Industrial policy is back on the national agenda. From Marco Rubio on the right to Elizabeth Warren on the left, a bipartisan consensus is emerging that America’s deindustrialization has passed the point where governmental passivity is appropriate.

The intensifying national security threat from China, and supply chain vulnerabilities newly revealed by the COVID pandemic, have extended the urgency beyond purely economic concerns.

And yet, the current ferment is in danger of ending up like previous versions in the 1970s, 1980s, and 1990s: nowhere. Conceiving and marshaling the political will to adopt and effectively administer a sound industrial policy will require a solid, defensible theory of its economic foundations, and such a theory has not been put forth. The absence of such theory was a major factor dooming previous efforts, and without it, the U.S. will continue to be restricted to one-off tactical moves, against only the most obvious problems and using only the most obvious solutions. It will not be able to undertake the coordinated, strategic-scale, all-of-government solutions it needs.

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