Prominent economist Mariana Mazzucato, in her latest book, proposes a set of five principles – terming them taken together as a ‘compass’ – which, according to her should characterise an economy. These principles are purpose and directionality, co-creation by citizens, collective learning, reward sharing, and accountability. Subsequent to the identification of the principles, the book dissects the merits and worth of each principle.

The book begins with a historical journey tracing the philosophical origins of the common good. The works of Aristotle, Plato, Cicero, Thomas Hobbes etc. are alluded to before providing alternative challenges in the form of the communitarian visions of philosophers such as Micheal Sandel. This cascade of theories dealing with the collective good is an unintentional strain on the reader as the chapters seem to possess a strong drag value.

The author calls for a defining shift in terms of market shaping, ecosystems and collective value creations that will usher in a rethink on the roles of key actors and stakeholders. For example, in exhorting for a move from public interest or social value to dynamic public value, Mazzucato proposes a transformation from static market analysis to dynamic market analysis, change of focus from what will be delivered to will be tasked with the delivery, and technocratic approach to a more political and participatory one.

Urging the business to transform from bestowing attention to shareholder value to concentrating on “collective value creation,” Mazzucato dwells on the proposals made by Nobel Laureate Oliver Hart and professor of business administration, R. Edward Freeman (amongst others), in the realms of corporate governance and stakeholder value maximisation.

The book is replete with arresting and unique real-life examples that bolster the clarion call for introducing the “compass” into an economy. For example, while discussing the principle of co-creation, Mazzucato brings her readers’ attention to the European Union initiative, Horizon Europe. A mission on Climate-Neutral and Smart Cities, the mission has led to a fruitful and voluntary integration of local residents, local businesses, and community groups in designing transition road maps. Similarly, community led governance on natural resources has resulted in the creation of water co-operatives with a view to enhancing the conservation and preservation measures.

Alluding to a need to foster robust tax redistribution policies with a view to address income and wealth inequalities, Mazzucato vehemently advocates a “tax-the-rich” policy. Traversing in the footsteps of economists Gabriel Zucman, Thomas Piketty, and Emmanuel Saez, Mazzucato, argues in favour of imposition of wealth taxes and financial transaction taxes. Not stopping at the mere institution of redistribution measures, the author also strongly backs pre-distribution strategies such as imposition of conditionalities by the Governments into its contracts. Such conditionalities will function as pre-distribution tools that ensure that societal benefits are baked in from the very beginning. An example being the prohibiting conditions in the Creating Helpful Incentives to Produce Semiconductors (“CHIPS”) Act, that bar government funds from being employed for stock buybacks and payout of dividends.

The Common Good Economy – part optimistic part Utopian.

The Common Good Economy: A New Compass by Mariana Mazzucato is published by Allen Lane.

Thank You Net Galley for the Advance Reviewer Copy!