Industrial Policy in the United States: A Neo-Polanyian Interpretation

Frank Dobbin , Review of Otis Graham Jr., "Losing Time: The Industrial Policy Debate," Contemporary Sociology 22, no. 2 (1993): 251.

Ibid. See also Dobbin, Forging Industrial Policy: The United States, Britain, and France in the Railway Age (Princeton, NJ: Princeton University Press, 1994); John Campbell, "The State and the Nuclear Waste Crisis: An Institutional Analysis of Policy Constraints," Social Problems 34, no. 1 (1987): 18-33; Alex Hicks, "National Collective Action and Economic Performance: A Review Article," International Studies Quarterly 32, no. 2 (1988): 131-53; William Dietrich, In the Shadow of the Rising Sun: The Political Roots of American Economic Decline (University Park: Pennsylvania State University Press, 1991); Kenneth Finegold and Theda Skocpol, State and Party in America’s New Deal (Madison: University of Wisconsin Press, 1995); and Harold Wilensky, Rich Democracies: Political Economy, Public Policy, and Performance (Berkeley: University of California Press, 2002).

See Andrew Schrank and Josh Whitford, "The Anatomy of Network Failure," unpublished paper (Albuquerque and NY: University of New Mexico and Columbia University, 2009) on network failure; as well as Francis Bator, "The Anatomy of Market Failure," Quarterly Journal of Economics 72, no. 3 (1958): 351-79; Kenneth Arrow, "The Organization of Economic Activity: Issues Pertinent to the Choice of Market versus Nonmarket Allocation," in US Joint Economic Committee, the Analysis and Evaluation of Public Expenditure (Washington, DC: Government Printing Office, 1969); Marshall Meyer and Lynne Zucker, Permanently Failing Organizations (Newbury Park, CA: Sage, 1989); Mrinal Datta-Chaudhuri, "Market Failure and Government Failure," Journal of Economic Perspectives 4, no. 3 (1990): 25-39; and Lee Clarke and Charles Perrow, "Prosaic Organizational Failure," American Behavioral Scientist 39, no. 8 (1996): 1040-56 on market and organizational failures.

See Fred Block, "Political Choice and the Multiple ‘Logics’ of Capital," Theory and Society 15, no. 1/2 (1986): 178; as well as Fred Block, "Understanding the Diverging Trajectories of the United States and Europe: A Neo-Polanyian Analysis," Politics and Society 35, no. 1 (2007): 3-33; and Karl Polanyi, Great Transformation: The Political and Economic Origins of Our Time (Boston: Beacon, 1944/2001).

Dobbin, Forging Industrial Policy; and Finegold and Skocpol, State and Party in America’s New Deal provide path-dependent accounts of U.S. economic policy making. The Office of Technology Assessment (OTA), U.S. Industrial Competitiveness: A Comparison of Steel, Electronics, and Automobiles (Washington, DC: OTA, 1981), 175; and Lane Kenworthy, In Search of National Economic Success: Balancing Competition and Cooperation (Newbury Park, CA: Sage, 1995), 99, discuss the market failure rationale for industrial policy in particular.

Chalmers Johnson , ed., The Industrial Policy Debate (San Francisco: ICS Press , 1984).

Walter Powell , "Neither Market nor Hierarchy: Network Forms of Organization," in Research in Organizational Behavior, ed. Barry Staw and L. L. Cummings ( Greenwich, CT: JAI, 1990).

Chalmers Johnson , MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975 (Palo Alto, CA: Stanford University Press, 1982), 323.

Block , "Understanding the Diverging Trajectories of the United States and Europe," 5.

Ibid., 7.

Ibid. See also Marc Schneiberg , "What’s on the Path? Path Dependence, Organizational Diversity and the Problem of Institutional Change in the US Economy, 1900-1950," Socio-Economic Review 5, no. 1 (2007): 47-80.

See Fred Block, "One World or Three? Globalization and the Future of Welfare Capitalism," unpublished paper (Davis: University of California, Davis, 2003); Block, "Political Choice and the Multiple ‘Logics’ of Capital," 190; and Block, "Understanding the Diverging Trajectories of the United States and Europe," 5-10. In the latter paper, Block isolates four broad neo-Polanyian theses: embeddedness, the double movement, the heterogeneity of capitalist interests, and variable national responses to international competition. In personal correspondence, however, Block acknowledges that his third and fourth theses are really different dimensions of a more general commitment to the "multiple logics of capital" that he had already explored in his 1986 paper. We therefore pursue parsimony by collapsing his third and fourth theses. See also Peter Evans, "Is an Alternative Globalization Possible?" Politics & Society 36, no. 2 (2008): 271-305.

Fred Block, "Swimming against the Current: The Rise of a Hidden Developmental State in the United States," Politics & Society 36, no. 2 (2008): 169-206. See also Johnson, MITI and the Japanese Miracle; John Zysman, Government, Markets, and Growth: Financial Systems and Politics of Industrial Change (Ithaca, NY: Cornell University Press, 1983); Peter Katzenstein, Small States in World Markets: Industrial Policy in Europe (Ithaca, NY: Cornell University Press, 1985); Sharon Zukin, Industrial Policy: Business and Politics in the United States and France (New York: Praeger, 1985); and Ronald Dore, Flexible Rigidities: Industrial Policy and the Structural Adjustment in the Japanese Economy (Stanford, CA: Stanford University Press, 1986).

Block , "Swimming against the Current"

Block , " Understanding the Diverging Trajectories of the United States and Europe," 7.

Gary Becker, "The Best Industrial Policy Is None at All," Business Week (August 25, 1985). See also Bruce Bartlett, "Trade Policy and the Dangers of Protectionism," in The Industrial Policy Debate, ed. Chalmers Johnson (San Francisco: ICS Press, 1984); Don Lavoie, "Two Varieties of Industrial Policy: A Critique," Cato Journal 4, no. 2 (1984): 457-83; and Paul Craig Roberts, "The Asian Crisis Proves That Industrial Policy Doesn’t Pay," Business Week (December 22, 1997).

Barry Bluestone and Bennett Harrison, Deindustrialization of America: Plant Closings, Community Abandonment and the Dismantling of Basic Industry (New York: Basic Books, 1982); and Robert Reich, The Next American Frontier (New York: Times Books, 1983).

Cf. Reich, The Next American Frontier, 5; and Block, "Understanding the Diverging Trajectories of the United States and Europe," 9. Market skeptics neither offer nor adhere to a general theory of political and economic change. While Reich discusses the "pendulumlike vacillation" of "civic culture" and "business culture" in the United States, his pendulum bears little relation to Polanyi’s double movement-in that he portrays the "next American frontier" as the transcendence of the pendular swing-and his own understanding of Polanyi’s work is neither sympathetic nor subtle. See Reich, The Next American Frontier, 8, 21, 275; as well as Robert Reich, "The Second Great Transformation," Lecture at the Occasion of the Dagmar and Václav Havel Foundation Vize 97 Prize (2003).

Cf. Kenneth Noble, "Regan Belittles Idea of U.S. Industrial Policy," New York Times (October 15, 1983); and Otis Graham Jr., Losing Time: The Industrial Policy Debate (Cambridge, MA: Harvard University Press, 1992).

Ira C. Magaziner and Robert B. Reich, Minding America’s Business: The Decline and Rise of the American Economy (New York: Vintage Books, 1982), 378-79. See also Bluestone and Harrison, Deindustrialization of America; Alan Kantrow, "The Political Realities of Industrial Policy," Harvard Business Review 61, no. 5 (1983): 81-82; Mel Dubnick, "American States and the Industrial Policy Debate," Policy Studies Review 4, no. 1 (1984): 25; and Ellis Krauss and Jon Pierre, "Targeting Resources for Industrial Change," in Do Institutions Matter? Government Capabilities in the United State and Abroad, ed. R. Kent Weaver and Bert Rockman (Washington, DC: Brookings Institution, 1993), 181-83.

Peter Hall and David Soskice, "Introduction," in Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, ed. Peter Hall and David Soskice (Oxford: Oxford University Press, 2001), 47. See also R. Kent Weaver, The Politics of Industrial Change: Railway Policy in North America (Washington, DC: Brookings Institution, 1985); Zysman, Government, Markets, and Growth; Dobbin, Forging Industrial Policy; and Finegold and Skocpol, State and Party in America’s New Deal.

Michael Mann, "Has Globalization Ended the Rise and Rise of the Nation State?" Review of International Political Economy 4, no. 3 (1997): 472-96, at 484. See also Zysman, Government, Markets, and Growth, 281; R. Kent Weaver and Bert Rockman, "When and How Do Institutions Matter?" in Weaver and Rockman, Do Institutions Matter? 456; and Wilensky, Rich Democracies, 93.

Fred Block and Matthew Keller , "Where Do Innovations Come From? Transformations in the US Economy, 1970-2006," Socio-Economic Review 7, no. 3 (2009): 460.

Block , " Understanding the Diverging Trajectories of the United States and Europe," 12.

Block , "Swimming against the Current," 179.

Kevin Phillips , "U.S. Industrial Policy: Inevitable and Ineffective ," Harvard Business Review 70, no. 4 (1992): 104.

Krauss and Pierre , "Targeting Resources for Industrial Change ," 186.

Hall and Soskice , "Introduction," 49.

See Block, "Swimming against the Current," 198. Finegold and Skocpol draw an important distinction between advocates of "hard" sectoral policies like Robert Reich and Lester Thurow; proponents of "softer" competitiveness policies-including the provision of public goods-like Amitai Etzioni; and opponents of industrial policy writ large. See Finegold and Skocpol, State and Party in America’s New Deal, 224-33. Our classification maps onto-if by no means reduces to-their distinction in that advocates of sectoral policies tend to be liberal market skeptics, proponents of softer (or market-incentive) policies tend to be neo-institutionalists, and opponents of softer as well as harder policies tend to be market fundamentalists. A key point worth underscoring, however, is that institutionalists acknowledge the social construction of markets; they simply believe that in the Anglo-American institutional context they are better constructed in a broadly liberal manner.

Statement of Raymond G. Kammer, Director, National Institute for Standards and Technology, Technology Administration, Department of Commerce, House Committee on Science, Subcommittee on Technology (September 23, 1999), 17.

Block , " Swimming against the Current," 179-80.

Henry Etzkowitz et al., "Pathways to the Entrepreneurial University; Towards a Global Convergence," Science and Public Policy 35, no. 9 (2008): 681-95, at 685.

Block and Keller, "Where Do Innovations Come From?" See also Statement of Allen Li of the General Accounting Office Hearing on "Measuring Performance: Challenges in Evaluating Research and Development," House Committee on Science, Subcommittee on Technology (April 10, 1997).

OTA, Competing Economies: America, Europe, and the Pacific Rim (Washington, DC: OTA, 1991), 110; Rosalie Ruegg, "Delivering Public Benefits with Private Sector Efficiency through the ATP," in The Advanced Technology Program: Assessing Outcomes, ed. Charles Wessner (Washington, DC: National Academy Press, 2001), 121; and Roland Tibbetts, "SBIR, Renewal, and US Economic Security," unpublished paper (2006), 5.

David Connell , "Secrets" of the World’s Largest Seed Capital Fund: How the United States Government Uses Its Small Business Innovation Research (SBIR) Programme and Procurement Budgets to Support Small Technology Firms (Cambridge, UK: Centre for Business Research, 2006), 3.

Block , "Swimming against the Current," 176.

Steven Mufson , "U.S. in Control: Its Goal to Fix, Not Run, Firms," Washington Post (April 29, 2009).

Peter Wallsten and Jim Tankersley, "Remaking Detroit: Politics and Possibilities," Los Angeles Times (March 31, 2009). See also Paul Starobin, "The Economic Crisis: Washington’s Sad Triumph," National Journal (January 23, 2009); David Sanger and Bill Vlasic, "Chrysler’s Fall May Help Obama to Reshape GM," New York Times (May 2, 2009); and Peter Gosselin, "Obama Assigns Centrists to Make Radical Economic Moves," Los Angeles Times (November 25, 2008).

Colin Crouch, Capitalist Diversity and Change: Recombinant Governance and Institutional Entrepreneurs (Oxford: Oxford University Press, 2005), 24. See also Block, "Swimming against the Current," 179.

Krauss and Pierre , "Targeting Resources for Industrial Change ," 186.

Hall and Soskice, "Introduction."

Block, "Swimming against the Current," 179. See also Crouch, Capitalist Diversity and Change, 135; Etzkowitz et al., "Pathways to the Entrepreneurial University," 685.

Glenn Fong, "State Strength, Industry Structure, and Industrial Policy: American and Japanese Experiences in Microelectronics," Comparative Politics 22, no. 3 (1990): 276. See also Magaziner and Reich, Minding America’s Business, 378; and Eugene Bardach, "Implementing Industrial Policy," in The Industrial Policy Debate, ed. Chalmers Johnson (San Francisco: ICS Press, 1984), 103 on interregional conflicts; Dubnick, "American States and the Industrial Policy Debate"; and Wilensky, Rich Democracies on conflicts between Washington and state governments; and Joseph Badaracco and David Yoffie, "Industrial Policy: It Can’t Happen Here," Harvard Business Review (November-December 1983): 99 on conflicts between the executive and the courts.

Michael Piore and Charles Sabel, The Second Industrial Divide: Possibilities for Prosperity (New York: Basic Books, 1984); Jorge Carrillo, "Transnational Strategies and Regional Development: The Case of GM and Delphi in Mexico," Industry and Innovation 11, no. 1/2 (2004): 127-53; Gary Herrigel, "Emerging Strategies and Forms of Governance in the Components Industry in High Wage Regions," Industry and Innovation 11, no. 1/2 (2004): 45-80; Andrew Schrank, "Ready-to-Wear Development? Foreign Investment, Technology Transfer, and Learning-by-Watching in the Apparel Trade," Social Forces 83, no. 1 (2004): 123-56; and Josh Whitford and Jonathan Zeitlin, "Governing Decentralized Production: Institutions, Public Policy, and the Prospects for Inter-Firm Collaboration in US Manufacturing," Industry and Innovation 11, no. 1/2 (2004): 11-44.

James Cobb, The Selling of the South: The Southern Crusade for Industrial Development: 1936-1980 (Baton Rouge: Louisiana State University Press, 1982); Gavin Wright, Old South, New South: Revolutions in the Southern Economy since the Civil War (New York: Basic Books, 1986); David Carlton, "The Revolution from Above: The National Market and the Beginnings of Industrialization in North Carolina," Journal of American History 77, no. 2 (1990): 445-75; and Jefferson Cowie, Capital Moves: RCA’s Seventy-Year Quest for Cheap Labor (Ithaca, NY: Cornell University Press, 1999).

See, e.g., Nick Cullather, "Fuel for the Good Dragon: The United States and Industrial Policy in Taiwan, 1950-1965," Diplomatic History 20, no. 1 (1996): 1-25; and Andrew Schrank, "Foreign Investors, ‘Flying Geese,’ and the Limits to Export-Led Industrialization in the Dominican Republic," Theory and Society 32, no. 4 (2003): 415-43 on overseas trouble spots; and Bill Luker, "The Public Sector and Sunbelt Development," Challenge 40 (1997); pp. 58-62. Ann Markusen, The Rise of the Gunbelt: The Military Remapping of Industrial America (Oxford: Oxford University Press, 1991); and Gavin Wright, "The Economic Revolution in the American South," Journal of Economic Perspectives 1 (Summer 1987), pp. 161-178, on the domestic periphery.

Scott Campbell , "Interregional Migration of Defense Scientists and Engineers to the Gunbelt during the 1980s," Economic Geography 69, no. 2 ( 1993): 204-23.

Andrew Schrank , "Green Capitalists in a Purple State: Sandia National Laboratories and the Renewable Energy Industry in New Mexico," Project on Innovation Policy Working Paper no. 5 (Davis: Institute of Governmental Affairs, University of California, Davis, 2008).

Tom Baldwin , "North and South Split as ‘Car Wars’ Rev Up in Battle over $14bn Bailout" Times of London (December 15, 2008); and Daniel Gross , "Southern Comfort," Newsweek (December 22, 2008).

Peter Boyer, "The Road Ahead: Smyrna, Tennessee V. Detroit," New Yorker (April 29, 2009). Cf. James Inhofe, "Sen. Inhofe Outlines Concerns on Auto Bailout Bill," US Fed News (December 10, 2008); and Judd Gregg, "Sen. Gregg Comments on Auto Bailout, Concerns about Using Tarp Funds for the Big Three," US Fed News (December 12, 2008).

Statement of Senator Bob Corker, released March 30, 2009, http://corker.senate.gov/public/index.cfm?FuseAction=NewsRoom.NewsReleases&ContentRecord _id=58294274-f22f-a44c-9b1a-50a81b40af42 (accessed August 21, 2009). See also Monica Langley and Neal Boudette, "Detroit’s Fate Sealed in West Wing," Wall Street Journal (March 31, 2009); and Andrea Billups, "Obama’s ‘Tough Love’ Doesn’t Dent Detroit’s Spirit," Washington Times (March 31, 2009).

David Cole et al., Car Research Memorandum: The Impact on the U.S. Economy of a Major Contraction of the Detroit Three Automakers (Ann Arbor, MI: Center for Automotive Research, 2008), 3. Cole et al. provide rigorous estimates of the supplier shocks engendered by the potential collapse of the U.S. automakers and their impacts on foreign transplants. See also Peter Whoriskey, "Senator Corker Faces Backlash at Home," Washington Post (December 12, 2008), D-1; as well as Boyer, "The Road Ahead"; and Todd Spangler, "GOP Senator Fighting Like a Mich. Dem to Keep GM Plant Open," Detroit Free Press (April 10, 2009).

Cf. Cristine Russell , "On the Hill, a Battle over R&D Funding ," Washington Post (February 15, 1982); and Business Week , "An Idea That’s Working: Federal Funds for High Tech Start-Ups" (October 22, 1984).

Henry Etzkowitz, "The New Visible Hand: An Assisted Linear Model of Science and Innovation Policy," Science and Public Policy 33, no. 5 (2006): 310-20, at 314. See also Ronald Cooper, "Changing Emphasis of National Technology Policy," unpublished paper (Washington, DC: Small Business Administration, 2005), 3.

Charles Wessner , ed., An Assessment of the SBIR Program, National Research Council ( Washington, DC: National Academies Press, 2008), 3, 42, 45.

Statement of Robert M. Berdahl, President, Association of American Universities, House Committee on Science and Technology, Subcommittee on Technology and Innovation (April 23 2009).

Alan Hughes, "Innovation Policy as Cargo Cult: Myth and Reality in Knowledge-Led Productivity Growth," Institute for Technology, Enterprise and Competitiveness (ITEC) Working Paper Series 07-26 (Cambridge, UK: ITEC, 2007). See also Charles Stein, "A Sugar Daddy for Hungry Startups: Old Uncle Sam," Fortune Small Business 10, no. 4 (2000); pp. 41-2, and Tibbetts, "SBIR, Renewal, and US Economic Security," unpublished paper.

David Audretsch, Juergen Weigand, and Claudia Weigand, "The Impact of the SBIR on Creating Entrepreneurial Behavior," Economic Development Quarterly 16, no. 1 (2002): 32-38; as well as Connell, "Secrets" of the World’s Largest Seed Capital Fund; and Josh Lerner, "The Government as Venture Capitalist: The Long-Run Impact of the SBIR Program," Journal of Business 72, no. 3 (1999): 285-318.

See, for example, Statement of Ms. Judy Armstrong, President and CEO, ADA Technologies, Inc., Hearing on "SBIR Program Oversight and Reauthorization," House Committee on Small Business, Subcommittee on Government Programs and Oversight (May 27, 1999); as well as the statement of Al Behar, President and CEO, Personal Improvement Computer Systems, Inc., Hearing on "SBIR Program Oversight and Reauthorization," House Committee on Small Business, Subcommittee on Government Programs and Oversight (May 27, 1999).

James Rottsolk, Statement of James E. Rottsolk, Chairman, President and CEO, Cray Inc., Hearing on "Advanced Manufacturing and Biotechnology," Senate Committee on Commerce, Science, and Transportation (April 14, 2003); and Oak Ridge National Laboratories (ORNL), Partnership Success Story: ORNL and General Electric Collaborate on Superefficient Water Heater (Oak Ridge, TN: ORNL, 2008).

See Andrew Lawler, "Neutron Scattering: Green Light for Long-Awaited Facility," Science 279, no. 23 (1998): 470-71; as well as the Prepared Statement of the Biotechnology Industry Organization, Hearing on "Departments of Labor, Health and Human Services, Education, and Related Agencies, Appropriations for Fiscal Year 2000," Senate Appropriations Committee (February 23, 1999). Furthermore, the Ad Hoc Group for Medical Research aggregates more than two hundred pharmaceutical firms, universities, and nonprofit organizations into a coalition dedicated exclusively to increasing National Institutes of Health (NIH) funding. "When the organization was founded in 1982," writes one observer, "the NIH’s annual budget was almost $4 billion; today it is close to $30 billion." See Coco Ballantyne, "The Lobbying Landscape and Beyond: 15 Groups to Know," Nature Medicine 14, no. 10 (2008): 1002-3.

See the Statement of David W. Danjczek, Staff Vice President, Unova Inc., Hearing on "Challenges Confronting the Machine Tool Industry," Senate Committee on Science, Commerce, and Transportation; Subcommittee on Manufacturing and Competitiveness (October 28, 1999); Statement of Scott Donnelly, Senior Vice President for Global Research, General Electric Company, Hearing on "Technology Administration and the NIST, Including the ATP," Senate Committee on Science, Commerce, and Transportation (April 16, 2002); Prepared Statement of Phyllis Gardner, Associate Professor of Medicine, Stanford University, on Behalf of the Biotechnology Industry Organization, Hearing on "NIH: Moving Research from the Bench to the Bedside," House Committee on Energy and Commerce, Subcommittee on Health (July 10, 2003); and Statement of Ms. Deborah L. Grubbe, Corporate Director for Safety and Health, Dupont, Wilmington, DR, Hearing on "Fiscal Year 2005 NIST Budget: Views from Industry," House Committee on Science, Subcommittee on Environment, Technology, and Standards (April 28, 2004).

Statement of Ms. Deborah L. Grubbe, Corporate Director for Safety and Health, Dupont, 21.

Letter to the House of Representatives from the Alliance for Science and Technology Research in America, Hearing on "Fiscal Year 2005 NIST Budget: Views from Industry," House Committee on Science, Subcommittee on Environment, Technology, and Standards (April 28, 2004).

Wilensky, Rich Democracies, 93. See also the Statement by the Institute of Electrical and Electronics Engineers-United States of America (IEEE-USA), Hearing on "Fiscal Year 2005 NIST Budget: Views from Industry," House Committee on Science, Subcommittee on Environment, Technology, and Standards (April 28, 2004), 62.

Bardach, "Implementing Industrial Policy," 98; Melvyn Krauss, "Europeanizing’ the US Economy: The Enduring Appeal of the Corporatist State," in The Industrial Policy Debate, ed. Chalmers Johnson (San Francisco: ICS Press, 1984), 90.

James Turner , "Discussion," in The Advanced Technology Program: Assessing Outcomes, ed. Charles Wessner (Washington, DC: National Academies Press, 2001), 128.

National Science Board, Science and Engineering Indicators, vol. 1 (Arlington, VA: National Science Foundation, 2008), 4-61; and Wendy Schacht, "CRS Report for Congress," The Technology Innovation Program, Order Code RS22815 (2008), 3-4.

Magaziner and Reich, Minding America’s Business, 255.

Powell, "Neither Market nor Hierarchy"; Joel Podolny and Karen Page, "Network Forms of Organization," Annual Review of Sociology 24 (1998): 57-76; and Laurel Smith-Doerr and Walter Powell, "Networks and Economic Life," in The Handbook of Economic Sociology, ed. Neil Smelser and Richard Swedberg, 2nd ed. (Princeton, NJ: Princeton University Press, 2005).

See, inter alia, AnnaLee Saxenian, Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (Cambridge, MA: Harvard University Press, 1994); Walter W. Powell et al., "The Spatial Clustering of Science and Capital," Regional Studies 36, no. 3 (2002): 299-313; Judith Jordan and Julian Lowe, "Protecting Strategic Knowledge: Insights from Collaborative Agreements in the Aerospace Industry," Technology Analysis and Strategic Management 16, no. 2 (2004): 241-59; and Josh Whitford, The New Old Economy: Networks, Institutions, and the Organizational Transformation of American Manufacturing (Oxford: Oxford University Press, 2005).

Powell , " Neither Market nor Hierarchy," 328, 385.

Smith-Doerr and Powell , " Networks and Economic Life," 380.

Schrank and Whitford, "The Anatomy of Network Failure."

Bruce Kogut, "The Stability of Joint Ventures: Reciprocity and Competitive Rivalry," Journal of Industrial Economics 38, no. 2 (1989): 183-98, at 187. See also Seung Ho Park and Michael Russo, "When Competition Eclipses Cooperation: An Event History Analysis of Joint Venture Failure," Management Science 42, no. 6 (1996): 875-90.

The Economist , "Flying in Formation" (July 22, 1995), 59-60.

Sherrie Human and Keith Provan , "Legitimacy Building in the Evolution of Small-Firm Networks: A Comparative Study of Success and Demise," Administrative Science Quarterly 45, no. 3 (2000): 327-65, at 361.

Andreas Papandreou, Externality and Institutions (Oxford, UK: Clarendon, 1994), 5-6. See, e.g., Stuart Leslie and Robert Kargon, "Selling Silicon Valley: Frederick Terman’s Model of Regional Advantage," Business History Review 70 (1996): 435-72; and Stuart Leslie, "Regional Disadvantage: Replicating Silicon Valley in New York’s Capital Region," Technology and Culture 42, no. 2 (2001): 236-64.

Meyer and Zucker, Permanently Failing Organizations, 19. See, e.g., Howard Aldrich and Martin Reuf, Organizations Evolving (Thousand Oaks, CA: Sage, 2006).

Hall and Soskice, "Introduction," 53. Cf. Block and Keller, "Where Do Innovations Come From?"

Jeanne W Powell , "Advanced Technology Program-Development, Commercialization, and Diffusion of Enabling Technologies: Progress Report for Projects Funded 1993-1995," NISTIR 6098 (Gaithersburg, MD: National Institute of Standards and Technology 1997), 41.

See Erica Fuchs , "The Role of DARPA in Seeding and Encouraging New Technology Trajectories: Pre- and Post- Tony Tether in the New Innovation Ecosystem," Project on Innovation Policy Working Paper no. 2, Institute of Governmental Affairs (Davis, University of California, Davis, 2008); as well as Schrank, "Green Capitalists in a Purple State."

For instance, the Small Business Innovation Research (SBIR) program hosts an annual conference for Phase II award recipients that includes "reviews of technical and commercial progress, networking among grantees and potential investors, and training sessions on intellectual property protection, licensing strategy and investment strategies." See Testimony of Kesh Narayanan, Division Director, Industrial Innovation and Partnerships (IIP), Directorate for Engineering National Science Foundation, House Committee on Science and Technology, Subcommittee on Technology and Innovation (June 26, 2007). Individual agencies and states host conferences of their own and in some cases provide mentoring programs that link commercially viable SBIR alumni to recent award recipients. See Innovation Associates, Commercialization Needs of SBIR Firms (Washington, DC: Department of Agriculture, 2001), 25.

John Padgett , "Hierarchy and Ecological Control in Federal Budgetary Decision Making," American Journal of Sociology 87, no. 1 ( 1981): 75-129, at 82.

Etzkowitz et al., "Pathways to the Entrepreneurial University," 685.

National Science Board, Science and Engineering Indicators, vol. 1, 8-94; and the Statement of Barbara Stoller, Director, SBIR Outreach Program, Technology Ventures Inc., Hearing on "Present and Future of the SBIR, FAST, and MEP Programs," House Committee on Small Business, Subcommittee on Workforce, Empowerment, and Government Programs (May 6, 2003), 50-51.

Statement of Jo Anne Goodnight, SBIR/STTR Program Coordinator, Hearing on "SBIR: Advancing Medical Breakthroughs," House Committee on Small Business, Subcommittee on Investigations and Oversight (February 13, 2008). Sandia National Laboratories not only pursues SBIR grants with abandon but boast a unique partnership with the New Mexico Manufacturing Extension Partnership (MEP). MEP staffers are "embedded" in the labs. They not only work on technology transfer to private businesses but also help ensure the quality and efficiency of the lab’s supplier base. See Innovation Associates, Commercialization Needs of SBIR Firms.

Charles Wessner , "The Advanced Technology Program: It Works," Issues in Science and Technology 18, no. 1 (2001): 59-64, at 63.

National Science Board, Science and Engineering Indicators, vol. 1, 8-70.

Ibid., 8-94.

Charles Wessner, ed., An Assessment of the SBIR Program, National Research Council (Washington, DC: National Academies Press, 2009), 45. New Hampshire’s story is a variation on the theme. A single engineering services firm, Creare, is not only responsible for a vastly disproportionate share of the state’s SBIR awards-and the third most successful applicant in the history of the program-but the source of more than a dozen spin-off firms with hundreds of employees and a quarter of a billion dollars in annual revenue. Bob Dean, who founded Creare in 1961, was a former Dartmouth engineering professor; and Jim Block, who served as president of the company in the 1980s, had links to New Hampshire Senator Warren Rudman, a key sponsor of the original SBIR legislation. "As a consequence, the company knew that SBIR was on its way. Creare was among the first firms to apply for, and to receive, an SBIR award." See Philip Auerswald, "Creare, Inc," in An Assessment of the SBIR Program, ed. Charles Wessner and National Research Council (Washington, DC: National Academies Press, 2008).

Charles Wessner, Comments, Hearing on "An Assessment of Federal Funding for Private Research and Development," Senate Committee on Homeland Security and Governmental Affairs, Subcommittee on Federal Financial Management, Government Information, and International Security (May 26, 2005), 15.

No less telling is Henry Etzkowitz’s interview with an SBIR program founder who admits that "we definitely see the programs as a de facto industrial policy, but we cannot use that term, so we usually call it R&D policy and things like that instead." See Etzkowitz et al., "Pathways to the Entrepreneurial University," 314.

Whitford and Zeitlin, "Governing Decentralized Production"; and Robert Atkinson, "Deep Competitiveness," Issues in Science and Technology 23, no. 2 (2007): 69-75, at 70.

Connell, "Secrets" of the World’s Largest Seed Capital Fund; and Ronald Cooper, "Purpose and Performance of the Small Business Innovation Research (SBIR) Program," Small Business Economics 20 (2003): 137-51. Furthermore, David Audretsch and his colleagues conclude that 20 percent of SBIR recipients would never have started their firms, and almost half would have abandoned their firms, without the awards. See Audretsch, Weigand, and Weigand, "The Impact of the SBIR on Creating Entrepreneurial Behavior."

Prepared Opening Statement of Senator Carl Levin, Hearing on "An Assessment of Federal Funding for Private Research and Development," Senate Committee on Homeland Security and Governmental Affairs, Subcommittee on Federal Financial Management, Government Information, and International Security (May 26, 2005), 9. See also Maryann Feldman and Maryellen Kelley, "Leveraging Research and Development: Assessing the Impact of the U.S. Advanced Technology Program," in The Advanced Technology Program: Assessing Outcomes, ed. Charles Wessner (Washington, DC: National Academy Press, 2001); and Wessner, "The Advanced Technology Program: It Works."

Statement of Raymond G. Kammer, Director, National Institute for Standards and Technology, Technology Administration, Department of Commerce, before the House Committee on Science, Subcommittee on Technology (September 23, 1999).

Kevin Murphy, and Robert Topel, "The Value of Health and Longevity," unpublished paper (Chicago: University of Chicago, 2005), 34. See also Elias Zerhouni, "NIH in the Post-doubling Era: Realities and Strategies," Science 314 (2006): 1088-90.

Bardach , "Implementing Industrial Policy," 106; John Zysman and Laura Tyson , "American Industry in International Competition," in American Industry in International Competition, ed. John Zysman and Laura Tyson ( Ithaca, NY: Cornell University Press, 1984), 22.

Johnson, MITI and the Japanese Miracle. See also Chalmers Johnson, "Who’s Afraid of Industrial Policy?" New York Times (September 16, 1990).

Marian Negoita , "To Hide or Not to Hide? The ATP in the Future of US Civilian Technology Policy," Project on Innovation Policy Working Paper no. 4 (Davis: Institute of Governmental Affairs, University of California, Davis, 2008).

Michael Schrage , "A Technocrat Faces the GOP Assault on Government’s Role in Innovation" Washington Post (November 18, 1994).

Paul Hallacher , Why Policy Issue Networks Matter: The Advanced Technology Program and the Manufacturing Extension Partnership (Lanham, MD: Rowman & Littlefield, 2005 ), 54.

Tibbetts, "SBIR, Renewal, and US Economic Security," 1. See also Connell, "Secrets" of the World’s Largest Seed Capital Fund, 6.

Matthew Keller, "The Rise of Public Sector Venture Capital Initiatives in the United States," Project on Innovation Policy Working Paper no. 6 (Davis: Institute of Governmental Affairs, University of California, Davis, 2008). See also Kevin Leicht and J. Craig Jenkins, "Political Resources and Direct Intervention: The Adoption of Public Venture Capital Programs in the American States," Social Forces 76 (1998): 1323-46 on the state-level origins of public venture capital; and Phaedra Hise, "New Recruitment Strategy: Ask Your Best Employees to Leave," Inc 19 (July 1997): 28; and Schrank, "Green Capitalists in a Purple State" on the origins and diffusion of "entrepreneurial separation" programs that have spawned technology transfers at the national laboratories by giving lab scientists and engineers the right to take leaves of absence to commercialize their technologies without risking their jobs and benefits at the labs themselves.

Göran Marklund , "Swedish Small Business Innovation Policy: Design and International Outlook," paper presented at conference on "The Innovation Imperative: Globalization and National Competitiveness" (George Washington University, Washington, DC, April 27, 2006).

See Schrank, "Green Capitalists in a Purple State." Employment security in the DOE weapons laboratories would appear to be at a low point today but appears to be relatively high in comparative terms. See Jeff Johnson, "DOE Weapons Labs at a Crossroad," Chemical and Engineering News 87, no. 2 (2009): 32-34.

Richard Lester and Michel Piore , Innovation: The Missing Dimension (Cambridge, MA: Harvard University Press, 2004).

Bartik estimates that some $20-30 billion is spent annually in the United States for economic development, most of which simply goes to tax incentives to attract branch plants. He notes that "many location and expansion decisions are unchanged by incentives. The cost of incentives to businesses whose location decisions are unchanged exceeds the taxes from businesses whose location decisions are changed. The average net governmental cost per job created by incentives is around $4000 annually for the life of the plant." See Tim Bartik, "Economic Development Incentive Wars," Employment Research (spring 1995): 1-4; as well as Bartik, "Thoughts on American Manufacturing Decline and Revitalization" (Kalamazoo, MI: W.E. Upjohn Institute for Employment Research, 2003).

Paul David , "Comment on ‘The Role of Geography in Development,’ by Paul Krugman," in Annual World Bank Conference on Development Economics 1998, ed. B. Pleskovic and Joseph Stiglitz (Washington, DC: World Bank, 1999).

Statement of Barbara Stoller, Director, SBIR Outreach Program, Technology Ventures Inc., 50.

Ibid., 52. Ron Martin and Peter Sunley label the idea of the "cluster" as the focus of economic development policy an overly simplistic "policy panacea." See Martin and Sunley, "Deconstructing Clusters: Chaotic Concept or Policy Panacea?" Journal of Economic Geography 3, no. 1 (2003): 5-35. Our goal is less to resolve the debate than to note the shift-from a focus on luring transplants to a focus on cluster formation-and recognize the many states that have formed cluster initiatives. See Mary Jo Waits, "The Added Value of the Industry Cluster Approach to Economic Analysis, Strategy Development, and Service Delivery," Economic Development Quarterly 14, no. 1 (2000): 35-50.

Statement of James E. Rottsolk, Chairman, President, and CEO, Cray Inc., 23. Oak Ridge National Laboratories are taking advantage of their rural Tennessee base to pursue a sophisticated biofuels initiative in conjunction with Dupont, the University of Tennessee-Knoxville, and dozens of nearby farmers. See Lamar Alexander, "Producing Clean Energy in Tennessee," Weekly Column (October, 19 2008), http://alexander.senate.gov/ public/index.cfm?FuseAction=Columns.Detail&Column_id=4543cab7-71bc-4dab9aa0-321f8e2470ef&Month=10&Year=2008; as well as Pete Engardio, "State Capitalism," Business Week (February 9, 2009).

Statement of Ms. Deborah L. Grubbe, 46.

Robert Turner , "Public Policies for Manufacturing Revitalization: Competing Models in Three American States" (PhD Thesis, University of Wisconsin-Madison, 1999), 218-19, 222.

Whitford, The New Old Economy.

Hall and Soskice, "Introduction," 47.

Statement of Rolf Albers, Chairman and CEO, Albers Manufacturing, Hearing on "Present and Future of the SBIR, FAST, and MEP Programs," House Committee on Small Business, Subcommittee on Workforce, Empowerment, and Government Programs (May 6, 2003), 9; John Churchill, Testimony of John Churchill, Quality Assurance Director, Wilcoxon Research, Gaithersburg, Maryland, Hearing on "Small Manufacturing and the Challenges of the New Millennium," House Committee on Science, Subcommittee on Technology (September 23, 1999), 40; and Norman Braddock, Testimony of Norman Braddock, President of Saginaw Remanufacturing, Saginaw, Michigan, Hearing on "Small Manufacturing and the Challenges of the New Millennium," House Committee on Science, Subcommittee on Technology (September 23, 1999), 47.

Industrial policies like SBIR and the Advanced Technology Program (ATP) are so successful, in fact, that they are being mimicked by a number of U.S. competitors, including the very "coordinated market economies" they were originally designed to combat- thus giving the lie to the more "rigid" approaches to the study of comparative capitalism and bolstering the case for cross-national learning, imitation, and hybridization. See, for example, Göran Marklund, "Swedish Small Business Innovation Policy: Design and International Outlook"; Matthew Shapiro, "The Triple Helix Paradigm in Korea: A Test for New Forms of Capital," International Journal of Technology Management and Sustainable Development 6, no. 3 (2007): 175; and David Edgington, "The Japanese Innovation System: University-Industry Linkages, Small Firms, and Regional Technology Clusters," Prometheus 26, no. 1 (2008): 12. The MEP provides a particularly revealing case of cross-national learning, for the National Institute of Standards and Technology (NIST) program is in part modeled on Japan’s kohsetsushi industrial extension service, which was itself modeled on American agricultural extension earlier in the twentieth century. See Daniel Burton, "High Tech Competitiveness," Foreign Policy 92 (autumn 2008): 117-32.

Block, "Swimming against the Current," 199.

Ibid. See also Etzkowitz, "The New Visible Hand"; and Fong, "State Strength, Industry Structure, and Industrial Policy."

Johnson, The Industrial Policy Debate; and Zukin, Industrial Policy.

Zysman and Tyson , "American Industry in International Competition," 42.

Michael Crow and Barry Bozeman , Limited by Design: R and D Laboratories in the US National Innovation System (New York: Columbia University Press, 1998); and Graham, Losing Time.

Zysman and Tyson , "American Industry in International Competition," 42.

Powell , " Neither Market nor Hierarchy," 295.

Ibid., 303.

Ibid., 298.

Greta Krippner , "The Elusive Market: Embeddedness and the Paradigm of Economic Sociology," Theory and Society 30 (2001): 786.

Brian Riedl , "The Advanced Technology Program: Time to End This Corporate Welfare Handout," Heritage Foundation Backgrounder #1665 (Washington, DC : Heritage Foundation, 2003).

Feldman and Kelley, "Leveraging Research and Development." See also Todd Watkins, "Comments," Assessing the ATP Assessment Program: Challenges and Opportunities, ed. Charles Wessner (Washington, DC: National Academy Press, 2001). Take, for example, the ATP’s HDTV partnership. "We would never have been able to work with the broadcast television networks and the other members of the partnership without the ATP," wrote one IBM official. "This kind of precompetitive enabling technology development will not get done by private industry operating alone. The result is greater than the sum of its parts." See Kathleen Kingscott, "Lowering Hurdle Rates for New Technologies," in The Advanced Technology Program: Assessing Outcomes, ed. Charles Wessner (Washington, DC: National Academy Press, 2001), 115.

See, for example, Powell, "Neither Market nor Hierarchy"; and Malcolm Sawyer, "Reflections on the Nature and Role of Industrial Policy," Metroecnomica 43, no. 1/2 (1992): 51-73. Podolny and Page recognize that failure is understudied in analyses of network forms of organization in "Network Forms of Organization." And we have therefore developed a preliminary theory of network failure in Schrank and Whitford, "The Anatomy of Network Failure." Our point is less to defend our theory per se, however, than to make the more general case for the development and eventual testing of a theory of network failure capable of advancing the development of economic sociology and fueling a progressive political agenda.