REVI EW
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This is the key difference between market-making and market-fixing, where the state intervenes in dying industries (which often produces stranded assets with huge economic and social consequential costs). Mazzucato’s proposal with the state sponsoring new industrial sectors is in line with the Austrian political economist Joseph Schumpeter’s concept of “Creative Destruction” as a tool for capitalist progress and development. Another aspect discussed in the essay collection are the causes of uneven development. In his Theory of Combined and Uneven Development, the Russian Marxist revolutionary Leon Trotsky argued that capitalism develops unevenly across different regions with “backward” areas forced to combine old and new forms of production in unique ways. Reinert and Kvangraven et al. disagree and claim that capitalism creates geographical unevenness through its “structured social relations,” meaning that some regions become home to high-tech manufacturing, while others are stuck with extractive industries. A classic example from my personal experience is the uneven development
materials or low-tech manufacturing 3 . Following Reinert’s broader theory, countries that specialize in goods of diminishing returns such as commodities lose advantages compared to those trading in goods of increasing returns such as high-tech manufacturing. Instead of developing sophisticated production capacities, these regions can experience technological regression – losing industrial proficiency they once had or failing to develop it at all. The subordinate position prevents them from moving up the technological ladder. This creates, as the authors claim, persistent core-periphery dynamics where the “polarizing tendencies of global capitalism” are systematically reproduced through production structures. A vicious cycle. This is further discussed on a global scale in relation to financialized capitalism. This transformation is marked by the substantive completion of the internationalization of capital circuits, where finance takes the form of a US dollar market-based system while production is delivered through global production networks. This transformation has increased both the size and nature of value transfer from
“Peripheral regions are further forced into power imbalances, combining traditional economic structures, often of a feudal nature, with subordinate roles in global production.”
of Tehran, the capital of Iran, as a global city during the Pahlavi era (1925-1979) compared to areas in Khuzestan in the southwest of the country, where oil was extracted and people were still living in poverty regardless of the region’s natural wealth. Peripheral regions are further forced into power imbalances, combining traditional economic structures, often of a feudal nature, with subordinate roles in global production. Where this happens, they are often locked into extracting raw
3 See our review of Amir Lebdioui’s book “Survival of the Greenest,” OPEC Fund Quarterly 3/2024, p. 36
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