[A] Mariana Mazzucato | Economic Value [ PRACTICE ]

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⏱ 01:58 - 04:39

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contested

[ kuhn-'test-ed ]

adjective

- disputed or argued over, often with differing opinions

The definition of "value creation" was highly contested among economists 300 years ago.

bail out

phrasal verb

- to provide financial assistance to a failing organization or individual to save them from collapse

The government decided to bail out the struggling company to prevent massive job losses.

value creator

noun phrase

- a person or entity that generates economic or societal worth through their work, products, or services

Entrepreneurs are often seen as value creators because they bring new ideas and opportunities to the market.

wealth creation

noun phrase

- the process of generating assets, resources, or economic value

Education plays a vital role in wealth creation by equipping individuals with the skills to succeed.

agricultural society

noun phrase

- a community or economy primarily focused on farming and producing crops

In an agricultural society, most of the population depends on farming as their main source of income.

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FIRST CUT ⏱ 01:58 - 03:18

Let's read...

Between 2007 and 2010, 8.8 million people lost their jobs. The bank also had to then be bailed out by the US taxpayer for the sum of 10 billion dollars. We didn't hear the taxpayers bragging that they were value creators, but obviously, having bailed out one of the biggest value-creating productive companies perhaps they should have. What I want to do next is kind of ask ourselves how we lost our way, how it could be, actually, that a statement like that could almost go unnoticed, because it wasn't an after-dinner joke; it was said very seriously. So what I want to do is bring you back 300 years in economic thinking, when, actually, the term was contested. It doesn't mean that they were right or wrong, but you couldn't just call yourself a value creator, a wealth creator. There was a lot of debate within the economics profession. And what I want to argue is, we've kind of lost our way, and that has actually allowed this term, "wealth creation" and "value," to become quite weak and lazy and also easily captured. OK? So let's start -- I hate to break it to you -- 300 years ago. Now, what was interesting 300 years ago is the society was still an agricultural type of society. So it's not surprising that the economists of the time, who were called the Physiocrats, actually put the center of their attention to farm labor.

Let's follow Mariana Mazzucato...

Between 2007 and 2010, / 8.8 million people lost their jobs. // The bank also had to then be bailed out / by the US taxpayer / for the sum of 10 billion dollars. // We didn't hear the taxpayers bragging / that they were value creators, / but obviously, / having bailed out one of the biggest value-creating productive companies, / perhaps they should have. // What I want to do next is / kind of ask ourselves how we lost our way, / how it could be, actually, / that a statement like that could almost go unnoticed, / because it wasn't an after-dinner joke; / it was said very seriously. // So what I want to do is / bring you back 300 years in economic thinking, / when, actually, / the term was contested. // It doesn't mean that they were right or wrong, / but you couldn't just call yourself a value creator, / a wealth creator. // There was a lot of debate / within the economics profession. // And what I want to argue is, / we've kind of lost our way, / and that has actually allowed this term, "wealth creation" and "value," / to become quite weak and lazy / and also easily captured. // OK? // So let's start -- I hate to break it to you -- / 300 years ago. // Now, what was interesting 300 years ago is / the society was still an agricultural type of society. // So it's not surprising / that the economists of the time, / who were called the Physiocrats, / actually put the center of their attention to farm labor.

SECOND CUT ⏱ 03:18 – 04:39

Let's read...

When they said, "Where does value come from?" they looked at farming. And they produced what I think was probably the world's first spreadsheet, called the "Tableau Economique," and this was done by François Quesnay, one of the leaders of this movement. And it was very interesting, because they didn't just say, "Farming is the source of value." They then really worried about what was happening to that value when it was produced. What the Tableau Economique does -- and I've tried to make it a bit simpler here for you -- is it broke down the classes in society into three. The farmers, creating value, were called the "productive class." Then others who were just moving some of this value around but it was useful, it was necessary, these were the merchants; they were called the "proprietors." And then there was another class that was simply charging the farmers a fee for an existing asset, the land, and they called them the "sterile class." Now, this is a really heavy-hitting word if you think what it means: that if too much of the resources are going to the landlords, you're actually putting the reproduction potential of the system at risk. And so all these little arrows there were their way of simulating -- again, spreadsheets and simulators, these guys were really using big data -- they were simulating what would actually happen under different scenarios if the wealth actually wasn't reinvested back into production to make that land more productive and was actually being siphoned out in different ways, or even if the proprietors were getting too much.

Let's follow Mariana Mazzucato...

When they said, "Where does value come from?" / they looked at farming. // And they produced what I think was probably / the world's first spreadsheet, / called the "Tableau Économique," / and this was done by François Quesnay, / one of the leaders of this movement. // And it was very interesting, / because they didn't just say, "Farming is the source of value." // They then really worried about / what was happening to that value / when it was produced. // What the Tableau Économique does -- and I've tried to make it a bit simpler here for you -- / is it broke down the classes in society into three. // The farmers, creating value, / were called the "productive class." // Then others who were just moving some of this value around, / but it was useful, / it was necessary, / these were the merchants; / they were called the "proprietors." // And then there was another class / that was simply charging the farmers a fee for an existing asset, / the land, / and they called them the "sterile class." // Now, this is a really heavy-hitting word / if you think what it means: / that if too much of the resources are going to the landlords, / you're actually putting the reproduction potential of the system at risk. // And so all these little arrows there / were their way of simulating -- / again, spreadsheets and simulators, / these guys were really using big data -- / they were simulating what would actually happen under different scenarios / if the wealth actually wasn't reinvested back into production / to make that land more productive / and was actually being siphoned out in different ways, / or even if the proprietors were getting too much.