Week 4: The Entrepreneurial Society and the Entrepreneurial State

Mariana Mazzucato has deservedly received extensive media coverage and plaudits (e.g., Martin Wolf in the FT or Richard Cooper in Foreign Affairs) for her important 2013 book The Entrepreneurial State: Debunking Public vs Private Sector Myths.  If you have not read it already, you should.  A glimmer of its contents can be found in her Harvard Business Review article published this week.  What is unusual about Mazzucato’s work is that she focuses explicitly on the role of state as an entrepreneurial actor. There have, of course, been numerous critiques including raising questions about her definition of public goods (in Forbes), or deriding the success of past rounds of industrial policy and challenging the absence of consumers in her model in a 20 page rebuttal from the libertarian Cato Institute.

The title raises related questions about the role of the state in fostering entrepreneurship.  Many studies will identify the importance of the state at the start, but then tend to get lost in the stories about their favourite startups (e.g., the World Economic Forum study in 2011 of Global Entrepreneurship) or focus on venture capital or other private sources of capital or social capital. Recently though, there have been some studies that seek to develop a more careful empirical case for what has worked in the past and what has not such as the 2008 NBER conference on the subject and a useful 2014 OECD study.  A common view on the subject is expressed in the title of Josh Lerner’s book: Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed — and What to Do About It

  1. Are you convinced by Mazzucato’s basic argument about the need for the state to make risky investments? What about her views on the success of those investments? Should the state move beyond correcting market failures to creating markets as she suggests?
  2. She undoubtedly takes on the conventional wisdom in the U.S., U.K., and in some other jurisdictions, but how resonant are her arguments elsewhere, e.g., France, Japan, China, Korea, etc?
  3. Do you find any of the criticisms compelling? If so, which, and why?
  4. What about for the case of entrepreneurship itself? What role should the state have? How would you explain the growth of your favourite tech cluster (Silicon Valley, Silicon Fen, Silicon Roundabout, etc)?

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