Wednesday, September 30, 2015

Mariana Mazzucato — Jeremy Corbyn’s Necessary Agenda

When the Labour Party lost the election last May, it received considerable criticism – even from its own frontbenchers – for failing to embrace the business community as “wealth creators.” But while businesses clearly create wealth, so do workers, public institutions, and civil-society organizations, which, through dynamic partnerships, drive long-term growth and productivity. Indeed, a progressive economic agenda must begin with the recognition that wealth creation is a collective process and that market outcomes are the product of how these various “wealth creators” interact.
We must drop the false dichotomy of governments versus markets and begin to think more clearly about the market outcomes we want. There is plenty to learn from public investments that were mission-oriented, instead of focused on “facilitating” or “incentivizing” business. Policy should actively shape and create markets, not just fix them when they go wrong.…
Project Syndicate
Jeremy Corbyn’s Necessary Agenda
Mariana Mazzucato | Professor of the Economics of Innovation at the Science Policy Research Unit of the University of Sussex, and author of The Entrepreneurial State: Debunking Public vs. Private Sector Myths

4 comments:

Dan Kervick said...

Good comment from M.M.

Also, the whole idea that the government should be merely a facilitator of a private sector that grows and develops in whatever the hell direction the private sector wants to grow and develop in is an immature attitude that we can no longer afford as a species. We no longer live in a world of a few hundred million people spreading out into a vast and under-cultivated environment, filled with endless resources and space. We are 7 billion people packed into a tiny planet straining under the human burden. The way we live on this planet needs to be more thoughtfully planned, governed and organized going forward than used to be necessary. If that irks people addicted to old laissez faire ideals of spontaneity, radical individualism and unbridled avarice ... well tough. We need to grow up.

Neil Wilson said...

It's not all good from MM

"We must also shape a new narrative on debt. Rather than focus on budget deficits, we should concentrate on the denominator of debt-to-GDP ratios. As long as public investment increases long-term productivity, the ratio will remain in check. "

Not really relevant to relate a stock to a flow anyway and the whole concept is flawed.

"Money creation, through quantitative easing, will not fuel the real economy if the new money ends up in banks that do not lend."

Money creation via QE is a post event action that simply reduces the amount of income received on savings. At that point the spending or tax cuts that may achieve something real has already happened.

There is still too much appeasement going on towards ancient ideas that simply do not stack up. And you therefore end up with evolution along a dead end - creating wardrobes for the emperor's clothes.

Dan Kervick said...

IF QE is used to reduce the interest rates cities and and other major capital developers pay to finance useful projects, and those projects are carried out, it is a good thing. Reducing the proportion of generated income that flows to rentiers is a feature, not a bug.

Neil Wilson said...

"IF QE is used to reduce the interest rates cities and and other major capital developers pay to finance useful projects, and those projects are carried out, it is a good thing. "

Interest rates have negligible effects on whether things happen or not at the levels they are at, and have uncertain distribution characteristics in any case. You don't want excess borrowing for the obvious reason that private borrowing is dynamically unstable.

So you need lending restrictions to determine what loans are used for - in particular banning them for settling currency debts.

All QE does is return the curves to what they would have been if *Treasury* hadn't been doing monetary policy with its bonds.

I really don't understand why people want to try and drive things indirectly via private sector borrowing when there is a perfectly good steering wheel in front of them.