Mariana Mazzucato is one of my favorite economic thinkers. She’s an academic economist who rejects market orthodoxy and presents her arguments, persuasively, to the masses—a gift that many in her field don’t possess. Mazzucato’s overarching argument is that (a) the state’s role in driving innovation, and therefore economic growth, is much larger than is reflected by market reward mechanisms, and (b) a primary reason for this lopsided arrangement is the flawed way we value a range of inputs to production.
On this latter point, Mazzucato argues in a recent New York Times Op-Ed:
Essentially, only something with a price is valuable. This approach overvalues goods and services with a price tag — which in turn make up a country’s gross domestic product, the driver of public policy. This has perverse effects. A coal mine that spews carbon into the atmosphere increases G.D.P., and so is valued. (The pollution it causes is not taken into account.) But the care given to children by their parents at home doesn’t carry a price, and so is not valued.
Since I have the topic of entrepreneurial ecosystems at top of mind, I immediately went there after reading this quote. It reminds me that what gets valued in entrepreneurial ecosystems tends to be the tangible factors that can easily be counted, like the amount of investment capital or the number of startups, instead of the intangible factors that more fundamentally drive system value, such as social capital or tacit knowledge.