economic mission

Marco Buti, ATACAMACHAÇA
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By MICHAEL ROBERTS*

Commentary on the Book of Mariana Mazzucato.

Italian-American economist Mariana Mazzucato, who works and lives in London, has become a household name in what might be called the “centre left” or, more broadly, in mainstream economic and political circles. She released a new book Mission Economy: a moon shot guide to changing capitalism [Economic Mission: A Launch Guide to Changing Capitalism].

Mazzucato was economics adviser to the UK Labor Party under Corbyn and McDonnell for a brief period; she is apparently heard by left-wing US Congresswoman Alexandria Ocásio-Cortez; moreover, she has advised Democratic presidential candidate Senator Elizabeth Warren as well as Scottish nationalist leader Nicola Sturgeon. She even received the title “The Scariest Economist in the World” because her ideas were apparently undermining the beliefs of important people. According to the London Times, she is “admired by Bill Gates, consulted by governments; in fact, Mariana Mazzucato is that expert with whom others argue at their peril”.

However, although she started out as an adviser on the left of the political spectrum, more recently she has made herself available across the spectrum. So she quickly abandoned her role as adviser to Corbyn. According to a critic of her new book, "Mazzucato quickly recognized that there was no real role for her as advisor to Corbyn, and so she resigned after two months."

At the time, he told the Daily Mail: “the people pulling the strings there were Seumas Milne and his team. I didn't feel well and told them: if you want to do what you're planning, do it, but don't do it in my name”. The Mail went on to comment: “After a brief dalliance with the wrong kind of politician, she is keen to point out that she worked closely with the Conservatives, advising Greg Clark, among others, on industrial strategy when he filled the ever-changing role business secretary.

Mazzucato now advises governments and institutions around the world in general; moreover, she has appeared in several international forums. She was appointed, by the World Health Organization, as head of the Health Economics for All Council, in 2020. It is also known, on the other hand, that she recently praised the appointment of the former head of the ECB and central banker (unelected) , Mario Draghi, as Prime Minister of Italy. Presumably, she considered that he will save Italy's economy. As a result of all that, she doesn't look all that scary.

I have reviewed Mazzucato's earlier (much more important) books, the entrepreneurial state e the value of everything, in other articles. In this latest book, she continues her main argument that she developed in previous books: the public sector must lead the way in modern economies. “Rather than acting as investors of first resort, many governments have become passive lenders of last resort, only addressing problems after they arise. But, as we should have learned during the post-2008 Great Recession, it costs much more to bail out national economies during a crisis than to maintain a proactive attitude on the issue of public investment”.

She correctly points out an error that is being widely practiced: “the more we subscribe to the myth of the superiority of the private sector, the worse we will be in the face of future crises”. The role of publicly funded innovation, as well as state-funded research and technological development, has been deliberately downplayed by mainstream policy. And yet, it was publicly funded research that led to the rapid rollout of vaccines for the COVID pandemic. Furthermore, it was public and government-run health services that provided the best response in reducing deaths caused by the pandemic.

Mazzucato wishes, with some reason, to restore and proclaim the “narrative of government as a source of [use] value creation”. Although, as I argue in my review of his penultimate book, government does not create value (ie profit for capital) but uses values ​​(supposedly for the benefit of society). Now this is a distinction that Mazzucato does not recognize, but which capitalists certainly always do. She notes, for example, that an Obama administration loan was crucial to Tesla's success, and that a BBC computer literacy program in the 1980s led to the founding of a leading software development company, as well as to the creation of a low-cost computer used in classrooms around the world.

But most of all, in this book, she aims to promote the model of the Apollo space mission to the Moon as the way to develop innovations and spread them throughout the economy; something she calls a “mission-driven” approach.

As she says, “The Apollo program clearly demonstrated that it was able to drive organizational change at all levels, through multisectoral public-private collaboration, mission-oriented procurement, as well as through state-led innovation. Furthermore, such ventures tend to have side effects – software, camera phones, baby formula – that have far-reaching benefits.” And what this model shows, she says, is that "landing a man on the moon required an extremely capable public sector, as well as a purpose-built partnership with the private sector."

So, what modern capitalism needs is “purpose-oriented” public-private partnerships: “the rocket launches to the moon should be understood not as large isolated ventures, perhaps as the pet project of a minister , but rather as bold social goals that can be achieved through large-scale collaboration between public and private entities”. Apparently – he says – what is needed is “a bold portfolio approach, a redesign of tools, as well as an adequate economic theory to face and produce directionality in growth” – whatever that term “generate directionality in growth” means.

Mazzucato acknowledges that so-called public-private partnerships in the past have often failed to promote the public interest. We must not, however – she says – “repeat the failures associated with the digital economy; they emerged in their current form after the state provided the technological foundation, but then forgot to regulate what was built on top of that foundation. As a result, some dominant Big Tech companies have ushered in a new era of algorithmic extraction of value produced, benefiting the few at the expense of the many.” Instead, it is now necessary to “maintain a vision of civil society as a whole, as a common, including private companies and public institutions”.

She argues that public-private partnerships have focused on de-risking investments through guarantees, subsidies and assistance. Instead, they should emphasize sharing risks and rewards. Therefore, governments and capitalist companies must share the risks in order to distribute the rewards well. This thesis, however, already shows the inherent difficulty of the mission as a valid approach. The mission to overcome the COVID pandemic has already shown which sector took the risks and who is reaping the rewards – just as it did on the Apollo mission.

Mazzucato considers that a fundamental reassessment of the role of the public sector is necessary, which must go beyond the traditional role of correcting “market failures”, as well established in neoclassical welfare economics. This proposes that the State has only the role of “co-creator of the market” and “market modeler”. According to her, “it is no longer a question of fixing markets, but of creating markets”.

But can the government's mission become “creating markets” or “shaping markets”? Is it really possible that the public sector can take the lead in investment for social purposes, thus contradicting investment that is motivated by capitalist profit? Is it really possible that a “vision of the commons” can be “bought” by large companies that normally seek profits for their shareholders? Can companies and governments have different goals?

Can climate change and global warming be reversed while the fossil fuel industry remains untouched by governments? Can growing inequality be reversed through some “vision of the commons” in a public-private partnership? Can tech unemployment be avoided when big tech companies employ robots and artificial intelligence to replace human labor? Can a “launch to the moon” mission approach, based on partnering with big business and creating markets, really succeed, given the social structure of modern capitalism? When these questions are raised, they provide – I think – a clear answer.

Indeed, some of the mission approach schemes that Mazzucato cites in his book have been as unsuccessful as the “public-private” partnerships he criticizes. She advised German company Energiewende on a project to transition energy to renewable sources, but it failed to offer anything better than the others in reducing carbon emissions. She advised Scottish nationalists in launching their National Investment Bank. After two months, the government cut funding from £241m to £205m, a paltry sum to begin with. When Corbyn Labor first proposed this type of bank, it would be capitalized with £20 billion!

And when you have in mind UK Prime Minister Boris Johnson's "mission to the moon", which aimed to mass test and track the spread of the coronavirus, it's best to say no more.

After all, how are these missions to be democratically controlled so that they achieve and focus on “a vision of the commons”? Mazzucato states that it will be necessary to “involve citizens in the solution of social challenges and in the creation of a great civic enthusiasm that feeds the power of collective innovation”. Wandering through this kind of jargon, she seems to be saying that policymakers, researchers (like herself) and business will get together and listen to “citizens” somehow – and that out of that will emerge a widely endorsed set of “missions” innovative.

Mazzucato summarizes: “The Missionary Economy offers a way to rejuvenate the State and, thus, to fix capitalism, instead of doing away with it”. In my opinion, this is an impossible mission.

*Michael Roberts is an economist. Author, among other books, of The Great Recession: A Marxist View.

Translation: Eleutério FS Prado

Originally published on the website The next recession blog.

Reference


Mariana Mazzucato. Mission Economy: a moon shot guide to changing capitalism. New York, Harper Business, 272 pages.

 

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