Policy with a purpose

Modern industrial policy should shape markets, not just fix their failures.The climate crisis is intensifying, with temperatures set to rise at least 1.5 degrees Celsius above preindustrial levels this century.Global warming is inflicting terrible destruction-much of it irreversible-on planet, people, and economies.And we are nowhere near reaching the climate finance flows of at least $5.4 trillion a year by 2030 needed to stave off the worst effects of a hotter planet.It's worth stating the obvious: the crisis is not an accident but the direct result of how we have designed our economies-particularly public and private institutions and their relationships.This means that we have agency-the power to redesign them to put planet and people first.But to do so we must move beyond fixing markets and the related notion of "financing gaps" toward shaping markets and paying attention to finance's quality not just quantity.We must design policies that tilt economies toward achieving ambitious goals with strong direction while leaving open the question of how to reach those goals.Simply "leveling the playing field" and transferring money won't do.