The Common Good Economy by Mariana Mazzucato – How can Labor make a difference? | | Economics

When Keir Starmer won Labour’s big show pledging to carry out five governing “missions”, prominent left-wing economist Mariana Mazzucato was tipped to be an inspiration. Two years earlier, his new book helps to shed light on why Labor in power struggled to articulate a vision of “mission-led government”, as Mazzucato calls it. Building on and expanding his old work, here he presents “a new economy for working together for the common good”.

From this point of view, the economy is not related to independent forces, which must be established and resolved by public policies, but a project – or several projects – with a direction and a goal. Finances must be adjusted to benefit these social goals rather than simply chasing short-term returns, he says, and companies’ ability to serve people.

As he says, “good financial planning is about aligning goals, fostering collaboration, fostering collective intelligence, and ensuring that all participants share knowledge, risks and rewards”. This also means putting an end to what Mazzucato calls the “false narrative”, popular in some environmental circles, that economic growth is antithetical to tackling the climate crisis.

The “compass” in the title is a set of five points, which Mazzucato says that such an economy should be: the goal is “to control”; developed together with citizens; learning together; reward sharing; and answer. (Hikers may balk at the idea of ​​a five-pointed compass – and would be well advised not to try to follow all of its directions at once).

Each of these points is explained in detail. Co-creation refers to the participation of the grassroots in the creation and reform of government programs, for example – because, “when people help define a problem and develop and implement solutions, they see them as theirs instead of forcing them”.

Reward sharing means ensuring that the producers or owners of valuable economic assets benefit: from Indians whose homes are close to storage, to TV users whose data supports the profits of Big Tech.

This means major changes in taxation – including greater use of wealth taxes – and a stronger use of resources in public contracts, to ensure that workers and taxpayers get their fair share: a process they call “distribution”. “For example, companies that benefit from government-sponsored research should be pressured to keep prices low and not to create patents that are too broad and powerful, making them harder to obtain.”

Aspects of the debate, including the role of the state as a supporter of the arts, are familiar from Mazzucato’s previous work, including his 2013 book, The Entrepreneurial State. But in this mass support he urges us to reject the idea of ​​establishing “market failures”, or to see social and economic problems as negative but inevitable consequences of economic growth, to be solved by an odd project funded by taxpayers – what he calls a “gap-filling strategy”.

According to Mazzucato’s definition, Labour’s attempt at mission-led government failed miserably. Its first and foremost goal – “economic growth” – cannot be a “work” at all, because it has no necessary purpose. What, in other words, should economic growth be for?

In some cases, its appearance is difficult. He takes us on a long journey through the history of economics, from Aristotle through Adam Smith to Amartya Sen, removing all the major ideas and several previous attempts to align them with the best. The book’s views might be tempting to call utopian – a far cry from the political economy we’ve had – if it hadn’t been for the many practical examples, though many are few.

“The seeds of change are everywhere,” he says, citing initiatives that range from providing healthy and sustainable school meals in Sweden to the EU’s goal of helping cities become climate-resilient, to the international Nagoya Protocol on sharing the benefits of natural resources and cultural knowledge.

Mazzucato’s views are reflected in other Labor policies – from using the threat of legislation to use pension funds to invest more in the UK, to writing youth training conditions into clean energy contracts. But while the scope of this ambitious book is global, the analysis also debunks Starmer’s claims that he is pursuing a national “mission,” by explaining how common – and very different – that can look.

The economy works best, he believes, when it achieves the main goals – the production and distribution of an epidemic vaccine; or facing a climate crisis (or, although he is not leaning on an example here, preparing for a new and more dangerous political climate). We need to ask, he says, “not the market failure we want to fix, but what direction do we want the economy to go”.