The Industrial Policy That America Has Forgotten
In the late 1940s, the United States adopted an industrial policy as sophisticated as any in world history. Rather than seek to build up power and wealth at home, Americans aimed instead to forge a deep and equitable industrial inter-dependence among nations.
Washington refined the idea in Europe, where it used the Marshall Plan to all but force France to accept the European Coal and Steel Community. It applied the same principles in east Asia, ceding to Japan and Taiwan large swathes of key U.S. markets. In commodities like oil, ores and cereals, Washington built market structures that ensured a free flow of raw materials to all non-Soviet states at fair prices.
Two goals shaped this strategy. The first was efficiency: to get more people of more nations to work cooperatively, whether to build automobiles, jet fighters or anything else. The second was more fundamental still, for the goal was peace. America’s post-war policymakers believed that the more intimately people relied on their neighbours for industrial goods and food, the harder it would be to go to war with them.
By almost any traditional definition, America’s industrial policy during those years was not mercantilist. On the contrary, Washington routinely forced U.S. companies and workers to sacrifice markets and earning power to others in Europe and Asia.
Looking back over a half century of this industrial policy, the Norwegian historian Geir Lundestad, who heads the Nobel Institute, wrote in 1998 that “the United States [has] behaved rather differently from other leading powers in history.” What the world had witnessed, he remarked, was “empire by integration.” This imperial system delivered exactly the result dreamed of by its designers – peace and prosperity among nations emerging from a war that had been powered by their rival industrial strengths.
Too bad, then, that the United States abandoned this strategy almost 20 years ago, swapping it in for policies that now threaten both prosperity and peace.
The core characteristics of any state strategy depend on who controls that state, and the key to understanding the nature of U.S. industrial policy today is the revolutionary change in American politics in the early 1980s.