Letters and Politics

Who Creates Value in an Economy?

It has been a decade since the global recession began,  with a banking system on the edge of collapse to people loosing their savings, retirements, and homes, and unemployment rates as low as the ones during the great depression of the 1930’s, and the largest transfer of wealth from the middle class to the very top. Economist Mariana Mazzucato, argues that the reason is that economic policy continues to be informed by neoliberal ideology and its academic cousin, “public choice” theory, rather than by historical experience.

Guest: Mariana Mazzucato is Professor in the Economics of Innovation and Public Value at University College London (UCL), where she directs the Institute for Innovation and Public Purpose.  She is the author of several books including her latest, The Value of Everything: Making and Taking in the Global Economy.

About The Value of Everything

The book rigorously scrutinizes the way in which economic value has been accounted and reveals how economic theory has failed to clearly delineate the difference between value creation and value extraction. Mariana Mazzucato argues that the increasingly blurry distinction between the two categories has allowed certain actors in the economy to portray themselves as value creators, while in reality they are just moving around existing value or, even worse, destroying it.

The book uses case studies-from Silicon Valley to the financial sector to big pharma-to show how the foggy notions of value create confusion between rents and profits, reward extractors and creators, and distort the measurements of growth and GDP. In the process, innovation suffers and inequality rises.

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