Even after stepping off an international flight, and despite a troublesome phone line, economics professor Mariana Mazzucato, comes across exactly like she does in the countless podcasts, YouTube videos, and articles. No nonsense, forthright, and articulate about her ideas.
Those ideas — which have led her to advise everyone from firebrand US politician Alexandria Ocasio-Cortez, to the European commissioner for research, science and innovation Carlos Moedas, and the government of Scotland — have captured the imagination of a number of SA government officials.
As a result, Mazzucato now counts President Cyril Ramaphosa’s economic advisory council, which met for the first time on Wednesday, among her many advisory roles.
The Italian-born and American-raised professor’s local fans include public enterprises minister Pravin Gordhan. The minister introduced Mazzucato to Ramaphosa at this year’s World Economic Forum after an “intense discussion” about how an entrepreneurial state — an important theme of Mazzucato’s work and the subject of her breakout 2013 book — can help catalyse innovation in SA.
Her first book — The Entrepreneurial State: Debunking Public vs Private Sector Myths — interrogates the narrative that the private sector is solely where innovation happens. It examines the large risks and early-stage investments taken by the likes of the US government that made the extraordinary growth and profitability of companies like Apple possible.
As the founding director of the Institute for Innovation & Public Purpose (IIPP) at University College London, Mazzucato’s work also includes helping governments to reframe the way they approach policy. Not as a series of sector-specific targets, but as a set of clearly defined missions that aim to address societal problems, which various actors across the public and private arena work on together.
Another admirer is trade and industry minister Ebrahim Patel, who in a recent interview with the Mail & Guardian referenced Mazzucato’s book and bemoaned what he sees as SA’s “strawman” debate, that routinely pits the state against the private sector.
Mazzucato’s work critically examines this question.
“Depicting the private business as the innovative force, while the state is cast as the inertial one — necessary for the ‘basics, but too large and heavy to be the dynamic engine’— is a description that can become a self-fulfilling prophecy.
“If we continue to depict the state as only a facilitator and administrator and tell it to stop dreaming, in the end that is what we get, and ironically it also then becomes easier to criticise it for being lame and inefficient,” she says in her book.
In SA, however, discussions over the state’s role in the economy remain contentious. The tension has arguably only worsened after a decade of corruption left many of the country’s state-owned institutions stripped of money, skills and morale. It has all but eradicated the public’s confidence in the state’s ability to achieve anything.
But Mazzucato acknowledges the problem of corruption — “believe me as an Italian I know a lot about that”, she tells Business Day — as well as state capacity.
In countries with a history of corruption, it is very important to tackle the problem seriously while not giving into the dichotomous narrative that the public is bad, and the private is good, she says.
The problems facing SA’s state-owned entities (SOEs), many of which became ground zero in battles between political factions and patronage networks in recent years, loom large for Mazzucato. But outright privatisation of SOEs would, she argues, “deprive the state and other interacting private companies in the economy of an important pool of technical competencies in strategic sectors”.
A key concern, she says, will be determining what it means to “remain public but to serve the public good and not give in to sectoral political interests”.
State capacity is a problem, not just in developing countries, she points out. But when the state is there simply to fix market failures, it has “little incentive to invest in its internal capabilities and capacities” she argues, becoming reliant on consultants, and in the case of many developing countries, philanthropic organisations.
Mazzucato joins what has been largely viewed as a stellar list of economists and academics that make up the council. It includes the likes of Dani Rodrik, a professor of International Political Economy at the John F Kennedy School of Government, Harvard University, and an adviser to former president Thabo Mbeki. As well as infrastructure and regulatory economist Grové Steyn; agricultural economist Wandile Sihlobo, and former governor of the Bank of Tanzania Benno Ndulu to name just a few.
But the council’s announcement was quickly followed by the question: Why does SA need yet another advisory body when what it really needs is policy implementation.
Mazzucato is keenly aware of this.
“I am not an expert on SA, and I will ... at least try to learn and listen and not just go there and preach,” she says.
She will not emphasise “new stuff to be done”. Instead her focus will be on how to “rethink existing instruments” in the government’s toolbox like procurement, for example, to “nurture new solutions” to SA’s well-diagnosed problems.
This approach also tackles the question of money, particularly pertinent in SA’s case as an extra bailout for embattled power utility Eskom is expected to widen the budget deficit and drive up the country’s debt to GDP ratio.
Crying foul over budget constraints is, Mazzucato says, “a false problem”.
“The budget of any country is huge,” she says.
“It’s not as if the SA government isn’t spending money, the question is how to transform some of the ways [of] spending money.”
It is important not to underestimate just how much change can come from “transforming static instruments like government purchasing power” into more dynamic instruments, that make public spending more strategic and crowd in other forms of finance.
“The state can do nothing by itself, they need other partners but if the state instruments are static they then fail to crowd in other forms of finance,” she says.
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