10 - How Does the State Shape Innovation? How Should It?

Summary

Just as we would be remiss to skip past a discussion of the role of entrepreneurs in innovation, we would be remiss to skip over the role of the state. In this chapter, we move through three starkly different visions of what role government ought to play in bringing about innovation in the economy. The first paper discussed, by Acemoglu & Robinson, suggests that the state actually plays a key role in creating the institutions that make innovation worthwhile. The second reading, a set of chapters from a book by Mazzucato, argues that this institution-oriented view is too limited, provides evidence of how ‘entrepreneurial states’ can also work to develop innovations, and suggests that this implies a state that is much more active in investing in and directing innovation. The third reading turns up this argument further, arguing that the urgency of the global climate crisis and the vast economic reorganization that it demands means that the state should not just be more active in investing and directing: the crisis, it argues, can only be solved by a complete socialization of the economy, by the state actively managing innovation and production.