Financing risky science does not make the State an entrepreneur

This article reviews 'The Entrepreneurial State: Debunking public vs. private sector myths' by Mariana Mazzucato Mariana Mazzucato, a Professor of Innovation at the University of Sussex, has written a book that is an extended version of a 2011 NESTA report of the same name, in which she lays out a full-throated defence of bold, activist big-government centred innovation policy. The book presents itself as a contrarian truth-telling debunking of the idea of the State as a riskadverse loser-picking enterprise, which Mazzucato repeatedly attributes to ideological mythmaking. She is worried about the direction of public sector funding of basic science and mission oriented R&D, documenting a steady decline through time that is even more worrying for the retreat in corporate R&D (she largely focuses on the US, but her concern is equally with Europe: she is more impressed with Asia). And she proposes a number of suggestions by which to put things back on the right track, which she associates with the 1940s-60s compact between the military-industrial-academic complex that US President Eisenhower once warned about. One suggestion is to re-balance the risk-reward calculus of public investment by seeking income-contingent equity positions in the technologies that the state is involved in financing. Apparently we need this because the usual way the state recoups its R&D investments (through the tax system) doesn't really work because of widespread corporate tax avoidance. Mazzucato doesn't present any evidence, so your own priors will have to be your guide here. Maybe it's a good idea; maybe it's not.