10 May 2019. At the beginning of her lively address in the Aula of the University of St.Gallen, the Italian-American economist mentioned four global problems which could only be solved by means of “purpose-oriented value creation”: climate change, financial crises, an industry which fails to adequately share its economic successes with society, and a state which administers rather than creating.

Mariana Mazzucato, an innovation economist at the University of Sussex, said that we needed a new debate about value creation and about the question as to who creates value in our world, and how. The four global problems were also based on narratives about how value, prosperity and wealth come into being. These narratives were often myths. These production myths, however, are so influential because parts of society assertively speak about how much value they create, while others are very restrained. The state, for instance, was frequently only perceived as an administrator and a troublesome obstacle although it was also an investor and thus bore entrepreneurial risks.

Myths shape thought
The distinction between productive and unproductive forces dominated the value creation debate, said Mazzucato. In the USA, for instance, the myth was prevalent that the market alone was responsible for the emergence of trail-blazing innovations such as the internet and firms such as Google, Facebook and co. In point of fact, however, there was a great deal of government investment in the US, too. She mentioned Tesla founder Elon Musk as a case in point. With his SpaceX company, he docked a space capsule on to the International Space Station ISS. Everything he did was added to the gross domestic product because he was a private entrepreneur. But ultimately, the entrepreneur also owed his success to a collective effort: he had received billions from the government. Thus the state also contributed to Elon Musk’s success, said Mariana Mazzucato.

The state as an entrepreneur with a mission
In one of her studies, the researcher had a closer look at how the state can benefit society as an entrepreneur. This publication is entitled The Entrepreneurial State: debunking public vs. private sector myths. The quintessence of her research was that politics required societal objectives, a task, a mission. Getting the first man onto the moon had been such a mission. Each country was facing different challenges – which should be countered with clear-cut missions. Clean cities, a sea without plastic, a solution to the demographic crisis: with specifically targeted investments, the government and the private sector would be able to accomplish this mission together. The prerequisite for this was a renunciation of the one-sided thinking in terms of “market versus state”, as well as a fair balance between industry and the public sector. The state and the market should share both risk and success, said the academic. Only this would pave the way to a climate that was conducive to innovation.

Value cannot always be measured
To conclude, the innovation researcher also addressed her own colleagues, stating that economists only attributed value to things that had a price, for example when they worked out the gross domestic product. Private care and housework, for instance, were valuable for society but were not economically measurable. Mazzucato recommended that economists should argue again about how they talked about value, otherwise they would end up regarding people who used up value as people who created it.

Further sources: University of Sussex, Zeit Online