Wednesday, October 30, 2013

Randy Wray — Mazzucato: The Entrepreneurial State

I’ve been meaning to write a blog on a book by my friend, Mariana Mazzucato, titled The E State. It is essential reading for anyone who wants to understand the role played by government in encouraging innovation. For so many years we’ve been sold the notion that our nation’s Undertakers (also called Entrepreneurs or Capitalists) are the lions who drive growth through innovation. Actually, according to her well-documented book, Mariana shows they are nothing but domesticated pussycats, who have to be dragged along by the entrepreneurial State. The State innovates, doing the hard stuff and even guaranteeing markets; the pussycats merely make profits off the State’s initiatives.
Economonitor — Great Leap Forward
Mazzucato: The Entrepreneurial State
L. Randall Wray | Professor of Economics and Research Director of the Center for Full Employment and Price Stability, University of Missouri–Kansas City

Smacking down one of the chief myths of neoliberal "capitalism." 

The downside of that too much government-led innovation is military-related. For example, Ike even justified the interstate highway system based on logistical support needed for national security.

8 comments:

Chewitup said...
This comment has been removed by the author.
Chewitup said...

Her comment on the State taking a small equity piece of a government aided startup is functionally a tax. But it is a good selling point politically.

Unknown said...

I haven't read the rest of Wray's piece, but his comment here seems way too simplistic.

"Mariana shows they are nothing but domesticated pussycats, who have to be dragged along by the entrepreneurial State. The State innovates, doing the hard stuff and even guaranteeing markets; the pussycats merely make profits off the State’s initiatives".

What he just said there is that no innovations come from private businesses first. That's just incorrect, and will immediately put off lots of people. Also, I can't see the point of constantly using the term 'undertaker' to describe all business owners. All the time is too much.

Matt Franko said...

Y,

see what you are saying...

Current "obamacare" implementation fiasco perhaps supports your view...

I dont know about his use of 'govt innovates' is the best perhaps "govt facilitates national initiative onto previously unattempted enterprise"... or something like that...

Current 'Obamacare' situation is perhaps instructive... govt institution has to 'lead' or something and then business has to be brought in a controlled way for implementation and yes business will "make money" off the efforts....

Many in business currently dont like the 'Obamacare', but once they figure out that they can make a $bazillion they would get right on board imo....

govt has to become comfortable with non-govt "making money" off the govt.

No avoiding this imo...

As long as govt remains in the knowledge that govt is 'in charge' ultimately.... which current govt cohort does not imo...

I like what Dan has written on this subject...

rsp,

paul meli said...

"…That's just incorrect and will immediately put off a lot of people,…"

Ego is a major problem…wonder if Aristotle had one?

I suspect the vast majority of "innovation" occurs at the university level, funded by the state.

here would be little "innovation" if the hard work required to create the idea (technology) wasn't produced by someone…this research is expensive and un-profitable for the creator. it's a labor of love.

University is where people with ideas can get access to the resources needed to develop the idea.

Some Individual entrepreneurs take the research gathered and compiled by university researchers and apply it to real-world products that hopefully fulfill cconsumers needs.

They get rich and take credit for the idea.

The guy that invented the spreadsheet (and didn't make a penny from it) was a university professor.

DOS was the invention of some geek that died in obscurity…Bill Gates maneuvered the code into an empire.

Most entrepreneurs are merely chasing dollars and aren't very creative, while many creative entrepreneurs fail because they don't care about money.

Steve Jobs is an example of a genius in seeing what consumers will need in the future, and implementing it using "ideas created by others".

He is an exception because his own ideas could see into the future.

Most CEO's are morons that react only to profit.

Samsung, et al are examples of companies using their market position to try to catch up (by copying what seems to work), while having almost zero creative energy of their own.

Unknown said...

Paul,

just to confirm, are you saying that private businesses never create new innovations?

Unknown said...

I saw this interesting comment under Wolf's article over at the FT:

"As someone who works in R&D the conclusions of this book are so utterly obvious that one wonders how anyone argues against it. Private industry is great at combining fundamental technologies to make a product, but utterly lousy at doing the fundamental research. This is not their "fault". Investors want fast, predictable and secure returns. This is the utter opposite of fundamental research - where results are close to unpredictable, difficult to patent (thank god), and often expensive. The entire world economy (eg entire electronics industry) is unknowingly supported by developments made by people and institutions over the last 150 years for whom the profit motive was nonexistent."

However there was another interesting comment I saw, which asked what the situation might be/might have been if taxes and government spending were far lower than they are or have been.

Ryan Harris said...

To MMT folks, this isn't new or novel. The question I have, is why when we know this and talk about the job buffer, why we don't talk about this sort of innovation. The opposition talks about productivity problems associated with a job buffer program but this suggests that much innovation and real productivity occurs with in government. When private industry doesn't have enough good ideas to drive the economy, government needs to innovate and create gold for the private economy to mine. This should always precede any presentation on the JG. And that word, guarantee, get rid of it. Buffer. Semantics and context.