The incoherence at the heart of the Mazzucato Plan

Mariana Mazzucato has a plan for sorting out the world. It suffers fro a number of problems, only one of which is an illusory belief in governmental competence. There’s a logical contradiction in there.

If we want to ensure a socially just – and thus effective – transition, green investment banks must be governed democratically, and their financial assets should be shared collectively among workers and citizens. This could take the form of a citizens’ dividend that would provide everyone with a guaranteed minimum income, for example.

This is presupposing that the entire plan is profitable. Well, OK. But then if the plan is profitable then the use of green investment banks, governmental insistences, forcings and so on aren’t necessary.

Just assume, for a moment, that the initial diagnosis is correct. There’s a climate change problem, we’re causing it and something must be done. It’s possible that the something which must be done is not conventionally profitable therefore the investment won’t arrive under its own steam. Thus the forcing by government is required.

Or, alternatively, the system is altered so that such investment is conventionally profitable. Externalities are internalised, climate costs are now in prices, green investment makes sense in traditional money grubbing terms.

We would all agree that the capitalists are greedy for profit - sorry, are motivated by their enlightened self-interest. That means that we only require - again, assuming the base diagnosis is itself correct - one of the two sets of actions.

We either require the forcing into unprofitable investment or, having adjusted the system’s incentives, we stand back and gawp at the rush for the lucre to be had by going green.

What cannot possibly be true is that we’ve this gushing fountain of profit to be had which we also have to force finance to gulp from. And yet that’s what the insistence is. There’s going to be this massive profit to be had from greenery which must be shared directly among the citizenry but also we’ve got to force finance into partaking because there’s no profit available in their doing so.

We can’t believe that we’re the only people to spot this logical contradiction at the heart of this plan for the species. But then it never is popular to be pointing to the errors in recitations of currently fashionable nostrums, is it? However contradictory they are when piled upon each other.