Guest Editorial > “The Entrepreneurial State – Debunking Public vs. Private Sector Myths”, by Mariana Mazzucato
“The Entrepreneurial State – Debunking Public vs. Private Sector Myths”, by Mariana Mazzucato | Roger Steer
This important book deals with a topic of central concern to all NHS leaders today. Yet there is a big surprise lurking in the undergrowth, as Roger Steer artfully illustrates in this excellent review.
Nobody working at a senior level in the NHS will reject the message of this book that the state has a crucial role in leading innovation, growth and prosperity. Most will be aware of how important the debates have been over the years on the extent and confidence with which this role was played out. From the debates about Britain’s comparatively poor economic performance versus the French, German and Japanese to the role of National Enterprise Boards, National Investment Banks and how best to use the receipts from North Sea Oil to more recent debates about how to rebalance the economy away from a reliance on financial services and estate agency, the proper role of the state is the key subject.
Although Mazzucato as an economist provides a brief review of past economic debates, quotes Keynes approvingly, and Polyani’s ‘The Great Transformation’, and provides examples of where the state has stepped in across the world to lead nations to a more developed and prosperous outcome, her intention is to energise those in the UK who have lost confidence in the state as an economic actor, to remind them of the state’s role in recent examples of economic success and the real motors for that success, and to encourage a more interventionist attitude.
The implications for the NHS are obvious but what has elevated this book to discussion at the top table – the Financial Time’s Martin Wolf has reviewed the book approvingly in the last week? How is it possible that the messages of the book, which are not very much different to any ‘socialist’ tract published over the years, can now be taken seriously? The answer is that her team of researchers have looked at Apple and the pharmaceutical industry with a forensic eye and looked at the reality of US trade policy rather than listened to the rhetoric from the propagandists.
The shocking surprise is that every one of the dozen or so technological discoveries and innovations incorporated in the i-pad, i-phone and i-pod were made in state-sponsored institutions and it wasn’t venture capitalists or entrepreneurial individuals or firms that stood behind Apple but the US military, the US government and for good measure the EU and other national governments. Everyone knew that the Space Programme had spin offs but it turns out that Silicon Valley was the biggest spin off of all.
The pharmaceutical (or biotech) industry also turns out to be the beneficiary of state largesse. Three-quarters of the new molecular biopharmaceutical entities owe their creation to publicly-funded laboratories. In the past ten years the top ten companies in this industry have made more in profits than the rest of the Fortune 500 companies combined. The book goes on to discuss the rapidly burgeoning green energy sector and how governments are seeking to position their industries as leaders in this field (or not in the case of the UK).
As asides to the main thrust, short shrift is given to the contributions of the venture capitalists and senior executives who have enriched themselves in the transition from scientific invention within state institutions to the market place. Tribute is paid to Steve Jobs but mainly for ignoring the demands of the market and focussing on his long-term vision of products.
Overall it is a most enjoyable book. It is written in somewhat of a breathless style reflecting the surprise and urgency the author evidently felt and wishes to generate. We will have to wait and see whether the implications are absorbed and acted upon.
For the NHS however there is much to ponder in the quotes and references. I was struck by the quote on page 6, ‘Indeed, when not confident the state will get “captured” and bow to private interests. When not taking a leading role the state becomes a poor imitator of private sector behaviours, rather than a real alternative. And the usual criticisms of the state as slow and bureaucratic are more likely in countries that sideline it to play a purely ‘administrative’ role’, or on p19, ‘it has responded to criticism by becoming vulnerable and timid, easily “captured” by lobbies seeking public resources and private gain, or by pundits that parrot the “myth “about the origins of economic dynamism’.
Who would argue that the leadership of the NHS has not been captured and that it has lost confidence in developing its role to support the needs of patients and its stakeholders. Sadly its senior executives queue up to sell off their contacts and inside tracks to future juicy contracts which may appear to offer short-term benefits to governments but which often, but not always, turn out to be long-term costs to the taxpayer.
Hopefully this book may bolster a future leadership made of sterner stuff.
Roger Steer is Executive Director of Healthcare Audit
“The Entrepreneurial State – Debunking Public vs. Private Sector Myths” by Mariana Mazzucato, published by Anthem Press, London 2013, £14.95