A recent discussion of industrial policy on Dani Rodrik’s blog got me thinking. When the phrase “industrial policy” comes up (as I’m sure it often does at the wild parties our readers get soused at), we think of government commissions that “pick the winners”, funneling credits and subsidies to the embryonic Industries of the Future, while showing the door to the enfeebled Industries of the Past.
My experience in Germany, however, showed me another model. A society can favor the development of certain types of industries via a mosaic of education and training institutions, stakeholder-oriented financial institutions, vibrant local and regional economic development initiatives and the like. In other words, IP can be bottom-up rather than top down. When Germans think IP they think France, where all decisions are made in Paris, but a foreigner can see that Germany has its own form of IP, one that probably works better and is more participatory.
The next step was to think again about John Dewey and his ideas for the extension of democracy (his strong democracy, not our current weak one) into the economy. Open up a system like Germany’s to even more participation and you would have something like what Dewey had in mind. (The old guy called it “socialism” but admitted it didn’t look much like what the rest of the world called socialism.) But Dewey’s concern was not only political but (ahem) pragmatic. It was essential that the system should really work and not just be politically agreeable. Most of his analytical juices went into that part of the problem, and I think much of his insight could be translated into IP-ish terms. He was also off base on some matters (such as an overly optimistic conception of the role of science), and we can learn from that too.
Kevin Q. can probably spin rings around this post – I’d be happy if he would.