The Entrepreneurial State Debate - Book Report/Review Example

Mariana Mazzucato’s The Entrepreneurial State (2013) states that industrial policy is essential in promoting innovation, adding that organizations take advantage of government-funded research to remain innovative (Mazzucato, 2013, p. 4). Her argument on riding on the effectiveness of government research is not adequately supported by evidence; instead, she uses an extensive definition of industrial policy, including unintended consequences of government intervention. Mazzucato did not also prove if the government intervention she highlighted were explicitly meant to achieve specific output (Mingardi, 2015). Her approach is what she deems as a general law that has not been substantiated. Her argument regarding the role of government in enhancing innovation-oriented economy is not convincing because her claim is based on a peculiar line of economic thinking which does not consider the significance of booth the demand and consumers in the current economy. She does not also discuss how to deal with scarce resources.

As much as people put their ideas in books, it does not necessarily mean that they are factual; instead, they may resonate with the deeply rooted misconception, which is a severe case. Despite Mazzucato’s praise for the award-winning piece of work on The Entrepreneurial State, which many argue as a massive step towards innovation, so many questions are left unanswered (Mazzucato, 2013). Because books tell stories, it is not satisfactory to conclude that her work is a turning point in innovation by justifying the role of government in promoting innovation. Beyond Mazzucato’s prowess in public speaking and being a great writer, her claim cannot just be taken directly without carrying out a further analysis (Mazzucato, 2013). She does not believe the fact that innovation is always a result of market interactions adding that private entrepreneurs tend to get more credit for being innovative. At the same time, the government is blamed for slowing the progress through other mechanisms such as overregulating the private sector.

Mazzucato believes that blaming the government for stifling innovation lacks empirical grounding adding that it is the government that has all it takes to promote innovation. She says that flashy start-ups do not have a say in the growth of innovation and that the government can facilitate innovation because it is risk-averse when investing (Mingardi, 2015). Mazzucato gives credit to industrial policy for the emergence of some of the latest technology and uses an example of the US as an example of a government that has done well through industrial policy (Mazzucato, 2013). Mazzucato does not highlight that the US is a free-market economy that sees the market forces taking the place of the economic condition. Interestingly, she does not consider the impact of other self-styled economies in Europe, meaning that there could be specific reasons best known for her avoiding other economies (Mingardi, 2015). The use of the American industrial policy is perhaps for the author to convince the readers that it is indeed the government that shapes the future of innovation (Mingardi, 2015). The role of the government in promoting innovation has been argued in different pieces of literature. Still, Mazzucato’s perception is that unless the government intervenes, it is not easy for technology to emerge (Mazzucato, 2013).

The main question in Mazzucato’s work is whether they hold up to scrutiny and whether she succeeds in making her case for industrial policy and government role. Maybe as a writer, she is telling a story that augurs well with the ingrained prejudices. It is hard to succeed without the help of other people, especially in the private sector (Mingardi, 2015). The innovative entrepreneurs need the help of others to succeed, but that does not mean that it is only the government's help that can guarantee the success of every innovation (Mazzucato, 2013). It is this argument that makes Marzacoto’s claim unconvincing. Some people have succeeded even at their level to be innovative without government input.

The other exciting issue about the Entrepreneurial State is the author's contradictory statements that are also evident in work. In as much as she argues for the success and significance of industrial policy. She does not seem to appreciate the success of industrial policy in Europe, where it was broadly applied; instead, she focusses on America (Mazzucato, 2013). In the US, there are areas that the industrial policy did not apply fully as compared to Europe and that in itself is a contradictory statement. The book would have been more convincing if it used Europe as an example. She is pushing for her arguments without proving the providential nature of industrial policy and ignores the critical role of the consumer in the modern economy (Mazzucato, 2013). Writing about an economy without the input of the consumers is being unrealistic (Mingardi, 2015). It is the consumers who play a primary role in ensuring that the economy stabilizes or not. That's why in ascertaining the stability of an economy, the GDP is considered because it determines the consumers' purchasing power.

The good thing about Mazzucato is that she explains her motives, which contribute to the role of government in society. Her argument regarding austerity measures is compelling, especially her view on the European crisis (Mazzucato, 2013). She does not believe that the European crisis is a fiscal crisis arguing that the intention of relating the crisis to the government is to paint the government as cumbersome. Mazzacuto says that the government should not be portrayed as being only able to correct market failure, and she does this by providing an exciting vision of the role of the state (Mazzucato, 2013). She attempts to convince the UK government to change its strategy by not cutting state programs; instead, it should focus on ways of having a sustainable post-recovery. She adds that the challenge that the state faces is the lack of a proper communication department.

She further notes that economists mostly adopt an ideological technique that focuses on government failure and believes that the government's role is limited to the correction of market failures. However, her opposition to the school of thought is curious because she equates the market failure approach to government policy and free-market economics, but this is not right (Mazzucato, 2013). The other exciting perception is the perception that public choice theory does not persuasively explain innovation. Still, since this may be true, the theory's main intention is not to achieve what she argues. Instead, the approach helps in providing the way policymaking works, which are also essential. Mazzucato could have made her point convincing by proving that the government intervention is evident in the modern capitalism and that there is a specific industrial policy that has been effective in promoting innovation (Mazzucato, 2013). She needed to be more convincing by providing several examples but not what she presented in her book. It is, therefore, undoubtful that she does not support her claims with examples.

Another interesting observation is that Mazzucato’s story revolves around industrial policy. She states can stimulate the people's ability to innovate hence making the government intervention an essential factor of innovation (Mazzucato, 2013). She, however, does not support this claim with "what is" argument. Her claim is more of "is-ought" by saying that most revolutionary innovations such as railroads are attributed to government intervention. She asserts that the government's substantial investment in these innovations has been incredible (Mazzucato, 2013). Her argument may not be valid because, even though the government-funded construction of railroads, the innovation of the same was an individual's work, which is not attributed to the government. What happened is that the railroads in the US were nationalized, meaning that the private sector initially owned them.

Mazzucato has presented specific supposed success stories to paint the government as an entrepreneurial state because of the milestone achieved in specific programs. She highlighted the Defense Advanced Research Projects Agency, orphan drugs regulations and small business innovation research, among others, which she claimed to have been a result of the state's proactive approach to shape the market by driving innovation claiming that the government agencies envisioned innovation (Mazzucato, 2013). She applauds the government for envisioning and pursuing innovation and adds that the private sector instead grabbed the low-hanging fruit meaning that they did not do much and only depended on the government effort (Mingardi, 2015). The US government, after the Manhattan Project, played a critical role as she explains, in proposing the best technology to pursue both military and commercial use which led to the government's funding of computer science departments and oversaw the early stages of the internet (Mazzucato, 2013, p. 77). She perceives DARPA as an efficiency model with both dynamic and flexible structure. Still, she does not explain the details of the assistance and how the government is a leader in innovation because she only states this in the book but does not support it with enough evidence (Mazzucato, 2013, p. 79).

Linking the government with the internet is another issue that is not convincing because, ideally, Mazzucato has not shown how the government envisioned the commercial internet. The truth of the matter is that the government-supported universities to develop ideas surrounding the internet, such as FTP and TCP/IP. The primary purpose of "packet switching" was produced by two MIT researchers (Chandler, 2005). The TCI/IP router was also developed by a Cisco, a private business, and the optical fibers that help distribute the internet were the brainchild of Corning Glass Works (Chandler, 2005). Therefore, it means that the alleged government spending by Mazzucato was expected for defense instead of inspiring innovation as she puts it. Mazzucato needs to give credit where it deserves but not the government because researchers take their time to develop some of the most significant technologies. She tries to coin the US universities as homogenous, which is committed to fulfilling government orders, but this may not be the right way to define higher learning institutions (Mazzucato, 2013). The government funding may be meant for different purposes, such as attracting capital and the best production factors while also gaining more students but not as a way of promoting innovation as Mazzucato puts it (Mazzucato, 2013). The assumption by the author that everything that goes well in the economy is as a result of government intervention, yet the existence of government funding does not consider different nuances.

The other contentious issue is the argument by Mazzucato that industrial policy can be decentralized, but that is not true because it only exists if the government deliberately commits to promoting the industry. The truth of the matter is that industrial policy can have unintended consequences like other policies, but apparently, she confuses the unintended consequences with the intended ones (Mazzucato, 2013, p. 78). She uses the SBIR program, which was launched by President Reagan, as a decentralized policy that was intended to support high-tech firms and has indeed fostered development for new enterprises (Mazzucato, 2013, p. 80). However, the problem is that there is no single innovation linked with the SBIR grant, and it is also not proper to qualify the program as part of industrial policy. The increase of the funding cannot be attributed to the output but instead, as a formality of what government programs usually become, a factor of political vision and public administration. It is not right to assume that those allocating government funds are smart enough to do what is right. The readers must also acknowledge that the benefits accrued from the program are not what the government intended.

An attempt to link the mobile phone innovation with the government’s efforts is another issue that is not convincing. It is not the US government’s intervention that led to the innovation of phones as Mazzucato puts it (Mazzucato, 2013, p. 103). Wayne Westerman, who cofounded FingerWorks, played an essential role in revolutionizing the mobile phone industry. Still, Mazzucato explains that it is the government's grant that led to success because it was able to complete his education program. It is not true that government funding helped Westerman write his thesis and succeed in his quest to introduce new technology.

In a nutshell, Mazzucato has not explained how the government leads to innovation, and she does not seem to consider innovation as a concept beyond technological progress. She should have linked the benefits of innovation to humans and further understand that funding does not necessarily lead to innovation. Mazzucato must understand that resources are scarce; hence, cannot be given out anyhow by the government to promote innovation because it is never guaranteed in the first place. She should have also considered the role of consumers in innovation and must not assume them as passive subjects when it comes to innovation. Therefore, it means that her arguments miss essential elements of innovations such as those of the consumers and the private researchers.