Forging Industrial Policy: The United States, Britain, and France in the Railway Age. - book reviews

Administrative Science Quarterly,  March, 1997  by John Boli

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That we have come a long way in our understanding of why states behave as they do is powerfully demonstrated in these two books on industrial policy. Even more, they show how our understanding of the very nature and meaning of the state has improved. Liberal, pluralist, capitalist, corporatist, and statist models have contributed much, but they have generally failed to question sufficiently the concept of the state as such. Not so with these books. Dobbin shows that the state is also cultural, and its cultural dimension is neglected only to our peril. Knoke and collaborators show that the state is also organizational and that the boundaries and structure of the state vary depending on the particular political issues involved.

Though they share a concern with explaining differences in state policy formation in major developed countries, the books could not be more different from one another. Dobbin tackles the issue of railroad policy in the U.S., France, and Britain during the nineteenth century, as their railroad industries emerged and matured. Knoke and collaborators grapple with labor policy in the U.S., Germany, and Japan in the postindustrial 1980s. Dobbin explains the striking differences among his cases in cultural terms, building his analyses on a thorough study of secondary sources and treating individual and collective actors essentially as enactors of cultural scripts. Knoke et al. develop a network analysis of the major players in the labor policy domain of each country, relying primarily on interviews with an ambitiously extensive range of key individuals in many organizations and state agencies. For them, these organizations and agencies are actors exercising competitive agency, constrained primarily by the agency of other actors. Dobbin's central concern is showing that rational-actor and economistic theories stumble badly when applied to industrial policy because largely similar industrial development was governed by such remarkably different policy structures. Knoke et al. mainly want to demonstrate the applicability of their complicated concept of the "organizational state" to the analysis of policy domains, without directly arguing against other theoretical approaches. If opposites do not always attract, in this case they certainly should. These works complement each other splendidly. I will describe each more fully before turning to the issue of the useful marriage that might be made of them.

Dobbin's neoinstitutional analysis makes the straightforward argument that, at least for economically and politically prominent countries, the dominant cultural theory of the polity's structure and modus operandi (its "political culture") shapes its industrial policy. Successful countries interpret their prominence as due to their structure and modus operandi; their political cultures become explanations of their competitive prowess. No matter that other prominent countries succeed with different structures; each sees its own characteristics as le clef secret and attempts to reproduce them in new industries.

In the U.S., a Tocquevillian policy generated by and for autonomous local communities was the obvious formula for success. Central coordination and control was not only unnecessary but deleterious, for it interfered with the absolute rationality of the free market. In France, by contrast, the legitimated theory, which might be dubbed "Quatorzian," held that only central state management could produce rational and effective development. Unconstrained capitalists would build only profitable railroads serving particularist interests, yielding a non-system that would be inadequate to promote general national progress. Britain was closer to the American case, its conception of the legitimated pursuit of progress relying on strong elite individuals operating autonomously under a minimal state. In this Lockeian commercialism, the primary duty of the state was to prevent competition from undermining the viability of firms, particularly small firms that British cultural theory depicted as the driving force of her early industrialization and world domination.

Policy conformed to these cultural theories. The Americans built railroads in response to local demand and heavily subsidized by local governments, with little federal action except a brief period (1862-1872) of land-grant subsidization, abandoned because the corruption it fostered put the free market in jeopardy, and antitrust measures that came only toward the end of the century. The French process was dominated by the state's Corps des Ponts et Chaussees, which planned a Paris-centered network and closely regulated private interests to eliminate competition and ensure rational development. As for the British, neither the central state nor local government initially had much to do with railroading. When the state finally began to "intervene" in the industry, most of its effort went toward supporting small firms by fixing prices and encouraging cartels that would allow weaker companies to survive through cooperative arrangements.