Re-live: The Designer Economy - A New Paradigm?
For a few decades, it was clear that whatever needed to be settled was best done by the market. But what is valid today, when the old leitmotif no longer applies? Berggruen researcher Yakov Feygin has now come up with a proposal - the "Designer Economy".
PUBLISHED18. APRIL 2023
READING TIME5 MIN
The Short Cut as Re-Live
For a few decades, it was clear that whatever needed to be settled was best done by the market. But what is valid today, when the old leitmotif no longer applies? And what if the alternative cannot be that instead of the market, the state now regulates everything and always? Dani Rodrik and Mariana Mazzucato have tried to answer this question in recent years with their concepts of ‘productivism’ and ‘mission economy’ respectively. Another proposal has now been made by the Berggruen economist Yakov Feygin – who in a widely acknowledged essay has elaborated the idea of a “designer economy“.
In said essay, Yakov Feygin and co-author Nils Gilman explore the possibility of uniting different political camps in the US behind the idea of a pro-active role for the government in shaping the economy.
Instead of focusing on ex-post redistribution and regulation, the government in the Designer Economy has the necessary administrative capacity to ex-ante implement directed supply side policies, observing technological and economic trends to promote country specific potentialities. Rather than commanding one ideal path, the politics of design are about what features are wanted in the future for the economy to better serve shared prosperity and common societal goals.
We have invited Yakov Feygin to discuss his theses in our New Economy Short Cut on April 18 at 6pm CET on Zoom. This event took place in cooperation with INET’s Young Scholars Initiative.
Yakov Feygin started by emphasising that the essay by its nature is very US-centric. Observing the political debates and ideas of the last months, he noticed that industrial policy is becoming more and more salient – in both sides of the political spectrum. According to Feygin’s interpretation, this is nothing less than the opportunity for a paradigm shift.
In American history in general, there are these kind of moments of paradigm shifts within the political sphere. There are these moments of coalition. You have the new deal coalition, the neo liberal coalition, etc. And all of these are actually not moments in which there is political agreement within American politics, in fact, exactly the opposite. But within these coalitions, where there is lot of disagreement in most areas, there are some policy areas that everyone agrees upon.
As one example, he gave the post Reagan paradigm shift towards market fundamentalism, where there was a lot of political agreement to deregulate and to erode the welfare state. In fact, Jimmy Carter as the last president of the old post New Deal coalition did already start to adopt some of these policies. According to Feygin, the analogy today would be that after Obama’s approach to tweak the neoliberal model did not work, Trump startet to move in a more dirigiste direction, sounding the bell for a shift in US-American policy, maybe even a paradigm shift.
An analogy, I think is really neat is that in many ways Donald Trump was Jimmy Carter in the sense that he was the last president of the old Post New Deal coalition before Reaganism. But, in fact, many things Reagan said, which we identify and bad and good, started with Carter. An you could say the same thing about Trump and Biden: the return of the regime of a more dirigiste view of the American economy. It starts under Trump in its negative ways, and it doesn't work, but it is indicative of a shift in American elite thinking, and part of that shift is caused by Trump himself, because everyone is realising that this kind of Obama idea of tweaking the neoliberal model, making it more European, won't work in the United States. So both parties have to kind of come up with something new, or else you get a Trump.
Obama’s way to add European like welfare state elements to the neoliberal model did not work, and in the view of Feygin could not work, because the US economy is just so different from Europe. While exports and competitiveness are crucial for a country like Germany, the US can rely on a large domestic market. Moreover, Europe does welfare policy through the welfare state and industrial relations between capital and labour. In contrast, the American state does welfare policy through industrial and labor market policies, trying to create good jobs in tight labor markets.
Due to these differences, the US focus when it comes to globalisation is much more resilience than on competitiveness. Even though there are also signs of a switching paradigm in Europe with respect to globalisation or industrial policy, the question remains, whether the US and Europe will move in the same direction, or if they will follow different paths.