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Mariana Mazzucato calls for a return to mission-oriented public-sector procurement and leadership in the common interest

Mariana Mazzucato calls for a return to mission-oriented public-sector procurement and leadership in the common interest

The development of COVID-19 vaccines in less than a year was clearly a major achievement. But the rollout has been far from perfect. In the United States, Operation Warp Speed met its manufacturing targets but stumbled in coordinating initial shipments. The plan neither prioritized vaccine recipients according to need, nor did it go far enough to address racial inequality in the distribution.

Clearly, creating safe and effective vaccines and creating equitable vaccination programs are two different things. States’ Mission-oriented innovation agencies, especially the Defense Advanced Research Projects Agency (DARPA) and the Biomedical Advanced Research and Development Authority (BARDA), have proven to be critical in seeding the development of the cutting-edge mRNA vaccines. But is the technological mission of Warp Speed linked to the health mission of delivering a “People’s Vaccine”?

US President Joe Biden’s administration will need to keep this distinction in mind as it tries to build back better and reinvigorate science and technology funding after four years of Donald Trump’s dismissal of science and contempt for scientists. The vaccine rollout in the US – and even more so in Europe – shows that it is just as important to get the details of public-private partnerships right as it is to start with an ambitious overall objective.

In my new book, Mission Economy: A Moonshot Guide to Changing Capitalism, I argue that NASA’s program to put a man on the moon still offers lessons in catalyzing and governing public-private relationships that deliver results. Costing taxpayers the equivalent of $283 billion today, the Apollo Program stimulated innovation in multiple sectors – from aeronautics and nutrition materials to electronics and software – while also strengthening the public sector’s own capabilities.

NASA paid hundreds of millions of dollars to companies like General Motors, Pratt & Whitney (known then as United Aircraft), and Honeywell to invent the new fuel, propulsion, and stabilization systems inside its legendary Saturn V rockets. These publicly funded technologies then created numerous spinoffs that we still use today, including baby formula (from the astronauts’ dried food) and cordless vacuum cleaners (from the machines that scoured the moon’s surface). The integrated circuits used for navigation were a foundation stone of modern computing.

Critically, NASA made sure that the government got a good deal, offering companies “fixed-price” contracts to force them to operate efficiently, while also providing incentives for continual quality improvements. And the contracts’ “no-excess profits” provisions helped to ensure that the space race was driven by scientific curiosity, not greed or speculation.

Equally important, NASA avoided overreliance on the private sector. Had the agency outsourced its governance role, it would have been vulnerable to what its then head of procurement called “brochuremanship”: when the private-sector party dictates what is “best.” Because NASA had developed internal expertise, it knew as much as the contractors did about technology, and thus was well equipped to negotiate and manage its contracts.

By strengthening the public sector’s capabilities and outlining a clear purpose for public-private alliances, the Biden administration could both deliver growth and help tackle some of the greatest challenges of our age, from inequality and weak health systems to global warming.

These problems are much more complex and multi-dimensional than sending a man to the moon. But the imperative is the same: effective strategic governance of the space where public funding meets private industry. For example, whereas Big Pharma portrays the public sector as a mere consumer of medicines, the discovery of those drugs typically begins with publicly funded research.

Consider the $40 billion the US government invests every year in the National Institutes of Health. The NIH (along with the US Department of Veterans Affairs) backed the Hepatitis C drug sofosbuvir with over ten years of taxpayer-funded research. But when the private biotech company Gilead Sciences acquired the drug, it priced a 12-week course of pills at $84,000. Similarly, one of the first antiviral treatments for COVID-19, Remdesivir, received an estimated $70.5 million in public funding between 2002 and 2020. Now, Gilead charges $3,120 for a five-day course of it.

This speaks to a parasitic, rather than a symbiotic, partnership. The NIH must do more to ensure fair pricing and access to the innovations it funds, rather than chipping away at its own power, as it did in 1995 when it scrapped the Fair Pricing Clause from its cooperative research and development agreements. Conditionalities must be considered for innovations from mission-oriented agencies such as DARPA, BARDA, and the newly proposed Advanced Research Projects Agency-Health (ARPA-H), which will focus exclusively on health priorities.  

In the case of the pandemic, various governments poured $8.5 billion into the development of vaccines that are currently being manufactured and sold by US companies like Johnson & Johnson, Pfizer, Novavax, and Moderna. The question now is whether vaccine knowledge and know-how will be shared with as many countries as possible to bring an end to the pandemic. Will the NIH join a voluntary technology pool created by the World Health Organization for this exact purpose?

In preparing for the post-pandemic era, Biden’s promise to “build back better” implies more than a return to normalcy. But reshaping the economy for the better will require not just a shift in mindset but also a new social contract that promotes value creation over profit extraction; socializes risks as well as rewards; and invests in the common good, rather than just in specific companies or sectors.

While the US Coronavirus Aid, Relief, and Economic Security (CARES) Act imposed some conditions on businesses receiving government aid to maintain jobs, the new $1.9-trillion American Rescue Plan and the proposed $2 trillion American Jobs Plan must go further. They must ensure that public-sector investment is accompanied by a transformation in the relationship between the state and the private sector.

Here, lessons can be drawn from Europe. In France, President Emmanuel Macron made sure that recovery funds to airlines and automobile makers were conditioned on commitments to lower their carbon emissions. And in Austria and Denmark, firms receiving recovery funds had to commit not to use tax havens.

The task for the Biden administration is to provide leadership for the missions that will shape the decades ahead, starting with the fight against climate change. The US, said President John F. Kennedy in 1962, would “choose to go to the moon in this decade and do other things, not because they are easy, but because they are hard.” Today, the same type of visionary leadership is not a choice, but a necessity.

We need top-down direction to catalyse innovation and investment across the economy. And the Apollo era’s examples of government leadership, bold public-interest contracts, and public-sector dynamism offer a valuable template. Unless we use it, building back better will never be more than a slogan.


Mariana Mazzucato, Professor in the Economics of Innovation and Public Value at University College London and Founding Director of the UCL Institute for Innovation and Public Purpose, is Chair of the World Health Organization’s Council on the Economics of Health for All and the author, most recently, of Mission Economy: A Moonshot Guide to Changing Capitalism (Allen Lane, 2021). Copyright: Project Syndicate, 2021, and published here with permission.

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41 Comments

Good arguments and reasoning as to be expected from an academic versed in the subject. The world in which NASA ventured forth though is not the same as that of today. In the early stages the USSR outpaced the USA space program. BBC has an article currently explaining how out of necessity the Soviets had had to keep things simple, perhaps they still do given the rapidity of the arrival of the Sputnik vaccine. Hard to imagine though how NASA in its early formation would have succeeded in the face of today’s burgeoning bureaucracy, political machinations and compromises, corporate and political corruption, and the idealistic reasoning in general that can envelop and stifle progress very efficiently. Sure all of that was around in the sixties but in today’s computer age of media and communications all of that, if you excuse the pun, got strapped to a rocket. The problem is that ever increasingly the actual running of government policy has fallen to bureaucrats rather than elected representatives and what we are seeing is a bureaucracy that is self protective and self interested, more often than not too, opinionated and unaccountable. Not a great environment to furnish novel and efficient thinking, nor results.

the term deep state comes to mind

Agree very much Foxy. I have argued that a lot have forgotten what the point of Government is, and that more regulation is needed. But of course the capitalist free marketeers are saying "hands off". This is a good article that our government should heed as well, especially if they want to achieve what they say they do.

The key paragraph is here....
"Equally important, NASA avoided overreliance on the private sector. Had the agency outsourced its governance role, it would have been vulnerable to what its then head of procurement called “brochuremanship”: when the private-sector party dictates what is “best.” Because NASA had developed internal expertise, it knew as much as the contractors did about technology, and thus was well equipped to negotiate and manage its contracts."

Irrespective of the technology it must apply and we see daily the results when it hasnt.

I agree. As a retired computer programmer/analyst with experience both 'in house' and 'contractor' I learnt that the correct way to use contractors is tell them what to do. You don't out source expertise required in house. Remember Novapay? Wikipedia: "" purchased by the New Zealand Ministry of Education for $182 million over ten years, and was implemented in August 2012 after seven years of planning and development by Australian human resources company Talent2. From the outset, the system led to widespread problems with over 8,000 teachers receiving the wrong pay and in some cases no pay at all ""

Yes have noticed local councils switching to contractors as consultants now a bit of a dirty word. Of course the reason for use of whichever is self serving. The consultant insists on a disclaimer absolving them of any liability if things go pear shaped, in which case the council can then blame the consultant. Shocking example of this sort of nicety in central Christchurch. Council wants to herd people towards a new metro centre swimming pool. Therefore to catalyse that, shut down existing public swimming pool in Riccarton. Justified by publishing ongoing costs of existing pool at around $7mill. Amateur accounting sleuths at Riccarton pool reveal actual cost $2 mill at most. Says city council, oh dear the consultant slipped up. That is a 70% slip up. More likely the council briefed the consultant of the answer they wanted and told them to work backwards from there. It is actually in essence corrupted manipulation of other people’s money that is becoming very scary.

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Kiwi build is another good example of how its done in NZ

Hey, that's funny. Isn't kiwibuild using private companies? Private developers in fact. Because most government infrastructure got torn down to create artificial markets?

So really, it's another example of private market failure.

I am sure Light Rail must also be a private market failure .. just cannot figure out how . Would you enlighten me ?

Hey that's also funny. Nope, that's sheer lack of will and incompetence, wedded in by 40+ years of neoliberalism. After all there's so much institutionalisation at all levels no one can see any kind of bigger picture or embrace progressiveness. And this Labour government have been quite appalling too. But let's not make excuses for the other mob either - they have absolutely no interest whatsoever in public transport, progressive policies or advancing the public's interest.

hardly private companies are still building more houses than ever -- Kiwibuild currently at around 1300 in total for its 4 years -- government funded and government organized and contracted -- disaster a bit like light rail -- mental health review, child poverty, tackling inequity and pretty much everything else except corvid -- which we know has something to do with being and island.

Labour has been rubbish, a slightly better flavour of rubbish than the previous mob.

Interested to know what you think they've done better.

Well, while Labour are a bit rubbish on the border side of things, National would have had the country open the whole time a la Bolsonaro, and probably simultaneously saying there is no virus and telling us all to harden up.

Quite happy about the hit to property investors too - that would never happen under the previous mob. (and no, Labour are not doing well on housing either)

There's a couple of things right there.

Not being a tax haven any more - that's pretty good. Oh and not having the corruption and dirty politics of the National party and it's ilk, that's great too.

Beg your pardon. But the scenes at the committee reviewing MIQ etc were unsavoury to say the least. Pre-organised and orchestrated suppression of ability of legitimate questions being asked within the serious halls of our democracy. Transparent, think not. Kind, hardly. Arrogant certainly. Acceptable mature and candid behaviour, the complete opposite. Ask the speaker, it was so bad, he had to agree. Must be hard walking round life with a short left leg, quite something of a tilt.

Sure. Not related to the previous comments, but sure.

Oh so that does not fit, it is unrelated then, to your own sanitised subjective view of dirty politics then.

Come on. Actually read the comments instead of trying to goad.

And there's quite a good factual account of Dirty Politics in the form of a book, not to mention the well documented court cases if you need any reference material.

Oh read your comment sure enough. Perhaps you should read them again. Yes agree totally the statement by Key “we are not a tax haven’ was pathetic, odious and exposed well and truly, when that government was forced to revise the law somewhat and those Cayman like trusts were up and gone the next day. But the fact is that that government, for better or for worse, willingly or unwillingly, nonetheless,did that, not the present one. You say explicitly that this government is not corrupt, not versed in dirty politics yet the example of the aforementioned committee meeting as is all of that. For heavens sake have the spine to own up to your own words.

"...public-sector procurement and leadership in the common interest". Pray tell who decides what the common interest is? Unelected, unaccountable ideologues like the climate commission? List MPs accountable only to their party leader? Zero career outside politics political leaders?
Government research? "Simon Wain-Hobson, a virologist at the Pasteur Institute in Paris, points out that the researchers have created a novel virus that “grows remarkably well” in human cells. “If the virus escaped, nobody could predict the trajectory,” he says."
https://www.nature.com/news/engineered-bat-virus-stirs-debate-over-risky...

The private sector doesn't care about the common interest, only their own. So they have a big say. The ACT and National parties don't care about the common interest. Only their own.

The Labour shill is back from a lengthy break I see

Nah not really. The definition of shill is "an accomplice of a confidence trickster or swindler who poses as a genuine customer to entice or encourage others."

That doesn't seem like me.

Addressing my previous comment is there anything in there that is factually incorrect?

Kind of does seem like you, though. Every comment on this thread that exposed the government's failures you've defended and blamed on something else.

Haven't defended at all sorry. Please read my comments. There's a much greater context around multiple failures that needs cross party consensus and a more collaborative approach. I don't see that happening any time soon.

Very broad statements are very easy to disprove dcnbwz. For example, the ACT party have some excellent policy on dealing with New Zealand's mental health and addiction issues. Why bother if you don't care about the common interest? Of course you could claim this was just to "help them get elected", but that could be said for any party.

You do seem like a shill to me.

Please see any of the above comments.

If you can’t stand the heat, get out of the kitchen! Compliments, Harry S Truman.

Sounds like you're quite the nasty bully foxglove

More idea pathogens from an academic...

https://www.amazon.com/Parasitic-Mind-Infectious-Killing-Common/dp/16215...

Dr. Gad Saad, the host of the enormously popular YouTube show THE SAAD TRUTH, exposes the bad ideas—what he calls “idea pathogens”—that are killing common sense and rational debate. Incubated in our universities and spread through the tyranny of political correctness, these ideas are endangering our most basic freedoms—including freedom of thought and speech.

There is not much hope of any progress while out current crop of economists and politicians have no idea of where money comes from. In their minds money is only something that has to be borrowed from those that already have it and those people unfortunately all seem to live overseas.

All money is existing. Banks only lend out what they take from mum and dad depositors. And currently banks are awash with customer deposits..

Love it

:)

Money doesn't grow on trees Ponzikiwi!

.. that would constrain supply!

I presume this is a piss take?

build back better --- sounds very like Grant's the great reset! i assume it will be equally as dismal and then completely dropped .....

The actual outcome is a better fit if you don't believe we actually put a man on the moon. The space race was driven by the USA beating the Russians and it was done at any cost.

It was a national defense concern for sure. One of the few tasks I don't mind government picking up!