Downstream: Governments Do Capitalism Wrong. Here’s How We Fix It. w/ Mariana Mazzucato

**Ash Sarkar** (0:13)
So, sadly today, we lost another prime minister.
And you know what Oscar Wilde said, to lose one prime minister is a tragedy, to lose two is carelessness, to lose six is what the fuck is going on with your political system. And there are as many explanations for why we scroll through prime ministers in the way that we do, as there have been prime ministers in the last decade. So for some people, it's all about Brexit. For other people, it's all about first past the post. Or it's the bond markets, or it's some crazy compliment that Epstein had and gave to the CIA that would make your eyes water. There's one thing which I think cuts through and under absolutely everything, which is that economic optimism is at an all time low. So in the most recent survey, 78% of people in this country think that things will get worse rather than better in the next 12 months. And it doesn't matter who the government puts up, whether it's Rishi Sunak or Jeremy Hunt or Rachel Reeves, it doesn't matter who the government of the day puts up to go on the telly and say, oh, look, line go up. It's all very good actually. Doesn't actually persuade people. And for some reason, they never entertain the notion that people might have better insight into their lives than a bunch of lines on a graph do.
So our next very special guest argues that what the state actually needs is a sense of purpose that comes from the people. And that the economy is not a set of rapacious forces to either be marshaled or to be kept in check. It is a project through which we may achieve goals that we set for ourselves as a society, or indeed as a species. Mariana Mazzucato is a professor in the economics of innovation and public value at University College London. But if you're like me and you're a little bit long in the tooth to be hanging around a university lecture hall, you've probably read her work on the entrepreneurial state debunking public versus private sector myths, or indeed her lacerating book, The Big Con, which took aim at the likes of McKinsey and Deloitte. We're here to discuss her new book, The Common Good Economy, The New Compass, a passionate and rigorously researched call for a new relationship between the state and capital, which puts the pursuit of the common good at the heart of everything we do. And is that Andy Burnham I can see taking notes at the back? Could be, just could be a Gen Xer dad, I don't know. Anyway, Mariana Mazzucato, welcome to Downstream.
So, Mariana, what a fucking day in British politics.
And what a day to have you on. Before we get on to your new book, I suppose my first question for you was, where did it all go wrong for Keir Starmer and Rachel Reeves? In some ways, they took a lot of inspiration from you. They talked about missions, and they set all these targets. They had a new relaunch every three months. You know, where did they go wrong?

**Mariana Mazzucato** (3:37)
Well, so that's a huge question, and I think there's different places, but I think the first is that after saying the truth, which they did, which is that we had 14 years of misery, there was no need for austerity. Even the World Bank and the IMF, which are not known for their Communist ideas, have said that was not a good idea. So once they explained that this whole had been created by creating a very problematic economy, what should have happened next was a strategy, a vision, an upbeat view of what needs to be done. And that didn't come.
What we heard very early on were the negatives, right? So the disability allowance being taken away, the winter fuel payment being taken away, and there was this constant talk about the whole. And the problem with the economy, or not the problem, the truth is that it's a function of what we do. There are no economic pressures and market forces coming from Mars. It depends on what you do with the economy. So one of the key problems which they never talked about was the private sector. We always talk about, right, public debt and we need to constrain it, and I'm sure we'll get to that later.
If you don't actually have a private sector that invests, if you have a private sector of the Thames Water kind, of the Carilion kind, and many other private companies kind where when they do have profits, they don't reinvest those profits, then the economy doesn't grow. So it's not just about fixing the whole with some public money, and then saying, oh, but there's not enough money, so we'll do it a bit less. It's how do you get the private sector to do their job, to invest and to innovate and to work with the government around problems. And that's what the whole point of Mission Economy was. We would have never gotten to the moon had NASA not been really confident about its role, put really important clauses in the contracts, no excess profits, not no profits. You need profits as capitalism, fine, but not in excess, not gambling, not rents. Marks, Adam Smith and people you've read and I've read, no one else has read them, distinguished between profits and rents.