The Value of Everything

Something is amiss in our economies when the finance sector is allowed to contribute to the GDP even though it's simply pushing money around. Mazzucato's book is a call to reevaluate what counts as economic value and where we draw the line between value creation and value extraction when it comes to measuring economical growth.

At the root of the evil is a financial market driven by share-holder-optimization, which makes financial gain for investors the only goal of companies. Instead of re-investing profit into R&D or improving of worker conditions, big companies are using the profit to buy back shares. All the ratios (CEO to median worker) and values are off, and it would require a whole new set of policies to encourage long-term planning vs short-term gains.

Mazzucato also makes it her mission to discredit the assumption that government and public spending is inherently bad for the economy, and that less taxes would result in a more prosperous private industry. States investing in health, education and research are a highly influential instigator of economic growth. Yet governments should have a stricter hand on what happens with the result of publicly funded research. Pharmacy companies shouldn't be allowed to drive up prices to ridiculous heights when their products are based on early public funding. Instead of searching for tax loopholes, tech companies should re-contribute part of their wealth considering innovations like the internet or GPS came from public money.


You'd think economics is a straight forward science based on numbers, but this book definitely proves its not. So this was very fascinating, even if it was sometimes a bit too dense for me. Especially the first 2 chapters had too much dry historical content. But as I am new to the topic, it was also pretty enlightening, introducing me to terms like rent-seeking (growing wealth without re-contributing value, like licensing or patents).