Wired magazine dares to challenge and deconstruct one of the media’s and the Western world’s dominant memes about the economy. The article introduces its readers to Italian-American economist Mariana Mazzucato, who recently launched a frontal attack on modern capitalism’s favorite fairy tale: the Silicon Valley “myths about innovation.”

For the past 30 years, the Western world has elaborated and adopted an ideology of heroic individualism that has increasingly taken on the force of a religious credo. It revolves around the belief in the redeeming power of technological innovation.

The subtitle of the Wired article reads: “Mariana Mazzucato has demonstrated that the real driver of innovation isn’t lone geniuses but state investment.”

Here is the 3D definition of the day:

Lone genius:

An individual at the head of a private enterprise who has achieved fame through effective PR designed to create an arbitrary association of that person with successful commercial innovation, instilling in the public’s mind the absurd belief that the insight behind the innovation emerged from a social, economic and intellectual vacuum

Contextual Note

US culture has always celebrated the idea of the lone hero and even the lone villain. Early television gave the nation its “Lone Ranger,” an oxymoronic title if ever there was one, since the historical Rangers were a collective entity, an organized militia first created in 1823 to protect white families that had settled in the Mexican territory of Texas. The idea that one isolated hero can do the job of an army and defeat public enemies has always appealed to the American audiences. In the movie “True Grit” (both versions), the hero is a 14-year-old girl who is an orphan. This pushes the sympathy the public feels with the isolated individual capable of being a hero to an exciting extreme.

Then there is the “lone assassin,” a myth in its own right that has become a staple of politics. It allows governments and the media to deviate the public’s attention from the collective responsibilities discernible in extremely dramatic political events by qualifying any claim of the existence of an organized collective effort as a “conspiracy theory.” And despite the mountains of evidence of complicity in the assassinations of two Kennedys, Martin Luther King and Malcolm X that contradict the theory of the lone assassin, the media in the US have consistently defended the official versions. The mysterious malevolent individual unable to control their worst instincts will always hide the banality of the coldly scheming and calculating crowd.

Ever since Dr. Jekyll and Mr. Hyde, popular literature and the movies have always shown a taste for both the “nutty professor” and the “evil genius.”

Mazzucato attacks not just the lone genius meme, but also the belief that innovation is the fruit of the unbridled play of the free market. Even the Europeans bought into the American myth. “There was this belief that we didn’t have European Googles and Facebooks because we didn’t subscribe to Silicon Valley’s free market approach,” she says. “It was just ideology: there was no free market in Silicon Valley.”

After examining the “great innovations” that have sculpted our modern technological environment, Mazzucato concludes: “The more I looked, the more I realised: state investment is everywhere.” And she offers an explanation of the public’s ignorance when she notices that “a narrative of innovation that omitted the role of the state was exactly what corporations had been deploying as they lobbied for lax regulation and low taxation.”

Historical Note

Mariana Mazzucato bluntly states her case: “History tells us that innovation is an outcome of a massive collective effort — not just from a narrow group of young white men in California.” She also describes her frustration when trying to explain the reality of the economy to politicians. In her words, “a politician … just wants the slogans, but doesn’t really get the details behind the message.”

Florida’s high-profile Republican senator, Marco Rubio, is an excellent example of a politician who tries to understand but gets stuck on his commitment to slogans. Focusing on the issue of innovation, Rubio correctly identifies some of the problems Mazzucato highlights but, for ideological reasons, fails to notice the essential.

Rubio not only persists in believing the historical myth concerning innovation, but he wants to see reality conform to the myth. The solution he proposes to the problems of investment and innovation echoes President Donald Trump’s vacuous slogan, “Make America Great Again.” Senator Rubio wants to return to what he believes to be the logic of an imaginary, idealized point of America’s economic and political history.

In a lengthy policy document with the title, “American Investment in the 21st century, Project for Strong Labor Markets and National Investment,” Rubio details his belief in the very myth that Mazzucato has exposed: “Private business has historically provided the dominant source of investment spending in the American economy, and economic productivity has been the outcome of a high-investment private business sector.”

Even Mazzucato doesn’t delve into what she implicitly recognizes: that since World War I, the economy has been globalized by two evolutions: the growth of state finance and the permanent militarization of national economies. In the aftermath of that moment of extreme crisis in Western civilization, American banks implicitly took over the European economy by financing the debt corresponding to the war effort of its allies. When the entire Western industrial economy collapsed in 1929, the same financial interests focused on financing what was to become Nazi Germany’s military-industrial complex.

Adolf Hitler’s plan for militarization was in many ways a logical response to the disastrous terms of the Treaty of Versailles that marked the end of the World War I. The outcome of the war meant not only that “the German economy became massively dependent on American investment and loans,” but that, with the rise of the Nazis, the US financial establishment began to see Hitler’s plan as a model to be encouraged.

The final irony is that, after World War II, the US adopted that model to create its own far more impressive military-industrial complex and even recruited numerous former Nazis to help develop it. It was that model that provided the platform for investment in technological innovation that Mazzucato describes.

Rubio appears to agree with Mazzucato when he identifies the single most pernicious and destructive trend in modern capitalism: 

“Rising out of the economic stagnation of the 1970s, shareholder primacy theory refocused corporate management’s understanding of economic value as financial return to shareholders. This theory tilts business decision-making towards returning money quickly and predictably to investors rather than building long-term corporate capabilities, reduces investment in research and innovation, and undervalues American workers’ contribution to production.” 

He doesn’t, however, look at the question of where the funding of the innovation that the nation is so proud of came from: the state and what Republicans officially revile: “big government.”

After demonstrating his understanding of the weakness and vulnerability of today’s financialized version of capitalism – the version his Republican party has clamored for and defended for the past century – Rubio then contradicts his own insight by reaffirming the pseudo-historical myth Mazzucato has taken the trouble to expose. As a prisoner of his ideological illusions, Rubio delineates what he sees as the solution: “An economy more oriented toward capital development by the private sector would be truer to the system of American capitalism that created great prosperity in prior generations.”

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Rubio correctly describes the current historical challenge that comes from a collectivist society that will never be tempted by America’s individualism: “China has a whole-of-nation effort underway to dominate innovation and high-value manufacturing in this century. Our economic competitors understand the critical importance of investment in themselves, and we must as well.”

But Rubio’s thought processes seem to stop there. He doesn’t want to acknowledge that the military-industrial complex has, for the better part of a century, made that investment and transferred the potential for profit to the private sector even as he complains that it doesn’t know how to invest. And yet he wants that sector both to change its errant ways and lead the way.

That may be a tall order for an entire culture that has been taught to seek profit first and human quality only at some unspecified later date.

*[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news.]

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.