Economist Calls for A New Form of Capitalism

The Central Bank of Barbados’ 48th Sir Winston Scott Memorial Lecturer, Professor Mariana Mazzucato, has called for a radical restructuring of capitalism. Mazzucato is Professor in the Economics of Innovation and Public Value at University College London and Founding Director of the UCL Institute for Innovation & Public Purpose.

Delivering the first in-person lecture since 2019 on the topic “Directing Inclusive and Sustainable Economic Growth: A Mission-Oriented Approach”, she said the current approach to capitalism was “very problematic” and had led to one crisis after another.

“We need to get out of this in a proactive way. We need to stop having crises to react to. If we keep doing that, we’ll always be too little too late. We’re designing ourselves into being in these crises,” Professor Mazzucato told the audience, which included Prime Minister Mia Amor Mottley and other government officials.

The highly respected economist and advisor to governments around the world said countries like Barbados and many in the global south were suffering the consequences of capitalism gone wrong, as reflected in the climate crisis.

“But the double jeopardy is that we’ve also created an international financial system that not only is not prepared to deal with capitalism but has actually also contributed to the crisis itself by having, for example, very problematic conditions tied to loans provided to countries.”

Professor Mazzucato, the author of Mission Economy: A Moonshot Guide to Changing Capitalism, said loans were often contingent on reducing public investment and public spending in an effort to reduce the fiscal deficit.

However, she said, countries aren’t encouraged to be proactive in structuring public finance and investment so they can expand their productive capacity in a way that’s inclusive and sustainable.

She pointed out that without critical public and private sector investments that lead to long-term growth, a country’s debt-to-GDP ratio can increase even with a reduction in the deficit.

During her presentation, Professor Mazzucato stressed that economic growth should be good for both people and the planet.