The world’s scariest economist?

Edited and translated version of article in Swedish, published here.

Mariana Mazzucato is a professor at University College London in ”Economics of Innovation and Public Value”. She has become one of the world’s most influential economists. At least that’s how Quartz Magazine described her in an article in 2019, and many would probably agree. She has also gained the reputation of being ”the world’s scariest economist”, following an article in the Sunday Times in 2017. However, that has not stopped Bill Gates from admiring her. Nor has it prevented politicians from both the left and the right from engaging her for various assignments. In the USA, she has, for example, helped the Democrats’ radical congresswoman Alexandria Ocasio-Cortez with the ”Green New Deal”. In Scotland, she was tasked by Prime Minister Nicola Sturgeon to design a new mission-oriented public bank. In Great Britain, she has collaborated with Greg Clarke, a minister in the Tory government. Even the Pope has engaged her. The list of merits of that kind is long. She has an admirable commitment to equality, justice and sustainability, but there is reason to be critical of her solutions and I will return to that.

Mazzucato became famous through the book ”The Entrepreneurial State. Debunking Public vs. Private Sector Myths” which was published in 2013. The book ”The Value of Everything: Making and Taking in the Global Economy” from 2018 received at least as much attention. In this book, she tackles the important questions of what value is and who creates it. To answer these questions, she looks back to physiocrats and classical economists, including Marx. That is not so common these days and has probably contributed to giving the impression of her as the world’s scariest economist. However, she does not want to call herself a left-wing economist. In an interview in connection with her visiting Sweden in February 2020 and lecturing, she was clear that she is not against capitalism. I will return to that below.

Now Mariana Mazzucato has written a new book, “Mission Economy: A Moonshot Guide to Changing Capitalism”. It pursues the thesis that the world has gone astray. Without fundamental re-considerations of both the state and capitalism, we will never be able to cope with the multitude of challenges the world is facing, including the climate crisis. The UN’s global goals for sustainable development from 2015 will never be achieved.

She does not spare the gunpowder in her criticism. The governance and management capacity of the state has weakened and this is due to the neoliberal ideology that Reagan and Thatcher launched in the 1980s. This has happened through privatizations and outsourcing of not only activity but also a large part of the state’s competence. It has also happened through a misdirected focus on statistical efficiency measures. This has created an institutional amnesia and growing dependence on increasingly expensive consulting companies. She gives many examples of how badly things have gone in both Britain and the United States. It is also because the states have outsourced their ability to manage the outsourcing contracts. They have simply made themselves easily deceived. All this is usually framed with the term New Public Management. It is criticized to bits and pieces by Mazzucato. She also condemns several other theories, including Public Choice. There is a fresh air blowing in Mazzucato’s book, and for those who want to know more about the problems in today’s world, there is a lot to learn. In a comprehensive diagnosis, she believes that capitalism has undoubtedly entered a crisis.

But what is the cause of this crisis? It turns out that the crisis does not concern capitalism as such, but a particular and dysfunctional form of capitalism, according to Mazzucato. The dysfunctionality is due to the short-termism of the financial sector, the financialization of business, the climate crisis and weakened states, i.e. four main reasons. The crisis thus has to do with the development that has taken place in recent decades. But otherwise then? Was everything peace and joy before the 80s? Those who protested in the 1960s and pushed for the labour legislation of the 1970s obviously did not think so. However, nothing is said about that in Mazzucato’s book.

This way you start to get a sense of where things are going. The solution is not to abolish capitalism, but it must be reformed. According to Mazzucato, there is a variety of forms of capitalism, and we have the wrong form. The solution also involves the state, which Mazzucato wants to invest heavily in. The state must be transformed from within, while the economy must be given a new direction. She urges us to start believing in the public sector and invest in its core competencies. The state must be transformed into a structure characterized by “courage, dynamic competence, leadership, resilience and creativity.” That sounds really great and could certainly re-attract many of those who have fled government jobs because of bad working conditions.

This should be based on an approach that Mazzucato calls mission-oriented. The state should not only exist to solve problems that the market has created. There must be an end to short-term profit thinking, Mazzucato believes. Instead, she wants the state and the private sector to work together to design missions that are then fulfilled through symbiotic collaborations. There is plenty of inspiration from past achievements to learn from and Mazzucatto particularly highlights the Apollo project through an interesting historiography. The capitalists must be convinced that it will be best that way, not only for them but for all of us.

She mentions Larry Fink, CEO of the world’s largest asset manager BlackRock, who in 2018 wrote a letter to 500 other CEOs calling for an end to short-term profit thinking. The same message was heard the following year from the Business Roundtable, a club of 180 powerful CEOs. To bring about a better functioning form of capitalism, they argued, all stakeholders must share in the profits, not least the wage earners. The problem is, writes Mazzucato, that despite these calls for change, not much is changing. However, it has nothing to do with the capitalist system itself, Mazzucato claims, but with understanding. What she wants us to understand is how everyone actually co-produces value and therefore has the right to share in the results.

It sounds good and then you wonder what she means by value. There is not much about that in the latest book, but in ”The Value of Everything”. There it appears that by value she means what the classical economists, including Marx, called use value. She distinguishes that from the price and writes in her new book that these two are usually mixed up and only what has a price is valuable. This means that much that is free is not valued. Rightly so, and this invisibility of, for example, even women’s domestic work is a big problem.

However, the distinction between value and price is not new. It was already formulated by Aristotle as a distinction between two types of value; use and exchange value. A use value is evident from its usefulness. It can apply to a thing but also to a certain activity, e.g. education. Air has use value, but so does what people create. When that which has a use value is sold, it also acquires an exchange value. Then it becomes a commodity. All commodities consist of both use and exchange value. On all this, the classical economists, including Marx, agreed. They also agreed on the existence of another form of value, namely that which makes all goods comparable and which consists of the societally average labour time it takes to produce a certain good. This form is called labour value.

It says something about contemporary economics that one of the world’s most influential representatives is being praised for something resembling a reinvention of the wheel; in this case the distinction between use and exchange value, which she calls value and price. Equally enlightening is that she misses the third form of value, namely labour value. This makes it quite impossible to understand the specifics of capitalism. The capitalist’s interest concerns profits, measured in exchange values and based on labour values. In order for capitalism to function, profits are required, regardless of the use values that are produced. Employed wage workers must produce commodities in competitive businesses. Then labour value is also produced and it is the difference in labour value between the produced labour values and the labour value of the labour power that forms the basis of the profit. In public activities such as childcare and healthcare, use values are produced but no labour values.

This means that the state and capital have different approaches to the co-production of value that Mazzucato cherishes. For the public sector, it is about producing use values that meet societal needs. For capital, on the other hand, it is not only about producing use values but in the first place labour values in the form of commodities that can enable profits. How could Larry Fink at BlackRock stop thinking about profit maximization without being outcompeted by others? Why would capital stop digging up fossil fuels if that’s where the biggest profits loom? It is not due to a certain ideology but to a complex system of power relations revolving around an inbuilt pursuit of profit maximization. Why would one stop if everyone else doesn’t? But capitalism ends eventually, and Mazzucato wants it to remain.

In Swedish, the title has been translated to “Aim for the stars”. Yes, that is what the most powerful capitalists do. In the summer of 2021, Richard Branson and Jeff Bezos became the first two billionaires to pay for their own trips into space. And they have big plans. How will Mazzucato change their minds? Imagine if today we could gather around the common goal of constructing a more inclusive and sustainable capitalism, she writes, as if classes and class struggle had never existed and unions and labour law had never really been needed. We could have long ago gathered around the common goal instead. Think how stupid that we haven’t done that. Or? Unfortunately, it’s not about stupidity, it’s about power. The guide to another form of capitalism that Mazzucato has presented risks making everything more commodified and the capitalists even more powerful.

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