 Hi, my name is Mariana Mazzucato and I'm here to talk about the case for government-funded innovation. A really big question in Europe, not just since the crisis, but really since the last, I would say, 20 years, is where are the European Googles? You know, why are all these funky, creative, dynamic, innovative companies like Apple, Amazon, Google, Facebook, coming out of the US and not out of Europe? And the answer that you often hear is that, you know, there's too much state, there's not enough market, there's not enough venture capitalists, there's not enough of an entrepreneurial culture, we don't have enough garage tinkerers, these kind of genius guys who in their garages think up great things. My mission is to make this debate much less ideological and to really think about the relationship between the state and the market. Provocatively, you know, what actually makes the iPhone so smart and not stupid? Well, it's revolutionary technologies that were actually funded by government. From the internet to GPS, touchscreen display, that as well was funded by government, as was Siri, the new voice-activated personal assistant on the iPhone 5. Now, of course, you need people like Steve Jobs to put together these existing technologies, but it is wrong to think that these people, these geniuses, came out of nowhere. Now, this is not sort of big bureaucratic government, you know, funding these things sort of top-down. This was result of a decentralized network state which had, you know, sort of 17 different agencies were involved often in funding these kinds of technologies. The problem is that companies have become increasingly short-termists, increasingly spending their profits on financialized practices which are just boosting their stock prices and not making these long-run committed investments in areas like research and development and human capital formation. And in fact, the whole venture capital model of funding these innovations, which we often hear we don't have enough of in Europe, is actually quite problematic because all of these innovations actually took about 15 to 20 years to come about. And the venture capital model is one where the returns are sought after more of a three to five-year cycle. What we really need is patient long-term committed finance and what we find around the world from Singapore, Korea, Brazil and Silicon Valley, it's often been public funding agencies that have provided this patient finance. Private finance is too risk-averse to fund precisely because innovation is so uncertain. You know, nine out of ten attempts will fail. Now, what this means is that when government attempts to engage in the process of innovation, it will fail. For every internet, you have nine concords. What venture capitalists can do is that, you know, they too, nine out of ten investments will fail. But that one winning investment will more than cover the losses often and they will provide the funds to fund the next round. That's what we don't have today with government, that it's almost a complete giveaway. There's so much talk today about building innovation ecosystems. And if you know anything about biology, you'll know that ecosystems can be either symbiotic or parasitic. We used to have in the 50s, 60s and even in the early 70s, companies like, say, you know, AT&T, which had Bell Labs or Xerox, which had Xerox PARC, big R&D labs that were co-investing with government in these big new opportunities. New opportunities which then created new technologies which people like Steve Jobs were able then to use, mixed together in different ways and create the iPhone. We've gone from having symbiotic public-private partnerships where the public and private sector were co-investing together into the big new opportunities of the future into increasingly parasitic relationships where we are socializing the risk in different types of, you know, open innovation systems, but privatizing the reward. The kind of ecosystems we want are not just public-private partnerships where the government is simply de-risking the private sector or getting out of the way, you know, taking out the red tape, getting rid of tax. It's actually building ecosystems, symbiotic ecosystems where the public and private sectors co-invest in a dynamic setting and also share the rewards. The state in the U.S. that funded the Internet had it been able to earn back even just 1% of the profits from the Internet. There would be so much more, so much more today that it could be spending on green instead of many of the same agencies which funded the whole Silicon Valley miracle like the National Science Foundation which funded Google's algorithm are today under extreme pressure to cut their budgets. Tomorrow might be the green revolution but what we might need and say 20 years time is some other color revolution and where is the money going to come from? Unless government departments and agencies can actually earn something back from these investments, the money in the next round is simply not there. We might have to think of direct mechanisms for the state to receive back a return. This could happen either the state retaining a golden share of the IPR, the patents, or retaining some equity and or income contingent loans. We have that for students, why not for companies? And what's very interesting in emerging economies like well the successful ones that actually are innovating like Brazil and China is that because their state investment banks are one of the leading players within the public infrastructure that are funding innovation actively alongside the private sector, they do retain equity. A real challenge today for economies around the world is really to build these symbiotic public-private partnerships and where they must begin is asking what do we want these sectors to do together. Both the internet and even the word nanotechnology came from civil service workers within these bureaucratic organizations. The state doesn't only fix markets, which is a traditional view of what the state does in the economy. It actively shapes and creates them.