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Johnson has taken the wrong economic lesson from the Covid crisis

Johnson has taken the wrong economic lesson from the Covid crisis

The writer is professor at University College London and author of ‘The Entrepreneurial State’

Boris Johnson attempted to look beyond the Covid-19 pandemic at the Conservative party conference this week by warning against drawing “the wrong economic conclusion from this crisis”. For “those on the left, who think everything can be funded by uncle sugar the taxpayer”, the UK prime minister said, “there comes a moment when the state must stand back and let the private sector get on with it”.

This crude characterisation of how innovations come about has worrying implications. It is the wrong economic vision for the post-pandemic recovery the UK desperately needs; the same vision that led to our unpreparedness in the first place. This is not about left versus right, or public versus private. It is about working together to shape a symbiotic innovation system fit to solve the greatest challenges of our times. 

Mr Johnson’s claim also reveals a poor understanding of the history of innovation. Contrary to his view that “it isn’t the state that produces the new drugs and therapies”, governments have funded some of the highest-risk research and development, leading to the most important innovations, including in biopharmaceuticals. The US National Institutes of Health spends more than $40bn a year in health innovation and contributed more than $200bn to research on innovative drugs approved from 2010-2019. 

Optimism about the private sector’s “rational interest” in competition, market share and sales as a driver for innovation is misplaced. The private sector has in fact been slow to respond to medical needs that are vital to public health but financially unattractive, such as new infectious diseases and antibiotics.

In contrast, the pivotal role of the state has been accentuated in the pandemic. Governments and supranational organisations have provided close to $6bn of investment

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