In her new book, The Common Good Economy, Mariana Mazzucato argues governments should stop merely fixing market failures and start actively shaping economies around public purpose, shared rewards and the common good.

International economist and adviser to governments, Mariana Mazzucato, argues in her new book, The Common Good Economy, that governments need to work hand in hand with the private sector, rather than leaving business to its own devices. They should be “moving away from fixing market failures and government failures towards actively shaping how markets are governed”.

Mazzucato is known for arguing that, all too often, the public sector socialises risks, while privatising rewards. Innovative products from private companies such as Apple are often co-created with the state. State institutions may do the basic research, train the skilled workers, provide the infrastructure and clean up the pollution generated. But when this pays off, the resultant profits go to the shareholders of the company. She believes more of the profits generated should be shared with the public.

This can be done through a combination of taxes on corporate profits, income, capital gains and wealth. Or it can involve equity stakes, where the government takes a part-ownership stake in the enterprise. Examples in her book range from Norway’s sovereign wealth fund to the London borough of Camden’s Community Wealth Fund, which invests in businesses to create jobs.

Mazzucato also reiterates her idea of governments setting out clear ‘missions’. These involve collaboration between private and........

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