Industrial Policy and Planning: A New (Old) Approach to Policymaking for a New Era
August 10, 2021
By Todd N. Tucker, Steph Sterling
Despite the myth over the past several decades that the US does not practice industrial policy and instead operates on purely free-market principles, our country has long had ad hoc measures that amount to an inadvertent neoliberal industrial policy favoring the wealthy and connected. Yet this neoliberal approach to industrial policy has largely failed: As the COVID-19 crisis has exposed, serious vulnerabilities in our economy have led inequality to grow to unimaginable, ungovernable, and unsustainable levels. The moment demands a more systematic approach.
In “Industrial Policy and Planning: A New (Old) Approach to Policymaking for a New Era,” Todd N. Tucker and Steph Sterling propose a forward-looking approach to industrial policy and planning as a core part of economic policymaking. Understanding and embracing the language and policy tools of industrial policy can aid economic policymakers seeking to rebalance power in our economy and harness the potential for growth and inclusion in this new era. A new industrial policy should not be ad hoc, as it has been for the US in the past, nor authoritarian, as it is now for China. Industrial policy is more likely to be effective as part of an economy-wide plan, and more likely to be legitimate if this plan is inclusive, democratically decided, and accountable. The US has an opportunity to distinguish itself from its allies and competitors by implementing industrial policy through more democratic, inclusive, and accountable means. As more and more policymakers across the ideological spectrum warm to a form of industrial policy, there is a need for criteria to evaluate competing proposals, including their impact on productive capacity, climate, equity, economic democracy, and government capacity.