Mariana Mazzucato does not do cautious. The economist who has advised Biden’s White House on the CHIPS Act, worked with Pope Francis on the common good, and collaborated directly with Andy Burnham during his time as Greater Manchester mayor, spoke to the New Statesman’s Oli Dugmore for an interview that ranged from the philosophy of Aristotle to the toilet systems on the Artemis mission to the carnival economics of Notting Hill.
The throughline was consistent: Britain has been making the wrong choices, they were always choices not inevitabilities, and the incoming prime minister has an opportunity to make different ones. Whether he will is the question Mazzucato is waiting to see answered.
What Labour got wrong
Her verdict on the Starmer government was characteristically direct. “They began exhausted. They began by complaining, as we all did, so they were right to complain, but then – hey, you’ve done it. Okay, now move on.” She identified two specific errors. First, they started on a negative footing with the winter fuel cut and disability allowance changes. “Even if that had been the right thing to do – and I think that was the wrong thing to do – you don’t begin with that. It’s kind of obvious. I mean, I don’t know who was running comms, but whatever. Heads should roll.”
Second, they adopted a missions approach she had helped develop and then implemented it poorly. Growth was not a mission, she argued – it was an outcome. “Who doesn’t want growth? Find me one country that’s not interested in growth. How do you achieve growth? You achieve it by solving problems through public and private investment.” The net zero mission was the one she thought had progressed. The others – opportunity, safer streets – had been left behind.
She had a particular critique of safer streets. “That should have become a social and economic determinants of crime mission. A lot of issues around teenage crime have to do with self-hate. If your own body has no value, your body has no value.” The austerity cuts to youth centres, community centres and public libraries had not just been wrong on their own terms – they had fuelled a crisis that now cost more to manage than prevention would have cost.
The public debt lie
On public debt, which she called a “misdirect,” Mazzucato was forensic. The 2008 financial crisis was caused by private debt, not public debt. Britain then responded by cutting public spending to reduce the deficit – “by reducing the numerator of debt to GDP, while cutting the long-run drivers of the denominator.” The result was that the ratio could rise even as the deficit fell, as the economy weakened beneath it. “That’s actually what we saw in Southern Europe.”
She then made the structural comparison: the difference between Germany and Britain was not fiscal discipline but the strategic nature of public institutions. Germany’s public bank had strong conditionalities linked to loans, ensuring the business sector receiving them was part of the solution. Britain bailed out industries without reciprocity. Germany required its steel sector to reduce material content of production as a condition of receiving support – driving innovation through the supply chain rather than simply preserving old jobs.
“Austerity did not work. It simply created cuts which did not then drive a more competitive economy. It just really created lots of misery on the ground.”
Burnham and the bond markets
The interview’s most directly political moment came when Dugmore asked about Burnham’s comment that Britain should not be “in hock to the bond markets.” Mazzucato had just met Burnham in Madrid at a Bloomberg philanthropies event bringing together mayors from around the world – where they had reflected on their shared mission work in Manchester.
“Bond markets penalise less trust for a very not intelligent tax policy. They will obviously also react to war, energy prices, and so on. But if you have a leader coming in who says ‘we’re actually going to start putting in some serious public money to drive a huge wave of innovation, to reduce the digital divide, to improve health systems’ – I literally cannot think of a country in the global north that’s been penalised for that.”
The nuance she added was important: it requires communication. She cited Claudia Sheinbaum, Mexico’s president, who holds a 7:30am daily press conference – open to hostile press – explaining her policies. “Imagine if Keir Starmer had done that here.” Her argument about Burnham was that his statement was correct in substance but had been misunderstood, in part because the communication architecture to support it was not there.
She was equally clear that money alone was not the answer. The “Deloittification” of the civil service – the outsourcing of public sector capability to consultants – had hollowed out the state’s ability to implement anything well. “Even when the finance is there, sometimes you lack that administrative capacity.” This was why she had set up the UCL Institute for Innovation and Public Purpose – because building the civil service’s capacity to think strategically was a prerequisite of any of the rest of it working.
‘Starvation in this country is a crime’
One of the more striking moments in the interview came when she spoke about child poverty and free school meals. She had previously gone viral for her Brexit verdict, and her willingness to use blunt moral language is characteristic. “We have starvation in this country. It’s crazy. That is a crime. It is a crime. We cannot have the levels of child poverty.”
She described work she had done in Brazil with Lula’s government, framing free school meals not as welfare but as an industrial strategy – creating local supply chains, linking schools to food manufacturing, building cross-ministerial cooperation between agriculture, health, education and finance. The point was that what looked like a social policy was actually an economic one: it drives investment, creates jobs, builds community and produces measurable outcomes across multiple departments simultaneously.
What she wants from Burnham
Mazzucato’s five elements for a “common good economy” provide the clearest summary of what she is asking of the incoming prime minister: purpose and directionality (missions with clear goals); co-creation and participation (designing policies with communities, not for them); sharing knowledge (not allowing public investment to be privately captured); sharing rewards (socialising risks and returns); and transparency and accountability.
She was explicit that picking and choosing among these was insufficient. “Unless you do the whole thing, you can’t call it common good.” The Manchester mission work she did with Burnham’s mayoral administration is the template she holds up – but she acknowledged it has to translate to national government, which is an entirely different scale and requires the civil service capability that currently does not exist.
Unison’s endorsement of Miliband as chancellor fits into this framework – Mazzucato’s view is that the chancellor appointment signals whether reciprocity and investment will be at the centre of economic policy or whether the bond market reassurance argument will win. The debate over Reeves and the North Sea is precisely the kind of question she has been asking for years: does public money come with conditions that drive innovation, or does it just flow to existing industries to preserve existing structures?
Her answer to the question of whether she is optimistic: “All our problems are due to choices we have made. None of them are due to deterministic boogeyman financial markets.” The incoming prime minister has a narrow window to make different choices. Whether he takes it is the question Mazzucato, like a growing number of economists and former Starmer colleagues, is watching closely.
You can watch the interview below:
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