This is much more ambitious than the traditional narrow framing of ‘legitimate’ industrial policy (one that meets ‘state aid controls’ in European parlance) as a mere correction of ‘market failures’ that needs to pursue ‘efficiency’ at all costs. State participation and investment can drive essential progress in areas where private initiative is insufficient – greening the economy, expanding energy sources, creating and updating infrastructure, designing intellectual property, laying out independent digital systems. There is, however, recent serious work on industrial policy by economists and economic historians 1ĭebunking the myth that state intervention needs necessarily be about ‘picking winners and supporting losers’. State-led programmes like the US Inflation Reduction Act, the American Rescue Plan, and the Investing in America agenda (and European equivalents) were initially seen with apprehension as the first salvo of a protectionist turn and a bad ‘race to subsidies’. While the very notion of industrial policy was unmentionable in the US until five years ago, and in Europe was traditionally associated with bad, inefficient national champions lobbying their governments for subsidies, the position has moved on. Paradigm shifts in industrial policy, inflation control, and tradeĪ major rethink is leading to the resurgence of industrial policy as a key lever to direct and implement change. Europe has multiple issues of its own – including divisions and fragmentation – but is also reflecting on similar phenomena see the Resilient EU 2030 report produced by the Spanish Presidency of the EU in September 2023, which provides a realistic appraisal of the mountain Europe has to climb and why it needs an urgent plan (Spain’s National Office of Foresight and Strategy 2023). Inequality between vast corporations with enormous lobbying powers and citizens has deeply affected the democratic discourse in the US and elsewhere. ‘Resilience’ and ‘strategic autonomy’ have become fundamental economic goals given realisation that long supply chains are unreliable and brittle, making us dependent on unfriendly regimes for everything from energy to commodities to sophisticated components deindustrialisation has occurred with little relief from social amortisation measures the labour share of GDP has fallen and large swathes of the population have become impoverished and disenfranchised. The confluence and intensification of multiple crises (climate, energy, pandemic, wars) in the post-2008 era, accelerating since 2019, has driven major reappraisals in multiple policy areas and changed conventional wisdoms – leading to what Rana Foroohar recently described as the ‘Great Reordering’ orchestrated in the US by the Biden administration, an ‘epochal shift in how the economy is governed’ (Faroohar 2023). This first column in a two-part series argues that the defensive posture of much of the antitrust community at large is a-historic and out of touch. Current US enforcers have embraced this holistic view, elsewhere is more of a struggle. As a key instrument to control how assets get reallocated and used in the economy, antitrust cannot be aloof and independent of the profound shifts affecting the economy and upending other policy choices. Re-appraising the role that government can play in directing and making large transformational investments, founded around a “new industrial policy” rethinking the causes and cures for inflation recognising that trade policy which enabled hyper-globalisation and facilitated offshoring also favoured large incumbents embracing antimonopoly as an explicit goal. The last five years of ‘polycrisis’ have accelerated a rethink in received wisdoms across multiple areas of policy, with several paradigm shifts in 2023 as policy makers struggled to deal with overlapping emergencies.
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