A great TED talk and a highly interesting position on the role of governments!
Mazzucato is asking, why all the innovative new economy type companies come out of the USA. “Where are the European Googles?” and “What is the secret behind the Silicon Valley growth model? On the one hand side there are different market making mechanisms like a dynamic venture capital sector and different commercialization policies that allow companies to bring their products to market more easily. However, the crucial point is the funding of innovative technology by Government. Mazzucato uses the examples of the iPhone where all the innovative technologies that make the iPhone a cool device were funded by Government: the internet (funded by DARPA, Government of Defense), GPS (funded by military Navistar Program), the touchscreen display (funded by CIA and NSF), SIRI (funded by DARPA). Therfore the Government’s and public sector’s reputation of being a boring, complex, leviathan, bureaucratic and somehow annoying aparatus is unsuitable. According to Mazzucato there is a widely shared notion that the legitimation of a state is to fix market failures and to care for higher level problems like pollution. This notion is nurished by media when they discuss that ‘Governments should stick to the basics: better schools for a skilled work-force, clear rules and a level playing field for enterprises of all kinds’ (The Economist, April 21st 2012, The Third Industrial Revolution). This notion however, neglects that the state was rather creating the market (with reference to the previously mentioned examples) than fixing it. Mazzucato therefore appeals to stop depicting the state as a neccessary and boring part in the economic environment. She argues that it actually is the state who takes the risks and creates the markets without being rewarded. She therefore appeals to create an entrepreneurical state organisation where a the markets grant back gains from their business based on state funded innovation.