62. K. Kelly, ‘The new socialism: Global collectivist society is coming online’, Wired magazine, 17 June 2009.
63. E. Morozov, ‘Silicon Valley likes to promise “digital socialism” – but it is selling a fairy tale’, the Guardian, 28 February 2015.
64. Variously attributed. Common attribution is to Andrew Lewis, as blue_beetle on MetaFilter 2010, ‘If you’re not paying for it, you’re not the customer; you’re the product being sold’: http://www.metafilter.com/95152/Userdriven-discontent#3256046
65. M. J. Sandel, What Money Can’t Buy: The Moral Limits of Markets (London and New York: Allen Lane and Farrar, Straus and Giroux, 2013).
66. Evgeny Morozov, ‘Don’t believe the hype, the “sharing economy” masks a failing economy’, the Guardian, 28 September 2014: http://www.theguardian.com/commentisfree/2014/sep/28/sharing-economy-internet-hype-benefits-overstated-evgeny-morozov; Evgeny Morozov, ‘Cheap cab ride? You must have missed Uber’s true cost’, the Guardian, 31 January 2016: http://www.theguardian.com/commentisfree/2016/jan/31/cheap-cab-ride-uber-true-cost-google-wealth-taxation
67. Evgeny Morozov, ‘Where Uber and Amazon rule: welcome to the world of the platform’, the Guardian, 7 June 2015: http://www.theguardian.com/technology/2015/jun/07/facebook-uber-amazon-platform-economy
68. https://www.bloomberg.com/news/articles/2017-02-28/in-video-uber-ceo-argues-with-driver-over-falling-fares
69. http://fortune.com/2016/10/20/uber-app-riders/
70. A useful distinction can be made between direct and indirect network effects. When a higher number of participants increases the benefit to each individual member – as in the case of Facebook – the effect is direct. Where, instead, a higher number of members (for example, buyers) increases the convenience of using the platform, not for the members but for another group (for example, the sellers), we talk of indirect network effects.
71. Source: Statista database (www.statista.com), and http://uk.businessinsider.com/facebook-and-google-winners-of-digital-advertising-2016-6?r=US&IR=T
72. Morozov, ‘Where Uber and Amazon rule’.
73. See note 70 for the distinction between direct and indirect network effects.
74. Mazzucato, The Entrepreneurial State.
75. Foley, ‘Rethinking financial capitalism and the “information” economy’.
76. See ibid. for a rigorous but accessible explanation of the classical theory of surplus value and how it can be used to provide an alternative interpretation of the so-called ‘new economy’.
77. https://www.theguardian.com/commentisfree/2016/dec/04/data-populists-must-seize-information-for-benefit-of-all-evgeny-morozov
78. H. A. Simon, ‘Public administration in today’s world of organizations and markets’, PS: Political Science and Politics, December 2000, p. 756.
79. https://www.theguardian.com/technology/2016/jun/09/uber-suffers-legal-setbacks-in-france-and-germany https://www.theguardian.com/technology/2016/jun/08/berlin-ban-airbnb-short-term-rentals-upheld-city-court https://www.theguardian.com/media/2016/may/25/netflix-and-amazon-must-guarantee-20-of-content-is-european
80. For a discussion of the criteria and implementation issues behind mission-oriented policies see my recent report, M. Mazzucato, Mission-oriented research & innovation in the European Union – A problem-solving approach to fuel innovation-led growth, European Commission, 2018.
81. Such thinking is indeed what has inspired Mission Innovation (MI; http://mission-innovation.net), an alliance of twenty-two ministers and the European Union to combat climate change through national commitments (around $20 billion) to invest in clean energy innovation. The coalition was announced on 30 November 2015 during the COPS meeting in Paris. On the private-sector side the Breakthrough Coalition is committing an equal amount of money. Since 2014 I have been leading a project on the need for such mission-oriented thinking in innovation: http://marianamazzucato.com/projects/mission-oriented-innovation-policy/
8. UNDERVALUING THE PUBLIC SECTOR
1. https://www.gov.uk/government/speeches/mansion-house-2015-speech-by-the-chancellor-of-the-exchequer
2. ‘The third industrial revolution’, The Economist, 21 April 2012: http://www.economist.com/node/21553017
3. K. Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (1944; Boston MA: Beacon Press, 2001), p. 144.
4. C. M. Reinhart and K. S. Rogoff, ‘Growth in a time of debt’, American Economic Review, 100(2) (2010), pp. 573–8.
5. Ibid., p. 573.
6. T. Herndon, M. Ash and R. Pollin, ‘Does high public debt consistently stifle economic growth? A critique of Reinhart and Rogoff’, Cambridge Journal of Economics, 38(2) (2014), pp. 257–79: http://doi.org/10.1093/cje/bet075, p. 5.
7. Ibid., pp. 7–8.
8. Reinhart and Rogoff: http://www.nytimes.com/2013/04/26/opinion/debt-growth-and-the-austerity-debate.html?_r=0 and Reinhard and Rogoff: http://www.nytimes.com/2013/04/26/opinion/reinhart-and-rogoff-responding-to-our-critics.html
9. http://www.focus-economics.com/countries/italy
10. https://www.theguardian.com/business/2014/oct/01/austerity-eurozone-disaster-joseph-stiglitz
11. Crowding out usually refers to the negative effect that government spending or investment may have on private investment, primarily because either government borrowing pushes up interest rates (making it harder for business to take out loans) or because government moves into activities that were in the private sector. Analyses on crowding out have been problematic due to the lack of proper analysis of what the private sector is willing to do.
12. A. Bergh and M. Henrekson, ‘Government size and growth: A survey and interpretation of the evidence’, Journal of Economic Surveys, 25(5) (2011), pp. 872–97: http://doi.org/10.1111/j.1467-6419.2011.00697.x
13. P. Steiner, ‘Wealth and power: Quesnay’s political economy of the “Agricultural Kingdom” ’, Journal of the History of Economic Thought, 24(1) (2002), pp. 91–110.
14. The ‘sterile class’ comprised city dwellers or artisans. In Schumpeter’s History of Economic Analysis, p. 239, the same word is used to describe the ‘bourgeoisie’. ‘Disposable class’ is the name that Turgot gave to the class of landowners (classe propriétaire/souveraine/distributive).
15. Quesnay, quoted in Steiner, ‘Wealth and power’, p. 99.
16. Schumpeter, History of Economic Analysis, p. 230; Steiner, ‘Wealth and Power’, p. 100.
17. Smith, The Wealth of Nations, Book IV, Introduction.
18. Ibid., Book I, ch. 1.
19. Ibid., Book V, ch. 1.
20. Ibid.
21. David Ricardo, The Works and Correspondence of David Ricardo, ed. P. Sraffa with the collaboration of M. H. Dobb, vol. 1: On the Principles of Political Economy and Taxation (Cambridge: University Press, 1951), p. 150.
22. Ibid., p. 151.
23. Karl Marx and Friedrich Engels, The Communist Manifesto (1848; London: Penguin Classics, 2010), ch. 1.
24. A. Marshall, Principles of Economics (1890; London: Macmillan, 1920), Book I, ch. 4, para. 4.
25. Ibid.
26. B. Snowdon and H. Vane, A Macroeconomics Reader (London: Routledge, 1997), p. 3.
27. Keynes, The General Theory of Employment, Interest and Money, p. 249.
28. This and the following are from the Preface to the French edition of The General Theory of Employment, Interest and Money.
29. R. Reich, ‘Economist John Maynard Keynes’, TIME magazine, 29 March 1999.
30. McLeay, Radia and Thomas, ‘Money creation in the modern economy’, p. 14.
31. BEA, Measuring the Economy: A Primer on GDP and the National Income and Product Accounts (Washington, DC: Bureau of Economic Analysis, US Department of Commerce, 2014), pp. 9–4: http://www.bea.gov/national/pdf/nipa_primer.pdf
32. T. Atkinson, Atkinson Review: Final Report. Measurement of Government Output and Productivity for the National Accounts (Basingstoke and New York: Palgrave Macmillan, 2005).
33. M. G. Phelp
s, S. Kamarudeen, K. Mills and R. Wild, ‘Total public service output, inputs and productivity’, Economic and Labour Market Review, 4(10) (2010), pp. 89–112: http://doi.org/10.1057/elmr.2010.145
34. ONS (Office for National Statistics), Public Service Productivity Estimates: Total Public Services, 2012 (2015): http://www.ons.gov.uk/ons/dcp171766_394117.pdf
35. The multiplier looks at how much total increase in GDP results from an initial increase in government spending. The calculation assumes a known marginal propensity to save and consume, i.e. how much of every pound or dollar earned a consumer will spend and how much he or she will save. If 80 per cent is consumed, then the GDP will increase by an amount of 1/(1−0.8) multiplied by the stimulus; so if the initial extra spending was £1 million, GDP will increase by £5 million.
36. ‘Fiscal policy as a countercyclical tool’, World Economic Outlook, ch. 5 (Washington DC: International Monetary Fund, October 2008); L. Cohen, J. Coval and C. Malloy, ‘Do powerful politicians cause corporate downsizing?’, Journal of Political Economy, 119(6) (2011), pp. 1015–60: doi:10.1086/664820; R. J. Barro and C. J. Redlick, ‘Macroeconomic effects from government purchases and taxes’, Quarterly Journal of Economics 126(1) (2011), pp. 51–102: doi: 10.1093/qje/qjq002
37. D. Leigh, P. Devries, C. Freedman, J. Guajardo, D. Laxton and A. Pescatori, ‘Will it hurt? Macroeconomic effects of fiscal consolidation’, IMF World Economic Outlook (Washington, DC: International Monetary Fund, 2010), pp. 93–124.
38. D. Leigh and O. J. Blanchard, ‘Growth forecast errors and fiscal multipliers’, Working Paper no. 13/1 (Washington, DC: International Monetary Fund, 2013).
39. A. O. Krueger, ‘The political economy of the rent-seeking society’, The American Economic Review, 64(3) (June 1974), pp. 291–303.
40. G. Tullock, A. Seldon and G. L. Brady, Government Failure: A Primer in Public Choice (Washington, DC: Cato Institute, 2002).
41. B. M. Friedman, ‘Crowding out or crowding in? Economic consequences of financing government deficits’, Brookings Papers on Economic Activity, 3 (1979), pp. 593–654.
42. J. M. Buchanan, ‘Public choice: The origins and development of a research program’, Champions of Freedom, 31 (2003), pp. 13–32.
43. J. E. Stiglitz, Economics of the Public Sector (New York: W. W. Norton, 3rd edn, 2000).
44. National Audit Office, ‘Memorandum on managing government suppliers’, 12 November 2013.
45. NHS, ‘Principles and values that guide the NHS’ (2018): http://www.nhs.uk/NHSEngland/thenhs/about/Pages/nhscoreprinciples.aspx#
46. WHO, ‘The world health report 2000 – Health systems: improving performance’ (2000): http://www.who.int/whr/2000/en/whr00_en.pdf?ua=1
47. E. C. Schneider, D. O. Sarnak, D. Squires, A. Shah and M. M. Doty (2017). Mirror, Mirror 2017: International Comparison Reflects Flaws and Opportunities for Better U.S. Health Care, The Commonwealth Fund.
48. OECD, ‘Health expenditure and financing’ (2017): http://stats.oecd.org/index.aspx?DataSetCode=HEALTH_STAT
49. YouGov, ‘Nationalise energy and rail companies, say public’ (2013): https://yougov.co.uk/news/2013/11/04/nationalise-energy-and-rail-companies-say-public/
50. J. Lethbridge, Empty promises: The Impact of Outsourcing on NHS Services, technical report, UNISON (London, 2012).
51. C. Crouch, ‘The paradoxes of privatisation and public service outsourcing’, in Jacobs and Mazzucato (eds), Rethinking Capitalism.
52. G. Kirkwood and A. M. Pollock, ‘Patient choice and private provision decreased public provision and increased inequalities in Scotland: A case study of elective hip arthroplasty’, Journal of Public Health, 39(3) (2017), pp. 593–60.
53. We Own It, ‘We love our NHS – keep it public’: https://weownit.org.uk/public-ownership/nhs
54. A. Pollock, ‘This deadly debt spiral was meant to destroy the NHS: There is a way to stop it’, the Guardian, 5 July 2016: https://www.theguardian.com/commentisfree/2016/jul/05/debt-spiral-destroy-nhs-health-social-care-act-bill
55. A. Pollock, ‘The NHS is about care, not markets’, the Guardian, 3 September 2009: https://www.theguardian.com/commentisfree/2009/sep/03/nhs-business-markets
56. J. Davis, J. Lister and D. Wringler, NHS for Sale: Myths, Lies & Deception (London: Merlin Press, 2015).
57. N. Chomsky, ‘The state-corporate complex: A threat to freedom and survival’, lecture given at the University of Toronto, 7 April 2011: https://chomsky.info/20110407-2/
58. L. MacFarlane, Blueprint for a Scottish National Investment Bank (New Economics Foundation, 2016): http://allofusfirst.org/tasks/render/file/?fileID=3B9725EA-E444-5C6C-D28A3B3E27195B57
59. Ibid.
60. C. Crouch, The Knowledge Corrupters: Hidden Consequences of the Financial Takeover of Public Life (Cambridge: Polity Press, 2016).
61. https://www.theguardian.com/society/2016/apr/15/g4s-fined-100-times-since-2010-prison-contracts
62. https://www.washingtonpost.com/news/wonk/wp/2013/07/16/meet-serco-the-private-firm-getting-1-2-billion-to-process-your-obamacare-application/?utm_term=.0ffc214237a8
63. United States Government Accountability Office, ‘Contracting data analysis; Assessment of government-wide trends’, March 2017: https://www.gao.gov/assets/690/683273.pdf.
64. As reported in J. A. Sekera, The Public Economy in Crisis: A Call for a New Public Economics (Springer International Publishing, 2016); J. Dilulio, Bring Back the Bureaucrats: Why More Federal Workers Will Lead to Better (and Smaller!) Government (West Conshohocken, PA: Templeton Press, 2014); and Paul R. Verkuil, (2007) Outsourcing Sovereignty: Why Privatization of Government Functions Threatens Democracy and What We Can Do about It (Cambridge: University Press, 2007), p. 128.
65. http://www.pogo.org/our-work/reports/2011/co-gp-20110913.html#Executive%20Summary
66. Crouch, The Knowledge Corrupters.
67. https://er.jsc.nasa.gov/seh/ricetalk.htm
68. R. Wood, ‘Fallen Solyndra Won Bankruptcy Battle but Faces Tax War’, Forbes, 11 June 2012.
69. G. Owen, Industrial Policy in Europe since the Second World War: What Has Been Learnt? ECIPE Occasional Paper no. 1 (Brussels: The European Centre for International Political Economy, 2012): http://eprints.lse.ac.uk/41902/
70. J. M. Poterba, ‘Venture capital and capital gains taxation’, in L. H. Summers (ed.), Tax Policy and the Economy, Vol. 3 (Cambridge, MA: MIT Press, 1989), pp. 47–68.
71. G. Akerlof, ‘Comment’ on the chapter by William J. Baumol in G. L. Perry and James Tobin (eds), Economic Events, Ideas, and Policies: The 1960s and After (Washington, DC: Brookings Institution Press, 2010).
72. Mazzucato, The Entrepreneurial State.
73. See https://www.project-syndicate.org/onpoint/growth-and-public-sector-investment-by-mariana-mazzucato-2017-12?barrier=accesspaylog
74. J. Gertner, The Idea Factory: Bell Labs and the Great Age of American Innovation (London and New York: Penguin, 2013).
9. THE ECONOMICS OF HOPE
1. Both Tony Blair, the former British Prime Minister, and Chuka Umunna, considered a rising star in the Labour Party, argued that the Labour Party needed to embrace business, calling them the wealth creators https://www.theguardian.com/commentisfree/2015/may/09/tony-blair-what-labour-must-do-next-election-ed-miliband and Chuka Umunna https://www.theguardian.com/commentisfree/2015/may/09/labours-first-step-to-regaining-power-is-to-recognise-the-mistakes-we-made
2. http://ec.europa.eu/eurostat/documents/118025/118123/Fitoussi+Commission+report
3. D. Elson, Macroeconomics and Macroeconomic Policy from a Gender Perspective, Public Hearing of Study Commission on Globalization of the World Economy-Challenges and Responses, Deutscher Bundestag, Berlin, 18 February 2002.
4. https://www.theguardian.com/us-news/2016/may/17/ceo-pay-ratio-average-worker-afl-cio
5. https://www.ifs.org.uk/publications/5362
6. P. Evans, Embedded Autonomy: States and Industrial Transformation (Princeton, NJ: University Press, 1995).
7. E.
Morozov, ‘Democracy, Technology and City’, transcript of CCCB lecture, Barcelona, 2014.
8. C. Perez, ‘Capitalism, technology and a green global golden age: The role of history in helping to shape the future’, in M. Jacobs and M. Mazzucato (eds), Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth (Chichester: Wiley-Blackwell, 2016).
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