The estimated reading time for this post is 6 Minutes

Introduction

Mariana Mazzucato’s book, The Value of Everything: Making and Taking in the Global Economy, explores the concept of value today, attempting to show how value extraction is now more commended than value creation. This book offers an insightful analysis of the economic value that is crucial in helping to reopen the debate on the value of everything. This read also sparks the ongoing discussions on the current state of capitalist economies and societies. The discussion on value is crucial, and this book is timely as the aspect of value pegs to everything around us simply because everything has a price in the market. I particularly find this book an essential read because it draws attention to addressing the core of the conversations on value as it is used in economics. Scarcity and preference as critical factors in attaching the price to an item; everything can fetch a price in the market according to its value. The discussions around the economics of value are vital to grasp, as illustrated by Mazzucato because they touch on every part of an individual’s life. Apart from a personal level where an individual can decide on value creation and extraction, there are more substantial levels where value extraction happens through patenting, government control, or high-priced innovative products. From this aspect, Mazzucato’s book emphasizes the role of social consensus in determining the value and price of an economy.

Book summary

The overall content in The Value of Everything: Making and Taking in the Global Economy provides a detailed argument that the current methods through which the society’s production, wealth, and value measures are significantly influenced by the need to the history of the evolution of the economics around output, wealth, and value. In the book, Mazzucato also points out that the systemic alterations of the rules and influences significantly widen the gap between income and wealth. The book also helps distinguish value creation and extraction as how human, intangible, and tangible resources are used to produce goods or services versus an individual moving existing resources and disproportionately gains from such a transaction without value creation. The closing discussion dwells on the economics of hope, focusing on various ways the state can recover some return on their taxpayer investments, which will help create value and restore hope.

Chapter 6 analysis

Chapter 6 primary focus is how the traditional corporations previously were dedicated to producing goods. In this chapter, Mazzucato illustrates the major problem as the firms’ focusing on short-run results at the expense of the more beneficial long-term possible outcomes. She also seeks to shed light on the innovation economy, questioning why the taxpayers have to be the ones to take the risk and foot the bill to whose benefits and compensation do not accrue to them. Mazzucato argues that the distribution of risk and rewards takes a distorted form that favors a few at the expense of many. This chapter concludes with a compelling exposure of the public disclosure necessary to provoke meaningful change in the economy. Mazzucato proposes that aspects such as patents should be viewed as an incentive to promote innovation rather than a right to limit the production of a given brilliant idea.

I agree with Mazzucato’s argument on the issue of risk versus reward in society because its effects are far-reaching than the leaders and corporates will seek to admit. The ideology promotes private wealth at the expense of the greater public good. It also provides an in-depth analysis of the evenness of the reward system for the economy is paramount because it influences various aspects such as affecting job performance and effort. The natural expectation of any employee or an individual in service to a given system is that they will receive more rewards proportionate with their input. Reward systems serve as one of the leading motivators to the system’s functioning. Contingent to the prize, such an individual is more likely to perform better or become demotivated. Also, a proper reward and risk system will improve attendance and retention. This aspect means that the citizens in an economy that serves them appropriately in tips have a higher possibility of maintaining their investments and innovations within their economy. This model will help ensure their commitment to growing their economy with the expectation that it will keep benefiting them as they invest more.

Additionally, I also agree with the argument that when institutions focus on short-term goals, they stand a chance to ruin the long-term plans, which would benefit the economy better and for the greater good of all sections of the economy. While making short-term goals is a significant aspect for the economy to ensure that the stakeholders evaluate their growth, it is also a disadvantage that a majority of the investors might not have faith in a system that disregards prospects. For the majority, sacrificing opportunities that would be more valuable to them as a long-term project can be an overwhelming affair that can provoke them to abandon, show less interest, kill motivation, and become less purposeful while undertaking the projects at stake. Mazzucato emphasizes keeping the long-term prospects in mind because it becomes easier to involve all the aspects of the economy by creating a sense of inclusivity and consideration.

On the issue of transition from a shareholder orientation to a stakeholder orientation, I agree that it is vital to consider because it will level the ground for which the workers in the organization’s system will enjoy more equitable participation in the distribution of monetary rewards. Also, being a stakeholder is more solid because such an individual does not focus on the appreciation or decline of the organization’s stock performance like a shareholder but instead has an interest in the company’s overall performance, which incorporates long-term projections. I also find this issue paramount because the significant benefit is to minimize income inequality in the economy.

Chapter 9 analysis

I think the suggestions for solutions presented in this chapter could effectively work considering the author’s problems in her book. Firstly, Mazzucato suggests that policymakers be encouraged to advocate and negotiate for public-private partnerships to ensure natural value creation. This aspect is possible and viable because it will promote purposeful investments and collaborations between these sectors devoid of sectionalized reward systems. Secondly, she advocates that patent law should be encouraged to foster more research instead of hindering competition and innovation. This solution will work because more competitiveness in the market will ensure that the participants focus on delivering quality to maintain business minding the sufficient competition. Thirdly, public investment should not limit traditional infrastructure projects but also green transformation. In this sense, the shift would encourage deliberate change for the entire system in the economy. Overall, I am convinced by Mazzucato’s argument; the bottom line is that vagueness has given room for particular actors in the economy to portray as value creators while they are moving the value around for their sole benefit. There are not enough discussions which Mazzucato’s rallies for equalization of incomes and consideration of sectors across the economy to benefit.

References

Szabó, D. (2020). Mariana Mazzucato – The value of everything: Making and taking in the global economy. Köz-gazdaság15(3), 256-259. https://doi.org/10.14267/retp2020.03.20

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