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Industrial Policy in Europe after 1945: Wealth, Power and Economic Development in the Cold War

Editor(s):Grabas, Christian
Nützenadel, Alexander
Reviewer(s):Felice, Emanuele

Published by EH.Net (September 2014)

Christian Grabas and Alexander Nützenadel, editors, Industrial Policy in Europe after 1945: Wealth, Power and Economic Development in the Cold War. New York: Palgrave Macmillan, 2014. xiii + 388 pp. $110 (hardcover), ISBN: 978-1-137-32989-9.

Reviewed for EH.Net by Emanuele Felice, Department of Economic History, Universitat Autònoma de Barcelona.

This book, edited by Christian Grabas and Alexander Nützenadel (Humboldt University, Berlin), is an ambitious collection of essays about the history of industrial policies in Europe, and beyond, after the Second World War (mainly during the economic miracle, 1945-1973). The topic is not novel, of course, plenty of studies have been devoted to it, but this volume can boast an impressive coverage and broad perspective, unparalleled thus far: not only countries from both the Western and the Eastern blocks are analyzed and discussed, but attention is also paid to a part of the Third World under the influence of Western Europe.

The general flavor of the book, about a more favorable consideration of industrial policies and economic planning, also is a reason of interest. As stated in the Introduction (p. 2), “for a long time industrial policy appeared old-fashioned, something that belonged to a distant past when mercantilism ruled economic philosophy in Europe. The industrial sector seemed to fade away, marginalized by the Internet boom, the financial sector and other expanding branches of the knowledge economy.” According to the authors, the global financial turmoil has thrown into question many of these assumptions, given that countries with a sounder industrial sector, such as Germany or France, have weathered the crisis better than countries more heavily depending on services (United Kingdom, United States); furthermore, the neo-liberal credo of superior market efficiency is no longer a dogma, as a consequence of the crisis, and economic planning has been revitalized, up to the point that some are even talking of a New Marshall Plan (here intended as “long-term strategies of industrial growth”) which would help overcome the present troubles of Southern European countries. One may disagree with the first part of this reasoning, arguing that industry in itself is not a guarantee of stability (after all, in the medium term more service-oriented countries, such as the United States or the United Kingdom, are performing better than more industrial-oriented, such ones as Italy), but the second part seems less disputable: industrial policy and industrial development are back to the fore, in all the European countries (the good as well as the bad performing ones) and throughout the world — I would add: because the rise of China is a product of industrial policy. In view of this, an in-depth reconsideration of industrial policies carried out in one of the most economically successful regions of the world, during its economic miracle, is surely praiseworthy and may appeal to a worldwide public.

The book is divided in three parts, about industrial policies in Western Europe (I), the debate at a transnational level in the European Community and its influence beyond Europe (II), and industrial policies in the Soviet Bloc (III). In part I, after an introductory chapter significantly subtitled “Planning the Economic Miracle,” by James Foreman-Peck, each country is treated as a separate chapter (Britain, France, West Germany, Sweden, Italy, Spain). In a similar way, Part III has an introductory chapter named “Industrial Policy and Its Failure in the Soviet Bloc” (please note the contrast with the title chosen for Western Europe), by Ivan T. Berend, and then three chapters dedicated, respectively, to the German Democratic Republic, Hungary, and the Soviet Union. Part II is the most original one, with chapters discussing the Marshall Plan in a global perspective (by Daniel Speich Chassé), the debate about a common European industrial policy (by Laurent Warlouzet), and the early industrial development policy of the European Economic Community in Francophone West Africa (by Martin Rempe) and the African-Caribbean-Pacific group (by Guia Migani). Above all, the subjects covered in the last two chapters have received, so far, little attention; it is right to put them in this intermediate position, given that these are policies planned by Western European countries.

To say it in a different way, I strongly agree with the overall structure of the book and acknowledge its underlying ambition. Such an ambition, however, is only partly fulfilled. A few pieces are missing, mainly concerning the Eastern bloc (what about Czechoslovakia, or what about such a peculiar experience as the Yugoslavian one?), but this is after all excusable — there is hardly a book that can claim total coverage. The main point is that this volume brings together a wide range of scholars and methods (from political sciences, to sociology, to economic history), each one dealing with a specific subject (i.e. with a different national case) in that particular perspective. In the editors’ view, this is a strength: “Each analysis is always based on the contemporary definitions of industrial policy, which vary over time and from one country to another”; furthermore, “because even the priorities of policy makers to influence the sectoral structural change in the respective European countries have often been quite different, all chapters focus on a changing diversity of approaches, institutions and instruments of industrial policy, and their specific outcomes” (p. 7). This may cause serious problems, though. De facto, we are unable to compare and thus to assess the different industrial policies by a common yardstick; for the same reason, for some countries the picture may not be satisfactorily exhaustive, nor correct. For instance, the chapter about Italy, by Christian Grabas, has a savor of well-informed economic history, although it is mainly a good collection of second-hand literature; but it dedicates only two pages to the crucial experience of development policies in Southern Italy, arguably the most important — and coherent — industrial development policy which was carried out in that period by the Italian state (although at that time it was called “regional development policy”). Conversely, the chapter about Spain, by Joseba De la Torre and Mario García Zúñiga, extensively (9 pages) deals with the regional impact of industrial policy, which arguably was less important there than in Italy.

In view of this, it may not be coincidental that the book lacks a conclusive chapter, one aiming to summarize which policies succeeded the most and why. It is true that the Introduction contains two pages of “overall results,” but these rather focus on common features, such as the fact that industrial policies were regarded as a pivot of economic policy in general, or that they were often used as short-term measures to cope with economic downturn. According to the editors, it is this last characteristic that “may explain the failure of many programmes in this field” (p. 8), since declining industries, with subsequent inefficient allocation of resources, were often subsidized. And yet this interpretative framework is not entirely convincing. It is not only that industrial policies mostly failed. It is that, paradoxically, the countries which in that period grew at a faster rate were those of less industrial policy, at least according to the analyses from this book. In the case of Western Germany, the author (Stefan Grüner) plainly recognizes that “intervention through industrial political measures played a smaller role between 1950 and 1975 than in other European countries, such as France or Great Britain” (p. 105); but in that period Western Germany, and its industry, performed far better. In the case of Italy, the second best-performing country in the economic miracle, industrial policies, or at least economic planning, are considered to have been mostly a failure. Indeed, what worked well in Italy’s miracle years were state-owned enterprises; due to the different approach used, how state-owned enterprises worked in other contexts, namely in France, is not very clear; for Britain, a poignant but necessarily fleeting comparison with Italy is proposed only in the introductory chapter by Foreman-Peck.

To conclude, in my view the book makes a considerable and admirable effort in order to provide a broad comparative picture of industrial policies in European countries. To this scope, a common interpretative framework, or at least some in-depth conclusive remarks (for instance, via comparing industrial policies by main subjects: state-owned enterprises versus subsidies to private enterprises, sectoral planning versus regional development policies) would have helped.

Emanuele Felice (ClaudioEmanuele.Felice@uab.cat) is visiting professor of Economic History at the Universitat Autònoma de Barcelona. His main research interests are on Italy’s long-run economic growth and the Italian North-South divide. He has published several articles in international journals and a number of books, including Perché il Sud è rimasto indietro (il Mulino, 2013: Why Southern Italy Is Backward). In 2013 he won the Hamilton Prize of the Spanish Association of Economic History, for the best international article published in top journals of economic history and related areas.

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Subject(s):Economic Planning and Policy
Geographic Area(s):Europe
Time Period(s):20th Century: Pre WWII