Social Policy in Ontario

On 16 April 2019 Greta Thunberg, the young Swedish climate activist, gave a speech to the European Parliament, calling for ‘cathedral thinking’ to tackle climate change: 

When they built the cathedrals that are among Europe’s most magnificent cultural achievements, the medieval master builders took chances that would drive a modern architect out of business. Nobody knew how much it would cost to build a cathedral or how long it would take. But these were missions with a purpose – to demonstrate the glory of God through creativity – and they brought together many different sec­tors of society: clergy, craftsmen, nobles, rulers and ordinary people. Today, the cathedrals are still with us. 

Government can build the cathedrals of mission-­oriented innovation in the twenty-­first century if it is recast with courage, dynamic competency, leadership, resilience and creativity. But this means strengthening systems and the underlying forms of collaborations. Indeed, as is well known, many workers died building the great cathedrals. Having societal challenges drive modern innovation means embed­ding equity, fairness and sustainability within our systems of public health, public education, public transport. The social infrastructure that enables businesses to work and compete globally must be imagined and designed in this way from the outset. 

And the relationship goes both ways. For public systems to work and be part of a healthy social fabric, we need a different type of private sector with which governments can interact. Government alone, no matter how ambitious and mission­-oriented, cannot pursue a better path if it does not have a more productive relationship with business – and if business itself is not more long-­term­-minded and purposeful. While there are movements afoot to get business to move away from pure maximization of profits and shareholder value towards a more stakeholder­-driven governance structure, so far there is little evidence that this is actually changing any­ thing beyond the feel­-good factor. Real progress will only happen when stakeholder governance and ‘purpose’ become central to how organizations are governed and how they inter­act. To address the challenges set out in this book, to change capitalism, we must therefore change the inter­relationships between government, business and civil society, especially the underlying power relationship. There are a variety of differ­ent forms of capitalism, and we have the wrong one. 

Chapter 2 began with a list of the central problems in cap­italism today: finance financing finance; business preoccupied with quarterly returns instead of long­-run growth; global warming; and governments that are tinkering rather than steering transformative change. Chapter 3 looked at how the way in which government acts (too little too late) nests within a particular intellectual framing of what government is for: fixing markets. Chapters 4 and 5 explored the need to bring a more mission­-oriented approach to public policy. This chap­ter argues that a more purpose­-driven government and a new relationship between public and private – i.e. capitalism – requires a new political economy founded on the co-­creation and shaping of markets, not just fixing them. This requires rethinking value creation as a collective endeavour. Just as existing policies and structures are informed by (problematic) theories, a mission­-oriented ‘practice’ for policy requires a new theoretical basis driven by a new approach to market shaping and value creation. 

There are, I believe, seven key pillars to a better political economy that can guide a mission­-oriented approach.

The first is about a new approach to value and the collective pro­cess through which it is created. We need business, government and civil society to create value together, with none being rel­egated to cheerleaders of the other. In this process it is necessary to define the collective creation of value and the notion of public purpose which can drive the direction of that value creation and inform how value is owned and shared. 

The second is about markets and market shaping. Missions require a different framing for policy – not about fixing market failures but actively ‘co­-creating and co­-shaping’ markets. Shaping markets means moving our language – and our thinking – from a model in which the state’s main goal is to fix and ‘level’ the playing field to one in which it co-creates a direction, and hence must tilt the playing field towards that direction. The latter is not about ‘picking winners’ but (as explained in Chapter 3) picking the willing by aligning instru­ments that are available to government to steer the economy in the direction that produces the kind of value we want. This means that taxation can be used to reward value creation over value extraction, and to steer value creation towards building an economy that is more inclusive and sustainable. 

The third is about organizations and organizational change. If what is being sought is a common purpose, that requires capabilities which are about co­operation, not com­petition. These include the capability to take risks together and experiment; to welcome learning under conditions of uncertainty; and to use finance to serve long­term objectives rather than itself. It also includes the ability to evaluate past experiences based on a holistic view of the spillovers – both positive and negative – that occur when trying to achieve an objective. Here, it is crucial to go against the trend of govern­ments outsourcing their capabilities and capacity and to reinvest resources into structures that foster knowledge cre­ation, learning and creativity inside the civil service. It is impossible to co­-create value without this. 

The fourth is about finance and long­term financing. So much of today’s economic discussion tends to focus on public debts and deficits. But a mission­-oriented approach brings a new perspective. Getting the economy to work for societal goals, rather than society working for the economy, requires a reversal of the way budgets are thought about. We must begin with the question, ‘what needs to be done?’ and then move to that of how to pay for it. If structured through dynamic institutions that encourage creativity and innovation along the way, public investment can foster long­-run growth. 

If we can do it in wartime, why not in peacetime, when the urgency is to solve societal battles and achieve common goals? The fifth is about distribution and inclusive growth. Col­lective value creation and market-shaping make sure the creation of value and its direction gets the conditions right, so that inequality can be fought by pre-distribution, not only by redistribution. This means more emphasis on good jobs, col­lective ownership structures – including key resources such as data – rather than the usual ex­-post-correction via taxation. In other words, once we accept that value creation is a collect­ive effort (value), requiring risk-­taking and experimentation (capabilities), and adequate and well­-structured financing (finance), the distribution of that value must reflect those prin­ciples. First, it must reward the entire set of value creators. Second, it should enable the recreation of that value by invest­ing in the sources of creativity. Third, the financing sources must be replenished rather than extracted. Then there will be more fairness and resilience in our economic system.

The sixth is about partnership and stakeholder value. Emphasis on collective value creation means that how we design the collaborations between business and government matters. The notion of ‘purpose’ and stakeholder value is not only about changes to corporate governance but is also about the details of contracts between business and the state. The example of how NASA worked with the private sector has important lessons for modern-­day partnerships, which too often are parasitic rather than symbiotic. Parasitic partner­ships are ones where one organization grows at the expense of another. Symbiotic ones are where both prosper – with a common goal. How this can be done in today’s markets for digital platforms, health and energy is a pressing question. 

The seventh is about participation and co­-creation. For value to be created collectively, we must foster new forms of participation in that creation process, via a revival of debate, discussion and consensus­-building. For this to happen, new, decentralized forums are needed that bring together different voices and experiences, such as citizen assemblies. And if such forums and institutions are not present, they must be built. We should not forget that both Roosevelt’s New Deal and the moon landing were in essence governed by the elite. The chal­lenges of the twenty-­first century will require much more interaction with citizens and communities, and indeed leader­ ship by them. But in the first instance, a stakeholder approach to value must begin with the recognition that value is collec­tively created by multiple groups, including businesses, workers and local and central governments. 

Together, these seven pillars can help create a new polit­ical economy – one that encourages a mission­-oriented approach and builds an economy driven by public purpose and citizen engagement. 

https://www.broadbentinstitute.ca/mission_economy?utm_campaign=july5_21_bom&utm_medium=email&utm_source=broadbent