
As you might remember from high school textbooks, the race between the developed states during the Cold War led to technological achievements. These inventions benefited society and business. Business could generate large profits. The Italian-American economics professor
Mazzucato has studied in depth who actually develops new technical innovations. Is it the state or capital? The answer is the state. In the US, we have NASA, which has been responsible for much of weapons and space research. The US business community has received other products from there. For the liberal capitalist ideology, it is important that companies are not seen as incapable because the criticism of communism was that the state could not develop new products as efficiently as the companies. Mazzucato shows that companies are largely incapable of developing significant technology or other innovations. In order to defend the liberal capitalist ideology, various companies are allowed to take credit for important state technological achievements.
NASA's collaboration with DARPA
NASA has too collaborated with the US government's military research activity DARPA and various major agencies. Together they have developed new technology such as computers, jet planes, civilian nuclear power, lasers and biotechnology: "DARPA was created to secure US supremacy in mainly (but not exclusively) technology-related sectors and has always been offensively mission-oriented.” DARPA has 240 employees and a $3 billion a year budget. They are nevertheless very cost-effective. They not only deal with long-term research funding and important long-term basic research, but also provide establishment support for new companies. An example of a large company that has developed through various forms of support indirectly or directly is Apple and its personal computer.
DARPA arose around World War II. However, Reagan was not as much in favor of free market development for product development as the propaganda made it seem. He combined and further developed DARPA with SBIR (the government grant for small business research and innovation). The program helps start-up entrepreneurs with a budget of over $2 billion a year to support high-tech companies.
Companies can't make it without extensive government funding and basic research support to develop the technology that a country's business community needs to assert itself in international competition. If we in Sweden want to cope with international competition, we should set up similar state funding and research institutes. A large public sector is needed.
Can Sweden as a state then afford to invest in research?
We can afford work projects
The state can resort to deficits to afford a program for public work project with the aim of stimulating the economy in society. Then the new money is associated with increased productivity.
The risk of inflation is greater if money is created without the amount of work, products and services increasing at the same time.
But if the state runs a deficit for public projects, there is no problem expanding the economy in this way.
Modern monetary theory
Read "The deficit myth” by economist Stephanie Kelton on the universal wealth-creating power of nationally controlled and owned central banks.
The book deals with Modern monetary theory. It shows that as the economy grows, the government must run a deficit in order for the economy to continue to grow. Taxes just redistribute old money. When the economy is to grow, society needs new money, e.g. by the state becoming indebted to itself. If we increase productivity by investing in research or by building housing, the state can create money for this without a greater risk of inflation.
If the government does not run a deficit, the private companies and private households will have to.
Only two accounts
The opposite of an account lien is that someone else owes you a debt. Since there are basically only two accounts in an economy, the public account and the private account, surpluses in the public account correspond to deficits in the private account and vice versa. The private account, unlike a state backed by a national central bank, can go bankrupt. Then government deficits go more to public utilities and empirical evidence shows that government deficits have a greater economic drive for society. Therefore, it is better if the government runs a deficit instead of the private account. A healthy deficit is a to program to build housing with government housing subsidy.
So that the state runs a deficit to get research projects started and to save us from a financial crash is the only way in the long term.
The limit to how much money we can print is that it must not exceed the growth rate of the national economy and employment so that it becomes inflation. But Kelton shows with a lot of empirical evidence that there is usually no inflation.
Read about covid inflation and how it does not contradict what was said above.
Great that you are paying attention to Mazzucato.
Her book came out at the same time as two other books in the same vein: Ha Joon-Chang: 23 Things They Don't Want You to Know About Capitalism, and Erik Reinert: Global Economy. Both reformist, old-fashioned social-democratic, razor-sharp books (of which I was involved in the publication of Reinerts).
It's about time they were reviewed somewhere. It will not happen in the mainstream media (Swedish newspapers are totally uninterested in economics, said Stefan de Vylder). So you can contribute to that.
Jan, your comments are always so insightful. Do you want to become a writer at redjustice?