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Published Sep 15, 2022

Rewriting the Rules of Capitalism and Public Investment — with Mariana Mazzucato

Economist Mariana Mazzucato critiques the flaws of capitalism by dismantling myths of wealth creation and emphasizing the transformative role of public sector innovation, while presenting a compelling argument for reshaping economic narratives and policy priorities to address inequality, with insights from global examples like Singapore and Germany.
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  • Public Innovation

    Mariana Mazzucato highlights the innovative approaches in public services seen in countries like Singapore and Israel. She notes that these nations have made public service attractive by offering competitive salaries and fostering a culture of investment and risk-taking within government roles 1. This approach challenges the traditional view of risk-taking as solely a private sector activity. In discussing economic role models, Mazzucato points to France and Germany, where public investments are tied to conditions like reducing carbon emissions, showcasing a balance between market incentives and public welfare 2.

    In France recently, their Covid recovery fund was again a confident one. So the minister of finance, Bruno la Mer, made sure that companies like Renault or Air France actually committed to reducing their carbon emissions in order to get €1 out of the government.

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    These examples illustrate how public sector innovation can drive economic and social progress.

       

    Investment Lessons

    Mazzucato examines the impact of government investments on innovation, using Tesla and Solyndra as case studies. She argues that while Solyndra's failure is often highlighted, Tesla's success was also a result of government support, emphasizing the need for a balanced investment portfolio 3. This approach ensures that both risks and rewards are shared, potentially funding future innovations. Furthermore, Mazzucato suggests that public investments should come with conditions to prevent misuse, such as ensuring pharmaceutical companies do not exploit intellectual property rights 4.

    There was a wider portfolio, but you also need to start thinking about it in terms of an investor of first resort portfolio kind of storytelling, but also in order to share not just the risks, but also the rewards.

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    Such governance can enhance public trust and ensure that investments serve the broader public good.

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