Guns and Butter – Public Policy in the Age of Innovation. A conversation with Philippe Aghion

Artificial intelligence, technological disruption, and geopolitical instability are reshaping the policy landscape. In an era defined by overlapping economic and technological transitions, governments face renewed questions about prioritisation: how should states balance immediate social pressures (“butter”) with longer-term strategic and security demands (“guns”)? The Wheeler Institute for Business and Development was delighted to host Philippe Aghion, recent Nobel Laureate of Economics, for a discussion on the relationship between innovation, competition, institutions, and long-run economic growth. The event was opened by Sergei Guriev, Professor of Economics and Dean of LBS, and moderated by Paolo Surico, Professor of Economics at LBS. It marked the first in a limited series of conversations on Public Policy in the Age of Innovation. Subscribe to our YouTube channel ➤ https://bit.ly/3bukgoT Visit our website ➤ https://bit.ly/3cl5b8m Follow our social media accounts: Twitter: https://bit.ly/3gGs1Kg LinkedIn: https://bit.ly/2TyBfQY Instagram: https://bit.ly/3cLK54D 00:00 Introduction by Sergei Guriev 05:34 Creative Destruction: Innovation as the Engine of Growth 11:04 The Role of Government: Horizontal and Vertical Policies 18:30 The US Model: DARPA meets Venture Capital 21:35 Europe’s Innovation Puzzle 25:58 Guns vs. Butter: Defence Spending as Opportunity 30:16 Spending on Defence without Killing Competition 36:17 The UK Case: ARIA and the late-stage Funding Gap 38:28 One Piece of Advice: Draghi & Inclusion 46:21 Audience Q&A 50:17 Q&A: Innovation in Emerging Markets 51:58 Q&A: Smaller Economies and the Korea lesson 54:26 Q&A: China and the Global Innovation Ecosystem 58:44 Q&A: Welfare and Innovation, the Danish way 1:01:11 Q&A: The Critique of Populism 1:05:52 Q&A: Strategic Autonomy and Value Chains 1:08:55 Closing: Vannevar Bush and the series ahead