[State at Wits] WIPES 3

[Keith Breckenridge]

Just this once, Jon ... :ANTHONY BUTLER: Shooting for the moon is a pie in
the sky goal for SA politics Desperate governments tend to hire advisers
who will tell them what they want to hear, and Mariana Mazzucato has our
government’s ear
BL PREMIUM
02 April 2021 - 08:19
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Mariana Mazzucato. Picture: SUPPLIED

We all agree that the presidential economic advisory council shouldn’t just
be a talking shop. It is less clear whether it should directly challenge
the conventional assumptions of the president and his ministers, or instead
accept — and merely refine — the prevailing ideas of those in power.

Cynics have long embraced a general rule about the role of ideas in
political life. Politicians do not dispassionately seek out the truth or,
indeed, consistently recall that such a concept exists. Instead, they
search for theories — and academic advisers — that tell them what they want
to hear.

In this way their politically convenient programmes can be presented as the
outcomes of a process of principled reasoning, purportedly built on robust
intellectual foundations.

A president suffering from fiscal incontinence — perhaps because unions and
special interest groups are breathing down his neck — can recruit a modern
monetary theorist to explain why his actions are justified. Advisers to a
desperate government that wants to crank up the banknote printing presses
can seek out intellectual justifications for revoking central bank
independence.

The most high profile international member of the presidential economic
advisory council, Prof Mariana Mazzucato, founding director of an institute
for innovation at University College London, provides an interesting test
case for this theory about the role of ideas.

Some warning signs accompanied Mazzucato’s recruitment. Apparently, public
enterprises minister Pravin Gordhan sought her out after reading her
well-regarded book on the “entrepreneurial state”. Ominously, her ideas
also struck a chord with trade, industry and competition minister Ebrahim
Patel. Introduced to President Cyril Ramaphosa at a Davos dinner, she was
apparently penciled in there and then for an advisory council role.

Unsurprisingly, such a recruitment methodology can entrench the familiar
pathology of politicians being told only what they want to hear. There may
be a Mazzucato effect, in addition, which magnifies her influence: her
arguments are extremely well-organised, and they are unusually powerfully
expressed.

In a recently published book, *Mission Economy: A Moonshot Guide to
Changing Capitalism*, she revisits her earlier claims about state-led
innovation in the post-war US. But this is also a more ambitious effort “to
rethink capitalism through rethinking the state”, which captures some of
the anti-capitalist spirit of the times.

She points to the role of the state in driving “game-changing”
breakthroughs in technology-based businesses, highlighting the dependence
of companies such as Apple on prior state-funded research, in the internet,
programming languages, and voice-activated systems, among many others.
Google’s search algorithm and the most profitable modern medicines alike,
she shows, grew out of state-funded projects.

Mazzucato methodically debunks a myth prevalent in the US, and other parts
of the global Anglosphere, that the private sector is good and the public
bad. She also powerfully condemns the way risk has been socialised by the
state while rewards have been privatised by tax-dodging beneficiary
corporations.

Her signature theme is that the state should organise its interventions
around “grand challenges”. For her, the 1960s Apollo programme is the
archetypal “moonshot”, an inspirational mission that created not just new
technologies but also new markets and new human possibilities.

Today’s grand challenges include climate change, the amelioration of global
poverty, gender inequality, hunger, and deficiencies in the provision of
basic education and health. Mazzucato concedes that these goals are “even
more challenging than the moon landing”. This is something of an
understatement. But her insistence that these challenges require concerted
action is important and undeniable.

Mazzucato’s selection bias, however, represents a serious flaw of method,
one she shares with “developmental state” proponents: she cherry-picks
state-driven interventions that “worked” and ignores similar interventions
that didn’t. (Those who believe the moon landings were a colossal waste of
time and resources, driven by mindless superpower rivalry, are not
entertained at all.)

She does not reflect on the failures, such as the 1970s US war on cancer,
designed precisely to replicate the alleged successes of Apollo, let alone
the myriad disastrous developmental state interventions that scarred many
economies, north and south, across the post-war period.

Giving politicians leeway to engage in “moonshot” programmes has often been
an invitation for them to spread patronage and secure short term political
advantage. Today’s “strongman” leaders, in particular, are enamoured of
visionary initiatives, or great leaps forward that embody national virility
and symbolise the leader’s position at the vanguard of change.

SA has had its own recent moonshots. For the Fifa Soccer World Cup in 2010,
for example, routine state activities such as maintaining energy and
communications infrastructure were suspended, while resources were poured
into infrastructural white elephants. The event was essentially a
nationalist political project, so satisfying to elites that they have been
unable to account frankly for dismal balance of costs of benefits it
generated.

Former president Jacob Zuma’s proposed Russian nuclear procurement exercise
was perhaps another great mission, one that was tragically derailed by
counter-revolutionary forces.

In the US, where scepticism about the state is deeply entrenched and
acclaim for entrepreneurial genius is naïve and fanciful, Mazzucato no
doubt provides a useful corrective to prevailing wisdom, especially among
conventional academic economists.

In SA, a “moonshot mentality” is likely to be less benign, liable instead
to entrench the reactionary mindsets of some economy cluster ministers, and
to embolden them in their many ill-considered interventions.

Privatising SA’s state-owned enterprises, Mazzucato has claimed, will
“deprive the state ... of an important pool of technical competencies in
strategic sectors”. But SAA is not going to the moon. It can’t even get off
the ground.

*• **Butler teaches public policy at the University of Cape Town.*

*--------------------------------*
The world renowned economist seeking to transform capitalism hopes to also
help SA dream again The professor’s views have captured the imagination of
a number of SA government officials, including President Cyril Ramaphosa
and Pravin Gordhan
BL PREMIUM
10 October 2019 - 14:22 Lynley Donnelly
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<https://lh3.googleusercontent.com/WDS9d1Uywy8slIf-tEBTHyBUja7F6pYzXPBdWHQrGlkXKM-l5YpRJbVUPv-PR9204H4bNmA5fIwe2_ZSaKGRUWrXC-2CgEA=s1200>
Mariana Mazzucato Picture: SUPPLIED

Even after stepping off an international flight, and despite a troublesome
phone line, economics professor Mariana Mazzucato, comes across exactly
like she does in the countless podcasts, YouTube videos, and articles. No
nonsense, forthright, and articulate about her ideas.

Those ideas — which have led her to advise everyone from firebrand US
politician Alexandria Ocasio-Cortez, to the European commissioner for
research, science and innovation Carlos Moedas, and the government of
Scotland — have captured the imagination of a number of SA government
officials.

As a result, Mazzucato now counts President Cyril Ramaphosa’s economic
advisory council, which met for the first time on Wednesday, among her many
advisory roles.

The Italian-born and American-raised professor’s local fans include public
enterprises minister Pravin Gordhan. The minister introduced Mazzucato to
Ramaphosa at this year’s World Economic Forum after an “intense discussion”
about how an entrepreneurial state — an important theme of Mazzucato’s work
and the subject of her breakout 2013 book — can help catalyse innovation in
SA.

Her first book —* The Entrepreneurial State: Debunking Public vs Private
Sector Myths* — interrogates the narrative that the private sector is
solely where innovation happens. It examines the large risks and
early-stage investments taken by the likes of the US government that made
the extraordinary growth and profitability of companies like Apple possible.

As the founding director of the Institute for Innovation & Public Purpose
(IIPP) at University College London, Mazzucato’s work also includes helping
governments to reframe the way they approach policy. Not as a series of
sector-specific targets, but as a set of clearly defined missions that aim
to address societal problems, which various actors across the public and
private arena work on together.

Another admirer is trade and industry minister Ebrahim Patel, who in a
recent interview with the Mail & Guardian referenced Mazzucato’s book and
bemoaned what he sees as SA’s “strawman” debate, that routinely pits the
state against the private sector.

Mazzucato’s work critically examines this question.

“Depicting the private business as the innovative force, while the state is
cast as the inertial one — necessary for the ‘basics, but too large and
heavy to be the dynamic engine’— is a description that can become a
self-fulfilling prophecy.

“If we continue to depict the state as only a facilitator and administrator
and tell it to stop dreaming, in the end that is what we get, and
ironically it also then becomes easier to criticise it for being lame and
inefficient,” she says in her book.

In SA, however, discussions over the state’s role in the economy remain
contentious. The tension has arguably only worsened after a decade of
corruption left many of the country’s state-owned institutions stripped of
money, skills and morale. It has all but eradicated the public’s confidence
in the state’s ability to achieve anything.

But Mazzucato acknowledges the problem of corruption — “believe me as an
Italian I know a lot about that”, she tells Business Day — as well as state
capacity.

In countries with a history of corruption, it is very important to tackle
the problem seriously while not giving into the dichotomous narrative that
the public is bad, and the private is good, she says.

The problems facing SA’s state-owned entities (SOEs), many of which became
ground zero in battles between political factions and patronage networks in
recent years, loom large for Mazzucato. But outright privatisation of SOEs
would, she argues, “deprive the state and other interacting private
companies in the economy of an important pool of technical competencies in
strategic sectors”.

A key concern, she says, will be determining what it means to “remain
public but to serve the public good and not give in to sectoral political
interests”.

State capacity is a problem, not just in developing countries, she points
out. But when the state is there simply to fix market failures, it has
“little incentive to invest in its internal capabilities and capacities”
she argues, becoming reliant on consultants, and in the case of many
developing countries, philanthropic organisations.

Mazzucato joins what has been largely viewed as a stellar list of
economists and academics that make up the council. It includes the likes of
Dani Rodrik, a professor of International Political Economy at the John F
Kennedy School of Government, Harvard University, and an adviser to former
president Thabo Mbeki. As well as infrastructure and regulatory economist
Grové Steyn; agricultural economist Wandile Sihlobo, and former governor of
the Bank of Tanzania Benno Ndulu to name just a few.

But the council’s announcement was quickly followed by the question: Why
does SA need yet another advisory body when what it really needs is policy
implementation.

Mazzucato is keenly aware of this.

“I am not an expert on SA, and I will ... at least try to learn and listen
and not just go there and preach,” she says.

She will not emphasise “new stuff to be done”. Instead her focus will be on
how to “rethink existing instruments” in the government’s toolbox like
procurement, for example, to “nurture new solutions” to SA’s well-diagnosed
problems.

This approach also tackles the question of money, particularly pertinent in
SA’s case as an extra bailout for embattled power utility Eskom is expected
to widen the budget deficit and drive up the country’s debt to GDP ratio.

Crying foul over budget constraints is, Mazzucato says, “a false problem”.

*“*The budget of any country is huge,” she says.

“It’s not as if the SA government isn’t spending money, the question is how
to transform some of the ways [of] spending money.”

It is important not to underestimate just how much change can come from
“transforming static instruments like government purchasing power” into
more dynamic instruments, that make public spending more strategic and
crowd in other forms of finance.

“The state can do nothing by itself, they need other partners but if the
state instruments are static they then fail to crowd in other forms of
finance,” she says.

*donnellyl at businesslive.co.za* <//donnellyl at businesslive.co.za>


-------
Keith Breckenridge  *W I S E R* - The Wits Institute for Social and
Economic Research, University of the Witwatersrand | Pbag 3, PO Wits,
 Johannesburg, South Africa, 2050 | Phone +27(0)11-7174272 | Web:
wiser.wits.ac.za



On Mon, 3 May 2021 at 10:28, Jonathan Klaaren <Jonathan.Klaaren at wits.ac.za>
wrote:

> Thanks Keith – both of these articles are behind a paywall – is there an
> alternative access or can some pirate circulate?
>
>
>
> *From: *State <state-bounces at lists.wiser.org.za> on behalf of Keith
> Breckenridge <keith at breckenridge.org.za>
> *Date: *Monday, 03 May 2021 at 10:20
> *To: *state at lists.wiser.org.za <state at lists.wiser.org.za>
> *Subject: *Re: [State at Wits] WIPES 3
>
> A reminder of the meeting on Thursday this week to discuss Mazzucato's *Entrepreneurial
> State.   *There's a grumpy assessment here
> <https://www.businesslive.co.za/bd/opinion/columnists/2021-04-02-anthony-butler-shooting-for-the-moon-is-a-pie-in-the-sky-goal-for-sa-politics/>
> by Anthony Butler, and a more optimistic one here
> <https://www.businesslive.co.za/bd/national/2019-10-10-how-mariana-mazzucato-aims-to-help-get-the-state-dreaming-again/>
> by Lynley Donnelly.
>
>
>
> *** Please note that the meeting will be at 4pm* -- I got the time wrong
> in the mail last week.
>
>
>
> Here's the Zoom link :
> https://wits-za.zoom.us/j/94809440246?pwd=MHNYQ05zTUhjMEZNMDRZekQ1Y2Ftdz09
>
>
>
> -------
> Keith Breckenridge  *W I S E R* - The Wits Institute for Social and
> Economic Research, University of the Witwatersrand | Pbag 3, PO Wits,
>  Johannesburg, South Africa, 2050 | Phone +27(0)11-7174272 | Web: wiser.wits.ac.za
>
>
>
>
>
>
> On Thu, 29 Apr 2021 at 12:36, Keith Breckenridge <
> keith at breckenridge.org.za> wrote:
>
> We will be reading
>
> *Mazzucato, M. (2015). The entrepreneurial state: Debunking public vs.
> private sector myths. Chapters :  Intro, 1, 8 & 9.  *
>
> For next Thursday, May 6, at 6pm.
>
>
>
> Zoom link to follow on the day.
>
>
> -------
> Keith Breckenridge  *W I S E R* - The Wits Institute for Social and
> Economic Research, University of the Witwatersrand | Pbag 3, PO Wits,
>  Johannesburg, South Africa, 2050 | Phone +27(0)11-7174272 | Web: wiser.wits.ac.za
>
>
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> contrary.
>
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