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Government research: Not just useful, but entrepreneurial and visionary?

Mariana Mazzucato’s ideas about innovation begin to circulate in the media.

The “government—not the private sector—is the economy’s indispensable entrepreneur,” argued Teresa Tritch of the New York Times last month. The government innovates, she declared, “at the frontiers of science and technology, able and willing to take risks and to persevere through uncertainty.” She cited Mariana Mazzucato, a professor of the economics of innovation at the University of Sussex, whose book The Entrepreneurial State: Debunking Public vs. Private Sector Myths has begun drawing media attention.

Mazzucato’s ideas have inspired articles in well-known newspapers, favorable comments at the business site and in a New York Times blog posting, and a skeptical commentary at Especially notable, though, is the long essay “Innovation: The government was crucial after all,” by the former New York Times economics columnist Jeff Madrick, writing in the New York Review of Books.

Madrick opens by contradicting Milton Friedman, the Nobel laureate economist who died in 2006. In a 2007 New York Review of Books essay, another Nobel laureate economist, the liberal New York Times columnist Paul Krugman, called Friedman “the great popularizer of free-market doctrine.” Madrick condemns as a “myth” Friedman’s assertion that the “great advances of civilization, whether in architecture or painting, in science or literature, in industry or agriculture, have never come from centralized government.”

We “hear time and again from those who should know better,” Madrick complains, “that government is a hindrance to the innovation that produces economic growth.” He argues instead that both “government research and entrepreneurial capital are necessary conditions for the advance of commercial innovation.”

He declares that Mazzucato “shows in detail that, while Steve Jobs brilliantly imagined and designed attractive new commercial products, almost all the scientific research on which the iPod, iPhone, and iPad were based was done by government-backed scientists and engineers in Europe and America.” Concerning the charge that the government shouldn’t try to pick winners and losers, he reports that contrary to widespread surmises based on the much-publicized case of Solyndra, “only roughly 2 percent of the projects partly financed by the federal government have gone bankrupt.”

Madrick cites giant magnetoresistance as a government funding success for information technology. And he points out that three decades ago, the federal government formed Sematech, the Semiconductor Manufacturing Technology consortium, “a research partnership of US semiconductor companies designed to combat Japan’s growing lead in chip technologies.” With $100 million per year in public funds, it reestablished US competitiveness.

He emphasizes Mazzucato’s belief that government research has been “visionary,” not only reducing market risks for companies, but opening technology to new ideas. He mentions biotechnology, nuclear energy, and nanotechnology.

Madrick’s conclusion merits quoting:

But Mazzucato’s criticism of US innovation strategies goes deeper than the lack of adequate funding. She makes one of the most convincing cases I have seen for the value and competence of government itself, and for its ability to do what the private sector simply cannot. It is not only, as economists argue, a matter of reducing the risk of research and innovation for private enterprise. She argues that government efforts are the source of new technological visions for the future, and—very persuasively—she cites the innovations of the past sixty years to make her case.


Steven T. Corneliussen, a media analyst for the American Institute of Physics, monitors three national newspapers, the weeklies Nature and Science, and occasionally other publications. He has published op-eds in the Washington Post and other newspapers, has written for NASA's history program, and is a science writer at a particle-accelerator laboratory.

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