This week we talk about another side of capitalism: the innovation economy. Can capitalism deal with climate change? How much depends on the role of the state? And who will pay? We compare the Green New Deal to FDR's original version: does history show us how to get this done? With Bill Janeway, author of Doing Capitalism in the Innovation Economy, Diane Coyle and Helen Thompson. Plus: David and Helen catch up with the latest comings and goings in British politics: are the two main parties starting to break apart? More - much more - next week.

Talking Points:

The basic idea behind the Green New Deal is that an innovation economy faced with an existential crisis will need massive state investment. Is it being pitched right?

• Putting climate change on the agenda is an important first step.
• How do you make this a legitimate political mission? The language of war has been debased; you can’t use that.
• We don’t have the technologies needed to allow 50% or more of the grid anywhere in the world to be supplied by intermittent energy sources such as solar and wind. The mission needs to allow the state the latitude to experiment and build this technological base.

The state has longer time horizons and has to be a part of fundamental investments in technology.

• The time horizons for venture capitalism aren’t appropriate for tackling climate change.
• The idea of industrial strategy/industrial policy is coming back.
• State coordination is also necessary to set technical standards and figure out how infrastructure will be funded.

Eventually, the productivity benefits of technical changes comes through, but it can take decades. Are we on the cusp of that with digital technology?

• It’s not just about using a new technology to do what you’re already doing, but using the new technology to change what you’re doing.
• This requires infrastructure investments and corporate reorganization.
• It can take a long time to see the full benefits because it’s not just about technical change, it’s also about social change.

These are all international issues, but the frameworks are still domestic.

• To what extent will politics constrain progress?
• Technological innovation has been heavily politicized: there is no way to do this kind of innovation on a global scale that would escape geopolitics.

What about the independent group?

• When it was just the Labour MPs, it was more a critique of Corbyn’s leadership.
• With the defection of 3 conservative MPs, it looks more like an anti-Brexit formation.
• It may be more difficult for Labour MPs to defect now.
• But these groupings don’t change the parliamentary arithmetic.

Mentioned in this Episode:

• Bill Janeway’s book, Doing Capitalism in the Innovation Economy
• Diane Coyle’s blog, The Enlightened Economist
• Simon Wren-Lewis on funding the new deal for The New Statesman
• The Solow productivity paradox

And as ever, recommended reading curated by our friends at the LRB can be found here: lrb.co.uk/talking

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