Moveable Measures: Statistics of Production and Market Value Give a One-Eyed View of Economic Worth

By Tooze, Adam | New Statesman (1996), June 8, 2018 | Go to article overview

Moveable Measures: Statistics of Production and Market Value Give a One-Eyed View of Economic Worth


Tooze, Adam, New Statesman (1996)


The Value of Everything: Making and Taking in the Global Economy

Mariana Mazzucato

Allen Lane, 384pp. 20 [pounds sterling]

Mariana Mazzucato has made a name for herself as a vigorous opponent of laissez-faire ideology. In 2013, The Entrepreneurial State caught the mood of the moment with its call to recognise the role that government had played in the tech revolution. With The Value of Everything, her ambitions have widened further. Now Mazzucato calls for nothing less than a complete reconsideration of our system of economic values. Financialisation, corporate short-termism, the denigration of the public sector and the gigantic profits earned by tech monopolists all point to a warped system of valuation.

Mazzucato draws inspiration for her activism from two sources: on the one hand the heterodox economics of Karl Polanyi and on the other hand the democratic ambition of John F Kennedy. JFK inspires Mazzucato to call for the economy to be given a "new mission". Polanyi's analysis of the economy as a constructed social artefact makes this seem possible. If the market was made by the state then it can presumably be remade. The question, of course, is how. Unfortunately, the boldness of Mazzucato's vision and the brashness of her rhetoric are not matched by the depth or coherence of her answer to this basic question.

The inspirations she cites are telltale. For o a techno-optimist JFK is a natural hero. He did, after all, send America to the moon.

But what Kennedy did not do was to remake America's political economy. His successor, Johnson, did have a go at introducing an American welfare state. We know how limited that achievement turned out to be.

If Mazzucato wanted to find historical examples for more comprehensive socioeconomic reorganisation she might have looked to 1970s social democracy or the Scandinavian welfare states. But that would have involved trade unions and the ugly business of industrial struggle, neither of which feature prominently in her book. Rather than addressing the glaring power imbalances in the modern economy head on, Mazzucato insists that first we need to have a debate about the stories we tell about the economy and the systems of measurement and valuation they are based on.

Only a crude reductionist would argue that political narratives and systems of valuation do not matter. But it would be no less reductive to imagine that they matter on their own and not in combination with various other types of forces. No one will deny, for instance, that accounting rules and incentive schemes designed to force managers to maximise shareholder returns have had a dramatic effect on modern economic life. Likewise, if a cost of living index is used to adjust the level of pensions then the composition of that index warrants our closest attention. But Mazzucato's claim is both more general and more vague than this. She asserts that our entire system of values is out of whack, and to remedy this she thinks we need to review not the nitty-gritty of social and economic history, but the intellectual history of economics back to the 18th century.

The first part of Mazzucato's whistle-stop tour of value theories passes muster at a basic level. But when we get to the 20th century things get messier. Only hasty writing and poor editing can account for her mangled treatment of Keynes and the basics of value-added accounting. Nevertheless, if we ignore the howlers, the gist of the story is clear enough. Classical economics had a notion of production and value that drew a distinction between earned and unearned income. As Karl Marx and others showed, this could easily be turned into a fundamental critique of inequality and exploitation. It was not by accident, therefore, that classical value theory was displaced in the late 19th century. So-called subjective value theory conflated value with price as derived from the balance of demand and supply. …

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