Governments Do Capitalism Wrong. Here’s How We Fix It.

Mariana Mazzucato is a towering figure in contemporary economics, known best for her work on the entrepreneurial state and mission-oriented, ‘moonshot’ economics. Her congregation is broad, ranging from an ascendant Andy Burnham, to the Pope, to the organisers of Brazil’s carnival, and Marco Rubio on the right of US politics. Ash Sarkar sat down with Mariana Mazzucato in front of a live audience at EartH Theatre in Hackney, to test out the ideas in her new book, The Common Good Economy.

Where did it all go wrong for Keir Starmer and Rachel Reeves, who adopted Mazzucato’s language of missions but were unable to deliver, and what can Burnham learn from their mistakes? How do we define the common good, and how should the private and public sectors work to achieve it? Why is the state so effective at achieving its goals in times of war, and so inept in times of peace? How do we balance the need for experimentation and freedom to fail, against the need for transparency, in the public sector? And should we spend our finite time trying to build a new and fundamentally different system, or is fixing capitalism actually the most radical goal for progressives?

Mazzucato's work emphasizes the critical role of the state in innovation. According to her, the state is not just a fixer of market failures but an active entrepreneur that takes risks and shapes markets. For instance, many technologies behind the iPhone originated from state-funded research. However, the profits are often privatized. Mazzucato argues that this imbalance needs correction.

The book centers on the concept of the 'common good' and proposes restructuring the economy to serve this purpose. It discusses how public-interest institutions should collaborate with profit-driven companies. It also stresses the need for broad societal involvement in defining state missions, encompassing not just economic growth but also social justice and environmental sustainability.

Mazzucato advocates for a radical transformation of the current capitalist system. She believes states should take a more active role in shaping markets and prioritize long-term societal benefit over short-term profit. This approach has attracted interest from both the right and left. However, implementing these ideas requires political will and social consensus. In her conversation with Ash Sarkar, Mazzucato elaborated on these challenges and potential solutions.