A little less conversation, a little more action

By Mariana Mazzucato, Rainer Kattel and Rowan Conway

COP26 highlighted bold ideas, but policymakers are lacking the tools to enact them. What’s now needed is time and space to experiment with new economic frameworks to enable positive action on climate transitions. With support from Laudes Foundation, we are embarking on a multi-annual partnership to create a dedicated economic policy experimentation hub called the ‘IIPP Policy Studio’.

When the UCL Institute for Innovation and Public Purpose (IIPP) was founded in 2017 it set out to explicitly tackle the flaws in our current economic system and explore bold new thinking on the role of the state in the economy. Through our research and convening we have brought together networks across government, academia and business, playing a role in building a new movement that seeks to create an economy guided by the common good, equity and sustainability.

The risk with any new economic movement is that it remains closed within the confines of high level academic and conceptual debates — which sadly then forms part of the “blah blah blah” rather than moving policy practice forward. At IIPP, we never wanted to advocate for policy from an Ivory tower. From the day we started, we got our hands dirty and worked with policymakers in practice to co-design new tools and frameworks for inclusive, healthy and sustainable growth. While bold economics research is crucial, the work ‘on the ground’ with public organisations is equally critical in order to change public policy practice and so we have been exploring practical ways to translate this new economic thinking into policy change at the place or institutional level.

This has included a wide range of deep dives that ultimately led to the Mission-Oriented Horizon 2020 programme and policy guidance for the EU. This guidance then unlocked funding for research and innovation across members states, the MOIIS commission that drove challenge-oriented innovation and industrial strategy into UK government, and our work with the Scottish Government that helped to develop and launch a new mission-oriented national bank (Scottish National Investment Bank). Since then, we have worked on more deep dives with our growing MOIN network and other policy-making bodies — at a city level in Camden in London and Biscay region of Spain, in national and regional governments in British Columbia, Canada, South Africa, Denmark, New Zealand and Sweden — as well as with key public institutions such as the European Investment Bank (EIB) and the BBC where we developed an evaluation framework to measure dynamic public value.

Practice-based theorising in action

These deep dives are not simply standard academic or think tank round tables — they are what we call “practice-based theorising”. This means taking insights from pioneering research, enabling co-creation and setting a route to implementation when it comes to policy, and by using participatory research, engagement and design processes to bridge the gap between theory and practice. It is this collaborative work with policymakers that makes IIPP different. Through practice-based theorising our researchers bring new theories to policymakers, not just offering a theoretical stance but engaging, experimenting and evolving these concepts in practice. Through deep dives we have learned a great deal from practice and these lessons then feed back into the theory itself, and ultimately into what we teach through our Masters in Public Administration.

Practice-based theorising takes artful engagement of cross-disciplinary actors in multiple sectors and places. Using dynamic research methods, participatory co-design workshops and rapid prototyping, we learn from the places we work in and translate IIPP’s key economic theories into testable policy innovations. We also teach our MPA students many of the participatory design processes we deploy via our MPA module called “Transformation by Design” which acts as the connecting tissue between the taught course and the placement semester within our policymaking network organisations.

Bringing theory to life

While the participatory co-design method is important, without the new economic thinking it would be hollow. The theory is the essence of what IIPP brings to the process, seeking to advance new economic thinking through practice-based work in the following areas:

• MARKET SHAPING: Policy must be framed and designed as market shaping not market fixing
• COLLECTIVE VALUE CREATION: Value is created collectively; this is not reflected in underlying mainstream economic models of policy design and policy evaluation
• FINANCE is not neutral; financial structure of the economy is crucial for its value creation and market shaping
• DYNAMIC CAPABILITIES of public organisations are key to market shaping and value creation

Policymakers who work with us will often begin with the question of “how?”

“How do I get from high level missions to operational delivery models?” “How do I drive public value into the centre of our decision-making?” “How do we govern and evaluate for system change?”

But we find that immersing them more deeply in the “what” helps develop the mindset for change. The “how” will necessarily require deep engagement with the context and place that the frameworks will be used (it is never a simple cookie cutter replication process because there is quite fundamental change embedded within the theories). Learning — not copying — is central to the practice-based theorising model.

To engage policymakers on the ground in this new economic thinking, orientation is a necessary part of the process. This is why we have developed Executive Education programmes to provide a necessary immersion in the thinking as it explicitly challenges the prevailing market-failure logic that underpins policy interventions (see ‘The Entrepreneurial State’ and ‘Rethinking Capitalism’ ). Understanding how market shaping differs to market fixing is a vital element of the IIPP approach to economics. Market fixing relies on the notion that (perfectly) functioning markets can be understood as the most efficient, welfare-optimising way of organising society so that policy is needed only where there is clear evidence of market failure to help markets back into equilibrium, in our deep dives, we work with policymakers to test alternative market-shaping frameworks. The graphic below illustrates the key ontological differences between the market-fixing and market-shaping frames.

Shifting policymakers towards a ‘market-shaping’ approach where there is more uncertainty about the future involves challenging many deeply established paradigms, strongly held mindsets and common ways of working and thinking about policy. So in our deep dives we break down key frameworks such as mission-oriented innovation or long-term alternatives to cost-benefit analysis and explore how to get beyond ingrained and inertial concepts of both value and efficiency, taking on the applied challenge of pursuing a mission-oriented approach to policy, creating value and dynamic efficiency by reorienting finance and investment and driving innovation-led growth.

Scaling the process through the IIPP Policy Studio

Now with the generous support of Laudes Foundation, we are embarking on a four year partnership to deepen our multidisciplinary approach to academic research, teaching and policy design by creating a dedicated policy experimentation hub which we are calling the ‘IIPP Policy Studio’. The Studio is a virtual policy studio space which enables us to systematically coordinate our policy deep dives and draw together a dedicated team that enables this work at scale. We believe that in all of the areas we work in we need: first, new academic and policy frameworks; and second, new institutional innovations such as analytical tools and policy instruments, ways to engage the wider public and new storytelling. The key is to develop and test both new frameworks and on-the-ground solutions together. This work ultimately generates a new epistemology of policy-making — a new way of gathering, framing and analysing knowledge about policy.

This studio approach is multidisciplinary and combines different methodologies, lenses and approaches, including high-level advisory commissions and roundtables, a policy fellowship programme, policy analysis and deep dives, but also strategic design-based studio spaces. Key to the IIPP Policy Studio is our convening power: bringing together diverse new voices around key challenges, in a practice-focused way, will amplify and unify new thinking for policy reforms. The IIPP Policy Studio aims to develop and test creative, practical and scalable solutions to our most pressing challenges. The Studio is focused on policy-relevant research carried out by multidisciplinary teams, working together with policymakers and academic partners; that is, the studio approach is focused on concrete change through experimenting with stakeholders.

The urgency for this kind of new economic “thinking and doing” is pivotal in the context of the climate crisis. If under current economic theory, value is purely a reflection of price, then this effectively encourages the exploitation of those public and environmental goods that are “free” and today’s economists either ignore the natural environment, or trade it off against other monetary goals. If we are to get past the “blah blah blah” and have a chance of tackling the climate crisis, this must change.

See you in the IIPP Policy Studio!

The IIPP Policy Studio is supported by Laudes Foundation.