The Risk-Reward Nexus: Innovation, Finance and Inclusive Growth
Instead of focusing narrowly on redistribution – government taxes and transfers that take from some and give to others – progressives should also look at “predistribution”, which relates to how the market distributes rewards in the first place even before government collects taxes or pays out benefits.
Central to this policy debate is an understanding of the tension between how value is created and how value is extracted in modern day capitalism. That is, who takes the risks and who gets the rewards?
This paper by William Lazonick and Mariana Mazzucato offers a new perspective on why 'smart' innovation-led growth has not led to 'inclusive growth'. It argues that there is a disproportionate balance between the 'collective' distribution of risk taking in the innovation process, and the increasingly narrow distribution of the rewards. It proceeds to set out a “Risk-Reward Nexus” framework for understanding the relationship between innovation and inequality, and concludes with key policy implications.
The publication was launched and debated at a Policy Network event on 3rd of December.
The Guardian also carried an opinion piece by the authors to mark the launch and outline the paper's key arguments.
About the authors:
William Lazonick is professor and director of the UMass Center for Industrial Competitiveness, and president, The Academic-Industry Research Network.
Mariana Mazzucato is RM Phillips professor in science and technology policy at the University of Sussex (SPRU).
: Michael McTernan, email@example.com (020 73402215)