It was the economist Mariana Mazzucato who helped explode that myth. In her 2013 book “The Entrepreneurial State,” she argued many of the most significant innovations in recent decades — the internet, GPS and smartphone technologies — were kick-started by government investment. The secret to industrial policy, she argued, was rooted in defense spending, targeted subsidies and state-driven innovation.
Then Bidenomics came along and delivered the final coup de grâce to Europe’s sense that America was some kind of free-market fairy tale. U.S. President Joe Biden’s $369 billion Inflation Reduction Act, which offered support to sustainable industries, in particular America’s electric vehicles, was seen in Europe as an egregious government-led attempt to steal investment away from the EU.
In response, the EU became more obsessed than ever with playing the same game of state-led industrial policy, focusing on European champions and rushing through subsidy approvals.
But as Europe now scrambles to build its own industrial strategy, it’s missing the rise of something far more disruptive. The game has changed again: The next phase of U.S. economic policy isn’t about subsidies, state-driven growth or sector preferential regulation — it’s about smashing that model to bits.
The era of Bidenomics is already being eclipsed by a new vision rooted in what could be called “national capitalism.” It’s a philosophy of radical liberalization that rejects state intervention, embraces privatization and leans heavily on market forces to reshape the economy — albeit within the confines of a protected system.
For some reason this message isn’t getting through to Brussels, which is stubbornly fighting yesterday’s war, wielding the statist tools of a fading era.
