Governing the Economics of the Common Good

* Article: Governing the economics of the common good: from correcting market failures to shaping collective goals. Mariana Mazzucato. JOURNAL OF ECONOMIC POLICY REFORM, November 2023.

URL = https://www.tandfonline.com/doi/pdf/10.1080/17487870.2023.2280969

Abstract

"To meet today’s grand challenges, economics requires an understanding of how common objectives may be collaboratively set and met. Tied to the assumption that the state can, at best, fix market failures and is always at risk of “capture”, economic theory has been unable to offer such a framework. To move beyond such limiting assumptions, the article provides a renewed conception of the common good, going beyond the classic public good and commons approach, as a way of steering and shaping (rather than just fixing) the economy towards collective goals."

Excerpt

Five pillars of the Common Good as Policy Framework

Mariana Mazzucato:

"Five pillars for the common good A revived approach to the common good, posited as a collective objective rather than a correction focuses as much on the “how” as the “what”. It can be guided by a market shaping view of government, driven by public value. ...

The first pillar, purpose and directionality, can promote outcomes-oriented policies that are in the common interest.

The second pillar, co-creation and participation, allows citizens and stakeholders to participate in debate, discussion, and consensus-building that bring different voices to the table.

The third pillar, collective learning and knowledge-sharing, can help design true purpose-oriented partnerships that drive collective intelligence and sharing of knowledge.

The fourth pillar, access for all and reward-sharing, can be a way to share the benefits of innovation and investment with all the risk takers, whether through equity schemes, royalties, pricing, or collective funds.

The fifth pillar, transparency and accountability, can ensure public legitimacy and engagement by enforcing commitments amongst all actors and by aligning on evaluation mechanisms."

(https://www.tandfonline.com/doi/pdf/10.1080/17487870.2023.2280969)

From the conclusion

Mariana Mazzucato:

"The framework set out in this article has provided a systematic review and re- conceptualisation of the necessary steps that may be taken by economic actors to create public value while achieving collectively deliberated goals. The article has shown that with increasing attention to the need for such common goals, the philosophical tradition of the common good, centred on “relational” obligation and mutual concern, can provide helpful guidance. Previous economic good scholarship has not given sufficient consideration to the governance of collective goals and the therein embedded role of mutual – rather than private – concern. Putting the common good at the heart of governance empowers and encourages governments, business, and civil society to actively shape markets and to incorporate public value into the coordination required to meet common objectives. If problems like global warming, global vaccination, and the water crisis are to be addressed as global problems requiring collective action, it is necessary to see these problems not as imperfections of an otherwise perfectly functioning system, but rather as a deficiency in how the system itself is understood (theory) and hence designed (practice).

COVID-19 illustrates the implications of a political economy for the common good (WHO Council on the Economics of Health for All 2023). During the pandemic, too little attention was paid to how a common objective (global vaccination) can inform the design of the collaboration between public and private actors (Mazzucato et al. 2021; Torreele et al. 2023). Had global vaccination, rather than vaccines, been the goal, much more care would have needed to be taken on designing IP rights to be less extractive (e.g. not as strong, wide and upstream) and on making sure that the early stage, high-risk public funds provided were conditional on knowledge-sharing and issues around access. In positioning global vaccination as the “what”, the five common good pillars would have provided critical guidance on the “how”.

The five principles become active areas for not just policy making but for the skills needed by governments to govern in the public interest. A successful incorporation of the common good principles depends on the state’s dynamic capabilities to perform core policy functions, from the provision of public services to policy design and implementation (Kattel and Mazzucato 2018; Mazzucato and Kattel 2020; Mazzucato et al. 2021). Indeed, dynamic capabilities bear no relation to the size of government but are closely associated with investments made inside the public sector for it to be more creative, agile, and flexible (Kattel, Drechsler, and Karo 2022). One of the lessons of the Covid-19 crisis was how the ability for governments to manage the crisis depended on the cumulative investments made on the ability to govern, do, and manage, including investments in digital governance for the ”infodemic” side of the crisis (Mazzucato, Ghosh, and Torreele 2021). While the crisis was serious for all, it was especially a challenge for countries that ignored the needed investments in their dynamic capabilities and/or those that had instead chosen to outsource that capacity to consultants (Mazzucato and Collington 2023).

A crucial element of governing economies toward the common good is thus the development of associated dynamic capabilities inside the state. The common good principles described here are not meant to replace insights from previous notions of public goods and the commons, but to complement them by providing a framework that guides a symbiotic relationship between economic actors. This perspective acknowledges that no single actor, whether it be government, business, or civil society, should be positioned as more important or more able than another to create value. Engaging these actors in a cooperative manner to solve problems that are set and solved collectively becomes crucial in the pursuit of addressing the complex challenges that define the 21st century. By fostering a collaborative approach, where knowledge is shared, rewards are socialised, and accountability and transparency are at the forefront, the common good can effectively guide societal actors towards creating public value that is not only shared but also sustainable."

(https://www.tandfonline.com/doi/pdf/10.1080/17487870.2023.2280969)

More information

Bibliography

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Mazzucato, M., and J. Ryan-Collins. 2022. “Putting Value Creation Back into ‘Public value’: From Market Fixing to Market Shaping.” Journal of Economic Policy Reform 25 (4): 345–360. https:// doi.org/10.1080/17487870.2022.2053537.

Mazzucato, M., and M. Zaqout. Forthcoming. “Rethinking the Water Challenge as a Global Common Good.”