This economics professor who’s behind B.C.’s new economic plan wants to remake capitalism – The Globe and Mail

by | Apr 8, 2022 | Financial

A construction crane sits idle at the site of an office tower under construction as downtown condos and the north shore mountains are seen in the distance, in Vancouver, on Saturday, Jan. 9, 2021.DARRYL DYCK/The Canadian PressBritish economist Mariana Mazzucato wants to remake capitalism by shaping economic growth around objectives such as tackling social inequality and sustainability. Her ideas attracted the interest of British Columbia’s Jobs, Economic Recovery and Innovation Minister, Ravi Kahlon, who sought out the economics professor at University College London, and she spent a year helping draft a new economic plan for the province. In a telephone interview with The Globe and Mail’s Justine Hunter, Prof. Mazzucato explains the concepts behind the new “Stronger BC” economic blueprint, which is designed to build back from the pandemic and the climate catastrophes of 2021.I can see how your economic theories on inclusive and clean growth would appeal to this NDP government, but we are talking about a small subnational economy. Can you reshape how capitalism works on that scale?In some ways B.C. is the perfect size because it’s a region bigger than London, smaller than the country, but it has really specific issues.What is really important is starting out with the big-picture issues and then landing it on the supergranular and then scaling it back up to the general. So, in Sweden, they begin with this very high-level mission of a fossil-free welfare state, but then they land it on things like school meals. The school meals in Sweden have to be healthy, tasty – not just IKEA meatballs – and sustainable. So it is taking supernormal things like a school lunch and turning it into a lever through which, through guided policy, you can foster sustainability, inclusiveness and innovation, and that can foster growth.In your new paper published last week, you outline how B.C. “can help to tackle major social and environmental challenges, while also achieving higher productivity, investment and equitable growth.” It sounds like a bit of a unicorn ask. How does it work?I say all the time this is so common sense. Why don’t we have economic structures that deliver [on those goals]? But bringing those two things together was radical. Don’t have your productivity plan on one side, and then your climate program on another.Having an economy that’s explicitly a) directed toward its challenges and b) redesigning its instruments – budgeting, procurement, public finance, industrial strategy – toward achieving goals is completely not the status quo.You say this change requires policymakers to rethink the role of the state in shaping economic, social and environmental outcomes, but you also note that there has been a reluctance by governments to intervene in the markets, except to address failures. How do you bring the public along on such a shift?It’s not pie in the sky. It’s about redesigning these instruments so they are more fair and collectively creating value but also collectively sharing it for capitalism. It’s not about socialism.Governments can pretend that they’re always intervening. And most interventions have no effect. They don’t create what I call “additionality” – making things happen that wouldn’t have happened otherwise. How do we rewrite contracts that are truly ambitious, symbiotic and not parasitic – not just subsidies, guarantees and handouts to whomever lobbies their way up?You noted that across the country, governments aren’t doing enough to ensure that their investments in research and development, for example, produce results. In the context of biotech and health sciences, how does B.C. drive innovation and increase productivity?There’s overreliance in Canada broadly on tax incentives. Without tho …

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