The Fruits of “Patriotic” Industrial Policy

At the center of the post-Trump policy framework is the call to revive industrial policy. A traditional pillar of any mixed economy, especially in developing countries, industrial policy includes a range of government-directed methods to enhance domestic production and cultivate strong national firms.

It can be limited to sectors critical to national defense and energy consumption, or include durable consumer goods and even agriculture. Because infrastructure is critical to supporting national supply chains and the broader economic activity that local industry attracts, the state assumes a more interventionist role in the economy when setting various industrial targets.

Today’s heterodox conservatives have three principles behind their industrial policy push. The first is that a robust manufacturing base is essential to their conception of national security. Contrary to globalization’s promises, the shift to a more service-based economy has weakened American competitiveness. From this perspective, China, above all, has become too powerful in the wake of American deindustrialization.

In 2019, Robert D. Atkinson and Michael Lind prescribed “a more sophisticated national developmentalist strategy,” maintaining that “a strong nation-state can moderate conflicts among workers and capitalists, in the interest of national economic strategy with military security and widespread prosperity as its objectives.”

Their argument is that while Trumpian protectionism has been a primitive instrument to address complex issues of long-term economic advantage, it can be refined through a focus on producing high-input goods that can be exported to developing countries like India that have a growing middle-class.

Accordingly, “big firms that can marshal the scale needed to compete” are “critical national resources,” but they must abide by a policy regime that legitimates national priorities, including domestic reinvestment and corporate practices that are more favorable toward American workers.

The view that corporations and government should collaborate in pursuing a wealth-generating national interest conflicts with the free market maxims of the post–Cold War period, but its adherents are not overnight converts. A case in point is the US Trade Representative Robert E. Lighthizer, an old guard Republican who had attempted to lend a professional veneer to Trump’s populism.

Writing in a 2008 New York Times op-ed six months before the global financial crisis exploded, Lighthizer asserted that the Republican Party’s history of strategic protectionism had built “a strong and independent country with a prosperous middle class.” Lighthizer warned that the modern bipartisan push toward greater free trade was costing jobs, leading to import dependency, and fueling China’s transformation into a superpower — themes that Trump emphasized during his 2016 campaign when he charged that a neglectful elite was responsible for the country’s decline.

The second principle of industrial policy for heterodox conservatives is the romanticized view that manufacturing inherently bolsters local communities, civic pride, and even traditional family structures. In a recent article for Foreign Affairs, Lighthizer argues that policymakers should “envision the type of society desired and fashion a trade policy to fit” it.

Although he concedes a “middle course” between protectionism and globalization is desirable, Lighthizer attributes social cohesion and self-respect to plentiful manufacturing jobs, lamenting the “deaths of despair” that have resulted from plant shutdowns and firms outsourcing production to foreign countries.

“Doing honest work for a decent wage,” Lighthizer writes, “instills feelings of self-worth that come from being needed and contributing to society … the absence of stable, well-paying employment [cannot] be compensated for … by increased consumption of low-cost imported goods or by welfare checks.”

That same sentiment has been expressed by Oren Cass, a former advisor to Mitt Romney, who declared at last year’s National Conservatism Conference that “America should adopt an industrial policy.” Cass argued that “when communities lose manufacturing … they begin to ‘export need,’” that is, increase demand for care work that is often subsidized by the government.

While the concern for dignity and self-respect may echo libertarian shibboleths about individual responsibility, Cass’ main point is that industrial policy — and thus some form of state interventionism — “can improve upon our status quo, which is … far from ideal.”

Cass’s belief that a sense of belonging in the modern US economy is a moral good and more important than higher profits and dividends has become a recurrent topic among conservative columnists like Ross Douthat, who has generally supported a Trumpism-without-Trump trajectory for the Republican Party in the hopes that mid-century America’s stable work and natalist social norms can be refashioned for today.

This belief that the economy must be structured to better serve American families has led some heterodox conservatives to flirt with a business-friendly conception of unions and family policy. The third principle of conservative industrial policy, then, is that it can convince workers to have a stake in productive national capitalism and neutralize attempts by the Left to bring workers together across sectors around transformational policies like Medicare for All and a Green New Deal.

At American Compass, Cass has launched an ongoing discussion about how to increase union membership while appealing to “labor’s conservative heart.” Notably, the opening statement asserted that unions promote “economic agency” and “self-reliance,” thus reducing political pressure for more redistribution.

It also argued that “when workers have a seat at the table, discussions occur on a level playing field and the parties can make tradeoffs tailored to their circumstances and preferences, rendering much bureaucratic oversight” — that is, a strong regulatory state to safeguard and augment worker protections — “superfluous.” A related post argues that “a thriving trade union movement with a sustained focus on improving the lives of working people is indicative of robust and mature democratic capitalism, not Marxism.”

By evoking the sectoral bargaining and works councils found in countries like Germany as a rough model for domestic industry to follow without acknowledging the greater scale of Europe’s welfare states relative to the United States, it’s clear American Compass has an extremely narrow definition of worker solidarity. The scope of activity it conceives for unions is largely limited to negotiating wages and benefits, along with encouraging the type of civic pride that will supposedly reinforce traditional family structures.

This delegitimizes not just class struggle against exploitative or duplicitous employers, it also inhibits worker alliances between sectors as well as political organizing on behalf of social movements and universal public policies, giving a nod to workers’ importance in society while rejecting anything resembling a working-class political agenda.

The premium placed on promoting a “level playing field” assumes mutual obligations between firms and labor, ignoring the inherent power differences between them that unions can mitigate but never fully overcome under capitalism. It also suggests management will negotiate in good faith for workers’ benefit (rather than being guided by, say, a nonnegotiable mandate to do anything and everything possible to squeeze out more profits from workers).

A goal for heterodox conservatives, then, is to promote reforms that can foster “cooperative” and “communal” relations between business and labor, and render obsolete the “adversarial” dynamic that was institutionalized by the 1935 Wagner Act. They want a heavily modified return of the labor-capital compromise of the postwar era, stripped of the class struggle and left-wing politics that led to it and occasionally challenged it.

Under such an arrangement, unions would become an appendage to industrial policy, tightly if informally controlled through a politics of embedded corporatism. But unlike the forms of tripartitism found in Europe’s social democracies, unions wouldn’t enjoy considerable regulatory oversight or supportive state personnel, and would find their agency to advocate for a strong universal welfare state greatly diminished.

Somewhat bolder in the mix of heterodox policy ideas is the “FamilyPay” proposal that Gladden Pappin, a cofounder of American Affairs, and the economist Maria Molla have put forward. Designed to promote and support “family formation,” FamilyPay is a cash transfer scheme specifically delimited to families that do “at-home childcare,” as opposed to outsourcing care work.

Beginning with a $6,500 annual stipend for the first child that nearly doubles for the second and third (and continues at a declining amount thereafter), Pappin and Molla predict “the program would offer households a nearly 30 percent rise in after-tax income” and cost “around 6.5 percent of GDP at a current fertility rate of 1.8.”

The FamilyPay proposal, while not part of industrial policy, is an essential piece of the heterodox framework to reorient Republicans’ economic agenda. In contrast to other ideas that remain agnostic about fiscal policy outside of revamping infrastructure, it directly involves the state in family support, and as such the authors argue it is comparable to Western Europe’s generous child welfare subsidies.

In fact, by allocating the benefit strictly to families who maintain at-home care, which in most cases would result in the exit of new mothers from the labor market and keep them at home, FamilyPay is primarily designed to satisfy social conservatives looking for more than antiabortion commitments from Republican policymakers, and could dampen demand for universal public daycare.

In that respect, it’s modeled on the natalist approach of right-wing communitarians like the Law and Justice Party in Poland, whose own cash transfer program for families with children, called “500+,” reflects the view that the health of traditional families is the lead measure of “social justice.” But 500+ functions like a monthly family universal basic income, whereas FamilyPay’s parameters are more in line with American conservatives’ parsimonious approach to welfare.

As currently designed, FamilyPay would likely become a substitute for earned income instead of supplementing the total family wage of a two-parent household, undercutting its potential to eliminate precarity among working-class families.

As they grasp for ideas about how to change the economy to meet their own definition of societal needs, heterodox conservatives reveal their own lack of imagination: an attempt to recreate the postwar Fordist order. Their nostalgia indicates a lack of understanding of both the importance of the New Deal’s regulatory architecture and the labor struggles that ensured broad prosperity in the postwar era. Their general silence on progressive taxation, public services, housing, and other policies that could reduce inequality is also telling, though not surprising.

Yet in spite of these limitations, the evolving heterodox-populist worldview indicates an understanding that the Republican Party’s constant assault on the social contract is a political dead end, if the goal is to expand the Republican coalition.

A New Approach to the State?

The priorities underpinning conservative industrial policy — competitive national development in the global economy, social cohesion and stable employment, harmonious industrial relations, and stronger traditional family structures — aim to make right-wing populism into a coherent governing philosophy that exerts a “moral” influence over the decisions business and workers make.

So while many of their ideas reflect ambivalence about “big government,” the professed outlook of these conservatives contrasts with the radical libertarianism of Charles Koch and the Tea Party Republicans that entered Congress a decade ago. By asserting that moral behavior and social peace flow from the way the economy is structured — that, in Hawley’s words, the nature and quality of work within local communities is what “makes self-government possible” — the post-Trump right is trying to ditch Margaret Thatcher’s maxim that there is no such thing as society.

In turn, heterodox conservatives want to persuade the public they offer a genuine departure from neoliberalism, a goal that partly depends on the Democratic Party continuing its incrementalist, neoliberal approach to reform.

The Democratic establishment, along with many liberal public intellectuals, would likely dismiss these right-wing populist ambitions as fantasy. For one thing, much of the Democratic base is alert to the Republican Party’s long history of pursuing tax cuts for the rich, right-to-work laws, and cuts to social programs.

For all of the Democratic Party’s policy weaknesses, a majority of lower-income voters still perceive the party as willing to defend the safety net. The prevalence of white nationalism in Republican politics will continue to alienate voters who might otherwise entertain promises of economic reform from the Right and compensate for disillusionment with Democrats.

Another critical factor preventing a major realignment in favor of Republicans is the climate crisis, which is of paramount concern for young people. Given the GOP’s flagrant denial of climate change, the serious environmental dangers and practical limits of conservative industrial policy are plainly evident.

The recommendations put forth by Senator Marco Rubio, whose office has issued lengthy reports on the decline of capital investment in domestic production, emphasize more deregulation, particularly for resource extraction, along with incentivizing heavy industry purchases through tax write-offs — without offering clear mechanisms to steer industry toward the creation of high-wage manufacturing.

On the post-Trump right, it’s far easier to decry China’s industrial policy and the US economy’s growing polarization between the financial sector and low-wage services than to meaningfully confront any element of the capitalist class, including the major fossil fuel and mining industries that are driving ecological breakdown.

Many progressives, scholars, and journalists, meanwhile, might understandably insist that the GOP has already committed to pursuing minority rule through a right-wing judiciary, the undemocratic advantages it holds through the Electoral College, and voter suppression.

The heterodox-populist project to redefine conservatism would seem to be at cross-purposes with a GOP in thrall to what Nancy MacLean calls “property supremacists”: oligarchs and their sycophants who want a strong state only insofar that it firmly insulates them from democratic pressure for redistribution, stronger labor rights, environmental protection, and other public goods.

However thinly sketched, the most ideological of the heterodox conservatives arguably seek something different: a new relationship between the state, society, and industry. To be sure, their policies will undoubtedly protect the privileges of the 1 percent just as as they will criminalize undocumented immigrants, malign LGBTQ people, and erode reproductive rights.

The emphasis on restoring the male breadwinner model clearly demarcates who most stands to gain from conservative statecraft. But the emergence of a post-Trump populist who seems more willing to at least try to compel capital to occasionally serve the interests of the state here or there, and who promotes higher wages, new infrastructure, and experiments with welfare for “deserving” citizens, could threaten to be more successful and dangerous than Trump if Democrats fail to enact bold economic policies.

Indeed, a post-Trump GOP that adopted a “national developmentalist” strategy would signal that the dogma of “starving the beast” of government had outlived its political utility. Taken at face value, the heterodox-populist approach to policy differs from past Republican leaders like Newt Gingrich and Paul Ryan, whose zealous pursuit of austerity would find shrinking support among today’s GOP base.

From Republican Statecraft to Right-Wing Nationalism

As much as the ascent of selectively “pro-worker” and even “statist” conservatives seems dubious, there is some truth to the heterodox understanding that the Republican Party once saw capitalist industrialization and the national interest as reciprocal, and historically did not conform to the free-market fundamentalism it has espoused since Reagan.

While the reflexive “anti-government” attitude of many Republicans appears to preclude anything faintly resembling economic planning, active industrial policy, as Ganesh Sitaraman of Vanderbilt University argues, shaped American governance from the country’s founding until the rise of neoliberalism and supply-side economics. There is an overlooked legacy of Republican statecraft, one that elements of the populist right seek to claim for themselves.

For better or worse, the Republican Party dominated the course of economic development in the United States prior to the New Deal, drawing foremost on the Hamiltonian tradition to develop robust and diversified domestic manufacturing. Because of the bifurcated nature of development between the North and South, industrial policy was primarily the domain of Republican governance until the presidency of Woodrow Wilson further expanded the role of federal power. A doctrine of pure laissez-faire did not square with the continuing priorities and actual contingencies of national development.

The Republican Party’s general acquiescence to Franklin Roosevelt’s New Deal state and the postwar labor-capital compromise until the mid-1960s wasn’t merely an acceptance of a new political reality but was in keeping with its early-twentieth-century promises to ensure a “full dinner pail” and “square deal” for workers — however inadequate those promises were.

As the center-left political scientists Jacob S. Hacker and Paul Pierson illustrate in their 2016 book American Amnesia, the mainstream of the GOP wasn’t hostile to welfare capitalism, and in fact was supportive of government investment in infrastructure, research, and development, until “fusionist” conservatives and radical libertarians began to take over the party in the 1970s.

What makes a potential conservative turn toward industrial policy — or a “national developmentalist” strategy — ominous in the current political climate is that, beyond exacerbating the climate crisis, it would reinforce the nationalistic and authoritarian currents that have overtaken the Republican Party.

Already justified in part to counter the alleged threat that China poses to the United States’ “economic sovereignty,” Republican industrial policy would serve a jingoistic narrative about a new Cold War. We can easily imagine a new degree of cooperation between the state and favored corporations along with the emergence of an unaccountable patronage system that heavily rewards loyal jurisdictions while leaving others behind.

At the same time Republican promises of full employment would lure disaffected voters, poverty and extreme wealth inequality in the country’s most cosmopolitan cities would be dismissed as a “Democrat” problem.

The total absence of any moderation within the GOP, which has not only countenanced Trump’s racism but increasingly embraced the conspiracist and violent subculture of his base, presents a dilemma for right-wing populists who want to win the popular vote, if only enough to claim the “mandate” that Trump was denied.

The level of public mistrust toward the GOP now runs so deep and encompasses so many vital issues that a fusion of “economic nationalism” with social conservatism is unlikely to succeed at winning an electoral majority. Yet the new fusionists may try a two-pronged approach.

On the one hand, state and local Republicans will surely deploy voter suppression where they are dominant. On the other hand, a post-Trump party leader may substitute an “inclusive” version of “America First” for Trump’s politics of resentment, geared to expand the Republican coalition just as some conservatives now anticipate.

As evident in the rhetoric of Hawley and influential writers like Rod Dreher and Sohrab Ahmari, this “new” version of Republicanism neither resembles the consensus-oriented governance of the mid-century GOP nor has an affinity to Europe’s center-right Christian democratic parties. As an alternative to the “property supremacists,” the heterodox-populist wing is closer to Europe’s radical right and its antecedents in interwar fascism.

The Bannonite aspiration, taken to its logical extreme, conjures the fascist vision of an activist state steering patriotic industry toward national greatness, one in which the fervent backing of a traditionalist cross-class coalition buttresses both a radical obsession with “law and order” in domestic affairs and a unilateral and bellicose foreign policy.

If some prominent Republicans do begin to propose policies that eschew libertarian economic doctrine, this vision will pervade their search to give their party a post-Trump raison d’être.

Toward a People’s Industrial Policy

To cut off any such attempts by the Right, the Left must build solidarity between urban and rural workers and increase its leverage in local and national elections. Most importantly, it must charge ahead with promoting the feasibility of the one industrial policy that, in concert with labor and other social movements, can change the country for the better: the Green New Deal. Each of its pillars — new infrastructure, a rapid transition to renewables, promotion of domestic supply chains, public power, high-speed rail, a revolution in sustainable agriculture, a job guarantee — is a means to rebuild the American state, to rechart the path of economic development in a grossly unequal society toward justice.

The Green New Deal, moreover, shows that leftists and the progressive wing of the Democratic Party understand development is not the same as growth. Development includes far more measures of human welfare; it reflects the best uses of a country’s assets and productivity, not the concentration of riches and power.

Without discounting the shortcomings of previous generations of progressives and liberals, the most enlightened political leaders among them recognized that the creation and maintenance of a complex, wealth-generating economy required a solid floor for all citizens to feel secure.

The recurrent and often deep failings of the American social contract, along with an emboldened labor movement, motivated Franklin Roosevelt to articulate a Second Bill of Rights in 1944, and to center economic rights as a precondition of continued development. Like Bernie Sanders’ presidential campaigns, advocates of the Green New Deal seek to expand and deepen Roosevelt’s vision.

Conservatism, in contrast, has always minimized and attempted to repel the pressures from below that have led to reform and more inclusive development. But since Trump’s 2016 campaign, the populist right has increasingly asserted itself as the champion of the less educated and the left behind, a vehicle to rehabilitate the smaller cities and towns that elites from both parties have ignored in the age of globalization.

While the Democratic establishment may continue to underestimate the discontent and insecurity festering across the country — even in the middle of a pandemic — the future of development is where the new battle lines in party politics will be drawn.

To win this fight, the Left must debunk the populist right’s false bargain for labor and continue to advance a social contract that provides real security for working people while preventing the climate crisis from reaching a point of no return. The challenge is formidable, but it’s the only path to shared prosperity for future generations.