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PoliticsJOE Podcast

PoliticsJOE

The Biggest Lie about Capitalism | Mariana Mazzucato interview

Jun 21, 202639 min
Summary

In this episode of the PoliticsJOE Podcast, Mariana Mazzucato, Professor in the Economics of Innovation and Public Value at University College London, challenges the conventional wisdom surrounding capitalism and the role of the state. Mazzucato argues that modern economic policy is hindered by a reactive mindset that views the government merely as a corrector of market failures. Instead, she advocates for an objective-oriented approach rooted in the common good, where the state acts as a proactive architect of public value. A key focus of the discussion is the design of government contracts. Mazzucato contends that many current agreements with private corporations—ranging from infrastructure management to public service delivery—are inherently parasitic because they lack conditions that protect public interest. She highlights the frequent "socialization of risk and privatization of rewards," noting that the private sector often benefits from public investment while failing to contribute proportionately to societal outcomes. By centering public purpose, such as sustainability and social welfare, at the heart of economic strategy, she suggests that governments can move beyond outdated small-state versus big-state narratives to foster a more innovative, symbiotic relationship between the public and private sectors.

Updated Jun 21, 2026

About This Episode

In this episode, we sit down with renowned economist, author, and founder of the UCL Institute for Innovation & Public Purpose, Professor Mariana Mazzucato, to discuss her new book The Common Good Economy: A New Compass, and why she believes modern capitalism is failing to deliver for ordinary people.


From Palantir's NHS contracts and the future of AI governance to Thames Water, steel, industrial strategy, and the green transition, Mariana argues that governments have lost confidence in shaping markets around public purpose. Instead, she says, we've created an economy that too often socialises risk while privatising reward.


We explore why governments fund many of the world's biggest innovations, from the internet and AI to Tesla and SpaceX, yet rarely share in the rewards when those investments succeed. Mariana explains how public investment helped create some of today's most valuable companies, why she believes Britain's relationship with business has become increasingly "parasitic", and what a more mission-driven economy could look like.


The conversation also covers Labour's economic strategy, Keir Starmer's mission-led government, the future of industrial policy, public-private partnerships, corporate subsidies, regulation, and the role of the state in driving innovation. Mariana challenges the idea that regulation stifles growth, arguing instead that smart regulation has historically been one of the biggest drivers of innovation and prosperity.


Mariana also explains why governments need clearer goals, stronger contracts, and greater accountability when working with private companies. Whether discussing water infrastructure, pharmaceuticals, AI, or clean energy, her central argument is that markets should be organised around outcomes that benefit people and the planet, not simply around short-term profit.


If you're interested in economics, politics, industrial strategy, public ownership, AI, innovation, inequality, growth, Labour politics, public services, climate policy, or the future of capitalism, this conversation is essential listening.


Let us know your thoughts in the comments. Do you agree with Mariana's vision of a common good economy? Can governments and businesses work together more effectively to solve society's biggest challenges?


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