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The American paradox: ideology of free markets and the hidden practice of directional thrust

Wade, Robert H. (2017) The American paradox: ideology of free markets and the hidden practice of directional thrust. Cambridge Journal of Economics, 41 (3). pp. 859-880. ISSN 0309-166X

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Identification Number: 10.1093/cje/bew064

Abstract

The USA presents a paradox. The US state has practised production-focused industrial policy from the early years of the republic, with benefits that by any plausible measure far exceed costs. But since the 1980s, the exchange-focused idea that ‘the free market is what works, and having the state help it is usually a contradiction in terms’ has been at the normative centre of gravity in public policy discourse. With ‘industrial policy’ rendered toxic, the state has disguised its production-focused practice, to the point where even non-ideological academic researchers claim that the USA does industrial policy not at all, or badly. This essay reviews the history of US industrial policy, with an emphasis on ‘network-building industrial policy’ over the past two decades. At the end, it draws a lesson for policy communities in other countries and interstate development organisations such as the World Bank and IMF.

Item Type: Article
Official URL: https://academic.oup.com/cje
Additional Information: © 2017 The Author
Divisions: International Development
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HC Economic History and Conditions
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
JEL classification: H - Public Economics > H5 - National Government Expenditures and Related Policies > H54 - Infrastructures; Other Public Investment and Capital Stock
L - Industrial Organization > L5 - Regulation and Industrial Policy
N - Economic History > N6 - Manufacturing and Construction > N62 - U.S.; Canada: 1913-
O - Economic Development, Technological Change, and Growth > O5 - Economywide Country Studies > O52 - Europe
Sets: Departments > International Development
Collections > Economists Online
Date Deposited: 09 Mar 2017 14:51
Last Modified: 20 Apr 2019 01:43
URI: http://eprints.lse.ac.uk/id/eprint/69765

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