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Introduction

Governments have produced some remarkable achievements throughout history. The Roman Empire built a system of roads and aqueducts that enabled the Empire to thrive and expand, medieval governments (in cooperation with the church) built spectacular cathedrals that remain marvels in the twenty-first century, and the Great Wall of China stands as a tribute to the accomplishments of that government. More recently, the United States government developed atomic bombs to hasten the end of World War II, put a man on the moon in the 1960s, and created a system of GPS satellites that provide people throughout the world with precise location information. While moonshots and atomic weapons are probably things we would be at least as well-off without, governments have produced much that has benefited many.

The accomplishments of government listed in the previous paragraph all are accomplishments of engineering, not entrepreneurship. When faced with engineering challenges, governments often can meet them, given sufficient resources. Government’s engineering successes do not constitute entrepreneurship, however. Entrepreneurship consists of identifying and implementing new production methods or new or improved goods and services that create more in value than they cost to produce. Was the value of the Apollo program that landed men on the moon worth more than it cost? There is no way to tell, and the goal of the program was not to produce value in excess of its cost anyway. It was to land a man on the moon, and it succeeded.

Not all entrepreneurial activity is successful. The market test to see whether entrepreneurial actions are successful is whether they are profitable. If an innovation creates more value than it costs in resources to produce it, that innovation is profitable and an example of successful entrepreneurship.Footnote 1 If the innovation costs more to implement than its value to purchasers, the innovator realizes losses and the entrepreneurial act was unsuccessful. Whether successful or not, the entrepreneur’s goal is to create value, which then generates profit.

To lead with an example, in 1981 John DeLorean began producing an automobile with a stainless steel body. Production was short-lived. The DeLorean automobile was never profitable, and the firm went out of business. Mr. DeLorean’s automobile was an engineering success. It worked as promised, and the rust-proof stainless steel body offered some advantages to consumers, although consumers viewed those advantages as insufficient to return Mr. DeLorean a profit. The DeLorean automobile was an engineering success but an entrepreneurial failure.

Building on that example, consider two government projects: the Manhattan project that produced the atomic bomb and the Apollo program that landed a man on the moon, both of which have been offered as examples of the successes of the entrepreneurial state. The Manhattan project was initiated jointly by the governments of the United States, the United Kingdom, and Canada in 1939, with the goal of producing an atomic bomb. As is well-known, the project was successful, and the use of two atomic bombs prompted the Japanese to surrender to end their involvement in World War II. The Apollo program was officially initiated in 1961 when President Kennedy announced the goal of landing a man on the moon and safely returning him to Earth before the end of the decade.Footnote 2

The Manhattan project and the Apollo program are examples of engineering successes, much like the production of the DeLorean automobile. In all three cases, the engineering goals were met. Stainless steel automobiles were produced, atomic bombs were produced, and men landed on the moon. But there was no entrepreneurship involved in the Manhattan project or Apollo program. Rather, political leaders established engineering goals, much as John DeLorean did, and spent enough money on those projects to see them to completion.

As Mazzucato (2021, p. 4) says about the Apollo program, “cost was not the issue: the point was to get the job done.”Footnote 3 Could those projects have been completed more quickly had different methods been used? Could the same result have been accomplished at lower cost had different methods been used? More important from the standpoint of entrepreneurship, did the end products produce more in value than they cost to produce? These questions cannot be answered because the programs were produced through a top-down process in which resources were taken involuntarily from taxpayers to fund projects that could only fail in an engineering sense. While the programs undoubtedly produced benefits, there is no way to evaluate whether the benefits exceeded the costs. Those projects are not examples of entrepreneurship.

Entrepreneurial Government

While the Manhattan project and the Apollo program are examples of engineering, not entrepreneurship, one example of government entrepreneurship is the cooperative effort of the British and French governments to produce a supersonic airliner. That program had an engineering goal but also an entrepreneurial one—to enable cost-effective commercial supersonic flight. That program was an engineering success but an entrepreneurial failure.

Mazzucato (2021, p. 51) describes the Anglo-French supersonic Concorde airliner as “a technological triumph but cost vastly more than forecast to build and never led to a supersonic revolution in commercial air travel.” The Concorde was, in this sense, like the DeLorean automobile. Both were engineering successes, but entrepreneurial failures. The difference between the Concorde and the Apollo program or the Manhattan project is that the latter two did not have to justify the worth of their engineering successes. Using the same criteria Mazzucato uses to evaluate the Apollo project, the Concorde was just as successful.

These examples illustrate how entrepreneurial government must be evaluated. The setting and accomplishing engineering goals gives no evidence about whether government is entrepreneurial. Entrepreneurship is at its foundation an attempt to create value, not an attempt to achieve some technological goal. The engineering successes of governments, such as the triumph of producing a supersonic airliner or landing a man on the moon, offer no evidence about whether government has been a successful entrepreneur. At least in the Concorde’s case, governments were trying to be entrepreneurial. They just failed. In the case of the moon landing, there was no consideration given to the creation of value in excess of its cost.

To be clear, the issue here is not over whether the value created by the Apollo program exceeded its cost. Perhaps it did, but that is irrelevant. The goal of the program was not to create value in excess of its cost. The goal was an engineering one of accomplishing the mission, regardless of cost. This paper is not arguing against governments establishing engineering goals. Rather, it is arguing that engineering is not entrepreneurship.

The idea of entrepreneurial government is misguided. The above examples are suggestive, but when one understands what entrepreneurship is and the role it plays in economic development, it becomes apparent that attempts to design an entrepreneurial state cannot succeed. This is not just a matter of semantics. Mazzucato argues that the success of the Apollo program, the Manhattan project, and other government engineering successes lay the foundation for the employment of an entrepreneurial mission-oriented government that can be equally successful at addressing other challenges, such as climate change, inequality, improving health care, and narrowing the digital divide. These issues are categorically different from the engineering challenges like the Apollo program or the creation of a supersonic aircraft. This paper explains why, but the short answer comes down to a simple distinction: engineering is not entrepreneurship.

Engineering and Entrepreneurship

Schumpeter (1939) made a distinction between invention and innovation. Invention is the development of a new idea or process. Innovation is the creation of a profitable product as a result of implementing the invention. Entrepreneurs are the people who transform inventions into innovations. Using Schumpeter’s taxonomy, the government accomplishments listed in the preceding section are inventions, not innovations, and they are not the result of entrepreneurial government. Emphasizing the difference, Schumpeter (1939, p. 84) says “Innovation is possible without anything we should identify as invention, and invention does not necessarily induce innovation, but produces of itself…no economically relevant effect at all.” Engineering and invention by themselves produce no tangible benefit to people. The benefits come when those inventions are transformed into innovations that create value.

Consider the example of the development of the graphical user interface for computers. The graphical user interface, including windows on a computer screen and the use of a mouse to navigate the screen, was invented at the PARC laboratory of the Xerox Corporation in the early 1970s. The engineers at Xerox were the inventors, but Xerox never made a profitable product using their invention. The innovators were Steve Jobs, who introduced the Apple Macintosh computer, and Bill Gates, who developed the Microsoft Windows operating system. The people at Xerox did the engineering. Steve Jobs and Bill Gates were the entrepreneurs.

When one thinks of great entrepreneurs in markets, they are innovators, to use Schumpeter’s terminology, but rarely inventors. Andrew Carnegie did not invent the Bessemer process but made a fortune applying it to create the US Steel Corporation. Henry Ford did not invent the assembly line, but he made his fortune applying the concept to the manufacture of automobiles. As just noted, Steve Jobs and Bill Gates did not invent the graphical user interface for computers. All of those entrepreneurs took the inventions of others to create profitable products. Thomas Edison, founder of the General Electric Company, is a rare example of an individual who was both an inventor and an innovator.

Mazzucato (2015, ch. 5) discusses the growth of Apple in the consumer electronics market, pointing out that much of the technology Apple used was created with some government backing. Her recounting of Apple’s success illustrates Schumpeter’s distinction between invention and innovation. This is one of many examples of government invention—engineering accomplishments—that have enabled entrepreneurs to be innovative. Her discussion illustrates the difference between invention and innovation—between engineering and entrepreneurship. As she explains, government engineering produced inventions that opened the opportunity for Steve Jobs and his Apple Computer Company to be entrepreneurial. Government contributed to the engineering. Apple and Microsoft did the entrepreneurship. Entrepreneurship creates value from inventions. On their own, inventions have no value. Entrepreneurs transform inventions into innovations that people value.

Apple provides an excellent example of innovative entrepreneurship because product after product that the company introduced were panned by experts as having no commercial potential. Computer experts argued that people did not want toy computers like the Apple II. Marketing experts said the iPhone would be a niche product because people wanted phones with mechanical keypads. Steve Jobs had the entrepreneurial vision to turn the inventions of others into profitable innovations that enhanced people’s lives. Mazzucato (2015, p. 112) also notes that the technology behind Apple’s “virtual assistant Siri was developed at Stanford University.” But again, the invention has no value until an innovator applies it. Jobs recognized its potential and incorporated that technology in his iPhone in 2007.

Engineers are the inventors, but they are not entrepreneurs. Entrepreneurship, when successful, adds value to the economy and improves human well-being. Engineering provides raw material that can be used by entrepreneurs, but engineering by itself does not make people better off. Engineering is not entrepreneurship.

Profits and Progress

Capitalist economies are continually evolving. As Schumpeter (1947, pp. 82–83) observed: “The essential point to grasp is that in dealing with capitalism we are dealing with an evolutionary process.…Capitalism, then, is by its nature a form of method of economic change and not only never is but never can be stationary.” Biological systems also evolve, but there is no metric to judge whether a present ecosystem is better or worse than those that preceded it. The same is not true of economic evolution.

Schumpeter describes the evolutionary process of capitalism as one of creative destruction. New and improved products and new production methods displace the old. Much as with biological evolution, the process of creative destruction evolves through the survival of the fittest, and fitness in a market economy is profitability. Production occurs through the purchasing and combining inputs to produce output, and profits result when the value of the output exceeds the cost of the inputs. If the inputs cost more than the output, the result is a loss. Profitable firms thrive and grow. Firms that incur persistent losses wither and die.

Profit is an indicator that the profitable firm adds value to the economy, according to the judgments of those who are producing, buying, and selling profitable products. Profit occurs because those who are consuming the output place a higher value on it than those who are selling the inputs place on those inputs that produce the output. A profitable firm takes inputs with less value and combines them into outputs with more value than the inputs. Profit is not a measure of the full value generated by an innovation. Profit is the benefit to the seller, but the buyer also receives benefits in the form of consumer surplus—the utility the buyer gets in excess of the price of the product. The evidence is that both buyers’ and sellers’ benefit is that they both want to enter into the transactions that produce the seller’s profits.

When a firm introduces a value-enhancing product into the market, it generates profits for the firm. Over time, competing firms have an incentive to introduce similar products and even more, to introduce products that consumers prefer to existing profitable products. Profits for the initial innovator decline as a result, but the value of the innovation remains. As Holcombe (2014) describes, the result of competing innovators is that the value produced by a firm’s innovations increasingly shifts away from producers toward consumers in the form of consumer surplus. The process of creative destruction displaces products in the market with products that bring higher value to consumers. The fact that purchasers choose to purchase the new products over the old is evidence that they place a higher value on the new products.

People can see by casual observation that humankind is materially better off now when compared to a century ago, or even 50 or 20 years ago. Entrepreneurship is the engine that drives economic progress, as Holcombe (2007) explains. Innovations enhance the standard of living well-beyond income growth by bringing new products to market. Air conditioning, jet aircraft, smart phones, and an endless list of innovative products have been the result of entrepreneurs who have found ways to add value to everyone’s life. Engineering, by itself, adds no value. Entrepreneurship transforms engineering advances into innovations that enhance human well-being.

The distinction between engineering and entrepreneurship is crucial for public policy purposes because government missions detract from human well-being if they cost more than the value they bring. Advances in human well-being are produced by entrepreneurship, not engineering. Policymakers will be misled if they equate engineering successes with entrepreneurship. The examples offered above clearly show the distinction. The Apollo program was not entrepreneurial. The Concorde project was. Engineering is not entrepreneurship.

Uncertainty and Entrepreneurship

Kirzner (1973) defines the act of entrepreneurship as the discovery of a previously unnoticed profit opportunity. This definition would eliminate the Manhattan project and Apollo program as examples of government entrepreneurship because they were not intended to produce a profit or designed to return value greater than their cost, even if they might have done that. Those programs had engineering goals, not entrepreneurial ones.

Mazzucato (2021) emphasizes the risks involved in those programs and the uncertainties about how their goals could be accomplished, or even if they could be accomplished. There are always risks and uncertainties when trying to do something that never has been done before. But there is a fundamental difference between the risks and uncertainties in those projects and the risks and uncertainties that entrepreneurs face.

Because entrepreneurial innovations introduce something new into the economy, the entrepreneur can never know whether an innovation will be profitable. Henry Ford’s judgment that his innovation would be profitable proved correct; John DeLorean’s judgment turned out to be incorrect. These entrepreneurs faced engineering uncertainties as they designed products and production methods that had not previously been tried. But they also faced the uncertainty that even if their engineering goals were met, they would not add value to people’s lives—they would not be profitable.

Because entrepreneurs are speculating about the profitability of something previously untried, Foss and Klein (2012) emphasize that a major component of entrepreneurship is making judgments in the face of uncertainty. One can only speculate about how something that has not previously been tried will turn out. Entrepreneurs use their judgment about the potential for engineering successes but also about profitability. For government projects to be entrepreneurial, they must not only set engineering goals but also embody measures to indicate whether the value they produce exceeds the cost. Few government projects do this. The Anglo-French Concorde, discussed above, is a rare exception. Discussion about entrepreneurs tends to focus on the successful ones, the Henry Fords and Steve Jobs of the world, rather than the John DeLoreans who had ideas they thought would be profitable but turned out not to be.

The engineering uncertainties in the Manhattan project and Apollo program were different types of uncertainty. To succeed, those projects required technological advances beyond the technologies currently available, and there was genuine uncertainty about whether those technological challenges could be met. But there was no consideration of any entrepreneurial risk: whether the value of those projects would be greater than their cost. That did not matter to the success of the projects.

The fact that there were risks and uncertainties as to whether the Manhattan project or the Apollo program could achieve their engineering goals does not make them entrepreneurial. Entrepreneurship is the attempt to create more value than the cost of the entrepreneurial venture. Are we better off because we have nuclear weapons and have landed men on the moon? A persuasive argument could be made that people would be better off had nuclear weapons never been developed. One piece of evidence that the Apollo project was not worth the cost is that four decades after the last moon landing, nobody has found it worthwhile to go back. If the goal of these programs was to be entrepreneurial, good arguments could be made that they were entrepreneurial failures which, like the Concorde, cost more than they returned in value.

This is not to say that these programs were failures. They accomplished their goals. They were successful. They just were not entrepreneurial. The idea behind entrepreneurial government is that it should add value to people’s lives. Most missions that governments pursue have no way to judge whether they do so. Engineering is not entrepreneurship.

Government Monopolies

Governments do market some output. Water and wastewater treatment is widely produced and sold by governments, and in many cases electricity, telephone service, internet service, and public transportation such as bus and train service are government-produced. One might be tempted to view these as entrepreneurial ventures, but in almost all cases, governments prohibit competitors and establish themselves as monopolists. Because consumers have no choice if they want to consume the service, this blunts any entrepreneurial incentives. Government-enforced monopolies have a disincentive to innovate, because innovations can cannibalize their existing products and devalue their capital investments.

Christensen (1997) called this the innovator’s dilemma. Several examples in the computer industry illustrate the problem. In the 1960s IBM had a dominant position in the computer industry with their exceedingly profitable mainframes. They were slow to enter the minicomputer market because they did not want their minicomputers to cannibalize their mainframe business and were eclipsed by minicomputer innovators such as Digital Equipment Corporation (DEC). While DEC had substantial market share with their profitable minicomputers in the 1980s, many readers may be unfamiliar with the company, because they were slow to enter the PC market, not wanting to cannibalize their very profitable minicomputer business. DEC was bought by Compaq which then was bought by Hewlett Packard, fading out of the computer market.

That is the way that the creative destruction of capitalism works, but that innovator’s dilemma does not apply to government-enforced monopolies. Government monopolies do not go out of business, and they do not face entrepreneurial uncertainty. They do not have to worry about competitors undermining their operations with new and improved products and lower costs. This removes the incentive to innovate. Innovation is always risky, and there is no reason for those in government to interfere with a currently successful operation by taking the risk.

Economists usually conclude that monopolies are inefficient, and there is no good reason to think that government monopolies are an exception. While they may restrict output to raise their prices, Niskanen (1971) has explained that government managers have an incentive to maximize their budgets and to invest in capacity well beyond the efficient level. The incentive structure facing government decision-makers leads them to allocate resources under their control inefficiently and does not give them an incentive to be innovative or entrepreneurial.

Government Decision-Makers

Governments do not take actions or make decisions. Individuals act, and individuals make decisions. Recognizing this, governments cannot be entrepreneurial in the literal sense, and any suggestion that they are must be a shorthand reference to individuals within government acting entrepreneurially. The idea of entrepreneurial government must be analyzed by looking at the incentives and actions of individual government decision-makers.

Mazzucato (2021, p. 24) describes the goal of her book by saying “Mission Economy is about how government must change from within in order to deliver on ambitious outcomes, as well as how it must change its interaction with other actors.” She goes on to say (2021, p. 25, italics in original) that government “must transform itself into an innovating organization with the capacity and capability to energize and catalyze the economy to be more purpose driven.” These statements make government appear as if it is a single individual. Looking at her italicized itself, it should be clear that government cannot do anything to itself, although individual government decision-makers may be able to initiate and enact changes.

This is not a minor point. Mazzucato treats government as an omniscient benevolent despot that can change its behavior at will. In fact, the actions of government are the result of a collective decision-making process in which many individuals, all with their own individual interests, interact within an institutional structure to determine what collective actions it will undertake. If Mazzucato is correct that “government must change from within,” one question is why government has not already made these changes. The answer is that those who make the decisions that determine the direction of government do not have an incentive to make the changes Mazzucato recommends. Even if government decision-makers wanted to make those changes, in many cases they lack the information needed to make them. Government is not omniscient.

In democratic governments, public policies are made by elected officials whose primary incentive is to win the next election. Even the most public-spirited elected officials can only act in the public interest if they are reelected. Those policies are carried out by government bureaucrats whose incentives are to maximize their budgets, as Niskanen (1971) explains, and to perpetuate their jobs. Elected officials have an incentive to address problems that resonate with voters. Bureaucrats have little incentive to solve those problems, because if the problems go away, so do their jobs.

What Goals Make Good Missions?

The Manhattan project and the Apollo program are examples of good missions, in the sense that they had clearly defined goals and clear indicators of mission success. Those were engineering missions, not entrepreneurial ones. Mazzucato argues that the successes of these programs provide a template for employing an entrepreneurial mission-oriented government to solve a wide range of problems. Unlike the Manhattan project and Apollo program, that had clearly defined goals, the missions Mazzucato (2021) suggests do not have clearly defined goals and do not have clear indicators of mission success.

Mazzucato (2021, pp. 104–105) lists 17 goals for a mission-oriented government. Those goals are popular, making them good goals from a political standpoint, but they make poor missions because they are not clearly defined goals and do not have clear indicators of mission success.

The first goal in Mazzucato’s list is to end poverty in all its forms everywhere. This is an aspiration that has no policy content. Poverty has no absolute definition. Someone below the official poverty line in the United States would have a standard of living above the median citizen of many countries. Sen (1999) concludes that elimination of poverty requires more than just increasing people’s incomes—it requires expanding their freedoms. The point is not to accept or reject Sen’s definition of poverty, but to show that the goal is ambiguous. It gives no hint of how it can be accomplished, or what would indicate that the goal has been accomplished. One can point to clear evidence that a man has landed on the moon. One would be hard-pressed to offer a metric that would show whether poverty has been eliminated. This is an aspiration, not a mission. Most of the goals Mazzucato lists have that same quality.

The second goal is to end hunger, achieve food security and improved nutrition, and promote sustainable agriculture. This is similarly vague. How would one measure improved nutrition and know whether that goal was achieved? If nutrition improved, would people declare that goal accomplished and move on, as they did with the moon landing? Unlike a moonshot, these goals are open-ended and can never be achieved. It is disingenuous to set goals that never can be achieved.

Other goals are similarly open-ended. Good health; inclusive and equitable education; access to affordable and reliable energy; safe, resilient, and sustainable cities; and the building of resilient infrastructure are among the other goals Mazzucato lists. The ends those goals envision are, for the most part, desirable, but they are not missions like building atomic bombs or landing men on the moon. They are not amenable to engineering solutions.

Among the vaguest of the listed goals is “take urgent action to combat climate change and its impacts.” Governments are currently taking action on many different margins to combat climate change, so reading this charge literally, it has already been accomplished. Mazzucato (2021, pp. 137–146) discusses this mission at length, framing it as the green new deal, but she is vague about specific steps that would lead to a clear “mission accomplished” conclusion. Lofty aspirations to approach vague goals are not the same thing as missions.

Another goal is to “Promote sustained, inclusive and sustainable economic growth, full and productive employment, and decent work for all.” This is what capitalism has been doing since the beginning of the Industrial Revolution, with no central plan and no government direction. Indeed, many of the goals Mazzucato lists have been advanced through entrepreneurial activity in decentralized economies. Capitalist economies have reduced food insecurity, reduced poverty, provided reliable energy, and more. Why set aside institutions that have already shown success in exchange for turning them into government missions?

The “war on poverty” declared by United States President Lyndon Johnson in 1964 provides a good example of the way governments address missions with vague goals. According to the government’s official poverty statistics, the percentage of the population in official poverty at the end of the 1960s was about 12 percent and has fluctuated around that number for the next half-century (Chaudry et al. 2016, p. 9). It has risen to slightly above 15 percent and fallen to slightly above 11 percent over the half-century, but one must be impressed by the remarkable stability of the US official poverty rate for half a century, in the face of a mission to go to war against it.

The US government set mission goals to land a man on the moon and to eliminate poverty at about the same time. The first goal was accomplished in less than a decade, while there has been no progress (according to official statistics) in the second. This section suggests why. Missions with vague goals and no clear indicators of success are not amenable to attack by entrepreneurial governments.

Mission-Oriented Democracy

The missions discussed in the previous section are lofty aspirations, but whether they can be effectively addressed depends on the capability of government to address them. Rather than rely on wishful thinking, this section discusses the way that government policies are made and considers how decision-makers in democratic governments—voters, politicians, bureaucrats, lobbyists, and interest groups—will interact to respond to those mission statements. The common elements in the missions discussed in the previous section is that they have vague goals and no clear indicators of success.

Voters. Voters collectively determine who holds elective office, but each individual voter has no political power. In elections with more than just a few voters, voters know that their one vote will not be decisive, so they have little incentive to be well-informed. They are rationally ignorant, as Downs (1957) explains, and following Caplan (2007) may even be rationally irrational. Knowing that their one vote will not be decisive, Brennan and Lomasky (1993) explain why voters may vote for alternatives they would not choose if the choice were theirs alone. Because they know election outcomes will be the same regardless of how they vote, or even whether they vote, voters vote for alternatives that make them feel good, with little incentive to analyze the public policy outcomes that would be likely under the election alternatives they face.

Issues are complex, and voters cannot have the expertise to understand the details of public policy. Few of those voters will understand enough about electricity to do their own home electrical repairs. They will hire an electrician. Similarly, they will hire a plumber to do plumbing repairs. Public policy issues like those Mazzucato (2021) lists are more complex than plumbing or electrical wiring. The idea that voters can make informed choices about the efficacy of specific policies to improve food security, provide reliable and sustainable energy, or improve health outcomes is wishful thinking.

Most voters adopt their views on public policy from those of their political leaders, as Holcombe (2023) explains. They are offered alternatives by various parties and candidates and choose one to anchor on as they form their public policy preferences. They vote for the public policies that make them feel good about casting their vote. It is easy to see why voters would vote for candidates who want to end poverty, generate sustainable and reliable energy, and increase educational opportunities. Voters can feel good about supporting those aspirations.

Politicians. The first motivation of politicians is to win the next election, so they can remain in power. Even the most public-spirited politicians can only do good things if they remain in power. Voters like policy proposals that make them feel good, so legislators offer policy proposals that make them feel good. Those policy proposals tend to come in the form of vague aspirations rather than concrete policies. Ending poverty or increasing food security are examples. They are worthy aspirations, but without the suggestion of any actual policies that can accomplish those goals.

Mazzucato’s (2021) book is in this sense a good script for a successful political campaign. She offers vague “feel good” policy aspirations along with the claim that government can do these things, without detailing specific policies that can accomplish those policy goals. People like the message, which explains why this is a formula for a successful political campaign and explains the appeal of her book.

Political platforms are deliberately vague on the details because many people will share those aspirations but will differ on how to best accomplish them. As Arrow (1951) shows, there is in general no set of public policies that will be preferred by all others by a majority of voters.Footnote 4 Feel-good aspirations generate political support. Specific policy proposals risk generating opposition.

Vague policy aspirations have another advantage. Because they are vague on actual public policies, they allow legislators the flexibility to design policies that work to the advantage of organized interests, who can also offer political support. Legislators shape specific policies to conform to the desires of organized interests, who repay legislators with campaign contributions and support. Interest groups tend to be well-informed about policies that affect them, in contrast with the rational ignorance of voters.

From a political standpoint, whether politicians succeed in accomplishing the aspirations they campaign on seems to be of little importance. Franklin Roosevelt instituted his New Deal to mitigate the Great Depression, but the Depression lingered on until the military buildup due to World War II brought it to an end. The New Deal was not successful at ending the Depression, but it was politically popular. Similarly, Lyndon Johnson declared a war on poverty in 1964, but ending poverty remains one of Mazzucato’s (2021) goals well over half a century later. Lofty aspirations win political support, regardless of whether they are achieved.

Bureaucrats. While public policies are chosen by legislators, they are implemented by bureaucrats. Niskanen (1971) explains why, in the same way that firms act to maximize profits, bureaucrats act to maximize their budgets. While their budgets may be inefficiently large, bureaucrats have no incentive to actually accomplish vague missions such as ending poverty or ending hunger. If an agency’s goals were accomplished, the jobs of those who work in the agency would be in jeopardy. The Manhattan project ended. The Apollo program ended. Bureaucrats have no incentive to produce themselves out of their jobs.

When missions are vague and do not have clearly defined metrics to determine whether they are succeeding, bureaucratic incentives lead to self-perpetuating programs that never approach accomplishing those vague goals. To do so would eliminate the jobs of the bureaucrats who administer the programs.

Lobbyists and interest groups. Missions with vague goals and with no clear mechanisms to accomplish them invite entrepreneurial individuals to propose actions they can take to address those goals. While citizens and voters have little incentive to be informed about public policy or to actively engage in the political process, organized interest groups have an incentive to negotiate with politicians to gain benefits for themselves. Those who represent organized interest groups are the real entrepreneurs in entrepreneurial government. They engage in rent seeking (Tullock 1967; Krueger 1974) and agency capture (Stigler 1971) in which concentrated and organized interests have an advantage in gaining benefits for themselves at the expense of larger but unorganized interests (Olson 1965).

The mandate in the United States that gasoline for motor vehicles contain ethanol, passed in 2005, is a good example. The vague policy goals were to move the nation toward energy independence and to move toward more sustainable and environmentally friendly energy sources. Most ethanol is made from corn, and lobbyists representing the corn farming and processing industries, with corn processor Archer Daniels Midland heavily involved, argued that requiring motor fuels to contain ethanol would move toward accomplishing those goals. Since 2010 the United States has been a net exporter of petroleum, raising the question of whether energy independence remains a justification for the mandate. Whether ethanol is more environmentally friendly than petroleum is questionable, considering the amount of land that must be cleared to grow the corn for ethanol.

The mandate remains in place because it benefits a concentrated and well-organized interest group—the corn lobby—while it imposes costs on a larger but poorly organized group, those who purchase motor fuels. Organized interests can negotiate with government decision-makers to promote programs that benefit them, while unorganized interests are left out of the bargaining process. This example shows the way that entrepreneurship actually works in government. While legislators and bureaucrats have little incentive to be entrepreneurial, lobbyists and organized interests can take advantage of vague missions to propose actions to address those missions. Lobbyists and interest groups are the entrepreneurs in entrepreneurial government.

Amenta and Stagnaro (2022) show that subsidies to renewable energy in Europe have produced little renewable energy but have benefited the subsidized firms. Sandström and Alm (2022) document the failures of Swedish policies to subsidize biogas, ethanol, and fossil-free steel to accomplish their environmental goals, while benefiting the firms receiving government support. These are examples of a system of what Holcombe (2018) calls political capitalism, in which profitability increasingly comes from government connections rather than from producing value for consumers.

Promoting mission-oriented government, Mazzucato (2021, pp. 32–35) is critical of the conclusions arrived at by public choice approach to analyzing government—an approach that explains why entrepreneurship in government favors concentrated interests rather than the general public interest. But Mazzucato offers no explanation why the public choice analysis leads to flawed conclusions. Public choice theory uses the same tools of analysis that social scientists use to analyze markets to analyze government decision-making. This is the way that social science should be undertaken.

Government is not a single entity that makes decisions and designs public policy. Rather, individuals make decisions and public policies are the result of a collective decision-making process in which the interactions of many individuals are aggregated to create public policy. When thinking about the missions government might address, a complete analysis must set aside wishful thinking to analyze the way that governments actually do arrive at collective decisions and make public policy. Doing so points toward public policies that benefit well-connected interest groups while doing little to further the stated missions. Lobbyists and members of concentrated interest groups are the entrepreneurs in this process, not those in government.

Choosing Missions

Politicians look for missions that will gain political support. Voters favor missions that make them feel good about supporting them. Few people will be opposed to ending poverty and hunger, improving health outcomes, and generating sustainable economic growth. In contrast with missions such as building a nuclear bomb or landing a man on the moon, there is no metric to signal that their goals have been accomplished. Indeed, that is part of the political appeal of such goals. They lay the foundation for establishing perpetual bureaucracies to address them.

Governments are not institutionally designed to achieve goals like this. As documented in many studies in Wennberg and Sandström (2022), issues like this are better addressed by decentralized market institutions rather than the hierarchical structure of government, but this idea is a difficult political sell. Voters are more inclined to support candidates who claim they have the answers than those who say decentralized private activity will better address these issues if government just gets out of the way.

A mission-oriented state will choose its missions based on their political popularity rather than their potential to benefit citizens or the likelihood that the stated missions can be accomplished. Politicians and bureaucrats within government have no incentive to be entrepreneurial. The entrepreneurs in mission-oriented government are lobbyists and organized interest groups.

Conclusion

Successful government cannot run on slogans. The ideas of entrepreneurial government, or mission-oriented government, are slogans that have little content for actually developing successful public policy. Examples that advocates of entrepreneurial government have used to promote the idea have been examples of engineering, not entrepreneurship. Those examples, like the Manhattan project to create a nuclear bomb or the Apollo program to land a man on the moon, had well-defined goals, were not constrained by costs, and were not designed to create value in excess of their cost. Indeed, there was no attempt to measure the value of the completed projects.

This engineering approach to accomplishing missions cannot be applied when goals are vague and when there is no clear indicator of what constitutes success. The institutional structure of democratic government leads to interest group politics, rent seeking, and bureaucracies more intent on protecting and increasing their budgets rather than accomplishing a mission. Indeed, if the missions actually were accomplished, those working on them would lose their jobs, creating a disincentive to success.

Many real-world examples illustrate the divide between political success and mission success. Roosevelt’s New Deal and Johnson’s War on Poverty were politically successful, despite the New Deal’s failure to end the Depression and the War on Poverty’s failure to even reduce poverty (according to official government statistics). The British/French Concorde supersonic airliner is an example of actual government entrepreneurship, and while it was an engineering success—they did build a supersonic airliner—it was an entrepreneurial failure.

Over time, a mission-oriented government would enable interest groups to strengthen their political connections resulting in what Olson (1982) describes as the decline of nations. The people who have the incentive to be entrepreneurial in a mission-oriented government are not those in government, but members of concentrated and well-organized interest groups. The theory behind these conclusions is well-established. The institutional challenge is to design political institutions to prevent these welfare-reducing activities from taking place. Attempting to make government more mission-oriented and more entrepreneurial will encourage these counterproductive political activities.

The mission goals Mazzucato (2021) suggests, such as reducing poverty, increasing food security, providing reliable and affordable energy, and increasing educational opportunities, are goals that capitalist economies have been accomplishing since the beginning of the Industrial Revolution. She gives no good reason for displacing those decentralized market institutions that have proven successful to take a chance on government missions to address the same issues. The examples Mazzucato (2015, 2021) uses to promote entrepreneurial mission-oriented government are examples of engineering, not entrepreneurship. Engineering is not entrepreneurship.