Getting off the ground

ANTHONY BUTLER: Shooting for the moon is a pie in the sky goal for SA politics

Desperate governments tend to hire advisers who will tell them what they want to hear, and Mariana Mazzucato has our government’s ear

 First published in BusinessLive

2 APRIL 2021

We all agree that the presidential economic advisory council shouldn’t just be a talking shop. It is less clear whether it should directly challenge the conventional assumptions of the president and his ministers, or instead accept — and merely refine — the prevailing ideas of those in power.

Cynics have long embraced a general rule about the role of ideas in political life. Politicians do not dispassionately seek out the truth or, indeed, consistently recall that such a concept exists. Instead, they search for theories — and academic advisers — that tell them what they want to hear.

In this way their politically convenient programmes can be presented as the outcomes of a process of principled reasoning, purportedly built on robust intellectual foundations.

A president suffering from fiscal incontinence — perhaps because unions and special interest groups are breathing down his neck — can recruit a modern monetary theorist to explain why his actions are justified. Advisers to a desperate government that wants to crank up the banknote printing presses can seek out intellectual justifications for revoking central bank independence.

The most high profile international member of the presidential economic advisory council, Prof Mariana Mazzucato, founding director of an institute for innovation at University College London, provides an interesting test case for this theory about the role of ideas.

Some warning signs accompanied Mazzucato’s recruitment. Apparently, public enterprises minister Pravin Gordhan sought her out after reading her well-regarded book on the “entrepreneurial state”. Ominously, her ideas also struck a chord with trade, industry and competition minister Ebrahim Patel. Introduced to President Cyril Ramaphosa at a Davos dinner, she was apparently penciled in there and then for an advisory council role.

Unsurprisingly, such a recruitment methodology can entrench the familiar pathology of politicians being told only what they want to hear. There may be a Mazzucato effect, in addition, which magnifies her influence: her arguments are extremely well-organised, and they are unusually powerfully expressed.

In a recently published book, Mission Economy: A Moonshot Guide to Changing Capitalism, she revisits her earlier claims about state-led innovation in the post-war US. But this is also a more ambitious effort “to rethink capitalism through rethinking the state”, which captures some of the anti-capitalist spirit of the times.

She points to the role of the state in driving “game-changing” breakthroughs in technology-based businesses, highlighting the dependence of companies such as Apple on prior state-funded research, in the internet, programming languages, and voice-activated systems, among many others. Google’s search algorithm and the most profitable modern medicines alike, she shows, grew out of state-funded projects.

Mazzucato methodically debunks a myth prevalent in the US, and other parts of the global Anglosphere, that the private sector is good and the public bad. She also powerfully condemns the way risk has been socialised by the state while rewards have been privatised by tax-dodging beneficiary corporations.

Her signature theme is that the state should organise its interventions around “grand challenges”. For her, the 1960s Apollo programme is the archetypal “moonshot”, an inspirational mission that created not just new technologies but also new markets and new human possibilities.

Today’s grand challenges include climate change, the amelioration of global poverty, gender inequality, hunger, and deficiencies in the provision of basic education and health. Mazzucato concedes that these goals are “even more challenging than the moon landing”. This is something of an understatement. But her insistence that these challenges require concerted action is important and undeniable.

Mazzucato’s selection bias, however, represents a serious flaw of method, one she shares with “developmental state” proponents: she cherry-picks state-driven interventions that “worked” and ignores similar interventions that didn’t. (Those who believe the moon landings were a colossal waste of time and resources, driven by mindless superpower rivalry, are not entertained at all.)

She does not reflect on the failures, such as the 1970s US war on cancer, designed precisely to replicate the alleged successes of Apollo, let alone the myriad disastrous developmental state interventions that scarred many economies, north and south, across the post-war period.

Giving politicians leeway to engage in “moonshot” programmes has often been an invitation for them to spread patronage and secure short term political advantage. Today’s “strongman” leaders, in particular, are enamoured of visionary initiatives, or great leaps forward that embody national virility and symbolise the leader’s position at the vanguard of change.

SA has had its own recent moonshots. For the Fifa Soccer World Cup in 2010, for example, routine state activities such as maintaining energy and communications infrastructure were suspended, while resources were poured into infrastructural white elephants. The event was essentially a nationalist political project, so satisfying to elites that they have been unable to account frankly for dismal balance of costs of benefits it generated.

Former president Jacob Zuma’s proposed Russian nuclear procurement exercise was perhaps another great mission, one that was tragically derailed by counter-revolutionary forces.

In the US, where scepticism about the state is deeply entrenched and acclaim for entrepreneurial genius is naïve and fanciful, Mazzucato no doubt provides a useful corrective to prevailing wisdom, especially among conventional academic economists.

In SA, a “moonshot mentality” is likely to be less benign, liable instead to entrench the reactionary mindsets of some economy cluster ministers, and to embolden them in their many ill-considered interventions.

Privatising SA’s state-owned enterprises, Mazzucato has claimed, will “deprive the state … of an important pool of technical competencies in strategic sectors”. But SAA is not going to the moon. It can’t even get off the ground.

• Butler teaches public policy at the University of Cape Town.

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