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

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

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...

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Title:The Value of Everything: Making and Taking in the Global Economy
Author:Mariana Mazzucato
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Edition Language:English

The Value of Everything: Making and Taking in the Global Economy Reviews

  • 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."

  • 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").

  • 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.

  • Jesper Döpping

    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

    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.

  • 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.

  • 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.

  • 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.

  • 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.

  • 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.

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