Thursday, 16 September 2021

More nonsense from Mariana Mazzucato & Co.


That's in an article by her and co authors published by the Boston Review and entitled “Industrial Policy's Come Back”.

This article simply repeats a message she has made at least TWENTY TIMES before and I'm getting tired of it.

She and co-authors say in connection with Regan / Thatcher “neoliberal market fundamentalism” that “Under this regime, modern capitalist markets have proven themselves unable to create an even distribution of wealth and income, ecological sustainability, affordable shelter and health care..”.

Well no one ever said Regan / Thatcher style “fundamentalism” or free markets WOULD DEAL with inequality or “ecological sustainability”!!! Economics text books have always made it clear that there are some things the market does not deal well with, if at all: e.g. “externalities” like pollution, and inequality. Certainly in the UK, spending on social security did not plummet when Thatcher came to power: i.e. she was perfectly well aware that the market would not deal with poverty. (Incidentally, be nice if those who teach economics in universities got to grips with introductory economics text books, wouldn't it!!)

Ergo what is needed to deal with the latter problems is a social security system, anti pollution laws and measures like subsidies for wind & solar power etc. But we've been doing all that for YEARS and in some cases DECADES!! and no thanks to Mazzucato.

While one COULD CLASSIFY subsidies for wind and solar power as a FORM OF industrial policy, that on it's own is not what is normally meant by “industrial policy”. The phrase “industrial policy” (and this is the way in which the authors use the phrase in he second half of the article) means something like “a move towards a Soviet style central planning system” or an “industrial strategy” as the authors call it.

So while the authors claim the above points which have long been made in economics text books are an argument for an industrial stratety (in the latter broad sense) they are actually nothing of the sort.

Oooh. Gosh. Let's stimulate demand.

Next, the authors say “Any industrial strategy should therefore aim to stimulate demand...”. Well who ever said government and central bank SHOULD NOT stimulate demand when necessary? Why do Mazzucato & Co think governments and central banks have created and spent billions if not trillions into their economies since the GFC?


Next, the authors claim “We need a different approach to policy making: a mission-oriented framework that focuses government action on solving fundamental challenges rather than waiting for the solution to trickle down through competitive market forces.”

Now what ACTUAL EVIDENCE is there that a “mission-oriented framework” (whatever that is) would do better than competititve market forces? The authors offer no evidence!

This article is just a series of important sounding pseudo technical words and phrases which boil down to nothing.

Anyway, the authors then give four instances of “mission oriented frameworks” or if you like, for reasons for industrial policy. The first is that the state “should play an active role in creating and shaping markets in the direction of well-defined missions, using the full arsenal of policy instruments at its disposal—including public investment, regulation, demand-stimulating procurement, macroeconomic policy, and education and skills training.”

Well that's a bit like saying that in deciding what to do next week, you should have “well defined missions”. If that isn't as good as meaningless I don't know what is.

Anyway, the only actual EXAMPLE of the latter “market shaping” approach given is Germany's policies on combating climate change. But we already know (to repeat) that that's a problem that needs to be addressed and urgently!! We've all known that for YEARS!! Plus that (to repeat) is not any sort of new idea in that (to repeat) the economics text books have explained for DECADES, that the market does not deal well with externalities like excess CO2 emissions.

Looks like there is nothing in Mazzucato & Co's article that is original or new. It's just hot air, waffle and important sounding words of phrases, and I can't be bothered with any more of it.

But the authors should be congratulated in one respect: a torrent of waffle and important sounding pseudo technical words and phrases will fool a large majority of the public and perhaps about half of academia plus editors of publications like the Boston Review. If you can churn out hot air, waffle and important sounding phrases and a litany of false logic, you'll go far.

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