The Value of Everything: Making and Taking in the Global Economy

Behind every policy argument about growth, productivity, and public investment lies a theory of value — an account of which activities create wealth and which merely distribute or consume it. For most of the past century, that theory has operated invisibly, embedded so deeply in national accounting conventions, financial market assumptions, and the rhetoric of public debate that it has functioned less as a contestable hypothesis than as common sense. Mariana Mazzucato’s The Value of Everything, published in 2018, is an attempt to drag this submerged theory into daylight and contest it. Drawing on the history of economic thought from the classical political economists through the marginalist revolution to contemporary debates about financialisation and the knowledge economy, she argues that modern economies have systematically confused value creation with value extraction — that activities which redistribute or capture wealth generated elsewhere have come to be counted, and to count themselves, as productive — and that this confusion has consequences for inequality, for the underfunding of public goods, and for the long-run health of the economies it misrepresents.

The Core Claim

Mazzucato’s argument begins with intellectual history. The classical political economists — Smith, Ricardo, Marx — were preoccupied with the question of value in a way that mainstream economics subsequently abandoned. For them, the distinction between productive and unproductive labour was not merely a bookkeeping question but a structural one: it identified which activities expanded the productive capacity of an economy and which extracted a share of the surplus those activities generated without contributing to it. The landlord who collected rent from land whose value was created by the surrounding community, the merchant who profited from price differentials without adding anything to the goods transacted, the financier who captured returns from productive activities he did not undertake — these were paradigm cases of extraction, and distinguishing them from genuinely productive activity was the central analytical task of political economy.

The marginalist revolution of the 1870s dissolved this distinction. By relocating value in the subjective preferences of consumers — price as the measure of value, market participation as the criterion of productivity — it eliminated the theoretical basis for distinguishing makers from takers. If a transaction occurs at a mutually agreed price, both parties have created value by definition: the seller has provided something the buyer values, and the buyer has provided money the seller values. The production boundary — the line separating activities counted as contributing to GDP from those that are not — became a political and accounting convention rather than a theoretically grounded determination. And the conventions have shifted: financial services, once largely excluded from national accounts as intermediaries that facilitated production without constituting it, were progressively incorporated into GDP measurement as the financial sector expanded, a change whose implications Mazzucato traces with care.

The contemporary targets are finance and what she calls the “financialisation” of the non-financial economy — the subordination of productive investment to shareholder value maximisation, the redirection of corporate cash flows from research and wages toward share buybacks and dividends — and the systematic undervaluation of public sector contributions to innovation. The latter is the argument most distinctively her own and most directly connected to her earlier work in The Entrepreneurial State: that the state’s role in funding the foundational research, absorbing the early-stage risk, and building the infrastructure on which private innovation depends has been written out of the standard account of how economies grow. The iPhone, she argues, is the product not of Apple’s genius alone but of publicly funded research in touchscreens, GPS, the internet, and voice recognition — and the failure to recognise this shapes everything from tax policy to the terms on which the public recovers any return on its investments.

Where the Argument Is Strongest

The intellectual history of value theory is the book’s most original contribution and its most assured. Mazzucato’s account of how the production boundary was constructed, how it shifted, and what political and distributional consequences followed from those shifts is a form of ideological archaeology that mainstream economics rarely performs on itself, and her ability to make this history accessible to readers without technical training in the discipline is a genuine accomplishment. The particular case of financial services — the step-by-step account of how an industry understood for most of the twentieth century as a facilitator of productive activity came to be measured as a creator of value in its own right, and how this accounting change tracked and reinforced the political power of finance — is lucid and important.

The case for the entrepreneurial state is compelling in its strongest instances and has shifted the terms of debate about innovation policy in ways that are broadly warranted. The historical evidence that transformative technologies — from the internet to mRNA vaccine platforms — have depended on public funding at the stages of highest risk and longest time horizon is well established, and the political-economic argument that private actors systematically under-invest in basic research because they cannot capture sufficient returns is standard and sound. Mazzucato’s contribution is to connect this to the value theory argument: if the state is a value creator rather than merely a facilitator, then the terms on which it recoups its investments — through taxation, equity stakes, licensing conditions — are questions of economic justice as well as fiscal policy.

The diagnosis of financialisation as a value extraction rather than value creation mechanism is the most consequential substantive claim, and the evidence for it in the specific case of share buybacks — in which corporations redistribute cash to shareholders rather than investing it in productive capacity, research, or wages — is persuasive. The redirection of corporate cash flows documented over the past four decades, concentrated in sectors whose publicly funded research base Mazzucato has charted elsewhere, represents a transfer of value from the activities that generate it to the financial instruments that claim it, and the failure of standard national accounting to register this as extraction rather than production is both a theoretical and a political problem.

Where It Strains

The revival of a production boundary between value creation and value extraction — the book’s central analytical ambition — runs into a difficulty that Mazzucato acknowledges but does not resolve: she has rejected the marginalist criterion for identifying productive activity (market price) without supplying a replacement that can do the required work at scale. The classical political economists had labour value theory as their criterion, however contested; Mazzucato’s criterion is something like social usefulness or contribution to productive capacity, but these notions are sufficiently indeterminate that it is not clear how they would adjudicate hard cases. Finance provides easy targets — high-frequency trading, certain derivative instruments — but the line between financial activities that facilitate productive investment and those that merely extract from it is considerably harder to draw in practice than the framework implies. The book is more persuasive as a demonstration that the current production boundary is wrong than as a specification of where a better one would lie.

The intellectual history, while genuinely illuminating, has a tendency to flatten the debates it surveys. The classical economists were not unified in their account of productive and unproductive labour: Smith’s treatment is different from Ricardo’s, Ricardo’s from Marx’s, and the differences matter for what the tradition can be made to support. Marx’s labour theory of value is not simply a more rigorous version of the Smithian framework but a structurally different account, with different implications for what counts as exploitation and what remedies are appropriate. Presenting them as successive refinements of a common project that the marginalists then betrayed makes for a cleaner narrative than the history warrants, and it means that the theoretical framework Mazzucato is working toward is less clearly specified than it appears — because the tradition she is recovering was never as unified as the recovery suggests.

The treatment of public sector value creation, while broadly right in direction, runs together two importantly different claims. The first is the historical claim that public investment has been foundational to transformative private innovation — well supported. The second is the normative claim that this justifies different terms for public recovery of returns — plausible but requiring a more developed theory of property, risk, and reward than the book provides. And the third, implicit in the framework, is that we can identify in advance which public investments will be foundational — which is the hardest claim of all, since the history of publicly funded research is also a history of vast expenditure on directions that proved unproductive. The entrepreneurial state argument needs a theory of public investment failure as well as public investment success, and the book’s rhetorical momentum tends to suppress it.

The prescriptive sections are thinner than the diagnostic ones, and this is a characteristic pattern in this genre of political economy. Knowing that the production boundary is in the wrong place, that financialisation redistributes rather than creates, and that public investment is undervalued tells us the direction of travel but not very much about the specific institutional arrangements — in corporate governance, in tax design, in public procurement, in financial regulation — through which a different settlement would be achieved. The distance from diagnosis to prescription is where the theoretical work is hardest, and The Value of Everything largely defers it.

Verdict

The Value of Everything is an important book doing important work at a level of generality that sometimes frustrates the precision the argument requires. Its excavation of value theory as a contested political and intellectual terrain — rather than a technical matter settled by economics departments — is a genuine contribution to public debate, and the specific arguments about financialisation, public investment, and the misattribution of innovative success to private actors alone are well supported and politically consequential. Its central analytical ambition — a revived production boundary capable of distinguishing makers from takers — is more convincingly motivated than executed; the replacement criterion for value creation remains underspecified, and the intellectual history that is meant to ground it is smoother than the actual tradition it recovers. Read it alongside The Entrepreneurial State for the more fully developed empirical case on public investment; alongside William Lazonick’s work on financialisation and the corporation for the supporting microeconomic analysis; and alongside the classical texts she recovers — particularly Ricardo’s Principles and the relevant sections of Marx’s Theories of Surplus Value — to assess how much the tradition she invokes can actually bear the weight she places on it. As a provocation to take value theory seriously again, and to ask whose activities an economy is actually organised around rewarding, it succeeds. As a systematic account of how to answer those questions, it is a beginning.