The Entrepreneurial State Debunking Public vs. Private Myths in Risk and Innovation
Format: PDF / Kindle (mobi) / ePub
This book, which builds on the author’s work for a high-impact DEMOS report, debunks the myth of the state as a large bureaucratic organization that can at best facilitate the creative innovation which happens in the dynamic private sector. Analysing various case studies of innovation-led growth, in particular examples from Silicon Valley – from the Internet to the technologies behind the iPhone – it describes the opposite situation, whereby the private sector only finds the courage to invest after the entrepreneurial state has made the high-risk investments. It argues that in the history of modern capitalism – and today in what might soon become the ‘green’ revolution – the state has not only fixed market failures but also shaped and created markets, actively investing in new technologies and sectors that private investors only later find the courage to move into.
various public–private partnerships established largely by government and military agencies (Markusen et al. 1991; Lazonick 2008; Block 2008; Breakthrough Institute 2010). When Apple was formed to sell the Apple I personal computer kit in 1976, the product’s key technologies were based on public investments made in the computer industry during the 1960 and 1970s. Introduction of silicon during this period revolutionized the semiconductor industry and heralded in the start of a new age when access
market value to $600 billion. Only a few companies in the US such as GE ($600 billion in August 2000) and Microsoft ($619 billion, on 30 December 1999) have ever seen this incredible level of valuation (Svensson 2012). At the time of this writing, Apple’s market value surpassed its long-time rival Microsoft’s (nominal) record of a $619 billion valuation, as Apple stocks traded at a new peak of approximately $700/share between 18 and 19 September 2012. 4 Source: Yahoo! Finance, available online
attempting to grow or transition into green technology sectors. Generally speaking, demand-side policies are environmental regulations that impact energy consumption patterns. Supply-side policies are focused on how energy is generated and distributed, and influence innovation in energy technologies and their rapid adoption. Both are critical given that demand-side policy can help set a technological direction (what is the technology for?) that also includes support for solutions (low carbon/no
needed to endure challenges and an investment horizon which stretched their commitment. As many argue, the challenges faced by clean technologies are therefore seldom technical; they are political (and social) and include a need for greater commitments of patient capital by governments and businesses around the world. R&D works, but it is not enough. Nurturing risky new industries requires support, subsidy and long-term commitments to manufacturing and markets as well. Governments must also
per cent of the total) in 2012 (Shapiro 2012).2 When Apple’s CEO, Tim Cook, announced in February 2012 that the company has more cash ($98 billion) than it currently needs to sustain its operations, many analysts and shareholders expected Apple to return a portion of its record-high cash to its shareholders (Liedtke 2012). The top executives were intrigued by the question of what to do with the excess sitting cash, since the company had not been distributing dividends or repurchasing its own