Hilary Lamb interviews Mariana Mazzucato in Times Higher Education:
What are the greatest misconceptions surrounding innovation policy?
That innovation happens when the state gets out of the way. As I showed in The Entrepreneurial State, exactly the opposite is true. Many game-changing breakthroughs – the internet, biotechnology, nanotechnology and today’s emerging green technology – are the result of risk-taking, bold, entrepreneurial action by public sector institutions. But storytellers rule the world, and the idea of the lone, garage tinkerer triumphing against the odds is a great story. Steve Jobs coming up with the iPhone is a great story. But it’s only half true. Almost all the technological developments that made the iPhone possible were the result of state investments right along the innovation chain.
You argue that government is a market shaper: what do you mean by this?
Orthodox economics imagines a very limited role for the state in the economy – to fix market failures in areas where there is a clearly defined “public good”. But this model doesn’t do a very good job of describing how many public agencies have acted in the past, or of providing a policy framework for governments to apply the right lessons from Silicon Valley. From Darpa [the Defense Advanced Research Projects Agency] and SBIR [the Small Business Innovation Research programme] in the US to [the venture capital fund] Yozma in Israel, and Sitra [the Finnish Innovation Fund] and Tekes [the Finnish Funding Agency for Innovation] in Finland, public agencies have actively shaped and created new markets. And arguably China is doing the same now with investments in new green technologies…instead of seeing policy as “intervening” in the market, we should see it as co-creating it. This also means that we need to be more vigilant about what is being created, and here civil society has a key role.