Who creates value in today's world? Who is going to take away from it? Is it possible that by not making this distinction accurately, you end up destroying it? These are the fundamental questions on which Mariana Mazzucato, an Italian American economist, scholar for years of the innovation economy and high-tech industry and lecturer at UCL in London, reflects on daily.
“This is a debate that has always dominated the economy, because it determines the meaning of productivity, and what is productive and unproductive work.” Mazzucato’s study can be summarized in two books, The Entrepreneurial State and The Value of Everything. Making and taking in the modern economy, in which these concepts are analyzed in detail. According to the economist, economic thinkers have attributed value to different things over time: first agriculture, then trade, then work. But it is only in the last century that we have moved on to the subjective side of the issue, attributing value to personal preferences. Thus, Mazzucato explains, the distinction between production and value extraction has increasingly become blurred, causing a substantial inability to establish the boundary between one and the other. And this is how certain actors have been able to see society (and markets) as “value creators”,i.e., creators of wealth, especially in the field of innovation - not only technological, but also medical and pharmaceutical, for example. So what is the problem? This process has confused many, starting with policy makers, who have long considered themselves mere “redistributors” of this value, when in fact they are co-creators.
“History tells us that innovation is the result of a great collective effort, not a small group of white men in California,” Mazzucato says (the reference to Silicon Valley entrepreneurs is not accidental). The State, in fact, is the main agent of any process of innovation, although it is still considered (and, in many ways, considered itself) as a system of gray bureaucrats, drowning in paperwork and far from all that is smart, flexible, innovative - the words that characterize innovation today. “But we would never have made it to the Moon if the US government had not allocated USD 26 billion for the Apollo operation, 4% of its GDP at the time,” Mazzucato says. Without the State’s will and political ambition to work in that direction, in short, we would never have achieved certain goals. “It took vision, ambition, and the willingness to take risks,” Mazzucato explains.
If we really want to redirect growth from a sustainability and inclusion perspective, and make investments in that direction, we need to rethink what we are doing at all levels: institutional, personal, corporate.
Today, the idea of risk, however, is not taken into consideration when it comes to public investments, still entirely based on cost-benefit analysis (i.e. how much money it takes to develop a project, and how much money that project will bring in once accomplished). The State is still stuck in the previous step. “Progressives themselves make this mistake, they stop at the idea of value redistribution and do not reflect on its creation,” Mazzucato explains. But what about entrepreneurs? They exploited it: despite the huge amount of public money allocated to inventions such as Steve Jobs' iPhone or the Internet, “their creators pretended to be great inventors, but the reality is that they wouldn't have gone far without the funds they received.” Not only a brilliant idea, but the desire to export and institutionalize it at all levels of society is what ultimately made the difference. Also because “ideas do not market themselves”, Mazzucato says.
Yet, to date, our political class does not have the tools to address these challenges in the appropriately, to redirect growth. “That is exactly why we have not really overcome the economic crisis: the framework of the tools is so narrow and depressing in terms and functions - we still talk about “resolving the crises of the system” - that it is evident how difficult it is to adapt to the new concepts of sustainable, smart, inclusive growth.” Instead, “if we really want to redirect growth in a key of sustainability and inclusion, and make investments in that direction, we need to rethink what we are doing at all levels, institutional, personal, corporate,” Mazzucato says. “Today is the right time, because there is a will to do so. Before we didn't have the global SDGs (Sustainable Development Goals), but now we have the chance to rethink the terms by which we look at investment, industrial strategies, innovation policies and even technology.”
We need a narrative that focuses not only on spending, but on more strategic investments.
Mazzucato, who was a consultant to Alexandria Ocasio-Cortez in the development of the American Green New Deal, as well as a member of the UN Development Policy Committee, has also already developed the strategy for moving in this direction. An example above all, the European Commission has made a key contribution to the outline of a new legal tool to target research in five missions on cancer, climate, oceans, soil and zero-impact cities (the Horizon Europe). “We need a narrative that is not just about spending, but on more strategic investments,” Mazzucato says. Through the creation of missions, which are different from the challenges - the Cold War was a challenge, landing on the Moon is a mission - you can channel investments on specific goals, achieving concrete results. These, according to the economist, should follow five basic criteria: they should be bold and inspire citizens; be ambitious and risk-averse; have a precise goal and deadline; be interdisciplinary and cross-sectoral; and allow experimentation.
This is the only way, Mazzucato says, that policies can be created that allow greater fairness and solve the challenges that we face today. Starting with climate change, a game in which the State is a key player, not only through policies, but through its own investments. If there is a political will to act in that direction, the damage caused by climate change could be stopped within a decade, the expert concludes. We know that structural reform is needed from an economic point of view, but it’s even more essential to start from a cultural reform: Mazzucato is trying to change the terms of this conversation: moreover, if we have managed to go to the Moon, why should we not be able to stop the climate crisis in a few years?