It’s rare that a gifted orator and top-tier economist is able to shift the thinking of an entire generation. Mariana Mazzucato, innovation policy expert and economics professor at University College, London, is doing just that by addressing the central misconception of our time: How we define “value.”
In her new book, “The Value of Everything: Making and Taking in the Global Economy” (Penguin, April 2018), Mazzucato provides a new approach to economic theory, while addressing key policy matters: inequality, growth, the proper role of government and the future of capitalism itself.
Reviewed by esteemed Financial Times journalist Martin Wolf as “a challenging analysis that forces us to reconsider how our economies work — and who it works for,” “The Value of Everything” starts from the premise that we have for many years let prices determine value, rather than let value determine prices. Powerful companies and CEOs have convinced policymakers, investors and corporate boards that they are creating wealth where, in fact, they are extracting it. The result has been an economy where a handful of monopolists increasingly control key markets, inequality soars, and future innovation and growth are hobbled by a lack of long-term, patient investment.
“The Value of Everything,” though critical of certain corporate practices and viewpoints, offers policy insights that people in business should consider for two reasons. First, the private sector has failed to understand the importance of an active government in financing and de-risking innovation. Secondly, rising inequality and market concentration may force the public into an increasingly anti-business mindset. The central argument of “The Value of Everything” is that value needs to be measured in terms of what is actually produced, rather than short-term profits and inflated prices. As companies engage in massive share buybacks that raise the immediate return to their investors, it would be wise for those same investors to question whether sufficient investment is being made in long-term innovation and growth.
Mazzucato – who has advocated her vision and preached her warnings in influential media outlets such as The Economist, Bloomberg, and The New Statesman – aims to change the narrative, encourage a rethink of the merits of the current system, and devise a capitalism that is more inclusive, forward-thinking and sustainable. For this revolutionary economist, her new book is only the beginning of a journey to impact the way the world thinks about the policies we adopt to address – and who makes and who takes in the economy.