In an era defined by fiscal caution and stagnant growth, economist Mariana Mazzucato is calling for a fundamental shift in how governments approach their role in the economy. The University College London professor argues that the prevailing focus on austerity and market-correction models has stifled innovation and eroded the public sphere, urging policymakers to adopt an “objective-oriented” strategy centered on the common good.
Moving Beyond Market Failure
Mazzucato, known for her work on the “entrepreneurial state,” challenges the traditional neoliberal consensus that paints governments as passive administrators. She argues that the state is, and should be, a primary architect of economic growth. Her latest thesis suggests that instead of merely correcting market failures—such as carbon emissions or inequality—governments should proactively design economic missions that foster social wellbeing and environmental sustainability.
“In the old economics, doing good is a correction,” Mazzucato notes. “In an economics of the common good, it is an objective we design and work on together.”
The Role of Public Investment
A central pillar of Mazzucato’s argument is the rejection of rigid fiscal rules that she believes often strangle necessary public investment. She contends that fears regarding the bond market’s reaction to strategic investment are largely overstated. According to Mazzucato, historical market volatility, such as that seen during the Liz Truss administration, was driven by specific tax policy failures rather than strategic capital expenditure.
Her approach advocates for:
- Pre-distribution: Ensuring citizens receive a fair share of state-led investment gains from the outset, rather than relying solely on post-hoc tax redistribution.
- Mission-Oriented Governance: Setting ambitious, long-term goals—similar to historical space programs—that inspire public participation and provide a coherent narrative for economic direction.
- Investing in Community Infrastructure: Prioritizing physical and social spaces, such as public pools, libraries, and food cooperatives, which serve as foundational elements for a functioning society.
Capitalism and the Growth Narrative
While some radical economic schools advocate for “degrowth” to address the climate crisis, Mazzucato remains within a capitalist framework, arguing that the issue is not growth itself, but the nature of that growth. She posits that if the climate crisis cannot be mitigated within current systems, the time required for a total revolutionary restructuring would be insufficient to prevent catastrophic environmental outcomes.
Ultimately, Mazzucato suggests that the current disconnect between political discourse and civic life stems from the 1980s shift that recast citizens as “consumers” or “clients.” By refocusing on the common good, she believes governments can regain their “mojo,” fostering an economy that values human flourishing and creativity alongside traditional financial metrics.
