The COVID19 crisis is a chance to do capitalism differently Mariana Mazzucato
[Applause]
Maryana let’s start for the present
moment June 20 2006 months into the cog
19 pandemic you recently published an
essay and the title was the coveted
crisis is a chance to change to do
capitalism differently so lay out the
case for us
what is the chance and how do we do
capitalism differently sure so I mean
the temptation given that we’re all
struggling is to do everything we can to
go back to normal and really my view is
that we need to do everything we can not
to go back to normal because normal was
part of the problem and so in the essay
that you talked about I looked at three
different types of crises that were
undergoing the obvious immediate one
which is the health pandemic but also
underlying that is a real economic
crisis we have problematic types of
business structures corporate governance
we have a problematic type of financial
structure which has basically been
financing itself you might talk more
about that later
we have problematic forms of government
which really in some ways are oh is kind
of too little too late because Roe was
just trying to fix market failures and
so that’s kind of how it would call the
economic crisis but also third we have a
massive climate crisis you know just in
January we weren’t clapping on Thursdays
or whichever day of the week the health
workers we were all you know doing all
we could to support all sorts of other
services like fire workers who were
working in California and Australia
against the damages which are being
inflicted on us by climate change or in
Venice where my family’s from the flood
workers so we have a climate crisis and
economic crisis and a health crisis so
really the question is what do we do to
go to the source of those problems
versus just constantly fix our way path
or way out from one crisis to another
and I think in that sense this really is
an opportunity to rethink its underlying
sources but especially to do capitalism
differently and and by that what I mean
is we often go to this kind of dichotomy
of state or
market and you know as you said in my in
your introduction I wrote a book about
this state but really what we’re talking
about is collaboration and markets as
outcomes of how business is structured
how government is structured how civil
society institutions are not only
structures but relate to business and
the public sector and this focus on
relationships the kind of ecosystem the
partnership is what I hope that this
crisis makes us rethink partly also
because the mantra we keep hearing is
we’re all in it together so what does it
mean to work together differently
to solve the biggest problems of our
time whether they’re health related or
climate related and to do so by looking
at the underlying structures the
contracts literally how does business
interact with government and how might
we learn to do that better especially in
a moment now where government is
completely back you know flooding the
system with liquidity and unless we get
those structures right we’re gonna
repeat the problems that we caused in
the financial crisis where lots of money
came in to save the day but it more or
less ended up back in the financial
sector well let’s take one at those
points one after after the other so
maybe about the role of government there
is this brother mainstream notion the
government’s needs to stay out of the
way of business and of markets and
basically just intervene in order to fix
problems and problems arise you have
built most of your career and you have
devoted most of your research into
making the opposite case that
government’s actually need to intervene
shape create markets explain us that
sure so I think it’s not so true that
the mainstream ideas that government
sort of doesn’t play a role it’s exactly
what you said which is that the
mainstream view is this kind of lame
boring view of what that role is in this
idea that at best government is there to
fix market failures means you literally
have to wait for things to mess up the
markets are going to break down or to
make a mistake before you enter and so
what I’ve been advocating really kind of
specifically is that we need a different
framing one that’s much more about
market co-creation and market shaping
not market
Singh and what that really means is both
of course you know investment in all
those things especially public goods but
not all need that we need from public
education public health care but also
shaping that process so that citizens
benefit from it I mean if you look at
for example all the investments that I
talked about in my book the
entrepreneurial state you know the
internet GPS touchscreens Siri all the
things that make our smart products
smart and not stupid it’s not really
enough to just make those investments we
need to think how do you govern that
process how you you know how do you
govern digital platforms or some people
call it platform capitalism in such a
way that really benefits citizens or
take healthcare it’s not enough to spend
as much as many countries do through
public budgets and health innovation if
then the drugs that come out of that
process or either too expensive that the
same citizens we paid for it can’t
afford it or that we miss govern the
process for example allowing
intellectual property rights to be
abused so the market shaping process is
really also a call to arms to govern to
govern state investments not just to
spend not just to invest but to govern
those investments which are needed in
such a way that you know really benefit
the public so that means really making
public administrations more innovative
more courageous bolder and deputy
recovered crisis has shown that there
are problems we cannot solve it out
governments right but at the same time
we look around the world and you see a
sort of degradation of public
institutions so how do we we cannot
conjure up effective governance so how
do we start rebuilding the capacity of
public administrations to play the role
you just outlined right well in fact
it’s a great question it’s the reason
I’m also very tired when I go to bed at
night because I’ve set up a whole
institution here in London to do that
and in fact we focus really also on the
training and the education for that we
need kind of a new way of thinking it’s
not enough to have new policies it’s
exactly what you said we need more able
capable public institutions and I call
this the dynamic capabilities of the
public sector
really though it’s related to the
previous point if you don’t have the
view or framing of the public sector as
a co-creator of value and at best think
of it as an enabler a facilitator a
de-risk er then there isn’t really the
justification to invest in house in
those capabilities that allow you to
create value to take risks to welcome
uncertainty to be an investor first
resort not just a lender of last resort
and what’s striking and again the reason
I’m spending so much time on the
educational side as well as on the
policy and the kind of thought
leadership research side is if you look
at any Business School you know where as
top managers go from the private sector
they get to take the coolest classes
just look at the titles it’s like
strategic management organizational
behavior decisions Sciences and you know
they’re all trained to think out of the
box
especially when companies become big
there’s books called
rethinking the mature corporation and
yet when governments are a bit too
mature and large we just say oh that’s
because they’re bureaucratic as though
there’s something in the DNA of the
public sector in governments which kind
of by definition are gonna make it slow
inertial and you know not very flexible
and so in order to be an active market
shaper market co-creator we need
capabilities and capacity to create to
think out of the box to be dynamic to be
flexible to be a bit crazy and hungry as
Steve Jobs told those Stanford students
back in the day and so but that needs a
new curriculum and unfortunately the
curriculum we currently have has been
fed through kind of ideology which is
called I mean the actual theory is
public choice theory new public
management but it’s very much an outcome
of this idea that you know again fix
market failures then get out of the way
because you might be crowding out
business and so this co-creation Co
shaping agenda actually needs new
economic theory but also a new
curriculum for bureaucrats I am gonna
bring up a question from audience
actually in which just came in and I
hope that team can activities gonna
appear on the bottom of the screen I’m
Patrick Adams and she asked he asked can
you give an example of a
the fifties actually getting it right in
terms of moving along the way of fixing
capitalism sure so you know it’s
interesting because we work a lot with
organizations in other words we don’t
say that country that government is
perfect but we look at different types
of public organizations around the world
and in fact one of the you know
governments or types of administration’s
that I’ve also critiqued quite a bit is
the very UK government which in some
ways has bought into this notion of you
know small government and don’t crowd
out business and yet in the UK there’s
really interesting organizations which I
don’t want to say have gotten it right
but in some ways really provide
leadership on some of these questions
and one of those would be the BBC the
BBC is a public institution and in order
to in some ways justify the fact that it
hasn’t just done the kind of classic
public sector market fixing role you
know so great documentaries and great
high-quality news but also invested in
soap operas and talk shows by definition
it’s been a market shaper and creator in
all of those different formats and to do
that it had an internal debate it still
does around this concept of public value
and I don’t know many public
organisations around the world that
actually have kind of had that really
dynamic internal heated debate about
public value so I do look at the BBC in
some ways for leadership but just the
fact that you know they say we are value
creators is very interesting and has
caused internal discussions that are
that I find fascinating similarly in the
UK there’s a an organization called
government digital services which
actually created an award-winning
website for government and the first
thing they did was say you know citizens
are not clients they’re not customers
this kind of again brainwashing that
we’ve all accepted so students are
somehow clients of schools
or patients customers of hospitals they
are citizens they have human rights they
have to access the welfare state in a
way that is really user friendly
precisely in order to enrich their
experience when they you know
participate whether it’s getting a motor
vehicle license a passport registering
to vote
so those are two UK institutions in the
public
that I found really interesting and yet
the country is not one that I would say
you know look at the UK for a for an
interesting model of the state and also
in Germany there’s an interesting public
bank called the case they’ll be you that
we’ve done work with and again it’s a
very active public bank which has not
seen its role as just handing out money
like some other public banks I would
argue my own country Italy where you’re
from as well dude Bruno has
unfortunately often had kind of a
handout mentality through its public
institutions whereas that particular
public bank I have found interesting
because of its way of really Co
investing sharing risks seeing itself as
a risk taker in the different areas
that’s invested in but we’ve worked more
yeah let me believe have another
question on the point which is mention
because whenever I go to another chapter
and the question is from Maria Mohit
because you mentioned the public sector
for the scope crater of value and she
wonders ok the public sector basically
barely appears in GDP so how do we
measure for the contribution of the
public sector well that’s really
interesting it’s a great point it’s the
point that I kind of begin my you know
new book on value about because
unfortunately because we confuse price
with value then we have a very hard time
to know how to value in GDP as the
question asks those services which are
free but it doesn’t mean that the public
sector doesn’t appear in GDP
unfortunately it means it only appears
as a spender only in terms of the costs
so the costs of the schoolteachers goes
in but the value of a well-structured
and ambitious public education system
doesn’t and by the way there you know
there’s also bad public education system
so I’m not saying that by definition
it’s good value but we should have a way
to measure that value that’s actually
produced given precisely that we benefit
from that or similarly with public
health systems which today we realize
are incredibly important because we are
all only as healthy as their neighbors
so it’s a real awakening to the
importance of global health systems and
so I think you know it’s absolutely
right there’s an accounting problem we
don’t know how to put in a GDP but
there’s also this narrative kind of
storytelling problem that when we do
talk about it if it’s just about fixed
then there’s a feedback into the kind of
tools and instruments and and
capabilities that we think the public
sector needs just to patch things up and
get out of the way let’s talk a little
bit about the money or the table now so
there are literally trillions of dollars
depending on the accounts anywhere
between five and twelve trillions of
dollars that governments and central
banks are putting on the table to
restart the economy through stimulus
packages bailouts different forms how
should the money be spent or should that
help be structured so you’re absolutely
right that the problem currently is not
at least in many developed countries the
lack of funds it’s potentially the
structure of those funds and again just
like as I was mentioning at the
beginning and the financial crisis 2008
there was lots of there was trillions
put into the system the problem was how
it was structured and you know the
degree to which then it didn’t have the
effect it should have had and in fact a
lot of that funding went back into the
financial sector so I believe that first
of all I would kind of break it down
into two one is that we need to be
making sure that we are investing in new
structures in the real economy have a
real kind of investment led innovation
driven recovery that is improving those
very systems the so-called essential
work and essential parts of the economy
that we’ve thank god woken up to as
being essential precisely those that
we’ve undervalued so again healthcare
systems global healthcare systems have
to be strengthened so if this funding
that’s being injected in the economy
doesn’t strengthen health systems
that’s a terrible mistake but similarly
public education systems as all these
kids are home from school I’ve got four
of them in that sense I’m happy to go
back to normal so they get out of the
house you know we need to make sure that
these public education systems are as
strong and resilient as can be so when
students are home in case there’s
another lockdown we don’t produce the
digital divide that really we are
experiencing today because unfortunately
those investments haven’t been made and
so these are kind of real economy you
know investments that we need and that
itself would help us avoid the financial
crisis mistake where
a lot of their investment that went in
didn’t actually create new structures in
the real economy but second we need to
make sure that especially those funds
that are going to businesses and there’s
many different businesses in different
sectors receiving funds especially those
say in the sectors that are really on
their knees like the you know the
Airlines the hospitality industry these
bailouts or different types of
assistance can really be structured in
such a way to have conditions attached
that look more at the long term so you
give an immediate you know support
because we can’t wait you can’t sit
there and philosophize an immediate
support but with contracts that look at
the future so the airlines for example
really should be committing to in
exchange for the government support
reducing their carbon emissions or
companies that we know have been in
sectors which have overly used you know
tax havens for example should commit to
stop doing that or those types of
business practices which have been
overly extractive you know overly using
things like share buybacks could
actually also be made to question their
corporate governance structure in
exchange for this assistance and what we
do see around the world is that some
countries are being quite bold on that
you know Denmark has done just that
they’ve said that those companies using
tax havens will get support in France
there was pressure for the airline Air
France to make the commitment to
reducing its carbon emissions and you
have Elizabeth Warren and the US and
others in the u.s. you know putting
forward bills that would make sure that
those companies that receive you know
bailouts don’t just squander it around
dividend payouts and share buybacks so
there is this global discussion about it
unfortunately it’s not actually meeting
enough action and there’s lots of
lobbying by companies to avoid that so
you know easyJet just got a huge support
from the UK government with no
conditions attached Fiat a company that
has received very large amount of public
investment over the years both in terms
of worker salary support but also some
investments in the plants that Fiat has
benefited from from the state and yet
there was no conditions attached really
at least
explicit and direct to the bailout that
they’ve received so it’s you know that’s
unfortunate but I do think it’s it’s a
time where even the financial times you
know more mainstream paper is calling
for conditionalities or in some cases
equity stakes you know those companies
that are really going under if the
government’s going to save them why not
consider giving government some equity
in those very companies so you’re not
just socializing risks but also
socializing rewards Marie I want to talk
about your next book and the idea I need
about missions but there are many
questions coming in so let’s take some
of them maybe with some short answers
and is there you know on different
topics the first one is from Africa Hana
what is the role of small business
rebuilding Society you just thought
about different kinds of pieces getting
help small business seems to be the
category that doesn’t get that much help
so what is the role of small business in
rebuilding post comic ok so you know
it’s very interesting because there is
that impression that small business
doesn’t get help and and it’s actually
not true at least the countries I’ve
looked at small businesses do get quite
a bit of help in some ways I’ll say
something Pro you know there’s a bit of
a complication in some ways you could
argue they get too much help why because
they’re just seen as small businesses
and small businesses actually don’t need
to be simply condescendingly
taken care they need real help right and
so I’m I’m someone who advocates for
picking the willing and this might
actually you know kind of go into the
next question you were gonna ask me but
it’s appropriate to bring it up with a
small business question too often
governments are asked to support a type
of business of small business for
example a type of sector let’s say the
creative sector the life sciences sector
or you know sometimes a particular
technology so quantum computing and in
my view is that we shouldn’t be thinking
that way it’s not about the firm the
type of company the type of sector the
type of technology its the problems that
need to be solved you know whether it’s
the digital divide problem whether it’s
getting the plastic out of the ocean
whether it’s forming a carbon-neutral
city there’s plenty of room for small
businesses to find a role in that
process and what government should be
doing is helping businesses
best to innovate but just as much in
services as an you know goods to be part
of the solutions that we need to solve
public problems and if you’re small you
need extra support because you’re small
you might not have you know the kind of
equity and access that that large
businesses do to resources but your help
because you’re willing to help society
solve key problems that we might have
and you know there’s 17 sustainable
development goals out there underneath
them there’s a hundred and sixty nine
targets there’s plenty of room for small
businesses to become part of that
process and I really advocate for
governments to provide that patient
long-term committed strategic finance
not the impatient finance you might get
from the exit driven venture capital
model to companies that are willing and
again if they’re small they need extra
support there’s another question from
l’homme and Rebecca governments have the
hands full of coffee but if they want to
change where should they start well one
of the things that I guess you know you
and I have been talking about just now
is first they need to start by actually
investing in their in-house capabilities
and too often governments not only
haven’t done that but then they’ve over
relied on other actors whether it be the
big consulting companies you know the
Deloitte’s the KP n G’s the
PricewaterhouseCoopers to kind of take
the risks for them because they’re so
scared of you know getting in trouble
because if government is not explicitly
seen as a risk taker it also worries
about failure and so there’s been a
excessive outsourcing to consulting
companies especially in the product
management part of government investment
and the problem there it means that
you’re not really doing and if you’re
not doing you’re not learning by doing
and so you’re not doing trial and error
so you’re not learning you become
potentially stupid and so one thing is
to not to invest more in house - it’s
not so much to outsource less but to
partner properly you know also with the
private sector so private businesses
which of course will come into areas
that used to be mainly publicly governed
like transport education health or even
the space sector the problem is not the
private sector coming into these areas
its how does government
then collaborate with these companies
and what I’ve witnessed is the kind of
lack of again those kind of investments
I was talking about the lack of kind of
trusting your own also management skills
means that government has lost the
capacity even to write the terms of
reference literally the terms of
reference in the outsourcing contracts
are often kind of captured or written by
the same companies that are being
outsourced and that means that we no
longer have a public purpose - and kind
of a direction that kind of
directionality to what the public sector
is doing so you know to get them moving
them back again and years ago if you
look at the Apollo program they
outsource a lot there is plenty of
private sector activity Motorola direct
Noel you know these were really
important companies that helped NASA get
to the moon and back
but if you look at the procurement
contracts they were really dynamic very
ambitious they’re also quite short which
is interesting and when the private
sector didn’t deliver NASA just threw
the stuff back and said nope doesn’t
work do it again and so there is much
more ambition and in some ways
confidence and this notion that I’ve
been putting forward to be more mission
oriented again appeals to that notion of
moonshots but that’s not just for these
kind of big technological areas by
rethinking the welfare state rethinking
the kind of health systems we need
having really targeted goals around
those social problems is what like the
government should be doing you know what
are the goals what are the challenges
how do you then redesign government
tools and instruments to really welcome
and crowd in that bottom-up
experimentation by private public third
sector types of organizations but to do
what not just to commercialize or
produce economic value but to help
government and citizens solve again the
biggest problems of our time and I think
that kind of mission oriented lands the
dynamic capabilities within the ability
to redesign instruments to crowd in
private initiative all that requires new
tools and capabilities which
unfortunately governments currently need
to be thinking about better let’s come
back to missions in in a moment there is
a question by Rena Gleason and this may
be a bit political and you are in the
column is that how can we expect a
system that is the status quo to chain
status quo do we need a different system
yeah so you know it’s interesting
because I think many are calling for a
different system just last September the
Business Roundtable so 180 CEOs called
for a different system they said the
current system it’s being driven by you
know shareholder value maximization that
leads to short-termism we haven’t
invested enough in workers and
communities and they called really for a
more stakeholder driven system now you
know many of us have been writing about
this for a long time so we were very
happy to see that but not much has
changed so really the question is what
does it mean to move to actually walk
the talk of stakeholder capitalism which
means kind of really reinvesting the
value that’s created back into again
communities workers working conditions
the planet sustainability and not
allowing so much value to get extracted
out which kind of comes to the root of
many of the ills that we currently have
and my view is sorceress under this
what’s here yeah none of this happens
none of this happens just by waking up
and saying oh we need to be more Purpose
Driven we need to do stakeholder value
it only happens when it goes to the
center of the system and when it’s
mandatory so this is my point today
about Kovan you have huge amounts of
government investment coming into the
system make it mandatory
not just voluntary about you know
rethinking purpose and stakeholder value
that businesses can only access that
whether it’s investment whether it’s a
grant loan guarantee even a procurement
contract unless it changes so bringing
purpose and stakeholder value to the
center of our ecosystems of the system
through which government and business
interact is what I think is going to
change things and the point now is
government has huge negotiating power
you know it has the upper hand it’s
being begged to intervene so this is the
moment that really we cannot waste and
it shouldn’t be seen just as a stick
that would be kind of a negative way to
frame this this really is about building
a more inclusive and sustainable type of
growth type of economy type of
capitalism if we want to stick with the
capitalist system right now and bringing
that need to change making it mandatory
not just voluntary not just a
Davos kind of talk but conditional this
issue of conditionalities for me is
actually key it means a new contract a
new social compact between what it means
for business and government to work
together
so you mentioned sustainability I made a
question from Ken Lacovara how can we
move the value of ecosystem services in
the cost of environmental degradation
actually into the books of business and
government right well I mean to be
honest this is the bit that there is a
lot of work on and it is quite
surprising than if it doesn’t get
implemented but you know ESG targets for
example I mean ESG targets so
environmental social targets are
important because they go beyond the
kind of corporate social responsibility
you know icing on the cake but not the
cake kind of story so how do you get
mandatory again not voluntary metrics
put into place in corporate governance
structures that become part of the
accounting system so you have to report
your ability to move forwards and to
improve on both carbon emissions on
different criteria in terms of how
workers are not just paid but also
conditions of work making sure that
these different targets and metrics
become standard mainstream and again
become part of that conditionality that
I was talking about before so I was
working in Scotland and they had this
wonderful business pledge there’s 10
couldn’t work not 10 I can’t remember
there’s a dozen conditions that
businesses sign up to which have to do
with paying the living wage with again
reducing their carbon emissions
reinvesting profits into research and
development and long-term ism but it’s
it’s just voluntarily it’s kind of like
enjoying the club show that you’re you
know part of the solution the more we
can make these systems mandatory in
order to access public funding I think
the more we will actually start reaching
this kind of you know value change but
we need to be valuing it we need to
actually have accounting systems that
move forwards I don’t know one more
question from the audience then maybe a
short answer because I want to keep the
time to talk about missions can you
comment on the decoupling of economies
from stock markets so the DL economy in
stock markets seem to be going in
different directions
is the first and exuberance the second
so how much is borne by the public and
not the private sector today so right so
there’s two different questions one is
the stock market and yes with covet as
with other crises we see that in some
ways I know it sounds simplistic but you
know what’s good for people is often bad
for the stock market what’s good for the
stock market is bad for people so
they’re obviously de linked and this is
really a huge problem we don’t have a
proper financial markets which are able
to capture the kind of you know
different again criteria and that need
to be in place in order to make both our
planet more sustainable but also lives
of people better also in terms of
working conditions I remember once there
was a time when Microsoft announced that
it was going to invest a large amount of
money and in some research and
development I can’t remember exactly
sorry for the lack of details here but
the the its stock price spell the next
day that is not strange right in other
words when you’re gonna make long-run
investments and and all the things that
I talked about need these long-run
investments that both is high capital
investment but especially there’s risk
there’s uncertainty it requires a
long-run view all the things that the
stock market doesn’t necessarily nurture
but what’s interesting is that again in
terms of the public private I mean
unfortunately what we’ve seen both with
the financial crisis and now unless we
get these structures right is that the
public sector comes in as I was
mentioning before socializes of the
risks puts in the investment when the
private sector isn’t and then when
things go bad again the government picks
up the bill when things go well you know
the returns are privatized so finding a
real way to socialize both risks and
rewards is fundamental and you know we
don’t do this so the example I often
give is the Tesla Solyndra story these
are two companies in the US that both
got five hundred million in a guaranteed
loan by the government everyone knows
this Solyndra story because Solyndra
went bust and the taxpayer was asked to
bail them out they don’t know that the
same amount of money went to Tesla which
didn’t go bust but what was interesting
was that what Obama said to Elon
at the time was you know if you don’t
pay us back below we’re gonna take three
million shares in your company had he
said if you pay back the loan and you’re
successful we’ll get three million
shares the government would have made a
lot of money from that and this is what
I mean by we need both the new narrative
of government as investor first resort
risk-taker but also new systems so you
know in that case they need literally a
portfolio and make sure that whether
it’s through equity or something else
these citizens also benefit from the
successes instead of just bailing out
the losses well that’s not quite a bit
about missions last time we met it
wasn’t on your table a big manuscript
that you were working on called mission
economics that’s your next book and it
makes the argument the government’s
should structure their interventions
both in terms of investing and on
procurement so the big tools they have
around this notion of missions let’s
start with the general notion what do
you mean by missions sure so missions
are their challenges but much more
concrete right so again coming back to
the Apollo mission the mission was going
to the moon and back again in one
generation the challenge above it was
you know Sputnik and you know beating
the Russians but how they just say you
know let’s beat the Russians in space
that wouldn’t have galvanized the kind
of activity that we now know produced
all sorts of different spill overs
including the whole software industry
which was a spill over so having a
really concrete ambitious inspirational
targeted mission that you actually can
say yes or no did you achieve it which
is addressing a challenge a societal
challenge and I always go back to the
sustainable development goals as the
ones that today should be kind of the
eye on the prize challenge is the point
so but the next the next layer down
right so you start with challenge
emission the next layer down is the
sector’s right so instead of thinking in
a sectoral way like which sector are we
going to help Life Sciences finance
aerospace Aeronautics you need to design
these missions so they galvanize and
catalyze as much investment in
innovation across as many sectors as
possible and also again this word
inspirational that I use the more
interesting inspirational new
that can really kind of beyond the
frontier of creating new areas not just
kind of tinkering on existing ones the
more it can actually inspire new types
of investment and the next layer down
right so challenge mission sectors the
next layer down are kind of the projects
and this is where I talk about the need
for procurement contracts so government
as purchaser grants and loans to be
redesigned to really nurture and
catalyze inspire bottom-up
experimentation whether it’s by private
sector companies and those different
sectors also different types of public
organizations or increasingly in third
sector kind of voluntary organizations
which in different areas like health and
energy are important so you know that
means not thinking about guarantees
subsidies handouts but again designing
instruments in such a way that focuses
on the outcome that you want but then
how you get there is up to you so the
more you know the more difference is the
more trial and error you know the
attempts matter just as much as the kind
of successes and that’s why we also need
mission oriented organizations right so
in the US the classic one was DARPA
DARPA invested and innovated around what
later became the Internet which we all
need and and what’s interesting though
that DARPA didn’t just throw money at
the problem
it innovated within it was an innovative
public organization coming back to our
earlier discussion they welcomed in
certainty I once interviewed the head of
arpa-e so the equivalent organization
but in the Department of Energy the
woman Cheryl Martin and she said they
actually in arpa-e
measured their success by how much risk
they were willing to take and then how
much economy-wide impact their successes
have and that’s very different from how
civil service usually thinks you know
again that fear of failure because if
you mess up you’re in the front page of
the newspaper so it is also a cultural
change but missions are really about an
outcomes government let’s make it
concrete so let me mention two
challenges and tell us how to structure
attacking them or confronting them from
a missions perspective the first one is
climate change how you look at climate
change from the mission framework so
so first of all there’s different
missions for different challenges right
so climate change can have all sorts of
different missions and the one that I
worked with in Europe because I brought
this tool of missions to the European
Commission and I was very lucky I was
able to write a whole report that then
got voted on by the Parliament and the
council so now there’s legally a
missions instrument we use the climate
change kind of challenge as an example
to illustrate what this meant and you
know that again the challenge is climate
change but the mission could be we need
in the European you know Union 100
carbon neutral cities and in order to do
that we’re gonna have to have investment
in innovation across multiple different
sectors from transport to construction
materials to nutrition and you can
imagine all the different projects
within those sectors and new forms of
collaborations between those sectors and
so then the question is who are we even
talking to so if you’re talking to a
city mayor right you know assuming they
have a budget not all mayor’s have but
if it’s this then can become how they
think about really important questions
like the future of mobility and there
are mobility strategies how people move
around a city not just in terms of
public transport but from you know
literally all the different things that
citizens have to think about from the
moment they wake up to when to go they
go to bed to how they are moving and
attracting along the way and that itself
starts to have a strong kind of green if
you want a design lens to it and in fact
this notion of design I think is very
important because sometimes people they
think create a dichotomy between you
know kind of old-style planning the kind
of Soviet Chinese planning versus you
know the kind of cool design thinking
and I think what we really need is the
design lens on planning and a lot of
that means really redesigning the tools
that a mayor in a city has and
especially and this comes back to in
some ways what we’ve been talking about
along how the city views its
relationship with business so in
constructing that future mobility
strategy unless the city has a very
strong carbon neutrality strategy and
vision it can easily then along the way
kind of lose its its objectives and and
allow as I was saying
of reference of the relationship with
business partners to kind of you know
get lost but second example is actually
the example of the moment which is
vaccine development right a lot of
governments are putting actually a lot
of money into vaccine development and
preparing for potential production if
they turn out to be effective how do you
shape that process from a mission
oriented framework well that’s a great
question because often when I talk about
missions I look at it actually from
three different ways one is the public
sector kind of you know pools that we
were talking about then also the policy
is like a carbon neutral City policy but
then the question is production how do
we produce differently right so that’s
almost a different dimension and
vaccines have to be produced and there’s
no lack of public or private money going
into different areas in health
innovation it’s often just miss governed
and it doesn’t have that mission
oriented lens so what a vaccine mission
oriented lens would do would be to first
of all focus on what the mission itself
is and having you know a globally
accessible free vaccine means that
you’re gonna start governing that
process in a particular way and what we
need to then to do is to really learn
the mistakes that have occurred with
miss governing the process around all
sorts of different disease categories
from you know diabetes to cancer where
you have huge amounts of public
investment going in just in the US forty
billion a year dollars goes into the
health innovation process but then the
patents arm is governed and the prices
themselves of the products don’t reflect
that public contribution we have Britain
reported all the people’s prescription
making the point more generally not just
on vaccines is that we need things like
patent pools so instead of allowing you
know patents to create so much secrecy
and patents to be so wide and strong
meaning hard to license you need the
patents themselves and the knowledge
underneath them to be pooled and also
the licenses in some ways to be
compulsory so you have to license in
order to really share that learning and
you know what’s interesting is that we
talked about collective intelligence
that’s the new trendy word I don’t know
if you’ve had a good TED talk on that
but collective intelligence is the new
buzz
but how do you govern the innovation
process from a collective intelligence
angle that really needs to govern that
kind of really wide sharing and openness
and transparency of the underlying
knowledge production and vaccines now
since we you know we all have this race
for a vaccine and we know that our lives
very much depend on it especially next
winter when there might be another
strain of this coated pandemic the virus
making sure that we don’t allow
knowledge to be so secret and and so
much abuse in some ways I was I would
argue the intellectual property rights
because what patents should be is a
contract between the state and a private
attorney in this in the state really is
giving a 20 year monopoly to the private
sector through the patent but the
exchange what the state gets back so
what citizens get back is more diffusion
more knowledge creation but if the
patents are badly structured we don’t
get that and I think with vaccines we
can’t get this wrong let’s take another
question from our audience because it
leads exactly into that point is from an
uncle about the partnerships to address
structural challenges she asked what are
some necessary tools for innovative
public-private engagements can you share
some good examples can we go practical
give you a couple of examples yeah I
mean you know interestingly again coming
back to the kovetz situation I’m seeing
you know at this point in Denmark of the
conditionalities being attached to tax
havens or in France with the airline
conditionalities where they had to
reduce their carbon emissions in order
to get bailouts that itself is a form of
partnership and I would argue again
coming back to the BBC example I think
it’s this is an interesting example of a
partnership that I think can give us a
lot of lessons of how to think in a
mission oriented way back in the 1980s
the government had a real ambition it
was basically a literacy ambition to get
adults and kids to know how to code and
in order to do that and the BBC in some
ways was on the frontier of this they
needed to invest in a computer that
would actually find its way in all the
classrooms and they needed businesses
they need
business partners to help produce that
computer which ended up becoming the BBC
microcomputer and the only two tech
companies that we even probably know
about today in the UK acorn and arm
actually came from that process they
were part of that procurement process
which then led to the BBC microcomputer
and that’s just an interesting
partnership because of course profits
were made this isn’t about charity or
corporate social responsibility this
partnership went to the core of what
they wanted to produce and they did make
profits from it but it was in order to
help the public sector achieve what at
the time was you know a real ambition to
get people and citizens in the UK to be
digitally literate and I think in the
lesson really today for example in the
space sector you know where you have a
lot of different companies in space you
know from Elon Musk or Richard Branson
but it’s not always clear how they are
helping the you know large amounts of
government funding in space which have
preceded their investments in some ways
crowded in their investments to achieve
kind of public objectives you almost
have the opposite you have astronauts I
hear today that are complaining they can
no longer see anything in space because
of all the the garbage that’s being left
up there lots of this private initiative
and the point again it’s not private bad
public good but how do you really
partner in a mutualistic symbiotic way
not in this kind of parasitic way on the
back of public investments without then
helping the public kind of achieve the
goals that it’s trying to meet Madonna
I’m gonna hijack one more question from
the public because my prime number is
asking it seems like your vision will be
perfect for the European Union to adopt
and provide leadership globally I
suspect he means rather than the u.s. or
China providing the leadership and he
asked do you think that’s possible I
know you are working with the European
Commission so I’m asking you how is that
work going to see real momentum actually
in that direction so first I should say
it’s not just in Europe I just had the
honor last week to give a talk to 40 US
mayors actually sorry they were there
were global mayors but lots of the
mayors were in the US and I spoke
specifically with one from Los Angeles
and New Orleans and they were you know
very up for this approach so I’m hoping
that the missions approach does also
diffuse throughout the US we’re also
working with the approach in Latin
America in South Africa where as Grunow
mentioned I’m an advisor in Europe
what’s been interesting is that the work
that I did actually as I mentioned
became kind of law I don’t know if we
can call it law but there’s a legal
instrument I had to be voted on by the
partner in the council what they did
next was to choose kind of five broad
mission areas of which you know climate
and clean growth and even the future of
the soil you know cancer or different
kind of mission areas and how to
transform those mission areas into kind
of concrete missions one of the things
they’ve started doing is in fact forming
mission boards which then are you know
for each mission area and these
questions that have been talking about
about the willingness to experiment to
welcome risk-taking is something that’s
coming up in the boards in other words
do we actually have also the capacity in
the member states across Europe to
govern this process and so my experience
is especially my work with different
countries is that what really makes a
difference is not setting a mission and
by the way on setting the more we can
bring citizen engagement in ex-ante not
just expose the better and you know the
plastic free oceans mission itself in
some ways was inspired by the cultural
sector so that wonderful documentary
that Attenborough did not on Blue Planet
but what I was saying is it shouldn’t
just be relegated to kind of like a part
of government that thinks up a mission
right so say the Department of
innovation and Industry it really needs
to be seen as cross-cutting and that’s
what makes a difference cross-cutting
across government departments so in the
Treasury or the ministries of Finance in
different countries that’s often where I
see the bottleneck so if you continue to
see economic growth in this very siloed
way and not outcomes driven and not put
the citizen if you want at the core of
how we think about what the economy
should be doing so the economy should
serve people not people serving the
economy then this kind of mission
oriented thinking is harder in fact in
the European Commission itself I find
that it’s easier to talk about this in
the DG for innovation than say dgx fen
which is where all the kind of finance
you know an economic kind of discussions
take place however there’s definitely
improvement and the fact that the head
of the European Commission who sulla von
der Leyen has to put the Green Deal at
the center of European strategy and the
European Investment Bank kind of calls
itself now the climate bank in some ways
and the European Central Bank is
increasingly having discussions about
saying the Green Deal then I’m very
positive about what the future might
look like because that’s when change
happens change happens when we move the
kind of climate discussions outside of
the departments of the environment to
the Treasuries to the central bank to
the European Investment Bank and when
the head of the whole thing whether it’s
a president of a country or the European
Commission says this is gonna direct
growth because growth doesn’t just have
a rate it has a direction so putting the
Green Deal at the center of how we think
about economic growth is central it’s an
uphill battle it’s far from perfect but
I’m very optimistic at least in terms of
what I’m seeing and I do think the
Kovach crisis is gonna make all of this
much more urgent than ever there are
many other questions but we are running
out of time so I want to finish on a
question about another one of your
clients and he’s really funny and
strange to call him client because
that’s Pope Francis Pope Francis’s radio
broke the value of everything he has
publicly said it was a great reading and
he learned a lot and apparently now you
have weekly calls or bi-weekly calls
with his collaborators tell us about
that okay yes I I need to remind my
publishers to put the review on the back
that’s a good point
the review from the Pope what could be
better yes so I mean the discussions
with the Vatican actually began even
before that wonderful you know letter
that he wrote it was a letter he wrote
to an Argentinean judge which went viral
where he talked to my vibe
having some essential kind of you know
ideas and solutions for the crisis of
capitalism but I’d begin speaking to
them actually already in September when
they reached out because they had seen
the work that I had been doing in my
Institute’s doing around public value
and purpose these things that we’ve been
talking about and they said that has a
lot to do with how we in the Vatican
think about the common good right so and
if the common good just remains in the
kind of morality space and doesn’t have
an economic framework for it it kind of
doesn’t happen and so that’s my real
kind of interest in urgency to be
working with the Vatican but then you
know COBIT came along and all these
different countries started to set up
task forces around COBIT of which
different ones like in Italy in South
Africa and the Vatican itself that went
up so I was on the economics team and
it’s being run by a very inspirational
religious leader in the Vatican called
Auguste exampie nee he works in the
inclusive capitalism group and what
we’ve been doing over the last two
months is writing briefings for the
Vatican so I’m doing this through my
unit the Institute again here in London
for innovation of public purpose each
week with a different theme one was on
the conditionalities that we’ve been
talking about one was on the need for
debt relief one was on the need to keep
the Green Deal and the green transition
at the center of how we think about the
long-run recovery one was on working
conditions one was on health care
systems and so these are basically ways
to feed to the vatic and given that the
Pope makes his speeches often on a
weekly basis around the current crisis
to be as informed as possible both in
terms of kind of again long-run thinking
and the need to a vision but also in
practice you know what do we know what’s
working what’s not what’s the empirical
evidence around for example universal
basic income what are the different
types of income support that governments
could be thinking about for their
citizens and to give him options you
know any leader wants options and
instead of the Pope just kind of saying
you must do this kind of saying there’s
there’s a real moment for change there’s
there are options here is what’s being
done and let’s tilt the playing field
let’s move our economies in ways that
become more inclusive and sustainable
and obviously we’re sending him already
kind of economics briefings how it gets
interpreted the Vatican you know they
have their own system obviously but I
was
very encouraged after the first week of
our briefings it was on debt relief it
featured in the Easter sermon which is
another another good endorsement
Mariana thank you thank you very much
thank you for your work you’re looking
forward to the next book and to continue
the conversation thank you for being
with us today
at Ted 20/20 thank you very much was a
pleasure