What makes smart, equitable, and innovation-led economic growth possible? Very few Canadians would answer, “A more active role for government.”
We’ve been told that innovation is the work of bold entrepreneurs and venture capitalists. Governments are regulators, too timid and slow by design. They should simply get out of the way.
Stories about the dynamic, competitive private sector and the lethargic, bureaucratic public sector have shaped our perceptions and dominated our civic conversations for decades. There is a growing body of evidence, however, that challenges these perceptions. It posits a different narrative about who deserves credit for innovation and to be rewarded for taking well-calculated risks. It casts government in the role of courageous investor and deliverer of more equitable returns. It raises our expectations of the public sector instead of dampening them.
U.K. economist Mariana Mazzucato is a leader in the field of challengers to the traditional narrative. She holds the RM Phillips Chair in the Economics of Innovation in the Science Policy Research Unit at the University of Sussex. Her latest book, The Entrepreneurial State: Debunking Private vs. Public Sector Myths, focuses on new frameworks for understanding the role of government in economic growth, innovation, and financial markets.
Mazzucato’s research reveals the significant role that governments have played in some of the biggest breakthroughs in the past half-century, shaping and creating new markets in which businesses thrive today—from the Internet to information technology (IT), from bio and nano to green technology. It also shows how the risks associated with innovation are socialized while the rewards are privatized.
“Ignoring the key role of the state—or the taxpayer—in wealth creation,” Mazzucato argues, “has been a lead cause of inequality, allowing some (hyped up) actors to reap a rate of return way beyond their actual contribution.” This conclusion is a starting point for a very different conversation about what Canadians can expect from their governments—one that considers the appropriate balance between driving and supporting innovation, picking market winners and fixing failures, and taking and benefiting from risk.
This conversation starter aims to challenge inaccurate or incomplete perceptions about public investment in innovation. It also aims to engage a wide cross-section of Canadians—leading citizens, businesses, policymakers, academics, and everyone who cares about the country’s future—in asking questions about the kind of government we need for the kind of economic growth we want in the first half of this century. It assumes that the current levels of income and wealth inequality are unacceptable, and that a more active role for government is required to reduce them.
If you are reading this document from your iPhone or found it through a Google search, you can thank the enterprising government investors who came alongside others to make these innovations possible.
If you, too, want more courageous bets like these, but you want more from them next time, read on to learn what we have to do.
‘More Courageous Bets and Equitable Returns: Challenging Perceptions about Public Investment in Innovation’ is licensed under CC BY-NC 4.0
