Mariana Mazzucato: If we want growth today to be more innovation-drive...

What is needed is both a New Deal in terms of mission-oriented investments but also a new deal in terms of a modern social compact - one that allows the state to socialize not only risks but also rewards. Maybe then innovation-led growth will also become growth that includes all of us.

Mariana Mazzucato

innovation risk growth

In my view, the state should be active and work in cooperation with private businesses to spur growth that's sustainable and inclusive. The policy process is about co-creating and co-shaping of markets, creating new opportunities for business investment - and negotiating a better deal for the public too.

Mariana Mazzucato

creating views opportunity

Green is not just about renewable energy. It's also about creating a new direction for the whole economy. This requires government to step up, not step back, creating the kinds of mission-oriented public organizations that will enable us to tackle climate change - as ambitious as those that got us to the moon. It also requires the financial sector to be less short-term since we know that short-term finance has distorted incentives and directions in areas like biotechnology.

Mariana Mazzucato

government organization moon

I often use the iPhone as an example of how governments shape markets, because what makes the iPhone ‘smart’ and not stupid is what you can do with it. And yes, everything you can do with an iPhone was government-funded. From the Internet that allows you to surf the Web, to GPS that lets you use Google Maps, to touch screen display and even the SIRI voice activated system - all of these things were funded by Uncle Sam through the Defense Advanced Research Projects Agency (DARPA), NASA, the Navy, and even the CIA!

Mariana Mazzucato

uncles smart stupid

Government support is not only investing in upstream areas like basic research, but also in downstream areas like applied research and early-stage financing for the companies themselves. This means there are great risks.

Mariana Mazzucato

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It's important that public funds be spent in research directions that are pushing market frontiers rather than working in existing areas. This means funding research not only on drugs but also on areas like life-style changes, even if the profit potential is lower for Big Pharma as you cannot sell that change as you can sell a medicine.

Mariana Mazzucato

medicine drug mean

Most venture capital funds are too short-termist and exit-driven to deal with the highly uncertain and lengthy innovation process.

Mariana Mazzucato

venture exit innovation

Shareholder value theory - the destructive idea that companies should be run solely for the benefit of shareholders - has led to financialized businesses that do not invest in the areas that will lead to future growth or the invention of useful new products.

Mariana Mazzucato

growth running ideas

Fixing markets isn't enough. We have to actively shape and create them and tilt the playing field in the direction of the growth we want.

Mariana Mazzucato

tilt growth shapes

Markets are not static entities that are 'intervened' in (for good or bad) but are outcomes of public and private interactions.

Mariana Mazzucato

static entity outcomes

Unfortunately, simplistic framing of problems leads to simplistic answers.

Mariana Mazzucato

framing problem answers

Once we admit that the public sector takes an immense amount of risk along the entire innovation chain, it becomes crucial to find ways to share both risks and rewards.

Mariana Mazzucato

innovation risk way

We should be investing where the public returns are greatest - that is in innovation.

Mariana Mazzucato

investing innovation return

It would be a mistake to overstate the similarities between the Brexit vote and Trump's win - but there are common themes, not least in the rallying cries that the winning campaigns used. They focused on a supposed economic threat posed by outsiders, as immigrants or as trade partners. This fuelling of anxieties underpinned a narrative centered on the need to "regain control," whether of borders or of economic forces.

Mariana Mazzucato

rallying-cry winning mistake

People work hard and companies make big profits, but employees don't see that they share in the wealth they help to create.

Mariana Mazzucato

hard-work helping people

Brexit has shrunk the market opportunities. Exiting trade deals will do the same for the U.S. Those deals must be actively shaped and governed to make growth more inclusive.

Mariana Mazzucato

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There is a lot of flesh to be put on the bones - but there is at least an opening for a more pragmatic, less ideological debate about how to build economies that work for people, within the limits of our planet.

Mariana Mazzucato

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My specific concerns with Trump's plans are that they are likely to investments in infrastructure where the private returns are highest (for example toll roads and bridges) rather than where the public gains are greatest.

Mariana Mazzucato

tolls example bridges

Brexit and Trump have brought the problems of capitalism into sharp relief, but both are only making things worse. Take the investment challenge - businesses invest where there they see technological or market opportunity.

Mariana Mazzucato

relief challenges opportunity

Germany is using its Energiewende policy as a way of envisioning a green transformation and innovation across many sectors.

Mariana Mazzucato

germany innovation green

If we want growth today to be more innovation-driven, more inclusive and more sustainable, then we need a more active state, not a less active one. Yet we still hear the dogma that we should just fix market failure by focusing on science and infrastructure, and to "level the playing field."