Forum Final Response
Final response: Missions concern far more than scientific and industrial development. They are ultimately about public value creation.
September 15, 2021
With Responses From
Sep 15, 2021
6 Min read time
Missions need not be technocratic.
We are grateful to all the authors who responded to our essay. We are also pleased to note that the majority of respondents broadly agree with the central concept of missions as a new organizing framework for industrial policy. Nevertheless, several important critiques and concerns were raised that merit discussion.
There is much more to do to make the case for proactive, mission-oriented industrial policy around the globe.
One concern raised by several respondents—John Fitzgerald and Robert Kuttner, Nathan Lane, and Erica R.H. Fuchs—is that our essay is written at too high a level of abstraction and that what matters are concrete policies for specific countries rather than general ideas. In our defense, while the Biden administration’s rejection of market fundamentalism would appear to suggest the battle of (general) ideas has been won in the United States, things are rather different on the other side of the Atlantic and elsewhere. In Europe and beyond, progressive, social democratic governments are thin on the ground, and there has not been the same vast fiscal stimulus nor the targeted and coordinated investments in areas like semiconductors that Fitzgerald and Kuttner describe. In the United States, China may now be acting to focus the minds of policymakers toward a much more proactive form of industrial policy, but we feel there is much more to do to make the case for proactive, mission-oriented industrial policy around the globe.
For all these reasons, industrial policy—and economic policy more broadly—unfolds quite differently in the United States and other advanced economies today. Our essay attempts to discuss these issues in a general, pan-national context. Having said this, we agree with these respondents that failing to discuss specifics can understate the trade-offs involved in industrial policy. This leads to the broader concern raised by the majority of respondents—Suzanne Berger makes this point most forcefully—that our essay neglects the international political economy of industrial policy interventions.
In the U.S. case, the power of vested interests to water down radical policy interventions is of course a major barrier to the mission-oriented approach we advocate. We agree on this point entirely. Indeed, a key aim of the Institute for Innovation and Public Purpose—where we all work—is to find ways of translating new economic ideas into practice by working closely with policymakers and governments around the world to create new institutions like the Scottish National Investment Bank that can see through missions and withstand the “political business cycle,” as Nathan Lane puts it.
We want to emphasize that our vision of missions is not a technocratic one that neglects the role of labor, communities, social movements, and class struggle.
At the same time, we want to emphasize that our vision of missions is not a technocratic one that neglects the role of labor, communities, social movements, and class struggle. Indeed, when we talk about bottom-up as well as top-down mission formation, this should be interpreted as incorporating and, where appropriate, being led by the interests of these groups, not excluding them. We fully agree with Teresa Ghilarducci and Rick McGahey, Ann Pettifor, and Jake Werner that organized labor is key to creating the higher incomes that are vital to increase investment demand and help direct innovation and that the state has a key role in increasing their strength as a “countervailing force”—in the words of John Kenneth Galbraith—against business elites that have come to dominate advanced economies and overseen a growing chasm between productivity and wages.
Indeed, we are highly sympathetic and have written elsewhere and at length on the problem of growing economic rents: that is, the way modern capitalism is increasingly dominated by generation of profits from the ownership of assets in limited supply (including intangible assets like intellectual property) rather than investment in productive activities. We would argue this phenomenon is yet another justification for a mission-oriented approach since, in part at least, it is government’s failure to create the opportunities for profitable investment—including in environmentally sustainable innovations, as Pettifor reminds us—that has led to the development and entrenchment of financialized business models and rent extraction.
Julius Krein goes so far as to say that the structural changes that have negatively affected business models mean the government is now the “only source of risk capital.” We would not go quite so far. Instead, we’d argue that new forms of corporate governance and ownership are needed to drive more productive private investment. One obvious area where this approach should be given urgent consideration is the governance and ownership structures of Big Tech firms and platform driven digital markets—which, as Krein points out, are increasingly risk averse and drifting toward socially and economically damaging modes of operation.
While some authors find our concept of missions to be too general, others—Nemet, Fuchs, and especially Werner—argue it is not general enough, in the sense that it lacks an international dimension. We agree with the dangers of industrial policy nationalism, plainly evident (among other examples) in U.S. reluctance to regulate or tax increasingly monopolistic Big Tech firms in the name of competing with China. Our argument is that it is precisely because of the existence of existential challenges to public goods like biodiversity loss and climate change that we need to completely rethink economic policy and focus it on the achievement of missions. A net-zero transition and the shift to a “circular economy” is arguably the most important of such missions. Mission-oriented innovation policy, as we see it, is precisely about not limiting government action on global challenges like climate change to industrial policy but to ensure coordination across all areas of local, national, and international government to achieve this, from local procurement rules to the criteria central banks use to determine their large-scale asset purchases. From our perspective, a key challenge for government is the siloed nature of policymaking that holds back the achievement of missions.
Today’s challenges are what social scientists call “super wicked”: we don’t have much time, there is no central authority, and those trying to solve the problem are also causing the problem in the first place.
Let us make one final point about history. Lane’s thoughtful response argues that our vision of mission-oriented industrial policy is not as new as we paint it to be, pointing out that industrial policy in both Western and Asian economies in the postwar period was characterized by highly ambitious, cross-sectoral investment with some examples of social missions. We agree (indeed, this was partly the point of our historical example regarding Cold War–era moonshots in the United States). But we would argue that today’s problems are more difficult not just in degree but in kind. It is increasingly clear to many decision-makers that today’s challenges are what social scientists call “super wicked”: we don’t have much time, there is no central authority, and those trying to solve the problem are also causing the problem in the first place. In other words, challenges like the climate emergency require both a different kind of economic thinking and a different kind of governance to tackle them. Accordingly, governments are adopting mission-oriented approaches both in a narrow sense of industrial and science and technology policies but also increasingly in a broader sense of public sector reform. And while the narrower use of mission-oriented innovation harks back to postwar successes and debates, as Lane argues, the broader practices are driven by concerns that the governance and institutional solutions that predominated in the twentieth century are no longer sufficient or applicable today.
In this broader sense, missions concern far more than scientific and industrial development. They are ultimately about public value creation, more generally, and the central role of the public sector in achieving this goal. Mission-oriented policies are a pathway toward different ways of working across the public sector and creating better public value for citizens, and missions offer a way to reframe existing siloed policy practices and introduce new policymaking methods and tools. Our essay is an attempt to show how economics can and should engage with such fundamental shifts in governance and help tackle the grand challenges.
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