Misdiagnosing the Economy, from Left and Right

Something strange has been happening on the American right. A movement that spent the Reagan years quoting Friedrich Hayek now quotes industrial-policy memos with the enthusiasm Bernie Sanders reserves for Scandinavian tax brackets. Tariffs are statesmanship again; the state’s picking industrial winners is “strategic.” Meanwhile the left has rediscovered “the common good” as a rebrand of the dirigisme it never abandoned. Both camps agree on a diagnosis: Capitalism, left to itself, produced shuttered factories, BlackRock landlords, and a financial sector that exists mainly for itself. Both are right that something has gone wrong, and both are wrong about what it is.

What they’re describing, almost without exception, isn’t the failure of the free market. The state’s fingerprints are all over the scene of the crime, which features all kinds of interventions, from bailouts and occupational licensing to a tax code written by lobbyists for the companies that are lobbying the state. The left’s and the right’s misdiagnosis has led each side to prescribe more cronyism dressed up as benevolent planning. That confusion is the terrain Mariana Mazzucato claims with her new book, The Common Good Economy.

About the Author

Julia R. Cartwright

Julia R. Cartwright is a senior research fellow in law and economics at the American Institute for Economic Research.

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Something strange has been happening on the American right. A movement that spent the Reagan years quoting Friedrich Hayek now quotes industrial-policy memos with the enthusiasm Bernie Sanders reserves for Scandinavian tax brackets. Tariffs are statesmanship again; the state’s picking industrial winners is “strategic.” Meanwhile the left has rediscovered “the common good” as a rebrand of the dirigisme it never abandoned. Both camps agree on a diagnosis: Capitalism, left to itself, produced shuttered factories, BlackRock landlords, and a financial sector that exists mainly for itself. Both are right that something has gone wrong, and both are wrong about what it is.

What they’re describing, almost without exception, isn’t the failure of the free market. The state’s fingerprints are all over the scene of the crime, which features all kinds of interventions, from bailouts and occupational licensing to a tax code written by lobbyists for the companies that are lobbying the state. The left’s and the right’s misdiagnosis has led each side to prescribe more cronyism dressed up as benevolent planning. That confusion is the terrain Mariana Mazzucato claims with her new book, The Common Good Economy.