Reading ➾ The Value of Everything: Making and Taking in the Global Economy Author Mariana Mazzucato – Rvtrek.info

The Value of Everything: Making and Taking in the Global Economy Modern Economies Reward Activities That Extract Value Rather Than Create It This Must Change To Insure A Capitalism That Works For Us AllIn This Scathing Indictment Of Our Current Global Financial System, The Value Of Everything Rigorously Scrutinizes The Way In Which Economic Value Has Been Determined And Reveals How The Difference Between Value Creation And Value Extraction Has Become Increasingly Blurry Mariana Mazzucato Argues That This Blurriness Allowed Certain Actors In The Economy To Portray Themselves As Value Creators, While In Reality They Were Just Moving Existing Value Around Or, Even Worse, Destroying ItThe Book Uses Case Studies From Silicon Valley To The Financial Sector To Big Pharma To Show How The Foggy Notions Of Value Create Confusion Between Rents And Profits, A Difference That Distorts The Measurements Of Growth And GDPThe Lesson Here Is Urgent And Sobering To Rescue Our Economy From The Next, Inevitable Crisis And To Foster Long Term Economic Growth, We Will Need To Rethink Capitalism, Rethink The Role Of Public Policy And The Importance Of The Public Sector, And Redefine How We Measure Value In Our Society I wanted to like this book I thought that Mazzucato had her heart in the right place I kept hoping that she was going to deliver a new theory of value that was going take us into value s Copernican universe so that both the old discredited labor theory of value and the Neoclassical idea that value is a function of demand would look like the Ptolemaic epicycles of value theory But she didn t She seems to be saying that value is a function of overall social utility Fair enough But then she d I wanted to like this book I thought that Mazzucato had her heart in the right place I kept hoping that she was going to deliver a new theory of value that was going take us into value s Copernican universe so that both the old discredited labor theory of value and the Neoclassical idea that value is a function of demand would look like the Ptolemaic epicycles of value theory But she didn t She seems to be saying that value is a function of overall social utility Fair enough But then she doesn t tell us how to measure or maximize value Maybe that s because this is a popular book that can t have formulas or math, but I suspect that it is because her theory is not fully formed, because all we get from her is a pile of anecdotes where others claim to create or measure value but clearly fail to do so.Her main attack on Neoclassical value theory seems to be that price does not reflect value But when I was taught Neoclassical economics in college, nobody ever claimed that prices are true reflections of value There are too many market distorting forces at play for that to ever be true except in a few simple cases Value is a function of demand Most products for which there is demand have a price The price is driven at least in part by demand, but price and demand are not the same thing, though you wouldn t know that from reading this book or some of the other reviews.I strongly agree with her criticism of the finance business as being largely parasitic and not the value and wealth creator that it claims to be I am afraid that my own business of law is also often parasitic and too often only extracts value without contributing to it But that doesn t mean that finance or law are without value, only that that are not the value creators that they claim to be and that in a fairerperfect world financiers and lawyers would get smaller rewards that would compensate only for the value that they actually add.I also agree with her concept that corporations should be refocused away from the concept of maximizing shareholder value to a broader concept of enhancing value for all stakeholders The rewards for society as a whole in the long run would far exceed what the present system delivers.So Mazzucato is doing God s work in the results that she aims for I just wish that she could have delivered a stronger theoretical underpinning A must read for finance people and economists This is an excellent history of bad ideas and theories in economics Most especially, about how the government got removed and discounted as a creator of value In fact, government investments create much of the value that the market uses and builds upon When people think about government investments, they think about Solyndra Mazzucato asks us to consider Tesla and the smartphone and the internet and all of the foundational modern technologies an A must read for finance people and economists This is an excellent history of bad ideas and theories in economics Most especially, about how the government got removed and discounted as a creator of value In fact, government investments create much of the value that the market uses and builds upon When people think about government investments, they think about Solyndra Mazzucato asks us to consider Tesla and the smartphone and the internet and all of the foundational modern technologies and companies that began with government grants and investments Mazzucato s observations and conclusions won t surprise readers who ve readthan one or two works of contemporary critical theory But the fact that she is writing in a different register and for a largely different audience matters a great deal in this case, and I found the book very rewarding and even rather moving in her concluding call for an economics of hope. Capitalism has a problem and that is to confuse price with value So not only we think a 6 apple must be nicer than a 2 one, we also think that someone earning 100k must be better than one earning 60k etc Firms are also told to only maximise shareholder returns a.k.a ever lower Price earning ratios , so they dutifully increase revenue raise price , cut costs outsource and sack staff To boost stock price, they also buy back shares to decrease the number of outstanding stocks Not onl Capitalism has a problem and that is to confuse price with value So not only we think a 6 apple must be nicer than a 2 one, we also think that someone earning 100k must be better than one earning 60k etc Firms are also told to only maximise shareholder returns a.k.a ever lower Price earning ratios , so they dutifully increase revenue raise price , cut costs outsource and sack staff To boost stock price, they also buy back shares to decrease the number of outstanding stocks Not only that makes workers suffer, increase inequality, but also decreases long term investment That is because CEOs are rewarded with stock options and their performance is mostly based on stock price Pharmaceutical companies charge enormous prices for new drugs She wrote that historically, economists separate productive vs rent seeking unproductive activity According to the author finance is mostly unproductive activity Corporate raiders buy companies with debt that was saddled on the very companies that were bought, and make quick profits while workers are laid off Venture capitalists make enormous profits on companies built on government research like GPS and internet both built by the military Mazzucato also attacked the calculation of GDP, that it reflects not value but price So we can boost our GDP instantly if we just pay each other to cook and clean our house, even if the amount of work done is the same and the net amount of money that changed hands is zero Lastly, government has been put down as only the distributors of economic output, not generator of it So government has been asked to step aside, to just provide some protection and order, and build some roads so that real private wealth generators can do their thing The IMF and World Bank actually push this agenda to developing countries, asking them to sell almost everything to the private sector, and outsource essential services This leads to higher cost, worse service and for the government to pick up the tab when private providers go bankrupt Mazzucato suggested that we need to look at real Value, and that involves all the stakeholders She does not have the solution yet but we need to start that conversation She does have some suggestions 1 Financial transaction tax to favour long term investment 2 Grant fewer parents upstream so there isopen access 3 Limit what pharmaceutical companies can charge4 Any government support being conditioned on actual investment and not share buy back 5 Tax big tech companiessince they benefited from government basic research This is a thought provoking book, with very good ideas However, finance workers are certainly important our insurance, pension funds, and sovereign funds all depend on those guys to help us grow our money The stock market exists to encourage IPOs and thus innovation backed by VCs since they can then make profits by investing in start ups It is also very hard to determine the value of something if we cannot rely on its price who will decide then A committee That would be communism And some government services are really inefficient Nonetheless I am very inspired by this book because it really challenges many of my assumptions about the economy

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