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All of which means that policies constructed on the assumption that business always wants to invest, and simply needs a tax incentive to do so, are simplistic, not to say naïve.
As a result, a company or individual will often experience an increase in profits (through a tax cut) without increasing investment and without generating any new value.
it becomes only sensible to ensure that policy leads to the socialization not only of risks but also of rewards. A better realignment between risks and rewards, across public and private actors, can turn smart, innovation-led growth into inclusive growth.
neoclassical value theory for the most part disregards the value created by government, such as an educated workforce, human capital and the technology which ends up in our smart products.
As Robert Solow showed, most of the gains in productivity of the first half of the twentieth century can be attributed not to labour and capital but to technical change. And this is due not only to improved education and infrastructure, but also, as discussed in the previous chapter, to the collective efforts behind some of the most radical technical changes where the public sector has historically taken a lead role–‘the entrepreneurial state’.
