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New Times: Mariana Mazzucato on why it's time for progressives to rethink capitalism

Politically, the choice is presented as static and binary: austerity or infrastructure spending. What we really need is bold thinking about the type of economy we want.

This should be a defining moment for progressive politicians. The economic orthodoxy has failed. Economies around the world are stuck on paths of slow or fragile growth, business investment remains below pre-crisis trajectories, and living standards and wages for ordinary workers continue to stagnate. The Brexit vote reflected a broad dissatisfaction with the status quo – the feeling of being left behind – and a distrust of the ideas, or lack of them, that got us here. If ever there was a time for bold new thinking about where value comes from and how it is shared, that time is now. Yet progressives are struggling to articulate alternatives with enough credibility to seize the moment.

To many voters, politicians on the left seem interested only in how wealth is distributed, not how it is created. Those who try to counter this impression by talking positively about “wealth creators” or being “business-friendly” end up reinforcing a simplistic – and false – idea of who those who create wealth are.

A progressive economic agenda must have at its heart an understanding of wealth creation as a collective process. Yes, businesses are wealth creators, but they do not create wealth alone. Workers, public institutions and civil organisations are also wealth creators. Their collective actions can increase the investments required to drive long-run growth and productivity. But this will happen only if the private and public sectors find a way to share the risks and rewards of the 21st century.

This demands moving away from the idea that the public sector merely facilitates the private sector, or picks up the downside in an economy where the risks are borne by a “flexible” workforce and the rewards hoarded by corporate giants. Instead, we must consider how responsibilities can be shared for the bold investments that are needed. The current situation has led to an overly financialised private sector – with company profits being spent not on reinvestment, but on gimmicks to bolster stock options such as share buybacks – and to a public sector that is told to create the conditions for growth and let the private sector do the steering and profit-making.

Some separate economic from societal problems, stating that we must address the former before we can tackle the latter. But the future for progressives lies in advancing the two together. It is through applying our minds to societal and environmental issues that we can lay the foundations for future prosperity. The means is “mission-oriented” policy, where an objective – such as landing a human being on the moon or decarbonising the economy – can offer a fresh direction for the entire economy. Meeting challenges such as climate change by steering the economy in a green direction requires more than a “nudging” mentality. “Nudging” assumes business already wants to invest in new areas and merely requires incentivising through reductions in tax or regulations. But the animal spirits of business must be created, not assumed. This requires a more active market-shaping and market-creating framework that sparks business excitement about new investment.

Politically, the choice is presented as static and binary: austerity or infrastructure spending. Yet bold thinking about the kind of economy we want – the direction of growth, and not just the rate – prompts questions about the type of infrastructure, and the types of skills and new technologies that are required to transform an economy. We can learn from countries that have achieved innovation-led growth and from the public-sector investment behind some of capitalism’s boldest advances – from general-purpose technologies such as the internet and wireless technology to biotechnology and nanotechnology. As I showed in my book The Entrepreneurial State, in each of these areas, the private sector entered only after the public sector made long-term investments in high-risk areas.

Having recognised the state’s role in financing high-risk areas, we must translate those investments into a fairer distribution of the rewards. Just as the financial sector socialised risks but privatised rewards, so this happens in the real economy. Changing this requires fixing the relationship between business and government, based on new “deals” to ensure both sides co-invest in the innovation ecosystem. This will ensure that the systems we build for wealth creation enrich the achievements of the postwar welfare state.

The conversation on government spending needs to change, with less emphasis placed on the annual deficit and more on investment for long-term growth. The problem in southern Europe, for instance, has been not the deficit but the slow rate of GDP growth. Countries such as Italy have had historically low deficits alongside low rates of growth because of a lack of investments in areas, such as education, which drive long-term economic expansion. It is a failure of growth that has created the problem of ever-higher debt-to-GDP ratios. This is the argument progressives need to make.

There is also a dearth of support for the idea of smart, capable government. Public-sector reform is too often a cipher for cutbacks and outsourcing. This leads to a self-fulfilling prophecy in which public institutions become less able to navigate the obstacle-strewn paths ahead. Rather than consultancies or third-sector institutions telling the state how to be smart and creative, we need reinvestment in government institutions and capacity. But an ideological aversion to the idea that the public sector can be innovative leads to even successful institutions being attacked. The BBC’s great history of innovation, including its investments in iPlayer that helped inform the Government Digital Service’s gov.uk platform, is little recognised.

The time is ripe for progressives to make their case with confidence and to rethink capitalism. Narratives about wealth creation must become more collective, as should the distribution of the rewards which result. The public realm matters to wealth creation, just as it matters to building a stronger and more just society.

Mariana Mazzucato is RM Phillips professor in the economics of innovation in the Science Policy Research Unit (SPRU) at Sussex University, author of The Entrepreneurial State: Debunking Public vs Private Sector Myths and co-editor of Rethinking Capitalism: Economics and Policy for Inclusive and Sustainable Growth.

This article is part of a New Times collection of the future of the left. Read the other pieces here.

 

This article first appeared in the 22 September 2016 issue of the New Statesman, The New Times

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We argue over Charlie Gard, but forget those spending whole lives caring for a disabled child

The everyday misery of care work is hidden behind abstract arguments over life and death.

“Sometimes,” says the mother, “I wish we’d let him go. Or that he’d just been allowed to slip away.” The father agrees, sometimes. So too does the child, who is not a child any more.

On good days, nobody thinks this way, but not all days are good. There have been bright spots during the course of the past four decades, occasional moments of real hope, but now everyone is tired, everyone is old and the mundane work of loving takes a ferocious toll.

When we talk about caring for sick children, we usually mean minors. It’s easiest that way. That for some parents, the exhaustion and intensity of those first days with a newborn never, ever ends – that you can be in your fifties, sixties, seventies, caring for a child in their twenties, thirties, forties – is not something the rest of us want to think about.

It’s hard to romanticise devotion strung out over that many hopeless, sleepless nights. Better to imagine the tragic mother holding on to the infant who still fits in her loving arms, not the son who’s now twice her size, himself edging towards middle-age and the cliff edge that comes when mummy’s no longer around.

Writing on the tragic case of Charlie Gard, the Guardian’s Giles Fraser claims that he would “rain fire on the whole world to hold my child for a day longer”. The Gard case, he argues, has “set the cool rational compassion of judicial judgement and clinical expertise against the passion of parental love”: “Which is why those who have never smelled the specific perfume of Charlie’s neck, those who have never held him tight or wept and prayed over his welfare, are deemed better placed to determine how he is to live and die.”

This may be true. It may also be true that right now, countless parents who have smelled their own child’s specific perfume, held them tightly, wept for them, loved them beyond all measure, are wishing only for that child’s suffering to end. What of their love? What of their reluctance to set the world aflame for one day more? And what of their need for a life of their own, away from the fantasies of those who’ll passionately defend a parent’s right to keep their child alive but won’t be there at 5am, night after night, cleaning out feeding tubes and mopping up shit?

Parental – in particular, maternal – devotion is seen as an endlessly renewable resource. A real parent never gets tired of loving. A real parent never wonders whether actually, all things considered, it might have caused less suffering for a child never to have been born at all. Such thoughts are impermissible, not least because they’re dangerous. Everyone’s life matters. Nonetheless, there are parents who have these thoughts, not because they don’t love their children, but because they do.

Reporting on the Gard case reminds me of the sanitised image we have of what constitutes the life of a parent of a sick child. It’s impossible not to feel enormous compassion for Charlie’s parents. As the mother of a toddler, I know that in a similar situation I’d have been torn apart. It’s not difficult to look at photos of Charlie and imagine one’s own child in his place. All babies are small and helpless; all babies cry out to be held.

But attitudes change as children get older. In the case of my own family, I noticed a real dropping away of support for my parents and disabled brother as the latter moved into adulthood. There were people who briefly picked him up as a kind of project and then, upon realising that there would be no schmaltzy ending to the story, dropped him again. Love and compassion don’t conquer all, patience runs out and dignity is clearly best respected from a distance.

All too often, the everyday misery of care work is hidden behind abstract arguments over who gets the right to decide whether an individual lives or dies. I don’t know any parents who truly want that right. Not only would it be morally untenable, it’s also a misrepresentation of what their struggles really are and mean.

What many parents who remain lifelong carers need is adequate respite support, a space in which to talk honestly, and the recognition that actually, sometimes loving is a grim and hopeless pursuit. Those who romanticise parental love – who, like Fraser, wallow in heroic portrayals of “battling, devoted parents” – do nothing to alleviate the suffering of those whose love mingles with resentment, exhaustion and sheer loneliness.

There are parents out there who, just occasionally, would be willing to set the world on fire to have a day’s respite from loving. But regardless of whether your child lives or dies, love never ends. 

Glosswitch is a feminist mother of three who works in publishing.