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

by Mariana Mazzucato

As Karl Polanyi wrote, markets are deeply embedded in social and political institutions.6 They are outcomes of complex processes, of interactions between different actors in the economy, including government. This is not a normative point but a structural one: how new socio-economic arrangements come about. The very fact that the market is co-shaped by different actors–including, crucially, policymakers–offers hope that a better future can be constructed. We can fashion markets in ways that produce desirable outcomes such as ‘green growth’ or a more ‘caring’ society with care influencing the type of social and physical infrastructure that is built. By the same token, we can allow speculative short-term finance to triumph over long-term investment. As we have already seen, even Adam Smith was of the opinion that markets needed to be shaped. Contrary to the modern interpretation of his work as ‘laissez-faire’ (leave the market alone), he believed that the right kind of freedom is not the absence of government policy, but freedom from rent extraction. Smith would have been baffled by the current understanding of economic freedom as a minimum of non-private activity. His Wealth of Nations is a huge book, largely because even in that simpler economic world there were so many varieties of rent-seeking to discuss. He devoted many pages to productive and unproductive activities, often simplistically putting some inside the production boundary and some outside. Karl Marx was subtle...