzucato – IMF F&D

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Bibliographic details

• Authors: BOB SIMISON
• Published: September 1, 2020

Profile and personal background

• Author/profile: BOB SIMISON.
• Publication: F&D Magazine, September 2020.
• Personal details cited:
  • Ages of Mazzucato’s children: 20, 17, and 14 (twins).
  • Mazzucato is described as a 52-year-old Italian-American.
  • Her father worked at Princeton University’s Plasma Physics Laboratory.
  • Undergraduate at Tufts University; doctorate at New School for Social Research.
  • Has worked in the United Kingdom most of the past 20 years and assumed her present position in 2017.
• Media and advisory roles:
  • Appeared on CNN, PBS, BBC’s “Desert Island Discs”, TED, and written for the Financial Times and the Guardian.
  • Advised: South Africa, Italy, the Vatican (COVID-19 task forces), Scottish government (economics), OECD (growth), Norway (research policy), European Union (research and innovation).

Core thesis: the role of the state in innovation

• Central claim:
  • Government should set big goals, define missions, encourage and invest in innovation, and govern the process so the public benefits.
  • Contrasts with conventional wisdom that government should only fix market failures and otherwise get out of the way.
• Intellectual lineage:
  • The Entrepreneurial State (2013) argues private innovation often relies on government-funded research.
  • The Value of Everything (2018) tackles “what is value” and ramifications for economic theory about “what is value.”
• Key conceptual distinctions:
  • Advocates “market-shaping” policies (directional state) rather than mere “market-fixing.”
  • Emphasizes governing to ensure public benefit (patent management, pricing reflecting public funding).

Evidence, examples, and empirical points cited

• Historical and practical examples:
  • US government funding underpinning pharmaceutical research and technologies behind Apple’s iPhone.
  • 1960s US moon-landing mission as an example of mission-oriented innovation.
  • DARPA (62-year-old at time of writing) as an agency designed to take risks with spillovers into civilian economy.
  • GPS development funded long before commercial uses (example used to question claims that state cannot pursue hunches/serendipity).
• Pandemic comparisons:
  • Governments of several much smaller, much less rich nations responded more effectively to the pandemic than America and Britain, including Vietnam, southwest India’s Kerala state, New Zealand, and Denmark.
  • Mazzucato argues these countries made substantial investments over time in state capacity, enabling better crisis management (lockdown measures, providing protective equipment, inspiring citizens’ trust).
• Labor and value observations:
  • “Real wages have stalled behind productivity growth.”
  • While the American economy has tripled in size, wages adjusted for inflation haven’t budged in four decades.
  • In 2019, over $40 billion went to medical research (public contribution cited).

Criticisms and rebuttals

• Major critiques cited:
  • Arthur Diamond: Government-led innovation resembles central planning; governments lack immersion and capacity for serendipity, hunch pursuit, and trial-and-error.
  • Alberto Mingardi: Mazzucato’s evidence is “shaky”; positive spillovers from military investment are not proved to be the result of directional policies.
• Mazzucato’s responses:
  • Points to historical public investments enabling private breakthroughs (e.g., Apple, Microsoft).
  • Argues state agencies historically have pursued risky, foundational research (DARPA, GPS).
  • Rejects central-planning label; advocates state direction plus governance to ensure public returns (patent sharing, pricing reflecting public funding).

Policy recommendations and proposals

• Government actions recommended:
  • Seize power to lead innovation and set mission-oriented goals.
  • Invest in state capacity and knowledge-creation mechanisms to cocreate value.
  • Use conditions on grants and loans: e.g., require airlines receiving bailouts to lower carbon emissions.
  • Consider “citizens’ dividends” and government equity stakes in businesses linked to government funding.
  • Ensure pricing of COVID-19 vaccines accounts for public funding; share patents in a common pool and make vaccines universally available and free.
• Institutional and training proposals:
  • Train civil servants in innovation, public policy, and public value to apply mission-oriented approaches in government.

Institutional work, impact, and accomplishments

• Institute for Innovation and Public Purpose (UCL):
  • Six-story building on London’s Russell Square.
  • Two-and-a-half-year-old institute with a team of 30.
  • Developing a Master of Public Administration program focusing on innovation, public policy, and public value.
  • Funding from teaching income, research grants, and policy consulting.
  • Contributions: helped Scotland set up a national investment bank; influenced the European Union’s mission-based research and innovation policy; aided the United Kingdom in developing an innovation and industrial strategy.
• Recognition:
  • Profiled by Wired, the Times of London, the New York Times, the Financial Times, Quartz, and Fast Company.
  • Praised by peers for reconnecting theory and policy practice and challenging market fundamentalism.

Risks, warnings, and future outlook

• Fiscal caution:
  • Mazzucato warns that although governments are opening fiscal spigots during the pandemic, austerity could still follow.
  • Notes talk in Britain of “burden sharing” where local governments may be expected to repay central funds, implying potential cuts to essential services.
• Political and social stakes:
  • Highlights a “huge battle ahead” over protecting and funding services identified as essential during the pandemic.
• Ongoing agenda:
  • Mazzucato intends to continue applying her ideas to the COVID-19 crisis and broader debates on government’s role in innovation and public value.

F&D Magazine — BOB SIMISON, September 2020.

Content in this bundle

• Economics Agitator: Mariana Mazzucato – IMF F&D
  • Economics Agitator: Mariana Mazzucato – IMF F&D (Markdown version)
  • Economics Agitator: Mariana Mazzucato – IMF F&D (PDF)
• Agitadora de la economía ● Finanzas y Desarrollo ● Septiembre de 2020
  • Agitadora de la economía ● Finanzas y Desarrollo ● Septiembre de 2020 (Markdown version)
  • Agitadora de la economía ● Finanzas y Desarrollo ● Septiembre de 2020 (PDF)
• Paroles d’économistes : Agitatrice d’idées au service de l’économie
  • Paroles d’économistes : Agitatrice d’idées au service de l’économie (Markdown version)
  • Paroles d’économistes : Agitatrice d’idées au service de l’économie (PDF)