BOOK TIPS | When government mismanages innovation: researchers examine ‘Green Deals’

Mission-oriented innovation policy has gained a lot of traction among politicians and government officials, not least in Europe. In the book Mission Economy: A Moonshot Guide to Changing Capitalism (2021), researcher Mariana Mazzucato argues that traditional market solutions cannot be relied on to solve major societal challenges.

However, there are critical voices in the scientific community. In the books Questioning the Entrepreneurial State: Status-quo, Pitfalls, and the Need for Credible Innovation Policy (2022) and Moonshots and the New Industrial Policy: Questioning the Mission Economy (2024), scholars offer objections and criticisms of the entrepreneurial state and analyze the consequences of initiatives inspired by mission-oriented innovation policies.

The editors of Moonshots and the New Industrial Policy – Magnus Henrekson, Christian Sandström and Mikael Stenkula – have now published a new book – A Green Entrepreneurial State? Exploring the Pitfalls of Green Deals (open access – link at the end).

In the book, they and 17 other researchers examine various forms of ‘Green Deals’, including the EU Green Deal. This is done on the basis of a number of empirical cases and the analysis is based on three theoretical perspectives: evolutionary economics, the public choice school, and behavioral economics.

The book highlights what the authors consider to be a series of failed and problematic projects and policies. Examples include Germany’s Energiwende (transformation to renewable energy), Italy’s super bonus for reduced energy use, and the Swedish examples of Hybrit (fossil-free steel) and Northvolt (batteries). Broader areas such as the transition to a more plant-based diet and the development of hydrogen production are also covered in the book.

According to the authors, there are several factors that cause mission-oriented policies to fail. Among others, they point to:

• that complex problems do not lend themselves to top-down management.

• policy makers lack the information needed to design missions to be effective.

• the missions distort competition.

The authors do not reject policy measures to reduce carbon emissions, but argue that such efforts should be more gradual and technology-neutral. The final section of the book highlights some alternative ways forward, including the question of whether or not to use nuclear power.

Download the book – free.

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