First things first in leap to technological future

It is not difficult to see why economist Mariana Mazzucato ’ s ideas about the importance of state involvement in innovation and inclusive economic growth struck a chord within President Cyril Ramaphosa’s administration.

Considering that SA has been torn between the realities of a capitalist economy and the ideology of socialism, which provided such inspiration for our struggle, the role of the state remains a seductive proposition.

The way our politicians relish state intervention and the associated power has been demonstrated so clearly during the national lockdown.

What is not clear, though, is whether the most seductive part is the intervention itself based on ideological persuasion — or the associated intoxication of unmitigated power.

The glee with which government ministers seemed to dish out directives based on no more than a whim during this lockdown raises the suspicion that it may be the latter that holds sway.

After all, a government which can aid and abet thieving and corruption on the scale the ANC government has done cannot hide behind any sort of ideological persuasion.

“If a central hurdle to business investment in new technology is that it will not make investments that can create benefits for the ‘public good’ (since it then can’t capture the majority of the value created), then it is essential the state do so — and worry about how to transform those investments into new economic growth later.”

This is an excerpt from Mazzucato’s book, The Entrepreneurial State: Debunking Public vs Private Sector Myths, published in 2013.

In it she argues the role played by the state in the US, perhaps the poster child of capitalism, towards investment in technology and innovation, and how this was leveraged by technology firms like Apple.

Mazzucato’s argument is that the state is much more important in the creation of new markets, investment in innovation and the resultant economic growth. This is opposed to the dominant capitalist view that this role is played primarily by the private sector and that the state sits on the sidelines.

Capitalist states such as the US have always been too liberal in their promotion of the ideology of the free market in other markets, while they support their domestic markets with huge subsidies making their markets inaccessible to other economies.

Mazzucato shows that the role of these so-called capitalist states goes far beyond subsidies and crosses over into concerted investments in new technologies. The importance of Mazzucato’s ideas, and perhaps what made her part of

Ramaphosa’s presidential economic advisory council, is precisely her belief that state power can be leveraged to tap into the vast promises of technology, innovation and inclusive economic growth.

Considering Ramaphosa’s apparent interest in the 4IR as a vehicle for economic recovery and his reluctant socialist leanings, this is hardly surprising.

There is little to argue against the idea of an entrepreneurial state. In the face of rapid technological innovation, new challenges, changing markets and a growing population of informed citizens, an entrepreneurial state has become a necessity.

If we consider the somewhat traditional role of the state as the primary driver of infrastructure development, we can appreciate that this role remains paramount.

What has changed is what we consider as infrastructure development. While in the past infrastructure was related to roads, dams, and energy and communication lines, today technology has become part of the infrastructure which enables economic development.

This requires a complete change of approach to how we view the state.

“The state must spearhead innovation in new strategic sectors, but bring the public, private and civil society sectors to collaborate across different sectors”, Mazzucato said in an interview with Sunday Times recently. This is all well and good. The ideas are great and make perfect sense.

However, if we are unable to deal with corruption, cadre deployment and lack of consequence for criminal activity in the ranks of the politically connected, none of these ideas will gain traction.

One of the important approaches espoused by Mazzucato is a mission-orientated state.

However, our ability to present grand missions is completely divorced from our ability to pursue those missions. It’s almost like we have a government formed by people trained in the art of bluster, all about presentation and never about implementation.

If Ramaphosa hopes to make an impact, he’d better make the impact. Mazzucato won’t do it for him!

In the face of rapid technological innovation, new challenges, changing markets and a growing population of informed citizens, an entrepreneurial state has become a necessity