Modern Public Management GPP 506

November 9, 2017

Diego A. Bastidas Chasing

The Entrepreneurial State Book Analysis

Since its founding fathers, the

United States has always been
torn between two traditions, the
activist policies of Alexander
Hamilton (1755-1804) and Thomas
Jeffersons (1743- 1826) maxim
that the government that govern
least, governs best. With time
and usual American pragmatism,
this rivalry has been resolved by
putting the Jeffersonians in charge
of the rhetoric and the
Hamiltonians in charge of policy
(Erik Reinert)

A) Introduction. -

This paper will sum the main ideas contain in professor Mazzucato books The

Entrepreneurial State, and it will be developed trough three sections: Is the

State the problem or the solution, a summary of the Entrepreneurial State

paradigm, and finally made some conclusion regarding my position as a future

policy maker.

B) Is the State the problem or the solution?

Historically, the State purpose has been under big discussions in the different

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social realms. Among the political forces there has been a big struggle for

increase or decrease the State role in the social life. Conservative forces have

struggle for a minimum size State restricted just for given security to its citizens

and enforcement of the laws. As contrast, the reformist forces have struggle for

strong State capable to protect their citizens since the birth until their deaths.

According to the Liberals the State has to be provide basic goods and act in

relation to a procedural notion of Justice (Rawls, 2013). The anarchy-capitalist

scholars have developed the primacy of markets instead of any other social

instance, so that the State has to work for improving the functioning of those

markets (Nozick, 1995). The Marxist tradition has divide between Leninist

approach whereas the State is just the Executive Committee of Ruling Elites

interests and rights (Lenin, 1917), on the other hand more critical perspectives

saying the State is the result of force correlations within a Society (Gramsci,

2011; Jessop, 2016).

During the 80s, this debate was appropriate sum in the famous Ronald Reagan

rhetoric in the sense that the Government it will be always the problem, and

never part of the solution. Underlying this notion supposedly the countries has to

shift from a post war welfare policy (interventionist State) to the absolutism of

the free markets. In spite of the rhetoric use by Reagan his policies were always

interventionist in support of USA capitalist historical cycles, expanding military

budget and their big corporations interests around the world.

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In these sense, Canadian scholars Leo Patnich and Sam Gindin has shown with

strong historical evidence how the State has been always the backbone for the

development of US capitalism during the last 300 years (Patnich, 2013). Beyond

from being a stranger paradigm to US reality the interventionist and

protectionist State idea has been the most American genuine paradigm. For

example, since the Jefferson government it was inaugurated the idea of the

protectionist policy in order to granted the development of the infant industry.

The Entrepreneurial State paradigm could be situated among this historical

and theoretical debates regarding how to conceive a State in front of society

needs. I think the most accurate expression to describe how really works and

should work the State came from the Gramscian reflection of this phenomenon.

Gramsci idea of the State pointed out that the State it is the result of the

correlation of force in between the Civil Society and Political Society. In these

sense, it is more usefully to analyze the State role from a complex approach were

the State could be a mix of problem and solution depending of material historical

conditions. A direct consequence of this paradigm is to debunking the public vs

private sector frontiers.

Mazzucato sum very well this debate stating it is necessary to build a theory of

the States role in shaping and creating markets- more in line with the work of

Karl Polanyi (1944) who emphasized how the capitalist market has from the start

been heavily shaped by State actions.

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 C) The Entrepreneurial State paradigm. -

Professor Mazzucato research evidence how the State has been the catalyst for

huge leaps in the economics realms. Under the State leadership during the 20 th

century the world has seen as possible the Digital Age Revolution innovation. It

was the result of an intentional from policy makers levers projects such as

Internet, information technologies advances, pharmaceutical improving, and so

on.

The idea behind to conceive a State as a key factor pushing the boundaries of the

knowledge and innovation at the economical levels is related to a historical

perspective within the Capitalism evolution. After the stabilization of the liberal

political system in western democracies there were the enough political space

for govern the political power in direction to what the nation states and their

markets need.

Mazzucato thesis argue base on the cases evidence during 20 th century how the

US state it was the leadership of the technological leap in every single case they

intervened. The State was not only a political entity capable to just fix markets

problems, but the mastermind and visionary behind the concepts, ideas, policies

and implementation of these innovative creations. There is a necessity for

recovering at the rhetoric level all this social effort. Despite this necessity even

the most conservatives statespersons (e.g. Reagan, etc.) meanwhile in public

they defend a minimum state paradigm in their deep policy work they

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implemented and funding an interventionist State at their strategical economics

priorities.

The Entrepreneurial States conception were the State performs a protagonist

role for the creation of new markets, new production dynamics, and explorer of

the unknown territories for the innovation. Taking the US State role in the

economy in the 60s and 70s specially we have seen how the inventions like the

iPhone, Internet, Siri, GPS, are related to those years states policies and

interventions in the economy through government projects like ARPANET,

NAVSTAR. Even nowadays the same dynamics is replying in the renewable

energies realms were funding granted by US Department of Energy is giving the

opportunity for corporations to develop the technology and also to having a

market for its inventions and products.

Mazzucato proposal for understanding the Entrepreneurial State idea is a State

() able to take risks and create a highly networked system of actors that

harness the best of the private sector for the national good over a medium- to

long- term time horizon. It is the State acting as lead investor and catalyst which

sparks the network to act and spread knowledge. The State can and does act as

creator, not just facilitator, of the knowledge economy (Mazzucato, 2017). This

idea requires to policy makers and scholars to think in terms of innovation and

creative ways for discovering the unknown. The old common places belonging to

classical State theory does not will help to given answers to the new challenges

that humankind and planet are facing.

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For future policy makers and scholars, the Entrepreneurial State paradigm

implies the necessity for answering questions related to how build a more

vibrant public private ecosystem, or how to governs the markets in an efficiently

and equity way, how to evaluate the risk and investments policies made it at the

innovation territory, issues regarding to creating consent at public opinion for

supporting this kind of policies.

D) Yachay project as an Ecuadorian Entrepreneurial State experience.-

In this last section I would like to make some reflections about how the

experience of implementing the Entrepreneurial State paradigm in Ecuador has

been a novelty scenario for our society in understanding the nature and

challenges of the Government role within Society. During the last 20 years Latin

American has live a wage of progressive governments which basically has

working for redistribute the wealth and empowering traditionally marginalized

social groups, and at the same time trying to modernize our countries. Ecuador

has been part of that historical process trough Rafael Correa government.

One of the strategical investment during Correas government it was the

education and social budget, specifically in research and development.

Therefore, one policy decision it was to create the city of knowledge Yachay

Tech, which consist in the creation of an University devoted to high technology

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development and research, and to create an innovation hub alongside with the

productive sector both domestic and at international level. The project has called

the Silicon Valley of the Andes.

Yachay project were designated during 2012 and 2013 by a group of

international scientific under the leadership of Ecuadors Ministry of Science

and Technology (SENESCYT). The project has the main goals to educate young

people in engineering and sciences, and to connect with productive sector in

order to promote the innovation required by Digital Era and Knowledge

Economy. The public investment it has been around $1000 millions dollars for

funding this project during the last five years.

During the inauguration day speech Director of SENESCYT Rene Ramirez argue

that this project its vital for Ecuador entry in a smart way to the Digital Era or

the cognitive capitalism Age where the Knowledge it is the most important assets

for a society. The necessity of Ecuador to create social innovation relates with

our critical necessity as well to improve our productivity and production system.

Ramirez explain how historically the biggest problem of Ecuador has been its

cognitive dependency due to its lacks of investment in building a strong national

intelligentsia. Finally, he summary that Yachay project will work as the social

space were joint together the University, Private sector, social actors, and the

Entrepreneurial State will work together for building a society base on

innovation and knowledge.

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Under Mazzucato explanation Yachay has the purpose to become the greater

catalyst of State creating new technologies and applications far away trough just

funding basic sciences and infrastructure or the classical liberal approach of a fix

markets failure. After its creation things has been a mix of unmet promise and

low time response from key stakeholders around this project. From a systemic

perspective there is a big challenge around this project laid in the instability of

political institutions in Ecuador. I would like to argue from this last issue.

I believe that in spite of professor Mazzucato doing a great analysis of how

historical evidence shows that has exist an Entrepreneurial State behind the

greater Digital Age inventions, there is a lack of power relations analysis from a

World-System approach. The thesis of the book assumption is mainly developed

for a particular political structure such the US or some others Global North

countries, rather than for a other political context such as Ecuador. In the

Ecuadorian case there is lots of structural restrictions both domestic and

international for moving forward ambitious conception of a State as driver of the

innovation at digital and technological inventions.

In these line, Mazzucato does not give some approach of how this paradigm

could be implemented by a Global South society under currently World-System

situation. For instance, there is myriads of external restrictions (e.g. patents) for

a societies like Ecuador to access to the knowledge and advance technological

inventions produce at Global North social actors. There is a new international

division of Labor were some countries have situated at the technological frontier

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and beyond, and some others have become cognitive dependency on the first.

This order of ideas requires a strong and innovative reflection in terms of

political economy and from a power relations analysis to trying to giving answers

to alternative envelopment agendas coming from the South, which Mazzucato

books is totally absent.

The idea of the Entrepreneurial State in Ecuador at domestic level has faced also

difficulties to be adopt for the main political actors across the political spectrum.

Paradoxically, the biggest adversaries of Yachay project, for instance, has been

the center- right and right wing political parties. The Ecuadorian right-wing

spectrum still argue in behalf of lest Government, and promoting the markets

as the main drivers of the economical and productive life. This has make very

difficult to the government to persuade the society of the importance of this kind

of State intervention and leadership at the economic level. In addition, the main

economical elites does not seem Yachay project as a positive idea and policy

mainly because are economical actors predominantly imports economy base

dependent.

There are some financial barriers for a country like Ecuador to promote this

interesting paradigm because of the risk involved on the implementation of the

idea. As Mazzucato explain well there is not certainty of a return in terms of

financial results or a social achievements when the Entrepreneurial State is

trying to pushing the boundaries of the innovation and production system. I am

thinking also in the rigid legal and institutional frameworks that regulate

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government spending which make also risky for politician and policy makers to

take this kind decisions.

E) Conclusions.-

Alongside this paper its clear that there is no doubt what importance does have

the democratic and constitutional State for the advanced and progress of any

contemporaries society. Historically the categorization around what the State

nature is and for what social purpose is conceive has been a vibrant debate

between conservative and reformist forces. However, it is clear that in modern

western societies the most effective way to analyze this topic is that notion were

the State is just the result of social forces interaction within a Society in a

historically particular context. Therefore, the State rather to being an idea of

ideological extremism (leftist or right political spectrum) is just a sort kind of

social tool.

Professor Mazzucato thesis has evidence the role that a strong Government

interventions has result in the advance of the human flourish trough

technological inventions. In spite of this facts there still needs to developing a

conceptual and practical tools for reshape the Government classical functions in

the realm of the entrepreneurial and innovation within the core of production

system. In this sense the State studies and public policy paradigms has to been

situated under the new historical momentum that humankind is living know as

the Digital Age were the symbiotic work between public and private sector

looking for granted the common good rather to be a fashionable issue, it is a

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point of survival for any democratic society.

At the Ecuadorian experience level the experience in applying the

Entrepreneurial State paradigm has been ambivalent. It has been an historical

political decision and discursive one taken by President Correa government to

invite the society to take a big leap in direction to the Digital Age and Knowledge

economy revolution. Although, the structural conditions of the country at this

moment of huge political struggle does not granted all the conditions for moving

forward this ambitious ideal in an maximum level.

As a future policy maker in Ecuadorian context the book help me to understand

the challenges existing in terms to prepare the State and Government machine

for the Digital Age and the necessity of innovation for our economical surviving

under this new Capitalism momentum. It is important to consider the

institutional, legal, cultural barriers to overcome in order to create an innovation

ecosystem in the society.

F) References.-

Ecuador: between "The Matrix" and "Utopia". (n.d.). Retrieved November 09,

2017, from http://rebelyouth-magazine.blogspot.ca/2015/07/ecuador-between-

matrix-and-utopia.html

My article explore the achieve and challenges face by Ecuador during Correa

government.

Gramsci, A., & Buttigieg, J. A. (2011). Prison notebooks. New York, NY: Columbia

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Univ. Press.

Jessop, B. (2016). The State: past, present, future. Cambridge: Polity Press.

Lenin, V. I. (1917). The state and revolution. Detroit, Mi.: Marxian Educational

Society.

MAZZUCATO, M. (2017). ENTREPRENEURIAL STATE: debunking public vs.

private sector myths. S.l.: PENGUIN BOOKS.

Nozick, R. (1995). Anarchy, state, and utopia. Oxford: Blackwell.

Panitch, L., & Gindin, S. (2013). The making of global capitalism: the political

economy of American empire. London: Verso.

Rawls, J. (2013). A theory of justice. New Delhi: Universal Law Publishing Co Ltd.

Ren Ramrez Gallegos, Secretario de Educacin Superior, Ciencia, Tecnologa e

Innovacin Seguir. (n.d.). Discurso para la inauguracin de la Universidad

Experimental Yachay. Retrieved November 09, 2017, from

https://es.slideshare.net/rramirezgallegos/discurso-para-inauguracin-la-

universidad-experimental-yachay

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