Defining Industrial Policy in the Post-Neoliberal Political Order
[1.0] Political Order Primer
A Political Order is the dominant worldview through which to experience political phenomena.
For a brief overview, see [Defining the Post-Neoliberal Political Order]:[1.0].
For an in-depth exploration, please visit the Definitions section of CivilizationStack.
[2.0] Economics in the Neoliberal Political Order (NPO)
[2.1] Economic Problems Addressed by the NPO
The Neoliberal Political Order (NPO) developed its economic policy suite in the West amidst the Cold War: it championed free market capitalism as the counter to socialist central planning. To be against central planning is to be against the spirit of bureaucracy and regulation; reducing government intervention meant embracing deregulation and privatization.
Keynesianism was the core economic paradigm of the New Deal Political Order (NDPO) that preceded the NPO; the failure of the Keynesian policy suite to deal with the OPEC Oil Crisis of the 1970s ended the legitimacy of the NDPO. Thus, the void left through the fall of the NDPO paved the way for the emergence of the NPO in the 1980s with a new Neoliberal policy suite.
[2.2] Economic Assumptions of the NPO
Free market fundamentalism is the unquestioned belief of the NPO as it emerged against both socialist Iron Curtain countries and its interventionist Western Keynesian predecessor. Free market fundamentalists hold it inviolable that markets are the most efficient means of allocating labour, resources, and capital. When markets are fundamental, states are secondary: the conception of the state in the NPO is that of a market facilitator. Further, markets as the deepest guiding logic of NPO economics means that human flourishing is framed under consumerist individualism: the good life is wedded to access to consumer goods.
If access to consumer goods is the good life, then nothing less than access to the entire world’s supply of goods is the good world: this can only be achieved by free trade and financial deregulation as promulgated through the ideological vehicle of globalization. One unified world of accessible commodities is the utopian heaven-on-earth for the free market fundamentalist.
A harmonized global market of accessible goods necessitates an interoperable labour pool of human widgets – this is the spreadsheet view of the world. The NPO’s perspective assumes that human beings are simply fungible, economic units that can be replaced with other supposedly fungible units during labour market gaps, with no tangible negative consequences – the market perspective is the only relevant perspective. Therefore, national borders and tight labor market controls in the form of restrictive immigration policies are assumed to be undesirable: such mechanisms form barriers to trade, globalization, and ever-increasing economic growth.
Concepts like national interest have no meaning in a borderless world – the worldview of the NPO assumes that a nation has no need to keep key industries within its borders. Further, it is held that all potential interests, including security concerns, can be met by globalization and free trade; a nation’s historical enemy can be traded with, and competing powers will become democratized and liberalized through economic incentives and participation in the free market. All hail the globalized free market as the universal solvent.
[2.3] Economic Standards of Legitimacy in the NPO
Economic growth and financial market stability are the key performance indicators for any polity operating under the guiding economic logic of the NPO on the international stage: GDP growth and the maintenance of investor confidence are sacred cows and are therefore valued over and above other interests such as social cohesion, national order, and sovereignty.
[2.4] Economic Methods of the NPO
The NPO used deregulation to erode governmental controls over financial markets; the NPO used privatization to transfer state-owned enterprises over to private control. Monetary policy – the manipulation of interest rates – was favoured over fiscal policy approaches like governmental infrastructure spending; infrastructure projects that did take place were performed under the framework of public-private partnerships. As a rule of thumb, the state is untrustworthy and must be either paired with or overseen by private enterprise wherever possible
As a corollary to the deregulation of financial markets, the NPO also seeks to deregulate borders and to liberalize immigration policy, in order to facilitate the free movement of capital, goods and people across borders.
[3.0] Economics in the Post-Neoliberal Political Order (Post-NPO)
[3.1] Economic Problems Addressed by the Post-NPO
The NPO’s unquestioned belief in free market fundamentalism, as championed through globalization, is now coming under scrutiny – this the chief economic axiom being challenged in the Post-Neoliberal Political Order (Post-NPO). Free trade resulted in the deindustrialization of the West: the landmarks of this policy are the rustbelts, with their deindustrialized settlements, that pepper the metropolises of North America and Europe.
A harmonized global market in the unrestricted flow of labour, goods, and capital meant that the operating incentive structures favoured offshoring and outsourcing away from the industrial pioneers. Factories and jobs flowed out of the industrial pioneers; investment capital flowed out of the industrial pioneers; goods made elsewhere were allowed back into where they would have been formerly made. This supposed global order was allowed to take precedence over the national interests of the industrial pioneers, who were left with nothing but cratered post-industrial cities riddled with job losses, broken families, and deaths of despair – all in the name of a more efficient global market. Efficient for whom?
Nonetheless, the Neoliberal Political Order died in the face of the 2007-2008 Global Financial Crisis – the GFC was to the NPO what the OPEC Oil Crisis was to the NDPO. The logic of the NPO stated that governmental bureaucracy is inefficient, such that deregulation is the preferred playbook; however, the Global Financial Crisis was a direct by-product of deregulated markets and thus the legitimacy of the NPO was seriously undermined. Unfortunately, in economic terms, we had been clinging to the rotting corpse of the NPO’s economic thinking for well over a decade post-2008; it has only been with Trump’s second term that we see a genuine divergence from the dead Neoliberal Political Order’s way of thinking.
The NPO’s overemphasis on GDP as the only mechanism of progress and growth and its overreliance on mass immigration to meet labour demands also left the Anglosphere polities with increasing social tensions. These tensions are expanded on further in [Defining National Order] and [Defining Anglospheric Identity].
[3.2] Economic Assumptions of the Post-NPO
The twin re-emergence of industrial policy and fiscal policy are central pillars of the Post-NPO. Industrial policy consists of tactics like protectionism and reshoring; fiscal policy relates to state-driven infrastructure project and the like.
Free market fundamentalism is being rejected in favour of managed economies that prioritize state intervention as a necessary way to shape markets. Hyper-Globalization is being rejected in favour of national or regional spheres, where there is a foundational shift away from the unrestricted movement of capital, goods, and people. Economic growth as the prime measure of regime legitimacy is being rejected in favour of economic stability and security.
Downstream of industrial policy – where any polity wielding it will require a skilled domestic labour base – the interests and rights of Capital that saw entrenchment during the NPO will see some loosening as the interests and rights of Labour gain some ground through means like greater pushes for unionization.
The Post-NPO also understands economic progress and success as just one key component of a nation’s interests. CivilizationStack’s other position papers explore additional key performance indicators, including the need to preserve a unifying identity and national order.
[3.3] Economic Standards of Legitimacy in the Post-NPO
Jointly, economic security and economic stability are the guiding north star for polities in the Post-Neoliberal Political Order. Economic security is when citizens and their households have reliable access to the resources necessary to maintain a basic standard of living – this includes access to income, employment, housing, and healthcare even under a restrictive definition. Economic stability is when a nation’s economy experiences steady growth, low inflation, and low unemployment – essentially, this is the absence of large-scale economic disruptions. Together, economic security and stability foster an operating environment where citizens and businesses can plan for the future without fear of significant economic disruption.
Economic security and stability are, again, understood to be just one dimension of a nation’s overall managed stability. CivilizationStack’s other position papers explore parallel key standards of legitimacy as they pertain to national order and a unifying identity.
[3.4] Economic Methods of the Post-NPO: The Re-Emergence of Industrial Policy
Several clusters of acceptable tools and techniques are consolidating and being implemented around what can be called State-Orchestrated Economic Management – an umbrella term we can use to encompass industrial policy and protectionism. Industrial policy is simply the strategic efforts of a given government to promote specific sectors or industries within its economy for economic growth and competitiveness.
The pathway of protectionism is one policy trajectory – restricting imports to protect domestic industries from competition. One flavour is Infant Industry Protection, where the restricted imports are for mission critical industries that a government wants to grow before they can compete internationally. Another flavour is the more general Import Substitution, where the government protects local industries through tariffs and quotas, while providing subsidies and incentives to domestic producers.
As one may observe, the core policy tools are merely twofold: tariffs and subsidies. Tariffs are taxes imposed on imported goods to make them more expensive than domestic products; subsidies are financial aids provided by the government to domestic producers to lower production costs, encourage investment, and enhance international competitiveness. In short, one is to block opposing teams while the other is to promote your own team.
However, there are nuances and variations in how states either block or promote. Blocking tactics could include Quotas, where there are government-imposed limits on the quantity or value of specific goods that can be imported during a given time period. Promoting tactics can be more explicit around Export Incentives where domestic producers are encouraged to sell goods abroad, in the pursuit of enhancing the nation’s trade balance and global market presence. The economic methods which emerge as optimized for the Post-NPO will be the ones that can align the nation’s economic interests with its wider interests in security, national order, and the maintenance of a unifying identity.