Industrial strategy for economic transformation 19 May 2018 Laurie Macfarlane Research Associate, UCL Institute for Innovation and Public Purpose Economics editor, openDemocracy @L__Macfarlane

Challenges facing UK economy: Stagnant wages and productivity Income, wealth and regional inequalities Low investment, debt-fuelled consumption Weak industrial base Concentration of power Value extraction rewarded more than value creation Greatly exceeding ecological limits and boundaries Uncertainties around Brexit

Questions for post-Brexit industrial strategy: What is the desired direction of travel? What technologies and industrial landscapes do we need to get there? What policies are required to make it happen? What institutional changes are needed? How do we know if we are succeeding?

What is the desired direction of travel? An economy that is: Productive and dynamic, capable of providing a high standard of living for all and overcoming key societal challenges Green and sustainable, living safely within ecological limits and boundaries Inclusive and just, with rewards reflecting the collective nature of wealth creation Participatory and democratic, involving relevant stakeholders in the decision-making process

What policies are required to make it happen? Socialisation of investment: direct funds towards solving specific technological, societal and environmental problems Conditionality: use the state’s purchasing power to promote innovation and encourage desirable business practice Universal basic infrastructure: ensure every part of the UK is served by a minimum standard of physical and social infrastructure Citizens’ wealth fund: common ownership of financial and physical assets, with returns used to pay citizens’ dividend Democratise ownership and governance: encourage employee ownership trusts, cooperative and mutual enterprises Overhaul of competition policy: including the digital economy

What institutional changes are needed? Capacity: reinvigorate competencies and expertise across the state. Build capacity to think and act big, experiment and take risks. Ambition: establish dedicated ‘mission-focused’ public institutions to lead the technological transition in different areas, attracting top talent Risks and rewards: if the state is bearing the risk, it should also share the rewards using return-generating mechanisms New methods of project appraisal: flawed cost-benefit analysis and ‘market failure’ approaches replaced with modern alternatives State aid and public accounting: new approaches to overcome bias against public investment and public ownership

How do we know if we are succeeding? Monitoring: New ‘Office for Strategic Economic Planning’ to monitor and measure the long-term success of the new strategy Measuring success: New metrics to replace GDP as benchmark indicator of progress which values wider social and environmental factors as well as non-market activities

Thank you! Laurie Macfarlane Research Associate, UCL Institute for Innovation and Public Purpose Economics editor, openDemocracy @L__Macfarlane