The Entrepreneurial State

The Entrepreneurial State (2013) by Marianna Mazzucato looks at how the state is, according to Mazzucato, entrepreneurial in its development of science and technology.

The first thing about the book is that it abuses the word ‘Entrepreneur’. Mazzucato tries to put forward the idea that the state, by financing research is being ‘Entrepreneurial’. But it’s not really. The financial risk for the state itself isn’t that great. The financial risk for the people who allocate the funding is also small.

The book does make the case well that a lot of technology had much of the initial development paid for by the state. The book looks at the IPhone extensively and points out that microprocessors, the internet, touchscreens and the GPS in the device were all built for the US government. She then implies that Apple and other technology companies and VC firms just took the money and should pay more of it in tax. The book downplays the difficulty of performing this kind of integration and ignores the many companies who tried and failed to build a successful smartphone prior to the IPhone.

There is a very interesting review of the book in The Guardian that points out the problems with her general thesis.

The book then puts forward the idea that the government is the key entity that needs to shape clean energy by being entrepreneurial, but also in taking the upside and more of the profit. She jumps from pointing out that the state created various technologies used by Google and Apple and pharmaceutical companies to saying that it can just shape the market to prefer her favored energy choices. It’s not a strong argument. The US government did invest in IT, but there was no design of a market for computers, software and smartphones. That simply evolved.

Mazzucato makes the point that Apple doesn’t pay their ‘fair share’ of tax by pointing out that they use tax shelters to minimize the tax they pay. She doesn’t mention the raw figure of how much tax big US IT companies pay. Even with various tricks to reduce their tax they still pay billions and their employees, in jobs created by these companies also pay a great deal of tax.

The Entrepreneurial State makes the case that well that state spending on R&D has paid off in many instances. The claims it makes that the state should obtain more of the profits and benefits and shape markets is not well made.

 

 

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