Mariana Mazzucato with The Clearing Book Club

I thought you were going to say since I was born, because it is. [laughter]

No, no, no. But yeah. Well, I mean, that's partly why I chose to focus so much on Apollo, because we all take it for granted, but we don't realize just how much kind of organizational redesign it required. And you know, anyone like me who's interested in innovation will know that people talk about things like procurement and you know, different types of loans, forms and so on. But actually, what NASA did was not romanticize those notions. They actually deconstructed the current contracts and organizations they had in order to be purpose-oriented. So I'm really keen actually to be having this conversation with you guys because of course, and the work of John over the triple bottom line has been so important for businesses to think about how to be more purpose-oriented. So what does it mean for government organizations, public sector organizations, the civil service to be more purpose-oriented for their own bureaucracies, their own way of doing things, but also how they work with business.

Very little. I mean, I shouldn't say very little, but what I knew and what interested me about it, why I wrote about it, was that, you know, I'm mainly... so I'm an economist and I focus a lot on what in economics is called kind of industrial economics, innovation economics. I was very inspired by the work of Joseph Schumpeter and so on. But the way that policy is often framed in these areas is very sector-specific, like, you know, quantum computing or AI, driverless cars. And what I knew about the moon landing is actually it required so many different sectors to innovate, collaborate, invest, and so many of the interesting things that happen happened kind of along the way serendipitously, right? You know, from camera phones to home insulation, you know, baby formula and so on. So I was very interested in kind of unpicking and looking much deeper at the moon landing in order for governments and businesses that are interested in talking about, you know, 21st century technology, the knowledge economy, you know, all the kind of, you know, usual talk we have around innovation to be much more grounded in kind of changes in the normal way that we do things in order to really inspire that cross-sectoral, cross-actor, serendipitous, you know, path towards actually achieving a big goal. And you know, the sustainable development goals, which are like the big goals out there that people talk about, there isn't really like an ambitious, you know, mission-oriented approach to get there. And so I kind of wanted to say, well, what got us to the moon and back, and can it be partly applied to the social goals we have? And of course the answer is a bit... and I tried to unpick the bit part, but of course the societal goals we have today are so much harder than just getting to the moon. They're the, you know, wicked challenges that require regulatory change and all sorts of changes, not just technological. But still, I was just interested in what actually happened, you know, like what did they talk about, and I'm happy to tell you a bit of the really interesting things that they talk about.

Highlighters and like stickums, I hope.

And by the way, if my hair is blowing, it's because I'm boiling. So put a fan near me. So it's not... [laughter] tiny. It's this tiny fan, but it's actually having an effect, which is great. So the main point of the book is that we should stop pretending things are easy. [laughter] Right, so going to the moon is very hard, but the first thing they did was actually to admit that... what, you know, remember Kennedy's speech, which was, 'We're going to do it because it's hard, not because it's easy.' And so the main tenet of the book is if we are going to tackle the really difficult things we have, like climate change, global warming, but also this health pandemic, so, you know, making our health systems, our global health systems more resilient, we're going to have to first of all admit it's going to be hard, and we need to kind of welcome that risk-taking, the uncertainty, the learning by doing along the way, and not kind of blame the civil service as soon as they make one mistake. But also we need to strengthen the civil service and not just kind of over-consultify it. You know, you, Valance, I guess you'd call yourself a consulting company, I don't know, but my next book, by the way, is... oh, I shouldn't tell you the title, but it's going to be unpicking the consulting model of capitalism. But anyway, that thing about investing [clears throat] within the dynamic capabilities of both public and private institutions so they can together really share risks, share rewards, but also invest, innovate from within, not just like what can government do for others to innovate. Government itself has to innovate from within in order to tackle climate change, in order to have more resilient health systems. So I wrote the book because I believe that it's impossible to have better policy around the SDGs, which I think we need, and we need better business structures as well. It's impossible unless we change our mindset and literally redesign the tools from scratch. And so by looking at the Apollo program and kind of, you know, looking at how seriously they took procurement and how they even had this clause of no excess profits, very interesting in terms of really getting a more mutualistic, not a parasitic public-private partnership, I just thought this is going to be a really interesting thing precisely because it was 50 years ago when I started writing it, 51 years ago that they landed on the moon, that I just don't think people have realized just what an organizational feat it was, not just kind of a technological one.

I am listening. I promise I'm not texting John.

But I am listening. I can... I'm a mother of four kids. I super multitask. I can be texting John, listening to you.

Hm. Interesting. Well, first of all, my first degree was in history and kind of political science at Tufts University. They had this Fletcher School of International Relations, kind of like the Kennedy School. And it was through my experience, this is actually kind of interesting. I don't know if you guys are interested, it's interesting if I think back to it. It was my work with trade unions in Boston, okay, that got me interested in the economy. Why? Because when I was doing university, which was, oh, back in... so from 1986 to 1990 I did my undergraduate degree in Boston. I'm Italian but grew up in Princeton, New Jersey. Wanted to get the hell out of Princeton. So I went to Boston, like the big city where I was, you know, going to go, and I ended up at Tufts. And all the people like me who were kind of progressive, you know, center-left and interested in, you know, making the world better were all looking abroad. So at the time they were all worried about apartheid, and you'll remember there was a big... there was lots of civil war in Central America, Nicaragua, El Salvador, people worried about Contras and Sandinistas. And I'm sitting there in Boston, which, you know, is I think still a very problematic city in terms of how ghettoized it is. It's actually very racist by job. Like all hotel workers are, you know, very kind of deprived and from particular communities. And I got interested in work, like how is work structured and why is it that in Europe you think that being part of a trade union is kind of normal, it's your right to organize. In the US there's all these companies actually helping other companies keep out trade unions, right? There's like law firms and media companies actually helping the private sector keep unions out to basically prevent workers from organizing. And you know that word organizing, I recommend anyone who hasn't seen it to see the film Norma Rae, which unfortunately is not available on any platform. I'm trying to get my kids to watch it. So the kind of need to actually allow workers in factories, you know, in the old world, but in any sort of work environment to together decide, you know, alongside, you know, capital, how to organize production. That's in theory what stakeholder capitalism is about. That's in theory what all the Davos talk about purpose. In America, it's illegal in many parts of the country. Like there's, you know, closed shop, open shop, etc. Anyway, my experience in working with trade unions in Boston opened my eyes to how little I understood about the economy and specifically about kind of production issues. So I got very interested in unpicking that, and I found myself looking at economics departments to do a kind of a master's and PhD, and decided to go to the only place in the world that teaches heterodox economics in a way that is not just like history of economic thought, like, 'Oh, once upon a time Marx said this and then Keynes said that and, you know, Ricardo said that,' but the real theory is mainstream kind of economics, you know, neoclassical economics. They taught at the Graduate Faculty of the New School for Social Research, which is where I went to do my PhD. It was founded by people who actually had left Germany during the Nazi period, especially the Frankfurt School in Germany, founded basically what then became the Graduate Faculty of the New School. There's philosophers, economists, and so on. And I benefited massively from my own economic training that I had literally the prima donnas in every single field of economic thought, including neoclassical mainstream economics. But they were all taught as equally viable different tools through which to understand the economy. Plus because I started to get super interested in technological change, that became sort of my focus. And I luckily had a very wonderful supervisor who said, 'Well, if you're interested in kind of all the, you know, nonlinearities and the kind of Schumpeterian kind of approach to economics, you need to go to the Santa Fe Institute for one summer.' I was the only woman on the Santa Fe Institute in New Mexico program on complexity theory and economics. So I can tell you a very funny story, but I won't because that'll put me on crack about that. But anyway, and so that kind of focus on labor conditions plus technological change and the impact it's had in the history of capitalism, plus new kind of methodological tools, you know, quantitative tools, not from Newtonian physics, which is all the math that is in economics is basically from Newtonian physics, you know, center of gravity, equilibrating forces and so on, but from, say, biology, you know, replicator dynamics, replicator-mutator dynamics, and complexity theory, also in terms of sim, like new agent-based modeling that I learned there. Those three things together kind of form the person that I am, and I think that's maybe the innovative bit, which is that I tried to understand how innovation occurs as a collectively created process and how we've dismissed many actors in that process, like the state, which isn't just facilitating and fixing markets but has often in the history of capitalism been the kind of the lead innovator, taking the early-stage high-risk investments that are, you know, like the internet, GPS, touchscreen, Siri, blah blah blah, that I wrote about in the previous book. But that what is then the theory of value and collective value creation that's required if we actually really understand all the different actors, not just business, that create value. And secondly, what's the kind of, you know, practical way to make sure that we are not just socializing risks in the process but really sharing the rewards. That really benefited a lot from my experience with trade unions, which had labor kind of at the center, but not in an ideological way, but really again in the way that in theory people at Davos talk about but then don't actually do. I learned a lot from that, and I must say that some of the most interesting people I've met in my life have been trade union organizers because it's a difficult battle. It is in America, it's guerrilla warfare.

Yeah. Not in America. The free...

Free to be exploited. [laughter]

I mean, there's different answers to that. First of all, economics, because it's been so paranoid to show that it's more scientific than any other field like anthropology and sociology, does what a lot of paranoid people do, which is like worry, right? So, you know, so I find that the economists in the mainstream kind of area that I've most spoken to are actually those who've kind of like won Nobel prizes. So, they're not paranoid. They're just kind of relaxed. They're like, 'Oh, wow. That's really interesting. Talk to me.' [laughter] Whereas those who are just worried about their like h-index and their citations, 'Oh no, she's a communist and we, you know, she's going to make me look weird.' I first of all, I don't care about them, but second, it's like that's where you get some of the most pushback, but I just kind of ignore that. I think because I have been so interested at least for the last 10 years in changing how we do capitalism, I've not really worried too much about what other academics think. Even though I'm in academia, I've been given the amazing opportunity by UCL to set up my own department. How cool is that? So like when they headhunted me, I was at the time at Sussex at the Science Policy Research Unit, which for what I do is sort of like the place to be. And so when UCL said, 'Please come to us and here's some, you know, things we can give you.' And I was like, 'Well, what I really want is...' and I started slowly saying, 'I wanted a center.' And I'm like, 'Ah, screw the center. I want a department.' [laughter] What you don't want is a center in a shitty department that forces you then to teach the wrong things. And you're just a little peripheral weird thing within a, you know, tradition. So the fact they let me do that means that I'm in a super privileged position to rewrite the curriculum and literally to rewrite the textbook, the kind of new economic thinking, not only for our undergraduate students, of which we just have one class called Rethinking Capitalism, which students from all over UCL take, but especially our main program, which is the Master's in Public Administration. You know, many, I'm sure, of your audience have done MBAs, Master's in Business Administration, which is very important. The top MBA schools in the world, you teach, you know, like strategic management, organizational behavior, decision sciences. We don't have that level of ambition for our government workers. It's all like new public management, public choice theory, that have basically convinced civil servants that, you know, at best they can fix a market failure, and guess what, government failure is even worse than market failure, so please do your thing and then get the hell out of the way, take as little space as possible. So there's no ambition. There's no intra-organizational investment in that kind of, you know, moonshot approach that I talked about, and there's fear of risk, and also it's kind of a boring place to work. So even though there's great people who work in the civil service, it's like notwithstanding the kind of bad environment, which is as soon as you make a mistake you're blamed. So no one wants to make a mistake, and that's why we end up inviting PwCs to do the risk-taking for government because everyone's scared of making a mistake. So there's no learning by doing. There's no like becoming a knowledge organization. And so that's what I'm focused on. And it's within an academic environment, which I should say not only am I proud of, but I'm going to resist as much as I can to not have a little like consulting arm of the institute, which is what people are telling us we should do because we're in massive demand to work with governments around the world, and university budgets and structures are really inertial. They're, you know, they make other governments' organizations look very dynamic. But I think it's really important to remain in the university in order to reinvent what universities should be. I think they've just become really static organizations that no longer, you know, like the Mont Pelerin Society movement, which was a huge kind of like, you know, I would call a regressive movement, not a progressive movement, involved universities, journalists, the media. It was a whole cultural movement. I think we need the same thing today for the opposite, to have like the equivalent of the Mont Pelerin Society but for the good [laughter] of the SDGs. We need to be a movement, and universities to be part of that need to change how they work, and that's what I'm trying to do, to make academics think about practice-based theorizing, so you actually care about what happens on the ground, you don't just go lecture people about why austerity sucks, you actually help them create new institutions and bring that back to the theory.

Well, no, it's very hard to onboard... I mean, but this is true for everyone, to onboard people on video. I actually had a wonderful chief of staff for the last year and a half, and I had to go move abroad again. And so totally different time zone. So it was going to be hard to work together, and I had never met him [laughter] physically, and yet we talked every day like six times. So it's just crazy that we become used to that. And I think on the one hand it's good, like we've learned that we can actually, you know, do all sorts of different things because working at home is now not something you have to ask for, but it's seen as normal. On the other hand, I think we're all working too much because like this Zoom call I'm on now is on the back of like five Zoom calls today, and we don't even have time to go pee. [laughter] Yeah, because it's so... I did, I promise. And [clears throat] I even got one of my PhD students, I said, 'Please make me a gin and tonic,' because they said I should have one on this, and I showed her your WhatsApp. It says, 'I need a gin and tonic, go make me one.'

They got to drink it as well. So I think it's very hard to be growing during lockdown because actually that human touch and the kind of random conversation, you know, in the hallway, in the kitchen, and so on, which actually makes us all realize how difficult actually some of the things we're doing are, and not just, you know, celebrating the successes, but kind of sharing experiences and so on. That's just harder to do in Zoom. And you don't see someone... this coach of one of my kids told me that the reason we're all tense is all the attention is here, right? You only see this bit. Whereas if I'm talking to you, you'll see my feet fidgeting, and there's attention to, I don't know, someone's knees and shoes, whereas all the attention is here, and our chest and our hearts and our necks are like stiff from that. I was like, 'Oh, that's why.'

So definitely you also need the private sector, but I think it's how. So currently, even in the UK, all the talk is about like business-friendly policies, and I think the least friendly thing you can do for business is just talk about being business-friendly because you're probably going to do some really aggressive thing which brings some businesses and not others. So it's not generic. It's not kind of generally business-friendly. It's just like sucking up to particular [laughter] businesses and probably a policy that, you know, doesn't actually have any effect. So what I think we need is both mission-driven government institutions and purpose-oriented private institutions, but that notion of purpose that needs to be at the center of the public-private relationship. And what I mean by that is, I mean again coming back to the moon landing, what was so interesting to me was first of all how many different companies were involved in the moon landing. There was, you know, hundreds, and lots of different sectors. It wasn't just aerospace, it was nutrition, materials, electronics, you know, software basically happened through that in terms of [clears throat] the software industry how we know it today and the kind of small computing capability within the lunar module that, you know, before that was all mainframes. So what was interesting to me is that in order to collaborate with the private sector, NASA actually ended up paying a lot of attention to the contracts, and that's like a purposeful contract, a social contract is what I think stakeholder capitalism should be about. It can't just be about a discussion within corporate governance. It has to be about the governance of systems and ecosystems and partnerships. And partnerships, you'll know from marriage. I don't know how many people here are married or in a partnership of some sort. And you'll know also from speaking to your friends or seeing Hollywood movies, there's abusive partnerships and there's, you know, better partnerships and ecosystems. If you speak to a biologist, you know, they'll tell you it can be predator-prey, it can be parasitic, it can be mutualistic, it can be symbiotic. So I think this idea of mutualistic and symbiotic partnerships requires kind of purpose at the center. And what NASA did in order to build that at the time, I think actually we have less of that in NASA today, and we can get to John's question later, unpicked the procurement contracts, which was just one of the types of contracts they had, from being cost-plus contracts which were easily gamed by the private sector, to be fixed-price contracts where the fixed price was almost like a prize scheme. There was a prize, you know, for businesses to sort out one of the hundreds of problems that need to be sorted, but with constant incentives for innovation and quality improvement. And they also had a clause within the contract of no excess profits. So this is not going to become a gambling casino. This is a collectively created space, literally outer space, and we're going to, you know, share in the rewards and not kind of, you know, cheat each other. And so that needed to be in the contract. It doesn't just happen naturally by going to the World Economic Forum. And I think that's what we need more of today, which is to unpick the faulty contracts, because a lot of these are actually, you know, legal contracts. But it's not just about the law, but it is actually part of it, you know, because we have to govern the relationships in a different way. And if you look at the vaccine today for COVID, it's a perfect place to start, which is you have, you know, companies like Pfizer, AstraZeneca. First of all, we're calling these vaccines by the company name, which is bad, because these are massive amounts of public investment as well. You know, the Oxford scientists are all working in public universities. People in America forget that, you know, Harvard, Yale, and Princeton are private, Oxford, Cambridge are public. The Oxford scientists actually took care, unlike the Pfizer vaccine, to make sure that the cost and the prices remained reasonable. They were also much more careful around the intellectual property rights. And intellectual property rights, unfortunately, are called rights. They're not rights. They're contracts. You give... the government is giving a private sector company 20 years of monopoly profits. That's not given from God. It's given to you by the state. In exchange for 20-year monopoly profits, you should be, you know, having to do certain things. For example, even the patent itself should not be abusive. It should not be extractive. Patents work when they are weak, so easy to license. They are not too wide, which they currently are, because patents are often used for strategic reasons, just to keep people out of your general neighborhood. And they're way too upstream today. So we're actually allowing the tools for research to be patented. And that's not what patents should be for. They should be much more downstream. So if you have, you know, patents that are too upstream, too wide, and too strong, that leads to what William Baumol, a wonderful ex... well, he is no longer living, and he actually was quite mainstream, but anyway, he called the abuse of patents leading to unproductive entrepreneurship, or what in my book on value I call rent. You know, basically rent, it's rent. [laughter] So that means reconstructing the relationship between business and the state to be more purposeful, to be more symbiotic, less parasitic, and less extractive. And I don't think that's the conversation that's currently being had as stakeholder value. It's just a corporate governance conversation.

Oh. Oh, yeah.

I mean, I think the discussion currently being had, at least in the US around the Green Deal, is much more ambitious than in the UK at least.

You know, or even with COVID-19 right now, it's interesting when you look at countries like Austria, Denmark, actually Scotland had this too. There's been conditions attached to the bailout funds.

[Clears throat] set for both Air France and Renault to access French COVID recovery was they had to lower their carbon emissions.