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

by Mariana Mazzucato

Third, this market story confuses policymakers. By and large, policymakers of all stripes want to help their communities and their country, and they think the way to do so is to put more trust in market mechanisms, with policy just a matter of tinkering at the edges. The crucial thing is to be seen as progressive while also ‘business-friendly’. But with a very limited understanding of where value comes from, politicians and all too many government employees are like putty in the hands of those who claim to be value creators. Regulators end up being lobbied by businesses and induced to endorse policies which make incumbents even richer–increasing profits but with little effect on investment. Examples include ways in which governments across much of the Western world have been persuaded to reduce capital gains tax, even though there is no reason to do so if the aim is to promote long-term investments rather than short-term ones. And lobbyists with their innovation stories have pushed through the Patent Box policy, which reduces tax on the profits generated from 20-year patent-based monopolies–even though the policy’s main impact has been merely to reduce government revenue, rather than increasing the types of investments that led to the patents in the first place.5 All of which serves only to subtract value from the economy and make for a less attractive future for almost everyone. Not having a clear view of the collective value creation process, the public sector is thus ‘c...