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

by Mariana Mazzucato

First, this narrative emboldens value extractors in finance and other sectors of the economy. Here, the crucial questions–which kinds of activities add value to the economy and which simply extract value for the sellers–are never asked. In the current way of thinking, financial trading, rapacious lending, funding property price bubbles are all value-added by definition, because price determines value: if there is a deal to be done, then there is value. By the same token, if a pharma company can sell a drug at a hundred or a thousand times more than it costs to produce, there is no problem: the market has determined the value. The same goes for chief executives who earn 340 times more than the average worker (the actual ratio in 2015 for companies in the S&P 500).4 The market has decided the value of their services–there is nothing more to be said. Economists are aware that some markets are not fair, for example when Google has something close to a monopoly on search advertising; but they are too often enthralled by the narrative of market efficiency to worry whether the gains are actually justly earned profits, or merely rents. Indeed, the distinction between profits and rents is not made. Price-equals-value thinking encourages companies to put financial markets and shareholders first, and to offer as little as possible to other stakeholders. This ignores the reality of value creation–as a collective process. In truth, everything concerning a company’s business–especially ...