Administering a Democratic Industrial Policy

71 Pages Posted: 21 Feb 2024 Last revised: 3 Apr 2024

See all articles by Amy Kapczynski

Amy Kapczynski

Yale University - Law School

Joel Michaels

Yale Law School

Date Written: January 30, 2024

Abstract

In Washington today, we are witnessing what many call the “return of industrial policy.” Some argue that a new political economic paradigm is emerging, departing from the neoliberal order of the last several decades. High-stakes questions about how to administer industrial policy have followed, for good reason: industrial policy necessarily involves a great deal of administrative discretion. Yet we have no adequate literature discussing how that discretion should be deployed. Administrative law scholarship has largely ignored the distinctive tools of industrial policy, such as grantmaking, lending, government contracts and ownership stakes. These tools require flexibility and discretion, and often cannot be—and are not—constrained by conventional administrative law tools like notice-and-comment rulemaking or judicial review. The literature on industrial policy argues for bureaucratic autonomy and flexibility, but also has little account of how this power can be accountable in a democracy.

This Article seeks to address this gap. We argue that we should view industrial policy as a developmental practice: it involves deliberate attempts to shape sectors of the economy to meet public aims writ broadly, rather than to serve values of wealth-maximation or national competitiveness. In order to be both effective and legitimate, we argue, industrial policy today requires concerted efforts to build administrative power sufficient to enable effective governance of the economy, including by experimenting with new kinds of conditionalities and public ownership structures. It must also build countervailing power to allow disorganized and marginalized groups to exercise influence over both the government and subsidy recipients. We map administrative tools that can help achieve these aims, arguing that by using them, we can help build industrial policy that does not merely subsidize particular sectors but advances shared goals for democratic development.

Suggested Citation

Kapczynski, Amy and Michaels, Joel, Administering a Democratic Industrial Policy (January 30, 2024). Harvard Law & Policy Review, Forthcoming, Yale Law School, Public Law Research Paper, Available at SSRN: https://ssrn.com/abstract=4711216

Amy Kapczynski

Yale University - Law School ( email )

P.O. Box 208215
New Haven, CT 06520-8215
United States

Joel Michaels (Contact Author)

Yale Law School ( email )

127 Wall Street
New Haven, CT 06510
United States

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