Mariana Mazzucato is making waves these days.
The 49-year-old University of London economist has just published a new book, The Value of Everything, which calls for a rethink of public policy and a return to State investments of the sort that helped to spark great waves of innovation across the private sector in the years after the Second World War.
She has also been advising the Scottish government on its plan to launch a new National Investment Bank, with almost £350m (€396m) in initial public capital and the aim to pump a total of £2bn in strategic investments in innovative companies.
Ms Mazzucato was born in Italy but spent much of her youth at Princeton, the Ivy League university where her father was employed as a nuclear scientist, befriending the maths genius, John Nash.
Around the millennium, she completed a doctorate on technological change in the US auto industry.
Her thinking has since been heavily influenced by the events of 2008. She came to dismiss the commonly held view that more lean, competitive economies would emerge from the wreckage of the crash.
Her core idea is that it is the state that has through investments in projects such as the space programme and alternative energy which helped to foster innovations such as semi-conductors, and the internet.
As Ms Mazzucato sees it, many of today’s technology titans have scooped the pool, feeding off massive public investment while giving little back.
As she told the Financial Times, three years ago, “Government has invested in basis research, in applied research, in companies like Tesla, all the way downstream”.
Silicon Valley, America’s great tech hub, owes much to the work of DARPA, the Defence Allied Research Projects Agency, while the National Institute of Health helped to spark the rise of much of the US pharmaceutical industry, an industry which today cashes in heavily on the drugs it has patented.
Sadly, the value of these taxpayer-funded investments have been captured by free-riding entrepreneurs. To
add insult to injury, many of the nascent monopolists of Silicon Valley have proved all too adept at minimising their tax bills.
Ireland has benefited from this international tax avoidance, but there are signs that we have reached “peak arbitrage”, with governments much more alert to lost corporate revenues.
Mazzucato is strikingly dismissive of the idea of big business as intrepid risk takers, as lions who must not be caged by regulations or by levies.
As she sees it, top managers — the hired hands who run these businesses — are obsessed with cutting costs and engineering share buybacks which please shareholders and fatten their own wallets.
In the process, research and development is neglected leading to a loss of future growth in productivity.
“The private sector all too often is financialised and parasitic...The State should be doing far more to strike deals with the private sector players benefiting from publicly funded research, the US government should have negotiated a share of the upside from helping to invent Google’s algorithm -- this would have financed an innovation fund to create the next round of Googles.”
In a recent interview with the Spectator magazine, she made the iconoclastic suggestion that “we should also go back to the old fashioned tax system — the top rate used to be 90%, that’s always an option”.
However, she has also criticised the European Left for its focus on the extraction of wealth rather than on new forms of value creation.
She contends that if the State can once again back innovative projects and this time round, succeed in capturing the benefits for the citizenry, there will not be the need for the heavy income taxation that characterised and arguably blighted economies in the 1960s and 1970s.
All the evidence suggests that a resort to heavy levels of income taxation would only serve to hamper entrepreneurship while forcing wealth creators and much of their assets overseas.
The task of extracting a fair contribution from the rich should not be shirked, but globalisation and the opening up of financial markets and the rise of new economic powers has made this an altogether more complicated activity.
Ms Mazzucato’s ideas now have greater traction than was the case a few years back when the Facebooks of this world appeared immune to criticism and most of us — led by the likes of Barack Obama — were pretty infatuated with the technology companies.
Her ideas dovetail with those of other radical thinkers such as the French economist, Thomas Piketty who has highlighted the way disparities in global wealth have grown again since the 1980s.
The big question mark over her grand idea — that of the State as catalyst for innovation — is arguably this: Do our public institutions have the inbuilt capacity in the form of dedicated managers to fulfil the transformative role envisaged?
In the post-war years, across Europe, we were fortunate enough to have public officials with real energy and vision.
These days, with so many of their would be successors being drawn to the fleshpots of a greatly expanded and far better rewarded private sector, one has to wonder how the necessary talent can be fostered and retained.
Ms Mazzucato has laid out a beguiling vision, but perhaps it is a vision of a golden past in which people — their attitudes forged by the communal experience of wartime — dedicated their lives to the common good.
Will it be possible to restore such a sense of communal purpose to a public sector which, in many areas, has been drained of purpose and deprived of a real innovative risk taking spirit ?