Proactive industrial policy has emerged as a major focus for the Biden-Harris administration and Congress in 2022. The external shocks of the pandemic, the realities of climate change, and geopolitical challenges like the war in Ukraine have had major impacts on production, exposing the brittle supply chain and the slow pace of economic transformation toward renewable energy.
Economists outside the neoliberal mainstream have for years called for renewed attention to industrial policy, and now explicit US industrial policymaking that does not rely on the traditional neoliberal toolbox is ramping up in a way not seen for at least a generation. But, any new industrial policies in the 2020s will necessarily be layered on top of decades of neoliberal decision-making by US businesses.
In “The Need for Corporate Guardrails in US Industrial Policy,” Lenore Palladino and Isabel Estevez make the case for industrial policy with rules that protect the American people. Palladino and Estevez explain how:
- Without specific course corrections by policymakers, US industrial policy will be embedded in the existing corporate orientation toward shareholder primacy;
- It is necessary to consider what kinds of “guardrails” must be in place in any industrial policy efforts to prevent these needed investments from dissipating if corporations continue to prioritize shareholder value maximization at the expense of true innovation; and
- The Infrastructure Investment and Jobs Act, CARES Act, CHIPS Act, and Inflation Reduction Act all invest in critical infrastructure, but without clear guardrails in place, dominant firms will gain public subsidies with no commitment that they will improve service, invest in innovation, or curb their focus on short-term share price appreciation.