The Mission Economy and the Entrepreneurial State by Mariana Mazzucato

Why do government agencies have the reputation – and sometimes the self-image – of being hidebound, uncreative and ineffective.  Does it have to be that way?   And why do governments seeking “innovation” seem sometimes to be gullible marks for slick salespeople?

Over the quiet holiday week I read The Mission Economy (2021) and The Entrepreneurial State (2015) by Mariana Mazzucato, providing powerful evidence that it doesn’t have to be this way – and that the world’s urgent challenges call for a different approach with a public sector vision leading the way.

Entrepreneurial State uses the case study of Apple Computer to roundly debunk the myth that the primary engine of innovation in society comes from private sector companies funded by bold, risk-taking venture capital investors. Instead, the book painstakingly investigates the fundamental innovations that Apple packaged – GPS navigation, miniaturized storage, touch screens, voice recognition and more – all came from government-led space and military programs.  The government invested in the innovations when short-term oriented investment firms shied away. 

Once the core technologies were developed, Apple did a masterful job of elegantly packaging and commissioning the manufacturing of these core technologies into beautiful and useful consumer products that brought enjoyment and utility to everyday life. 

In information technology, biotech, and clean energy, visionary government-led programs catalyzed cascades of innovation.  Meanwhile, right-wing pundits lambaste occasional failures (Solyndra) and overlooked the dramatic successes such as Tesla and strong overall success rate.   And meanwhile, Apple and other tech and pharma companies masterfully took advantage of all of the loopholes to shield the profits that owed much to public investments.

In The Mission Economy, Mazzucato uses a detailed case study of the US Apollo moonshot to explore a model for government initiatives that take on difficult societal challenges – especially climate change.

Mazzucato makes a strong case that the argument that government is inherently likely to be less competent than private business and should only step in the case of a market failure is ideology not destiny, and makes a compelling, evidence-based argument that it is possible to do things differently. 

Hallmarks of the moonshot model include: 

  • Setting inspirational shared goals
  • Shaping the market and private sector partnerships to public goal
  • Building skilled organizations that learn and takes risks
  • Budgeting based on outcomes

Mazzucato clearly shows that public sector programs can be led in ways that value learning and risk-taking. The ideologies and trends toward privatization and outsourcing in the 80s and 90s left governments without the skills to manage a mission, lacking in confidence about government abilities compared to the private sector.  

The case studies delve into the strategies for procurement and contracting that led to innovative results that achieved the goals of the mission.  This requires maintaining and increasing skill on the public sector side of the contract to be able to manage portfolios of projects.

Before you jump and critique the use of the Apollo Moonshot as a case study – saying Gil Scott Heron was right (and I agree) Mazzucato does cite the contemporaneous critics of the space program who questioned why the US was prioritizing the space race when people were struggling with poverty and oppression back on earth.

Mazzucato makes the case that a state shouldn’t have to choose – resources can and should be brought to bear on different challenges at the same time.  She acknowledges that challenges of issues such as poverty, health, and education have social complexities that are fundamentally different from the largely technical challenges of the moonshot. 

But she definitely underestimates the political challenges of building a shared vision for moonshot missions regarding contested issues.  She calls for “dynamic citizen engagement” to take on social challenges, but does not delve into the risks of participation strategies that turn out privileged residents to forcefully advocate for, say, more car parking and less housing. . 

And there are risks – and distractions – in the shared sense of purpose that animated the Apollo program. The Apollo program was fundamentally embedded in the cold war – an effort to win the Sputnik race and outstrip the Soviets in space technology. It was an effort to unify the country around the moon mission – rather than on the problems of health care, poverty, and racism that Gil Scott Heron raised – where the country was deeply divided.  

Worse than that, at the time when GSH was calling out the problems of decaying housing for Black people in cities, the country was simultaneously actively and successfully pursuing a “moonshot” goal of suburbanization – providing white people new houses with government-supported mortgages, accessible using new highways, while keeping Black people in segregated neighborhoods without funding for maintenance.

Mazzucato acknowledges that social challenges require deep engagement with the public and stakeholders, to reflect the needs of constituents, and to build political support and political will. But she spends a larger proportion of the book covering the technocratic solutions whereby government can effectively manage large, inspiring, mission-driving programs, and can shape markets to drive the public sector to support these mission-based programs.   

Mazzucato acknowledges that the bad and false ideas that hobble the potential power of government to lead missions are ideologically driven. But she handwaves through the challenge that the bad ideas are ideologically driven with powerful opponents.  This year, the US climate policy may run aground, halted by a senator whose economic base is the coal industry. And the EU’s climate policy may be diluted by the powerful natural gas industry. 

Overall, Mazzucato makes a persuasive case for powerful public sector led missions to take on big, existential challenges including climate change, with rich examples of the practices needed to do so successfully. 

I’m still reading Mazzucato’s The Value of Everything (2018) which is about how economics since the 1970s has narrowed its focus on GDP growth and prioritized financial returns to shareholders over growth in the economy of goods and services and returns to multiple stakeholders. And I also have Doughnut Economics in the queue, which is a book on the economic model that seeks to replace the one-dimensional goal of GDP growth with a model that works within fundamental limits of environmental and social sustainability.