Forging Industrial Policy

"Forging Industrial Policy is an economic sociology classic and looks at the evolution of railroad policies in England, France and the United States. Railroads are a track-bound means of transport , yet different countries with different cultural and political traditions organised railroads in different ways. The French railroad system grew out of the French government, which saw it as a development project. The French rail system is unified and rational, the government underwrites the whole thing and actually set up a school where people are trained to be engineers. The French created what they thought was a rational and efficient system. I use that word efficient intentionally. What economists mean by efficiency is competition that theoretically forces two sides to offer the best price and service. The French thought the way you got efficiency was by giving engineers a free hand to do what made sense. As you might expect in the United States, where the central government was weak, especially in the 19th century, there was an amazing amount of competition to build rail lines. There was vast overbuilding – at one point there were five separate lines between New York and Chicago. Nobody could make any money so railroads went from boom to bust continuously. These bankruptcies were economic shockwaves. This laissez faire model continued until the early 20th century. The British model was somewhere in between. Each model reflected the society it sprang from, not some interchangeable economic principles. There are two things. On the theory side, it’s his focus on the role of the government and the role of unique national cultures. On the method side, it’s Dobbin’s comparison of national cultures over a long historical period, which is what a fair amount of economic sociology does."