Back in 2015-2016 I wrote a series of posts criticizing the book "The Entrepreneurial State" by Mariana Mazzucato. While I'm not going to add much new to what I wrote back then, here I wanted to clarify what the critique amounts to in a concise way, providing a guide for all those posts. The earlier posts of the series are in Spanish and you can find them linked there but in what follows I'll just link to the English ones.
First, read this to understand the context in which the book appeared. One claim that is hinted at in the book is that (hyperbolically), the State invented the iPhone. Mazzucato does not argue that; and in that post you can see exactly what she says, but she does mean to say that the State was more involved in the history of the iPhone than we think, and that this involvement was key; that the state is an underrated actor there, perhaps to the point where they deserve to reap some of the rewards that Apple got.
Then, what argument is she really making? Does she mean to say state intervention is helpful for innovation? Necessary? Historically mission-oriented? I tried to explicitly explain the book's thesis here, to really distill the claims that are being made there. I further stressed the points there in What the Entrepreneurial State gets right, lest you think the book is utterly worthless and misguided.
Then there are some more philosophical claims about Knightian uncertainty and the extent to which cost-benefit analysis can be used when thinking about these matters, and trying to separate the claims that government intervention is necessary from those that it is helpful.
Other posts of the series include an examination of the role of cooperation in markets (And why antitrust can be a bad thing for innovation) and the last post of the series, Writing a better Entrepreneurial State.
As a summary, in case you don't want to read through all that and want an all-things considered statement, here are the key points of all these posts:
- Just because something happened historically doesn't mean that it had to happen that way. Modern aerospace has its origins in WWII and the Apollo program. Would we lack an aerospace sector absent that? Obviously not. But I don't mean to imply either that we are at mercy of historical forces. NASA was playing with reusable, VTOL rockets back in the 90s and we didn't get good ones until SpaceX came along. Absent Musk I think it would have taken way longer for us to get said rockets. Likewise I think we would have gotten to the internet without ARPA, but ARPANET got us there faster than otherwise.
- Just because something contributed to make something happen doesn't mean it was necessary. Apple got some funding from a bank that had some government guarantees. But they got them later in their journey; absent them it doesn't seem like it would have killed Apple. This is different from the case of SpaceX, where COTS did play a crucial role. COTS and SpaceX do fit the bill of the Entrepreneurial State: State action that was mission-oriented leading to a successful private company.
- Just because the State funded some research, or supported a researcher, it does not mean it was mission-oriented or entrepreneurial. The founders of Google were PhDs that had a NSF fellowship, but the government wasn't thinking "Hey, we need a new search engine, lets commission these guys to do it". Multi-touch screens likewise were developed in a pretty much researcher-led way without top down national planning.
- There is a difference between the standard economic case for R&D (public goods) and what the Entrepreneurial State defends. This point is very important. The book explicitly says it aims to go beyond this thinking. Rejecting the ES thesis does not mean rejecting the basic economic argument. The book makes it seem like broad support for academic research was in fact consciously devised to get to the desired outcome (An iPhone)
- The book has an intended purpose and that purpose is not being a faithful retelling of the academic literature. The book is (by the author's admission) a pamphlet whose core aim is to instigate action and change in government's approach to innovation. This has to be taken into account when reading the book. In service of a political goal, it is not uncommon to make simplifications in favor of a narrative that can get support for the desired changes.
- I got the impression that the book underestimates the role of the correct institutional setup to make these government mission-oriented projects work rather than fail. It is very important to look at, and learn from, failures as well, which is why in the last point of the series I point to Boulevard of Broken Dreams. This pattern is similar to one I see in the industrial policy debate, where most examples being discussed by the pro-IP crowd are of successful IP, with little discussion of why the ones that failed did so. Studwell's book does better than average.
- I've written elsewhere that I think some mission-orientedness is good, and in my proposed funding scheme in the conclusion of this post there is some money allocated for that. The key point I make is not that such institutional design is deficient (That is probably country-specific), but that historically Mazzucato overplays its role.
- Government investment in science and engineering can have negative effects as well, especially when it is mission oriented. The Space Shuttle was probably a net negative endeavour. Nuclear fusion funding that was really about nuclear weapons and international relations could have gone to funding a variety of smaller projects. DARPA is a good model of what mission-oriented funding should be. Rather than big national projects, a milestone-based funding pattern where project managers can rescope or outright kill projects that are not performing well and reallocate funding to others. If there's one pattern here to watch out for is prematurely committing to an approach and then sticking to it for too long if it's not working well, or if we've left other avenues unexplored. Right now it seems clear to me that any of the smaller fusion startups will beat ITER to fusion. Even when wanting to solve concrete problems, diversity of approaches matters greatly.
- Though this is not key to the book, I've also written elsewhere about the role of war in innovation, ending up relatively skeptical that in any sense war is good for it. I could see a theoretical argument for why the additional urgency that war generates could be good, but also one where war causes allocation towards capital goods and lines of research that are defense-specific.
In academic work, please cite this essay as:
Ricón, José Luis, “Thoughts on Mariana Mazzucato's Entrepreneurial State”, Nintil (2021-03-09), available at https://nintil.com/mazzucato/.