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.
6 comments:
Peter,
So, who was running the IP, the Lander governments? Unions in conjunction with companies through Mitbestimmung?
Well I can't run rings around this topic, I'd be more likely to get dizzy and fall down.
But we need more discussion of James, Dewey, and Hook than less. Somehow Pragmatism got shoved to the curb, itself a victim of the Cold War, it simply could not survive the labeling of 'socialism' . Well I am ready to give it another run. On the downside it might require reading some books by Dewey with James and Hook as bookends.
Well that's the point, Barkley: no one really runs the policy. Lots of groups have a hand in it, and in a sense the outcome is negotiated, although the anglo-saxon connotations of that word (in the context of specifying the terms of a contract) don't quite apply. For instance, an apprenticeship program lowers labor costs and raises productivity in a particular sector, but who chooses the sector? The unions that vet the work skills? The companies that agree to work with apprentices? The schools that provide academic support? The local governments that finance public-private projects that apprentices may segue into? The banks that provide favorable finance to local investments that extend the market for these skills?
To reiterate: I am not painting my face black, red and gold. I think the German IP system has a democratic deficit and falls far short of Dewey's ideals. It is also facing the prospect of long-term decline in the face of the EU and globalization. (It is a voice system that cannot tolerate very much exit.) But it really helps organize thinking about what a bottom-up IP could look like.
Peter,
A lot of this reflects deeply rooted historical traditions in Germany. Thus, their strong apprenticeship system is a direct offshoot of their previously strong guild system. The focus on Lander and even more local governments for participation is also a reflection of a more decentralized Germany prior to 1871, when local governments were very much involved in economic activities in a variety of ways.
Barkley,
Quite right. It reminds me of the punchline to Putnam’s book, Making Democracy Work: the key is getting the thirteenth century right.
But every country has traditions to build on. I’m not suggesting we imitate Germany (shades of Atlantic Crossings), but that we use this example to jog our imagination.
Peter,
But, there are some similarities here between the US and Germany, notably the degree of political decentralization. Where they differ is in the industrial relations area, with much more unionization and more agreeable relations between organized labor and management in Germany than in the US.
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