Moonshot Economics

5 min readSep 19, 2021

This week: a conversation with the economist Mariana Mazzucato about government’s capacity for confronting the big challenges. Listen today at 2 pm, or anytime at our site.

The economist Mariana Mazzucato has been called a “rockstar,” also “electrifying” in her role as a thinker “who has the ears of world leaders.” This week she’s on Open Source, talking about what can be accomplished when the state creates a mission for the private sector, and about how the worst threats—like climate change and COVID—necessitate such state-driven initiatives. She says this week:

I’ve been talking about mission economics and the need for an entrepreneurial state now for about 15 years. And my previous book called The Entrepreneurial State, kind of unpicked the iPhone and show that everything that makes our iPhones smart and not stupid actually was due to government financing of the Internet, GPS, touchscreen display, the Siri voice-activated system, and so on. But that’s not enough. We also then need to govern these publicly financed technologies, whether it’s in health, whether it’s in energy, whether it’s in IT, information technology, in such a way that people actually benefit.

While explaining the defeat of public interest by private interests—not by robots, but by businesses—Mazzucato this week goes back to the start of modern economics: a chapter of David Ricardo’s Principles of Political Economy.

The chapter was called “On Machinery,” and he already predicted that mechanization would replace jobs. However, what happened then for two hundred years was that the profits that were being generated were reinvested back in . . . So that then makes sure that we get new skills, new jobs, new sectors and so on, even though in the short term the technology might be displacing labor, as long as profits are reinvested back in, new jobs appear. That stops around 1980, precisely in the time that you get this kind of Thatcherite Reaganite idea of government just getting in the way, all this deregulation. But the big change is actually at the corporate governance level, this complete change of idea that businesses are not there to help people have good jobs and communities to prosper and foster long-run growth, but really just to serve their shareholders.

Government, she says, can structure investment in a way that serves people, can send the private sector on a coherent, focused mission (to confront climate change, for instance).

We need really bold targets. We need to go after them together throughout society, public, private, third-sector partnerships. But it has to be governed in a particular way to be both serious about the target, not just waffle about it—my kids use that word all the time, “you’re just waffling”—But also, it’s not going to deliver all these interesting spillovers if we don’t also get creative on how to make sure that the grants, the loans, the subsidies and so on, that I keep going on about, procurement doesn’t really then crowd in bottom-up solutions . . .
Small and medium enterprises . . . will be very important, but they need to be rewarded for investing in these particular areas. They shouldn’t be micromanaged in terms of how to do it because that will kill innovation. But there should be a tilting of the playing field and helping companies really deliver on these targets. And that’s how government policies should be structured, not just random subsidies, guarantees, and bailouts for companies to stay in place and to continue to be happy with the status quo.

Read: Mission Economy

You can read Mazzucato’s elaboration on all this in her book Mission Economy, where she explains how the moonshot analogy can model other public-private work:

This is not a pie-in-the-sky ambition. It has happened before. The way that government led the Apollo programme could hardly differ more from conventional thinking about the role of government in the economy, which leaves us ill equipped to tackle the greatest challenges of our time. The public sector set itself a goal hitherto hardly contemplated outside the ranks of science-fiction writers, visionaries anda. handful of scientists. It did so with a sense of urgency, with a clear and ambitious objective to accomplish the truly extraordinary: putting a man on the moon and bringing him back safely to a firm and very tight deadline.

Watch: Movies about Missions

Maybe start with Seven Samurai. The “group on a mission” genre is easily recognizable through movies directly and indirectly inspired by Kurosawa’s film—The Magnificent Seven, The Dirty Dozen, Inglourious Basterds. Films in this category aren’t necessarily good, but they all give a vantage of public interest colliding with private interest, which sometimes means the drama of an oil-driller who stops an asteroid from destroying Earth while he also learns to accept a possible son-in-law.