Can a Moonshot Fix Poverty After All?

By John P. Nelson

The economist Mariana Mazzucato may be the most eloquent contemporary exponent of the importance of dynamic, activist government for healthy capitalist economies. In her book The Entrepreneurial State (2013), which focused on the United States, she compellingly illustrated the central role of federal government research and development investment, early-adopter procurement, and infrastructure construction in creating today’s fastest-growing industries.  Mazzucato argued that there is no substitute for visionary, mission-oriented government investment in creating pathbreaking new technologies and markets.  In The Value of Everything (2018), Mazzucato took on one of the fundamental tenets of neoclassical economics: that market price is a good proxy for social value. She showed how this accounting of value rewards business activities that extract and destroy real-world value while undervaluing drivers of long-term and inclusive growth. Profit-based value-accounting systems such as the current version of gross domestic product conceal government’s role in value creation, ignore the importance of unpaid care work, and contribute to financialization and short-termism in business, producing problems such as the subprime mortgage crisis of 2007.

Throughout her work, Mazzucato has argued that decades of antigovernment rhetoric, warped economic value accounting, and disinvestment from and outsourcing of government work have sapped the ability of governments in the United States, the United Kingdom, and elsewhere to perform their essential social and economic functions. These functions include not merely fixing “market failures,” such as underinvestment in fundamental science, but actively investing in value-creating public goods such as education, infrastructure, health care, and pathbreaking technological innovation. In her latest book, Mission Economy, Mazzucato argues that revitalized and activist government is necessary to reform capitalism and solve today’s most pressing problems. Government has immense economic influence, she writes, and must use it to create, shape, and lead markets that serve public purposes.

Throughout her work, Mazzucato has argued that decades of antigovernment rhetoric, warped economic value accounting, and disinvestment from and outsourcing of government work have sapped the ability of governments in the United States, the United Kingdom, and elsewhere to perform their essential social and economic functions.

Characteristically fluid, in places breezy, Mazzucato supports her claims with a torrent of examples and quotations drawn from diverse sectors of industry, finance, government action, and economic and historical scholarship. New material includes a retrospective on management, organizational capacity, and learning-by-doing in the Apollo program, which Mazzucato takes as a model for public-sector-led, mission-driven innovation; a skim across the European Commission’s programs for pursuit of several United Nations Sustainable Development Goals; bullet-like breakdowns of features of the “new political economy” required to meet wicked problems such as climate change; and some convenient tables clarifying the difference between the old, market-failure-driven concept of government’s role and Mazzucato’s concept of “market shaping.” As her title indicates, Mazzucato’s overall thesis is that mission-oriented, end-to-end, market-shaping government investment of the sort emblematized by the Apollo program is necessary to address today’s grand challenges and reclaim innovation for public purpose. In the absence of strong government leadership, she argues, capitalism is producing only rudderless wealth concentration.

In the absence of strong government leadership, she argues, capitalism is producing only rudderless wealth concentration.

Rather bravely, given her book’s overall conceit, Mazzucato directly invokes Richard Nelson’s famous The Moon and the Ghetto (1977). In that book, another wide-ranging and heterodox economist tried to figure out why a society that could put humans on the moon couldn’t provide safety, health, and good education to significant proportions of its populace. Nelson suggests that an important component of the disparity is a lack of strong know-how about how to address complex, socially and economically entangled problems. Furthermore, Nelson proposes, such know-how is difficult to develop in the absence of promising avenues of inquiry and agreement on the natures of problems and of success. The widespread social problems of urban development are very different from the highly technical, socially isolated problems of putting a person on the moon. The latter could be accomplished by iterating upon proven and powerful technologies and knowledge already in existence, and it did not require any population-wide collective action besides funding. The moonshot was a lot easier than fixing poverty because stakeholders largely agreed on what they wanted to do, had a decent idea of how to do it, and could easily discern what worked and what didn’t.  But Mazzucato advocates bringing the moonshot back down to problems on Earth. How can we hope it will work?

Rather bravely, given her book’s overall conceit, Mazzucato directly invokes Richard Nelson’s famous 1977 book, The Moon and the Ghetto.

Mazzucato does not explain in detail how mission-oriented government action can overcome the immense differences between the highly technical, highly constrained, militarily backed goal of space travel and the controversial, deeply societally and economically entangled problems of, for example, global poverty and climate change. Indeed, outside discussions of the management structure of certain technical components of the Apollo program, she does not explain much in detail at all. This is perhaps inevitable given the sheer breadth of her aim—she hopes to set out principles for a new political economy in 212 accessible pages—but the effect is to render some of what were, in previous books, well-backed and detailed arguments down to bare assertions with accompanying citations. Scholars should not be required to rehearse all of their past work every time they refer to it, but I fear Mission Economy takes too much for granted. A reader new to Mazzucato could understandably dismiss or even simply miss important but little-explained arguments.

As manifesto for a new mythos of innovation and ethos of government, Mission Economy succeeds. But it does not offer a detailed plan for how to implement that novel ethos. The contemporary mission-oriented programs that she favorably cites as exemplars are relatively young and unproven. There is no systematic analysis of the outcomes of any of the European Commission’s programs she references, while her treatment of Germany’s Energiewende—its comprehensive policy framework for expanding renewable energy to reduce carbon emissions—mixes praise of its environmental aspirations with recognition that the Germans do not seem to be on track to meet their goals. Mazzucato argues for the necessity of new measures of value creation and governmental success. They are indeed needed.  In their absence, it is difficult to see how Mazzucato’s proposed reforms can be implemented.

As manifesto for a new mythos of innovation and ethos of government, Mission Economy succeeds. But it does not offer a detailed plan for how to implement that novel ethos.

Assessing the public value created by innovation programs is notoriously difficult—all the more so for long-term, diffuse, difficult-to-define outcomes. Mazzucato cannot be held responsible for such problems, though she is well-placed to address them. Regardless, the difficulties that stymie evaluation of mission-oriented government investment to address wicked problems pose practical, and not merely rhetorical, obstacles.

The Apollo program benefited from a well-bounded physical task that did not threaten empowered (American) stakeholders, as well as a political consensus of a sort never seen outside (hot or cold) war—and perhaps incompatible with real enfranchisement of a geographically, economically, and culturally diverse citizenry. Thanks to these conditions, Apollo was able to clearly define overall program success (putting a man on the moon) and modularize and define subcomponent success so as to permit uncontroversial sorting of successful from unsuccessful solutions. Clear and uncontroversial aims and understandings of success and failure permitted implementation of reliable learning cycles across the entire program.

These conditions, by definition, do not obtain for such wicked problems as climate change and poverty. These phenomena are characterized by their system complexity, by their unclear boundaries, and by political dissensus about their natures and about what counts as success in responding to them. Mazzucato is not so naïve as to believe that the moonshot model can be directly transferred to solving climate change and poverty, but she does not articulate and demonstrate what changes could allow it to work. The difficulty of such demonstration is indeed part of the problem.

Mazzucato’s book can be a valuable launching point for a new ethos of dynamic, problem-oriented government, and perhaps for scholarship to operationalize and study her many claims and prescriptions.

This is not an indictment. Certainly I would like to see government more like that for which Mazzucato advocates, and I am convinced that nations can serve their people much more effectively when they acknowledge and embrace their role in shaping markets and economies for public outcomes. Mazzucato’s book can be a valuable launching point for a new ethos of dynamic, problem-oriented government, and perhaps for scholarship to operationalize and study her many claims and prescriptions. But her assertion that “there is no reason a [moonshot-like or war-like] ‘whatever it takes’ mentality cannot be used for social problems” seems backwards. There are many such reasons, including widespread disagreement, even among experts, about what needs to be done, what it might take, and, indeed, what is going on in the first place. The Moon and the Ghetto stands unanswered; if innovation is to defeat problems such as poverty and inequality, it will need to be of a very different kind than that which took humans to the moon. Mazzucato does not show us what such a different sort of innovation might entail. Yet she is thoroughly convincing in her explanation of why the innovation systems of the United States and other developed nations are unequal to the challenges they are expected to address. And in envisioning the sorts of governments and economies that will be needed to make progress, she provides a valuable lodestar for innovation economics and policy.