By Mariana Mazzucato
Rethinking value creation and extraction
Subject
Themes
Economic value has become confused with price. Activities that merely extract wealth masquerade as wealth creation, enabling vast accumulation by a few while draining societal resources. This confusion stems from how modern economics defines value, allowing those who move existing assets around to claim the same status as those who create new goods and services.
Economic value has become confused with price. Activities that merely extract wealth masquerade as wealth creation, enabling vast accumulation by a few while draining societal resources. This confusion stems from how modern economics defines value, allowing those who move existing assets around to…
Mariana Mazzucato's intervention in debates about value theory arrives at a critical juncture for capitalism and economic thought. Published in 2018, the work responds to multiple crises: the 2008 financial collapse and its aftermath, escalating inequality reaching levels unseen since the Gilded…
Economic thought has long grappled with a fundamental question: which activities produce value, and which merely transfer it? This distinction creates what economists call the production boundary, an invisible line separating productive activities from unproductive ones. Inside this boundary lie the…
Finance has undergone a dramatic transformation from serving the real economy to becoming an end in itself. This process, known as financialisation, has fundamentally altered how capitalism operates. Where banks once primarily channelled savings into productive investment, financial institutions now…
The public sector has been systematically undervalued in modern economic thought and practice. This undervaluation stems partly from how government activities are measured in national accounts and partly from ideological assumptions about the relative efficiency of markets versus states. The…
Contemporary capitalism generates extreme concentrations of wealth that bear little relationship to productive contribution. In 2015, the combined wealth of the sixty-two richest individuals equalled that of the bottom half of humanity, some 3.5 billion people. This staggering inequality is not…
The late nineteenth century witnessed a fundamental transformation in economic thought that profoundly altered how value is understood and measured. The marginalist revolution displaced classical political economy's objective theories of value, which grounded worth in labour or production costs,…
Economic thought about value has evolved dramatically across centuries, with different schools placing the production boundary in radically different locations. The Mercantilists, dominant in sixteenth and seventeenth century Europe, equated wealth with precious metals accumulated through trade…
The late nineteenth century brought revolutionary changes to economic thought that fundamentally transformed how value is understood. The marginalist revolution displaced classical political economy's focus on production costs and labour with a new emphasis on individual preferences and subjective…
Gross Domestic Product, the primary measure of national economic performance, is not an objective fact discovered through measurement but a social convention reflecting particular theoretical assumptions about value. Understanding GDP requires examining its historical development and the choices…
Finance has transformed from a modest sector serving the real economy into a colossus dominating modern capitalism. This expansion reflects not proportional increases in productive contribution but rather changes in how financial activities are counted and valued, combined with institutional…
Casino capitalism describes an economic system where speculative financial activity dominates productive investment, with short-term trading and risk-taking replacing patient capital formation. This transformation reflects both changes within the financial sector itself and the spread of financial…
Financialisation extends far beyond the financial sector itself, penetrating deeply into how non-financial corporations operate and are managed. Manufacturing firms, technology companies, pharmaceutical businesses, and other real economy enterprises increasingly adopt financial logics, prioritising…
Innovation is celebrated as the engine of economic growth and prosperity, with entrepreneurs and technology firms credited as primary wealth creators. Yet this narrative obscures the collective foundations of innovation and enables extraction disguised as creation. Understanding value in the…
The public sector faces systematic undervaluation in contemporary economic thought and measurement, treated as inherently less productive than private enterprise despite crucial contributions to economic functioning and innovation. This undervaluation stems from measurement conventions that assess…
Transforming economies to prioritise genuine value creation over extraction requires rethinking fundamental assumptions about markets, government, innovation, and distribution. This involves reviving substantive debates about value theory, developing measurement frameworks that distinguish creation…
By Mariana Mazzucato
Subject
Themes
Economic value has become confused with price. Activities that merely extract wealth masquerade as wealth creation, enabling vast accumulation by a few while draining societal resources. This confusion stems from how modern economics defines value, allowing those who move existing assets around to claim the same status as those who create new goods and services.