You are currently viewing The fight against climate change requires a new role for the State

In times of great festivals, the study of economics had its own festival, spearheaded by two great headliners, such as Mariana Mazzucato and Joseph Stiglitz. The latter, Nobel Prize in Economics in 2001.

Part of the always conservative and ideologized Creole elite tried to present them as marginal economists and to characterize their ideas as typical of an outdated statism, despite the fact that both enjoy high influence in the definition of economic policies throughout the world and that they are far from be considered radical economists.

At the risk of being reductionist, the central thesis of the work of both maintains that the market by itself does not have sufficient tools to face the great challenges facing the planet and, with it, humanity in the 21st century. Without being either of the two specialists, much less activists in environmental matters, they agree that climate change represents the clearest and most pressing example of this lack of market tools.

In the presence of costs not internalized by producers, markets will produce goods in greater quantities than the socially optimal, as would be the case of fossil fuels and their consequent emission of greenhouse gases (GHG). Following the same logic, when producers cannot appropriate the benefits of producing some good, they will tend to produce less than what is desirable, as would be the case with research and development. Until then, the thesis focuses on the basic premises of what is known as externalities, to which the dominant economic paradigm would respond that there is space for the State to correct these situations by way, for example, of subsidizing research and development. , while taxing GHG emissions.

What Mazzucato and Stiglitz propose, on the other hand, is to overcome this vision of the State as a mere corrector of market failures and give the public apparatus proactive tools to think about long-term solutions that the market is unable to provide. From reading the work of both authors, it is very easy to see that their proposals are very far from the statist vision that local critics try to impute to them. The basis of his studies is the observation that the great productive transformations of our times, such as the Internet, come from state investment.

The transition towards an ecologically reasonable economy undoubtedly requires this public impulse, since the very structure and incentives of the capital market make it impossible for a risky and long-term trajectory to be led by the private sector. Thus, for example, both economists mentioned in their conferences in Chile the case of Tesla, champion of private investment in green technologies, but whose mythology omits that in its beginnings it was subsidized by the State with US$465 million.

Mazzucato and Stiglitz then invite us to open our imaginations and think of the State as an entity that anticipates future problems, that invests in potential solutions at a level of risk that private investment cannot sustain and, just as importantly, , to redistribute the profits of those investments. If taxpayers had to pay the US$465 million subsidy to Tesla out of their taxes, what efficiency reason is there for them not participating in their profits? And if there were, why should they take precedence over considerations of justice for them to do so?

Even if one is against the position held by both economists, it is necessary to recognize that this is a political dispute that, in a democratic country, must be resolved by the will of the majority. Our current Constitution, however, explicitly enshrines the State’s helpfulness under the protection of intermediate groups, implicitly giving shape to the principle of subsidiarity, which makes unconstitutional – or subject to supra-majority wills – the adoption of certain policies that grant a greater role to the State in economic planning.

The challenges that climate change imposes on us therefore require not only greater empowerment of the State’s participation in the economy, but also a questioning of the economic recipes that have proven time and again not to go the distance and whose alternatives seem to be outlawed in local public discussion.

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Source: www.elmostrador.cl

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J. A. Allen

Author, blogger, freelance writer. Hater of spiders. Drinker of wine. Mother of hellions.

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