AMY GOODMAN: This is Democracy Now!, democracynow.org. I’m Amy Goodman, with Anjali Kamat.

NERMEEN SHAIKH: We’re joined now by the Italian American economist Mariana Mazzucato. She has advised governments, policymakers and even the pope on economic policy.

AMY GOODMAN: Mariana Mazzucato is a professor in the economics of innovation and public value at UCL. That’s University College London. She’s founding director of the UCL Institute for Innovation and Public Purpose. She’s in New York to launch her new book, The Common Good Economy, joining us here in our studio.

You present a new theory of economics here that should be based in the common good. Can you characterize American capitalism and how it — how close it is to the common good economy, or not?

MARIANA MAZZUCATO: Right. Good question. So, first of all, what I try to also do in the book is provide a new vocabulary. So, anytime you hear the word, like, “the state versus the market,” that’s a misunderstanding. You have state structures; you have private sector structures. And how they interrelate determines what kind of market outcomes we get.

So, what we have currently in the U.S. is we have corporate governance, which I think is very problematic. We are wed to just shareholder maximization, so quarterly returns, which means that about $7 trillion have been used just to buy back shares to boost stock prices, stock options and executive pay. It’s a key driver of inequality in this country. And we have a state — forget Trump just for a minute now, even in previous administrations — that at the worst, it’s get out of the way, and at best, when it comes in, it’s there to fix a market failure.

So, what I argue in the book is that this, by design, not by coincidence, means that it’s impossible actually to govern the economy in an outcomes-oriented way. What we actually require is a theory also of the state itself, ex ante, to be about shaping the economy to actually deliver on the goals. Now, forget what the goals are just for a second — I’m sure we’ll get there — because, of course, Trump’s goals might be different from Biden’s goals and so on. But even just the fact of having a goal, what does it mean to actually have a state structure, including all the different public organizations, so the decentralized network of public agencies that help shape the economy towards being, if the goal is more inclusive, more sustainable, more driven by innovation?

And the point of talking about the common good is that when you then have leaders — and there’s many of them globally — that still believe in climate action, that still believe that we need goals like health for all or to reduce the digital divide, so if we ever have a lockdown again, all kids continue to have access to their human right to education, what does it mean to put those goals into the relationships between public, private and other actors from the start? So, I call this predistribution, not redistribution.

That means getting the water rights to be proper, instead of having 80% of industrial waste water not recycled, even though the state is giving the water right to, say, Anheuser-Busch. What does it mean for property rights to not be abused? Currently, patents are too upstream in the innovation process. They’re too strong, so hard to license. And they’re too wide, used just for strategic reasons. So, that blocks innovation. What does it mean for procurement contracts? Governments, all governments around the world, often have 20 to 30% of their budget just used to purchase stuff. Are they purchasing it with those good goals at the center, as we did when we got to the moon, where the head of procurement for NASA said, “We ain’t going to get there unless we change how we do procurement in an outcomes-oriented way,” or is it just a race to the bottom, just thinking about costs?

So, what the book says is currently we’re stuck with those who believe in good outcomes. Again, we can come to Trump, who doesn’t even believe in climate change and so on. They are currently paralyzed, those who actually are trying to be goal-oriented, because the economics that is informing the ministers of economy, the ministers of finance globally is a very reactive — and boring — way to think about the role of the state.

ANJALI KAMAT: And explain, you know, what are the goals of Trump’s ideas of the economy right now.

MARIANA MAZZUCATO: Right.

ANJALI KAMAT: And what are we living in? I mean, we’re facing — like, we have $40 trillion of debt, and Trump keeps saying the stock market is going up, so things are OK.

MARIANA MAZZUCATO: Right. Well, first of all, let’s not forget that the U.S. government, like almost every other government in the world, signed up to, in 2015, the global Sustainable Development Goals. That’s the context in the back. So, you know, irrespective of who the leader is currently, the United States of America has, on paper, signed up to 17 Sustainable Development Goals: no hunger, no poverty, gender parity, climate action, life below our ocean, so we don’t fill up the oceans with plastic, as the great David Attenborough has shown us in his latest documentary called Ocean. So, those are the goals that the U.S. government has signed up to. Now, if the U.S. government is no longer interested in those goals, they should take their name off. Now, luckily, that hasn’t happened, right? So, that’s just the background context.

That then lands, by the way, in particular cities and states. We still have states in the U.S. that do believe that we need urgent climate action. Think of what’s happening in California.

Now, the president of the United States, we know, also says not only that climate change has sort of been made up by the elites, but also that empathy is for wimps — you know, those kinds of statements we hear both from him and Elon Musk. So, luckily, that’s actually the exception. I don’t think we should confuse the current president of the United States with all Americans.

Now, when Trump, we know, got into power, especially in the second administration, by convincing everyone that Biden’s policies, you know, were failing, that he was going to come in and help the working class, now, that is important, to talk about labor. So, the labor share of global income is at one of the lowest levels it’s ever been in history. In the U.S., it’s low. The profit share is high, and yet those profits are not being reinvested into the economy. They’re being put into financial markets. He loves those markets. So, when he looks at the stock market going up, he thinks that’s good for the economy. Actually, it’s making the economy more and more sick. You have companies that are, as I mentioned before, you know, making profits from — what I have written about also in a previous book — The Entrepreneurial State, through a massive collective investment process, where the taxpayer and labor put in huge amounts of resources, right? So, even the AI revolution today, by the way, the early large language models, the early speech recognition was funded by DARPA. DARPA, the U.S. government’s Defense Advanced Research Production Agency.

AMY GOODMAN: In the military.

MARIANA MAZZUCATO: In the military.

AMY GOODMAN: Defense.

MARIANA MAZZUCATO: In the Department of Defense. Almost everything in your smartphone that makes it smart and not stupid was funded by the taxpayer, so internet, GPS, touchscreen, Siri. I tell that whole history, again, in The Entrepreneurial State. But what we ended up doing was socializing the risks and privatizing the rewards.

You know, fast-forward today, the trillions — not the billions, the trillions — being earned by a few tech companies is not because of the genius, you know, of those particular entrepreneurs. Of course, they did — they are spending today on research and development. But how did they get where they are today? They got where they are today with these trillions on the back of public investments in that technology, on the back of not paying their taxes, right? Let’s just say that loud and clear. They’ve saved a huge amount by not paying their fair share back to the government, back to society. In some cases, like Amazon, we also know that they made a lot of money by exploiting labor. And that’s not me saying it; just read all the accounts of this. There’s books and articles everywhere in terms of what they should be doing to reinvest those profits also into better working conditions.

Anyway, so, you know, coming back to your first question, that’s kind of the state of modern capitalism. The problem is, is then someone like Trump will come in and say things like, you know, “The working class in the U.S. is getting” — you know, I’m not allowed to swear on this program, but anyway, beep, beep. And he’s right. Right? Again, the labor share of income in the U.S. is low. But why is that? It’s precisely through those kinds of policies that Trump is advocating, allowing also the financial sector to finance itself. Even in the U.K., where I live, 80% of finance goes back to finance — finance, insurance and real estate. The acronym is FIRE. So, not only is the climate on fire, you know, the financial sector is on fire. So, this extractive mode of capitalism is hurting workers. And yet he celebrates that in terms of the short-term returns, but that’s not helping productive capacity in this country.

AMY GOODMAN: So, talk about another form of capitalism, I mean, U.S. capitalism versus other countries who do it differently.

MARIANA MAZZUCATO: Sure. Well, it’s a really good question, because we should remember there’s varieties of capitalism, right? So, in Scandinavia, trade unions are on the board of companies. Not only them, right? You have the different actors. You have the — obviously, the business actors, different shareholders, the government, but also trade unions. Labor is seen as a real stakeholder, not just in words, right? Larry Fink here every year, the head of BlackRock, will tell his investors, “We need to not just, you know, maximize shares, but give back to communities.” That’s ex post, right? That’s give back some pennies, some crumbs, to others, whether it’s to workers or communities. How do you, from the beginning, create value in a different way?

And what the book talks about, there’s three sections: theory, kind of practical stuff and also places. And I break down what a common good economy looks like, with real examples around the world of bits of it. But you don’t actually have any system that I would argue is truly kind of driven by the common good, and there’s lots of common good washing.

So, the five elements — because I call it a compass — that we should have for a common good economy, A, is very clear on the direction, right? When we went to the moon and back in a short amount of time, government worked with 400,000 people in the private sector — private sector, right? — this isn’t about socialism; it’s good capitalism — to deliver solutions to problems. Government didn’t tell the private sector what to do. They just said, “Hey, we got problems. We’ve got to make sure that the astronauts can go to the bathroom,” which you’ll remember recently with Artemis, that became the issue again. The toilet is always the issue up in space. We need to know what they’re going to eat. We need to know how they’re going to communicate back to the Mission Control room. It was through this outcomes orientation, clear on the direction, that we stimulated huge amounts of innovation: camera phones, foil blankets, baby diapers, home insulation. So, that’s what I call an interesting partnership where you have a purpose, and that purpose defines an outcomes orientation for that public-private partnership.

Second element is who decides what the mission is. Forget the space race, right? That was just a technocratic guys in the room deciding that was a good idea. The earthly missions is what are important. And they should be designed, and the input should come from people through their lived experience. So, the second element is co-creation and participatory democracy. This is why I also worked with the pope, because in Catholic — in early social Catholic thinking, the common good was often talked about, as it has in political philosophy. And this idea of the lived experience, what he called the principle of subsidiarity, the most local level, and the preferential option for the poor, look at how anything we do affects the people that are most vulnerable, and have those people who’ve been failed by the system help design a better system. And I give examples like participatory budgeting in Porto Alegre, in Brazil, or in Camden, where I live, in London, where we worked on adult social care across 10 housing estates, bringing the carers to the table to design that better policy, because they know it most. I’m actually going to Brazil this evening into the Amazon, where the Indigenous communities know more than anyone else about how to preserve the forests, about how to preserve biodiversity, on how to save water. And yet they’re not being brought to the table to govern, for example, the Amazon Fund.

The third element is sharing knowledge. What’s the point about talking about collective intelligence, open innovation, AI, if we continue to privatize knowledge in very dysfunctional ways, including during the pandemic, where most of the pharmaceutical companies refused to share the knowledge, so that the vaccine could not be produced in Africa? Only one vaccine, the one between Oxford and AstraZeneca, shared the knowledge, because those taxpayer-funded researchers at Oxford put it as a condition on that collaboration.

Fourth, sharing rewards, to avoid the Silicon Valley dynamic of socialization of risk, privatization of rewards.

And fifth, transparency and accountability. If we don’t even know who’s doing what and who’s earning what and why, and there’s all this lack of transparency, which I think is increasing with AI, then it’s impossible to govern the system.

And what I do in the book is say this isn’t a utopia. I give examples of each one of those elements, but then it doesn’t scale. It remains an exception, where we see that. And we have a lot of talk about doing good. In economics, by the way, the public good sounds good, right? Two words, one is “good.” But it’s really just a correction for a market failure. It’s correcting for something the private sector doesn’t do.

So, the whole point of the compass is to say, to do these good things — you know, climate action, biodiversity, water — if we don’t like the word “climate change,” just think of the consequences, right? Fires, droughts, lack of clean drinking water for 2 billion people globally, sewage in our rivers, even in the U.K., where we have a completely dysfunctional public-private relationship around water. What does it mean to talk about it as an objective, not a correction, where how we all relate to each other through those five elements matters as much as what we’re trying to do?

And the third part of the book, by the way, talks about the places where we also learn to respect each other and give — how do you say? — not work together in a condescending way. And I think that actually matters a huge amount to bring back trust into the system. I think many Americans, even in the red states where the Biden policies were having the greatest effect, still didn’t feel respected, still didn’t feel valued, didn’t have a voice at the table. So, this isn’t just to con people to think, “Oh, the common good is good for you.” It’s really to bring them to the table to feel dignity and valued again.

ANJALI KAMAT: And, Mariana, how would this actually work in practical terms? Because, I mean, the financialization of the economy, the way capitalism has sort of developed over the years, and especially in the U.S., but in many parts of the world, you know, Democrats or Republicans have supported it. And traditionally, you’ve seen, perhaps in cities, sort of, you know, at a municipal level, efforts to bring in sort of the private sector, right? 

MARIANA MAZZUCATO: Right.

ANJALI KAMAT: You have public-private partnerships.

MARIANA MAZZUCATO: Yes.

ANJALI KAMAT: You have consultants being brought in.

MARIANA MAZZUCATO: Yes.

ANJALI KAMAT: But in the real world, what is the incentive for capitalists, for corporate leaders to change, when they are making so much money?

MARIANA MAZZUCATO: Well, that’s a really good point, because there are so many power relationships underlying this. So, it’s nice to talk about the common good as something that we will all benefit from. But when you have these excess rents — I refuse to call them “profits,” right? — rents in the system, which is basically profits being made that are in excess of what they should be made if the system really was sharing the rewards as much as the risks taken, then if we actually design the economy in this different way that I advocate for, there will, of course, be a new distribution of income. It doesn’t mean that you don’t have profits, of course. Don’t forget that when NASA, again, went to the moon, they worked with the private sector, but the contract said “no excess profits.” We’re not going to turn this into a gambling machine, into a casino, which is what I think we have in space today.

So, again, the point of actually talking about real-world examples in the middle is to also kind of show the light, how to do this. So, the fact that some public banks in the world — and there’s $23 trillion in public banks globally — the fact that most of them are just handing out money to any sector that screams for help, and some of them, like the one in Brazil, BNDES, the one in Germany, the KfW —

AMY GOODMAN: And you’re talking also to a U.S. audience, may not even know what you’re talking about when you say “public banks.”

MARIANA MAZZUCATO: Right. So, most banks are — well, almost, you know, 90% of banks are private, so the ones that you know about, you know, Bank of America, Citibank, the large investment banks. In many parts of the world — and in the U.S., it’s only, basically, in South Dakota, I think, that there’s a public bank, but also in Alaska. In most parts of the world, there are these public banks, which, in theory — in theory — should be driven by public purpose. In practice, they’re not. They’re just giving out money, like in Italy — I’m from Italy — Cassa Depositi e Prestiti. Sounds beautiful, because it’s Italian. It’s our public bank. But when a sector’s in trouble, like the steel sector, they just get a subsidy. They get a loan, just to stay alive. That is not a bank driven by the common good.

KfW, it’s interesting, in Germany, because the German government over the last 10, 15 years has said, “We really have to tackle this climate problem,” and they have something called the Energiewende, kind of the vision around carbon reduction in the country. The way that bank then started to interact with that vision was that the loans provided, for example, to the steel sector, were conditional that the sector lower the material content of production, which they did. And that’s the only reason there’s green steel in Germany. It’s not because they went to — you know, the companies went to Davos and talked about purpose. It’s because they had to in order to get the loan. They weren’t then told how to do it. That would kill innovation, kill entrepreneurship. So, these kind of conditionalities are key to parts of that, you know, compass in terms of sharing rewards and sharing knowledge.

And an example in the U.S. is the CHIPS Act, which I helped design, actually. Gina Raimondo, she was the secretary of commerce for Biden, called me up. She had read my books. By the way, one of them was called The Big Con, so the infantilization of government through the consulting companies that you mentioned. And she said, “How can we do this differently?” So, I said, “Look, the first thing to do is make sure that the contract” — because everything’s a contract, right? Like, everything I mentioned before — procurement, bailouts, subsidies — have contracts, legal contracts. But often they’re really just benefits to the company. How do we make sure that with the CHIPS Act, where billions were going to be provided to the semiconductor companies in order to provide more sovereignty in the U.S. on chips production, and to not be so dependent on the Asian-produced chips — how do you make sure that those companies then kind of give back to society in exchange for this huge taxpayer-funded support? So, I said three basic conditions should be at the center. No share buybacks, right? Again, reinvest your profits. This is a — 

AMY GOODMAN: What do you mean, “share buybacks”?

MARIANA MAZZUCATO: When you buy back your shares to boost stock prices, stock options and executive pay — literally, buying back your own stock. As I mentioned before, $7 trillion — that’s 12 zeros — have been spent by the largest companies in the U.S. in the S&P 500 to do that. So, that’s sort of not reinvesting money in, but extracting it out. If that was just their own money that they made from, you know, just being geniuses in their garages and so on, fine, do what you want. Given — and this is my key thesis — that that value, that wealth, has been created collectively, often with huge subsidies from the government — think of the $40 billion a year from NIH to the pharmaceutical industry — what should those companies be doing in exchange for this huge benefit they’re getting? If they’re not interested, by the way, get back to the end of the queue. Come back when you are interested. Government’s not telling them what to do. They’re saying, “If you want this support from government, well, here’s the exchange.”

And the three conditions I said was better working conditions and worker pay; energy-efficient supply chains — right? — so that they are part of the solution to make this planet livable; and, again, third, no share buybacks. They then added more things, which people like Ezra Klein, through their abundance theory, said was too much, and that’s stifling growth. I think what stifles growth in this country is, again, corporate governance and very problematic public-private relationships, which, in the book, I argue are parasitic ecosystems. Biologists are, I think, more rigorous than economists when they talk about ecosystems. We sometimes use it like it’s a neutral word. They differentiate a parasitic ecosystem, a predator-prey ecosystem, versus a mutualistic and symbiotic ecosystem. So, having a bad relationship between public and private doesn’t help us, A, get growth, because it allows a very lazy relationship — you don’t have to invest, you don’t have to innovate, you don’t have to train workers — those three variables that I just said drive growth — and, B, it doesn’t get us the right kind of growth — right? — to actually tackle some of the biggest problems: health problems, inequality, climate change and so on.

So, you know, we can argue whether, ultimately, then, they put too many conditions in the CHIPS Act. And, of course, that’s a design challenge. You don’t want too much stuff. But, of course, you need kind of three, four, five key issues that make sure that that relationship is a good relationship and not a dysfunctional one. And coming back to your point about capitalism, you know, the kind of capitalism we get, the kind of markets we get — don’t forget, markets are not business. Business is how they’re governed, the state, how it’s governed.

ANJALI KAMAT: But explain what you mean by “markets.”

MARIANA MAZZUCATO: Yeah.

ANJALI KAMAT: I mean, this is a key part of your book, that governments should shape markets, not just respond —

MARIANA MAZZUCATO: Yeah.

ANJALI KAMAT: — to market failures.

MARIANA MAZZUCATO: Right. So, in economic theory, we assume that, in capitalism, the market is the best way to organize the system. And we assume, the theoretical assumption — this might be boring for you, but it does matter, because economists, unfortunately, do make a lot of waves and do inform what governments do. As Keynes said, practitioners are often the slaves of defunct economic theory. So, economists assume that everyone is kind of Homo economicus, maximizing, whether it’s their utility function, so consumers maximizing their utility in terms of what they’re buying, workers maximizing their decisions of leisure versus work, companies maximizing their profits. Through these maximization decisions, we draw our supply and demand curves. Through those curves, we determine equilibrium prices and quantities. OK, this is kind of Econ 101. And then we look at the result and say, “Uh-oh, that market, with supply and demand, didn’t produce enough of clean water, didn’t produce enough of basic research, didn’t produce enough of defense systems.” These three areas I just mentioned are typical areas that economists say the government has to step in and fill the gap, because they’re public goods. In other words, they’re goods where the private sector will not invest, because the benefits are so wide, they can’t then appropriate the returns just to themselves. In economics, we make it more complicated. We call this non-excludable, non-rival characteristics, which define public goods.

So, this is really where I begin in the book. I say, so, a word that’s so important, like “public good” — you know, “public,” think of Aristotle; you know, “good,” think of all this stuff we all need — in economics, has been framed as something that needs to be corrected. When the business sector doesn’t do it, government has to say, “Whoops! Let’s add a bit of money.” Right? So, you’re always reactive. You’re also a bit depressed. I often joke that I come in as an economist and come out as a therapist. I’m like, “Come on, man! We can, you know, be creative, think out of the box, and, you know, go after those moonshots on Earth.” And so, that framing is what I argue really needs to change. And it’s not, like, by diktat. It’s not about shape the market and impose stuff; it’s admit that markets are outcomes — how we actually govern our corporate sector, how we govern our public sector.

I did a whole report, by the way, on the BBC. So, when I’m talking about public sector, I’m also talking about those organizations like public broadcasting. And the BBC is super interesting. If I start telling that story, we’re going to go off on a complete tangent. But they’re definitely a public actor that has shaped the broadcasting market. They didn’t just say, “We’re going to do high-quality news and documentaries about giraffes.” They completely changed what soap operas were. They completely changed what talk shows were like. You know, the first soap opera that brought the working class to the screen was EastEnders. Now, today, it’s normal, but they shaped that market. They were frontier. And that’s what government should do. The kind of high-risk, capital-intensive, bold, inspirational, public purpose-driven investments is what you want the public sector to do. And when it does it well, ultimately it crowds in the private sector. It creates also a new kind of playing field where they can also make money. But is that relationship extractive? Is the public side also getting back its fair share of the rewards from these high risks taken? The answer is no. So, again, that’s a stupid relationship, instead of a smart, strategic one.

AMY GOODMAN: So, the book is designed for functioning democracies. What do you do, for example, here, where we live increasingly in a world dictated by oligarchs and billionaires, and now a trillionaire?

MARIANA MAZZUCATO: Right. And the question is: Where did those trillions come from? I refuse, by the way, to call the tech bros “tech bros.” I just call them “bros,” the bros, the mafia.

AMY GOODMAN: Why?

MARIANA MAZZUCATO: No, well, because the tech didn’t come from them. They benefited massively, as I said, from huge amounts of investments from public actors of different types. Let’s not forget CERN, right? That’s in Europe, huge public laboratory that was responsible for the World Wide Web.

So, today, because they’ve earned these excess rents, these excess profits, which people like Adam Smith wrote about — people think that Adam Smith was about the free market, free from the state. No, read Adam Smith properly. It was free from rent, free from capture. And a state that gets captured doesn’t help us get the right kind of market. And so, you know, the question is: How do we — I mean, today it’s actually a bit late, right? So, the fact that they have earned these excess rents means that they’re also buying, paying researchers from universities, researchers from the DARPA-type institutions and NASA-type institutions exponentially higher salaries than they are earning in other state or university systems. And I believe it’s almost impossible to govern AI for good, which I talk about in the book what that could look like — 

AMY GOODMAN: I want to talk about that after — 

MARIANA MAZZUCATO: — when you don’t have the knowledge.

AMY GOODMAN: — what you mean.

MARIANA MAZZUCATO: When you don’t have the knowledge inside, right? So, that hemorrhaging of talent, not just to the consultants, which is a separate issue, where the brightest, you know, young students often end up in these, I think, very problematic organizations, which are very untransparent, where — you know, McKinsey, PwC, KPMG, which, again, I talked about in that book, but also going into these AI companies because they’re earning so much more, that’s a key problem over time. Can you govern a system in a certain direction when the knowledge is no longer inside the state or even inside the universities, where it used to be?

AMY GOODMAN: Right. I mean, you have this gerontocracy that’s running America, right? The Congress. And they don’t have experience with basic digital stuff, let alone AI. But you also have these billionaires and trillionaires, and you have this swamping, this drowning of money in politics.

MARIANA MAZZUCATO: Yeah, right. But, I mean, this has been a never-ending debate — right? — in the U.S. Like, I don’t have to write a book on the common good to tell you how corrupt the system is here in terms of the lobbies, in terms of what happened recently with the tech bros, if we want to call them that, around that table in Washington, D.C., you know, kind of kissing up to Trump. I mean, that’s — that’s embarrassing.

AMY GOODMAN: But look who is standing behind him at his inauguration.

MARIANA MAZZUCATO: No, exactly. So, but the problem is that’s a theatrical version of what’s happening. That has been happening for many, many years. You know, Trump, like Berlusconi, is the theatrical version of very dysfunctional capitalism. But he’s not the first, right? The fact that we actually for so many years, even with Democratic presidents, didn’t have the right governance structure, where you had those good public-private partnerships, which somehow we can only do it with the military — we don’t do it with health, we don’t do it with energy — it’s a very extractive relationship.

AMY GOODMAN: I mean, these are very important, critical points. The very often Republicans, but also corporate Democrats, who talk about the problems of socialism — 

MARIANA MAZZUCATO: Yeah.

AMY GOODMAN: — they’re the ones that are supporting the military.

MARIANA MAZZUCATO: Yeah. Well —

AMY GOODMAN: And explain what you mean by — 

MARIANA MAZZUCATO: Sure.

AMY GOODMAN: — it’s the military that’s doing this —

MARIANA MAZZUCATO: So, all over — yeah.

AMY GOODMAN: — where you have government control, and no one of them object to that.

MARIANA MAZZUCATO: Yeah, exactly. But also, what’s interesting — and I often say this, because it’s true in other countries, too — when it’s for a war effort, whether it was World War II or today with the current wars — and we are literally back at a very tense geopolitical situation — have you ever heard anyone say, “Oh, sorry, we can’t go,” you know, whether it’s to Vietnam, World War II, you know, Afghanistan, “because we don’t have any tax revenue”? For war, money has always been created out of thin air. Also recently in Germany, the German government, a year and a half or two ago, fell because there was this fight between the minister of finance and the minister of economy, who was from the green movement, like, “Oh, there’s no — you know, there’s not enough money if you want for climate action.” And because of the dispute, then the government fell. Literally, the next day, they created billions out of thin air for the war effort, right? So, for war, the first thing is, let’s just admit, we know the truth that money in countries with sovereign currencies and in the Global North — so, it’s different in the Global South — have always created money.

Now, what’s interesting with war is because there’s problems to solve in the battlefield, the relationship between public and private, it might be corrupt, but at least it’s outcomes-oriented. Right? So, when soldiers get sick on the battlefield, we have organizations in the government, like BARDA. It’s the Advanced Research Defense Agency, but more for health and kind of biotech kind of issues, that does advanced purchasing agreements with the pharmaceutical companies, that negotiates the prices, because they actually need to make sure that the health products get to the soldiers in the battlefield, or you won’t win the war.

It’s not surprising that during COVID, we used, actually, tools like the Defense Production Procurement Act from the Korean War, because COVID was treated for a short amount of time — short amount of time because we called them “essential workers” in the health sector, then forgot about them later — in this kind of war room scenario where you had, you know, ministers of finance, the military, health, education together figuring this thing out, because so many people were dying. Right? So, that’s what I call, like, the war room, military-industrial complex also, kind of thinking.

We don’t do that for any of the real urgent, urgent social problems that we have in most countries, including, again, the fact that we have, you know, 2 billion people in the world without access to safe drinking water. And think in the U.S. what happens in places like Flint, Michigan, where we, you know, divert the water so that at least the cars can be cleaned properly, but allow the people to get poisoned. So, in so many states in the U.S., there are urgent problems that we do not treat as urgent, and we pretend there’s no money.

Now, another thing that’s interesting with war is, as I mentioned with the moon landing, is that because there’s problems to be solved, like there was to get to the moon, then it requires innovation in the private sector. All those examples I gave — home insulation, baby diapers, baby formula, software — were solutions in the private sector guided with clear direction from the public sector, not telling them what to do, but being clear what the problem is.

Imagine if we applied that to — and I work on this globally on this particular area because I’m so interested in practical Earth shots, not just the moonshots — imagine if we said every child in this country will have access not just to school lunch, but healthy — not ketchup — tasty and sustainable lunch. The reason I said “ketchup” is you’ll remember that Reagan, who wanted to reduce the cost of school lunch, said ketchup was a vegetable, and some of us had T-shirts, “Reagan, ketchup, which is a vegetable?” Do you remember that? No. Anyway. So, that’s when you use procurement for something like school lunch as just cost-plus. If it’s an outcomes-oriented procurement, meaning you’re going to have innovation criteria for what we’re trying to deliver — healthy, tasty, sustainable lunch, using local manufacturing, you know, organic food, healthy, sustainable food — that’s going to require the business sector that’s interacting with the state through this lever called procurement, public purchasing, to innovate. They’re going to have to innovate in order to deliver that. They’re going to have to train their workers to deliver that. They will have to invest to deliver that.

It’s intersectoral, like the moon landing was not just aerospace, as I said — nutrition, material, electronics. Climate change is not just energy. It’s, again, how do we build; how do we eat; you know, where do we grow the materials — green cement, green steel, instead of the wrong kinds of steel and cement; how do we move — sustainable mobility. So, this intersectoral, which, you know, in the business sector, intersectoral relationship with government that needs to be thinking interministerially — right? — health is not just for the Ministry of Health — is what I call this mission-oriented approach, which is based on a previous book.

But what I say in The Common Good is it’s great to talk about this stuff, but if the government itself doesn’t have a theory, an economic theory that’s going to help them change how they themselves work in that system, and if good is just filling the gap for something the private sector doesn’t do, it’s impossible. Kennedy said, with the moon landing, we’re doing it because it’s hard, not because it’s easy. That means embracing difficulty together, sharing the risks, but also sharing the rewards, hence the no excess profits. And yet, any white paper, any policy paper you will read from Washington or from other governments talks the opposite. They say, “We need to de-risk the private sector. We need to facilitate.” Again, in Italian, it means making something easier, exactly the opposite of what got us to the moon. We’re doing it not because it’s easy, but because it’s hard. So, if the framing is about de-risking, enabling, facilitating, fixing, administering, regulating, is it surprising we don’t achieve these bold goals? Even for the countries that believe in goal orientation, let alone Trump, who says, you know, “Let’s just feed the stock market.”

ANJALI KAMAT: It sounds like so much of the orientation is towards how to work with the private sector and how to support the private sector rather than — 

MARIANA MAZZUCATO: That’s the goal itself.

ANJALI KAMAT: Right.

MARIANA MAZZUCATO: Exactly.

ANJALI KAMAT: Rather than coming up with a theory of how does the public sector do this on its own, how does the — I mean, you have examples throughout history — 

MARIANA MAZZUCATO: Yeah.

ANJALI KAMAT: — of other countries that have not used the private sector to develop, you know, the Soviet Union —

MARIANA MAZZUCATO: So, I think — yeah.

ANJALI KAMAT: I’m curious: What do you think about China, Chinese capitalism today?

MARIANA MAZZUCATO: OK. So, but just —

ANJALI KAMAT: Yeah.

MARIANA MAZZUCATO: Before China, because you make a very good point. Just to be very clear, I don’t think government will ever or should have all the capability inside government. But a key capability is knowing how to work with others. Ernest Brackett, that head of procurement at NASA, said, “We ain’t going to know how to work with others if we continue to outsource our own brain.” McKinsey, by the way, was formed in 1920, and they were already in the — 

AMY GOODMAN: The consulting company.

MARIANA MAZZUCATO: The consulting company. Thanks, yeah. And they were already finding their way into the NASA corridors. He said, “We have to work with the private sector, but we can’t have all this intermediation. We won’t even understand what the future opportunities are if our brains aren’t being invested in.” So, this massive outsourcing of kind of public capacity, public capability, has also hurt government’s ability to work well with the private sector, which includes knowing even how to write the contracts and the terms of reference. And you get captured easily, what Adam Smith worried about when you don’t have that internal capacity. My own institute is actually dedicated to building what we call dynamic capabilities within public institutions.

But, you know, China is interesting because it has a much more meritocratic kind of government in terms of how people kind of go up the chain. It’s less about, you know, did you go to, you know, Harvard, Yale, Princeton, Oxford, Cambridge. There’s all sorts of ways that they kind of funnel high-quality people up the chain. And it’s very much, again, outcomes-oriented. They are the biggest investors right now in reducing carbon emissions, because they have to. It’s not just because of it’s a lofty goal. They are suffocating in the pollution. And so, I think — and I wrote about this in the past — they learned the lessons of what made the U.S. competitive.

The U.S. is unlearning those lessons: Trump cutting the budgets of the NIH, or also making that remit of the National Institutes of Health, which have been critical, by the way, for, you know, life science innovation globally — mainly in the U.S., but globally — because these research projects are often global; the investments by DARPA, or by ARPA-E, which was set up by Obama after the financial crisis. In Europe, we were, you know, committing lots of self-harm with austerity, while here, Obama had an $800 billion stimulus program. Initially, he wanted it to be directed towards a greener economy. He brought in Steve Chu, a Nobel Prize-winning physicist, to run the DOE. He set up ARPA-E to emulate DARPA, so kind of an energy, you know, sustainability agency. And —

AMY GOODMAN: And what happened?

MARIANA MAZZUCATO: Well, what’s interesting is that — well, first of all, there was the whole tea party rebellion. you’ll remember. Whatever happened to them? I just realized. No, seriously, are they — is the tea party still around? Have they just changed name? But anyway, it really got stunted. And I think also what happened was that because there wasn’t that confidence inside that public institution — so, they have it, which some countries don’t have, right? Some countries don’t have the DARPAs. They don’t have the ARPA-Es. So, the U.S. has had an entrepreneurial state. But because the framing continued to be the wrong one, the deals that we got were, again, parasitic. And the example I give in the book is the Tesla investment, right? So, Tesla and Solyndra got the same amount of money.

AMY GOODMAN: Explain the comparison.

MARIANA MAZZUCATO: OK. So, they each got about $500 million in a guaranteed loan from the Department of Energy during that period, which was post-crisis, which, again, the U.S., unlike Europe, had a fiscal stimulus to spur growth.

AMY GOODMAN: And Solyndra is?

MARIANA MAZZUCATO: And Solyndra is a solar company — was a solar company, that went bust. Tesla, everyone knows what it is. It was in a portfolio of investments. Anytime you have a portfolio, you win some, lose some. And, you know, venture capitalists know about this. For every success, you have to accept about eight or nine failures, whether you’re private or public. That’s just how kind of learning by doing and portfolios work.

But what the public sector did in that case is the opposite of what they should have done. What they said to Tesla was, “Here’s this massive loan, and if you don’t pay back the loan, we want 3 million shares in your company.” Why would you want 3 million shares in a company that doesn’t pay back a loan, probably because it’s failing? They should have said, “Here’s a loan, and if you make money, and when you pay back the loan, we’ll get 3 million shares.” So, it won’t be under state ownership. This isn’t about socialism. It’s about healthy capitalism, again, risks and rewards. Had they done that, the price per share in 2009, when the loan was provided, was $9 per share. When it was paid back in 2013, it was nine — sorry, $90. So, just do the calculation: 90 minus nine, multiplied by 3 million, would have more than paid back the Solyndra loss, because Solyndra went bust. It became the story: Government’s so inept; it doesn’t know how to pick winners. It’s — you know, step out. You know, step out of the way. You’re creating problems. They could have, you know, paid back the Solyndra loss from that investment and the next round of investment. That’s what public venture capital means.

By the way, In-Q-Tel is a large public venture capital company run by the CIA, also critical to the early kind of Silicon Valley investments that I talked about in The Entrepreneurial State. So —

AMY GOODMAN: And what happened to In-Q-Tel?

MARIANA MAZZUCATO: I think it’s still alive and well. Yeah. Yeah.

AMY GOODMAN: Aren’t you making a case for socialism, because you’re talking about what would make capitalism healthy, but we are not seeing that?

MARIANA MAZZUCATO: OK. So, this is where it’s really interesting that, you know, people like Mayor Mamdani and AOC and others around the world — because it’s really only in the U.S. where that was like a bad word. So, if you have a progressive government — let’s just use some other words just for a second — that is truly wed to reducing inequality, to making sure that we actually solve, you know, the problem of health inequity, so actually with goals of health for all — you know, whether you achieve it or not, it’s difficult, we’re not talking about like perfect government — of reducing, again, the digital divide so everyone has equity in terms of their access to modern-day digital platforms, and so on, making sure that they have access to clean water, and so on, is that socialism? Or can it also be — just for those who are a bit allergic to that word — be a functional way to stimulate innovation, to get the right kinds of market structures, not oligopolies, monopolies and the trillionaires, you know, getting huge amounts of money on the back of other people’s efforts? It could just be described as a much more equitable form of capitalism.

Does that mean that we’re going to completely change lots of structures, including how the stock market works, how government interacts with the private sector, how private sector companies are governed? Absolutely. But, again, coming back to the point that there is varieties of capitalism — and I think currently there’s no perfect form of capitalism out there — but the point of the book is to give lots of different examples where we can learn from, instead of just talking about utopia, and then ask what would it mean to scale that to actually make it also so the sum is bigger than the parts, instead of cute little examples here and there.

AMY GOODMAN: The Common Good Economy: How to Make Capitalism Work for Us All, that’s the new book of Mariana Mazzucato, a professor in the economics of innovation and public value at University College London, UCL. This is Democracy Now! I’m Amy Goodman, with Anjali Kamat.