We should be more vigourous, says @MazzucatoM , in debating differences between value extraction and value creation, and between profits and rents.
[20:55] What I tried to do in the book was to bring these problems back to some fundamental debates that occurred in economics, which weren’t just lost over time, but kind of moved over thinking “oh that’s just kind of old style”, you know, “it’s just the classical economist who talked about value”.
[21:15] ” Now let’s actually just kind of confront more interesting questions” But literally the word “value” kind of went missing from economics departments. You don’t have textbooks as we used to have, even in the mainstream economics tradition, that even had that word kind of “value”. What is value, and then big debates about that.
[21:34] What I argue is that when we kind of allowed this concept of value to leave economics departments, and simply to go to business schools where the word is everywhere — think of it — shareholder value, shared value, Michael Porter’s very important work “value chains”. When that concept left economics departments and went to business schools, it — I don’t know how many business school people are here — it kind of became more flakey and fuzzy.
[22:02] And let me just say that in a kind of facetious way, but also in the process, made it less contested, less debated, within sort of the heart of economic reasoning and economic debates, and in the process made it much easier to extract value in the name of value creation because, what is valued?
[22:21] Right. So when you’re taught to Micro 101 and you’re taught you know things around the production function and marginal productivity and marginal utility, you’re not told “this is one particular theory of value and then we’ll learn other ones”. It’s just taught as Micro 101.
[22:37] So, when it’s not contested, it becomes much harder to do things which, in the past, were done like debating: well, what’s the difference between profits and rents? What is the difference between value extraction and value creation ? What happens when we reward value extraction over value creation?
[22:54] Do we get value destruction? But even just really simply, what is the difference between profits and rents?
[23:01] And I thought it was very interesting — and going back into the literature, it’s also to be reminded that Plato himself — smart guy — kind of often said in different ways, that story tellers ruled the world.
[23:11] And what I want to argue is that many of those four problems, that I talked about in the beginning, have in some ways been — how do you say — nurtured by the fact that the stories that are being told about where wealth creation comes from and where value creation comes from has been — if you want, captured — because it is not again in the active discourse of how we think about the economy
Source: Mariana Mazzucato | “The value of everything: rediscovering purpose in the economy” | January 31, 2019 |Blavatnik School of Government, University of Oxford, at https://www.youtube.com/watch?v=lCLSvojyJoI