The world-known professor Mariana Mazzucato visited Stockholm on September 30 and October 1 to speak at seminars arranged by Swedish Entrepreneurship Forum, VINNOVA (Sweden's innovation agency) and Statistics Sweden. Mariana Mazzucato research on the relationship between financial markets, innovation and economic growth, and her book - The Entrepreneurial State: debunking Private vs Public Sector myths - have placed in several top lists of the year's best books. In the book, she argues for the need to develop new ways to understand the state's role in innovation and economic growth.
- This idea that I am talking about, is about a focus to rebalance the economy with new industrial policies. In one way I really welcome this, however I find it problematic, due to the fact that the industries have become incredibly “financialized”, Mazzucato said in the beginning of her talk.
By this she was referring to the degree to which companies and pharmaceuticals are spending much more on e g share buy-backs and other such actions. More so than on R&D. The degree is a problem in and of itself, and how policy should tackle this is not yet solved, she said, and consider this a huge problem. It could in fact create a parasitic eco-system.
- Let´s be careful about the eco-system term by the way, it can be either mutualistic or parasitic. The key is to build symbiotic ecosystems. The issue or rebalancing is currently being discussed; symbiotic ecosystems would be one of many of the rebalancing acts of today. National policies are another one factor within that, Mazzucato continued.
According to Mazzucato, the growth needs to be more inclusive and sustainable. It is all over the EU 2020 programs, UN and others. If we want to achieve this, we have to be very hands on. The market alone will not necessarily ensure it on its own. We also need to talk about the role of the state. How do we even talk about the economy of the state? It is fundamental, Mazzucato addressed.
So what is the state’s role in the economy? Is it to set level playing field then get out of the way, to solve market failures or something more interesting? Externalities and all of that; this notion that you only have governments that intervene to fix things is somewhat flawed. We see a place for a role for the government more than just being in the background; it is moving away from a constant depiction of the state as not instrumental in creating innovation-systems.
- If we look at the data and patterns, we have had a lack of willingness to innovate in the market, and in my mind it is wrong to assume that.
The entrepreneurial risk taking state has a place for entrepreneurship in the way of taking risks, in regards to the innovation land-space, moving away from the economic market failure-state. The goal is to create a different framework, trickling down a new way of evaluating innovation and future investments etc.
- I am focusing on the indicators that fail to capture the whole picture, the important innovations and assuming a market and technology risk to a different degree, Mazzucato said.
Mazzucato took Silicon Valley as an example and the objective to continue to emulate that in other places, the state would not be able to capture the smart innovation growth. Countries that have had very active governments across the entire chain including massive capital, have succeeded to quite a large degree and it is fascinating that it is not recognized more. It has not just been the public research for the public good, but the entire chain has been involved.
- The notion that you have to teach entrepreneurship is silly. Entrepreneurs always use existing technology and the “genius-ness” is the way that they combine different innovations; that is the basis for much of the smartness of new product or services.
Mazzucato finished her talk with saying that government programs have shaped smart innovations, even though there are plenty of programs that are unsuccessful as well. Sweden has only direct funding seemingly (as a percentage of GDP). Spain has cut their publically funded spending R&D in order to be more competitive through indirect spending, which is mad. You tend to find a correlation between the countries that have indirect as well as business spending, where Sweden is at the top.