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Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth

Michael Jacobs (Editor), Mariana Mazzucato (Editor)
ISBN: 978-1-119-12095-7
224 pages
August 2016, Wiley-Blackwell
Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth (1119120950) cover image


"Thought provoking and fresh - this book challenges how we think about economics.”
Gillian Tett, Financial Times

For further information about recent publicity events and media coverage for Rethinking Capitalism please visit http://marianamazzucato.com/rethinking-capitalism/

Western capitalism is in crisis. For decades investment has been falling, living standards have stagnated or declined, and inequality has risen dramatically. Economic policy has neither reformed the financial system nor restored stable growth. Climate change meanwhile poses increasing risks to future prosperity. 

In this book some of the world’s leading economists propose new ways of thinking about capitalism. In clear and compelling prose, each chapter shows how today’s deep economic problems reflect the inadequacies of orthodox economic theory and the failure of policies informed by it. The chapters examine a range of contemporary economic issues, including fiscal and monetary policy, financial markets and business behaviour, inequality and privatisation, and innovation and environmental change. The authors set out alternative economic approaches which better explain how capitalism works, why it often doesn’t, and how it can be made more innovative, inclusive and sustainable. Outlining a series of far-reaching policy reforms, Rethinking Capitalism offers a powerful challenge to mainstream economic debate, and new ideas to transform it.  

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Table of Contents

1: Rethinking Capitalism: An Introduction (Michael Jacobs and Mariana Mazzucato)

2: The Failure of Austerity: Rethinking Fiscal Policy (Stephanie Kelton)

3: Understanding Money and Macroeconomic Policy (L. Randall Wray and Yeva Nersisyan)

4: The Costs of Short-termism (Andrew Haldane)

5: Innovative Enterprise and the Theory of the Firm (William Lazonick)

6: Innovation, the State and Patient Capital (Mariana Mazzucato)

7: Investment-led Growth: A Solution to the European Crisis (Stephany Griffith-Jones and Giovanni Cozzi)

8: Inequality and Economic Growth (Joseph Stiglitz)

9: The Paradoxes of Privatisation and Public Service Outsourcing (Colin Crouch)

10: Decarbonisation: Innovation and the Economics of Climate Change (Dimitri Zenghelis)

11: Capitalism, Technology and a Green Global Golden Age: The Role of History in Helping to Shape the Future (Carlota Perez)

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Author Information

Michael Jacobs is Visiting Professor in the School of Public Policy at University College London. 

Professor Mariana Mazzucato (PhD) holds the Chair in the Economics of Innovation and Public Value, University College London (UCL) where she is establishing a new Institute for Innovation & Public Purpose (launching Autumn 2017).

Further information:

Michael Jacobs
is Visiting Professor in the School of Public Policy and Department of Political Science at University College London. An environmental economist and political theorist, his work has focused on the political economy of environmental change. His books include The Green Economy: Environment, Sustainable Development and the Politics of the Future (Pluto Press, 1991), Greening the Millennium? The New Politics of the Environment (ed, Blackwell, 1997), The Politics of the Real World (Earthscan 1996) and Paying for Progress: A New Politics of Tax for Public Spending (Fabian Society 2000).

From 2004-10 he was a Special Adviser to the UK Prime Minister Gordon Brown, responsible for domestic and international policy on environment, energy and climate change, and before that (2004-2007) a member of the Council of Economic Advisers at the UK Treasury. He was formerly General Secretary of the Fabian Society, Co-Editor of The Political Quarterly and a research fellow at Lancaster University and the London School of Economics. He has also been a Visiting Professor at the Grantham Research Institute on Climate Change and the Environment at the LSE, a Visiting Fellow at the Institute for Public Policy Research and Senior Adviser to the Global Commission on the Economy and Climate, which he helped to found.

Professor Mariana Mazzucato (PhD) holds the Chair in the Economics of Innovation and Public Value, University College London (UCL) where she is establishing a new Institute for Innovation & Public Purpose (launching Autumn 2017). Mazzucato’s highly-acclaimed book The Entrepreneurial State: debunking public vs. private sector myths (Anthem 2013; Public Affairs, 2015) was on the 2013 Books of the Year list of the Financial Times. She is winner of the 2014 New Statesman SPERI Prize in Political Economy and the 2015 Hans-Matthöfer-Preis and in 2013 she was named as one of the '3 most important thinkers about innovation' in the New Republic.  

She has advised policy makers around the world on innovation-led growth and is currently a member of the Scottish Government’s Council of Economic Advisors; the World Economic Forum’s Council on the Economics of Innovation and SITRA’s (Finnish Innovation Fund) Advisory Panel.  Her current research projects include two funded by the EC Horizon 2020 programme:  Innovation-fuelled, Sustainable, Inclusive Growth (ISIGrowth) and Distributed Global Financial Systems for Society (Dolfins) and a new project on Rethinking Medical Innovation by the Open Society Foundations. Her recent research includes projects funded by the Ford Foundation and the Institute for New Economic Thinking, and work commissioned by NASA, the European Space Agency and the Brazilian Ministry for Science and Technology.

She is currently writing The Value of Everything which will be published by Penguin’s Allen Lane in 2017.

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Västvärldens kapitalism är i kris. Men det finns sätt att göra den mer innovativ, inkluderande och hållbar. Det anser författarna till Rethinking Capitalism. Economics and Policy for Sustainable and Inclusive Growth. I bokens kapitel diskuterar de problemen med moderna mainstreamteorier. De föreslår en rad lösningar på dagens ekonomiska problem, och menar att det krävs nytänkande såväl inom nationalekonomin som på policyområdet. För att förstå innovation behöver man studera verkliga exempel. Det duger inte att förlita sig på abstrakta teorier om företag som vinstoptimerande maskiner. Redaktörer är Michael Jacobs och Mariana Mazzucato.

The capitalism of the western world is in crisis. But there are ways to make it more innovative,
inclusive and sustainable. It considers the authors of Rethinking Capitalism. Economics and Policy
for Sustainable and Inclusive Growth. In the chapter of the book they discuss the problems of modern mainstream theories. They propose a series of solutions to today's economic problems, and argue that it requires innovative thinking, both in the national economy and in the policy area. In order to understand innovation, one needs to study real examples. It is not good to rely on abstract theories about companies like profit optimizing machines. Editors are Michael Jacobs and Mariana Mazzucato.

"A fine collection of chapters by leading progressives on what went wrong -- low growth, flagging investment and innovation, too few jobs and too much carbon -- and what might be done. May it close the door on the failed "mainstream" and open another, toward a fully-integrated, uncompromising, radical view of economics and economic policy."
James K. Galbraith, Lloyd M. Bentsen, Jr. Professor in Government and Business Relations, University of Texas at Austin, author of Future of Growth and Inequality: What Everyone Needs to Know

"The economies of developed countries face profound problems, including congested and polluted cities, deep inequalities, marginalisation of large segments of the population and sluggish growth. And the next twenty years will have to see severe cuts in greenhouse gas emissions if we are to have any serious chance of avoiding dangerous climate change. Economic policy must change radically and quickly if we are to tackle these deep and inter-related problems. That means, in turn, a deeper understanding of the workings of our capitalist system. This book is a very valuable and thoughtful contribution to these crucial tasks."
Lord Nicholas Stern, IG Patel Professor of Economics and Government at the London School of Economics and author of the Stern Review on the Economics of Climate Change 

"This excellent book could not be more timely. With the rise of populist protest movements across the west, the hard realities of stagnating real wages and entrenched inequality, it is plain that modern capitalism is not working. Rethinking economics is invaluable contribution to the challenging tasks ahead."
Will Hutton Principal Hertford College Oxford and author of The State We’re In

"We badly need fresh thinking in the world of economic policy making today - and this book offers a plethora of provocative ideas. It tackles numerous sacred cows in a lively and provocative manner and challenges our assumptions. It is thus a very valuable and welcome contribution to the current debate about why so many western economies have performed poorly since the great crisis.” 
Gillian Tett, Financial Times

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