The Entrepreneurial State: debunking public vs. private sector myths is stirring up much-needed debate worldwide about the role of the state in fostering long-run, innovation led economic growth.
A new US edition was published by Public Affairs in 2015, with revisions that include a new introduction in which Professor Mazzucato argues that American politicians need to think big, and have the courage to develop a more confident story about the state's role in the economy, in the run up to the 2016 Presidential elections. You can read the new introduction here.
Her book comprehensively debunks the myth of a lumbering, bureaucratic state versus a dynamic, innovative private sector. In a series of case studies—including IT, biotech and nanotech—Professor Mazzucato shows that the opposite is true: the private sector only finds the courage to invest after an entrepreneurial state has made the high-risk investments. In an intensely researched chapter, she reveals that every technology that makes the iPhone so ‘smart’ was government funded: the Internet, GPS, its touch-screen display and the voice-activated Siri. And in another chapter she argues that the green revolution is today is missing the kind of patient public sector financing, and de-financialized private sector, that got the IT revolution off the ground.
Mazzucato shows that in the history of modern capitalism the State has not only fixed market failures, but has also actively shaped and created markets. This required financing not only basic research but also applied research and early stage financing of companies. In doing so, the State sometimes wins and sometimes fails - as in the twin tales of Tesla and Solyndra. The US Government funded both: Solyndra went bust – and became the latest stick to beat the Government with for its attempt to ‘pick winners’ - while Tesla was successful. But where was the public’s reward for making that early investment? Does the tax system still work to bring back this social return? In fact the risks were socialised while the rewards were privatised. The book considers how to change this dysfunctional dynamic so that economic growth can be not only ‘smart’ but also ‘inclusive’. It is a conversation the US desperately needs to have.
In 2014 Professor Mazzucato was awarded the New Statesman SPERI Prize in Political Economy for her work on smart growth and the entrepreneurial state. She is currently working on a report for NASA on public / private partnerships in the low-earth orbit economy. Her book featured on the 2013 books of the year lists of the Financial Times and Forbes. It is being translated into 9 languages including Italian, German, Portuguese, Spanish, Dutch and Greek.