This economics professor behind British Columbia’s new economic plan wants to remake capitalism

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A construction crane stands idle at the site of an office tower under construction as downtown condos and the North Shore mountains are seen in the distance, in Vancouver, Saturday, Jan. 9, 2021.DARRYL DYCK/The Canadian Press

British economist Mariana Mazzucato wants to remake capitalism by shaping economic growth around goals such as tackling social inequality and sustainability. Her ideas caught the interest of British Columbia’s Minister of Jobs, Economic Recovery and Innovation, Ravi Kahlon, who approached the economics professor at University College London, and she spent a year writing a new economic plan for the province. In a phone interview with Justine Hunter of The Globe and Mail, Professor Mazzucato explains the concepts behind the new “Stronger BC” economic plan, which is designed to recover from the pandemic and the weather disasters of 2021.

I see how your economic theories on inclusive and clean growth would appeal to this NDP government, but we are talking about a small subnational economy. Can you reshape how capitalism works on this scale?

In some ways BC is the perfect size because it’s bigger than London, smaller than the country, but it has very specific issues.

What’s really important is to start with the big picture issues, then land it on the supergranular, then scale it to the general. So in Sweden, they start with this very high level mission of a fossil-free welfare state, but then they land it on things like school meals. School meals in Sweden should be healthy, tasty – not just IKEA meatballs – and sustainable. So it’s about taking supernormal things like a school lunch and turning it into a lever where, through guided policy, you can drive sustainability, inclusion, and innovation, and that can drive growth. .

In your new article published last week, you explain how British Columbia “can help address major social and environmental challenges, while achieving higher productivity, investment and equitable growth.” Sounds a bit like a unicorn request. How it works?

I always say it’s common sense. Why don’t we have economic structures that offer [on those goals]? But bringing those two things together was radical. Don’t have your productivity plan on one side and then your climate program on the other.

Having an economy explicitly a) oriented towards its challenges and b) rethinking its instruments – budgeting, procurement, public finance, industrial strategy – towards the achievement of objectives is absolutely not the status quo.

You say this change is forcing policymakers to rethink the role of the state in shaping economic, social and environmental outcomes, but you also note that governments have been reluctant to intervene in markets except to address failures. How do you embark the public in such a turn?

It’s not pie in the sky. It is a question of rethinking these instruments so that they are fairer and collectively create value but also to share it collectively for capitalism. It is not about socialism.

Governments can claim that they always intervene. And most interventions have no effect. They don’t create what I call “additionality” – making things happen that wouldn’t have happened otherwise. How do we rewrite truly ambitious, symbiotic, nonparasitic contracts — not just grants, guarantees, and handouts to anyone who lobby?

You noted that across the country, governments are not doing enough to ensure that their investments in research and development, for example, produce results. In the context of biotechnology and health sciences, how is British Columbia driving innovation and increasing productivity?

In general, Canada relies too heavily on tax incentives. Without these ambitious, mission-driven programs, it literally only drives profits, it doesn’t actually drive innovation that wouldn’t have happened anyway.

So the first question is: What do you want to do? What ambitious new area of ​​biotech or healthcare would you like to be known for? And what are the sets of policies that can create a new market in this area through direct financing – with tax incentives used as a last resort, to affect marginal investment.

When we consider the massive investments needed to adapt and mitigate the challenges of climate change, it’s hard to imagine a scenario in which my standard of living would rise unless I work in the construction of new seawalls or panels. solar. How will someone working in the oil, gas or mining sector see a better standard of living in this field?

If you’re part of an economy that thinks you can just redistribute money to people to get richer, you won’t have anything to redistribute over time, because you’re not creating value or wealth.

In an economy driven by investment and innovation – which requires business investment – ​​this investment should also be aimed at making our economies more sustainable and inclusive. But this investment within a company means investing in the training of workers, investing in new technologies. It means having a long-term growth plan. It is therefore good for wages, for productivity, but also for the formation of human capital.

Why do you think this will work? And how do you measure success?

It actually means focusing on the problems instead of giving the problems lip service. When we do military spending, no one has ever claimed to be able to fight or win a war just by throwing a little bit of money here and there. But we never applied that sense of urgency, commitment, focus and action to social issues.

What if we really apply [a mission-oriented approach] to our societal challenges? We need real participation. Do you want the community to have a voice very upstream to say: what are the missions we are pursuing? It’s the way to catalyze that kind of additionality, as opposed to just distributing money to different people who know how to ask for money.

This interview has been edited and condensed for brevity.

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