in the early 1980s, some observers concerned about the state of the U.S. economy thought that the remedy might be “industrial policy”— government-directed efforts to promote structural economic change through strategic investment. The idea went nowhere. In what became the standard dismissal, economist Charles Schultze wrote that the government should not try to determine “the allocation of resources to individual firms and industries. We have enough real problems,” he said, “without creating new ones.” The state, in short, could not match the market’s miracles.
For decades, Schultze’s criticism of industrial policy could simply be grabbed off the shelf because industrial policy was so deeply at odds with the reigning market fundamentalism. Frozen out of the corridors of domestic power in the United States, at odds with the global Washington Consensus, the idea became, as the International Monetary Fund put it in 2019, “the policy that shall not be named.”