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The revolutionary economist Mariana Mazzucato proposes a shift away from profit and big business – ...
2022-01-13 09:00:00

Better Not to Cross the Dreamer
The Revolutionary Economist

Photo © Mariana Mazzucato
Better Not to Cross the Dreamer
Better Not to Cross the Dreamer

“What world do you want to live in?” asks Mariana Mazzucato, a revolutionary economist who reminds politicians that they themselves, not big business, decide the shape of the world. She stubbornly argues that boldness and imagination and a sense of mission have always been more important than profit – and shall remain so.

Read in 16 minutes

Hailed “the world’s scariest economist”, Mazzucato admits that she likes this nickname and has learned to use it to her advantage. It was coined on the occasion of an interview with a woman journalist who presented the economist in a positive light, but her male editor colleagues gave the text its dreadful, attention-grabbing title. According to Mazzucato, this anecdote perfectly reflects the mindset of today’s elites, who have made capitalism toxic. Luckily, we can change this, she argues with a smile, reminding us of common sense and the freedom of choice. She discusses the economy as a part of human history – although her analyses rely on figures and specialist terms, they also convince us that behind every number there stands a living being whose decisions have tangible consequences, regardless of whether the latter result from far-reaching plans or cynical ploys, good or bad choices, failures or gaffes. Her appearances are captivating due to her vigorous and fact-based style of delivery. It is as if she were writing a realist novel with a Tolstoian love for people and belief in them.

Calling a spade a spade, Mazzucato recalls dictionary definitions of terms such as value, innovation and sharing. Analysing such concepts, she deconstructs the way in which the economy has been traditionally presented. Much like other progressive thinkers, she argues that it is high time we dispensed with the fairy tale shrouding global capitalism. Pointing out the stratagems employed by late-capitalist elites, she exposes the corporate lingo, deliberately obscure and full of theory, as well as the lexicon of dogmas we have been fed by neoliberals since the 1980s (chiefly the claim that the free market and unlimited profit from capital have no alternative). Today, this ideological monolith is crumbling under pressure from a variety of economists, but the 54-year-old Mazzucato has one advantage that could be really dangerous to the status quo: she is highly persuasive. Many politicians are paying close attention to what she has to say, among them the South African President Cyril Ramaphosa, British political party leaders, Italian Prime Ministers, the Scottish Prime Minister Nicola Sturgeon, American congresswomen (including Alexandria Ocasio-Cortez, co-author of the Green New Deal), Republican senators, European Union Commissioners, and even Pope Francis, who admires her books. What is more, these people do not only listen. Country leaders and heads of key institutions eagerly consult her and seek her advice while developing long-term strategies. They are determined to regain some of the power and agency lost by society to private companies. “Let us not forget that there’s different ways to do capitalism. The choice of the one we want to implement is ours,” she argues. In fact, it seems that she should rather be called “the world’s most influential economist”.

Elon, be thankful!

Mazzucato argues that the narrative of capitalism sways, unbalanced and unsustainable, on the illusory notion echoed by the private sector that it is in fact the only source of value. However, this claim erases the entire public sphere, whose revival she has advocated and preached, demonstrating that societies have always partaken in technological advancement and development of knowledge, as well as other achievements and services. We build together the world we live in. All our triumphs are shared, yet only a handful receive the credit and reap the rewards, because they have managed to convince us that without them we are worthless.

Mazzucato took up this subject in The Entrepreneurial State: Debunking Public vs. Private Sector (2013), her first widely-discussed book, which she started to write shortly after the 2007 financial crisis. In this study, she examines how subsequent countries introduced austerity measures, cutting funding for development, education and innovation in the public sector. At that time, politicians embraced the main idea promulgated by big business: although its role had already been narrowed by neoliberalism, the state ought to recede further into the background, making more room for private interests, specifically those of the banks and Silicon Valley. A similar model was adopted in Europe, where many services were outsourced to private business. According to Mazzucato, following this strategy was a mistake and also the main reason behind her book, which was meant to bring politicians to their senses by mobilizing them to re-estimate the power of their countries. As she demonstrates, reliance on outsourcing – which consists in contracting private companies to realize public tasks such as facilitating training courses, as well as organizing garbage disposal and public transport – is not only more costly budget-wise, but also harmful to what she has termed the ‘flexibility of the State’.

One recent example of this is the decision of the British government to commission part of the COVID-19 vaccination plan and public information campaign to private companies, paying them handsomely for so-called ‘consultations’, instead of developing the skills of people actually employed in public health services. Investing in the private sector reinforces the belief that the entire public sphere, including institutions and staff, is less insightful and effective. In consequence, this prejudice becomes reality when the public sector shrinks due to underinvestment. The persistent belief that the private sector does better than the state is a universal problem. Employment opportunities in public institutions are less attractive than private posts that lure people with new challenges, training prospects and higher salaries. There are few exceptional scientists and businesspeople who have decided to work for the government in recent years, although history has seen many such cases, at least when the concept of the welfare state was still alive and well. The last decades of the 20th century and the first ones of the 21st have nevertheless been marked by the degradation of the state.

Although the private sector would diminish the role of the government, after the 2007 crash it did not shy away from asking for subsidies. Financiers actually expected the state to come to the rescue, because it could no longer operate without them after transferring so many competences to the financial sector. Mazzucato points out the shocking naivety and helplessness of governments, which doled out huge rescue packages without any guarantees whatsoever. These were bad decisions rooted in poor negotiations, she argues, emphasizing that conventional approaches can lead, in situations of crisis, to irrational judgements on the part of the ruling, cementing the unhealthy and misguided relationship between business and the state. Mazzucato brings into focus and precisely estimates the real weight of what is public and shared, with particular emphasis on innovations, which we tend to ascribe to geniuses from Silicon Valley and other private ventures. However, as her research demonstrates, the last several decades unambiguously show that without the participation of the state, specifically taking financial risks with our own shared money, we would not have access to any of today’s key technologies. The internet, GPS, intelligent assistants such as Siri, touchscreens, computer mice – all have been developed and financed by governments, at least in the crucial early phases (for example, through agencies like DARPA). She does not hold that the government actually invented the iPhone, but simply that no smart technologies would be possible without public investment.

As Mazzucato underscores, the important thing is that government money was supposed to solve specific problems, with spending and innovating guided by clear goals. In this way, she draws attention to differences regarding what motivates companies and public organizations. The latter focus their efforts on the public good, seeking solutions that can serve all. In fact, the greatest risks are taken by everyone collectively. Although heads of investment funds boast about the challenges of backing bold start-up ideas, it is a fact that the costs of uncertainty in financing innovation are borne, at the earliest stages, by governments, which receive nothing in return. Let us reiterate this point: public means are used to support key technological achievements, but all profits are reaped by private companies that leach on our shared contribution. We have become demanding and critical of the authorities, Mazzucato argues, but we praise business even for its failures. As she observes, when officials make mistakes, they end up on the front page, but heads of investment funds are admired even if they admit that each one of their successes was preceded by seven failures. She appeals to us to allow governments to learn from practice and experiment, because this is the only way to develop vital competences.

Mazzucato accentuates that the crucial thing about innovation is to strive for it without cynical calculation. Some ambitions may never come to fruition, but in the process they stir minds and generate ideas, spreading and stimulating invention in related areas. No success has only one father. She once asked on Twitter: “Did Elon Musk ever say ‘Thank You’ to Uncle Sam? His growing empire is fuelled by $4.9 billion in public subsidies.” This reveals a certain problem: if governments partner up with private companies and provide funding without any stipulations, we do not deal with symbiosis, but a parasitic or predatory relationship. This, she points out, is the problem of states that give away money but fail to exhibit leadership and formulate clear goals. In response, she has developed the idea of the entrepreneurial state – one that outlines directions of future development and is not afraid to carry out its civilizational mission.

Values are priceless

Although born in Rome, she did not spend her childhood in sunny Italy, because her family moved across the Atlantic when Mariana was three. The daughter of Italian immigrants – her father was a physicist at Princeton and her mother ran the house – she made a stellar academic career in the US. She conducted research and lectured at many universities before finally settling in London, where she lives in Camden with her husband and four children. She appears wherever something important is happening: at the economic summit in Davos, during COP climate conferences (such as the recent one in Glasgow), and at the forums of other global events. Wherever she goes, she is followed with respect. With her penetrating eyes, sharp features and high energy, she easily dominates her speakers, not only intellectually but also quite literally because of her height.

Ideas she has been preaching for decades have already started making waves. “I have always been interested in implementing changes,” Mazzucato says. However, she began with solid research in theory and history, focusing on the economics of innovation and public value. She established the pioneering Institute for Innovation and Public Purpose at University College London. Moreover, she has advised the UN and the Swedish state innovation agency Vinnova on socio-economic questions. Finally, she has helped OECD Secretaries develop a new understanding of growth.

Her latest brainchild is the Council on the Economics of Health For All, which she chairs. Founded in 2020 by the WHO, it has set out to study and measure the value of healthcare, as well as to oversee its even distribution. “Health for all must be at the heart of government investment and innovation decisions – and it must be governed with the common good in mind,” Mazzucato says. In all three of her published books, she closely examines the concept of value, which is crucial for regarding the economy as a team effort. Also, it is far more complex than we have grown accustomed to assume.

First of all, Mazzucato opposes identifying value with price, or using financial measures to assess worth. Markets and traders cannot hold a privileged position in this area because the value of every single thing, event, service or piece of information emerges from relations formed among a number of actors within a long chain of occurrences. Thus, value should also be measured in terms of the consequences any given solution carries: if, whom and how it serves. Mazzucato addresses this question in The Value of Everything: Makers and Takers in the Global Economy (2018), where she demonstrates that the contemporary economy is far more preoccupied with reaping profits rather than creating value, the latter being indicative of real economic health and power. We have confused making with taking, she points out, encouraging us to restart the conversation about value and its true creators. As she reminds everyone, in classical economics the concept of value was central, but became gradually supplanted by the corporate obsession with squeezing out maximum profits, elevating prices and cutting costs. In this way, she has exposed the modus operandi of major American companies, which do not invest their gains in the economy, other companies, science and the rest of us, but allocate huge sums to buy their own shares in order to elevate their price and secure bonuses for managers. What she has demonstrated is the circulation of money for its own sake – greed in its purest form.

Dream budgets

Her latest book Mission Economy: A Moonshot Guide to Changing Capitalism and The Entrepreneurial State (2021) charts a map of inspirations for those who have proven overly conservative by accepting the role of agents who remedy everything the markets have broken. In her view, today’s problems are particularly acute because they cannot be solved with any single gesture. The climate crisis and social inequality are huge and complex issues. In order to face them, it is necessary to develop the courage and vision matching those behind the space flight programme. It is time we took off and achieved something truly otherworldly. This metaphor is not accidental: it was the moon landing mission announced by Kennedy in 1962 that has become the key reference for Mazzucato’s economic imagination. She invokes space flight in order to indicate the potential scale of ambitions and government plans, which it is possible and necessary to emulate today.

She is specifically fascinated with how Kennedy consciously managed risk while realizing the space programme. He knew that the project could be costly and pose immense challenges. The government would not be able to realize it alone. The aim was thus twofold: developmental and political. The point was to outrun the Soviets, at the same time attaining the impossible. This magnificent venture had a straightforward goal: fly to the moon, land there, and return safely home. The clarity and scale of this plan, Mazzucato emphasizes, stirred the imagination, nourishing the desire to participate and invest in this great, all-encompassing project. One anecdote that confirms her perspective is Kennedy’s meeting with a janitor at NASA. When the US President asked what the man’s job was, he replied that he was helping a man land on the moon. Whatever it is that we set out to realize together, it has to concern and serve all of us.

What could be today’s counterpart of the moon landing mission? Mazzucato has several ideas: reducing dementia-related diseases by half, removing plastic and microplastics from oceans, providing balanced universal healthcare all over the world. As she underscores, only governments are in a position to set such goals before humanity. It is not the point to finance them entirely out of state budgets and make states manage their realization, but to indicate the overall direction and to motivate many independent subjects to action, just like in the space race era.

The moon landing was exactly this: a top-down impulse that caused bottom-up progress. In the economy, incentives offered by the government and NASA started an avalanche of private investment in companies such as General Electric and Motorola. These investments were not limited to aeronautics, but also covered production of integrated circuits and food, as well as design and many other areas. In order to conquer space, steps needed to be made in many different fields. Mazzucato draws on this example also because of data showing how wisely NASA managed its finances. The agency offered money to private companies on the basis of disciplined partnership (not allowing them, for example, to increase already planned costs), declaring fair distribution of awards in case of success, and holding on to some of the achievements by investing in employees and their own technologies. It was clear from the start, Mazzucato contends, that getting to the moon was not going to be turned into a “gambling casino”. All in all, nothing was for sale and everything was about cooperation. In result, the effects are now impossible to overrate. The huge leap ushered in by a single dream brought much more than just the landing on the moon itself: telephones with cameras, running shoes, CAT scanners, LED lights, electronic thermometers, insulation materials, wireless headphones, mobile computers, dry frozen food, baby milk, dynamic prosthetics, and scratch-proof glasses. Naturally, this is only the tip of the iceberg.

How much did it all cost? In today’s terms, around $283 billion. Is this a lot? Mazzucato claims that visionary imagination requires framing this question differently. We should first ask what we want to achieve and then figure out how to fund it. After all, only governments have the prerogative to create and print money, which they do in order to build motorways, boost research and develop defence structures. The state also enjoys the privilege to wisely manage the means at its disposal, focusing on specific goals. Its mission cannot be limited by strictly calculated profitability, because it is more akin to dreams of unforeseeable consequences that cannot be easily estimated, since their value resists conversion into purely financial terms. Besides, as Mazzucato likes to repeat, when it comes to war, no government claims that it cannot afford it – they simply print the money and deploy the troops, designing the budget not around costs but rather the effects they wish to achieve. Why should we not do the same in the context of truly noble causes?

Missions and spreadsheets

It is no surprise then that the power elite cherishes Mazzucato. After all, she is the first economist in half a century to argue, with real enthusiasm and faith, that under capitalism governments should rule and not stand on the sidelines, allowing others to steal from them. This could potentially grist the mills of autocrats and European imitators of the Chinese model of state capitalism. However, her theories neither praise power for its own sake, nor promote a return to socialism. Mazzucato’s books are not guides for dictators. On the contrary, her philosophy incentivizes reassuming responsibility for a democratically-built world. In recent years it has become widely accepted that big corporations have become more powerful than the UN itself, and that no global problems can be solved at the level of individual states, the key challenge being to urge supranational, profit-driven industries to cooperate. Private markets demand less government intervention, while Mazzucato calls for ‘bigger’ governments that could determine their own paths of progress and develop honest rules of the game. Still, she warns that missions are difficult and their realization requires thorough mental and organizational transformation, almost a levy in mass among the people, who will have to be led toward a distant goal. How can we achieve this if governments and their philosophies change every four or five years? Mazzucato encourages readjusting the world’s balance of forces, specifically the relation between people – employees, entrepreneurs, clients, officials, who are the real creators of value – and the companies that wield power. Achieving this goal would be premised on utilizing our shared potential and involve restoring people’s participation in growth. Scandinavia has provided a useful model, for example by installing representatives of trade unions on company boards. In Scotland, Mazzucato helped the government set up the first green investment bank, which financially supports environmentally-friendly solutions without accumulating capital as its sole purpose.

The paradigm shift initiated to some degree by Mazzucato’s books is already underway in politics, with governments beginning to set new conditions before business. French President Emmanuel Macron has tied pandemic financial relief for the motor and aviation industries with the requirement to lower CO2 emissions. Mazzucato commented on this move by arguing that Macron’s message was direct: we will not buy you out, but rather change you. In Germany, support for the metallurgic industry was conditioned on the reduction of materials used for the production of steel, which enforced innovation and placed German foundries in the green avant-garde. Still, the recent pandemic has become an occasion for dire mistakes. One example is the aforementioned outsourcing of vaccination to private companies in the UK, which has caused huge losses. Mazzucato shows how to think level-headedly by practically examining particular solutions and assessing them as either good or bad. It is worth following how the situation unfolds, verifying what works and avoiding taking anything for granted. Participating in the economy begins with questioning and describing various phenomena accurately.

Although Mariana Mazzucato is an economist, she is preoccupied with the much broader task of changing the world for the better. Instead of replacing individual cogs and screws in the complex economic machine, she proposes the overhauling of it through philosophical revolution. She regards governments, whose tasks have been limited to the remedying of market failures and business excesses, as potentially visionary organizations. Her point is to pose the question of what kind of world we wish to live in, as well as who creates it and whom it serves. There can be no compromises with regard to ambitions, Mazzucato argues, although she has her feet fixed firmly to the ground, straddling academia and the practice of governance. She does not engage in developing theories that are meant to be verified later, but reverses this order: “In getting my hands dirty, I learn and I bring it back to the theory.” In this way, she argues, we learn from acting, taking risks and experimenting. Accordingly, the strategic ideas outlined in her books are accompanied by practical tips regarding their implementation: a complex hierarchy of bubbles and frames, on which she charts subsequent steps and mutual interdependencies among the various executors. The mission itself is not enough for Mazzucato – she recognizes that realizing it requires precise instructions.

Quotations from Mariana Mazzucato come from interviews published in The New York Times, Wired, Sway, and The British Library, as well as from her public statements and texts written for The Guardian.


Translated from the Polish by Grzegorz Czemiel

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Paulina Wilk

Paulina Wilk

is Editor of the Culture & Society section, as well as a writer and journalist focusing on global development. Among others, she has published the non-fiction books “Lalki w ogniu” (Dolls on Fire: Stories from Modern India) and “Pojutrze. O miastach przyszłości (After Tomorrow: On Future Cities). She has also written a series of fairy-tales about a teddy bear called Kazimierz. She is the co-creator of the “Kultura nie boli” foundation, the bookshop, café and literary space Big Book Café, and the Big Book Festival.