Losing Time: The Industrial Policy Debate by Otis L. Graham, Jr

Abstract

TECHNOLOGY AND CULTURE Book Reviews 467 The Technology Pork Barrel provides an excellent look at the role of the federal government in planning large-scale R&D programs for the commercial sector. It is an important complement to the works of Richard Nelson on the government’s role in technological develop­ ment and economic growth, even when, for purely ideological rea­ sons, the government chooses not to support a program. The book is not without its shortcomings, however. A couple of factual errors bear mention. James Fletcher was the administrator of NASA in the early 1970s, not James Beggs (p. 104), and the first shuttle mission after the Challenger explosion occurred in 1988, not 1989 (p. 197). Furthermore, Cohen and Noll’s statistical analyses of congressional votes are somewhat obtuse and tend to obscure the role of powerful and influential individuals in Congress on the process. Derek W. Elliott Dr. Elliott, formerly a curator in the history of public policy at the National Air and Space Museum, is an assistant professor of history at Tennessee State University. Losing Time: The Industrial Policy Debate. By Otis L. Graham, Jr. Cambridge, Mass.: Harvard University Press, 1992. Pp. xiii + 370; notes, index. $29.95. Losing Time is a very good book. It chronicles the ways in which history has been ignored and manipulated in the American dispute about sector-specific economic policy. In doing so, it documents the role of a hostile ideology (based in neoclassical economics) in distorting the his­ torical record regarding U.S. governmental (national and subnational) interventions for the purpose of microeconomic development. And it shows how advocates ofindustrial policy missed the opportunity to mo­ bilize history on their side of the debate. The lack of critical analysis of the industrial policy track record (for example, whether or not the Reconstruction Finance Corporation had, on balance, been a success or not) is shown to characterize both sides in the controversy. Inaccurate history has been debilitating. Rather than developing a coherent industrial policy, like Japan or several members of the European Community, the U.S. has resorted to subterfuge (hiding initiatives in the Pentagon orjustifying them as once-only concessions to powerful client groups, such as agricultural interests). The result is America’s “unconscious industrial plan.” Laissez-faire theology per­ petuated the fiction that government could not be involved in the targeting of strategic industrial sectors. Doing without industrial policy meant that America undertook the worst kind of sectoral interventions—the bailout of Chrysler Corporation being the most recent example. Otis Graham divides his book into three sections. Part 1 begins with a troubled United States in the 1970s as we worry about what 468 Book Reviews TECHNOLOGY AND CULTURE happened to the “American century.” The economic priesthood tells us everything is fine—services, or some combinations of services and high-technology products, will substitute for manufacturing capabil­ ity. They tell us to ignore the problems with the steel industry and increasing protectionist sentiments (and Chrysler). But optimists had a tougher time making their arguments credible as the U.S. economy went through bad times in the late 1970s and was hemorrhaging between 1980 and 1983. As a consequence, the first movements of the business community toward the industrial policy idea could be detected here—at least the recognition that we had a de facto technology policy that was badly designed. However, Reaganomics bought time for defenders of the faith. Heavy investments in defense helped right the economy. The year 1983 proved to be a temporary flood tide for critics, marked by presidential candidate Walter Mondale’s retreat from supporting a modified industrial policy before the conservative counterattack that blended ideology and political “realism” (reliance on markets plus a denial that government had the capability to manage). History was manipulated by everyone. Part 2 is about how we discovered we had 29 different federal government agencies with 265 sectorally targeted initiatives on the books in 1982, not to mention the 50 different state governments with their own initiatives. Yet the 1984 election provided opponents with enough confirmation that they could continue to ignore the issue. A decision was made not to manage the existing unconscious industrial policy mix. Nonetheless, the number and...