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IN THIS ARTICLE BILL CLINTON'S CHARGE THAT WE ARE WORKING HARDER FOR LESS WAS REPEATED AT CAMPAIGN BUS STOPS ALL THE WAY TO THE WHITE HOUSE. ECHOING A DECADE OF POLICY DEBATE AMONG DEMOCRATS, HE TALKED OF THE NEED FOR AMERICA TO SEEK A HIGH WAGE PATH THROUGH THE NEW COMPETITIVE GLOBAL MARKETPLACE. WITH HIS ELECTION, INDUSTRIAL POLICY HAS CREPT BACK ON THE NATIONAL AGENDA: THE QUESTION NOW IS NOT WHETHER THE GOVERNMENT SHOULD GUIDE THE PRIVATE SECTOR TO BECOME MORE COMPETITIVE, BUT HOW?

German imperial expansion, begun under Bismarck, swiftly unfolded with the aid of industrial technology along lines that adapted it ideally for the organization, not of a national state, but of a continent or even the world. In this fact lies a major contrast between the neo-mercantilism which followed 1879 and the cameralism borrowed from the Burgundians by the German princes in the sixteenth century. The system extolled by Becher was designed to meet the power needs of dwarf states perpetually torn, by a mule-and-the-two-haystacks dilemma, between the fractioning particularism of the lay princes on the one hand, and the centrifugal pull of a meaningless imperial universalism on the other. The 'new age' for which, as Schulze- Gavaernitz once remarked, Bismarck played the role of 'obstetrician,' employed a machinery for internal unification that fitted the national—in particular the German—state almost as badly as it did the political fractions of which it was compounded.

Executive SummaryAlongside the challenge of maintaining economic competitiveness in the face of great uncertainty, Brexit brings an opportunity for the government to set out a new industrial strategy. The case for doing so rests on the need to address areas of persistent structural weakness in the UK economy, including low productivity. But it is important that any new industrial strategy be based on appropriately granular data reflecting the real structure of the UK corporate sector: the overwhelmingly preponderant role of services as opposed to manufacturing, for example; the importance of young, fast-growing firms as opposed to SMEs; the relatively high failure rate of companies in the UK; and the relative lack of successful mid-sized firms. Such a data-driven approach might spawn an industrial strategy quite different from the piecemeal programmes of recent years.Internationally, the UK is a laggard in this area, and the recently-created Industrial Strategy Council does not look strong enough to change that position. To move forward, the government needs to make industrial strategy a central plank of economic policy, embedded at the heart of the administration with its own staff and funding, and operations based on a comprehensive review of the economic contribution and potential of various types of firm. Needless to say, it cannot be a substitute for a continuing commitment to competition and markets, or a stalking horse for protectionism: interventions should be justified by carefully-argued market failure arguments, be time-limited, and transparently evaluated.