A post of mine on industrial policy from last July is having a second life, so let me rewrite it more clearly now that I have more experience with X. Can industrial policy work? Yes. The East Asian experience shows it can, at least partially. But its success rests on a key condition: labor control. Japan, South Korea, and Taiwan industrialized rapidly under authoritarian (e.g., Park’s South Korea) or semi-authoritarian regimes (e.g., Japan). Wages and labor rights were systematically repressed to favor capital accumulation and export competitiveness. This was especially stark in South Korea during the 1980s and 1990s, when unions clashed with the state and big business. China’s recent experience basically follows the same pattern. Authoritarianism in East Asia was not incidental to the success of industrial policy. It was functional. No labor repression, no successful industrial policy. Let me be careful about what I am NOT claiming: 1) I am not claiming labor repression is sufficient for industrial policy to succeed. You need many other ingredients. Best counterexample? Brazil under import substitution: labor repression, but without the other key pieces, such as aggressive export orientation. Labor repression is a necessary condition. If you do not get the difference between necessary and sufficient, you have more important priorities than reading about industrial policy. 2) I am not claiming the only path to growth is industrial policy. Many countries have grown without it, or with pretty lousy and ineffectual versions of it. Best example? Spain. 3) I am not saying labor repression means wages do not grow. It means they grow less than they otherwise would have. Think counterfactuals. 4) I am not saying democracies cannot repress labor. They sometimes do. It just happens far less often, and often less effectively. Continental Western Europe after WWII was not an example of industrial policy. France and, to some degree, Italy used some, but the mainstream view is that postwar growth was not driven by it. What many of these countries used was a form of “coordinated capitalism,” in which unions accepted slower wage growth in exchange for higher investment and faster growth. That has a flavor similar to my argument. As far as I can tell, there is no clean example of large-scale industrial policy that has succeeded without labor repression. Why so many people on the left are in love with industrial policy is a mystery to me. More generally, why so many people on the left admire China, given that its economic policy is 100% contrary to what they support (low taxes, little industrial regulation, little concern for the environment, labor repression, as little economic and political power to women and minorities as possible) is even more of a mystery except for some infantile contrarian positioning (“since this is not what The Economist like, I support it”) Alexander Gerschenkron made this point better than anyone. But it was also Marx’s point about “primitive accumulation,” and Stalin’s logic in the five-year plans, which were all about repressing labor (mostly agricultural, but to a lesser degree in manufacturing too). I am not going to praise Stalin in public, but he understood economics better than the average poster on X. Read Gerschenkron. Seriously. The original post: xitter.cf/JesusFerna7026/status/…