The Value of Everything: Who Makes and Who Takes from the Real Economy

The Value of Everything: Who Makes and Who Takes from the Real Economy Modern Economies Reward Activities That Extract Value Rather Than Create It This Must Change To Insure A Capitalism That Works For Us AllIn 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 ItThe 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 GDPThe Lesson Here Is Urgent And Sobering To Rescue Our Economy From The Next, Inevitable Crisis And To Foster Long Term Economic Growth, We Will Need To Rethink Capitalism, Rethink The Role Of Public Policy And The Importance Of The Public Sector, And Redefine How We Measure Value In Our Society

Mariana Mazzucato is an economist with dual Italian and United States citizenship She is a professor in the Economics of Innovation and Public Value and the director of the Institute for Innovation and Public Purpose at University College London UCL and the RM Phillips Chair in the Economics of Innovation at the University of Sussex She is also a member of the Scottish Government s Council of

➽ [Reading] ➿ The Value of Everything: Who Makes and Who Takes from the Real Economy By Mariana Mazzucato ➲ –
  • Hardcover
  • 384 pages
  • The Value of Everything: Who Makes and Who Takes from the Real Economy
  • Mariana Mazzucato
  • English
  • 22 May 2019
  • 9781610396745

10 thoughts on “The Value of Everything: Who Makes and Who Takes from the Real Economy

  1. says:

    A must read for finance people and economists This is an excellent history of bad ideas and theories in economics Most especially, about how the government got removed and discounted as a creator of value In fact, government investments create much of the value that the market uses and builds upon When people think about government investments, they think about Solyndra Mazzucato asks us to consider Tesla and the smartphone and the internet and all of the foundational modern technologies and companies that began with government grants and investments.

  2. says:

    Mazzucato s observations and conclusions won t surprise readers who ve read than one or two works of contemporary critical theory But the fact that she is writing in a different register and for a largely different audience matters a great deal in this case, and I found the book very rewarding and even rather moving in her concluding call for an economics of hope.

  3. says:

    Capitalism has a problem and that is to confuse price with value So not only we think a 6 apple must be nicer than a 2 one, we also think that someone earning 100k must be better than one earning 60k etc Firms are also told to only maximise shareholder returns a.k.a ever lower Price earning ratios , so they dutifully increase revenue raise price , cut costs outsource and sack staff To boost stock price, they also buy back shares to decrease the number of outstanding stocks Not only that makes workers suffer, increase inequality, but also decreases long term investment That is because CEOs are rewarded with stock options and their performance is mostly based on stock price Pharmaceutical companies charge enormous prices for new drugs She wrote that historically, economists separate productive vs rent seeking unproductive activity According to the author finance is mostly unproductive activity Corporate raiders buy companies with debt that was saddled on the very companies that were bought, and make quick profits while workers are laid off Venture capitalists make enormous profits on companies built on government research like GPS and internet both built by the military Mazzucato also attacked the calculation of GDP, that it reflects not value but price So we can boost our GDP instantly if we just pay each other to cook and clean our house, even if the amount of work done is the same and the net amount of money that changed hands is zero Lastly, government has been put down as only the distributors of economic output, not generator of it So government has been asked to step aside, to just provide some protection and order, and build some roads so that real private wealth generators can do their thing The IMF and World Bank actually push this agenda to developing countries, asking them to sell almost everything to the private sector, and outsource essential services This leads to higher cost, worse service and for the government to pick up the tab when private providers go bankrupt Mazzucato suggested that we need to look at real Value, and that involves all the stakeholders She does not have the solution yet but we need to start that conversation She does have some suggestions 1 Financial transaction tax to favour long term investment 2 Grant fewer parents upstream so there is open access 3 Limit what pharmaceutical companies can charge4 Any government support being conditioned on actual investment and not share buy back 5 Tax big tech companies since they benefited from government basic research This is a thought provoking book, with very good ideas However, finance workers are certainly important our insurance, pension funds, and sovereign funds all depend on those guys to help us grow our money The stock market exists to encourage IPOs and thus innovation backed by VCs since they can then make profits by investing in start ups It is also very hard to determine the value of something if we cannot rely on its price who will decide then A committee That would be communism And some government services are really inefficient Nonetheless I am very inspired by this book because it really challenges many of my assumptions about the economy.

  4. says:

    Mariana is a post Keynesian, hence relies on observations of actual economic behaviour rather than doctrine and illogical theoretical assumptions as did Keynes in his writings and some of this book follows Keynes discussions in his General Theory She debunks the classicists in a comparable fashion It is refreshingly entertaining writing.The whole book is readable, and is a logical sequel to her previous entrepreneurial state , developing similar themes The chapters on theory of value do not actually reach a defined conclusion and she does skirt the issue of how utilitarianism led to neoclassicism a little, but it is still powerful stuff Her arguments are compelling the financial sector is basically parasitic, and the reasoning is solid 21stC capitalism tends to extract rather than create value A little on how externalities especially environmental damage, carbon emissions and pollution are written out of the value equation would have been welcome, given that climate change is basically an economic issue She is canny in citing Marx and Smith, and extracts residual value from all the classicists after her critiques.If only my own economics lectures at UCL had been as considered and with an equivalent standard of critical assessment, I might have not abandoned the dismal science she is an optimist all those years ago.

  5. says:

    The value of everything by Mariana Mazzucato is about value creation and value extraction, making versus taking, which is a subtitle of the book We currently have corporate governance structures which are very much not just aimed at short termism but actually very much centred around extracting value The book talks about particular practices of value extraction, for example, the increasing practice of just buying back your own shares to boost your share price or options and, unsurprisingly, executive pay.The book also opens polemics with narratives and lazy assumptions that are used all the time that wealth is created in business and then, at best, what government can do is facilitate it and redistribute that value through taxation Mariana, on the other hand, argues that the value creation process is a collective creation and of course labour creates value, different types of state entities create value, businesses create value, and of course, civil society creates value We would not have weekends and we would not have an eight hour workday without trade unions In this concept of different actors comes together to co create value and, undoubtedly, have conflict in the process This should be at the heart of any progressive agenda She also argues that the financial sector and the Silicon Valley seen as great wealth creators are often just shuffling around existing value, or even worse, destroying it.Anyway, the book provides a good storyline of where does value come from in different ages and gives a great analysis of how these concepts interlink Mariana explains a change in the understanding of the value and how it affects the way we see things In the 1600s we had Mercantilists who created value by trade, focusing on the terms of trade, on exchange rates and taxation They thought it was trade itself that created value and that s why they put so much emphasis on that Then in 1700s Physiocrats opted for farming It was still before the industrial revolution in an agricultural society so at the heart of their theory of value was, in fact, farm labour In the next century Classicals like Adam Smith and Karl Marks were starting to put emphasis on value as embodied in the industrial environment in the working process They tried to understand if you like to read my full review please visit my blog

  6. says:

    I heard an interview with the author on the Brian Lehrer show Her perspective on value leans a little socialist than mine, but it s healthy to read opinions different from your own.Certainly, her opinions are different than mine, though I can hear echoes of her opinions in comments made by President Obama, Secretary Hillary Clinton, and Senator Bernie Sanders The book strikes me as a little too idealistic, imagining government and society as a Disney movie, where all the critters chirp and scuttle about happily with Snow White labor and the government while the evil queen capitalism, entrepreneurs, etc plots to put Snow White to sleep and rape the forest s timber for her mill.The chapters set up a series of straw man arguments plucked mostly from recent press villains as examples of capitalism gone wrong Each successful business profiting at the expense of the government and its citizens in a zero sum game where consumers and workers aren t free to make their own choices.She seems conflicted about the relationship between price and value It s immoral when some actors price for value drug companies , but moral when others do it government The book complains that technologies like the internet, microwaves, and GPS were all funded by the government with public dollars, but the companies that make profits with consumer products using those technologies are extracting their profits from public dollars, not adding value.The book s economics are very zero sum No one can make money or create value.I would have gotten out of the book had the author spent time arguing her points rather than just criticizing capitalism For instance, the chapter discussing the Keynesian multiplier just mentioned there were critics of the idea, but didn t explore the criticisms In this specific case, Bastiat s Broken Window Fallacy was screaming at me while the chapter talked about the importance of deficit spending My suspicion is the book could have been persuasive had it argued its points rather than, well, not arguing them.

  7. says:

    Mazzucato is one of the most interesting economists working today I say this because her project in the last two books focus on a ground up redetermination of what is important in the economy To someone like me, who is interested in the social generation and distribution of resources but who think that policy makers went the wrong way in recent years especially before 2008, see Bernanke to Friedman Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve I would like to say to Milton and Anna Regarding the Great Depression You re right, we did it We re very sorry But thanks to you, we won t do it again this book is just catnip So much catnip that I stayed up too late a couple of nights in a row reading it.Mazzucato, in this book, looks at where value was theoretically derived historically from the physiocrats to Smith through Marx and into the marginal revolution She focuses the critique on the marginalists and the composition of current GDP about how it focus to much on the market how what has a price has value and nothing else For Mazzucato, this sidelines non market institutions like the government which are long term value creators but left out of market considerations because what they do doesn t have a price It is a compelling argument to look at how we analyze the economy in a different light.

  8. says:

    This is a follow up to the Entrepreneurial State and is a consideration of how the public sector should be shown to be adding economic value rather than being seen as a drain on the economy.This is done via an analysis of rent seekers in the 21st C like banks that have taken over from land owners in their rent seeking capacity It then reviews the concepts of the previous book how government adds value to research and risk taking to enable companies in the private sector to stand on their shoulders and reap the financial benefits It also assesses why education, roads and other core government provisions add real value that is not shown in GDP statistics.It also provides a good analysis on how the new monopolies in the virtual world like Facebook add no real value, should be charged by the consumer for the information provided and earns its money through advertising, which is non valued adding Its real value add is via the information provision.Overall, there is no question that government adds value and should reap some reward for it via royalties, profit shares etc In my old industry of defence and aerospace, the US government did take a royalty on international sales where they had paid for RD this was a norm But, governments seem to have lost the thread in their desire to placate private industry.Can this change before it is too late We are already in a GDP overkill period where natural resources are in grave danger We are close to robots taking many millions of jobs and where the consumer has seen wages held very low and is moving into low paid work Not sure that MM has a method for evaluating all the new threads of economics within the focus on value but it is an important work that refocuses the economic mind so that government and private industry are seen not as competitors but, somehow, symbiotic.

  9. says:

    A must read While wealth is created through a collective effort, the massive imbalance in the distribution of the gains from economic growth has often been the result of wealth extraction, whose potential scale globalization has greatly magnifiedI will argue that the way the word value is used in modern economics has made it easier for value extracting activities to masquerade as value creating activities And in the process rents unearned income get confused with profits earned income inequality rises, and investment in the real economy falls What s , if we cannot differentiate value creation from value extraction, it becomes nearly impossible to reward the former over the latter If the goal is to produce growth that is innovation led smart growth , inclusive and sustainable, we need a better understanding of value to steer us.

  10. says:

    I fear that confirmation bias makes me a poor judge the author articulates and explains what I have been feeling for years.She s a respected economist and writes accessibly If you feel that something may be wrong with our rulers views on the nature of value, read this book.

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