This book, which builds on the author’s work for a high-impact DEMOS report, debunks the myth of the state as a large bureaucratic organization that can at best facilitate the creative innovation which happens in the dynamic private sector. Analysing various case studies of innovation-led growth, in particular examples from Silicon Valley – from the Internet to the technologies behind the iPhone – it describes the opposite situation, whereby the private sector only finds the courage to invest after the entrepreneurial state has made the high-risk investments. It argues that in the history of modern capitalism – and today in what might soon become the ‘green’ revolution – the state has not only fixed market failures but also shaped and created markets, actively investing in new technologies and sectors that private investors only later find the courage to move into.