Market fundamentalism has failed to improve economic and social conditions. Now, we need a mission-oriented approach to the economy that embraces an active role for government in spurring growth and innovation.

hen President Joe Biden campaigned last year under the slogan “build back better,” he signaled a break with decades of economic thinking that prescribed a limited government role in the economy. As the New York Times put it in April, Biden’s proposal to cut carbon emissions in half by 2030 is “perhaps the greatest bet in recent American history on what economists call industrial policy, the idea that the government can steer the development of jobs and industries in the economy.”

The United States is not alone. Countries throughout Europe and elsewhere are increasingly turning to the view that governments should use industrial policy to tackle grand challenges. Recognizing this trend, the International Monetary Fund issued a report in 2019 called “The Return of the Policy That Shall Not Be Named: Principles of Industrial Policy.”

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