Forging industrial policy

by Frank Dobbin

Harvard Sociology
Gru Han
 Research Question

•
•
 “How did the United States, France,
and Britain settle on their industrial
policies?”
 Key concept

•
•
 “Rationality is socially
constructed”
 Explaining the different industrial policies

• What he argues

Political Industrial
stitution and culture policy making
Collective understanding of rationality
(Socially constructed logics of state action)
 Critique 1
• Several approaches to explain industrial policy


• Political realism
– Has the premise that policy choice reflect the will of
competing social groups with divergent material
interests.
– But, 1) interest groups are different across nations
– 2) ‘interest’ is socially constructed according to the
institutional background. (e.g. American railroaders
advocated local government financing but not federal
financing. French railroads advocated state financing
but eschewed provincial and local financing as
irrational)
– 3) strongest group does not always win. Sometimes
strong interest groups lose political battles because
political culture favors their opponents.
 Critique 2
• Economic realism
– They suggest that policy outcomes reflect application of
natural economic principles or alternatively that natural
laws select out optimal policies for survival.
– No best optimal way: three countries understood the ways
to promote railway industry in very different ways but
all of them were successful. (e.g. French believed that if
they allowed private parties to plan railroads the result
would be unsuccessful, but this strategy worked in the
U.S. and Britain)
– The three countries had different economic principles.
Then, where do the economic principles come from?
From political culture. Policies they adopted to guard
political rights became associated in the public mind
with economic growth.
 Critique 3
• Institutional realism
– This attempts to answer this question “why do national
policy strategies persist over time?”
– “social structures have inertia” is their answer
– 1) But this is tautology: “institutional practices persist
because they have inertia”
– 2) They cannot explain why the orientation of policies are
maintained even though government structure
changes.
– To this problem, Dobbin argues that it is the socially
constructed logics of state action that persist to
produce policy continuity.
– Cultural notation of causation.
– Extant institutionalized policy strategies shape how we
think about cause and effect
 Rationality is socially constructed
• Analysts did not explain why the policies are different
across nations because the fact that there are
differences in policies in different countries, which
aims an economic benefit, contradicts with the
modern worldview they adopted.
•
• Rationality is a kind of meaning system like religious
meaning system.
•
• Rationality has cultural aspect because it represents
cultural frames for representing and explaining
things.
•
 Political culture shapes the industrial policies
• Political culture shapes industrial policies.
– The political structures that were built to achieve social
order were retrofitted to the goal of economic
expansion
• How?
1. Political culture determines the problems perceived.
– In U.S. and Britain, political institutions worked to guard
community and individual sovereignty against
concentration of political power in the central states.
– Their industrial policy recognizes the concentration of
economic power in the state or in the private
corporation as problem.
– In France, political institution purported to achieve order
by concentrating authority.
– Their industrial policy perceives concentrated economic
authority as a means to economic order
2. Political culture determines the solutions conceived.


– Political culture forms cause-effect relationship

– In France, political order had been achieved through
control from the center. In industrial problems, they
thought of solutions that involved central state control.
– In Britain, political order had been achieved through
maximizing the autonomy of local elites. In industrial
problems, they thought of solutions that induce actors
to identify their interests with collective interests.
 Political culture Railroad industrial Policy

Constitutive Destructive Planning Pricing and competition

of to
political political
order order
U.S. community centralized local enforcing price
sovereignty Authority government competition
(regulation to prevent rate
discrimination, price
fixing,
cartelization)

France central state excessive state bureaucrats forced mergers in early stage
concentration Privatism (rebuffed the and create six private
of efforts of regional
authority localities and monopolies to prevent
railroaders) unorchestrated competition

Britain political domination by private protecting firms from state

autonomy of state or other investors or predatory railroaders to
individuals private actors stabilize entrepreneurial
firms
 Discussion

• Relation to Weber
• Difference from former approaches
– Even though previous approaches incorporated
the concept of environment, the constraints
the environment imposes on organizations are
economic or technical ones.
– In this article, the environment affects actor’s
understanding. Cognitive effect.
– Rationality is embedded in institutional legacy.
• Former approaches try to understand the
emergence of organizational structure with
rationality assumption that builders of those
organizations were rational in the way we are
now.
• But in Dobbin’s perspective, they could have their
own rationality which is historically embedded
and those rationality could differ across
organizations.
 Discussion

• Relation to other articles this week

– Meyer and Rowan (1977) discovered that organizational
structure is influenced by institutional aspects of the
environment.
– In their argument, we couldn’t see how the institutional
aspect differs across different societies. (only
modernization)
– Dobbin shows how the different styles of “rationalized
myths” produce different organizational results
–
• How about present times?
– Do political realism and economic realism fail to
explain contemporary society?
– Globalization, academic world is more sweeping
than past.
–
 •
•
 Thank you
 Observations
His research is based on two empirical
observations
1.
2.Institutions for organizing political life is used
again for organizing economic life
3.
2. Industrial strategies are reproduced when

nations tackle new problems because state

institutions provide principles of causality
that policy makers apply to new problems
 Critique

• Political analysts, economists, and institutional

statist analysts
– They take the modern worldview and consider it
given, and try to understand the modernity
with that view. So they cannot truly
understand the modernity and ask big
questions about where did that view come
from.
– Modern worldview: behavior is oriented to
economic utility maximization and to political
struggles over collective material interests