Capitalism’s Greatest Weakness?
Article

Capitalism’s Greatest Weakness?

It confuses price with value

Mariana Mazzucato
World Economic Forum, 2018
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Editorial Rating

8

Qualities

  • Controversial
  • Analytical
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Recommendation

Does the CEO of a big tech company add more value to the economy than a teacher or a politician? Most people would say yes, and the reason hinges on the price-centric nature of today’s economic mind-set. Workers such as nurses and bureaucrats aren’t viewed as economic stimulators, even though the economy would certainly be worse off without them. Professor Mariana Mazzucato says that it’s time to view these engines of capitalism in a different light. getAbstract recommends this thought-provoking article for its alternative view of what makes capitalism tick.

Summary

The Great Recession turned a spotlight on the adverse impacts of risk taking and speculation. Yet still today, a system that backs the speculative use of financial assets over investments that create jobs remains deep-rooted. While some believe that discrete reforms – for example, discouraging the corporate fixation on quarterly results and reining in exorbitant executive salaries – could help change that mind-set, the crux of real reform lies in examining what creates value. 

Economic theory once held that the value of a product or service dictated...

About the Author

Mariana Mazzucato is a professor of economics at University College London.

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