By Mariana Mazzucato
The world is in a critical state. The Covid-19 pandemic is rapidly spreading across countries, with a scale and severity not seen since the devastating Spanish flu in 1918. Unless coordinated global action is taken to contain it, the contagion will soon become an economic and financial one too.
The magnitude of the crisis requires governments to step in. And they are. States are injecting stimulus into the economy while desperately trying to slow the spread of the disease, to protect vulnerable populations, and to help create new therapies and vaccines. The scale and intensity of these interventions reminiscent of a military conflict – this is a war against the spread of the virus and economic collapse.
And yet there is a problem. The intervention needed requires a very different framing from the one that governments have chosen. Since the 1980s, governments have been told to take a back seat and let business steer and create wealth, intervening only for the purpose of fixing problems when they arise. The result is that governments are not always properly prepared and equipped to deal with crises such as Covid-19 or the climate emergency. By assuming that governments have to wait until the occurrence of a huge systemic shock before they resolve to take action, insufficient preparations are made along the way.
In the process, critical institutions providing public services and public goods more widely – such as the NHS in the UK, where there have been cuts to public health totalling £1bn since 2015 – are left weakened.
The prominent role of business in public life has also led to a loss of confidence in what the government can achieve alone – leading in turn to the many problematic public-private partnerships, which prioritise the interests of business over the public good. For example, it has been well documented that public-private partnerships in research and development often favour “blockbusters” at the expense of less commercially appealing medicines that are hugely important to public health, including antibiotics and vaccines for a number of diseases with outbreak potential.
On top of this, there is a lack of a safety net and protection for working people in societies with rising inequality, especially for those working in the gig economy with no social protection.
But we now have an opportunity to use this crisis as a way to understand how to do capitalism differently. This requires a rethink of what governments are for: rather than simply fixing market failures when they arise, they should move towards actively shaping and creating markets that deliver sustainable and inclusive growth. They should also ensure that partnerships with business involving government funds are driven by public interest, not profit.
