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Three main conclusions from our inaugural public lecture series with the British Library

By Rainer Kattel | @rainerkattel

Capitalism is broken and signs of its demise are abundant. Leading firms of our time are highly financialised (they are managed for shareholder return only) and they have turned evading and avoiding taxation into an art form. Investments in the leading economies of the world are anaemic yet money is virtually free. Urban centres become quickly gentrified, pricing out creativity and diversity. Inequality is increasing almost everywhere. Extreme populism is taking advantage of this with dire consequences for human rights and peace. Last but not least climate change, the planetary doomsday, has become almost unstoppable.

Much of what’s wrong with capitalism today stems from the fact that we (wilfully or unwittingly) misunderstand its core tenet. More than a hundred years ago, Norwegian-American economist Thorstein Veblen argued that what makes capitalism so successful is that it is a system of co-production. Without consumers, there are no products and vice versa. Without competitors, there are no innovations. Without institutions (such as money and laws), there are no markets. Co-production spreads knowledge, skills, and values inherent in them. In other words, what we call “value” in capitalist society is co-produced by multiple actors in the public, private and civil sectors.

Innovation is, simply put, an economic, social and political process. Yet, the capitalism of today assumes value and innovation are produced by a single actor: the private enterprise. And the digital economy has taken this to the extreme. The comforts of the digital age assume there is no society.

The Institute for Innovation and Public Purpose’s lecture series with the British Library, Rethinking Public Value and Public Purpose in 21st-Century Capitalism, brought together leading thinkers, architects, economists and urban planners to tackle the basic flaw in today’s economy: its lack of institutions, policy frameworks and toolkits for actions to co-create public value.

Richard Rogers + Shumi Bose in conversation: Architectural agency in the public sector

We can bring out three main conclusions from the series:

First, currently dominant policymaking frameworks — the ways in which most politicians, policy advisors, civil servants and academics alike see what should be done, and why and how they should be done — are fundamentally one-dimensional. The ‘market fixing’ principle of public policymaking is always in mending mode and a ‘do no harm’ mode. As important as that it is — avoiding bad things happening is as important in the public sector as is the creation of new opportunities – such narrow lenses create concepts and language that undermine public servants and make them weak partners for business and civic partners.

The public sector has become engrossed by the belief system that delivering savings is the ultimate virtue.

Focusing on fixing the failures — in markets, systems or in governance — and being able to prove public money is not being wasted, has engendered complex performance systems in the public sector that rarely ask what outcomes we want and how do we achieve them. The public sector has become engrossed by the belief system that delivering savings is the ultimate virtue.

Mike Bracken + Rainer Kattel in conversation: Unlocking public value from the data revolution

Second, partially because of the flawed policy frameworks, we have given up on the idea of public space: agoras of opinion, diversity and conflict. Our urban planning has become wholeheartedly a vessel of advancing private interest. Innovation and creativity is often spun from the unexpected and the foreign. Urban spaces, the fabric of things around our everyday activities, can and should embrace boisterous multitude rather than standardise, unify and privatise.

Indeed, one of the key messages of the lecture series is that planning, design and architecture are fundamentally moral sciences and practices.

A utopia of private electric vehicles making our commute more efficient epitomises the flawed policy frameworks and the extremely narrow ‘we’ that results from it. Indeed, one of the key messages of the lecture series is that planning, design and architecture are fundamentally moral sciences and practices. They create the space that guides us towards — or away — from each other. Space is the syntax to our political language.

Amanda Levete: Only connect — why public spaces matter

Third, the failure-oriented policy mindsets and diminished experiences of the public space can also be seen as a failure of our scientific and analytical frameworks. There is something fundamentally wrong with the way we think we should go about finding out what works — and what doesn’t — in policymaking. We are stuck in the idea that averaging out individual uniqueness gives us a pretty good etalon of human needs and desires. This creates, perhaps counterintuitively, public services that rely on the idea of redundancy. Schools, hospitals and social services should cope with all needs, whatever life throws at us, public services should be able to handle it. So far, this works only if we average human needs.

This creates redundancy by design and it worked brilliantly as long as we believed that such systems should be funded by public insurance systems. The public purse had different principles from the private wallet. Households need to save to spend; the public needs to spend to create services and savings (in the private sector and the households). Accordingly, as technology is fundamentally challenging the way we work, communicate and socialise, we also need a new epistemology in the public sector. Otherwise, we run the risk of creating privatised and highly personalised services — that are exactly right for me, as long as I can pay for them. The danger of increasing inequality is more than evident in this.

Stephanie Kelton: The public purse — a government budget is not a family budget… and why this matters

Yet, how do we scale up knowledge about one individual to a system level of transformed, digitally enabled public service, such as personalised health care? What are the fundamental principles of such new epistemology that relies as much on big data as it does on ethnography of places and people? This is where our next series with British Library picks up in April 2019. The welfare state and the innovation economy are often pitted against each other: one the wealth creator and the other the re-distributor of that wealth. But could this dichotomy obscure the real opportunity? Could there be ways to unite the power of the welfare state — in its capacity to create a healthy and educated population — with the full power of the fourth industrial revolution?

To read more and watch each talk from this lecture series, visit Rethinking Public Value Lecture Series on the UCL IIPP Blog.

Sign up to the UCL Institute for Innovation and Public Purpose’s mailing list to hear about our latest research, news and events. You can also follow us on Twitter: @IIPP_UCL.

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UCL Institute for Innovation and Public Purpose

UCL Institute for Innovation and Public Purpose

Changing how public value is imagined, practiced and evaluated to tackle societal challenges | Director: Mariana Mazzucato | Deputy Director: Rainer Kattel