The Value of Everything: Making and Taking in the Global Economy

by Mariana Mazzucato

Plato recognized that stories form character, culture and behaviour: ‘Our first business is to supervise the production of stories, and chose only those we think suitable, and reject the rest. We shall persuade mothers and nurses to tell our chosen stories to their children, and by means of them to mould their minds and characters rather than their bodies. The greater part of the stories current today we shall have to reject.’

In Dante’s Inferno, usurers are consigned to the hottest part of hell (circle 7) because they are making money not from the productive sources, which for Dante were Nature or Art, but from speculation and differences in interest rates. Indeed, he is so disgusted by usury that he puts usurers just below the circle of hell housing the sodomites.

What we measure affects what we do; and if our measurements are flawed, decisions may be distorted. Joseph Stiglitz, Amartya Sen and Jean-Paul Fitoussi, Mismeasuring Our Lives (2010)

The marginalist theory of value underlying contemporary national accounting systems leads to an indiscriminate attribution of productivity to anyone grabbing a large income, and downplays the productivity of the less fortunate. In so doing, it justifies excessive inequalities of income and wealth and turns value extraction into value creation.

If ‘the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done’.

Sustaining economic growth through household borrowing has been aptly defined as ‘privatized Keynesianism’,54 because ‘instead of governments taking on debt to stimulate the economy, individuals did so’.55 But it was an unsustainable solution to the lack of wage-led demand growth.

Indeed, the crash of 2008 vindicated the warnings of Keynes, Minsky and others about the dangers of excessive financialization. Yet while the crash and the ensuing crisis weakened banks, it still left them in a dominant position in the economy, sparing the embarrassment of those who had extolled the value of financial services in the years before they imploded into bankruptcy and fraud.

If the influence of PE on the productive economy seems exaggerated, consider this: Blackstone, one of the largest PE companies, has a portfolio of over seventy-seven companies, which together generate over $64 billion in combined annual revenues and employ more than 514,000 people globally.11