If the first floor of a building catches fire, it’s a problem for the penthouse. A fire is a collective threat to owners, tenants, visitors, and others. The resources that protect the building – fire extinguishers, sprinklers, fire escapes – make everyone safer. They support the common good.
Collective threats require collective solutions. But our world struggles to tackle challenges that endanger everyone, such as hunger or climate change. Mariana Mazzucato, an award-winning economist and founder of the University College London Institute for Innovation and Public Purpose (IIPP), believes that a new economic approach to the common good is required, one driven by mission-oriented public-sector leadership. She believes that the role of the public sector must be to set bold objectives and foster innovation, rather than simply reacting to market failures. Mazzucato’s vision focuses as much on the ‘how’ we do things as the ‘what’ we are trying to achieve – with the public, private and civil sectors working in mutual, reciprocal partnership, resulting in benefits to everyone.
Mazzucato’s work has drawn the attention of leaders around the world. She frequently consults with governments such as the U.S., U.K, Italy, and South Africa, as well as international institutions like the United Nations, World Economic Forum, and World Health Organization. In 2022, Pope Francis appointed her to the Pontifical Academy for Life for bringing ‘more humanity’ to the world. During her 2024 Bellagio Center Residency, Mazzucato began developing her newest book, The Common Good Economy: A New Compass, which lays out a new economic theory of the common good and outlines how it can address the challenges that define our time.
We spoke to Mazzucato about what inspired her to explore the idea of common good, the role it can play in tackling global challenges, and what makes her hopeful that this vision can be realized.
"It’s not about large or small, it’s about the state playing a smarter, more strategic role in society - being proactive, not just reacting to problems and fixing market failures."
Mariana MazzucatoAuthor, "The Common Good Economy: A New Compass"
What led you to focus on reimagining the role of the public sector?
After the 2008 financial crisis, many countries started implementing austerity programs in order for their economies to recover. It was about stimulating competition to spur innovation, and the state had to tighten its belt. I wrote The Entrepreneurial State to debunk the idea that, in order to stimulate innovation and competitiveness, we needed a smaller state. It’s not about large or small, it’s about the state playing a smarter, more strategic role in society – being proactive, not just reacting to problems and fixing market failures.
If you look at the history of Silicon Valley, you see that the technologies that make our phones “smart” – the internet, GPS, touchscreens, Siri, etc. – would not have been created without this kind of strategic, public-sector involvement. They were largely developed through the military-industrial complex. Why is it that it’s only through war or major crises like COVID that our government knows how to work with the private sector in a reciprocal way to benefit everyone? In normal times, the state tends to fall back to that reactive, market-fixing role.
I see The Entrepreneurial State as a historical correction to the idea that innovation only comes through the private sector, with the state existing mainly to solve market failures. But it’s also a guide for future policy. What would it mean to have a state use these same strategies to take on problems like climate change, biodiversity, and hunger?
What would it take for governments to embrace this approach to take on major global challenges?
The moon landing demonstrates that, when we want it to, the state can work with the private sector in a symbiotic, mutualistic way, with reciprocity. Going to the moon wasn’t just aerospace. It also involved investments in nutrition, materials, electronics, software, etc. Climate change presents a similar challenge. Addressing it means dealing with where we get our energy, what we eat, how we grow our food, what we wear, what we build…
There has to be intersectoral collaboration, and it has to accomplish the mission in a mutually beneficial way. To achieve that, the state has to use all its different levers – procurement, loans through public funds, grants, subsidies, tax incentives – to stimulate bottom-up innovation that can help accomplish the mission.
I’ve written a lot about this idea, and it’s one that has had quite a bit of impact. Our team at the IIPP advised the Biden administration on the design and implementation of the 2022 CHIPS for America Act, which focused on bringing semiconductor research and manufacturing back to the U.S. Our idea was to have more conditionality, so that the way the public and private sector work together has to have certain characteristics. Instead of just giving a lot of money to semiconductor companies, CHIPS said that they needed to be willing and able to invest and become better companies – using energy efficient supply chains, providing better working conditions, limiting share buybacks, things like that.
The idea of the public good – creating outcomes that benefit the public as a whole – should be seen as the highest possible goal. The work I started writing about at the Bellagio Center was about building a new economic theory of the common good, one that focused not on correcting market failures but on proactive approaches and ambitious, moonshot goals that benefit everyone. What does it mean for economic theory to justify public intervention to fulfill a bold objective – like net-zero emissions or solving the global water problem?
What does this theory of the common good look like in action?
In my book, I break the common good economy down into five elements. The first is purpose and directionality – identifying the bold mission we are trying to achieve. Next is co-creation and participation – using participatory processes rather than creating the mission and goals top-down. The third is collective learning and knowledge sharing. If a few actors benefit from the knowledge while others are blocked, whether that’s through patents or other tools, we’re not seeing the common good. The fourth is access for all and reward sharing, ensuring that everyone experiences collective benefits, rather than socializing the risks while privatizing the rewards. The final element is transparency and accountability. If we don’t know what people are doing, what they are getting, and why, then none of this makes any sense.
The book has plenty of real-world examples. Take the development of the AstraZeneca COVID vaccine…As a condition of its funding and partnership, the U.K required that the vaccine be distributed at cost. This enabled the government to distribute it to all citizens while making it more affordable and accessible to other countries. The agreement also built knowledge sharing into the process, deepening the U.K.’s overall understanding and capacity for vaccine manufacturing.
What would the world look like if we embraced the common good economy?
Moonshot goals require huge amounts of collective intelligence, collaboration, and trust between different actors who have to work well together. Those ideas are at the heart of the common good economy.
Governments and companies will also have to walk the walk. Right now, public and private sector actors often talk about “public good” and “public interest,” but if we don’t have an underlying framework, then those terms wind up being used in a very general way. The elements of the common good economy allow us to test those statements and hold people accountable. If there’s no mission, no participatory inclusion in the goal-setting or monitoring, no sharing of knowledge or rewards, or no transparency, then what are they really talking about?
This approach will also allow more learning. Agreed-upon standards and criteria for common good economics will create more rigor and standardization in terms of what these elements mean, enabling us to collaborate more and better.
Too often good work happens away from coherent economic policy. You might have a department of education doing good things with students or a department of health doing great work around diabetes. But the ministry of finance keeps building its growth models using the same old-school thinking. If economists don’t know how to evaluate, nurture, support, and learn from good ideas, they won’t scale and create a wider impact. Bringing the common good into a clear economic theory helps build that understanding and create more transformative change across sectors.
In 2024, Mazzucato joined the late Pope Francis – a prominent supporter of her work – at the Vatican to make the case for economics centered around the common good. In his welcome address, Francis said, “Pursuit of the common good and justice are essential and indispensable for the defense of all human life, especially the most fragile and defenseless, and for the respect of the entire ecosystem that we inhabit.”
Learn More:
- Watch the Vatican dialogue on Economics of the Common Good with Mazzucato, Prime Minister Mia Mottley of Barbados, and Pope Francis.
- Listen to Mazzucato discuss the power of mission and moonshot thinking to achieve collective social progress on the Hidden Forces podcast.
- Read Mazzucato’s landmark paper outlining the theory of Common Good Economics in the Journal of Economic Policy Reform..
The opinions expressed in this article are those of the author. The Rockefeller Foundation is not responsible for and does not endorse its content.