Marshall Auerback's review of Manufacturing Green Prosperity

Public works has a long history in the US from the days of Alexander Hamilton to the highway construction program of Eisenhower. The best example, however, is the New Deal, which ultimately created the foundation for decades of American prosperity in spite of efforts of historical revisionists to denigrate the achievements of FDR. The managerial model of capitalism, predominating from that period until the 1980s, delivered high growth. Finance was made subordinate to industrial development and full employment.
We're now seeing the consequences of reversing this trend and embracing a more finance-centric approach under the guise of "globalisation". Since abandoning Main Street in favor of Wall Street, financial instability is a predominant feature of our economy and "recoveries" (such as they are) remain jobless. By undoing a manufacturing based model, our policy makers have denied to us the development strategy that has best succeeded in creating thriving domestic markets, rising productivity, capital formation and living standards.
In this excellent book, Jon Rynn shows us a way out - in effect a "New Green Deal". But Rynn's approach entails discarding many of the neo-liberal shibboleths of the past 30 years, notably our irrational hatred of "industrial policy". Ideally, Rynn demonstrates a government fiscal policy that is longer directed toward financial bailouts, but designed to encourage businesses to reinvest in more efficient technology or in new product innovation, both of which could help improve US export competitiveness.
Alternatively, public/private cooperation in R&D projects like Sematech could be explored with various emerging energy technologies, for example, in order to reduce US energy dependence. At best, favorable effects on business investment will arise be secondary or peripheral results of some of the infrastructure and green tech investments in the current fiscal stimulus package, but we need to do more over the medium and longer term. Rynn's book provides the blue print.
Marshall Auerback is global portfolio strategist, RAB Capital plc, fellow for the Economists for Peace and Security and a blogger with of the Roosevelt Institute. Mr Auerback is one of the contributors to the upcoming Companion to Minsky book by Edward Elgar Publishing.