debunking public sector myths

Martin Wolf reviews The Entrepreneurial State: Debunking Public vs Private Sector Myths, a new book by Mariana Mazzucato (Anthem Press, 2013).

Growth of output per head determines living standards. Innovation determines the growth of output per head. But what determines innovation?

Conventional economics offers abstract models; conventional wisdom insists the answer lies with private entrepreneurship. In this brilliant book, Mariana Mazzucato, a Sussex university professor of economics who specialises in science and technology, argues that the former is useless and the latter incomplete. Yes, innovation depends on bold entrepreneurship. But the entity that takes the boldest risks and achieves the biggest breakthroughs is not the private sector; it is the much-maligned state. ….

This book has a controversial thesis. But it is basically right. The failure to recognise the role of the government in driving innovation may well be the greatest threat to rising prosperity.

Martin Wolf, “A much-maligned engine of innovation“, Financial Times, 5 August 2013.

That is the beginning and end of the review. Copyright restrictions prevent me from copying and pasting the middle paragraphs. Read the entire review. Non-FT subscribers, this is an excellent use for one of your ten monthly downloads.

You can view the table of contents and introduction to the book at Amazon.com.

I enjoyed the following quotation, which appears (with three others) at the beginning of the book, just before the table of contents.

The important thing for government is not to do things which individuals are doing already, and to do them a little better or a little worse; but to do those things which at present are not done at all.

John Maynard Keynes, (“The end of laissez-faire“, Hogarth Press, 1926)

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