Here is a brillant person I did not know about until moments ago. Not surprising as i don’t read in this area: Mariana Mazzucato
I looked her up the cheap way on Wiki. Her is their summary of her reseaarch. She sounds like someone I would like to read more of:
Mazzucato’s work examines the interaction between technological change, firm performance and industry structure.
She works within the Schumpeterian framework of evolutionary economics, studying the origin and evolution of persistent differences between firms and how these differences vary across sectors and over the industry life-cycle.
Her empirical studies have focused on the auto, PC, biotech and pharma industries. Her most recent work has analyzed the co-evolution of technological change and stock market bubbles. In this, she claims that stock price volatility tends to be highest at the firm and industry level, when technological innovation is the most “radical”.
In 2011, Mazzucato published The Entrepreneurial State, in which she argues that the most risky and uncertain investments underlying most technological revolutions were undertaken by public sector agencies. She claims that neither the ‘market failure’ perspective nor the National Systems of Innovation perspective, have adequately studied the risk-taking role of the public sector, and its ability to set the vision and ‘mission’ for private sector growth. She also argues that while private risk finance is lacking in many sectors, most venture capital investments in Silicon Valley were riding the wave of public sector investments. Developing this argument, in a 2012 paper for the think tank Policy Network entitled “The Risk-Reward Nexus”, Mazzucato argues that central to this policy debate is an understanding of the tension between how value is created and how value is extracted in modern day capitalism.
Offering her perspective on why ‘smart,’ innovation-led growth has not led to ‘inclusive growth’, she argues that there is a disproportionate balance between the ‘collective’ distribution of risk taking in the innovation process, and the increasingly narrow distribution of the rewards.
Similarly, in another paper for the think tank Policy Network called “Rebalancing What?”, Mazzucato argues that the problem is not only one of short-termism, it is also about the way in which financial activities focused on value extraction have been rewarded above activities focused on value creation – often leading to value destruction.
Critics have argued that Mazzucato offers a confused definition of “public goods,” which is a “crucial point,” since “the non-rivalrous and non-excludable nature [of public goods] make them difficult to profit from providing,” and thus the private sector cannot, by definition, be interested in them. Others claim that she is “too hard on business” but acknowledge that “she is right to argue that the state has played a central role in producing game-changing breakthroughs, and that its contribution to the success of technology-based businesses should not be underestimated.”
Martin Wolf wrote that The Entrepreneurial State offers “a controversial thesis,” but “it is basically right,” and warns that the “failure to recognise the role of the government in driving innovation may well be the greatest threat to rising prosperity.” Another critic stated that “it is one thing to legitimize the state as a driver of innovation and give credit where credit is due — something [Mazzucato’s] book does masterfully”, but “it is another thing altogether to craft effective innovation policy that deals with risk in a politically acceptable way.”