The “Entrepreneurial State” Approach
To build a prosperous and resilient economy, the state must pivot from being a passive market fixer to an active and entrepreneurial partner that co-creates and shapes markets alongside private industry by setting ambitious, mission-oriented goals.
OK, lets cut the academic jargon crap – what we’re talking about is this…
Imagine the government acting like a team captain for the country’s economy, but for really big, game-changing projects.
Instead of just refereeing the game (regulating) or putting money in the bank (collecting taxes), this team captain gets on the field. They declare a bold, exciting mission, like “we’re going to be the first team to play a game on the Moon!” or “we’re going to invent a whole new sport that’s safer and better for the planet.”
Private companies are the star players. They have the specific skills, speed, and creativity to score goals. But on their own, they might just play small, safe, local games because inventing a whole new sport is expensive, incredibly risky, and might not pay off for decades.
So, the government as the “entrepreneurial partner” does three things:
- Sets the Mission: It points everyone in the same direction with a clear, ambitious goal.
- Takes the Early Risk: It pays for the expensive, uncertain, early-stage work—like designing the new stadium, inventing the new ball, and writing the first rulebook.
- Builds the Field: It creates the conditions for success, helping to fund the new leagues and training facilities so the players (companies) can thrive.
In short, it means the government and private companies work together as a team to create brand new industries and technologies that probably wouldn’t exist otherwise.
Five Examples of This Happening in Real Life
Here are five examples where the state played the role of a visionary, risk-taking partner to achieve a major goal.
1. Creating the Internet
Today’s internet, which powers companies from Google to Amazon, was not invented by the private sector.
- The Mission: In the 1960s, during the Cold War, the U.S. Department of Defense wanted a communication network that could survive a nuclear attack.
- The State’s Precise Role: Its Advanced Research Projects Agency (ARPA, later DARPA) conceived of, funded, and managed the entire project. It brought together scientists from different universities and directed them to build a decentralised, packet-switching network called ARPANET.
- Unique Value of the State: Patience and Vision. No private company would have funded a hugely expensive, technically uncertain project with no immediate commercial application. The government was the only entity willing and able to fund this high-risk, long-term research for decades, purely for a strategic goal. It created the entire technological foundation that private companies later built upon.
2. The Global Positioning System (GPS)
The GPS in your phone, car, and countless delivery apps is a direct result of a state-led mission.
- The Mission: The U.S. military needed a way to accurately track the location of its assets (submarines, ships, soldiers) anywhere in the world.
- The State’s Precise Role: The Department of Defense designed, funded, built, and launched the entire satellite constellation. The U.S. Air Force continues to operate and maintain the system to this day.
- Unique Value of the State: Infrastructure Builder and Giver. The government was the only entity with the resources to build a multi-billion dollar global utility in space. Crucially, in the 1980s, it made this powerful military technology available for free to civilian and commercial users worldwide, creating a massive new market for location-based services that generates hundreds of billions in economic value.
3. Kickstarting the Electric Vehicle Market (Tesla)
While Elon Musk is famous for Tesla, the company’s survival and success were directly enabled by a state-led industrial strategy.
- The Mission: To reduce America’s dependence on foreign oil and kickstart a domestic advanced vehicle manufacturing industry to compete globally.
- The State’s Precise Role: In 2010, through the Advanced Technology Vehicles Manufacturing (ATVM) program, the U.S. Department of Energy gave Tesla a crucial $465 million loan. This was not a handout, but a strategic investment when private capital was scarce and the company was close to collapse. The government also created the market by offering a $7,500 tax credit to consumers who bought EVs, directly boosting demand.
- Unique Value of the State: Strategic Early-Stage Investor and Market Creator. The government acted like a venture capitalist with a public purpose. It provided critical capital at a moment of high risk that other investors would not, and it used policy (tax credits) to build customer demand from scratch, making the entire industry viable.
4. Mapping Our Genes (The Human Genome Project)
The breakthroughs in genetic medicine, ancestry tests, and personalised treatments are all built on this monumental, state-led scientific mission.
- The Mission: To map and sequence the entire human genetic code—a foundational “source code” for human biology.
- The State’s Precise Role: The U.S. National Institutes of Health (NIH) and the Department of Energy initiated and provided the majority of the $3 billion in public funding. They coordinated a global consortium of scientists from six countries, setting the rules and ensuring the data was made publicly and freely available.
- Unique Value of the State: Coordinator of ‘Big Science’ and Protector of Public Good. A project of this scale and complexity, requiring international collaboration over 13 years, could only have been organised and funded by governments. By insisting the data be public, the state prevented private companies from patenting human genes and created a shared, open platform for innovation that has fuelled the entire biotech industry for decades.
5. COVID-19 Vaccines (Operation Warp Speed)
The rapid development of COVID-19 vaccines was a direct result of governments stepping in to reshape the pharmaceutical market.
- The Mission: To produce and deliver hundreds of millions of doses of a safe and effective vaccine in less than a year—a process that normally takes a decade.
- The State’s Precise Role: Through “Operation Warp Speed,” the U.S. government (and similar efforts in the UK and Germany) invested billions to pre-fund research for multiple vaccine candidates simultaneously. Most importantly, it signed Advanced Purchase Agreements, guaranteeing it would buy hundreds of millions of doses from companies like Pfizer/BioNTech and Moderna before the vaccines were even proven to work.
- Unique Value of the State: Ultimate Risk-Taker. The government completely removed the financial risk for pharmaceutical companies. The firms didn’t have to worry if their vaccine would fail or if they could find buyers. The government’s promise to pay for the vaccines regardless of outcome allowed these companies to invest and scale up manufacturing at a speed that would have been commercially impossible otherwise.
In other words, the government should act like the cool headteacher—setting big missions for the country and helping businesses achieve amazing things that create a better future for everyone.
The Old Way
The headteacher says, “Everyone can set up a stall. Sell whatever you like. We’ll just have some teachers walking around to make sure nobody is fighting or cheating.”
You might get a few stalls selling cookies, some selling old toys, maybe a lemonade stand. It would be okay, but probably not very exciting. The teachers are just like referees in a football match – they only step in when a rule is broken.
The New Way
Now, imagine the headteacher says: “This year, our fair has a Mission: Let’s Invent the Future! I want to see the coolest new inventions you can dream up. And to help you, the school will:
- Set the Goal: The mission is to invent something new and amazing.
- Help with Resources: We’ll open the science labs and the design workshops after school for you to use.
- Share the Risk: We’ll give the best five ideas £20 each from the school budget to buy parts.
- Work with You: The science and design teachers will be there to help you if you get stuck.
- Create a Market: We promise that the school will buy the winning invention to use in the school office!”
Suddenly, you and your friends aren’t just selling boring cookies. You’re trying to invent robot helpers, self-watering plants, and maybe even a homework-doing machine! The school is acting like a team captain. It’s not just watching from the sidelines; it’s setting a big goal and helping everyone work together to achieve something incredible that you wouldn’t have done on your own.
What We Are Doing Now and Why It Won’t Work
Currently, governments are operating under a neoliberal ideology that views the state as an inefficient burden to be minimised. This approach, which reached an extreme conclusion in the fictional “DOGE” (Department of Government Efficiency) example, is counterproductive. It is characterised by:
- Outsourcing Core Functions: Governments have hollowed out their own expertise by outsourcing policy design and strategy to expensive consulting firms (the “Big Con”), leaving them “infantilised” and unable to think strategically.
- A False Definition of Efficiency: It uses the rhetoric of “efficiency” and “slashing waste” as a cover for a political and ideological project to dismantle public oversight, weaken regulatory bodies, and transfer public resources to private interests—what the article calls a “protection racket.”
- A “Startup” Mentality: It wrongly treats government like a startup, applying a “move fast and break things” logic to essential and life-or-death public services, leading to chaos and the destruction of vital capabilities that take decades to rebuild.
- Short-Term Thinking: It relies on static tools like cost-benefit analysis that prioritise small, quantifiable gains over ambitious, long-term transformative projects.
This model will not work because it is fundamentally destructive. It erodes the very state capacity required for future innovation and social progress, effectively “pulling up the ladder” that enabled past growth and leaving society less able to tackle complex challenges.
Which UK Political Parties want to create an entrepreneurial state?
Based on the ideas in the article, here is an analysis of which UK political parties have policies that most closely align with the proposed “entrepreneurial state” model.
- The Labour Party: Labour’s platform shows the strongest alignment with the principles outlined by Mazzucato (who has previously advised the party). Their central focus on a “mission-driven government,” with stated goals for clean energy, NHS reform, and economic growth, directly reflects the “Mission Economy” concept. Policies such as the creation of GB Energy, a publicly-owned energy company, and a National Wealth Fund to invest in strategic industries, are practical examples of the state taking an active, market-shaping role to direct investment and create public value.
- The Green Party: The Green Party’s policies also align strongly with the core concept of a mission-oriented state. Their central and ambitious mission—to tackle the climate crisis—would necessitate massive, state-led public investment in technology, infrastructure, and skills. This commitment to using the power of the state to reshape the economy for a specific public purpose is highly consistent with the article’s thesis.
- The Liberal Democrats: The Liberal Democrats share some alignment, particularly through their long-standing commitment to environmental policies and investment in green technology and R&D. Their focus on building a stable, investment-friendly environment for renewables and innovation fits within the broader framework, though their platform is generally less centred on the “mission-driven” narrative as a core governing philosophy compared to Labour.
- The Conservative Party: The policies and ideology of the current Conservative Party are presented in the article as the problem that the entrepreneurial state model seeks to solve. The text explicitly critiques the “chainsaw” approach of cutting state capacity, deregulation, and privatisation that has been a feature of Conservative governance. The article notes that senior Conservatives like Kemi Badenoch have expressed admiration for the “DOGE” model, positioning the party’s ideology as being in direct opposition to Mazzucato’s call for rebuilding state capacity and pursuing mission-oriented public investment.
Comparison with Traditional Socialist Ideals
The “Entrepreneurial State” model shares some common ground with traditional socialism but has fundamental differences.
Similarities (Compare):
- A Strong, Active State: Both ideologies reject laissez-faire capitalism and advocate for a strong and interventionist state that plays a central role in the economy.
- Critique of Private Sector Failures: Both are critical of how the unfettered market fails to serve the public good, leading to inequality, short-termism, and the private capture of publicly created value (rent-seeking).
- Focus on Public Value: Both prioritise collective goals and public value—such as health, education, and environmental sustainability—over the pure profit motive of private enterprise.
Differences (Contrast):
- Ownership of the Means of Production: This is the most significant difference. Traditional socialism advocates for the public ownership of the means of production (factories, land, resources) to eliminate private enterprise. The Entrepreneurial State model does not seek to abolish the private sector. Instead, it aims to create a symbiotic, dynamic partnership where the state directs and enables a vibrant private sector.
- Role of Markets: Traditional socialism seeks to replace market mechanisms with central planning. The Entrepreneurial State seeks to shape and create new markets. It doesn’t want to get rid of markets; it wants to make them work better by setting their direction and catalysing innovation that the private sector is too risk-averse to pursue on its own.
- Ultimate Goal: The ultimate goal of traditional socialism is a classless, post-capitalist society. The ultimate goal of the Entrepreneurial State is to create a more effective, innovative, and purposeful form of capitalism. As the title of Mazzucato’s book suggests, it is a “guide to changing capitalism,” not replacing it. It is about steering the system, not overthrowing it.
In essence, the Entrepreneurial State is a “third way” that critiques both the minimalist state of neoliberalism and the totalising state of traditional socialism. It argues for a smarter state, not just a bigger one—a state as a lead investor and innovator in a partnership with the private sector.