 And you pronounced it perfectly, perfectly. It actually means Christmas tree in Japanese, apparently, my surname, but I am Italian, I promise. So thank you so much, Swami, for, can I speak, can I call you Swami, Chancellor Swami, for your words, especially the word common good, which is really gonna be the kind of cross cutting theme today, James for the fantastic introduction, and Sheila for the incredible tender loving care. What's weird about traveling in this moment, as you just said, right, that we're all finally traveling again, is that people aren't really used to it, so you get extra care. And I'm sure you would have given it anyway, but just getting picked up by Gregor at the train station. No one has ever picked me up at the train station. I think we're like 15 years. Oh, what am I doing? Wrong. Sorry. I'm taller than all the boys, so I have to. Anyway, so it's such a pleasure to be here. I actually got my PhD at the new school, the cousin, the sister, what is it, the brother, the real partner, I think, with UMass Amherst in terms of new economic thinking. And you might have heard of at least the non-economists in the room, you might have heard of John Maynard Keynes. He had this wonderful quote. He said, practitioners on the ground who think they're just kind of getting the job done are often slaves of defunct economic thinking so slaves of the old way of thinking about the economy. So if we're interested in better practice and better policies, and I'm sure we all are, because the world is not a perfect place by any means, we need new economic thinking and we need to have a relationship between the two. And that's really what I'm gonna be focusing a lot on today, that if we actually care about some of the biggest problems that we're facing around the globe, we need to ask ourselves, why is it also that we've been so inertial that we're not acting with speed but also with that kind of care to the design of what actually needs to be done and why we have these very problematic assumptions guiding policy and why having better policies also needs to be debunking constantly those assumptions. So that kind of feedback. And the lecture I've called it directing economic growth because there's this kind of curious thing that we talk about directions in terms of really important words that are out there, including the sustainable development goals, these really ambitious 17 goals that we have since 2015 that the whole world decided on together. They've actually been signed up to by basically every country. We talk about things like green growth and the green deal. We talk about industrial strategy or anyone who's been to Brussels, maybe not in the last years, you'll know that the European Commission has for 10 years now been talking about directed growth in terms of smart, inclusive, sustainable growth. So there's this language about the direction. It's not growth for growth's sake. And yet on the ground, coming back to that point I just made in terms of the practice, we're not designing our tools or the relationships between all the different actors in the system in a directed way to actually fuel a very different type of growth which solves those problems that are underlying those ambitious words like sustainable development goals of which if you read what they are, zero hunger, zero poverty, clean oceans and so on, require a very particular direction to our investments and relationships. So I'm gonna be talking about what would it look like if we actually elevate that word directionality to actually designing our capitalist system and shaping it as opposed to taking it as a given to actually also have a conversation of what that direction should be because these aren't directions that are kind of top down. So we're also of course living through the moment that Swami just talked about, which is a tragic moment, one that we also found ourselves globally so, so badly prepared. If you just think back to that March, 2020 when COVID became a household word, we failed miserably globally to just even do the very basic, like giving so-called essential workers, who we call the essential, but haven't been treating them as essential, personal protection equipment. Many of them died because they didn't have that personal protection equipment. We failed to deliver test and trace systems and often didn't even have the capacity on the ground to implement it. In the UK where I live, we actually managed to outsource test and trace to Deloitte, a consulting company that the last time I checked that wasn't exactly their expertise. In fact, they did a terrible job. We also continue to fail to deliver on the vaccine because I'll be using the word mission in a minute, but the mission is not the vaccine. The mission of course is to vaccinate the entire world when you have a global pandemic. You're only as safe as your neighbor is, as the next country is, as the world is. So we have today what Dr. Tedros, the head of the World Health Organization calls vaccine apartheid, where 80% of the vaccines are being hoarded by 10% of the countries. So we have failed miserably on that. We've also failed miserably on all sorts of social goals around COVID, like the digital divide. As we have had children and students globally being locked down, many continue to have their human right to education, but most did not. The digital divide means that many were not able to continue learning at home due to the lack of digital technology, broadband and so on. So really stark wake-up call. But we don't need that wake-up call if we're honest. We've now been talking about climate change forever. And as Greta Thornberg, when she was already 16, now she's 18 says, stop blah, blah, bling. When your house is on fire, what do you do? Do you sit there and debate? Should I stay? Should I go? You get out and you get out fast. You might have seen the IPCC report, the last one that came out just a couple of weeks ago. It continues to tell us we have very, very few years left. It is very soon becoming irreversible, this problem of the climate emergency. And yet, if you look at the numbers, even during COVID-19, with the recovery funds, we continued actually to subsidize fossil fuel projects. And if you look at both at the US, also the European Union, we have over the last 10 years, continued to subsidize fossil fuel industries, even though we continue to talk about issues like sustainability and so on, because it sounds really good. And what's striking is that we seem to just have gotten used to this pattern of going from crisis to crisis, to crisis, right, the financial crisis, which in some ways we still feel the ramifications of. And we haven't solved it at all, by the way. So the ratio of private debt to disposable income, so private debt, not public debt to disposable income in many countries like the UK is back at the record levels it was just before the financial crisis, and that's what caused the financial crisis. So we have hardly even really gone after the sources of that financial bubble, but of course, again, financial crises, climate crises, health crises, so on and so forth. And it's almost like we've just gotten super used to this reactive mode, just kind of patching up the system, right, so now we're already feeling that we can, maybe some of us take our masks off and maybe it's over, but we continue to be totally unprepared for the next pandemic. And you might have read some of the scientific journal articles about this, so as the permafrost melts due to climate change, many new viruses will appear. So you'd think that all these things would be alerting us to how to become proactive and not reactive, and also go to the source of the problem, just like if a doctor is just going after the symptoms of your illness, you will keep getting sick. So what I wanna do just for maybe five minutes is depress you a bit more, and then I promise that the rest will be super positive and also very practical in terms of what I've been learning around the world and actually how to design policy in this more outcomes-oriented, proactive way to truly be about solving the biggest problems that we have and we will continue to have unless we actually go through that redesign, but also what that means for all the different actors in the system, it's not just about government, it's also about businesses and what it means to really put issues around corporate governance at the center of that as well. But first, as I just said, we need a bit of time to reflect just like when, if you've seen Ken Loach's films about alcoholic synonymous, the first thing to say is I am Joe, I'm an alcoholic. Well, I think we have the same process to go through when we continue to cause an addiction actually in our economies to a very problematic form of growth. If we don't admit that dysfunctionality, then it's gonna be really hard to come out of it. And so just, again, a bit briefly, because this would be a whole lecture in itself, what we've almost gotten used to in the financial sector, which is one of the large sectors in the economy, is that it basically has been financing itself. So financing other parts of the broadly defined financial sector, finance, insurance, and real estate, the acronym there is FIRE. And this graph here from Andy Haldane at the Bank of England shows how in many countries, the share of financial intermediation as a percentage of gross value added has been outpacing the rest of the economy. And not because it has then been used to actually fund things actually happening in the real economy, but very much in terms of what I just mentioned, actually that money going back into other parts of the financial sector, including just making it really easy for people to take out loans. Even again, during COVID-19 in many countries to stimulate the economy, kind of making it easier for people to buy homes. Well, that's a problem. If your real wages haven't been increasing for the last 30 years, that partly increases again. Well, it's a key factor to increasing a private debt. So this kind of financialized form of finance, after the financial crisis, lots of liquidity was created by the global financial system, something like 80% of them went back to the financial sector. So unless it's actually accompanied by ambitious fiscal policy that's actually also creating opportunities in the real economy, that mismatch between the idea that we just need more finance, more money, without actually focusing on what do we want from the real economy itself so that new money creation actually lands on the structures that we need, including today, stronger global health systems, then we are completely missing the trick. Second, business is also financialized. It's not just finance, not going into the real economy where businesses are, businesses in the real economy themselves have become overly financialized. And some of your own researchers here at UMass Amherst, Lenore Palladino, has been doing work on this as I have and many others like Bill Azanek, just actually trying to create indicators that actually help us better understand this dysfunction. And if you look at share buybacks, for example, which is a tool that would be okay if it's just moderate levels, the excessive use of share buybacks over the last 50 years by companies that are really just focused on boosting their share prices by buying back their own shares, boosting share prices, stock options, surprise, surprise, executive pay, which many executives, as you know, get paid partly in stock options, this has been extraordinary, just the amount of kind of lack of reinvestment back into the real economy by businesses themselves. The latest figures actually just looked at the other day, calculate that about five trillion, that's $12 zeros, have been used by the global, by the Fortune 500 companies just to buy back their own stock. So this lack of reinvestment into, again, kind of production structures, you know, new machinery, human capital, training, you know, this is one of the key problems that we have today in terms of also technological change. What's interesting is that we blame the robots, right? It's like robots are taking our jobs, but actually mechanization since the times of the Industrial Revolution have in fact been labored displacing for 200 years. David Ricardo wrote about this back in 1821 in that first big economics textbook, Principles of Political Economy, chapter 31 called On Machinery, looked at that labor displacing effect of technology, as did Karl Marx, of course, he was one of the first also who really tried to examine that issue around mechanization and what it would do to all sorts of things, including rates of profit, which we won't go into. So what's interesting is that today, we say, robots are taking our jobs when actually what happened since the time of Ricardo is that, yes, technology was labor displacing, but as long as the profits being generated were reinvested back into the economy, then actually new sectors, new jobs, new skills were needed, so that kind of creative destruction also on the employment side. So it's really a huge corporate governance issue and we're blaming these poor robots, but you see these patterns also if you look at the investment ratio, this is what this graph is about here, the investment share of global GDP using different metrics, you can find it falling and of course this kind of extraction of value that James talked about, I wrote a whole book about it called The Value of Everything is one of the leading sources of modern forms of inequality today and much more attention on the governance of companies, why? Because the market is not business. We sometimes get lazy with our words, right? You might hear people saying the state and the market. No, the market is an outcome of how we organize our economy, how we govern public institutions, how we govern private institutions, how we govern their interrelationship. There's also civil society institutions including trade unions, so seeing the market as an outcome of governance decisions within different types of organizations but also how they interrelate one to another is incredibly important and that's why I think that some of the calls also to action by some large companies including BlackRock, this is Larry Fink here who every year writes a letter with shareholders and says, we've lost our way, we can't just be about maximizing shares, we need to maximize stakeholder value. So give back to communities and workers and talking about purpose. It's a weak concept unless it goes to the center of the system. How do we actually put stakeholder value in a different way to think about value at the center of how business relates to government, relates to finance, what would a purposeful capitalist system look like? What would stakeholder value look like in terms of how we actually produce, how we innovate, how we collaborate? So I'll come back to that. But this call to stakeholder value in some ways is like the kind of fluffy discussion point in reflection of some of those patterns I just talked to you about, that are really about extraction and the fact that companies that at least are reflecting about it I think is an opportunity that I'll come back to at the end, what would it look like to walk the talk of stakeholder value for example, how we actually produce vaccines, how we collaborate between public and private, how we put conditionalities at the centers of those collaborations. Third, this is still the bit where I'm depressing you. I promise it's almost over, the depressing bit. They've given me a huge amount of time to talk to you so let me depress you a bit more, is how we govern the public sector. So again, there's nothing inevitable in how we govern business. There's nothing inevitable in how we've actually chosen to govern our public institution. So I don't like the word the state. The state is actually made up of lots of different types of public actors and my book, The Entrepreneurial State, I talked about that decentralized network of different types of public actors. But just in terms of the misgovernance, I think that the problem is not only that kind of super ideological, kind of Reaganite, thatcherite view of the state's just the problem. To be honest, when there's adults in the room you don't really hear that. When there's adults in the room what you do hear is another form of problematic way of talking about the role of the public sector which is at best fixing market failures. So I think this is a big problem because if we are interested in tackling the sustainable development goals, if we are interested in getting prepared for the next pandemic, if we are interested in tackling in a proactive, not a reactive way, global warming, it's gonna be very hard to do that just by tinkering on the edges, putting bandages here and there. And the idea of market failure fixing is not a bad one. I don't think we should throw the baby out with the bat water, but the fact that we even talk about public goods, which sound good, one of the two words is good, as areas we need to invest in because of positive externalities that need fixing means that the public good has been framed as a correction. It's not even an objective. It's not a proactive objective of what we're trying to do. For that I think it's more useful to think about things like the common good, which I'm not religious, but the Pope, who's a pretty radical guy, that's why he got his cook to come with him from Argentina because I think he thought he was gonna get poisoned. But if you listen to the Pope's speeches, he's quite revolutionary actually in how he talks about the common good, the preferential option for the poor. How he talks about is very much an objective of how we need to think about what society can strive for and work together to achieve really important goals around inequality, health, climate, and so on. And yet we even have gotten used to framing really important tools, say like carbon taxes, which are just one of the many things that need to happen if we are interested in tackling global warming as correcting for the opposite of positive externalities, negative externalities. So carbon taxes would correct for that problem by actually forcing companies to embed that cost in their thinking, so to pollute less. But again, are we actually gonna be able to just patch up the system in order to fight global warming? Carbon taxes are important, but they're being framed as a correction to what otherwise would be a perfectly well-functioning market. So markets work well, sometimes they have problems, so introduce a mechanism to do that. Even funding of basic R&D, I was talking before about positive externalities. We all know we need innovation, but again, it's correcting for a problem. Funding, small media enterprises, correcting for information asymmetries. The need for counter-cyclical government, correcting for coordination failures. So again, it's not that we don't have these market failures, but the fact that we actually think we can steer a system by correcting and patching things up with different types of bandages is a huge problem. And that view of government, I'm still on this kind of third big dysfunctionality, then has unfortunately been also used to train civil servants who, you know, this idea of market failure theory then found its way into, you know, masters in public administration, courses around the world in terms of actually convincing civil servants that again, at best they can fix the market failure then get out of the way, but also to introduce their new public management ideas of efficiency, net present value, cost-benefit analysis that are coming from the private sector into the public sector also because one of the underlying theorems there is that government failure is even worse than market failure, so this kind of idea that you need to constantly be in the watch of corruption, of nepotism, which are a problem, I'm sure we'll get to that in the Q&A, but the fact that we actually have designed the system almost based on fear of corruption, fear of nepotism, fear of government failure, fear of market failure doesn't really help us actually get the kind of training that we need for a really ambitious, creative civil service. And what's interesting, because I'm very interested in curriculums in the institute I've set up, we've just tried to kind of rewrite the curriculum for global civil servants, is that if you think of the classes that managers take at the top business schools, right, and MBAs, not MPAs, they're really exciting. I mean, even just the names of these courses, like strategic management, decision sciences, organizational behavior, or textbooks that say, rejuvenating the mature corporation, why do you need to rejuvenate the mature corporation? Because a mature company, just like any mature organization might get sluggish, inertial, slow, but we know that corporations create value, right? So we need to rejuvenate them, we need to think out of the box, maybe do a multi-divisional company, like GM did back then, in order to resist that inertia. Whereas when government bureaucracies get in the way, or are inertial, we just almost think it's in the DNA of government itself. And I deeply think that this is very much because we haven't thought about public institutions as co-creating and co-shaping the economy alongside private institutions, that best they're there to fix markets, to enable, to de-risk the risk takers, to level the playing field so someone cool can go play the game. And so all the words we've used that actually very much come from that siloed way to think about government as at best fixing markets, of course then, in a self-fulfilling prophecy kind of way, create these problematic public institutions which are then often too vertical, too inertial, not agile, not flexible, and so on. And so what really struck me when I started writing, well, actually it struck me a long time ago but still what constantly strikes me is that we've just gotten so stuck in not questioning these government structures. We've gotten stuck in complaining about finance. We've gotten stuck in listening to proclamations that shareholder value doesn't work and so maybe we need something like stakeholder value but not seeing hardly any change. In fact, it's actually getting worse by all the metrics like the ones I mentioned before but especially getting stuck in having types of policies that are again at best fixing different types of problems being framed in that way and the language itself through which we talk about it just being incredibly boring. Again, facilitating, facilitating who? Making it easier for someone else to do something. And what's striking though is that when we've actually managed as humanity to do pretty hard things like going to the moon 51 years ago where the objective was not just to get to the moon and hang out there and die but to get there and come back in a short amount of time, the way that public and private work together, the way that government actually led but didn't micromanage, the language that was used, the design of the collaborations, the design of the contracts, the need to reorganize the public and the private organizations in question was incredibly ambitious. And we would have never gotten to the moon had it just been about fixing markets or one side facilitating or de-risking the other. And so the real kind of I think call to action here is that well, guess what? If that required an ambition, a creativity, an entrepreneurialism amongst all the different actors and an attention to the design about actually building what I call symbiotic and not parasitic public-private partnerships, then surely we should be learning from this instead of just constantly, again, getting stuck in that old language. And if market failure fixing didn't help us get to the moon and back, it surely is not gonna help us solve what's even harder, which is all these wicked problems. They're wicked, the sustainable development goals because they require not just technological change, they require behavioral change, regulatory change, social change and so on. And so what I've been trying to do in my work through different books, but also through this institute that I've set up is to ask what would it look like to have a framing that is kind of as rigorous as market failure fixing, that we have a whole body of academic work around if we actually were talking about co-shaping and co-creating an economy. What does it look like for the theory of value? What does it look like for the underlying organizational competence? What does it look like for the metrics, even ex-posts that we need to evaluate whether we're achieving a particular type of co-creation and co-shaping? And so I'll be focusing more on this kind of third book, which for me is like a recipe book on how to actually do this stuff in a practical way, but the previous two books I wrote, they're kind of a trilogy in terms of the story I tell. The first one, The Entrepreneurial State, was very much about that needed change of language, especially looking at the history, right? Like the history of the whole, you know, the internet, but literally everything that makes your smart products smart and not stupid actually came out of government investment, you know, internet, GPS, touchscreen, Siri. And not only was it government investment, but it was government investment through purpose-oriented organizations. The internet did not come about because someone said, oh, we need the internet. Like everyone today obsessing about AI and driverless cars and so on. The internet was a solution to a problem. They needed the satellites to communicate. The internet was the answer. GPS, no one said, we need GPS, funky technology. It was a solution to a problem that the Navy had, I'm not sure where all the ships were exactly around the world and our oceans. So it's true of many of these publicly funded organizations that actually they were required, they not only required that early stage, high risk, high capital intensive funding that governments are better able to provide due to a lot of risk diversity in the private sector, but there was a particular organizational setup that led to it, which we just completely ignore in economics. We don't have dummy variables in our regression saying whether it's a kind of, you know, purpose-oriented public investment or not. And by the way, I think Keynesian economics has been part of the problem because Keynes himself was very ambitious when you read what he wrote. He had this whole thing that government should not just be tinkering on the edges but really do what's not being done, but how it's often been interpreted is at best counter-cyclical investment versus also the organizational structure, the organizational form that's required in that investment. So public banks, innovation agencies, and that collaboration between public and private. So the entrepreneurial state for me was about debunking the word entrepreneurship. It's not about a particular private sector culture. It's about a system. How do you really nurture an entrepreneurial system which also requires that thinking out of the box and purpose-oriented culture inside the public sector, but also how do you design the system to make sure that the rewards from this huge amounts of public investment, like the 40 billion that the National Institutes of Health put into the system every year for drug innovation. How do we make sure we also govern that entrepreneurial innovation system so it also produces good for people and not just profits? And I think we failed miserably to do that. And the value of everything, I unpicked what that actually meant also for our understanding of value as collectively created. So it's not just value being created through production function analysis and then government coming in to again either facilitate or redistribute that value through taxation, but that idea of collective intelligence, what is the theory of value that's required underlying that, but also what does it mean for value within moving beyond again, shareholder value in companies, collective value creation between actors, but also how to redistribute again that value in such a way that we're not just socializing risks, but also rewards. What is the theory of value behind that? How can we have a pre-distributive understanding of inequality so we don't continue to create value in a problematic way, pick up the pieces in order to battle inequality? So it's a theory of value that we need also for pre-distribution. And coming to this latest book, what interested me so much was that again, the moon landing 51 years ago, which we all kind of know something about from books and movies and so on was also like a political economy project. It was not just aerospace. It required a particular type of leadership within government that I think we lack often. And don't think of this as a normative point. You can also have leadership in wars, we know that, but that kind of idea of a vision, a targeted vision, a direction of travel, literally going to the moon and back in a short amount of time, that level of leadership and vision that was very explicit, that then fostered a lot of that bottom-up experimentation was very, very interesting to me. And the idea of experimentation, the welcoming of uncertainty as opposed to fearing it, and there's also a difference between risk and uncertainty. We are not used to that. We are used to talking about again, as I mentioned before, one actor facilitating the other. I'll come back to these points in a minute. I just want to put them all up here. A lot of attention to organizational design, so issues around capabilities, a lot of attention to building tools that were outcomes focused, as opposed to thinking you could just put a lot of money in the system, stir the soup and hope for the best, and a lot of attention on partnership. So when NASA worked with the business sector, they didn't just say, oh, come in, let's work together, a lot of attention to actually how to build that partnership in such a way that would really foster as much innovation as possible, but also more equitable outcomes. They didn't talk about participation, but I'm gonna get to that towards the end. So I've just put it up there to put it up as sort of a bookmark or something I'll be talking about. So in Kennedy's famous speeches in the early days, and I'm sure most people remember this or have heard about it, but it is very important from the policy perspective, the idea that we're doing it, we're going to the moon because it's hard, not because it's easy. So the reason I don't like the concept of government facilitating business is the word facilitating comes from the Latin, facile, or Italian, Italian after Latin, which means easy, right? So he did not say we're going to the moon and it's gonna be hard and government is going to facilitate and make things easier for business to do it. This idea that it was gonna be incredibly hard and both public and private would have to embrace that difficulty together, this is actually a deeply important point in terms of reframing the kind of bogus, siloed, inertial, boring way that we talk about policy. And just look at any white paper, I encourage you to look at any policy wonk white paper. It's filled with this idea of facilitating, of enabling, of de-risking, right? So he talked about the need for experimentation. He also said it was gonna cost a lot of money, less than we spend on cigars and cigarettes every year, he said, but it would cost a lot of money. It was worth it. So bear with us, we're gonna have to also make a lot of mistakes along the way. He talked about the difficulty in the sense that there will be mistakes made along the way. So the admission, that experimentation, trial and error learning by doing is required for a very difficult task. It's actually a deep point, right? So do we allow our civil servants to make mistakes without being on the front page of the Daily Mail? You don't have the Daily Mail, what do you have here? That's like, what are the terrible papers, the sun? Sorry, the post, got it. Okay, I haven't lived here for a while. Okay, this, okay. Everyone's got their favorite, terrible paper to rag on. And so, and what was striking is they were kind of bluffing in the beginning. They had no idea how to get to the moon. I mean, if you, I really encourage you to listen to this great podcast that the BBC put out on the last, I think like 30 hours. And it's just really just a great podcast. But also, through that, they also talk about the early days and literally, they didn't know. And so they finally ended up with this lunar orbit, rendezvous, but the level of experimentation and willingness to pursue very different types of trajectories was, again, interesting. Because it's not what we do today. We continue to try to find the easiest route and to worry about the failures, to worry about the high risks and any sort of cost-benefit analysis would have killed any ambition to go to the moon in the first place. And one of the things they realized, again, really early on, was that the mistakes could also be fatal, could be terrible, like the Apollo 1 fire. But what was interesting with the Apollo 1 fire was that the result of that was a massive organizational change inside NASA. So one of the astronauts who died, there was three of them, Gus Grissom, before dying on that same day said, how are we gonna get to the moon if we can't even talk between two or three buildings? Because they couldn't hear literally what was being said to them in mission control room. So we've all gotten used to this as like a normal thing, right? All the governments working within their own little department, no proper communication, departmental silos is a word that people often talk about. Whereas what they did was they realized if we are purpose-oriented, if we have this really difficult ambition, getting to the moon and back in a short amount of time, not only do we need to perhaps fail along the way, but we better restructure our organization as we learn how to do this. So what they did was they brought in George Mueller from Bell Labs. Remind me to tell you something very interesting about Bell Labs later. I'm terrible because I speak in parentheses. So I'm not gonna do that, I'm gonna keep focused. Anyway, George Mueller came from Bell Labs on the back of that fire to help the organization become more flexible, more agile, less departmentally siloed so that famous new NASA structure, which also DARPA, ended up having DARPA which funded the internet, kind of project managers each with their delegated teams, bringing in the top people to actually run these projects, but the main thing is we have constant communication between them. So vertical teams that were in constant communication, so horizontal flow of information to have that kind of all of, today would say, all of government approach, all of departmental approach within NASA, that was needed not because they talked about purpose as a thing in itself, but because they needed that organizational structure more flexible, more agile, more horizontal in order to actually achieve what they needed. The other thing is that I don't think people realize as much as one should, is that this was a massive collective effort. There was about 400,000 people total involved in the entire Apollo program, if you look at all the different businesses and literally every single person that had something to do with the program, but lots of different sectors. It wasn't just aerospace, in the same way that climate change today is not just renewable energy. So there was innovations in nutrition and materials and electronics. The whole software industry in some ways was a spillover of it, but a lot of earthly goods that ended up being very useful like camera phones, athletic shoes, home insulation, foil blankets, water purification systems were solved along the way. So yes, there was a mission, a big targeted one, but a lot of homework problems had to be solved along the way in this purpose-oriented way, as I said before, where the technology is a solution to a problem. And it was, again, intersectoral. We would call it dynamic spillovers across many different sectors. And it didn't just happen because they said, oh, we need a lot of dynamic spillovers. NASA itself, one of the first things the head of procurement, this guy called Ernest Brackett did, to try to really help foster that bottom-up experimentation across many different sectors was to redesign procurement away from being cost plus, which he just felt was causing a lot of payouts from NASA to the private sector without stimulating the innovation that was needed, more towards a fixed price scheme, like a challenge, almost like there was a prize you'd get, a fixed price with it, then you'd get extra if you achieved all sorts of different targets around quality and innovation improvement. So a target, a target amount of money with incentives for innovation and quality improvement, and also they had a clause in the contracts of no excess profits. Really interesting, right? Because this is about making profits, you don't get to the moon through charity, through philanthropy, we're not gonna solve the vaccine problem either through charity or philanthropy, but doing business in a way with both public and private and not turning it into a gambling casino was on their mind. I mean, I just found that incredible. What is excess, in excess of what? In excess of what you're actually doing, right? So given that this is a massive collective effort, public and private, what is the right way, not necessarily to share the profits, we can get to that later when we look at different ways that we can do profit sharing. NASA couldn't make a profit, but they could hold down the costs and share in the way that actually it was governed. Something really, really important today, I think for the pharmaceutical industry. So lots of different companies, but how they worked together was governed in a particular way. It wasn't just like, oh, let's commercialize space, what's happening today. The same guy, Ernest Brackett, he really was a hero, an unknown hero, said, oh, and we won't even know who to work with in the private sector or how to write the terms of reference if we become stupid, because he was seeing what was already happening back then was this massive amount of outsourcing. Already by the way to companies like McKinsey, but we won't go into that, I'm writing a whole book on the McKinsey-fication. You can replace the I with the U if you'd like of our economies. I'm gonna try to be polite, I promise. I always forget that American audiences or speakers are more controlled than Italian ones. But it was very interesting because he didn't say don't outsource to the private sector. Of course they needed to work with the private sector. I just talked about huge amounts of public-private cooperation, but he knew that the government or NASA wouldn't be able to know who to work with or how to work with them literally at the contract level if they stopped investing in their own brain, that kind of insourcing of creativity that I was talking about before. What I call the dynamic capabilities of the public sector itself. He was starting to see them being withered away through this excessive use of outsourcing and he had this wonderful quote of if we continue to do this, we will get captured by bro-shermanship because at the time they didn't have PowerPoints, they just had nice, shiny brochures. And as Kennedy already foresaw in the beginning, it was gonna cost a lot of money, not as much as cigarettes and cigars he said, but it was a lot of money. It was 30 billion at the time and today's dollars would be 300 billion, much less than we've spent on wars and so on, but the point is the value that was actually created in the economy, think of it as a Keynesian multiplier for every pound, dollar, euro of public money, how much extra kind of GDP does it produce due to the kind of crowding in and additionality, that kind of catalytic effect that public money can have, it was very much about that. Those huge dynamic spillers that happened along the way that I talked about in that cross-sectoral way created an immense amount of value, not just in terms of products and services, but also in terms of a growth. And so what I do in the book, and I've got kind of another 15 or so minutes left to do the positive part of the story in terms of the recommendations, because I mentioned the book as sort of like a recipe book, is to say, that's pretty interesting. They designed a system to truly be collaborative, to foster collective intelligence, to not turn the system into a gambling casino, as we have today, I think in the healthcare sector, where again we have 40 billion a year of NIH money going into drug innovation in the US and we managed to just not even think about things like let's make sure the prices of the drugs reflect that public contribution, let's make sure the intellectual property rights are not gained and simply used for rent extraction, so that level of ambition in terms of the goal required them to then design their organization in that funky way that they did with the project managers, the horizontal flow information procurement as challenge oriented with incentives for innovation cross-sectoral but done in such a way that was very knowledgeable of that cross-sectoral collaboration they would require but didn't just pretend that you could just say, come on, many sectors come and play with us, they designed that collaboration in a very intentional, proactive, not reactive way and no one ever talked about fixing market failures. This is very much about shaping and co-creating this landscape. And so what I did, so this is not gonna get a bit practical, just giving you a sense of how some of these ideas can be put into practice. Of course it's much more complicated than any one of the specific things I'm gonna talk about but I think they are important in terms of just getting us to think differently and especially ask questions like what would it look like if we actually scaled up some of these examples that I'm talking about in terms of how the system itself works instead of using them as exceptions. So one of the things I did was to ask with the European Commission, so I'm Italian but I speak with an American accent because we moved to New Jersey when I was five but I've been living in Europe now for the last, God, 20 years? No, I don't remember. I moved there in 20, in 1999. How many years is that? That's not 20 years. How many years is that? 22 years, that's a long time and I managed to have four kids in five years, the first years I was there. That's why it's all a complete fuzz. Anyway, so I'm Italian but again, I've been living in Europe for a long time and what's interesting is Europe as a region has in theory this kind of innovation policy. So currently it's called the Horizon Program before it was called the Seventh Framework Program and so on and what struck me was coming back to my first slide, it was very ambitious about the goals, smart growth, inclusive growth, sustainable growth but then you looked at all the metrics of what was being achieved, none of that was actually happening at least not through the innovation policy. So I said, what would it look like if instead of just blabbing on about, Greta's point, blah, blah, blah, instead of just blabbing on about inclusive, sustainable growth, we actually brought some of these lessons to how we design an innovation policy. So starting with the challenges, inclusive, sustainable growth or the SDGs which in Europe by the way are talked about a lot more than the United States. My kids who go to primary school state education, sorry, when they went to primary school in London, they sung the SDGs, the SDGs are actually taught in school and I don't know if it happens here in Amherst, maybe it does, no, not even Amherst, not even Berkeley, nothing, so it's really bad. Anyway, so you start with the goals that we've decided on but then turning them into these kind of concrete moonshots because the government didn't just say, beat the Russians, space race, Sputnik, they turned it into a very clear goal to the moon and back in one generation. Why is that important? Because you can answer, did you do it? So forget the conspiracy theories that say that never happened but getting to the moon and back in a short amount of time, you can say yes or no. Talking just about climate change as a big challenge, all right and so how do you turn that challenge into a very concrete target that you can actually say yes or no. Second point, how do you do it in a way that's cross-sectoral? So you don't get into this kind of picking winners problem where a lot of money is just given to one sector because it's lobbied its way up or two sectors or three sectors into the system. So truly get missions which are again targeted ways to think about our challenges but that foster that immense intersectoral collaboration. And third, what does it mean for designing every tool we have from grants, loans, procurement policy which I talked about before, bailouts, recovery programs during a COVID-19 recovery period to foster that bottom-up experimentation to reach that goal. So in this report that I wrote for them, I gave kind of these two examples, one around climate, one around clean oceans, so SDG 13 and 14 for the oceans one, which is SDG 14, getting 90% of the plastic out over the next five years, what would that mean for all the different sectors that would be part of that both in terms of how to get the stuff out but especially the new materials going in but also all sorts of different services and marine and ports and so on. So, and then that design issue about how to actually use all the different levers to foster projects, whether it's reusable and biodegradable plastic substitutes, substitutes, plastic and microplastic digestion mechanisms, autonomous ocean stations to remove plastic pollution but also in terms of climate change, the mission was 100 carbon neutral cities around Europe and lots of different sectors, not just renewable energy but also many different types of projects including all sorts of projects we need to actually make our mobility systems clean, so clean urban electric mobility and so on. So instead of focusing on the projects as a thing in and of itself, electric vehicles, that's a project, what's the actual goal? How can we really have that kind of all of government approach to public-private partnership, intersectoral collaboration in order to get there? And the second report I wrote called Governing Missions, it was more about the how, what does this then mean about the design of again these instruments including public banks, development finance institutions which often are themselves part of the problem, they're just giving out money to whichever sector might ask for help, what does it mean to introduce conditionalities within for example public banks that then would give out loans conditional on private companies that receive those loans to actually be part of a sustainable growth path. What does it mean for that issue around adaptability and flexibility of the organizations, impact driven budgeting, sorry, outcomes oriented budgeting processes. Accountability also in terms of how we actually value or evaluate the projects themselves. So as I mentioned before, we have a lot of static, not dynamic evaluation mechanisms around net present value cost benefit analysis, what would be the evaluation criteria that you would use to also measure those dynamic spillovers across all those different sectors that requires a different type of metric to evaluate what you achieved because you could almost put it the other way even if they hadn't gotten to the moon by designing it in the way that I talked about would have still created a lot of that value in terms of dynamic spillovers. How would you actually capture that in a finance ministry given that that's where also a lot of the purse strings often lie. And so that really does require that attention to the financing, to the capabilities within our government institutions require really unlearning a lot of the assumptions and the ideology in the end that's come from public choice theory and new public management. A report I helped co-write with UNDP actually looked around the world and looked at which countries actually did better during COVID-19 and found it was actually the ones who had invested very much in these types of capabilities that I'm talking about. So Vietnam and Kerala on the back also of previous crises like the Nipah virus had actually invested also in really important issues, sorry areas like building trusted relationships between academia, civil society, business and government but also governing our digital platforms when we have an infodemic matters. So none of these just come out of thin air, it's actually results of an investment within that kind of public administration side. Recently I've been doing work with the BBC which I think is a really ambitious public organization because it never talks about fixing markets. So PBS here, public broadcasting services, it's good, I'm sure we all watch it and so on but it's kind of stuck to this idea that it's there to do what the private sector is not doing, what Fox News is not doing. So high quality news, documentaries, really high level talk shows. The BBC has always thought of itself as a shaper co-creator and has done it across any kind of format, soap operas, talk shows, high quality news, documentaries but with a metric of public value inside to hold itself also accountable. So when it's making a soap opera about the working class EastEnders and not just Dallas and Dynasty, what are those kinds of metrics that you require to also hold yourself accountable that you're really doing what's not being done but in an ambitious way, not just filling the gap of something the private sector is not doing. So building these capabilities requires also putting time into asking things, well what is public value? So this exercise we did with the BBC looked at it as a summation of kind of individual value, how much do people actually like the shows, are they good but also social value fighting against fake news or bringing diversity to the screen participation in different ways but also industry value. So by being ambitious through, for example, investing in the iPlayer, a new technology where they put all the radio and television on an internet platform in a very innovative way that ended up actually crowding in all sorts of other businesses around that platform but also back in the 1980s, the BBC had an ambition, a mission to get everyone to code and to do that, they invested in the BBC micro computer which then actually had to be procured all the different parts in that itself in order to get a computer in the classroom all across the UK and did up requiring again a specific type of procurement method which again crowded in a lot of industry but also if you just look at their programming including the R&D that they've done around Blue Planet which is David Attenborough's recent, one of his recent documentaries, they've always invested also in the knowledge creation, the R&D, the kind of new thinking that's required for cutting edge documentaries, talk shows, high quality news and so on but what does that then mean on how we actually evaluate the performance of such a public organization beyond asking the old questions of which market has to be fixed. Industrial strategy, I had it up as one of my first slides, that's about directed economic growth however in the old style of industrial strategy which often doesn't work, it's when it ends up just being a list of sectors that a government might prioritize in the UK up until recently, they were prioritizing aerospace, automotive, financial services, life sciences and the creative industries. So that sounds good, five sectors to do what? Lots of sectors aren't there. So reversing the idea of industrial strategy as a list of sectors to prioritize instead choosing challenges and missions which then a lot of sectors, not just the ones that have lobbied their way up to being considered the top sectors, that's something that I think is very interesting in terms of a mission oriented redesign of industrial strategy. So this work I did with the UK government, I forgot to say by the way that the European work I did ended up getting put into kind of loss so now they have these five mission areas that they've chosen and a part of the 100 billion horizon scheme in Europe is now dedicated towards these kind of different missions which then land at the member state level where then they decide exactly what the missions are but the mission areas have been decided by the commission and their clean growth, soil and water, conservation, healthy cities, cancer, there's another one. But the main thing is those are the mission areas which then help design the innovation program where then the actual missions within those mission areas is left also to much more kind of local coordination but it just means that instead of just talking about these challenges, it's now a tool for the innovation policy itself and that was the idea here with the industrial policy which is to start with the challenges and then backtrack on what the missions might be and to actually foster that intersectoral dynamism so in the UK one of the challenges was future mobility and the mission they decided on through a work we did through this commission I ran was by 2040 to put the UK at the forefront of safe, sustainable and universally accessible travel creating congestion and admission-free zero accident systems, it's a mouthful but just the fact that it actually had words like accessible 100% accessible travel meant that some of these bubbles on the bottom were things like 100% accessible public transport with equal access across all models so you just kind of get the picture that to fuel growth that's directed it's not about kind of throwing a lot of money at a particular sector but being very ambitious on the challenges and then using the levers like industrial strategy, innovation policy or procurement to actually foster that intersectoral, interactor work also helped to design a mission-oriented public bank as I mentioned, sometimes public banks are part of the problem just giving out money subsidies, loans and so on to problematic sectors that beg for help, think of the steel sector which is begging for help everywhere a mission-oriented public bank helped design this in Scotland where the point is to provide that kind of patient long-term committed strategic finance to those organizations that are willing to work with the government around really important goals and they're not told what to do, that's kept very open otherwise you stifle innovation but the fact that there's kind of conditionality linked to the loans moving in a particular system sorry, particular trajectory as opposed to just by random categories like SME financing if you are a small company you might need extra help but you don't get money because you're small but because you're seen as being willing to engage with some of these government missions in Germany recently because they have the energy vendor green challenge kind of directing a lot of their economic policy of course this is now huge with the crisis of gas they started to change the loans that were provided from the KFW, their public bank to the steel sector so the condition was that steel had to lower its material content which it did they now have one of the greenest steel production systems in the world because they used repurpose, reuse, recycle technology through the whole value chain not because they went to Davos but because they had to let me just skip ahead in Sweden an interesting thing is this idea of mission orientation I've worked quite a bit with Venova the Swedish Innovation Agency has landed on the very particular, the very local so they have this very high level challenge of a fossil free welfare state and it lands on the particular public transport public education, public health so in public education school meals in Sweden have to be healthy, tasty not just IKEA meatballs and sustainable and that then very specific kind of directed outcome that they want is used to write contracts that are very specific and targeted for how again the private sector might procure in innovative solutions around meals but it's not just oh we need private sector innovation to do school meals it's very targeted and second they've gotten kids involved in it so sustainable school meals become something they can learn about through the curriculum and they also get kids to kind of help co-design some of these meals so that issue of participation is very important which is something I've also learned a lot about in my own local part of London I live in Camden, North London and I co-chair Camden Renewal Commission where the idea of missions also falls in a very specific place like our housing estate social housing, affordable housing Camden has chosen its housing estate as the place where to really focus the clean growth mission and instead of just talking about retrofitting buildings it's very much also about participation bringing communities, resident associations to the table from the beginning not just being lectured at to actually debate what does it mean to live together in a more sustainable way and part of that has also been to change some of the programs like food banks to food cooperatives and as you know food banks have popped all over the place due to hunger and poverty which has been aggravated during COVID so really bringing also that agency of citizens through a cooperative form within some of these organizations that become central to mission orientation is very important. Lastly, key point here is what it means for this issue of kind of sharing in the rewards instead of just the gambling casino that I mentioned before this issue of conditionalities that I already mentioned with the public bank I think it's quite interesting how differently countries have reacted in this kind of creation of money that we've seen during the COVID-19 recovery programs not all over the world but think of the US big infrastructure funding the build back better discussion in Europe the next gen EU one trillion recovery fund is that in some countries they've actually nested within that this idea of conditionality so the money is not just free giveaway to help businesses that are having a hard time but that it's conditional on businesses actually changing how they're working so in France this is the picture of the French finance minister both Renault and Air France received the loans in COVID-19 on condition that they were willing to reduce their carbon emissions in the next five years and Denmark and Austria the condition was to stop using tax havens it's like, uh-huh like why do we have to wait for people to think that up it was just so obvious and yet building this kind of conditionality into these new public schemes and creation of money but also if you think of the huge issues right now I talked about vaccine apartheid how do we actually govern innovation processes govern production, govern collaborations govern collective intelligence in a mission oriented way so starting with what the goal is backtrack in what it actually means for how you govern the innovation system this is very much what Jayati and I are trying to do in our council on the economics of health for all for the WHO, World Health Organization we say focus on the goal health for all backtrack on what it actually means for procurement, outcomes oriented budgeting public-private partnerships intellectual property rights conditionality of the functional not dysfunctional type and I really do believe genuinely that if we sort through some of these details that I'm talking about and put this issue of stakeholder value not just the academic literature about it we know that's an old thing varieties of capitalism but how it's being talked about by large companies if we put it at the center of a system of how actually to produce to collaborate in the ways that I've been talking about it's gonna be very disruptive it's gonna mean doing the vaccines and how we've made them currently completely differently it's gonna mean running our digital platforms differently so instead of just money going in around digital and having to pick up the mess later around privacy taxation doing it ex ante in a way that really fosters in the pre-distributive way the right kind of symbiotic public-private partnership as opposed to the ones we've gotten used to I really think that's central and the last chapter of my book I asked then what this means for the kind of rethinking economics I began with the point by Keynes that practitioners think they're just getting the job done but they're slaves of defunct economic theory I think a lot of what I've talked about and I have talked too much so I promise I'll stop in a second is really about rethinking the fundamental pillars underlying how we think about the economy so how we think about value as collectively created markets as co-shaped not just fixed those dynamic capabilities in all organizations so the new training that's required within the civil service and that kind of seeing even themselves as co-creators of value not just fixers but what are the creative capabilities required inside fragility, flexibility, adaptability and so on, finances, outcomes oriented instead of just thinking we can spray money around and hope for the best battling inequality in that pre-distributive way getting the conditions right in the first place partnership with actual measures around symbiosis and mutualism that would be really useful we talk about ESG metrics but what is the metric that we require between organizations to make sure we're on the right track and it's not an abusive partnership and this last point that I made about participation which to be honest I'm just learning about I don't think economists know anything about co-design, co-creation and participation but it's so important and a system global system where there's so much polarization and most people have given up on business and governments and there's huge distress I think the issue of participation is huge and the reason I set up this whole institute a department at University College London is I really think it also needs to begin with a new narrative, a new story about what this is all for and so when the first brochure we made it was very much about crossing out these old ways of thinking like de-risking it's not about de-risking it's about welcoming uncertainty and actually structuring that risk taking between organizations but also socializing not just the risks but also the rewards so that kind of new narrative, new story I think is super important there's an old Native American saying apparently Plato said this too that storytellers rule the world well if we wanna claw back and get a much better system that is truly inclusive, sustainable and can meet these goals that we've all signed up to it also requires a very different type of story narrative of collective value creation and then the details and sorry if I've bored you with some of those details they really need to be ironed out it's not gonna happen just cause we all feel good when we talk about sustainability so thank you thank you so much Mariana and you said 60 minutes I did 60 minutes plus three so not too much so we're going to move to the Q and A portion what I would like if you have a comment or a question for Mariana Professor Mazzucato please come up here line up in front of the mic and she will facilitate it I would ask you to be facilitate not facilitate well welcome the difficulty of your questions the participatory part of the event please keep your questions very brief so that we can allow everyone to have a chance so I welcome you to come up or I'll call on you all right yay thanks very much can you just tell us about Bell Labs the labs oh Bell Labs thank you I do have this memory thing and I used to just say things right away because I knew I'd forget and I do it with jokes too I was worried I'd forget the ending so I tell it at the beginning and it didn't work so it's good I've started doing it this way people have to remind me so Bell Labs so first of all for those who don't know what it is it was an incredibly innovative private sector R&D department which is historically known as having been key to the whole digital you know ICT information computing technology revolution it came out of AT&T there's a great book about it called the ideas factory I recommend you read it's actually a really fun read but what people don't know I didn't even know that it came out of government forcing AT&T to reinvest back so this is coming back to my first point about value extraction it was a when AT&T had the government monopoly on telecoms the condition that government at the time set was that to retain that monopoly status AT&T had to reinvest their profits back into the economy back into innovation back into big innovation beyond telecoms that's why Bell Labs is set up it wasn't just set up because one day AT&T is like oh we need to do innovation so it's just so interesting that we don't think about that like of government monopoly in that way government given government granted monopoly patents I don't like the word intellectual property rights it makes us think it's like a God given right these aren't rights it's a contract you've been given a 20 year monopoly so you're getting monopoly profits for 20 years by the government that's the contract what do you give back right so the government should in designing these contracts you know I've spent a long time talking about how we have to design these systems in a particular way think about how to make sure for example that those patents aren't abused so patents should be not upstream so we shouldn't be patenting the tools for research they're supposed to be downstream patents shouldn't be wide which they are because patents are increasingly being used just for strategic reasons you know like cats and dogs when they pee to keep out the other cats and dogs in a garden literally just for strategic reasons to stake out a territory that's a wide patent they should be narrow and patents should be weak in other words easy to license those characteristics of a weak narrow downstream patent would ensure the government that what it's getting back which is knowledge diffusion at the end of those 20 years happens because what used to happen before we even had patents was that there was just secrecy like in the Middle Ages right so the idea behind patents was and patents by the way aren't used in every sector and there's plenty of innovation and some sectors which you know software doesn't really have patents and there's plenty of innovation but some sectors like pharmaceuticals we could debate whether patents are needed or not let's just assume they are needed but the way we structure those patents then really matters because what government gets back instead of secrecy which means no knowledge sharing is that by writing it down right because that's what you do when you you know patent you actually have to write down exactly what you've done when the patents over you actually have full diffusion and deployment of that knowledge so you actually get the knowledge spillovers which is what the public side wants if you have no idea what you're doing and you've been captured by brochuremanship in the ways that Ernest Brackett warned when you become stupid you end up misgoverning these patents and it just leads to rent seeking value extraction and not value creation Schumpeter wrote a lot about this so yeah, it's interesting coming back to Bell Labs that it actually even though people glorify it it came out of a contract a condition set by government in return for the monopoly status they gave to AT&T imagine what it would look like today if we had that kind of ambition and courage including on share buybacks which Lenore writes about you know that itself could be a condition Pfizer everyone knows about Pfizer now because of the vaccine I've been ranting against Pfizer now for a decade or so is there anyone here from Pfizer? No, good. I don't know why I was asked to give the opening speech for the life sciences strategy so it was all the pharmaceutical companies so obviously the government minister who invited me had just seen I wrote something about pharma and my books did well so I got this to invite her I just put up the share buyback numbers like they were just and all the little biotech companies came up and hugged me at the end because yeah but anyway Pfizer is a massive share buybacker actually spends more on share buybacks and dividend payouts than it does in R&D and it's interesting it's actually making billions right now in the back of the vaccine which AstraZeneca it's not that they are saints or anything but the deal that AstraZeneca made with the Oxford University publicly funded researchers yes Oxford and Cambridge and all UK universities are public not private it's a good thing the state in that case actually did a really good deal I think with or a much better deal with AstraZeneca then the Pfizer deal was in terms of actually keeping the cost and the price is low and doing much more of the sharing behind kind of a patent pool then Pfizer didn't sign up to any of that and AstraZeneca said we're not gonna do this just to make billions Pfizer's making billions and it's not surprising they're literally one of the most financialized companies in the world after Exxon and we shouldn't call it the Pfizer vaccine or the AstraZeneca vaccine it was a massive collective collaboration between lots of different entities were you? Smith? Thank you very much for that excellent presentation what a question regarding the SDGs so in the spirit of leaving no one behind what strategies do you think less developed countries for example in Africa can employ to ensure that they implement a similar approach to the one that you're presenting about today? Thank you so so I'm an advisor for Cyril Ramapoza in South Africa so I work a lot with the civil service there they often say to me oh Mariana come on stop all this entrepreneurial state we have a weak state you know we can't do what you're talking about and my answer is often you need it more than ever because when you have a weak state the question of how do we actually strengthen the state not by size it's not about big state but smart state that actually can become part of the solution and not part of the problem I think of again South Africa where large state-owned enterprises like Escom a large energy company that state-owned has actually been part of the problem right so instead of just public private conditionalities that I talked about also public public but that idea that actually to have a stronger state it requires an active investment within our public administrations and less of the kind of outsourcing that I was speaking today with Leon C. there you are who wrote a wonderful book called Capital Flight from Africa very much about also the outsourcing of those capabilities to consulting companies and others who then help manage this capital flight that's huge and you know I'm Italian so when people talk about corruption and nepotism as though I don't know about it I'm like we invented that like thank you can we get credit for it you know the mafia was an outcome so the mafia which we've all seen those great you know movies about Sopranos the series and so on actually came out of a weak state so in Sicily it was very badly governed people just you know had to basically help each other through mutual self-help organizations the early mafia was the Socchita di Beati Paoli literally a mutual help organization that then turned into the mafia so actually getting states to do their job but with metrics within that hold them accountable and that's why I'm very interested in issues around public value and public purpose and conditionalities linked to you know state money going to other parts of the state like a state-owned enterprise or a public bank I think are incredibly important in a developing country context but also in many developing countries that depend for example in natural resource sectors seeing those sectors not as sectors but inputs towards some sort of cross-sectoral mission thinking in Chile I'm talking now to the new government about you know copper not seen as a thing in itself but as part of a renewable or sustainable growth path that's you know that cross-sectoral focus not sectoral focus and conditionalities linked to sectoral transformation are incredibly important also in countries and in many developing countries have this where there's a parasitic public-private relationship where the public just gives out a lot of money to sectors that have captured the government right so that issue of a new social contract through conditionalities that are nested within all the different contracts whether it's public bank loans or procurement strategies these are all I think part of the solution how to do it unfortunate or not unfortunately realistically it's really important to start on something whether it's school meals or something else learn how to do it in a different way from the status quo which is that more parasitic inertial system and then start scaling up the lessons to the system but first you need the will to do that there's many profits being made by both public and private so money being pocketed by not changing the system so it's really about holding to account at least those governments that talk about the fact they want to change that talk about a green deal that talk about a sustainable inclusive growth path and saying all right you want to do that okay let's get our hands dirty with the details and testing it out kind of sandboxing it one of the things we do in my institute is this kind of sandboxing idea which is if you have a great idea and you try to implement it working with the civil servants and then bring back the learning on the ground because it's much harder than any academic paper to the theory itself so practice-based theorizing but yeah you need to work with willing partners so thank you as a new college student studying econ for the first time how would you suggest sort of being able to navigate some of the problematic conventional language that we might find in our textbooks UMass Amherst? You got problematic textbooks? Well it's a really good question there's a whole rethinking economics movement amongst students globally and I think first of all definitely tap into that because I think it's first of all it's a movement which is great I think one of the things I found is also it's really important also to make sure one doesn't get lazy so for example it's really easy to criticize neoclassical text or mainstream textbooks that there's too much math but actually the real problem is they have the wrong math you know so just by saying there's too much math can it make some economists feel these little lefties just don't understand math but actually there's a great book by an old professor of mine Phil Moralski who wrote More Heat Than Light where he shows actually that the mathematics that was chosen by neoclassical economists in the early days came from Newtonian physics and it wasn't through a scientific method that they said oh that's the problem I'm gonna you know explore all these different tools to understand that problem it was more like that's the solution I want to show Pareto optimality, equilibria you know, representative average firms as important what are the tools what are the equations what's the body of math that's gonna help me prove that and that was Newtonian physics so I think also being quite critical of the type of methodologies that have been used which become kind of self-reinforcing and I think holding your professors accountable if you want to also explain why there's one way of thinking about value or one way of thinking about rigor and having that kind of more portfolio mindset but also getting part of the movement I think would be very important it's a very important student movement globally and it's global yeah and definitely the UMass professors keep hiring the right ones ha ha ha ha ha ha ha ha ha ha ha ha ha ha just kidding but UMass I should say UMass Amherst is one of the few economics departments in the world alongside the new school and a handful of others that have really embraced different ways of thinking about the economy normally what happens in economic departments is there's like history of economic thought so here's what a bunch of old people said but now we have the theory but actually presenting different ways to analyze the economy you know, different, you know, post-Kinsey and neorecardian, neoclassical evolutionary thinking and using different methodologies that's really important I think, you know, I mean that's the best I think that a student can have because then you can choose your own you can mix and match and kind of find your path so it's the variety that's really important it's not just about one dogmatic idea Hi, my question is about partnerships and while we're here at UMass I have been thinking about how UMass has a lot of goals of sustainability but we continue our partnership with Bank of America one of the top financiers of the fossil fuel industry so I guess my question off of that is are partnerships in of themselves more important than individual organizations having their own concrete goals? Really important question and actually what's funny is the guy who runs Bank of America his name is escaping me is like the guy who's actually signing up to these letters with Larry Fank about purpose and stakeholder values so calling out the are we allowed to say bullshit? Yes, yes good calling out the bullshit also of those proclamations about purpose and stakeholder value is just as important and that's the organizational point so corporate governance driven by stakeholder value surely can't be done also by I think something like 7% of Fox News is actually owned by BlackRock so what does that mean about kind of ESG metrics in terms of democracy and fostering healthy debate in terms of the partnership the reason I focus a lot on it is I don't think enough has been done so ESG metrics are within organizations and universities will have their own type of ESG metrics the partnership is how you actually work together and I don't think I don't know of any proper metrics that look at how are we partnering just like in a marriage of any sort it can also be an abusive partnership so what are the metrics we have to actually make sure that we have that kind of symbiosis and mutualisticness and not a gambling casino like I think we have in the public-private partnerships in the health sector so it's not that they're more important than the intra-organizational ones but I think there's almost no work on that and again any biologist would hold if you use the word ecosystem and in my world of innovation everyone talks about ecosystems they'd ask you really what kind of ecosystem predator or prey you know again symbiotic, mutualistic whereas we just use the word as though it's a normative good thing whereas there's lots of unhealthy ones so I think they're both needed and definitely your university shouldn't walk the talk walk the talk there you are it's hard so I think what's really important is welcoming the debate just like any of these things it's not about saying we're perfect but it's about what is the right discussion what are the metrics that can help guide Do you think shared buybacks can have a more positive effect on the real economy if shares were more equitably distributed amongst the common good and is this a goal like worth reaching for? I think someone else should answer that it's a very good question but the way that the shareholder model works right now is almost driven by the fact that it's not skewed like that it's not distributed in other words that would be more like a cooperative model or something of our system right so shareholder value maximization trying to improve that just by distributing shares to everyone ends up being a different system and one of the reasons I like so UBI for example is sorry this is a bit off topic but I'll come back to your question universal basic income might be a policy I support but I don't like coming back to the story and the narrative you know the Native Americans saying about storytellers rule the world the story around UBI continues to be someone else is creating the wealth and then it gets redistributed in a progressive way just like we can have progressive or regressive taxation through a check in the mail that's gonna be sent to citizens talking about the citizens share or the citizens dividend you might end up getting the same amount in the check as you would with UBI but the story, the narrative but also the form it would take in terms of spreading the wealth more equitably it's just a very different story you're getting back a share of the wealth you helped to co-create you're not getting a handout from someone else right so I think in that sense distributing the wealth more equitably instead of doing it by just giving everyone a share through a shareholder value model could actually happen through and I'm glad you asked it because this is one of the things we're working on is if you think about for example having community wealth funds or a sovereign wealth fund that is truly also directed towards making our economies more sustainable and inclusive and getting those citizen dividends paid out through that public fund which is what happens in Alaska of course many of these sovereign wealth funds and public banks as I've already mentioned are part of the problem so holding them then accountable as the question was just made about universities and how they're investing that's hugely important but finding a different organizational form that can distribute that wealth in a collective way as opposed to tinkering with a shareholder model I don't know, do you want to add something? No, okay it's nice when you start calling in other people I'm personally interested in how the food system shaped global nutrition and how governments could potentially reshape it to improve nutrition for all so in the pursuit of the end of hunger and malnutrition what are your thoughts about how the United States could ensure that everybody eats well and not just put bandages on a negative market outcome? Great question, wow so I mean it's a huge question which would require all sorts of different kind of policy proposals surely having a regulatory structure that's not captured by the food and different bits of the food industry including the sugar industry would be an obvious place to start but I think beyond the obvious points like that which you don't need me to say I do think that something like that school meal program it's just really interesting because it means that the role of government also in delivering that food through a school meal program itself would become a funnel for innovation and sustainability and then you multiply that across all the different levers like school meals that's just one example that they did in Sweden it would mean that the way that again the government is delivering on something as crucial as a school meal becomes also a way to hold itself accountable through that kind of targeted way of actually having a definition of what we're even trying to achieve and I think that's the main point like in this like going back to our who council so health for all you said food for all backtrack and what it means for all the different levels levers all the different partnerships all the different tools there's huge amounts of money I mean I keep talking about procurement why because it's a huge chunk of government budgets like in the UK or a whole innovation budget is 10 billion just the procurement budget of the Ministry of Transport is 40 billion so think of all the food contracts that are go through some sort of procurement system hospital food you know and so on learning how to as I mentioned to the question that was asked before I was gonna say by Smith but that's just what's on your shirt about how to actually do this stuff differently learning through maybe something very local and learning what it actually means for changing the status quo of the regulatory structure of the procurement structure of that design of public-private partnership and then scaling it up to the entire system I think is like that's what we mean by sandboxing but definitely I mean the regulatory capture in the US with food is you know is is well known the Rockefeller Foundation has just put out literally a couple months ago a very good report on transforming our food systems for inclusive and sustainable growth everywhere you can look at that but I'm not a food expert Hi, first a comment I'm a graduate student at the School of Public Policy here and I really appreciated the way that you're challenging how policy and administration degrees are taught and so I like that message that you're sending out there my question with public-private partnerships is the boldness of the government to be able to demand things when did that disappear because if we look at the state of New York just approved $800 million to help build the Buffalo Bill Stadium on like a one billion dollar stadium so the taxpayers are supporting most of the funding for that but why like what is where is what happened to the backbone then to say to AT&T build create Bell Labs like do these like why are we cow-towing in these negotiations It's a very good question and I think the first thing is to reveal all that completely parasitic like I don't think enough people know how bad it is I don't think enough people know that Tesla would not have existed without a 465 million guaranteed loan from the U.S. government the same amount just a bit more went to Cylindra everyone knows about Cylindra because they went bust right oh government failure thought about the Tesla success you know and the way they structured that had no smart thinking like you just said so you know Cylindra goes bust taxpayer bails them out Tesla does well must be private sector genius even worse even though Obama had all these Goldman Sachs guys in government which at least then they could have like taught him you know how to do think about investment they could have said structure that investment deal properly instead what he said to Elon Musk was well not he the Department of Energy it was a guaranteed loan if you don't pay back the loan we want three million shares in your company it's like why would you want three million shares in a crappy company that doesn't pay back the loan had they said three million shares if you do pay back the loan which they did in 2013 loan take it out in 2009 price per share in that period goes from nine to 90 that difference 90 minus nine multiplied by three million would have been more than enough to pay back the Cylindra loss and the next round of investment so it's both about those kind of conditionalities that you're talking about but also structuring this stuff so you're not getting screwed socializing both risks and rewards and it's not just monetary it's also conditionalities on the reinvestment conditionalities on the prices of drugs and so on so I think you know it has been and I don't like to use the word neoliberal because it just sounds like a big minister on soup of everything but that kind of neoliberal economics thinking that happened alongside this new public management public choice theory thinking that kind of at best market failure theory thinking of what governments are for that was what Tony Jett a famous author who died in his book ill fair as the land he said there was a discursive battle that accompanied this kind of new Reaganite thatcherite way of thinking about the state and the discursive battle he said meant that the way government even thought of itself coming back to having the kind of courage to get the right deal changed massively alongside these big changes like shareholder value maximization is becoming the new big way we run companies so for example he gives really specific examples like instead of talking about departments administration you know small business administration so we're administering facilitating I mean I added those words facilitating de-risking enabling all these words I don't like but he said administration you're there just to administer you're not a value creator you're not a co-shaper so I think I mean I would say it started in 1980s early 1980s it wasn't perfect before but it did become a battle against the state and again the reason I set up a whole institute around this but also I think it's a movement between other institutes and departments is in the same way we have the Montpillerine society movement kind of anti a state reducing even the courage within the state to get the right deal for people and running then these rubbish bureaucracies in that spirit we need a counter movement and it's not gonna happen just with better economic thinking it literally needs to be a movement we need the media we need culture it's a cultural movement actually and I don't think we've seen it as such so what reduced state capacity was a movement and at best you might have someone like me here giving a lecture but it's not really a movement and I do think there's something about asking what would that look like to have a proper counter movement to what we've just gone through in the last 30 years or 40 years at some point this is gonna end right it looks like we have one last question and this will be the last question no I'm happy to take more after I just threatened Hi Professor it's great to have you here thank you for being here but the model the economic model of China being referred to as state led capitalism so I was wondering how this state led capitalism model fits into your framework of public private partnership and if there is something that possibly could be learned from there interesting so I once wrote or not wrote an interview some maybe 10 years ago I said no when did Trump start I can't remember it was during Trump's thing I told you my memories are complete plus so I said that China is learning from the history of the United States at the same time that the US is unlearning it because under Trump it was all about it was basically a mercantilistic strategy it was all about exchange and trade trade rules having to change and walls and all that kind of stuff so this kind of lack of we talked about it today in our discussion with the graduate students there was no proper kind of industrial strategy or innovation policy it was all about exchange and I think China has moved away from just being a country trying to make do with low cost labor they are actually especially on the green transition one of the biggest innovators in the world so they have a lot of state investment they were spending pre COVID so forget the COVID recovery kind of schemes two trillion in greening their entire economy through all sorts of distributed policies including energy friendly technologies Denmark by the way, tiny country, tiny country look it up I can't remember the population but it's very small is the number one provider of high tech green digital services to China that itself came out of a very specific mission oriented policy in Denmark around Copenhagen wanting to be the greenest city in the world so their startup community became then directed towards actually fostering all these green digital services but anyway I think China is an example of a country with a very clear kind of you know mission around green that has come from this massive pollution problem they have but that is not what I call an entrepreneurial state so they have a lot of state spending they also have increasingly these kind of you know what they call market led companies but when I talk about the entrepreneurial state it's about a decentralized network of a distributed capacity of public sector organizations across the whole innovation chain that are working alongside the private sector towards kind of goals their current situation is they have huge blocks of state money like the Chinese Development Bank Huawei by the way would not exist without it Huawei got a seven billion guaranteed loan Elon Musk got five billion from the US government for his three companies so it's not that big seven billion but still for one company seven billion is a lot almost all the energy companies solar especially in China have gotten these massive loans from the Chinese Development Bank I think as an innovation system it's not very distributed right now hence the risks are just like the Soviet Union found that this kind of inflexible just big organizations putting in a lot of money might not actually be very resilient especially not adaptive in that way that I mentioned NASA when it kind of reorganized its organizational structure but that's the question I mean they're very adaptive someone once wrote a book called The Adaptive State for China so the problem is then democracy too right so this issue of participation that I talked about which is one of my biggest interests right now even though I don't know much about it so I'm interested because of that how do you actually get truly co-designed co-created missions so cities it's easier to do it at the city level say than the nation state level but what does it mean to be just as ambitious on the social innovations as on the technological innovations in terms of increasing democratic participation I sometimes use this word citizen assemblies and I was told the other day by someone called Christina Lafont who studied citizen assemblies at Northwestern and said don't look at citizen assemblies they're very anti-democratic because they're replacing democratic processes through citizen assemblies but she said they can be very useful when they're also helping to inform the democratic process but that point of democratic process and co-creation, co-design is incredibly important to make sure that sustainable growth, innovation led growth is also inclusive growth and obviously China is not a model for that so but neither is the US I mean it's one of the least inclusive countries in the world especially if we look at issues around health and so on so I think it is about understanding what's worked in different parts of the world both on the innovation sustainability side but this inclusive issue and that's why it's important to get one's hands dirty with the actual reality on the ground instead of big blanket ideas of partnerships yeah, thanks