If you are interested in publicly-funded research, entrepreneurialism, and innovation ecosystems and you have not heard of Mariana Mazzucato, then now is a good time to get an introduction to her work ahead of a speaking tour to Australia.
Professor Mazzucato is chair of the Economics of Innovation and Public Value at University College London, and is the founder of the UCL’s Institute for Innovation & Public Purpose. She holds an undergraduate arts degree in history and international relations, but her masters and and PhD is in economics.
Prof Mazzucato is a prolific and somewhat controversial writer. Her book The Entrepreneurial State: Debunking Public and Private Sector Myths published in 2013 is a stunning read. I am quite late to this book, which is easily one of the best I have read this year, but its currency has lost none of its value.
The central thesis of the book is as advertised. It deconstructs the popular myths around private sector genius and perceived government dopeyness.
It tracks the role of the State in directing and funding the research on which vast wealth has been created in tech and innovation.
If you have an interest in research and innovation and in particular the translation of ideas and breakthroughs into the commercial realm, this is a high-impact book.
(And as an aside I would recommend as a companion reader The Fifth Risk, from the author of The Big Short and Moneyball Michael Lewis, who similarly champions the role and expertise of the State in delivering extraordinary but under recognised value.)
Here are a couple of extracts from Prof Mazzucato. You’ll get the gist:
“The conventional view of a boring, lethargic State versus a dynamic private sector is as wrong as it is widespread. [Mazzucato] concentrates on telling a very different story; in countries that owe their growth to innovation – and in regions within those countries like Silicon Valley – the State has historically served not just as an administrator and regulator of the wealth creation process, but a key actor in it, and often a more daring one, willing to take the risks that businesses won’t.
“This has been true not only in the narrow areas that the economists call ‘public goods’ (like funding basic research) but across the entire innovation chain, from basic research to applied research, commercialisation and early-stage financing of companies themselves.
“Such investments (yes governments invest, not only ‘spend’) have proved transformative, creating entirely new markets and sectors, including the Internet, nanotechnology, biotechnology and clean energy. In other words, the State has been key to creating markets not only ‘fixing’ them.”
Prof Mazzucato spends an entire chapter trawling through the gizzards of an Apple iPhone to illustrate the role of the State as the underpinning creator of the technology on which spectacular wealth has been created.
Every technology that “makes the iPhone smart and not stupid” was originated through basic and applied research funded by the State.
She is able to describe in detail how the venture capital sector has been able to extract a disproportionately large amount of the value created by this research, despite being too risk averse to support even its early-stage commercialisation, which is also often left to the state.
“This of course does not mean that Steve Jobs and his team were not crucial to Apple’s success, but that ignoring the ‘public’ side of that story will prevent future Apples from being born,” she said.
“Transformational public investments were often the fruits of ‘mission oriented’ policies, aimed at thinking big: going to the moon or fighting climate change,” Prof Mazzucato writes.
“Getting governments to think big again about innovation is not just about throwing more taxpayer money at more activities. It requires fundamentally reconsidering the traditional role of the state in the economy.”
There is obviously an Australian context here, precisely why Prof Mazzucato has been invited to Australia to deliver public lectures.
But on a day when a team at the University of NSW led by Professor Michelle Simmons (literally today) has published a paper detailing a breakthrough that brings us one step closer to scalable quantum computing in silicon, it is worth considering the impact of publicly-funded research, and whether we are thinking big enough.
CSIRO has contributed billions of dollars of value into the Australian and global economies. Leaving aside WiFi and the other often-cited research, CSIRO’s contribution in sectors like agriculture and biosciences is vast.