In the latest issue of Regulation, I explore the resurgence of industrial policy—or as some prefer, “industrial strategy”—across the globe, likening it to a 17th-century déjà vu inspired by Jean-Baptiste Colbert, the Finance Minister under Louis XIV. This modern-day industrial policy is not merely a collection of haphazard political interventions—if that were the case, we’d see it popping up throughout history like a persistent weed—but rather, as defined by some experts, “government policies explicitly aimed at restructuring economic activity to achieve certain public objectives.” In my article titled (“Of Tariffs and Industrial Policy,” 48-2 [Summer 2025], pp. 7-8):
Examining government as it currently stands, rather than as interventionists fantasize it could be, unveils the stark reality that a cohesive industrial policy is unattainable. … The push for industrial policy is fundamentally ideological. …
This policy can be viewed as the modern embodiment of what Jean-Baptiste Colbert (1619–1683) aspired to achieve. Economic historian Donald Coleman characterizes Colbertism as “a comprehensive approach to managing economic activities.” Colbert employed an array of strategies: subsidies, tax incentives, protection from foreign imports, and more. His goal was to bolster exports and domestic industry. A true dirigiste mercantilist, Colbert believed his initiatives enriched the nation, and consequently, the king—despite the irony that they likely contributed to France’s lag behind England as the Industrial Revolution unfolded. …
[Industrial policy] embodies the belief that a coercive resource allocation will yield the products that politicians and bureaucrats presume consumers should desire. At best, it reflects an optimistic view that political and bureaucratic systems will, through some magical means, outperform market competition in catering to consumer preferences.
Coinciding with the release of Regulation, British Prime Minister Sir Keir Starmer unveiled a fresh attempt at implementing industrial policy. He expressed pride in introducing a “new industrial strategy for the nation today,” which he claimed would be “robust, strategic, and unapologetically long-term.” This initiative, he asserted, addresses “the challenges of our era,” notably through a “10-year plan.” (Keir Starmer, “The Industrial Strategy Will Provide Certainty for Business,” Financial Times, June 23, 2025.)
The Economist has prudently raised eyebrows at this new strategy. Commenting on the government’s policy document, the publication states (“Britain’s Industrial Strategy Is Unlikely to Boost Its Economy,” July 24, 2025):
The extensive document covers a vast array of sectors and is packed with “transformative” funds, hubs, and accelerators. … Historical experience warrants a degree of skepticism.
Industrial policy, and the equally enticing notion of an industrial strategy, are mere labels for an age-old mirage: the belief that politicians and bureaucrats can effectively stimulate economic growth by determining where resources should flow. One of the underlying hopes—if not the primary aspiration—of many proponents is that this will lead to increased tax revenues and a more expansive state. In the 1930s and 1940s, economists Ludwig von Mises and Friedrich Hayek illuminated the futility of central planners, arguing that they lack the widely dispersed knowledge of supply and demand, costs, and preferences necessary to steer the economy toward true prosperity as diverse individuals envision it.
