Mariana Mazzucato - The Value of Everything - Making and Taking in the Global Economy

Polanyi helps us to go beyond both Smith and Marx. Rather than focusing on which activities are inside or outside the production boundary, today we can work to ensure that all activities – in both the real economy and in the financial sector – promote the outcomes that we want: if the quality and characteristics of an activity in question help deliver true value, then it should be rewarded for being inside the boundary. Policymakers must be emboldened to broker ‘deals’ that generate symbiotic public–private partnerships. In the case of finance, it would mean favouring long-term investment over short-term (through measures like a financial transaction tax), but, even more, founding new financial institutions (like mission-oriented state investment banks) that can provide the strategic, long-term finance crucial to the high risk investments required for exploration and research underlying value creation.

Beyond the financial sector, patent law and regulation should encourage big pharma to foster research into needed essential drugs rather than, as is currently so often the case, block competition and innovation through the use of strong and wide patents used to block competitors. One possibility is to grant fewer patents upstream, leaving the tools for research open-access. And the prices of the drugs should reflect the overall ‘deal’ between public and private actors, not force the taxpayer to pay twice. Furthermore, the high level of share buybacks in the sector should be questioned before government handouts are provided. In general, government support should be made conditional on an increase in committed investment by business – reducing the trends of hoarding and financialization.

In the ICT and digital sectors, more thinking is required about the appropriate tax system for companies like Uber and Airbnb, which would never have existed without publicly funded technology such as GPS and the Internet and which exploited network effects to create their potentially highly profitable first-mover advantages. It should be clear that many people – not just company employees – have contributed to their competitive advantage. How we govern technology affects who shares in the benefits. The digital revolution requires participatory democracy, keeping the citizen, not big business or big government, at the centre of technological change. Take smart meters, for example; Morozov argues that if they are closed boxes transferring information, ‘what we are doing is essentially introducing more and more closed systems which simply seek to capture rent from infrastructure that has been funded by us, without letting us the citizens take advantage of the same infrastructure for our own purposes and our own monitoring of the government, whether it is the city, or the national government’. 7

With this in mind, we can move beyond the idea of public goods as ‘corrections’, that is being limited to areas that need fixing (due to positive externalities that they generate), to being ‘objectives’. This requires a new understanding of policy as actively ‘shaping’ and ‘creating’ markets that achieve public value, benefitting society more widely.

Making public value better justified, appreciated and evaluated would potentially open up a new vocabulary for policy makers. Rather than being mere ‘regulators’ of health care or the digital agenda, as co-creators of that care and digital transformation policymakers would have a more justifiable right to make sure that the benefits are accessible to all. A different vocabulary, and a new policymaking framework, would also reduce the timidity which has kept politicians from funding much-needed infrastructure investments for decades, and which led to a bare-minimum fiscal and legislative response to the 2008 financial crisis and subsequent recession. Once the potential of the executive and legislative branches to promote the good of society is fully recognized, then elected officials can start to live up to higher, but still realistic, expectations. Young, ambitious people might start choose electoral politics, or careers in the civil service, over jobs in the City or business – but only if they see that such choices are valuable and valued.

TAKING THE ECONOMY ON A MISSION

The question remains: what direction should the economy take if it is to benefit the greatest number of people? Maximum GDP growth, one standard answer these days, is far too crude to be helpful: it sweeps away all the serious questions about value. Another common answer is fiscal probity, governments running balanced budgets or even, as in Germany, a surplus. This, however, is not only crude but wrong-headed. The drive to reduce government deficits after the 2009 recession continues to impede a proper European economic recovery. A low fiscal deficit is a misplaced target. The real question is how government spending and investment can create long-term growth. And while such investments might require short-term deficits to increase, in the long term by raising GDP, the debt–GDP ratio will be kept in check by the effects of such value-creating investments. This is indeed why so many countries that continue to have modest deficits might also have a high debt–GDP ratio.

The question of growth must thus focus less on the rate of growth and more on its direction. A more open discussion of economic value could, I believe, also help shape discussions about directionality. Progressive arguments against fiscal austerity too often default to a cry for investing in infrastructure (or ‘shovel ready’ projects) as though that were a panacea. That is a very modest demand. The discussion of the kind of infrastructure, and its relationship to greater social goals, has been puerile. Just roads and bridges? Public investment that is driven by ambition and a vision cannot be limited to a laundry list of traditional physical infrastructure projects. The first step should be to think seriously about the problem in question. A green transformation requires not only green infrastructure but a clear vision of what living a green life means. It means transforming all sectors, including traditional ones like steel to lower its material content.

Indeed, a key way to tackle some of society’s most pressing problems today is to learn lessons from historical periods in which bold ambitions were set to tackle difficult technological problems. Consider two lessons from the man on moon mission. First, the agencies involved, from NASA to DARPA, built up their own capacity and competences. They did not outsource their tasks, or the resulting knowledge, to the private sector. This practice should be borne in mind when considering the currently fashionable public–private partnership arrangements. They will only succeed as dynamic knowledge-intensive collaborations, with both sides equally committed to investing in in-house competencies and capabilities.

Second, the Apollo mission required different types of actors and sectors to collaborate, from aerospace to innovations in textiles. The focus was not on subsidising a sector (aeronautics) but on solving problems together, which required many sectors and different types of public and private actors to collaborate – even those in low-tech sectors like textiles. Similarly, today’s challenge to reverse human damage to the environment is not something that can be solved solely by increased investment in renewable energy – although that is already a daunting technological challenge – but requires a societal commitment to new, less physically materialist approaches to the way we live. Concrete missions that involve different types of collaboration are required to drive the fight against climate change or the fight to eradicate cancer – with clear targets, a multitude of sectors and actors, co-investing and exploring new landscapes, but also patience in achieving long-term goals. Past periods of technological upheaval have been associated with changes in lifestyle, such as the connection between mass-production and suburbanization. 8A green revolution will require deliberate and conscious changes in social values: a redirection of the entire economy, transforming production, distribution and consumption in all sectors.