BOOK REVIEW/Heather Seggel

Too Big to Fail to Catch the Irony

We know that income disparity in the US continues to favor the wealthy, and that the tiniest handful of one-percenters—so tiny they’re really more like half a percent—control the vast majority of wealth in this country. But how did that happen? In "The Value of Everything: Making and Taking in the Global Economy" (Public Affairs), author Mariana Mazzucato argues that a cagey sleight of hand has been at work for decades. The book is dense and may be challenging for lay readers to follow, but she makes a persuasive case for shutting down present-day capitalism and its tendency to reward value extraction and punish value creation.

Mazzucato, who is professor in the Economics of Innovation and Public Value at University College London, begins with a historical overview of economic theories, from defining “value” to thumbnail sketches of the mercantilists, marginalists, and other schools of economic thought; each has a slightly different view of who adds and who subtracts from the overall health of a nation’s finances. She points to the banks and financial markets setting down a long-standing rivalry to work together as one of the harbingers of bad times to come. Rather than rest on existing definitions of value, these businesses began to consider financial transactions themselves a form of value creation, despite the tangible benefits all flowing up to that 0.5%.

Prior to the early 1970s, financial sector activity was not included in calculations of Gross Domestic Product; it was considered a transfer of existing value. As the banks and markets became cozier, their new approach caught on. Not content to be left out of the action, others began moving goalposts around as they saw fit in order to create the perception of “value creation” from thin air as well.

Take Apple. (Please.) In the introduction, Mazzucato describes how the iPhone juggernaut, the world’s biggest company by stock market value, has moved billions of dollars into tax shelters to avoid paying money it owes to Ireland as well as its home state of California. Out of state shell companies and the manipulation of varying definitions of “residence” for tax purposes enable Apple to rake in money while not contributing to the infrastructure of the communities they squat in. Love your Apple Watch and just don’t care? Consider that your prescription medication was almost certainly invented through taxpayer-funded research, but the companies holding the patents often operate with the same casino mentality. In those cases as in actual casinos the house always wins, so good luck with that asthma.

While the story here is infuriating, it’s also an academic treatise on economics; this lay reader occasionally wished Lee Child would rewrite it as a Jack Reacher thriller while stumbling over definitions and graphs. Even a ghost story incorporating that creepy Invisible Hand would have been welcome. (This isn’t as crazy as it sounds; The Sunday Times of London suggested it be made into a musical in the vein of Gilbert and Sullivan.) That said, it’s worth the effort to engage with these ideas!

Economics wonks will find it refreshingly honest for its suggestions to revitalize the private sector and prioritize public investment that has a mission attached. Even folks lacing up their shoes to dance on the grave of late-stage capitalism will concede that major revisions to our current system would be of benefit to many; what may feel like a Robin Hood-y shakedown is really just an effort to correct a tremendous amount of corruption and dysfunction.

When it feels like we’re running from one emergency to the next it can be good to look at a big-picture systemic issue, then begin watching to see where traces of it show up in our lives and thinking about how we want to approach them. The Value of Everything is not a beach read, but it’s an intelligent dose of critical thinking about a topic where ignorance all but guarantees we’ll end up being played. Take the time to get smart about it.

Heather Seggel, a writer based in Mendocino County, California, is no librettist, but nevertheless, challenge accepted: “I am producing value though I can provide no evidence; My yacht and diamonds and three wives are simply humble recompense.” My God, it writes itself! Email heatherlseggel@gmail.com.

From The Progressive Populist, August 1, 2018

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