INNOVATION AUGUST 20, 2013
Even liberal politicians are loath to admit that the government plays a leading role in the economy. But it absolutely does, and has done so since World War II. The propensity to deny government’s role—a legacy of America’s anti-statist revolution and frontier past—has hampered efforts to improve the way government does intervene in the economy. Quietly, however, some economic theorists and policy experts have attempted to explain government’s role and to shape the debate. Here are three worth paying attention to.
Robert Atkinson: Atkinson was a veteran of Congress’s Office of Technology Assessment, an invaluable Capitol Hill think tank that Newt Gingrich’s Republican majority shut down in 1996. In 2006, he founded the Innovation Technology and Information Foundation in Washington, which is the foremost proponent for what is now called “innovation strategy.” His latest book, Innovation Economics, was written with Stephen J. Ezell. Much of Atkinson and ITIF’s focus has urging federal spending on science and technology to make American manufacturing more competitive. ITIF publishes a State New Economy Index that rates states on their use of information technology in manufacturing. Atkinson and ITIF’s brief on Fifty Ways to Leave Your Competitiveness Woes Behind helped inspire the Obama administration’s proposal for a National Network for Manufacturing Innovation, which ITIF debuted at a forum in its downtown office in December 2012.
Fred Block: Block, a former colleague of mine on the wonderfully named Socialist Revolution, is a professor of sociology at the University of California at Davis. Fred has authored numerous essays and books about what he calls the “invisible hand of government.” A good place to start is his essay, “Swimming against the Current: the Rise of a Hidden Development State in the United States,” which appeared in Politics & Society in 2008. Block writes:
Like the purloined letter, the hidden developmental state is hidden in plain view.
But it has been rendered invisible by the success of market fundamentalist ideology. Since that ideology insists that the private sector is efficient and dynamic while the state is wasteful and unproductive, there is simply no conceptual space for the idea that government plays a critical role in maintaining and expanding the private sector’s dynamism.
Recently, he and Matthew R. Keller edited a book, State of Innovation: the U.S. Government’s Role in Technology Development.
Mariana Mazzucato: Mazzucato, a professor in Science and Technology Policy at the University of Sussex, is far better known in Europe than in the United States, but her new book, The Entrepreneurial State, takes the United States as its model of how government quietly serves as a source of innovation. Invoking the work of Joseph Schumpeter, Mazzucato argues that government needs to play the role not simply of a backstop to the failures of private capitalism, but of an entrepreneur, promoting innovations that private corporations are unwilling to undertake because of their risk. The state can invest where what economist Frank Knight called “uncertainty” still prevails. Writes Mazzucato:
Public sector funding often ends up doing much more than fixing market failures. By being more willing to engage in the world of Knightian uncertainty, investing in early stage technology development, the public sector can in fact create new products and related markets. Two examples include its role in dreaming up the possibility of the Internet or nanotech when the terms did not even exist. By envisioning new spaces, creating new ‘missions,’ the State leads the growth process rather than just incentivizing or stabilizing it.