Industrial Policy Coming Into Vogue After China Cleans US Clock by Using It

Industrial Policy Coming Into Vogue After China Cleans US Clock by Using It
Yves Smith, July 30, 2021 [from Naked Capitalism]

Actually, USA excels at industrial policy — when it tries it. In fact, it’s how USA was built. The entire electronics and computer industry exists today because the Office of Naval Research and the Army Ordnance Department deliberately decided to share the technology developed in government and government-funded labs during World War Two. The creation of an entire new industry can be traced to a single event – the Moore School lectures at University of Pennsylvania in August 1945.

There is a long tradition of the military being the driver for creating new technologies and industries. Metal cutting and forming machine tools developed at the national armories were deliberately seeded into civilian companies in the 1830s to 1850s. The Navy introduced systematized scientific knowledge of designing and building steam engines in the 1850s and 1860s, basically creating the profession of mechanical engineering. Radio Corporation of America was founded in 1919 at the instigation of the Navy as a silent partner. The Navy played the exact same role in the creation of Cray Research in the 1970s. In the 1950s through 1970s, the three major developments in aerodynamics — the area rule, supercritical wings, and winglets — were developed by NASA scientist Richard Whitcomb at Langley Research Center. In the 1950s, the frozen food industry was saved and put on a solid foundation by the efforts of USDA research labs. This is just a handful of examples from the hundreds, even thousands of examples of successful USA government industrial policies.

Every single technology in cell phones began as a USA government research program, as detailed by Mariana Mazzucato in her 2013 book The Entrepreneurial State: Debunking Public vs. Private Sector Myths.

But this history does not conform to the free market / free enterprise mythology favored by financiers and rentiers, so it really is not taught.