Mariana Mazzucato challenges the logic of endless defence spending

Economist Mariana Mazzucato has renewed her sharp critique of government spending priorities, asking a question that’s been nagging at policymakers and citizens alike: why do Western governments seem to find unlimited funds for military budgets while pleading poverty when it comes to hospitals, housing, and green infrastructure?

Speaking on Channel 4, Mazzucato — a professor at University College London and one of the world’s most prominent heterodox economists — argued that the choice to fund war over public investment isn’t an economic inevitability. It’s a political decision dressed up as fiscal common sense.

The money always exists — it’s the priorities that shift

Mazzucato pointed to the speed with which governments unlocked cash during the COVID-19 pandemic and again when European nations began rearming following Russia’s 2022 invasion of Ukraine. The UK, for instance, pledged to raise defence spending to 2.5% of GDP, a commitment worth roughly £75 billion a year by the end of the decade. Similar commitments are unfolding across NATO member states.

But when nurses ask for a 10% pay rise, or councils demand more funds to fix crumbling schools, suddenly the Treasury is tapping its pockets and finding them empty.

“The narrative that there’s no money is one of the most powerful and most dishonest narratives in modern politics,” Mazzucato said during the interview. “States have always found money for what they’ve decided matters.”

A structural argument, not just a political one

What makes Mazzucato’s position distinctive is that she’s not simply making a left-wing spending argument. She’s challenging the underlying economic framework. Her work — including her influential 2013 book The Entrepreneurial State — has long demonstrated that governments are often the first movers in major innovation, from the internet to GPS to mRNA vaccines. Private capital, she argues, follows public investment. It rarely leads it.

So the idea that cutting public spending frees up resources for a more productive private sector gets the story backwards, in her view. Austerity doesn’t grow economies. It just shifts who bears the cost.

Critics aren’t entirely convinced

Not everyone agrees. Some economists argue that defence spending carries its own economic multiplier effects and that security is itself a precondition for investment. A spokesperson for a leading fiscal think tank noted that “the conversation about spending trade-offs is legitimate, but it requires honest accounting of long-term debt sustainability, not just short-term political framing.”

Fair point. But Mazzucato’s challenge isn’t really about accounting. It’s about imagination.

What comes next

With UK and European defence budgets set to climb significantly through 2030, the debate Mazzucato is pushing isn’t going away. She’s calling for mission-oriented public investment — bold, coordinated, long-term — in climate, health and digital infrastructure. The same urgency applied to rearmament, applied elsewhere.

Whether governments have the political will to do both remains, for now, the open question.