13 Common Good Economics

Mazzucato

The concept of ‘good’ has its roots predominantly in welfare economics, where it captures the relative benefits of consumers and producers through individualistic utility definitions - the ‘good’ is an aggregated form of private interest. Economic theory has avoided providing a comprehensive definition of ‘good’ as a collective approach to the ‘what’ and ‘how’ of economic activity.

Recognising this limitation, the notion of economic activity serving the common good and wellbeing has garnered considerable attention from scholars aiming to develop alternatives to gross domestic product (GDP) as the primary objective of economics (e.g. Felber and Hagelber 2017; Costanza et al. 2018; Coscieme et al. 2019; Dolderer et al. 2021). While this scholarship has contributed to important critiques of neoclassical economics, and formulated alternative organisational metrics at a micro-level (Felber et al. 2019) and accounting metrics at a macro- level (Stiglitz et al. 2009), less attention has been paid to the theoretical framework guiding the state’s role in governing the economy through collaborating with other actors for the common good.

The paper addresses this question by building on, while distinguishing itself from, previous work on the public good (Samuelson 1954), the global public good (Kaul et al. 1999), and the commons and common-pool resources (Ostrom 1990).

In particular, the concept of global public goods, while advancing the need for global cooperation in promoting wellbeing, remains conceptually largely attached to an understanding of the state as mitigating externalities that need fixing.

While the literature on the commons and common-pool resources has successfully foregrounded and significantly advanced our understanding of the value of community involvement (Ostrom 2010; Saunders 2014), this focus has often been linked to an implicit assumption of insufficient or ineffective government activity, and positioned as a way of moving beyond the state/market dichotomy (Ostrom 2010; Sanderson et al. 2020). In other words, governments are seen as part of the problem, due to weak capacity or state capture. The view that states only fix when markets fail prevails. The public sector is understood to fill the gap created by markets, rather than setting ambitious objectives and promoting collective action towards achieving them

The 17 UN Sustainable Development Goals (SDGs) are an important moment in which the need for ambitious governance and collective action – regionally, nationally and globally – towards ambitious goals becomes clear. The paper argues that the increasing focus on viewing the SDGs as collective challenges in need of a ‘common agenda’ (United Nations 2023a), requires a renewed focus on achieving objectives that are collectively considered ‘good’.

The paper puts forth a framework of the common good as an objective, centring the ‘what’ and the ‘how’ as central questions that guide collective economic activity. A renewed conception of the common good, one that is nested in market-shaping and public value, may be a productive way of forming synergies between previous contributions, while moving beyond existing shortcomings and informing what is being considered an urgent moment for collective action.

It draws valuable insight from political philosophy as highlighting the relational and mutual nature of the common good. The paper puts forth a framework where the ways in which actors work together towards collective goals are guided by five key principles: (1) purpose and directionality; (2) co-creation and participation; (3) collective learning and knowledge-sharing; (4) access for all and reward-sharing; and (5) transparency and accountability.

Section 2 reviews how the common good has been discussed in political philosophy, with an emphasis on relational attributes. Section 3 reviews how ‘good’ has been framed in economics, tied to a theory of markets and market failures. This section compares public goods, global public goods, the commons and common-pool resources in order to distinguish previous approaches to economic goods from a renewed theory of the common good. Section 4 builds a new approach to the common good through five pillars. Section 5 concludes.

Mazzucato (2023) Governing the economics of the common good (pdf)