I attended a Policy Network event on 3 December. It was part of their series on economic reform, and the launch of William Lazonick & Marian Mazzucato’s paper called The Risk-Reward Nexus. Committee Room 3 in the House of Lords was a wonderfully grandiose setting.
The event was to centre on the ideas of predistribution and whether this was a viable or desirable alternative to the current economic strategies. Predistribution is “about providing a new path to economic growth by increasing human capital and consequently increasing overall economic performance as well. It is not just about cutting the pie more equally, but about producing a bigger pie and cutting that pie more equally”. Mariana’s talk centred on the main tenets of: predistribution, venture capitalists, structural change, innovation and equality, the issue of R&D and tax credits in the UK.
One point that stuck was that inequality was increasing, as CEOs of the UK’s top companies now get 185 times the average wage, and the gap has been increasing over the last 20 years. In innovation terms as Mariana put it “the risk is increasingly socialised in a knowledge economy but the profits are in increasingly smaller hands”.
Chuka Umunna spoke about where he saw the Labour Party’s policy going. This involved 5 lessons: 1) that organisations drive innovation and this needs to be encouraged and nurtured; 2) the merits of share buy-backs need to be explored; 3) the debate about the states’ role in risky investments in future technologies needs to be de-politicised, that the UK should look across the pond for examples; 4) when the state does invest in projects how can it be ensured the public get a better return on their investment? What should the state’s exit strategy be for when investments goes well; and 5) the principle concern of implementing an industrial strategy which has independent and objective decisions on state investments.
Dan Corry and Robin Murray also provided responses to the paper. Robin spoke from his years of experience in the business world, and provided examples of situations where predistribution had been tried previously to no good effect. Dan provided a broader overview of his experience in economics and government, but had no concrete answers to these questions.
There is a great amount of debate surrounding innovation, the tools, environment, capital and people needed for it. This event seemed to propose these questions: Is the system in which it can thrive best a fair one? Should it be fairer? Are there necessary compromises to make? And, what should the government’s policy look like?