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Jim Dorn on Mazzucato and Bauer

Summary:
It is hard not to be impressed by the success of Mariana Mazzucato. In a few years, Mazzucato became a point of reference for the world left and her views are having a significant impact in the post-pandemic world, perhaps (perhaps?) because they reinforce the instincts and assuage the thirst for grandeur of the world’s politicians. Jim Dorn comments here on a recent article in which Mazzucato sings the praises of a “Cornwall Consensus” to take the place of the “Washington Consensus”. She writes: Whereas the Washington Consensus minimized the state’s role in the economy and pushed an aggressive free-market agenda of deregulation, privatization, and trade liberalization, the Cornwall Consensus (reflecting commitments voiced at the G7 summit in Cornwall last June)

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Jim Dorn on Mazzucato and Bauer

It is hard not to be impressed by the success of Mariana Mazzucato. In a few years, Mazzucato became a point of reference for the world left and her views are having a significant impact in the post-pandemic world, perhaps (perhaps?) because they reinforce the instincts and assuage the thirst for grandeur of the world’s politicians. Jim Dorn comments here on a recent article in which Mazzucato sings the praises of a “Cornwall Consensus” to take the place of the “Washington Consensus”.

She writes:

Whereas the Washington Consensus minimized the state’s role in the economy and pushed an aggressive free-market agenda of deregulation, privatization, and trade liberalization, the Cornwall Consensus (reflecting commitments voiced at the G7 summit in Cornwall last June) would invert these imperatives.

Dorn reminds us that the so-called Washington Consensus “was not meant to be an exhaustive list or a blueprint for development. Nor was it a recipe for minimum government or neoliberalism”. But he also does something much more important. He compares the views of Mazzucato, a world famous economist, with those of Peter Bauer, a largely neglected figure when he was alive and an almost totally forgotten one now. Bauer was known as a critic of development economics (one of the very first). Bauer’s criticisms of foreign aid were grounded in his understanding of development, according to which, as Dorn aptly remarks, “It is more meaningful to say that capital is created in the process of development, rather than that development is a function of capital”. Mazzucato’s work can be read as suggesting instead that we ought to throw money at all possible research projects, hence the “entrepreneurial state” can do it better, since it commands more resources, than any private investors, who is pressed at a certain point (perhaps just a couple of billion ahead of a possible breakthrough) to exit and draw a line between profitable and unprofitable ventures.

Alberto Mingardi
Mingardi, one of the rising stars of European libertarianism, is the founder and Director General of the Italian free-market think tank, Instituto Bruno Leoni. His areas of interest include the history of economic thought and antitrust and healthcare systems. He is particularly well known for popularizing the work of past scholars under-appreciated by today’s libertarians. Currently an adjunct scholar at the Cato Institute, Mingardi has also worked with the Heritage Foundation, the Atlas Economic Research Foundation, the Acton Institute, and the Centre for a New Europe.

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