Post-2008 British Industrial Policy and Constructivist Political Economy: New Directions and New Tensions

Abstract

The article serves to introduce a number of recent changes in the practices and rationale of British industrial policy since 2008. I observe a shift towards a stronger role for the government and for agencies of industrial policy in the provision of industrial finance, and towards an increasingly discretionary and strategic approach to industrial policy intervention, both of which stand in tension with the neoliberal ‘coordinative discourse’ that continues to structure macroeconomic policy in the post-2008 context. I suggest that this tension is indicative of the emergence of two competing ‘crisis diagnoses’ in government after 2008; one reflecting the neoliberal coordinative discourse that structured economic policymaking prior to 2008, the other at odds with this neoliberal crisis diagnosis. I argue that constructivist analytical frameworks on crisis and political–economic change are insufficiently developed to accommodate these findings. I therefore reflect upon some conceptual and empirical implications that the findings raise for a constructivist analysis of economic policy in the post-2008 context in Britain, before concluding that a more contingent, contested and, crucially, incomplete process of re-alignment in the ideas that structure economic policymaking is underway in Britain than is generally acknowledged.

Keywords:

• constructivism
• constructivist political economy
• constructivist institutionalism
• industrial policy
• British industrial policy
• British economic policy
• ideational change
• coordinative discourse

Funding

This work was supported by the Economics and Social Sciences Research Council [ES/I901507/1].

Notes on contributor

Martin Craig is a PhD student at the University of Sheffield, where he is supervised by Colin Hay. He has a long-standing interest in constructivist approaches to the study of political economy. His research topic is the diagnosis and narration of economic crisis in the post-2008 context in the UK.

Notes

1. Schmidt's concept of ‘coordinative discourse’ differs to that of ‘paradigm’ in a number of respects, being a more fluid concept that is better able to account for ideational change through its foregrounding of agential interaction. It is for this reason that I work with the concept in my broader research on crisis diagnosis. However, both are functionally equivalent for the purposes of this paper; both relate to the ideational conditions in which policymakers conceive of their interests and formulate policy.

2. Carstensen (2011) has recently intervened in opposition to the ‘punctuated’ models of ideational change implied by the constructivist frameworks for the analysis of crisis and political–economic change discussed in this paragraph. The point in his critique that is of most relevance to the present argument is his assertion that ideational change is not characterised by the adaptation of coherent ‘paradigms’, but rather by an ongoing process of ‘bricolage’ at crisis and non-crisis moments whereby policymakers ‘muddle through’ economic problems by pragmatically (and possibly incoherently) combining existing ideational and institutional resources around them to solve policy problems. Space does not permit a full engagement with Carstensen's critique; however my findings both support and challenge elements of his framework. There are reasons in a constructivist account to assume that ideational responses to the emergence of economic failures – ‘crisis diagnoses’ – are of greater coherence than at times of ‘normal policymaking’. My point here is that there are two contrasting but equally coherent diagnoses. However, my findings support Carstensen's focus on ideational path-dependency and the suggestion that ideational and institutional resources that are ‘at hand’ in moments of policy failure are influences on the diagnosis and resolution of those failures. Both issues are discussed in greater length in the conclusion.