 Welcome to Downstream Navarro Media's weekly interview with me, Aaron Bostani and sometimes Ash Sargatou. If you've not already, hit the subscribe button. It means so much to us. And of course, like this video. Now, on to our conversation. Even before the COVID-19 pandemic, capitalism was stuck with no answers to a host of problems, including health, inequality, elderly care, the digital divide and, most pressingly, the environmental crisis. In her new book, Mission Economy, economist Mariano Mazzacato argues that to address such crises, we must rethink the capacity and role of government within our economy and society, and above all, recover a sense of public purpose. This should take inspiration from the Apollo missions in the 1960s, where identifiable problems that need solving drive policymakers. Mariano Mazzacato, welcome to Downstream. Thank you. Happy to be here. We're very happy to have you. You write across the book about some of the inherent flaws within the present economic model we have across the West, big W, Europe, North America. Do you think that some of these issues, which we'll go on to talk about, have been at the foundation of why these countries have failed in dealing with COVID-19? High GDP countries, high innovation, high standard of living, and yet the US, EU countries, UK have some of the highest death tolls in the world? Yes, but there's nothing inevitable in that. In fact, you have across different types of countries within the same level of development, very different types of performance achievements right now. I do think that one of the key factors, and this is the factor, not surprisingly, that I focus on in the book, is the lack of ability for public institutions to actually actively govern, create, shape the economy and environment we want to be living in. They've basically bought into this whole notion that at best the public sector is there to fix market failures. By definition, it's always too little, too late. It's actually waiting for a problem to arise, and then it comes in, whether it's pollution through carbon taxes or problems around innovation with government spending on R&D. The question of what are we even trying to do in the first place? What's the goal, and how can that goal foster new types of capabilities within organizations, but especially really ambitious ways to collaborate towards kind of common good targets? That's what the book's about. A lot of the problems in the country where I'm sitting right now in the UK have been, I think, again, not inevitable. It's been directly related also to the outsourcing of public sector capacity. We saw this with the test and trace system. It was all outsourced to Deloitte, which, by the way, didn't do very well, whereas the vaccine rollout, what's been so interesting in recent weeks, is that its success has been very much also related to it being nested within a public health system. Now, that public health system has also suffered cuts and lack of capacity, but at least it's built, it's in the community, there's trust with citizens, what would it look like if we were properly resourcing, but also reimagining, because a lot of this is about creativity and social innovation, all the different types of public services from public transport, public education, public health, in order to drive the kind of growth that we want, which has to be inclusive growth and sustainable growth. Unfortunately, yeah, go on. There go on. Unfortunately, we don't have that. There's lots of problems in the private sector. Of course, my previous book was on that, The Value of Everything, but unless we have a dynamic, capable, ambitious, and well resourced public sector, it's very hard to get the dynamic public-private partnerships that are ambitious and really focus on public goals. I mean, you've been a critic of shareholder capitalism, that particular model, for a long time. You came onto my radar with the idea of the entrepreneurial state a decade ago. I think that was your big breakthrough. You've been very consistent in this critique and proposition on offer, but were even you taken aback by the scale of failure when it came to addressing COVID-19 in the UK, in the United States, France, Italy, Spain, and so on? Not really. I mean, it depends, because there have been so many different types of failures. Currently, the biggest failure we have the week that we're recording, this is the failure in solidarity. We finally have some vaccines, but if 80% of the dosages are being hoarded by rich countries, we end up with what Dr. Tedros, the head of the World Health Organization, calls vaccine apartheid. Given that this health crisis is a global pandemic, and we're all only as healthy as our neighbor is, had it begun in Africa, where health systems are much weaker than in China, we would all globally be worse off, it's just depressing to see this failure in solidarity. That's just the latest, but the other types of failures are definitely capacity on the ground. We should remember that when we have wars, capacity is really important. World War II was fought by transforming existing capacity, for example, in automobiles and transforming that into capacity for a wartime mission. That itself requires capabilities on the ground. It also requires trade unions, which were very important in World War II, and actually helping that sector transform itself. These are social problems that require lots of different actors in the public, private, third sector trade unions to work on together. There's also a failure of collaboration. We tend to just look at the failure in terms of death rates. Of course, there's different factors that are contributing to that. Again, just the massive difference between the testing problem and the vaccine one just shows that it's not necessarily, again, inevitable or about a particular country being completely rubbish. There's, within any country, different types of ecosystems and decisions that are being made that then really affect what happens. The problem is we've made lots of wrong decisions. I'm not surprised because what I've been writing about for quite a long time, and I was quite relieved to see others now talking about it like Lord Agnew talking about the ultra-consultification, if one can call it that, of the UK government, which he argued had infantilized Whitehall. Again, Whitehall, so the UK government not investing enough in its own capacity, overly relying on the Circo and G4Ss like they did, you might recall, in the London Olympics, where G4S, a private contractor, just didn't deliver last minute. The military had to go in to do the security. That's just such a pervasive way that we have decided, for some strange reason, to govern things whether it's hospitals, care homes, or prisons. The prisons, we know that for such a long time, we have failed to govern prisons with the benefit of people in the prisons, both the guards with the prisoners, in terms of how do we govern that relationship between the public and the private sector. I think this is just, unfortunately, because the death toll is extremely high and it was not inevitable, the latest of a series of symptoms of how we are misgoverning capitalism. Yeah, I think for anybody who buys and reads the book, which I would recommend, I think there's just so many fantastic nuggets in there in terms of information. So you talk, for instance, about NHS trusts that use, you know, sort of consultants more, actually, it turns out that they tended to be less productive. They had sort of bigger problems, bigger overruns. You talk about PFI, this is amazing. I had a sort of run-in with John Rental from The Independent. And I think something like $60 billion of capital spend ended up costing more than $300 billion, or will cost more than $300 billion by the mid-2040s. I mean, you've just said, this is a strange way to run things. I mean, clearly, I think if you laid out the facts to anybody in a clear, comprehensible way, whether they were on a minimum wage or whether they're a CEO of a FTSE 100 company, they would say this is a crazy way to run society. So how has it been like that for so long? And why is changing it so difficult? Yeah, I mean, maybe if I can is to go back in how the book begins, which is the Apollo mission, because that was governed in a very particular way. And the lesson from the book is not to pretend that the modern-day social problems that are embedded within the 17 sustainable development goals, but also how they land in particular countries and cities within specific contexts are the same as a technological feat of going to the moon and back. But the reason I talk about that is actually something that often is not talked about with Apollo, which is how are the procurement contracts actually set up? So you just mentioned PFI, which is the private financing initiatives in health and in other areas. These were contracts, right, that failed to deliver for citizens. So the kind of health system we ended up with in the UK with the PFI schemes was definitely not good value for money, but even more so not looking at the economy side, just how people have been served. It's been a disaster story. And so what's interesting for me to go back to Apollo was, first of all, there was real leadership on the top, but it's not like it was just public sector. There was huge amounts of private initiative. There was General Electric, General Motors, Motorola, Honeywell, and also lots of medium and smaller-sized companies, and they were part of that incredible feat. But how they interacted with the public sector was very much driven by what the public sector, NASA at the time, National Space Agency, was trying to do. And so they really paid attention to things like the procurement contracts. And I studied them, and there's a part of the book that talks about the clauses that they put in, like no excess profits. This is not going to be a speculative casino kind of moment, but this is going to be truly collaborative endeavour. It's going to require innovation. Of course, you'll make profits, but not excess profits. And they tried to design the procurement contract so it was very goal-oriented, but then they didn't micromanage the companies because that would stifle innovation. There was a lot of bottom-up, we can call it bottom-up innovation in the private sector, but to fulfill a public goal. So even there, we could just stop and say, look, it doesn't matter if we're talking about a technological feat or a social one, just the ways that the public and private collaborate, who's driving the show? What is the goal? First of all, if there is no goal, you've got a problem. And if the private sector is driving the goal, that will be a problem in areas that really shouldn't be purely profit-oriented. So you would want a public goal-oriented system with lots of private sector innovation and profits, of course, for the private sector. It's not about charity, but that has to be designed into the system, both in terms of the sharing of the rewards, but also how to foster as much creativity as possible, but to do something together. And also the fact that Kennedy in that famous 1962 speech, I mean, he was very upfront about the cost. He's like, you know, we're going to do this, not because it's easy, but because it's hard, it's going to cost a huge amount of money, we're probably going to screw up along the way, but hey, it's worth it. And of course they did mess up along the way. There was, of course, the terrible tragedy of Apollo 1, but there was huge amounts of, you know, spillovers that happened. Not only did we get to the moon and back, so in that sense it was successful, but in one part of the book where I'm looking at the public-private relationship, I look at all the spillovers that happened which weren't really meant to happen, right? You know, camber phones, scratchers and lenses, CAT scans, LEDs, landmine removal have all benefited from different things that had to happen, the kind of homework problems that had to happen along the way. So another lesson there is if you do have a mission-oriented, public-purpose-driven public actor, then how you evaluate its success, I think today where we're evaluating the BBC or evaluating a public education program, has to be also really looking at all the spillovers that happened along the way. You can't do this just from cost-benefit analysis and that present value. You know, no one would have bothered going to the moon had we done a cost-benefit evaluation because the risks were just too high and that's really important and that's why, you know, I've been working with different governments globally for a long time on this. The book is sort of like a diary of, you know, what the issues are, but in the UK, one of the things we've been doing and I was really happy to see the change is working with the Treasury around the green book and arguing that if you are going to be mission-oriented and they did start to be more mission-oriented in Bayes, the Ministry for Innovation here, on the back of some work I did with Greg Clark. We had an industrial strategy that was challenge-oriented. We argued that if you are going to do that, it's not good enough just to do it on the innovation side. You have to ask in the Treasury, what does it mean to then evaluate a challenge-led, say, innovation program? And we talked about you're going to need metrics to capture the dynamic spillovers that happened along the way. Anyway, so all this is about a new mindset, but also the budgeting, it's kind of an outcomes-based budgeting, right? I mean, Kennedy did not, you know, he said, this is the goal and we're going to, you know, throw money at that goal. How much it's going to cost, we'll see, but we have to do it really well. And if you do design an innovation system and really nest it within a broader system of different types of, you know, linkages like science industry linkages, patient finance institutions, today we have, say, public banks, part of the ecosystem, but the DARPA kind of a research organization and so on, that can really help foster long-term growth, which is, of course, the denominator of debt to GDP. But what we often have in countries is they focus too much on public debt or public deficit and don't remember it's actually the ratio that matters. So even if you're investing a lot of public money in something that's well designed, you know, if, you know, as long as it also doesn't just solve the problems, but also really helps you to foster long-term growth, you also are keeping that debt to GDP ratio in check. Yeah, anyway, so I do think the Apollo program just in terms of the level of ambition in the public sector and the well-designed public-private partnerships, it wasn't perfect, but, you know, I just don't see that level of ambition or care to design a symbiotic, not a parasitic, public-private partnership in how we work today. I hope you enjoyed the interview. But before we continue, I've got one ask for people watching at home, hit the subscribe button here on YouTube, hit like as well. And if you're listening to this as a podcast later on, give us a review. I think, you know, it's inarguable the Apollo missions were, you know, if there is a sort of archetype of smart, private public partnerships, amazing public policy, I think, you know, I think very few people would dispute it successfully because, you know, the mission was accomplished. But I suppose I've got a question, which is, to what extent is it transferable to various contexts? So you can see how that works in a sort of geopolitical rivalry context, you know, there's the United States and the Soviet Union, you're trying to get somewhere first. But in something like housing, you know, there are entrenched interests, which don't really want to solve the housing crisis, because the status quo suits them, or perhaps more, you know, sort of easily understood, you know, climate change. There are massive hydrocarbon companies. There are massive consumer lobbies or even, you know, the car lobby taxi, you know, taxis in London are a major sort of actually London cab basically want to be a price cartel. There are major interests, which you might agree with them, you might disagree with some of them. But that's a bit different to the Apollo missions in so much as it's about competing interests rather than, you know, all of us want this one thing, let's push towards it together because that doesn't necessarily hold for climate change or for elderly care of the housing crisis, does it? Yes. I mean, the book is not trying to unpick everything. What it's saying is we have lots of money out there being spent by governments in terms of procurement. By the way, procurement is a huge percentage of government budgets, you know, like in the UK, the whole innovation budget across government, it's 10 billion, just the procurement budget of the Ministry of Transport is close to 40 billion. So four times the whole innovation budget across the government. So if you can transform things that governments are already doing, innovation policy budgets, industrial strategy budgets, procurement, SME, small, medium enterprise financing and transform it to be more purpose oriented, that's sort of what the book is really focusing on. However, I also spent a lot of time throughout the book from the beginning to the end reminding the reader that the kind of challenges we have today, which I do think we should always remember, that we signed up to the SDGs, the 17 Sustainable Development Goals, which broadly defined some of the biggest challenges we have around poverty, around climate, around gender parity and so on, you know, those challenges are what I call wicked. They're much more, they're much harder than going to the moon. That's why a colleague of mine, a wonderful academic at Columbia University, Richard Nelson, back in the 70s, he wrote a book called The Moon and the Ghetto, you know, basically saying, hold on a second, we just got to the moon and back and we still have ghettos. Why? And the answer is very deep, you know, partly we just haven't treated with the same level of urgency or social problems. But even when we have, remember Johnson's War on Poverty, it's just so much harder because it requires everything you just mentioned, you know, political change, regulatory change, behavioral change. Fundamentally, a lot of the, again, issues that I talk about in the book about public-private, that's not a technical thing. That's about the social compact. Who negotiates that? So, yes, it's hard. But I do think that the mission-oriented approach, focus more on that word, not so much on the moonshot, and I, in some ways, I regret using that word because of how it was then bastardized in the UK and Dominic Cummings had actually brought me into Downing Street a year ago saying, love your stuff. We want to do it. I was like, uh-oh. I mean, they had already started designing their own way and I kept saying, hold on, hold on, you're doing it wrong. But, you know, this concept of the moonshot makes one just kind of think potentially that this is a deterministic technocratic, you know, to spend a lot of money on science and somehow we're going to solve problems. That's not at all what I'm arguing. What I'm arguing is we need to put our social problems at the center of how we design our economy, our society. We need to treat it with a level of urgency. We need leaders who prioritize it and it can actually talk about it in really ambitious ways. You know, I had Kennedy, you know, today's Kennedy said, we're going to fight climate change, not because it's easy, but because it's hard. Yeah, that's a good start. Then tell us what else you're going to do, but at least start with that, right? It's not just going to be about a carbon tax. But, you know, what's interesting is that if you unpick all those different types of policies that I mentioned already exist because the book is not actually about saying we need to spend more. It's about spend completely differently and that's differently. We probably also have to invest a lot more, but, you know, focus on the goals. So climate change is SDG 14 or life below water is SDG 13. If you can transform these broad challenges into really concrete goals like this, by the way, these examples I'm giving you are in this report that I wrote before writing the book for Europe, arguing the European Commission that we needed a mission oriented approach. It was voted on by the parliament and the European Council. So now missions are now a legal instrument within the European Commission to help direct innovation policy. Oops, sorry, towards big goals. Those types of very concrete, sorry, those broad challenges need to be rendered more concrete. Like we're going to have 100 carbon neutral cities across a region or we're going to get 90% of the plastic out of the ocean. And the key point I'm saying is don't think of this as just a public or a private thing. A, don't think of it as just a sectoral area, right? This isn't just about renewable energy, say with climate. If you're going to have a carbon neutral city, you're going to need investment, innovation, new collaborations in real estate and energy, in mobility systems and construction materials and the social sector and food and so on. And the main challenge, you know, and it is a bit of a nitty gritty point. So maybe some, you know, some people might say, all right, this is boring, but to me it is about changing capitalism, redesign everything government does to foster that bottom up innovation to fuel activity towards that goal. Now the fact that it also requires new incentives, including tax, right? We're still taxing today materials less than we tax labor, right? If you want to reduce the material content of our economy, which is central to actually reducing our carbon emissions, the tax system can help you incentivize that. If you have capital gains tax as low as it is right now, what is that incentivizing? Short-termism, right? You can just make money quickly by buying and selling existing assets. If you want to foster long-termism in the business sector, you need to again have a tax system that has things like the financial transaction tax, but also within capital gains is rewarding those who keep their investments for a longer time, say 10 years, not just two years. So of course the tax system is really central in all the social problems that we have, but that doesn't mean that we don't need an investment pathway and a new design of public-private partnerships and serious capability within government so they don't just outsource their brains to the private sector. And of course we need a private sector that is less financialized, the topic of my previous book. But even that, why would that happen? We need incentives for that. One of the reasons why we ended up back in the day with an extremely innovative private sector laboratory called Bell Labs. Many books have been written about Bell Labs. It was fundamental to the IT revolution. Globally, is government actually created an incentive for AT&T at the time to retain their monopoly status. They had to, to retain that contract, reinvest their profits into the real economy, into innovation and big innovation beyond telecoms. Bell Labs was the answer. Imagine today if we had that. If we had requirements that any company, whether it's big pharmaceutical companies or big energy companies and so on, that receive public benefits, whether it's a patent, which by the way is a contract that government gives you for 20 years, or accessing public resources like in the United States, 40 billion dollars a year is given basically to the ecosystem of health innovation for the private sector to benefit from. Imagine if all of that kind of public subsidy, public investment, public bailouts, which we have more and more of, were conditional on profits A being reinvested back into the economy as opposed to extract it out to the financial sector, and B invested towards helping really important goals be met, the green transition, but also more inclusive economy in terms of treat your workers well, pay your tax and so on. That's where I think COVID has been so refreshing in some ways, as tragic as it still is. We've seen some countries be much more ambitious in terms of the conditionalities on the bailouts. We didn't see this with the financial crisis. France has created conditions for both the auto and the airline industry to access recovery funds if they reduce their carbon emissions, so airlines and autos. Denmark and Austria have put conditions on you can't use tax havens if you're going to access recovery funds. Elizabeth Warren in the US was arguing that companies receiving recovery funds wouldn't be able to just use their funds on share buybacks, which you might know have just escalated massively in the last decade. Poor trillion dollars have been used by the top global companies just to buy back their shares to boost stock options and executive pay. Anyway, sorry, I'm rambling a bit, but none of these dysfunctions in our capitalist system like ultra financialization are inevitable. They've been allowed to happen. Create conditionalities in order to really foster the building back better or the stakeholder capitalism agenda that the World Economic Forum likes to talk about. That is not going to happen if it's just up to one's own free will. It has to be nested within the design of the partnerships in the ecosystem. And interestingly, the Apollo program has lessons on that. It wasn't about the technology necessarily, it was about the partnership. One of the most remarkable things actually in the last since the global financial crisis 12 years ago is the complete or the general absence of politicians in democratic society saying, I just want to solve a problem. Too frequently, the rhetoric is back compromise. I want to sit between A and B. And I agree to an extent, we don't need isms. I just want to know what you can do about the housing crisis, climate change, inequality, high private levels of debt, young people going to university, etc. And often we don't get that problem solving mindset. So I agree with you that should be the core of particularly sort of political rhetoric. I just think it's so absent it's startling actually. But I guess the counter argument is the reason why we have the present model that we do heavily financialized, you know, based upon basically, high levels of personal and regional inequality, the massive shareholder model, imposition shareholder model, debt leverage consumption, all of that is a response to the crisis of the 1970s of high inflation, increasingly low rates of profit for private enterprise. And, you know, if you there's two ways of looking at it, you can come from the right, you can be a thatcher, right? And you can say that's because label was too strong there, that the share of the pie was too big. And that wasn't benefiting, you know, that wasn't in the public interest. We can come from the left and they'll say, Yeah, we did what we had to do. We can come from the left and you say, Well, yeah, workers actually were, you know, they were taking too much of the overall share of national products. And that wasn't acceptable. And that was smashed in two ways destroying organized labor and locating production to the global south. So, unless you have a response to that problematic, which is to say the present model, which has all these issues, is a response or an answer repost to the previous crisis of the 1970s, then we're not going to be able to move to a different kind of model, the stakeholder model that you want. Is that a fair assessment? And, you know, are we going to need, are we going to need a thatcher, right politics of the kind you're talking about here, because or do you think that public policy makers will naturally say, This is the right way to do things. This is in the mutual interest. Let's do it. Okay. So that's, that's a broad question. And let me tackle it and sort of its different chunks. The first thing is, you know, when NASA was founded back in the early 50s, when DARPA was founded, which funded the internet, you know, my book, the entrepreneurial state argues that everything that makes our iPhones smart and not stupid was funded by public investment. It was very risky. A lot of those investments failed, but the ones that succeeded are allowing us today to have all this smart technology. That was on the back of a system where the top marginal taxation rate was over 90%. Right. So it definitely didn't kill innovation, kill investment. It was actually, you know, a time where we weren't necessarily doing the right things. I don't know if going to the moon was the right thing or not. That's definitely not my, you know, specialty, but it was hard. Imagine all the hard things we could do today and yet we don't have, you know, all the things I mentioned before, but it'd be really hard to argue that that period then set up a wave of, you know, low profits or problems that then the reactions have brought us to sort of the situation we are today. I do think it was very strong ideological bias. You know, labor share was much larger than compared to today. Today's labor share is the lowest it's ever been. The profit share is very high for the viewers. You know, you'll recall that GDP can be broken up in different ways. One of the ways is by income. One of the ways is by demand. So consumption, investment, government and so on. The income is wages, profits, rents and interests. So the labor share, the wage share is at a record low. That's not because, you know, things had to go one way because it was structured wrong. You know, that happened because we ended up having, you know, unions torn apart. We ended up buying into this shareholder maximization model, which is, you know, since the 80s found it on just false assumptions, right? It's not, you know, a lot of this is also about ideology and storytelling and theories that have taken hold and they just, we just have to actually get rid of them. They're false, right? So shareholder value maximization, which leads to the kind of share, you know, buybacks that we were talking about before in the financialized model assumes that the shareholder is the biggest risk taker. There's a whole theory in the business books called maximization of shareholder value, but it's assuming that there's a residual claimant, right? Everyone else in the system has something called a guaranteed rate of return. Workers get their salaries, banks will get their interest rate and shareholders are risking the most because at the end of say a biotech boom, a clean tech boom or whatever, they might have gotten nothing, right? So they deserve then to take their residual and to do whatever the hell they want with it. So that notion that government has a guaranteed rate of return is completely false. You know, for all these technologies that we're invested in by those public organizations that talk about in my book, there was many, many failures. There's no guarantee. Workers have no guaranteed anything, right? I mean, you can begin in a company thinking that you have a lifetime career and you don't because of, you know, the new ways that we've decided to, you know, also have zero hour contracts and so on. So there's all sorts of multiple risk takers. So if you want to fight something like the financialization of the system and find the wrongs, you know, that it has produced, you can't just look at the side effects, you know, the bad things that have come from that. We need to better understand what were the assumptions and the stories and the theories and the lobbying that occurred in order to drive that through. And that's about power, right? You know, capital gains tax that I just mentioned before, which I think in many countries is ill designed, doesn't just happen because someone was stupid and introduced it. It happened through an immense amount of lobbying by particular parts of the financial sector, which kind of conned governments into thinking that in order to have a knowledge innovation driven economy, you need low capital gains tax, so venture capital will come in and it's just not true. That's actually been part of the problem. So the way that venture capital has benefited from huge public investments, when it has become too short term driven to exit driven wanting to exit through an IPO or buy out and so on, that's because how we designed the system was faulty. And so we ended up with a biotech sector, for example, that has been, you know, really hurt by it. There's lots of plipos, productless IPOs, a lot of rush to exit in that sector, which was science driven. Anyway, so financialization is bad for innovation. So even there, if you just stop financialization is bad for innovation, that's bad for everyone. I mean, that's the irony. This is also bad for business, right, which benefits massively from actually having, for example, government thinking big, again, all the stuff that came out of, you know, these kind of mission oriented programs that benefited Apple, right, that benefited Google, Google's algorithm was funded by the NSF. So the big question is, this system right now actually is not even really benefiting businesses that are interested in long term innovation. It's benefiting businesses that are interested just in making money by transferring existing assets from one place to another. And what's interesting is even with the big tech companies, which have also obviously foster huge amounts of innovation, if we don't regulate those processes in a proper way, and this isn't just about, you know, taxation, if we don't govern digital algorithms, so they actually create values as opposed to extract value, you know, that then slants what could be a really productive and innovative sector just to itself become a casino like we've seen in the last week with all the, you know, GameStop interesting dynamics. So I guess it's sort of a long answer to your question, but I think at each step of the way, there's particular decisions can be made. And if we just look at kind of big international trends and say, oh, there is a period where we had, you know, workers with higher wages and then what we had before, you know, later was financialization and that must be because those higher wages were putting a strain on the system, so on and so on. You always have to step back and say, right, well, let's look actually at the data. Let's look at the investment data, the innovation data, the wage share data, the level ambition within public institutions and public resourcing for that innovation system, and so on. And what you see is a very different picture from the one that's usually depicted. And sort of the popular imagination in this country in Britain, most people would say, oh, the 1970s were a disaster, you know, they were terrible. And if you look at the data, I think probably, you know, you could argue it was the, it was sort of pinnacle of public policy success in this country, moving towards agricultural self-sufficiency, high levels of, well, comparatively high levels of R&D, declining inequality, rising productivity, rising home ownership, rising wages, you know, rising life expectancy. All of these indices were a real success story. And yet in the public imagination, the 70s were a complete calamity, they were terrible. And actually, you know, we can never go back to them. What's your response to that sort of politically? How do we, how do we, how do we kind of overcome that? Because it's completely incorrect, isn't it? Yeah, I mean, where I hear it, at least in my world of work, which tends to be more with politicians globally that work, civil servants that work on industrial strategy, innovation policy, they'll always bring out the kind of investments and things like the Concord, British Leyland and say, oh, she's talking about big projects like HS2, which is also bit of a disaster right now in terms of where is it going. And the book's not about that. So I do think that the 70s, in terms of how governments thought that they could foster say industrial growth, the mistake that was often made. And, you know, in this sense, there's some truth in what people say about the 70s. It's kind of putting all one's eggs in one basket, right? Kind of making big bets with the sector. You know, that's going to be at a really important sector or that, you know, automobile company that's going to, you know, be really important. So governments going to put a lot of money to back that. What I argue for is a more portfolio approach. I say, don't pick a sector, don't pick a company, British Leyland, don't pick up one big project, the Concord, pick a direction for the economy, right? You know, do you want a green transition? All right, you're going to have to do lots of things very different. The first thing is you will need some very concrete, inspirational targets that are going to require lots of different sectors to innovate towards. You don't need a sectoral approach. You need, again, to think about how to design your policy so as many different sectors, right? You're not going to put all your money in autos or even in today, quantum computing or AI to have an innovative economy. You need to think what the problems are and then get all the sectors from AI, nutrition, transport, real estate. But how are they going to do that? You're going to have to create incentives with no excess profits clauses, as I mentioned that NASA did to get those different actors to work together and to transform themselves. It's not about staying in place, right? So how you design, whether it's the British Investment Bank or the Germany's KFW that provides loans to companies and to sectors when they have problems. If you just give them money as a handout, just because they're having problems, which we're doing crises, but also pre-COVID, we were about to give a big bailout to the steel sector, without any conditions attached. That's sort of an old-style way of thinking. Here's money, keep it because your sector is important to jobs or to future competitiveness. No, we need to help that sector transform itself. And that's, by the way, what Germany did recently with steel, which is that the public bank gave them money to lower their material content. So they could only access a bailout. This is pre-COVID. If they would innovate towards a green steel sector, if you can have a green steel sector. And today, they are the most innovative light in terms of low material content steel sector. And they were incentivized to innovate to do that, repurpose, reuse, recycle technology across the whole value chain. So that's very not 1970s, right? So 1970s, I think, where I agree that it was a problem is you have kind of big government saying, we're important and here's a lot of money to this sector or this technology or this project. And when that goes bust, there's a problem, because you put all your eggs in a basket. So having a portfolio approach, different types of investments, collaborating alongside the private sector, but with the public goals, so designing those partnerships properly, not the PFI's, and focus and not picking winners, but what I call picking the willing, design the policies that bring in those that are willing to engage with you on something, that's kind of the spirit of what I'm talking about in the book. And so I do also think it's unfair when people just kind of read the title and see that I'm talking about the state having to rethink itself like, oh, she must be talking about 1970s big projects. And it's always the same cut and paste critique, concord, HS2, British Leyland is like, hold on, just relax, abandon your ideology, and listen to what is being proposed here. So that wasn't the, I mean, I hope you don't want me raising this. I read the FT review of the book before reading the book. I know, and then I read the book and I thought, have they read something else? I know. And it's a pity because John Kay is actually a smart guy. I really like his work. There's two possibilities. One is that he didn't read the book, but I'm sure every author likes to say that, oh, I didn't get a good review, it must have not read the book. So I think that's a cheesy response to my part. However, I don't think he read the book. But I think it's more that even if you're reading the book, which hopefully the FT makes sure that people that are reviewing books have read them, even if you had read the book or she, anyone, let's talk about any reviewer. If you have such strong ideological bias in your head, even if you're reading something, it kind of goes in one ear, it goes out the other, and it gets stuck in the place with your preconceptions. So it's exactly what you said before, because people have such strong preconceptions that as soon as you talk about a state led system, it must then be that thing that I think the 1970s was. Even though I'm talking about the opposite, I'm saying, pick a direction, get as many different sectors to collaborate. It's not just about the public sector. It's public and private. Like part of this thing was, oh, but she says the private sector doesn't matter. I'm like, no, there's a whole chapter on the fact that private sector does matter. And, you know, and it did matter also to get to the moon. Of course, it matters today with any of our big green, you know, or health related problems like the vaccine with Pfizer, just take the vaccine. The problem is not that you don't have private sector initiative, it's how we're governing the vaccine is hugely problematic. And we see that with how the intellectual property rights are being governed, how the prices and the accessibility isn't actually also taking into account the public contribution, which has been immense. But even if it was just private sector driven, the point is all these companies are part of a huge social kind of ecosystem, get all sorts of, you know, benefits from, you know, from government and so on. And if we don't learn to govern or digital platforms or health innovation and climate related investments in a way that actually really meets citizens needs, then, you know, it's a failure in governance and also investment. So, and that's what the book's about. So anyone who reads the book and says, oh, this is about, you know, saying the state is great, well, no, actually, it's all about how the state is no longer great, because it's stopped investing inside. So the weak state or the incapable state is not a good critique of the book. It's actually the symptom that the book is talking about of why we need change. Or, you know, she's not talking about private sector success. Of course, private sector is very important. But how public and private work together, this is the moment that we need to rethink that. And it's not as easy as going to the moon. And it's funny to say that because going to the moon is very hard, definitely harder than producing, you know, personal protection equipment that we still somehow haven't produced enough of. But how do you actually make sure that all the frontline workers have PPE is much more wicked, right? It actually requires again, all sorts of social and political decisions that are at the heart of the problem. And when the public sector is no longer guiding a process to meet, you know, big public goals, then the way it will be able to also deal with those more wicked problems is very problematic. Where do you stand on UBI? Because I mean, as I'm sort of reading the book, I kind of, I can feel an implicit critique of it, because you talk about the potential of, you know, what it might do to inflation. And obviously, it doesn't really sit with a goal oriented public policy. I mean, that's probably my big critique of UBI. So people say, well, we should do UBI. So look, let's just be optimistic and say it costs 150 to 200 billion pound in the UK year. For that money, what does it mean in terms of decarbonization, child poverty, housing inequality, etc., etc. And you can't really give me many guarantees. So I was just curious really, where do you sit on UBI? So, I mean, there's a couple of different issues. One, I think as a policy, forget what we call it, but just making sure that people have a floor under which they don't go, I think is really important just in terms of human rights. And, you know, one way you can do that is actually with the properly funded welfare state. Think of it as more as like universal basic services, if that was, which by the way, there's quite a bit of work on. If that was done properly, you could argue that there would be less of a need actually for UBI. So in some ways, UBI is important because we've had such a decimated, but also badly imagined welfare state. It's not just the money. It's also, you know, look at Ken Loach's films where, you know, people are having to fill in the thousands of forms and they just kind of give up and, you know, die in their homes. So if you have a badly imagined welfare state, which is really crushing to your soul, the human soul, and you have such levels of inequality for all the reasons we've also talked about in terms of financialization and so on, then of course we need something like UBI to make sure that, you know, people can just survive. Now, so I don't, you know, that has to happen at the same time that we're funding a system that creates wealth. And that's what my book's about. It was as much about the wealth creation side. So that also you can then have redistributive policies like UBI. You know, the two things have to go hand in hand. And a lot of progressive, for example, Latin American countries have focused too much on redistribution, not enough on issues around wealth creation, but I would argue that's been generally true in many countries. But what I don't like about UBI is, first of all, you need it more precisely because we're not doing the things right in the first place, you know, pre-distribution, which I talk about in the book. If we actually, you know, create wealth in a way that's inclusive and sustainable and get the pre-distribution contracts right, you actually need less redistribution. But you still need redistribution. One thing I don't like about UBI is the narrative. I prefer narratives around the citizen's dividend or the citizen's share, which is less about a handout that you're getting from these wonderful wealth creating companies that then pay ideally their tax to government, which then gives you a check in the mail called your UBI check. It's more like you are part of a system which collectively creates wealth and you deserve to make sure that your life is enhanced and you can get sick or you might decide also to take a break from work. And in that moment, you can have a time where you have enough income, even if you're not on the race constantly. Anyway, to support you. There's different ways that people, by the way, talk about UBI. Sometimes it sounds like it's just about having that minimum core. Other times, it's also about in order to have a flex security system where people can actually move between jobs. If during that movement between jobs, there's a gap, how are you going to make sure you have enough income and so on. But just the narrative, it's a bit too much of a handout, which it's not that I don't believe in handouts to citizens, but it strengthens the ideology or the narrative, the storytelling that pretends that all the values created here and then has to be redistributed to this side. Whereas what my book's talking about is if we really had kind of socially oriented missions, we'd be constantly strengthening this side here. In both creating value on this side, so the welfare state itself would be part of the value creation machine because a lot of the missions I talk about are actually about the social, also services that we receive. Anyway, sorry, that's a bit of a long answer. Let me just say something about the social services that I just mentioned. I've been working again globally, as I mentioned with policymakers around these issues. And in Sweden, one of the most interesting things they've been doing is looking at areas within social services like school meals, say. I mean, you could put that in the social service bucket because it's often free public meals provided to students. What in the UK, you needed a Manchester footballer, Marcus Rashford, to remind the government that they should be funding them properly also during lockdown and during holidays. The school meal has become the center of where they think about their carbon neutral targets. So healthy, sustainable, tasty school meals. You unpick the whole value chain of the school meal, production, distribution, consumption, get students to study the sustainability of the whole food production chain and so on. So it's in their curriculum, but also get them involved in designing that kind of notion that you need to get citizens engaged and get excited and kind of realize that this matters to your daily life. It's not just about a new top down way to do policy. I just think that there's such interesting things happening around projects like that. And that's why I'm really excited now with a project I'm working on in Camden, which is where I live in London, with the Camden Council. Georgia Gould and I, she's the Camden leader, we're co-chairing a commission, it's called the Camden Renewal Commission, and we're focusing on housing estates, on schools and school meals and things like that, but also youth centers and saying, why can't youth centers be the best that the 21st century has to offer? So the outlets of all these knowledge-creating institutions like the Turing Institute, Crick, British Library, Welcome Trust would kind of be housed within youth centers where very underprivileged youth, instead of just thinking, oh, we'll give them some training or get them good school meals, how do we really enable them to also feel part of a system which in theory in the 21st century should be fueling all sorts of opportunities for many different types of people, but it's not. It has been, just look at the data, been helping the 1% to get richer and now there's not two, but that requires a redesign of the policy space. I've got a final question for you. If you were to, for whatever reason, become the sort of, maybe you might not want to, but if you were somehow compelled to or you changed your mind, you would become the sort of public policy guru of a coalition government, a conservative government, whatever, after 2024, which was very sympathetic to what you wanted to do. What would be the sort of big changes you would advise for the British economy to become more egalitarian, better at value creation, more socially just? Wow, great question. I mean, there'd be lots of things on the list, but the first would be to make sure that we actually even believe in the public sector. I mean, this is where I think so much of the problems are in the UK. You remember that David Cameron actually began by saying civil servants are the enemies of enterprise. So the first would be to do something that's actually in the air now because there's all of a sudden talk about it. Again, on the back of Lord Agnew's point about we've infantilized government by all this outsourcing, the first thing would be what is the civil service for, right? And to make sure we're actually making the kind of investments within government institutions. But that also means creative, right? Like this isn't about like, oh, here's a new tool. It's about what does it mean to make being a civil servant a really funky job, a sexy job where you're motivated to take risks and you really see yourself not just a value distributor, but a value creator. I think just that whole pot of topics there is hugely relevant. The second is well, what is, you know, why do you need a valuable civil service? Well, it's to do stuff. So to make sure that we actually had also new forms of engagement with citizens that are so sick of politics, most people globally, not just in the UK are no longer actually believe that politics and policy matters. And they just think everyone's in it for their own good. How do you kind of innovate even around that? So citizen assemblies, which we know actually became quite important with the Brexit debate, mainly afterwards as people were trying to undo Brexit. But what does it mean to have kind of citizen assemblies to together think about carbon neutrality? Not that the UK, by the way, this year is going to be leading COP26. That can't just be a technocratic elite kind of, you know, carbon neutrality is good for you. No, what does it mean for citizens again, coming back to the Camden story in the housing estates and schools talking about carbon neutrality in their everyday life? And in the work we did in Manchester, actually, that's how we focus some of the work. And there was huge appetite for that. So I don't think it's I don't think people are going to push back on saying, let's focus big but bring citizens to the core. But to do that, you need new institutions like citizen assemblies that don't necessarily exist. And third, just really completely rethink how you think about finance and the budget. You know, this country continues even now after COVID or with COVID during COVID, there's already talk about the austerity that we're going to have to undergo because the debt is so high because of all the money that's being put into the system during this crisis. It just makes no sense. The reason this country was also worsely affected in many ways was because we had so much austerity that ruined the underlying social fabric of society, inequality is not only high, but the structures, the care homes were so much of the deaths occurred, they were again outsourced to private equity companies. I mean, you know, imagine that. So what does it mean to remember that actually the budget is there in order to make sure that we are from a purely economics kind of framework thinking about long term, not short term growth, but long term growth that has a direction inclusive and sustainable and really get that right and worry about the money later. That's the biggest point in the book, which is they didn't think about the money. They tried to do this incredible mission getting to the moon and back and because they didn't worry about the money, all these amazing spillovers happened including software. Had they done a cost benefit analysis or worried about the software or later on the internet as an end in itself, the internet would have never happened. The internet happened because we wanted the satellites to communicate, not because anyone said we need the internet. So again, always saying, think of what our problems are, focus on that. Get the kind of system right and functioning so you have well resourced dynamic public private actors, third sector actors working well together. And that's what I talk about in the book on the how and don't focus so much on the deficit and the debt. Italy where I'm from has had a low deficit for decades, lower than Germany's, but we have a high debt to GDP. Why? Because we haven't been making all the really important dynamic investments that are required for long term growth in GDP. So that's the irony. The more you focus on the deficit, the higher your debt to GDP potentially will be. You know, I think the most valuable part of your work over the last 10 years, Mariana, is how in each of your books, you offer dozens of these vignettes, anecdotes and facts, which just dismantle the prevailing political common sense around how public spending is dependent on the private sector, public wealth is dependent on private wealth, how shareholder value in GDP growth is so much more important than anything else. And I think just through very simple analysis and facts and data, you take that apart and it's so important. And in this book, actually, I think you do as well as anywhere else. So for that, I'm very grateful you've joined us on Downstreet. Thanks ever so much. Thanks so much.