‘Mission Economy’

‘The bungled response of the government to the pandemic – from the failure to enforce lockdown early enough to the test and trace debacle – has exposed the depth of the rot. It has also demonstrated the power and importance of the state in a crisis. But therein lies what might seem to be a paradox: just as we have needed a strong, capable government, those in power have been exposed as clueless and incompetent. Free marketers argue that these problems are inherent to the state. But contrasting international experiences reveal otherwise: the correct response to the pandemic is to demand better government, not less.’ – ‘Mission economy by Mariana Mazzucato review – the return of the state’ by Tom Kilbasi

One of the most glaring lessons coming out of the pandemic is the need to have greater meaningful role of government in shaping and running the economy, especially the markets. In her upcoming book ‘Mission economy: a moonshot guide to changing capitalism’, renowned economist, Mariana Mazzucato, goes a step further from her earlier book ‘The entrepreneurial state: debunking public vs. private sector myths’ where she asks governments to actively involve and invest themselves – just like, for instance, as the US did during the ‘new deal’ era, before ushering-in of Neoliberalism – in high-risk projects that allowed a sound and profound basis for private sector to take advantage of - for both themselves and for the overall benefit of economic growth.

In this regard, Tom Kilbasi points out in the same article: ‘In her landmark 2013 book The Entrepreneurial State she invited us to rethink the role that the state could have in the creation of wealth. This was followed by The Value of Everything in 2018, which demolished the widely held belief that a narrow economic elite was the wealth creator. The traditional framework confuses prices with value, meaning social goods are only examined for their costs rather than their social benefits. Mission Economy takes the argument forward. It is styled as a “how to” guide for policymakers who want to unleash the full potential of the state to solve some of the great challenges of the 21st century. Mazzucato invites us to imagine a government that “bears the greatest level of uncertainty and reforms … itself to take risks”. From confronting the climate crisis to improving health and wellbeing, Mission Economy offers a method to tackle the great challenges facing societies globally.

In her book ‘Mission Economy’ she has asked governments to not just be entrepreneurial, but to undertake involvement in the economy in a holistic manner, which in turn means adopting an intra-sectoral, cross-cutting kind of approach, just like for instance adopted by NASA (National Aeronautics and Space Administration) in preparation for their space-related projects, including landing man on the moon. Hence, it was not just the space exploration programme that they focused on, but also on its related aspects like nutrition, among others. As against the proponents of government taking a back seat, a theme that was vociferously voiced and implemented virtually globally during the era of Neoliberalism for around the last forty years now, was to roll back the state, and let private sector and markets decide and lead the direction and pace of economic growth.

That whole edifice came crashing, first during the Global Financial Crisis 2007-08, and even more glaringly as the pandemic continues to unfold. While governments find themselves in a crisis, it also provides them with an opportunity to alter the direction they have adopted under the influence of neoliberal-styled free-marketeers, which in turn has rendered them so incompetent and less prepared to not only to remain unable to avoid such a crisis in the first place, but also to effectively respond to it when it hit. In this regard, Mariana while talking about her book in an interview to Bloomberg recently, pointed out that governments need to ‘govern the process in the common interest.’

Hence, as a response to weak governance structures increasingly put in place since the beginning of the neoliberal assault, which have seriously diminished the scope of role and the level of capacity of governments to effectively deal with economic issues, in the same article Tom Kilbasi underlines the need to adopt Mariana’s approach in this regard, which he highlights as: “To carry out the Apollo mission,” Mazzucato explains, “hundreds of complex problems had to be solved. Some solutions worked, many failed. All came out of a close partnership between government and business: a partnership with a purpose.” Mazzucato’s prescription is for governments, in dialogue with citizens, to define the grand challenges of our times and to set missions to solve them in partnership with business. These missions should be bold and inspirational – from solving the climate crisis to curing cancer to eliminating the digital divide. By focusing on the ends rather than the means, policymakers should create the space for creativity, experimentation and collaboration across sectors. All the most interesting and important problems today are collective action problems.’

The government in Pakistan also needs to understand that the time is over-ripe to move away from neoliberal way of thinking – which has been centre-staged by both policymakers’ education and training in economic policy from mainstream economic orthodoxy, and in the policy prescription of neoliberal-styled multilateral institutions – and to re-define itself as an entrepreneurial and a mission-oriented government. Therefore, the government will have to involve itself in the economy more prepared, and deeply, to address economic issues, and to make itself more ready to avoid and fight crises like the current pandemic, and the fast-approaching existential threat of climate change. For that, economic fundamentals will have to be strengthened, which means, among other things, shaping markets and not just fixing market failures, so that the economy grows while giving value to important socio-economic signals, and not just follows profit-mindedness, and also providing correct rewards to labour; both in terms of the goods it produces, and the services it provides in turn.

For this, the government will have to build its capacity as well, so that it is appropriately capable to properly negotiate and regulate the private sector. The current crisis in dealing with independent power producers (IPPs) in the power sector amply highlights that beyond possible mala fide vested interest, it was incapacitated government ministries, which did not have the expertise to negotiate smart contracts. Lack of institutional capacity of ministries, and this keeping the underlying organizations weak, both in terms of needed incentive and governance structures, along with producing sub-optimal market fundamentals have all meant that the government does not have the needed extent of presence and capacity, to really check and shape economy to meet both short-term and long-term goals. This has, for instance, manifested in the lack of needed basis to see CPEC (China-Pakistan Economic Corridor) projects run on a quick pace on one hand, while on the other, not allowed control of inflation in a wholesome way of not just meaningfully checking it from the monetary side, but also from fiscal/governance directions.

For this reason, Mariana argues in her recent article ‘From moonshots to earthshots’ in which she discusses her upcoming book, that governments need to take a mission-oriented and cross-cutting sectoral approach. In this regard, she points out: ‘The pandemic has highlighted the cost of neglecting public investment, both in the welfare state and value creation. But the crisis has also created a huge opportunity to pursue industrial policies beyond traditional sectoral and technological silos, and to restore mission-driven governance in the public interest… As I explain in my new book Mission Economy: A Moonshot Guide to Changing Capitalism, landing a man on the moon required both an extremely capable public sector and a purpose-driven partnership with the private sector. Because we have dismantled these capabilities, we cannot hope to repeat earlier successes, let alone achieve ambitious targets such as those outlined in the Sustainable Development Goals (SDGs) and the Paris climate agreement.’

The incumbent government must not lose sight of the fact that it has come into political office at the back of agenda of big change, for which there could be nothing short of thinking big, and in this regard the arguments presented in the book ‘Mission Economy’ should be taken very seriously, and effectively injected into policymaking thought-process. Moreover, given her quite unique, and spirited sense of passion to fix capitalism for the common good, and in an inclusive way, it would make a lot of sense for the PTI government to request Mariana Mazzucato for some sort of technical collaboration at the policy level with a view to formulating a much-needed framework and actionable policy for enhancing the role of government in a mission-oriented way.

(The writer holds PhD in Economics from the University of Barcelona; he previously worked at International Monetary Fund) He tweets@omerjaved7

Copyright Business Recorder, 2021