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The Entrepreneurial State

Narrated by: Amy Finegan
Length: 8 hrs and 41 mins
4 out of 5 stars (5 ratings)
Regular price: £19.99
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Summary

Penguin presents the audiobook edition of The Entrepreneurial State by Mariana Mazzucato, read by Amy Finegan. 

According to conventional wisdom, innovation is best left to the dynamic entrepreneurs of the private sector, and government should get out of the way. But what if all this was wrong? What if, from Silicon Valley to medical breakthroughs, the public sector has been the boldest and most valuable risk taker of all?

©2018 Mariana Mazzucato (P)2018 Penguin Books Ltd

Critic reviews

"A brilliant book." (Martin Wolf, Financial Times)

"One of the most incisive economic books in years." (Jeff Madrick, New York Review of Books)

"Mazzucato is right to argue that the state has played a central role in producing game-changing breakthroughs." (Economist)

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Innovation and exaggeration

Mazzucato's book flips the narrative about the dynamic and innovative private sector on its head. It argues that the entrepreneurial state has been, and should continue to be, a vital player "not only in fixing markets, but in creating them."

The book applies the neo-Schumpeterian insights of evolutionary economics and innovation research to argue for a state-centric viewpoint on how innovation breaks new ground. Mazzucato correctly points out that radical innovation is subject to uncertain risks and rewards, and the initial risky investment for it is often hard to come buy in the private sector.

For Mazzucato, the short-sighted and risk-averse preferences of private venture capitalists prevent them from acting as the guardians of systemic long-term innovation. This allegedly means that the only reliable source of funding for technoindustrial revolutions comes from the deep and risk-loving pockets of governments.

There is much to admire in and agree with Mazzucato's thesis. The government clearly can play an important role in fostering innovation. In particular, although narrowly USA-centric, the book's history lesson is an important reality check. It highlights the contributions of various government-backed research institutions, such as Bell Labs, DARPA, the NIH, and NASA, to the growth and development of new technologies (and subsequently new markets). It also raises the important question of who should reap (privatise) the benefits of such distributed innovation.

That said, the book reads too one-sided. It does not properly explain the dangers of relying on heavy-handed and tax-funded government investment, nor the potential benefits of developing non-coercive and bottom-up alternatives to them. Many such arguments come from the very same evolutionary economics and innovation research literature that Mazzucato uses to cherry-pick the conclusions that support her argument. Her conclusions are therefore inadequate and undersupported by the available data.

Secondly, it fallaciously argues from the historical fact that the big government has played an important role in innovation research to the normative conclusion that a big government is therefore an indispensable part of all future innovation research. It could be that innovation research tends to take place in universities and research labs, whether or not these are tax-funded or privately funded. She 1) fails to consider how government has crowded out non-governmental alternatives; 2) conflates any government involvement with how the government should get credit for everything done with its (major or minor) help; 3) and completely ignores the possibility of charitable or privately funded institutes that are not driven by the profit motive but modelled on not-for-profit principles, such as the old Oxbridge model of research excellence based on the disinterested pursuit of knowledge.

Overall, Mazzucato's broader case falters on selective scholarship and rhetorical hyperbole. The weaker thesis about the historical and continued importance of government finance in fostering innovation remains valid, however. When combined with a more nuanced recognition of the pitfalls of government involvement in its myriad forms, and a better recognition of the need for the private sector as a system of innovation, the innovation systems perspective can play an important role in guiding public policy discussions going forward.

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  • Anonymous User
  • 30-01-19

Interesting and worth a listen

The book is worth a listening too. Easy to follow, and relevant. I would've given it 4 stars if content had been more varied, as it was just a little bit too reiterative sometimes.