The Value of Everything
A work of tremendous ambition, academic rigor, and originality, The Value of Everything argues that American companies have for too long been valued according to the amount of wealth they capture for themselves rather than for the value they create for the economy. In fact, Pfizer, Amazon, and countless other companies that claim to drive innovation are actually hopelessly dependent on public money, spend their resources on boosting share prices and executive pay, and reap ever-expanding rewards without offering the market real value. Such parasitic behavior is only getting worse: leading American companies are profiting from the redistribution of wealth and knowledge without giving anything back to the communities that have made them so profitable. In her previous groundbreaking and controversial work, The Entrepreneurial State, Mariana Mazzucato argued that public investment has been the most significant driver of innovation and product development. The iPhone as it exists would not have been possible without government-sponsored technology like Siri, GPS, the Internet, and Touch ID. Yet Apple today, like numerous other technology and biotech companies, is engaging in a massive repurchase scheme, and for the first time has prioritized value-extraction practices such as spending to boost shareholder profit and lobbying to diminish the state and its tax policies-the very initiatives that funded their software.
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60% recommend40% neutral
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What Hacker News says
- I’ve read it and you still are just engaging in nonsensical special pleading. In Smith’s conception, a free market was to be built on freedom from rent seeking, where labor and capital are deployed to productive ends and not siphoned off to unproductive ones by rentiering. Go watch this talk by UCL economist and historian Mariana Mazzucato for better context.
https://iai.tv/video/the-value-of-everything-mariana-mazzuca...
- Used to, as of when? The good old days of the 1990s? I think it goes back a lot further than that.
For a much more thorough look at how our modern financial systems produce what naive thinkers would consider to be bizarre results, I highly recommend Mariana Mazzucato's "The Value of Everything." It's a challenging read, but it goes into the details of how economic and political thought has shifted over the centuries regarding the concept of wealth and value creation, and how the game really works.
- Allocation of resources in capitalism is not a system beyond saying "let the capitalists decide". And how do we let them decide? Because we preferentially allow them to collect profits (over labor and ideas), creating an incentive (though not necessarily a requirement) on their part to maximise profit. So, capitalists will want to see the ventures they invest in generate profit, and the most obvious way to do this is to have the venture make things or provide services that others want to pay for.
However, just as there's no ironclad rule that an enterprise in a capitalist system must seek to maximise profits, there's also no ironclad rule that the best or only way to see profits is to do things that other people want to pay for.
Increasingly, the financialization of the US (and other) economies means that substantial profits can be obtained by extracting value from transactions, rather than creating value to society.
Mariana Mazzucato has discussed this at length in her excellent book "The Value of Everything: Making & Taking in the Global Economy Economics"
The point is that capitalism only works well for allocating resources when it happens to follow the goal of producing value for others, and in that sense any economic system that somehow prioritized this would have the same benefits as capitalism. Note that it also needs to take externalities into account, otherwise the short term benefits of value production-driven economic activity become a long term net negative. Capitalism has not proven itself in this regard so far.
The thing that is different about capitalism is that beyond (generally) favoring value production, it also favors the owners of capital as the beneficiaries of generated profit. This in turn makes the owners of capital have deeply vested interests in ensuring that this asymmetrical distribution of profit does not change (they will almost certainly lose if it does). That is what defines capitalism, not free markets, not value creation, not entrepeneurial activity.
- I like to add a bit of historical context and that is that communism as an ideology,field of study and it’s ideas were quite spread out over Europe and beyond (Way before the Russian revolution and after)
Karl Marx ideas were very revolutionary for its time (a good primer can be found in the book The Value of Everything) and set a lot of ideas in motion. And there was also debate in that regard on how to institute communism. So communism could never reach the “evil” moniker like Nazism, even though it was apparent the Soviet Union was quite a brute. So the ideology was kind of separated cognitively from its implementation by the Soviet Union.
In the Cold War period, the SU was definitely seen as something that had to be defeated. There was a lot of fear of nuclear escalation between the superpowers. The Soviet Union was seen as different at best, and something to be defeated in all cases. And yes, also evil. Just watch some action movies from that time to get a general idea.
- I would suggest reading the book "The Value of Everything" by Mariana Mazzucato so that you can better understand the difference between wealth creation and wealth extraction.
- The Value of Everything by Mariana Mazzucato may be of some interest:
> In modern capitalism, value-extraction is rewarded more highly than value-creation: the productive process that drives a healthy economy and society. From companies driven solely to maximise shareholder value to astronomically high prices of medicines justified through big pharma’s ‘value pricing’, we misidentify taking with making, and have lost sight of what value really means. Once a central plank of economic thought, this concept of value – what it is, why it matters to us – is simply no longer discussed.
* https://marianamazzucato.com/books/the-value-of-everything
> In this scathing indictment of our current global financial system, The Value of Everything rigorously scrutinizes the way in which economic value has been determined and reveals how the difference between value creation and value extraction has become increasingly blurry. Mariana Mazzucato argues that this blurriness allowed certain actors in the economy to portray themselves as value creators, while in reality they were just moving existing value around or, even worse, destroying it.
> The book uses case studies - from Silicon Valley to the financial sector to big pharma - to show how the foggy notions of value create confusion between rents and profits, a difference that distorts the measurements of growth and GDP.
* https://www.goodreads.com/book/show/29502362-the-value-of-ev...
One interesting anecdote she brings up: the US government gave a $456M guaranteed loan to Tesla, which Tesla paid back. But now that Tesla is "successful" and Musk is super-rich, does the US government get any credit for helping its success? How much 'value' did the folks at Tesla create versus the US government in helping to fund it?
Her previous book, The Entrepreneurial State: Debunking Public vs. Private Sector Myths, also has an interesting thesis:
> This book debunks the myth of the State as a large bureaucratic organization that can at best facilitate the creative innovation which happens in the dynamic private sector. Analysing various case studies of innovation-led growth, it describes the opposite situation, whereby the private sector only becomes bold enough to invest after the courageous State has made the high-risk investments.
* https://www.goodreads.com/book/show/17987621-the-entrepreneu...
* https://marianamazzucato.com/books/the-entrepreneurial-state
