#863 Government innovation is not an oxymoron

Mariana Mazzucato

Mariana Mazzucato interview with INETeconomics; photo clip from video

Anti-government pundits might not want to hear this, but Mariana Mazzucato makes a compelling case that the reason America is widely viewed as the hotbed of creativity and innovation is government. In The Entrepreneurial State: Debunking Public vs. Private Myths in Risk and Innovation, she presents case studies of innovative companies who have relied on research carried out by an entrepreneurial state.

Mazzucato is not just talking about infrastructure, an obvious benefit for business. She is referring to cutting-edge research carried out by government departments imbued with an entrepreneurial spirit. Funded through tax dollars, they investigate promising new technologies without the constant pressure of profitability. DARPA (Defense Advanced Research Projects Agency) is the example most of us are familiar with, since the Internet we make so much use of came out of their research and development.

Currently R.M. Phillips Professor in the Economics of Innovation department at the UK’s University of Sussex, the American economist wrote The Entrepreneurial State to caution the UK and Europe against government cutbacks that dismantle the very engines of economic growth that could turn their economies around.

The world is not just facing economic challenges. It is facing environmental crisis. In the introduction to her book, Mazzucato writes:

But even if today were a boom period, there would not be enough investments being made in radical green technologies were it not for the State. Even during a boom most firms and banks would prefer to fund low-risk incremental innovations, waiting for the State to make its mark in more radical areas. But as with all technological revolutions, green technology requires a bold government to take the lead—as was the case with the Internet, biotech and nanotech.

I am heartened to see an economist calling for a green, inclusive revolution based on technology that puts people and the environment center stage and pointing out the role of the state in bringing it about. She also speaks to the private sector, reminding them of the value of what they receive from government and the duty to give back (and not just through taxes).

Are you listening, world leaders, media and public? Mariana Mazzucota has lessons that are worth hearing. She gives me hope.

You can follow Mariana Mazzucato on Twitter.

Take a half hour to watch this thought-provoking interview:

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