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Modern economies reward activities that extract value rather than create it. This must change to insure a capitalism that works for us all. 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 extra Modern economies reward activities that extract value rather than create it. This must change to insure a capitalism that works for us all. 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. The 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.


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Modern economies reward activities that extract value rather than create it. This must change to insure a capitalism that works for us all. 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 extra Modern economies reward activities that extract value rather than create it. This must change to insure a capitalism that works for us all. 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. The 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.

30 review for The Value of Everything: Making and Taking in the Global Economy

  1. 5 out of 5

    Mehrsa

    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 an 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. 5 out of 5

    Dan

    Mazzucato's observations and conclusions won't surprise readers who've read more 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"). Mazzucato's observations and conclusions won't surprise readers who've read more 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. 4 out of 5

    Daniel

    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 onl 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 more open access. 3. Limit what pharmaceutical companies can charge 4. Any government support being conditioned on actual investment and not share buy-back. 5. Tax big tech companies more 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. 5 out of 5

    Louis

    A very disappointing book. Since it was billed as a refreshing alternative to free market capitalism, I was excited to see an academic take on what sustainable left-leaning policies look like, rather than the typical left-wing media take that relies heavily on moral obligations but fails to offer practical alternatives. Mazzucato does offer a plausible criticism of modern economics (although I have little experience with economics so am not in much of a position to criticise) - the role of value A very disappointing book. Since it was billed as a refreshing alternative to free market capitalism, I was excited to see an academic take on what sustainable left-leaning policies look like, rather than the typical left-wing media take that relies heavily on moral obligations but fails to offer practical alternatives. Mazzucato does offer a plausible criticism of modern economics (although I have little experience with economics so am not in much of a position to criticise) - the role of value is underestimated, leading to a universal misinterpretation of the role of government in the economy. As an economics professor, you would expect her economic analysis to be sound, but of course there will be little popular interest in a book about economic technicalities - this is no bad thing, but I sense mazzucato's interest is reaching outside of the economic sphere. Unfortunately, her grasp of business and finance is much weaker than of economics, and relies heavily on the tropes of left-wing media. Executive pay is offensive, bankers (used in the confused collective sense of anyone working in the financial industry) serve no purpose and earn too much money, the poor government is naively taken advantage of by rapacious entrepreneurs and big pharma lobbyists. Of course there is a certain amount of truth behind each of these perspectives, but to use these as proof of a broken system strikes me as a lazy straw man argument, which is repeated through all the central chapters of the book. The issue is that often these are topics that are regularly debated within the business world, and there are good arguments to be made on each side of the argument. But to present such issues to the public (which ultimately is the point of targeting this book towards a more popular audience) without even mentioning the commonly made counter arguments is remarkably shoddy academic practice. An example: the author heavily criticises the practice of share buybacks. This is a valid argument to be had, and is discussed within financial circles (for instance, Matt Levine at Bloomberg writes about this regularly). Mazzucato explains that share buybacks are purely a way for executives to boost their pay rather than reinvest in their industry; while this may be a reason for the practice, it is quite ridiculous to suggest that it is the primary motivation. The problem is that if Mazzucato were to expand on the normal reasons for companies to buy back their shares, she would reveal a fundamental contradiction in her arguments - firms have too much power to choose where investment is made, but are then criticised for returning shareholder money to allow the shareholders to choose where further investment should be made. It's not that I don't think she has a point, it's just that you can't make a decent argument if you create a straw man to argue against. It is a shame that the middle chapters of the book are marred by this kind of rhetoric because it detracts from the whole point of the enterprise. The opening and closing chapters are often great, but Mazzucato reveals either a fundamentally weak understanding of business, or the type of selective disclosure that we expect from partisan newspaper columnists. This begs the question: what is the point of this book? The economics part is interesting but technical and is suited to an academic paper rather than a 'popular' book; the remaining criticisms of capitalism are generic and unoriginal, and fail to provide the academic rigour that the book promises to deliver. I am generally left-leaning, and I really hoped that this book could offer a plausible economics to counter the inequalities of free market capitalism. However, if the book failed to convince me - actively wanting to be convinced - how can the author expect to enact any actual reform?

  5. 4 out of 5

    Tony Philpin

    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 n 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 more 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.

  6. 4 out of 5

    Charles J

    I have long known in my gut that usual measures of social wealth, most of all GDP, are fraudulent, in that they falsely identify value where there is none. I have intuited we were all being lied to, and that those who assured us that ever more value was being generated by our society by what appear to be objectively valueless activities were, at best, hiding something. This outstanding book, by left-wing economist Mariana Mazzucato, explains what is being hidden, what hard truths are being avoid I have long known in my gut that usual measures of social wealth, most of all GDP, are fraudulent, in that they falsely identify value where there is none. I have intuited we were all being lied to, and that those who assured us that ever more value was being generated by our society by what appear to be objectively valueless activities were, at best, hiding something. This outstanding book, by left-wing economist Mariana Mazzucato, explains what is being hidden, what hard truths are being avoided, and what she thinks we should do about it. And while I don’t agree with all her prescriptions, or with her rosy view of government competency, the first step on the path to self-improvement is admitting you have a problem. Others have tried to explain the corruption of the modern economy, such as Rana Foroohar in her dreadful Makers and Takers, but Mazzucato succeeds where they failed. Her core claim is that “much of what is passing for value creation is just value extraction in disguise.” What is value is the heart of this book, along with who creates value. And if value is defined not just as bargained-for exchange, it alters who and what can and should be viewed as productive of value. Most of all, this book is an attack on the financial industry as extractive and unproductive, something I have also long believed but could not precisely say why, even though I have a lot of direct experience with that industry. Since the financial industry has hoodwinked and bribed much of the world, especially conservatives, into thinking it is a key component of economic growth, and that attacks on it are attacks on the free market and on apple pie, this is a heresy. But a heresy that is also an essential truth. No surprise, Mazzucato begins by explaining value. “At its heart it is the production of new goods and services.” This is obvious, in a way, but frequently overlooked, ignored, or distorted. In my usual thought experiment, twenty people sitting around on the savanna who do nothing at all except eat and drink what is at hand produce no value. Mazzucato adds the qualifier that not all value, which for her is functionally the same thing as wealth, is net positive, because of externalities. A factory that produces new goods but pollutes creates less net value than if it did not pollute. Similarly, a Gender Studies or Latino Studies professor pollutes society and creates negative net social value, though that’s not an example Mazzucato gives. Conversely, value extraction is “activities focused on moving around existing resources and outputs, and gaining disproportionately from the ensuing trade.” Thus, determining what is a productive activity is the key to understanding value. In the modern era, since the late eighteenth century, variations on defining the “production boundary” have been used to make this determination. Activities inside the boundary create wealth; activities outside extract it. Today, economic orthodoxy views the production boundary as encompassing all bargained-for exchanges. If a price is paid, value exists. Mazzucato rejects this, holding that some prices paid result in unearned income not representing value creation, a throwback concept, and that some activities currently viewed as creating value actually destroy value. The first third of the book is a history of economic value. This is a quintessentially modern debate; until the late seventeenth century, economic value was essentially a moral question, revolving around virtuous behavior and contribution to the common good. With the changes wrought by the discovery of the New World, in particular the massive influx of metals, threads of abstract economic thought began to crop up, initially of the mercantilist sort—roughly, the idea that the more metals a country retained, the better. And to measure whether a country was advancing or retreating, the concept of national income was born. William Petty, surveyor to Oliver Cromwell and secretary to Thomas Hobbes, had the insight that viewing each country as a closed system, income and expenditure aggregated the same (ignoring savings), and thus if he could estimate national expenditure, he could estimate national income. He set the production boundary (although he didn’t call it that) to include in national income only production of necessities, such as food and clothing. What is inside and what is outside the production boundary is the core determination for all future calculations of national income—or, as we call it now, more or less, gross domestic product. The next major thrusts in this area were made by the Physiocrats during the reign of Louis XV, in the mid-eighteenth century. For them, only the primary sector, mostly agriculture but also activities such as mining, was productive. All other activities, including industrial transformations, merchant activities, and of course government, were outside the production boundary. Soon enough, along came the classical economists: Adam Smith and David Ricardo, along with Karl Marx, who are all three here (and not often elsewhere) lumped together, as deriving value, and therefore national income, primarily from labor itself (along with other direct costs of production), not from the focus of the labor. Smith set the production boundary to include any activity involved in production, because it creates value, and to exclude services (lawyers and the like) and government (as well as household production), which do not create value, but live off the surplus created by others. For Smith, using generated wealth to produce more was the key to national growth and success. (This would avoid the example of Spain, which under mercantilist theory should have been in great shape because of the enormous amounts of metals it absorbed, but it did not become more productive, and so sank back into poverty.) Rents, that is transfers of value to those who hold a monopoly on a scarce asset, most obviously land but not at all limited to that, were also unproductive. Ricardo further developed the theory of rents. As the population grew and assets such as land became relatively scarcer, Ricardo saw rents rising and economic stagnation resulting. Here we see telegraphed Mazzucato’s theme that most of the modern finance industry is not productive, but a seeker of, and gorger upon, rents. For Ricardo, consumption to allow more economic activity, as by industrialists, was good consumption; consumption of frippery was bad consumption. Ricardo, however, included services within the production boundary, as long as they were part of productive processes. Government services were, though, by definition unproductive (true, Ricardo was focused on war spending, and ignored activities such as infrastructure spending). Marx followed Ricardo in seeing labor as the source of value, but differed in seeing the extraction of surplus value from workers as the key engine of the modern industrial economy (and also the creator of alienation in the workers). Marx included “circulation” within the production boundary—that is, certain activities, including some merchants and some finance, that were needed for productive industry to realize profits. Surplus value that would otherwise be absorbed by production capitalists goes to circulation capitalists—but they also create surplus value, by making activities possible for the production capitalists that would not otherwise be possible. Amazon is an example, as are certain elements of finance—but not lending, “interest-bearing capital.” Thus, anything that created surplus value was within the production boundary. Other aspects, along with government and with household production, were as usual outside the production boundary. Along the same lines, rents were seen as merely redistributing value, not creating it, and were outside the production boundary—they were also merely claims on surplus value created by labor. In the late nineteenth century, and into the twentieth, the concepts of value developed by classical economics went by the wayside with the rise of the neoclassical economists, such as Alfred Marshall, who developed the marginalist theory of value. They held, and it is nearly universally held today, that people buy goods or services based on their subjective estimation of utility at the margin to the buyer, and therefore the only value of a good or service is whether and what someone is willing to pay for it. Of course, as Mazzucato points out, this means that total value production in a national economy is now purely subjective, and that measures of productivity now fluctuate with prices. Even more perniciously, this theory means that someone who is unemployed is merely choosing leisure over value, by preferring the utility of leisure to whatever work may be available. This also implies that to maximize national value any barriers to trade must be removed, such that everyone can get what he deserves based on his marginal production. Government’s role is only to remove market failures (and that only if it can be proven government will not be a worse cure than the disease, according to James Buchanan’s public choice theory), since by definition the totally free and frictionless market will provide optimal outcomes. Finally, it implies that rents in the old sense, of a monopoly on something such as land or capital, are no longer viewed with distaste; they are merely part of an individual’s utility maximizing, and income from rents is now viewed as inside the production boundary, whether derived from land or capital. Therefore, nearly every purchase transaction is included within today’s “comprehensive boundary.” Under this new view of things, anything that fetches a price is included in national income, GDP. Mazzucato goes into great detail about the modern calculation of GDP, something that I have long failed to understand, but which she makes accessible, though even with her explanations it’s still mushy and confusing, in its nature, not due to any failure of the author. The accounting calculations are very complex and frequently shifting, done pursuant to something of which you have never heard, the “United Nations’ System of National Accounts,” the SNA. It attempts to calculate GDP as “the amount of value added by production.” National production equals national income equals national expenditure. In theory, at least—but Mazzucato says much of this is ad hoc, such as the switch in 2008 from ignoring research and development to including it in GDP, which magically added 2.5 percent to United States GDP with no actual change in the economy. And anything that does not fetch a price, such as household work, is not part of GDP—but six percent of GDP is rent imputed to homeowners, again with the ad hoc judgment calls. Government spending is included in GDP only for amounts government spends as an actor, excluding transfer payments such as pensions and unemployment benefits (which show up in GDP as part of household spending). Government is ignored in calculations of production, something to which, again, Mazzucato objects, since she views government as very often a value creator. The explanations here don’t answer some of my questions, though. Where does money borrowed from the Chinese show up? Given the level of foreign debt we incur, national expenditure would seem to grossly exceed national production and national income. Or is the debt transferred to national income and national “production” by government spending? But how can debt be considered production? Or, to take another question that fascinates me, how about California? We are always told how big California’s economy is, how important it is to our country, how it “contributes” so much to national value. We are told if California were independent it would be the world’s fifth-largest economy. We are, of course, told these things to suggest that being run by people on the far left, woker than woke, is totally compatible with economic success, and that “red” states are parasites upon the awesome success of California and New York. I went exploring, to determine what it is that makes up California’s GDP, through statistics provided by the Bureau of Economic Affairs. The vast majority is things that do not, according to Mazzucato, actually result from the creation of value. Forty-seven percent is FIRE (finance, insurance, real estate), “professional and business services,” or “information.” Twelve percent is manufacturing. Eleven percent is “government and government enterprises.” Ten percent is education and social services. Wholesale and retail trade is eleven percent. And collectively, agriculture, construction, transportation, utilities, and mining are thirteen percent. Thus, what normal people regard colloquially as productive, manufacturing and other forms of real new value creation, is around twenty-five percent of the total. Maybe thirty-five percent, if you optimistically include part of education, “information” and “business services,” though the latter is probably mostly transactions costs such as lawyers imposed by the government and plaintiff’s lawyers engaging in legal extortion. But then, from that maximum of thirty-five percent you have to take away what is really not part of California at all. For example, it appears that any corporation headquartered in California has any capital investments included in California GDP, regardless of where the investment takes place. Along similar lines, presumably “information” includes revenue Google obtains from selling advertising, facilitating transactions that occur mostly totally outside California, and revenue derived from server farms, mostly located outside California. (If calculating GDP by the production method, are all iPhones produced attributed to California’s GDP? I’m not sure.) And so forth, suggesting that much of what appears as value in substantive categories is really not at all attributable to California—it is either fictional, not value at all, or tied to California merely by accounting convention. In other words, as Kurt Schlichter preaches in his “Split” novels, there is no there there, and California would merely collapse like the house in Poltergeist, or Venezuela, if it were severed from the rest of the country, because what passes for value in its GDP is mostly not value at all. Mazzucato’s history is warmup to her main application of an accurate value framework . . . [Review completes as first comment.]

  7. 4 out of 5

    Tom Gagne

    I heard an interview with the author on the Brian Lehrer show. Her perspective on "value" leans a little more 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 I heard an interview with the author on the Brian Lehrer show. Her perspective on "value" leans a little more 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 more out of the book had the author spent more 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 more persuasive had it argued its points rather than, well, not arguing them.

  8. 4 out of 5

    Maciej Nowicki

    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, ex 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 https://leadersarereaders.blog/the-va...)

  9. 5 out of 5

    Richard Thompson

    I wanted to like this book. I thought that Mazzucato had her heart in the right place. I kept hoping that she was going to deliver a new theory of value that was going take us into value's Copernican universe so that both the old discredited labor theory of value and the Neoclassical idea that value is a function of demand would look like the Ptolemaic epicycles of value theory. But she didn't. She seems to be saying that value is a function of overall social utility. Fair enough. But then she d I wanted to like this book. I thought that Mazzucato had her heart in the right place. I kept hoping that she was going to deliver a new theory of value that was going take us into value's Copernican universe so that both the old discredited labor theory of value and the Neoclassical idea that value is a function of demand would look like the Ptolemaic epicycles of value theory. But she didn't. She seems to be saying that value is a function of overall social utility. Fair enough. But then she doesn't tell us how to measure or maximize value. Maybe that's because this is a popular book that can't have formulas or math, but I suspect that it is because her theory is not fully formed, because all we get from her is a pile of anecdotes where others claim to create or measure value but clearly fail to do so. Her main attack on Neoclassical value theory seems to be that price does not reflect value. But when I was taught Neoclassical economics in college, nobody ever claimed that prices are true reflections of value. There are too many market distorting forces at play for that to ever be true except in a few simple cases. Value is a function of demand. Most products for which there is demand have a price. The price is driven at least in part by demand, but price and demand are not the same thing, though you wouldn't know that from reading this book or some of the other reviews. I strongly agree with her criticism of the finance business as being largely parasitic and not the value and wealth creator that it claims to be. I am afraid that my own business of law is also often parasitic and too often only extracts value without contributing to it. But that doesn't mean that finance or law are without value, only that that are not the value creators that they claim to be and that in a fairer more perfect world financiers and lawyers would get smaller rewards that would compensate only for the value that they actually add. I also agree with her concept that corporations should be refocused away from the concept of maximizing shareholder value to a broader concept of enhancing value for all stakeholders. The rewards for society as a whole in the long run would far exceed what the present system delivers. So Mazzucato is doing God's work in the results that she aims for. I just wish that she could have delivered a stronger theoretical underpinning.

  10. 5 out of 5

    John Mihelic

    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 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.

  11. 5 out of 5

    Jeff Kaye

    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 shou 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 R&D - 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.

  12. 5 out of 5

    Jason Harrop

    The author does a good job of drawing attention to the evils of rent seeking behaviour. Parasites! Although I agree there is a role for government in encouraging innovation, the author overstates government's contribution. This claim is stated repeatedly, but never treated in any depth. The government invented the Internet? It would have been interesting to discuss the great man theory of invention. In asserting government should get a larger share of the spoils, she ignores its take via tax. In th The author does a good job of drawing attention to the evils of rent seeking behaviour. Parasites! Although I agree there is a role for government in encouraging innovation, the author overstates government's contribution. This claim is stated repeatedly, but never treated in any depth. The government invented the Internet? It would have been interesting to discuss the great man theory of invention. In asserting government should get a larger share of the spoils, she ignores its take via tax. In this way it gets a large share, and it certainly doesn't always share in the losses of failures. When one thinks of government, one thinks of inefficiency. Acknowledging and addressing this somehow would strengthen the argument that despite this, government can do things of value. I would have liked her to be more forceful in her recommendations regarding patents. As in, get rid of them! It would have been interesting to cover the value of open source. As an aside, there are parallels with the role of pricing in monopolies thinking which she might have drawn out. Overall, a bit repetitive and lacking in depth. But worth reading.

  13. 5 out of 5

    Mike O'Brien

    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 more the result of wealth extraction, whose potential scale globalization has greatly magnified... I 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 in 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 more the result of wealth extraction, whose potential scale globalization has greatly magnified... I 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 more, 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 more innovation-led (smart growth), more inclusive and more sustainable, we need a better understanding of value to steer us."

  14. 4 out of 5

    Justin Evans

    An excellent argument for the relativity of 'value,' made from the perspective of an economist rather than a critical theorist. How do we calculate economic growth? In short, we include things made by private businesses, and exclude the work--'economic' or otherwise--of those who are not being employed by private businesses. Once you've done that, it's pretty easy to claim that tax cuts for the rich are the only ways to increase growth. Of course, once you recognize this, you should recognize th An excellent argument for the relativity of 'value,' made from the perspective of an economist rather than a critical theorist. How do we calculate economic growth? In short, we include things made by private businesses, and exclude the work--'economic' or otherwise--of those who are not being employed by private businesses. Once you've done that, it's pretty easy to claim that tax cuts for the rich are the only ways to increase growth. Of course, once you recognize this, you should recognize that our understanding of 'value' itself needs to be altered.

  15. 4 out of 5

    Romilly

    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 . 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 .

  16. 4 out of 5

    Marks54

    I heard about this author in a recent piece in the NYT where she was recommended as one of a group of five especially important women economists. She is a professor at University College London and appears to hang out with a sharp group of colleagues. This is a book on public policy and political economy. It reads more like a trade book than one intended specifically for economists. In this book she is taking on a whole host of current interrelated economic crises not unlike those of interest to I heard about this author in a recent piece in the NYT where she was recommended as one of a group of five especially important women economists. She is a professor at University College London and appears to hang out with a sharp group of colleagues. This is a book on public policy and political economy. It reads more like a trade book than one intended specifically for economists. In this book she is taking on a whole host of current interrelated economic crises not unlike those of interest to PIketty and others — inequality, innovation, governance, growth, etc. In light of the past two decades, these issues are all well known and I was curious to see what particular perspective she would adopt in telling her tales. By the way, if one follows these public policy perspectives, we are just at the spot when some new perspectives trying to draw together our current public crisis trifecta of pandemic, nascent depression, and racial unrest in a new treatment of what is going on. Apart from a few stray working papers on the economy moving forward, it still seems to be a bit early. This author, however, will be involved once the next wave of analysis begins. Back to the book. The perspective that Professor Mazzucato adopts is that current economic and policy approaches towards inequality and related issues are fundamental hamstrung due to the lack of a developed theory of value that permits the formulation of a meaningful progressive response to contemporary crises. As it currently stands, price theory has come to determine our view of value and as a result value has come to mean whatever economic actors say it means. This lack of a theory of value completely muddies the waters concerning what is value creation and how it differs from rent seeking or value extraction. This has enabled those in power to pursue their own interests at the expense of society - or of anyone else. The huge expansion of CEO pay is fine, the success of the top .01 % in appropriating more of the gains of economic activity is reasonable, and the growth of super-rich internet monopolies on the basis of publicly funded R&D is just peachy. The punchline is that the impoverishment of the economic theory of value (which is a relatively recent phenomenon) has emplowered those in power and impaired the ability of government or observers to object. This is an argument that the economic theory that becomes accepted and ensconced in government regulations and procedures makes a big difference in the way the resulting world operates. Economic life is not a natural phenomenon but a social one that we get to construct and thinking hard about it, paying attention to data, and having the courage to act on our conclusions. This is not the usual story and it is very well told. There is much to like about it. She might be criticized by some for throwing too much history in the mix, but that did not bother me. Overall, I followed the story and generally agreed. She is also a fine writer. Between a plausible story and a well written book, what is not to like here? If I had to raise any issues, the principal one would be that arguing for a different theory of value is certainly a good start. A nice follow-up would be to suggest one or a few that she might recommend. As is, she is perhaps too open-minded about different theories of value. If I followed her up through the last chapter, an final one on candidate value perspectives would have been eagerly read. I guess I will wait for the next installment. Given the current abundance of crises, I hope the wait is not long!

  17. 5 out of 5

    Darren Chuah

    I am punching above my intellectual bag with this read as i find it rather academic and theoretical. First half recapitulation of history and theories of economic thinkers was rather dry but it gets really good on the second half. This book confronts the future viability of capitalism and author is being very bold in inviting the paradigm shift of mindset in the definition of value and wealth creation. Tech Companies, Financial traders, rapacious lenders, and property flippers are being bashed r I am punching above my intellectual bag with this read as i find it rather academic and theoretical. First half recapitulation of history and theories of economic thinkers was rather dry but it gets really good on the second half. This book confronts the future viability of capitalism and author is being very bold in inviting the paradigm shift of mindset in the definition of value and wealth creation. Tech Companies, Financial traders, rapacious lenders, and property flippers are being bashed ruthlessly as wealth extractors, and they do make sense. I hope lawmakers in my country read this.

  18. 4 out of 5

    Jesper Döpping

    Easy read with a strong argument for re-instating value as a key concern I bought this book because I read the entrepreneurial state. This book in my opinion in a very easy to understand way for non-economists argues that we have to return to a much more basic question - the question of value creation, what is it and what is it not? The book starts with a theory historical perspective that are incredible easy to understand on how value have been conceptualized. This theory perspective gives a cle Easy read with a strong argument for re-instating value as a key concern I bought this book because I read the entrepreneurial state. This book in my opinion in a very easy to understand way for non-economists argues that we have to return to a much more basic question - the question of value creation, what is it and what is it not? The book starts with a theory historical perspective that are incredible easy to understand on how value have been conceptualized. This theory perspective gives a clear guideline to the different perspectives and the development towards a subjective understanding of value and what problems that rises. In particular the consistent discussion of rent seeking or value extraction is important - even though it might for some readers at first glance will be seen as a finance and neoliberal ideology bashing, it works by closer consideration as a tool to positive start a discussion of what value creation really means. By going this way the author succeed in forcing us to reconsider our everyday concepts of the state, and in particular its role in creating long term value and prosperity. Inevitable it comes to question and ask questions of how to define and understand the value of the common good, growth, innovation and entrepreneurship. From a more organizational and sociological perspective she forces us to consider how we run private business, how we extract value from the business both in terms of distribution (top versus other stakeholders). It forces anyone working in business to think if we are just rent-seekers or we actually create some value for all stakeholders. I find this book very helpful to think about politics, economy, sociology and organizational science.

  19. 4 out of 5

    Daniel Wei-hsuan

    The economy might as well be a self full-filling prophecy machine, "How we discuss value affects the way all of us, from giant corporations to the most modest shopper, behave as actors in the economy and in turn feeds back into the economy, and how we measure its performance." This book has demonstrated the importance of how we perceive and narrate "value" in our lives because our every little thought counts and they eventually feed back into the system to determine both the "price" and "value" The economy might as well be a self full-filling prophecy machine, "How we discuss value affects the way all of us, from giant corporations to the most modest shopper, behave as actors in the economy and in turn feeds back into the economy, and how we measure its performance." This book has demonstrated the importance of how we perceive and narrate "value" in our lives because our every little thought counts and they eventually feed back into the system to determine both the "price" and "value" in our own economy. Where does value come from? What is value? Are you a value creator or a value extractor in the economy? Without a discussion of the theory of value, we would not be able to distinguish between bloodsuckers and value creators. The author examines the source of value through a history lesson on the evolution of the economy as a field, starting from Physiocrats, Adam Smith, David Ricardo, Karl Marx, to Keynes. Critiques and insights are offered to help the readers understand the different school of thoughts and the strength and weakness of how each economist draws the boundaries of productivity. Then the author takes us further to use the established understanding of value to continue the discussion on the directionality of our current and future economy. She makes a few propositions on how we can achieve a smarter, more sustainable, and inclusive growth, relating to the flaws in how we calculate national account (GDP) as well as how we view innovation and the role of the government in the society. Is government a value creator or a mere impediment in the free market? Is free market a natural formation or a human artifact? The author will share with you her point of view with evidence to back it up. Despite the struggles of fighting through a few dense chapters, the read overall is extremely rewarding and thought-provoking. It has helped me answer many questions that have been on my mind for a while and allowed me to build a systematic understanding of how we can better contribute value in this world. I'm going to end the review with two quotes from Oscar Wilde, "don't be a cynic, who knows the price of everything but the value of nothing," and remember that "The truth is rarely pure and never simple."

  20. 4 out of 5

    Robert Maisey

    The Value of Everything is a heavy, serious and thoroughly argued slab of Keynesian economics for the post 2008 world. Just like Keynes himself, Mazzucato explores the tangible and intangible ways in which the economy and society interact, using different understandings of "value" as the mechanism to do this. The book deals with finance, investment, corporate behaviour and public policy in a sophisticated but not unintelligible fashion. The focus is on achieving what most of us would imagine to b The Value of Everything is a heavy, serious and thoroughly argued slab of Keynesian economics for the post 2008 world. Just like Keynes himself, Mazzucato explores the tangible and intangible ways in which the economy and society interact, using different understandings of "value" as the mechanism to do this. The book deals with finance, investment, corporate behaviour and public policy in a sophisticated but not unintelligible fashion. The focus is on achieving what most of us would imagine to be genuinely desirable outcomes, i.e. a clean, green, egalitarian, dynamic and growing economy. This might be its major flaw; it assumes that the reader is a rational actor, perhaps a policymaker looking combine improved productivity with social justice, and therefore neglects to deal with the fact that most policy making powers have been captured by bad faith actors who have no interest in such outcomes, and has nothing to say about how to struggle against this. For example, The Value of Everything makes a thorough deconstruction of the ideology of share value maximisation and the practice of neglecting investment in favour of financial wizardry like share buybacks. It even identifies the culprits, for example Private Equity funds. It demonstrates clearly alternative economic approaches, but doesn't really grapple with the fact that this kind of serious economic thinking is likely to be ignored - both by the economic actors themselves and by the captured state organs that serve them. The model of rational social partnership outlined by Mazzucato here was taken up by the Labour Party in the 2019 UK general election, and no doubt Mazzucato herself informed the policy platform they stood on. However, in the face remorseless class struggle Labour crashed and burned, and any hope of rational social partnership - so convincingly outlined in The Value of Everything - burned with them.

  21. 5 out of 5

    Praveen

    Mariana Mazzucato's The Value Of Everything - Making And Taking in The Global Economy. discuss on the distinction between value extraction and value creation which have far reaching consequences to the companies , their workers and beyond all in the whole societies. The social , economic and political impacts of value extraction are huge. Because in the modern capitalistic world value extractors get rewarded more than the value creators. Capitalisim rewards "rent seekers" over true "wealth Creat Mariana Mazzucato's The Value Of Everything - Making And Taking in The Global Economy. discuss on the distinction between value extraction and value creation which have far reaching consequences to the companies , their workers and beyond all in the whole societies. The social , economic and political impacts of value extraction are huge. Because in the modern capitalistic world value extractors get rewarded more than the value creators. Capitalisim rewards "rent seekers" over true "wealth Creators". Mariana Mazzucato is not trying to argue the competency of each theory but the trying to put forward dialogue on the better distribution of wealth in same lines of French economist Thomas Piketty Capital in the Twenty-First Century and she mostly contemns "rent seekers" and touch all the felids from FISIM, New Technology , Pharma, Patented and their treatment in national income accounting . Overall a good read.

  22. 4 out of 5

    Igor

    Most delusional economic book I ever read. The book is heavily biased providing only one sided view. There no real solution offered all suggestions are utopian and have no relation to real life.

  23. 5 out of 5

    Henrik Warne

    This book poses very interesting questions: What does creating value mean? Who is making, and who is taking? The first few chapters detail the history of economics from the perspective of value creation. The central problem is where to draw the production boundary – activities inside it create value, whereas activities outside it do not. The ideas from many famous economists, such as Adam Smith, David Ricardo and Karl Marx, are explained. Typically agriculture and manufacturing were placed inside This book poses very interesting questions: What does creating value mean? Who is making, and who is taking? The first few chapters detail the history of economics from the perspective of value creation. The central problem is where to draw the production boundary – activities inside it create value, whereas activities outside it do not. The ideas from many famous economists, such as Adam Smith, David Ricardo and Karl Marx, are explained. Typically agriculture and manufacturing were placed inside the production boundary. Next, the theories of marginal utility and scarcity are explained. This is also when price becomes the measure of value, and anything that is bought or sold is now by definition considered to be inside the production boundary. However, a problem with this is that value extraction (rent) can masquerade as value creation. This is the central theme of the book. Calculating GDP is tricky. However, many oddities in how it is calculated are pointed out. For example, state-funded activities that are provided below market price, or for free, are not handled well. Examples include schools, universities, health care, and public transport. Another example: are investments in R&D productive? Yes, this was added in 2008. Or – how should owning a house be treated? If it is counted as the value of the equivalent rent, then a housing bubble increases GDP. The next three chapters cover banks and financialization. Banks and financial markets were for a long time just regarded as a cost of doing business, and not producing any value. But this view changed with the deregulation at the end of the 20th century, and banks and financial markets are now counted as part of the GDP. These chapters cover a lot of the arguments of problems with banking today, such as “too big to fail” giving large institutions an implicit guarantee of being bailed out, and complex regulation acting like a barrier to entry. Finance’s growing share of GDP is usually celebrated. However, the author’s view is that if finance truly is efficient in serving the needs of the “real” economy, then its share of GDP should decrease over time, not increase. She makes the following analogy: if the cost of bus tickets kept rising, you would demand to know why the bus company kept getting less efficient, and you would investigate if it used monopoly power to push up its prices (from page 109). There is also a part on the practise of buying companies and stripping them of assets and taking on debt but at the same time under-investing in the business, and on the problems with the concept of Maximizing Shareholder Value (MSV), including share buy-backs. In the chapter on innovation, the author argues that innovations come from a broad set of factors (including government-funded research), but that venture capitalists have managed to get an outsized share of the rewards. Furthermore, she argues that patents have gone from stimulating innovation to stifling it. Patents now last longer, can be renewed, are easier to obtain, and can now cover not only products, but the knowledge behind them. This has fuelled rent-seeking, and caused ridiculous drug prices, such as $1000 a pill for a drug called Sovaldi. Finally, the author covers how what the public sector does is consistently undervalued. A lot of what the government does is only considered a cost, but the value (health care, infrastructure etc) is not counted. She also shows some examples of how privatization and outsourcing of health care in England has led to high cost, low quality and minimal transparency – exactly the problems it was supposed to solve. Overall, a really good and interesting book that makes a lot of good points. I liked how it described the history of economics and where to draw the production boundary, and how that has changed. However, it would have been nice if the author had a definition of what should be considered producing value, and what should be considered the opposite (value extraction). There where many good examples of unproductive and rent-seeking behaviour in many domains, but it is still unclear to me where to draw the line. For example, some functions banks perform are good for the “real” economy, but excessive trading between themselves, or naked credit default swaps (CDSs) are not. The same goes for patents. So when do you cross the line? Also, what should be done to prevent this? Not easy questions to answer, and I suppose just raising them is a necessary first step. Anyway, definitely a thought-provoking read!

  24. 5 out of 5

    A Man Called Ove

    Q - What is GDP ? A - It is the monetary VALUE of all finished goods and services made within a country during a specific period. Q - What is Value ? A - Read this book :P What activities add "value" to an economy ? Do all activities that have monetary value create wealth or do some merely extract value ? In particular, does the financial services sector privatise profits and socialise losses ? And say even if it did not, does it create wealth or extract value ? And what about a factory that is succ Q - What is GDP ? A - It is the monetary VALUE of all finished goods and services made within a country during a specific period. Q - What is Value ? A - Read this book :P What activities add "value" to an economy ? Do all activities that have monetary value create wealth or do some merely extract value ? In particular, does the financial services sector privatise profits and socialise losses ? And say even if it did not, does it create wealth or extract value ? And what about a factory that is successful but polluting ? a) The book starts with how value has been defined over history by various economists / thinkers. Building on that, we move on to how GDP is measured. The author makes some insightful comments on what changes can be made to the measurement system. This section required a lot of attention while reading and also was very thought-provoking. b) The second section was on the financial sector. By detailing its workings, the author convincingly argues how this sector has become unregulated and an extractor of value thru "casino capitalism” and rent-seeking. Because the 2008 subprime crisis was fresh in my mind, this part was easier to digest. c) The third section was on public sector vs private sector. After reading The Fifth Risk, my views on the role of government in the economy changed a lot. Starting from Ayn Rand's laissez-faire, to adding education/healthcare/public goods and finally adding regulation to government seemed to nail it. Add there are a no. of market failures where the government has to intervene. Oh wait, not just market failures, the government has aided a lot of research and development and a no. of the successes of Silicon Valley (among others) are riding on it. She casts govt in a positive role and here I would like to read more. Overall, it was a fantastic read but a tough and dry one and a little polemical at times. But for that it would have been a perfect 5/5. I quote the author underneath :- "The greatest challenge : defining and measuring the collective contribution to wealth creation, so that value extraction is less able to pass for value creation. As we have seen, the idea that price determines value and that markets are best at determining prices has all sorts of nefarious consequences."

  25. 4 out of 5

    Ryan

    In The Value of Everything, economist Mariana Mazzucato invites readers to ask what creates value and urges them to accept that governments add value. Back in the day, some economists began to pick sides on what produces value. Mercantilists pointed to merchants. Quesnay pointed to agriculture because how can a person really create something? Only the planet can do that and merchants are just moving resources around. Adam Smith, meanwhile, looked at two pin factories. The one with specialized wor In The Value of Everything, economist Mariana Mazzucato invites readers to ask what creates value and urges them to accept that governments add value. Back in the day, some economists began to pick sides on what produces value. Mercantilists pointed to merchants. Quesnay pointed to agriculture because how can a person really create something? Only the planet can do that and merchants are just moving resources around. Adam Smith, meanwhile, looked at two pin factories. The one with specialized workers produced more pins than their competitors who produced what I guess we would today call artisanal pins. Because the factory with specialized workers produced more pins with the same number of workers and the same time spent, they were producing more value. Right? Today, our dominant narrative argues that value is created in the private sector, but Mazzucato argues that governments create value, too. To the humble citizen, however, it might not be so obvious that government does not create value. We’ve already seen three ways in which it does so: bailing out banks; investing in infrastructure, education and basic science; and funding radical innovative technologies which are transforming our lives. The crucial point is that many of these activities involve taking risks and investing--exactly what austerity doesn't do--and in so doing they create value. But the value is not easily visible for the simple reason that much of it goes into the pockets of the private sector. (241) Piketty recently pointed out that almost all of the wealth the economies create is going into the hands of the financial elite. It seems that these elites aren't creating value so much as hoarding wealth. In other words, they're living off rents. What can be done? The first thing, I suppose, is for people to let go of their pro-austerity/ anti-government narrative--or at least to add greater complexity to it. Tesla was started with government investment. If the government had kept some shares in that business, rather than only asking for the loan to be paid back, how much money would return to the public pocket? Rather than a shareholder economy, Mazzucato would have readers vote for governments that would pursue shared and stakeholder economies. A useful follow-up might be Michael Lewis's The Fifth Risk.

  26. 5 out of 5

    Kirti

    Value should be centric to economy. Rather than value generation due to the price that an activity or an object raises, it should be the price to be determined basis the value generated by that activity or object. This perspective is immediately needed to be adopted by the economists and the policy makers to differentiate clearly between value creation and value extraction. Rather than major part of economy being part of rent or price changing hands, it should be about producing the real value. Value should be centric to economy. Rather than value generation due to the price that an activity or an object raises, it should be the price to be determined basis the value generated by that activity or object. This perspective is immediately needed to be adopted by the economists and the policy makers to differentiate clearly between value creation and value extraction. Rather than major part of economy being part of rent or price changing hands, it should be about producing the real value. This book is a must read ! Mariana has a strong voice and very clear articulation of her idea of way forward economy, how it should shape up.

  27. 5 out of 5

    Sandeep Tammu

    This book encapsulates everything that is wrong with our current understanding of "value". Mariana argues that by connecting value directly to the price, we are letting ourselves exploited by rent-seekers. By this logic, an expensive Apple must be valuable not because it is nutritious but it is priced high. This book poses more questions than it can answer and that's a good thing. Full review here This book encapsulates everything that is wrong with our current understanding of "value". Mariana argues that by connecting value directly to the price, we are letting ourselves exploited by rent-seekers. By this logic, an expensive Apple must be valuable not because it is nutritious but it is priced high. This book poses more questions than it can answer and that's a good thing. Full review here

  28. 4 out of 5

    Janek

    Phenomenal book that encapsulates many years of groundbreaking research both strictly economic and more philosophical. Based on her work, Mariana Mazzucato might pave the way for real changes in Western Capitalism. I fully expect to see her as a Nobel Laureate one day!

  29. 5 out of 5

    Daphne

    I didn’t agree with everything (far from it!) and I thought there was some cherrypicking - e.g. pensions referred to as institutional investors when she thinks they are acting in a reprehensible manner, but as people’s pensions when they are acting responsibly. Still, some interesting ideas, a refreshing look at classic economic approaches and some food for thought on how we can make a fairer world.

  30. 4 out of 5

    Zoltan Pogatsa

    A fantastic summary of: 1) value theory in different schools of economics, 2) all the problems of GDP accounting. I especially liked how she problematizes 1) neoliberal notions of how the state produces no value, and how current gdp accounting is used to reinfirce this fale idea, 2) carework, and how it could be accounted for in GDP like renting and home ownership are, 3) how current R&D regimes halt medical advancement, 4) private sector startups like Tesla, and hkw they are aides crucially by t A fantastic summary of: 1) value theory in different schools of economics, 2) all the problems of GDP accounting. I especially liked how she problematizes 1) neoliberal notions of how the state produces no value, and how current gdp accounting is used to reinfirce this fale idea, 2) carework, and how it could be accounted for in GDP like renting and home ownership are, 3) how current R&D regimes halt medical advancement, 4) private sector startups like Tesla, and hkw they are aides crucially by the state. All in all, a must read i think.

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