“That means changing government tools and culture, creating new markers of corporate governance, and ensuring that corporations, society, and the government coalesce to share a common goal.
Treasurer Jim Chalmers says poorly designed markets are a problem. Alex Ellinghausen
“To solve the massive crises facing us, we must be innovative — we must use collaborative, mission-oriented thinking while also bringing a stakeholder view of public private partnerships which means not only taking risks together but also sharing the rewards.
“We need to think bigger and mobilise our resources in a way that is as bold as inspirational as the moon landing – this time to the most ‘wicked’ social problems of our time.”
The 54-year-old is a Professor in the Economics of Innovation and Public Value at the University College London and has been an adviser to the World Health Organisation, Organisation for Economic Co-operation and Development, the Vatican, and governments in South Africa and Scotland.
Professor Mazzucato is the author of other books, including The Big Con: How the Consulting Industry Weakens our Businesses, Infantilizes our Governments and Warps our Economies, which describes how the consulting industry wields huge power over governments and companies and “thrives on the ills of modern capitalism, from financialisation and privatisation to the climate crisis”.
She also wrote Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth, and The Entrepreneurial State: Debunking public vs. private sector myths.
In a 6000-word essay on the future of capitalism for The Monthly, Dr Chalmers said markets were not so much the problem as “poorly designed ones.”
“Carefully constructed markets are a positive and powerful tool,” Dr Chalmers notes.
“As the influential economist Mariana Mazzucato has explored in her work, markets built in partnership through the efforts of business, labour and government are still the best mechanism we have to efficiently and effectively direct resources.
“But these considered and efficient markets were not what the old model delivered.
“And while the 2008 crisis finally exposed the illegitimacy of this approach, no fresh consensus has yet taken its place.
“One reason we became more vulnerable to economic uncertainty and upheaval by 2020 is that for much of the past decade leaders failed to do the thinking that would have given us a new plan in the intervening years.”
Dr Chalmers has outlined plans to collaborate and co-invest with business and investors – including superannuation funds – to address the clean energy transition, housing affordability, disability, aged care and health care.
He has flagged plans for the May federal budget to tackle “entrenched disadvantage” through social impact investing.
Other economists described Professor Mazzucato as “off the charts left” and a “huge lefty”.
Free market Italian economist Alberto Mingardi wrote a detailed critique of Professor Mazzucato’s work, arguing she used “shaky” evidence.
“The fundamental problem is that her work is based on a peculiar line of economic thinking that does not consider the inevitability of tradeoffs while dealing with scarce resources, and does not acknowledge the role of demand and of consumers in a modern market economy.”
A review of Professor Mazzucato’s work by Bob Simison for the International Monetary Fund, declared her an “economics agitator”.
“Her main message is that governments around the world need to seize their power to lead innovation for the betterment of humanity,” Mr Simison notes on the IMF website.
“Her controversial answer: government is for setting big goals, defining the missions necessary for achieving them, encouraging and investing in innovation, and governing the process so that the public benefits.
“This contradicts the modern conventional wisdom that government is there to clean up after disasters and fix egregious market imbalances, but it should otherwise get out of the way so that private enterprise can lead innovation.”
