By introducing a uniquely disruptive shock to both supply and demand, the COVID-19 pandemic has upended longstanding ideological debates almost overnight. Suddenly, far-reaching state intervention in the economy has become necessary to save market capitalism, which is unlikely to emerge unchanged.You may agree or not. But it is a fact.
Mancur Olson, a theorist on institutional economics, could now be a posthumous beacon on how to manage the aftermath. Olson argued that nations decline because of the lobbying power of distributional coalitions, or special-interest groups, whose growing influence fosters economic inefficiency and inequality.***
When he was writing, the main interest groups were trade unions and business cartels. Today, the pre-eminent interest group consists of finance professionals on Wall Street and in London. Through campaign finance and political donations, they have bought themselves protection from proper societal accountability. And they pose a continuing obstacle to the de-risking of banking of the kind recommended by the Vickers commission in the UK. Tackling such interest groups both in the US and Europe is one of the biggest post-crisis tasks for policymakers and a key to addressing concerns about systemic legitimacy. The inchoate nature of the public’s complaints is another. Not the least of the difficulties, to reformulate Winston Churchill’s famous remark on democracy, is that capitalism is the worst form of economic management except for all those other forms that have been tried from time to time. The public relations problem implicit in that pale endorsement is an underlying reason why legitimacy crises recur.
Mission Economy. A Moonshot Guide to Changing Capitalism
My former post on a recent book by Mazzucato was based on a comment by McCloskey. Now, she has published a new one, and the best comment has been made by John Kay, clear message, I don't have anything to add.
Ever since 1969, people have asked themselves why if humans can land on the moon, can’t they solve pressing problems here on Earth, such as poverty, dementia and climate change. Mariana Mazzucato offers an answer: if only governments would apply the mission-driven methods of the Apollo project, they could.
Mission Economy, the new book from the high-profile economist noted for her advocacy of a more active state, contains many screenshots of the whiteboards beloved of brainstorming meetings, each with an ambitious goal at the top: secure the future of mobility, clean oceans, defeat cancer; below is a jumble of boxes and circles linked by multidirectional arrows.
We need a “solutions based economy”, driven and co-ordinated by more powerful governments engaged in every stage of the process of innovation.
But Apollo was a success because the objective was specific and limited; the basic science was well understood, even if many subsidiary technological developments were needed to make the mission feasible; and the political commitment to the project was sufficiently strong to make budget overruns almost irrelevant. Centrally directed missions have sometimes succeeded when these conditions are in place; Apollo was a response to the Soviet Union’s pioneering launch of a human into space, and the greatest achievement of the USSR was the mobilisation of resources to defeat Nazi Germany.
Nixon’s war on cancer, explicitly modelled on the Apollo programme, was a failure because cancer is not a single illness and too little was then — or now — understood about the science of cell mutation. Mao’s Great Leap Forward, a vain bid to create an industrial society within five years, proved to be one of the greatest economic and humanitarian disasters in human history. At least 30m people died.
Democratic societies have more checks and balances to protect them from visionary leaders driven by missions and enthused by moonshots, but the characteristics which made the Great Leap Forward a catastrophe are nevertheless still evident in attenuated version.
With political direction of innovation we regularly encounter grandiosity of ambition and scale; the belief that strength of commitment overcomes practical problems; an absence of honest feedback; the suppression of sceptical comment and marginalisation of sceptical commentators. All these were seen in Britain’s experience with Concorde, the Channel Tunnel and the AGR nuclear reactor programme, some of the worst commercial projects in history. More recently, there is the £12bn wasted on the NHS computerisation programme — a project that Mazzucato mentions, though only to blame private contractors for their failure to deliver on the political imperative.
On a smaller scale, Britain has suffered in the last year from the delays resulting from Public Health England’s insistence on central control of the coronavirus testing programme and the predictable fiasco of the attempt to sideline the expertise of Apple and Google in order to develop a uniquely advanced NHS test and trace app. And in September there was prime minister Boris Johnson’s “operation moonshot”, designed to control the coronavirus by testing 10m people daily in early 2021.
In contrast to these failures, the rapid development of vaccines is, at least provisionally, a success story. That development is not the product of visionary central direction but is the result of a competitive process with many different teams around the world attempting to be among the first across the finishing line.
Their work has drawn on a combination of existing academic science with the expertise in development and testing and the manufacturing and logistics capabilities of the global pharmaceutical industry. The role of government, appropriately, has primarily been in funding basic research and assuring that there will be a rewarding market for successful products.
Mazzucato lists “twenty things we wouldn’t have without space travel”. Athletic shoes, CAT scanners, home insulation, baby formula, artificial limbs. Yes, really. But beyond the ridiculous headline, we see the reality of productive innovation: a decentralised process in which developers draw on and help create the collective intelligence that leads to constant incremental improvement in so many fields — including better running shoes.
When historians of technology review the past 50 years, they may conclude that Neil Armstrong exaggerated when he announced “one giant leap for mankind”. The “new frontier” of the late 1960s turned out to be, not space, but information technology. And the development of IT was characterised by a striking absence of centralised vision and direction.
No moonshots; but piecemeal innovation through disciplined pluralism in which temporary winners were almost always displaced as they failed to anticipate the next step of the journey. Do you remember Digital Equipment, Word Perfect, Wang Laboratories, CompuServe, Netscape, AOL, BlackBerry? Each once a leader, now forgotten. Even Apple suffered more than one near-death experience, Microsoft failed to anticipate mobile computing or the cloud, IBM was swept out of the industry it had created.
Mazzucato has correctly emphasised the contribution of state funded basic research to Silicon Valley, but thank goodness the development was in the hands of Steve Jobs, Travis Kalanick and Elon Musk rather than a committee in the department of commerce.
No one has, or could have, the knowledge of present or future required to create or implement successfully the strategies that Mazzucato recommends. Take her modern signature example — Germany’s Energiewende, or energy transition to renewables. You will not learn from Mission Economy that this highly political, much publicised and wildly expensive project has brought about significantly smaller reductions in carbon emissions than Britain’s quiet, economically and socially beneficial substitution of gas for coal.
The failure of the Energiewende illustrates the dangers of moonshots and the mission economy. As talk of a “Green New Deal” becomes more frequent on both sides of the Atlantic, the prospect of more large, costly and ineffectual visionary projects grows.
Politicians readily fall in love with such proposals, and Mazzucato is not shy in reminding us how anxious they are to engage with her in discussing them. But the vision that propelled China’s economic development was not Mao’s Great Leap Forward or Cultural Revolution, but Deng’s “it doesn’t matter whether a cat is black or white if it catches mice”. It is more rewarding and effective to build better mousetraps than to shoot for a mice-free world.
John Kay is an economist, author and fellow of St John’s College, Oxford
El passat 12 de març sense que gaire gent se n'adonés va passar un fet singular. En un consell de ministres es va aprovar la creació d'una empresa farmacèutica "pública", Terafront Farmatech. Dic "pública" perquè qui acorda el seu naixement és el govern. Ho va fer per la porta del darrera, sense fer soroll. La fórmula és: el CDTI té una empresa anomenada Innvierte Economía Sostenible SICC S.M.E, i aquesta empresa ha de fer una pacte negociat per a constituir una societat amb participació privada dedicada a teràpies avançades. Per descomptat, aprofitant que es pot amanir amb fons europeus i PERTE i el que calgui. El capital serà de 74 milions € i decideixen el la participació privada serà per part de dues empreses decidides digitalment ( a dit, fórmula democràtica i transparent): ROVI i Insud Pharma. I curiosament, aquestes dues empreses tindran el 51% del capital, serà doncs empresa privada (!). I ja hem tancat el cercle. Aquests són els fonaments del leviatan farmacèutic.
El leviatan (en hebreu: לִוְיָתָן, Livyatan, Liwyāṯān, "cargolat") és un monstre marí bíblic al qual es fa referència a l'Antic Testament, es fa servir sovint per designar forces incontrolables o criatures de grans proporcions. L'empresa "pública" ja s'ha dissenyat privada, incontrolable, i el sector públic no té els drets de decisió. Ara bé, les dues empreses privades tenen accés a fons europeus i PERTE sense necessitat d'aplicar a un concurs, en la mesura que el CDTI els aportarà. Accés a recursos financers fàcils i barats, baratíssims. Magnífic. Endavant les atxes.
Això té un nom i se'n diu capitalisme clientelar, "crony capitalism", "capitalismo de amiguetes" executat des del socialisme. Això ha passat davant els ulls de tothom sense que ningú en digués absolutament res.
Ara no és moment de debatre si cal o no una empresa farmacèutica pública o si aquestes empreses estan qualificades per a teràpies cel·lulars. Senzillament és moment de dir prou i fer marxa enrera a aquest tipus d'enginyeria clientelar opaca. Tant sols afegiré una dada addicional, totes dues empreses són de MADRID, "com no podia ser d'una altra manera".
The Anthropocene is functionally and stratigraphically distinct from the Holocene
The Conservation Revolution. Radical Ideas for Saving Nature beyond the Anthropocene
Two key articles and a book on the topic of planetary health.
Our more grounded goal was to distil the main issues at stake in these complex debates, which we argue revolve around two main axes: the human–nature dichotomy and the ecological merits or perils of contemporary capitalism. Both issues are not straightforward, and there can be no straightforward, black-and-white arguments for or against them. Indeed, there is a distinct danger in presenting them this way, as it does not correspond to empirical reality and the nuances of the debate. We therefore need to do justice to the potentially radical natures of these alternative proposals by discussing them in more depth to show in greater detail how and why they are radical and important, yet contain several untenable contradictions.
The Price Is Wrong. Why Capitalism Won’t Save the Planet
El mecanisme de preus no ha nascut per a capgirar les prioritats energètiques i conservacionistes. El capitalisme no salvarà el planeta, i ningú li ha dit que ho faci. Més aviat fa el contrari. I el socialisme tampoc el salvarà, això ja ho sabem de fa dies.
Today's consensus is that the key to curbing climate change is to produce green electricity and electrify everything possible. The main economic barrier in that project has seemingly been removed. But while prices of solar and wind power have tumbled, the golden era of renewables has yet to materialize.
The problem is that investment is driven by profit, not price, and operating solar and wind farms remains a marginal business, dependent everywhere on the state's financial support.
We cannot expect markets and the private sector to solve the climate crisis while the profits that are their lifeblood remain unappetizing. But there is an alternative to providing surrogate green profits through subsidies: to take energy out of the private sector's hands.
I el llibre proposa una energètica pública? No sé pas on anirem a parar.
We are telling the story in the way that we uncovered it, starting with midlife deaths of all kinds. We then focused on the immediate causes, which turned out to be deaths of despair among whites plus a slowdown and reversal in deaths from heart disease, which, until then, had been a main engine of mortality decline. Unfortunately, deaths of despair are not only afflicting middle-aged whites. While the elderly have been largely exempt, there have also been rapid increases in deaths of despair—particularly from overdoses and suicides—among younger whites. For whites between the ages of forty-five and fifty-four, deaths of despair tripled from 1990 to 2017. In 2017, this midlife age-group
had the highest rate of mortality from deaths of despair. But whites in younger age-groups were also doing badly and their deaths rose even more rapidly, accelerating in the last few years.
Drug overdoses are the single largest category of deaths of despair. They are part of a broader epidemic that includes death from alcoholism and suicide, a reflection of the social failures that we have described in this book. Yet the behavior of the pharmaceutical companies caused more deaths than would otherwise have happened, showering gasoline on smoldering despair. Stopping the drug epidemic will not eliminate the root causes of deaths of despair, but it will save many lives and should be an immediate priority. Addiction is extremely hard to treat, even with the cooperation of the addict. There appears to be wide agreement that medication-assisted treatment can be effective, but it is not available to everyone, often because of cost.
The first, critical step is to adopt a mission-oriented approach that focuses both public and private investments on achieving a clearly defined common goal: developing an effective COVID-19 vaccine(s) that can be produced at global scale rapidly and made universally available for free. Realizing this aim will require firm rules regarding intellectual property (IP), pricing, and manufacturing, designed and enforced in ways that value international collaboration and solidarity, rather than competition between countries.
Second, to maximize the impact on public health, the innovation ecosystem must be steered to use collective intelligence to accelerate advances. Science and medical innovation thrives and progresses when researchers exchange and share knowledge openly, enabling them to build upon one another’s successes and failures in real time.
Third, countries must take the lead in building and buttressing manufacturingcapabilities, particularly in the developing world. While an effective COVID-19 vaccine probably will not be available for another 12-18 months, a concerted effort is needed now to put in place the public and private capacity and infrastructure needed to produce rapidly the billions of doses that will be required.
Because we don’t know yet which vaccine will prove most effective, we may need to invest in a range of assets and technologies. This poses a technological and financial risk that can be overcome only with the help of entrepreneurial states backed by collective, public-interest-driven financing, such as from national and regional development banks, the World Bank, and philanthropic foundations.
Finally, conditions for ensuring global, equitable, and affordable access must be built into any vaccine-development program from the start. This would allow public investments to be structured less like a handout or simple market-fixer, and more like a proactive market-shaper, driven by public objectives.
I’m a big believer in capitalism – but some markets simply don’t function properly in a pandemic, and the market for lifesaving supplies is an obvious example. The private sector has an important role to play, but if our strategy for fighting Covid-19 devolves into a bidding war among countries, this disease will kill many more people than it has to.
In modern capitalism, value-extraction is rewarded more highly than value-creation: the productive process that drives a healthy economy and society. From companies driven solely to maximize shareholder value to astronomically high prices of medicines justified through big pharma's 'value pricing', we misidentify taking with making, and have lost sight of what value really means. Once a central plank of economic thought, this concept of value - what it is, why it matters to us - is simply no longer discussed.
The logical outcome of a combination of monopoly and rigid demand is sky-high prices, and this is precisely what is happening with specialty drugs. It explains why pharmaceutical companies enjoy absurdly high profit margins: in addition to the normal profit rate, they earn huge monopoly rents.59 A value-based assessment of the kind NICE carries out can be helpful because it reduces demand for the monopolists’ drugs and prevents them from charging whatever price they choose. The downside, however, is that increased elasticity of demand for drugs comes at the cost of leaving some patients without the medicines they need, because pharmaceutical companies may not cut their prices enough to treat everyone who needs the drug if doing so would reduce profit margins by more than the companies want.
Our Lives in Their Portfolios: Why Asset Managers Own the World
Els bancs han passat a un segon pla des de la crisi financera mundial de fa més d'una dècada. Avui, els nostres nous mestres financers són gestors d'actius, com Blackstone i BlackRock. I no només posseeixen actius financers.
Les carreteres per les quals conduïm; les canonades que subministren la nostra aigua potable; les terres de conreu que ens proporcionen els aliments; sistemes energètics per a electricitat i calor; hospitals, escoles i fins i tot les llars on molts de nosaltres vivim, ara tots augmenten la gran cartera d'inversió dels gestors d'actius.
Com a propietaris de cada cop més els elements bàsics de la vida quotidiana, els gestors d'actius configuren la vida de tots i cadascun de nosaltres de manera profunda i inquietant. En aquest seguiment revelador de Rentier Capitalism, Brett Christophers treu el vel a la ""societat de gestor d'actius".
Els gestors d'actius, mostra, són diferents dels propietaris tradicionals d'habitatges i altres infraestructures essencials. Comprant i venent aquests actius vitals a un ritme vertiginós, el quid del seu model de negoci no és la inversió a llarg termini i la custòdia acurada, sinó obtenir beneficis ràpids per a ells mateixos i els inversors que els donen suport.
En la societat gestora d'actius, els entorns naturals i construïts que ens sostenen es converteixen en un vehicle més per desviar diners de molts a pocs.
PS. Fonamental llegir aquest comentari.
