Book Review : A ‘National Industrial Strategy’ Gains Support

Staying on Top by Kevin P. Phillips (Random House: $15.95) This is an important book, because of its author’s stature in the world of contemporary politics and because of what it reveals about current trends among the intellectual leaders of the conservative movement. As any close observer of American politics knows, such trends can foreshadow enormous changes in government policy.

In the early 1960s, for example, certain new ideas about poverty and welfare began to gain adherence among intellectuals of the then-dominant liberal faction. And only a few years later, the United States embarked on a historic and very nearly revolutionary change in public policy toward the poor.

Today, of course, conservatives dominate American politics, and few writers can be better equipped to report on the latest trends among the conservative intelligentsia than Kevin Phillips. Now in his early 40s and already a top conservative leader, Phillips is in a position to tell us much about the directions in which conservative policy may be expected to turn in the next two decades.

A Bad Name

And what does he tell us? That conservatives may well turn away from the advocacy of laissez-faire and the free market to advocate instead “a national industrial strategy.”

Note that Phillips doesn’t say industrial policy . Yet he avoids the term not out of any fundamental disagreement with the ideas it describes, but only out of a desire to avoid creating unnecessary disagreement by using emotionally loaded words.

“The term ‘industrial policy’ has gotten a bad name,” he writes, “because it was associated with notions of excessive government interference in the economy.” It isn’t government interference in the economy per se that Phillips opposes, you see; only excessive government interference.

But the farther one reads into “Staying on Top,” the harder it becomes to distinguish between what Felix Rohatyn calls “industrial policy” and what Kevin Phillips calls “industrial strategy.” Phillips says early in his book, for example, that he “does not propound a ‘national industrial policy’ of a far-reaching sort involving . . . mechanisms for picking winning or losing industries or technologies.” But later on, he advocates tax breaks and loan assistance, not for all industries but only for those which have been judged to be “competing with business-government partnerships in the global market.”

Phillips’ main argument for his “industrial strategy” is the same as the liberal’s argument for “industrial policy”--that American industries cannot compete against foreign firms that receive aid from their governments unless they too receive government aid; that no “nostalgic” attempt “to restore the old marketplace verities that prevailed in the halcyon days” will do us any good amid the new realities and new rules of “the new world political economy.”

Yet, as Phillips himself acknowledges in his book’s best chapter (devoted to the history of government aid to business in the United States and abroad), foreign governments have assisted their citizens’ businesses for hundreds of years. Often these governments have owned the businesses outright. Yet American industry won a dominant role in the world economy decades ago, in open competition with these government-aided and government-owned industries. How? Like all advocates of industrial policy, Phillips offers no answer.