By Amanda Janoo
THE WORLD is at a unique moment. People are disillusioned with the status quo. We are on the brink of a paradigm shift that could transform our political and economic realities. Industrial policy has a unique opportunity to re-assert itself as an alternative way of managing an economy that is responsive to the desires and aspirations of society.
Industrial policy experts must be careful, however, not to pander to the fascist winds brewing as this could spell demise for economic discipline and the world.
For decades, countries have operated under the assumption that there is no alternative to market fundamentalism. Described by many as “neoliberalism,” market fundamentalism calls for a one-size-fits-all approach to economic policy. All countries, but particularly developing countries, were told to abide by the three sacred tenants: liberalize, privatize and deregulate. In this context, industrial policy was actively discouraged if not straight-up prohibited. However, the tide seems to be changing.
We have recently seen populist uprisings in the two countries that were the chief architects of neoliberalism, the United States and the United Kingdom, with people and politicians actively disavowing the free market consensus of the proceeding decades. This explicit flirtation with economic protectionism by these ideological giants, presents an opportunity for developing countries to openly question free trade and experiment with alternative economic policy approaches that are more in line with their societal priorities and objectives.
The danger is however, that the world will emulate the scapegoating, separatist and authoritarian rhetoric being articulated by the likesof Donald Trump and Marie Le Pen to legitimize the use of more interventionalist economic policies.
Reminiscent of Karl Polanyi’s description of the “double-movement” in the inter-war period, we are witnessing a yearning for social and political instruments to temper the inequality, instability and degradation wrought by decades of market fundamentalist policies. Industrial policy experts, having a deep understanding of the failings of an unruly free market system, are in an ideal position to advice governments disillusioned with Chicago School policy prescriptions. As space opens for new economic approaches, industrial policy can position itself as a more “hands on” and socially-responsive form of economic management. The danger is that industrial policy inherently implies a more powerful role of government in economic affairs, and therefore can just as easily be used to support authoritarian ambitions.
At the time of writing in the post-war period, Polanyi saw the “double-movement” manifesting in Europe in two extreme forms: Fascism and Socialism. In looking at the recent US elections we could easily see how the two populist candidates Donald Trump and Bernie Sanders fit into these polar categorizations. Both candidates appealed to economic protectionism but for very different reasons. Trump criticized free trade in order to further an aggressive foreign policy agenda and assert US dominance. While Sanders called for protectionist measures to help reduce social inequality and re-industrialize the economy. The clear danger here is that the same protectionist policies could be employed for either political agenda but if industrial policy becomes aligned with the fascist movements underway it will ultimately be discredited forever.
At this pivotal junction in history, industrial policy experts must not become drunk with the prospect of re-legitimation and bolster political movements that propagate messages of conspiracist scapegoating and cultural superiority. We must use industrial policy to support our global community to stand together as they critically reflect on the failures of market fundamentalism. It is time to creatively envision new forms of economic organization that can deliver on societies desire for greater dignity and security. The old economic consensus is out. The question is whether industrial policy can articulate a persuasive alternative that re-empowers governments to mold and direct their economies without instigating a trade war that will bring more harm than good.
It is time to creatively envision new forms of economic organization that can deliver on societies desire for greater dignity and security. The old economic consensus is out. The question is whether industrial policy can articulate a persuasive alternative that re-empowers governments to mold and direct their economies without instigating a trade war that will bring more harm than good.
(An early version of this text appeared in the UNIDO magazine Making It )
Amanda Janoo is an Alternative Economic Policy Adviser to governments and development organizations. Ing Graduate from Cambridge University she worked at the United Nations Industrial Development Organization (UNIDO) supporting government’s with evidence-based industrial policy design for inclusive and sustainable growth She has worked throughout Asia and Sub-Saharan Africa promoting greater economic self-determination and empowerment.