In recent articles you stated that the crisis is revealing important social problems, like precarious work. How can these be solved?
The crisis has unveiled weaknesses of the contemporary capitalist system, and now that companies ask for government aid, we must join efforts to help them. It’s time to create symbiotic public-private partnerships of real cooperation. Going from shareholder capitalism, where the main goal is to maximize profits, to stakeholder capitalism, where private companies become society’s trustee. There’s an opportunity now to rethink the government’s role and how we can work together—private and public sectors—to solve more pressing problems. Today, we tend to socialize risk and privatize reward, but we can incorporate disruptive policies that acknowledge that value and wealth are created collectively.
During the 2008 crisis, companies also asked for aid and after that, no real change was seen in their relationship with society. How can this change now?
It won’t change if we don’t do what I’m talking about. In 2008, the government filled the system with liquidity. Goldman Sachs was rescued by US taxpayers, but with no condition. The current situation gives us the opportunity to redesign contracts. Production capacity, social innovation, and solution to problems—be they energy or inequality—must all be financed. In order to do so, public money must beused. Airlines can be rescued, but on condition they reduce their carbon footprint, for example.
Is a particular government already implementing this type of strategy to channel public aid?
In Denmark, the government decided companies with operations intax havens would not be eligible for any aid. That’s how governments should operate, rewarding responsible companies and limiting resources for those that aren’t. In my book The Entrepreneurial State, I mentioned that that State not only spends and invests, it also knows how to negotiate. Any capitalist or entrepreneur would negotiate and establish that risk-reward relationship. The question is how to restructure the system so that public aid channeled to companies becomes part of a symbiotic, mutualistic,and less parasitic system.
Is this symbiotic relationship with the private sector you talk about present in investments made by numerous governments to develop a vaccine against SARS-CoV2?
I don’t think it is.There’s no guarantee that the structure of these public investments will ensure the widespread and free availability of vaccines
Will states continue to participatein the economy after this crisis?
They might say in a year that we have to tighten our belts. If that’s the case, we will live in austerity another 10 years. That would be the big mistake because the health system is on its knees today, in part, because of budget problems. Another thing they always say is there’s no money, but when we go to war, nobody says: “There’s no money.” We need to see climate and inequality crises with the same urgency as we see a war scenario. Inflation can be generated if money is created and the productioncapacity necessary to grow is not expanded. But we must realize that if we invest resources strategically, we can resolutely contribute to social progress.
Should a country the size of Brazil also print money to invest?
The problem is not the debt, but rather, what is happening in the country. Before COVID-19, In Italy we had a low deficit, but when it came to measuring it as a proportion of GDP, the ratio was very high. This is because productivity does not increase and GDP has had minimal growth in the last 20years. Public and private sectors do not invest well. The country won’t grow unless public investment is used for fundamental aspects like education, health, and research. And so, even with a low deficit, the debt-GDP ratio will crumble. Brazil must define what type of growth it needs. If it opts for investment-driven growth, it should allocate resources to relevant projects like the green economy. The government’s role goes beyond increasing industry profits through tax incentives,it must be able to design and conduct public policies that promote and multiply productioninvestment.
What do you make of Brazil today?
Brazil’s current situation is tragic, as is the United States’. The country has big social and economic challenges, and a president who is perhaps only interested in his close circle. There will be a serious problem if:there is no leadership to ensure the common good—as I believe is the case in Brazil—and there is [at the head of a state] someone who rejects science—when he or shehas a central role in addressing the health crisis.
What is Italy’s reconstruction Committee doing and what role do you play in it?
We’ve just finished phase three and have established the criteria to reopen the economy. A good part of these are based on WHO guidelines, but we’ve adapted them specifically to Italy’s case. I started working on the conditioning, like putting ambitious objectives on the table now that sectors are receiving government aid, and how to use these incentives so that Italy doesn’t go back to its normality, i.e. the normality of a stagnant economy with high unemployment among young people, and enormous development differences from region to region. The idea is to take advantage of this moment to foster investments that allow us to innovate and grow