The idea that neoliberal capitalism brought about the smart phone is actually a myth, as economist Mariana Mazzucato debunks in her book The Entrepreneurial State. In fact, it was the public sector that innovated the crucial technologies in a smart phone.

The tech

The US public sector, via the armed forces, pioneered the internet through the funding of its predecessor ARPANET. They also brought about GPS technology and a lot of early funding for Silicon Valley.

Then there’s the publicly funded academics who developed the touch screen and HTML.

Google’s partent Alphabet is worth $4.6 trillion. Yet it was a public grant from the National Science Foundation that funded its search algorithm.

The public sector should fund AI

The public sector is able to offer huge amounts of investment into new technologies that the private sector may find too risky.

Given automation and AI will eventually result in huge job losses, the public sector should take the initiative and invest heavily in AI. That could ensure equity for people who will not be in employment, even though it didn’t for previous public sector innovation.

Counter-arguments

While acknowleding the state innovation that brought about smart phones, the Economist argues against Mazzucato’s book, saying:

Yes, private-sector ventures also frequently fail, but their investors know when to stop: their own money runs out. Governments can keep on throwing taxpayers’ money away.

The thing is, other than available investment, there is no difference between people working in the public and private sectors. Both can be mismanaged and both can offer financial rewards for breakthroughs. The difference is the resulting products and services in the public sector can be offered without profit or in a more equitable way.

But with Apple and Google, the public investment has been privately capitalised on and they are now trillion dollar companies.

By James Wright

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