Abstract
This chapter outlines the relationship existing between economic power, institutions and industrial development. It uses these theoretical categories to introduce the role of the US economic power in the context of the global institutional order as an active force in promoting the interest of the American industry. In this framework, this chapter introduces the fundamental elements of the American industrial strategy in the neoliberal era: a rhetoric fostering a widespread consensus for a “free market” regime, the influence in defining the rules of the international economic game, and the activism, at domestic level, in protecting and promoting the national industrial system. Overall, this chapter lays the foundations to understand the evolution of the US industrial strategy over the past 40 years.
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In this context, as a pillar point of the dominant economic literature, productive resources are commonly perceived as limited compared to human needs (Robbins 1932) . There would be no seduction or, for us, source of interest in economic power without the common perception that productive resources are scarce. Private property of the livelihoods, as founding element of the contemporary economic system, stimulates competition for economic resources among the members of the society, posing the issue of the possible scarcity. This setting implies that there are not just private but also political implications of a particular distribution of economic power . Since economic resources are limited, their allocation for a particular purpose prevents to use them for other goals, affecting the opportunities left to the members of the organization. When such interdependency among agents is realized through the market institution , economic power corresponds to the market power , as the capacity of influencing the price and quantity of the market by controlling demand or supply and conditioning the final resources allocation. However, in this work I refer to a broader sense of economic power , as the relative capacity of the members—or subsystems—of controlling and organizing productive resources within any kind of organization, not just in the context of the market institution . In this framework, economic power is not referred solely to “economic” actors, but to all the agents of the system, such as governments, political parties, lobbies and trade unions, that influence the final resource allocation. Indeed, also “political” actors can be seen as “economic” agents endowed of economic power , since they compete with the other members of the system to influence the final resource allocation. The economic power of a government, for example, has to be seen in relation to the power of other social groups and it depends on the degree of autonomy that the government is able to acquire against them (see, e.g. Mann 1984) . A huge literature shows how economic agents and rent-seekers can, in some circumstances, use political power to condition the allocation of resources in the direction of their interest (Hirschman 1945; Cardoso e Faletto 1979; Salamon and Siegfried 1977; Hall 1989; Khan and Jomo 2000) . Accordingly, there is no reason for not considering political actors as a crucial part of the economic dynamic (as well as the vice versa), including them with full rights in our economic-power perspective.
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One of the most popular theoretical models used to explain how productive resources are allocated in a market economy is the model of General Economic Equilibrium developed by Arrow and Debreu. Under the stringent conditions of perfect competition, an individual action produces a Pareto efficient allocation of resources (Arrow 1951; Arrow and Debreu 1954; Debreu 1959) . In this case, economic power (i.e. the market power referring to a pure market system) is equally distributed to the members of the system and no agent prevails over the other in determining the resource allocation. However, as well known, the perfect competition model is by far inadequate to describe the economic reality of everyday life. Different initial endowments of resources and capital, bounded rationality of the agents (Simon 1957; Etzioni 1988), uncertainty (Knight 1921) , asymmetric information and transaction costs (Coase 1960; Knorr 1977; Keohane and Nye 1977; Williamson 1979; North 1992) can lead to significant disparities in agents’ ability to influence the final allocation of social resources and in their economic power . When there is the possibility of establishing rent and dominance positions and creating barriers to entry in markets, mere individual actions expressed within the markets may be strongly inadequate to achieving satisfactory results for all members of society. Economic theory identifies as market failures the cases where the market is not capable of leading the system to a desirable outcome (Bator 1958) , that are, in practice, all the circumstances in which the market institution , from a static or dynamic point of view, is perceived as inadequate to meet social needs (Cimoli Dosi Stiglitz 2009) . In these circumstances, which strongly characterize the everyday real world, the interdependence among members of society in the use of limited resources provides important incentives to establish cooperation agreements in an effort to achieve their goals, by harmonizing their behaviours, rather than acting individually (Downs 1957; Triandis 1995) . As a result, in the concreteness of economic reality, the allocation of social resources takes place through institutions based on collective dynamics, including the market institution itself. Indeed—in addition to the actions of governments and other political actors, which are the expression of collective dynamics by definition—also the market system needs to be somehow “chosen” as one among several possible institutional settings, according to the perception of the advantages that such an arrangement could generate for the different powers at stake. It is not possible, in practice, to separate the economic result from the political dynamics and from the definition of the institutional framework of reference. Eventually, the social result is predominantly determined by the expression of the prevailing economic powers at stake and by the normative value judgments of which they are representatives (Hirschman 1981) .
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There has been a growing interest in recent decades on the role of institutions in determining social outcome and economic development. Institutions —as systems of established, socially embedded rules (Hodgson 2006) —establish collective constraints and incentives by which the allocation of the economic resources of the organization is defined. In this sense, institutions can play an important role in stimulating economic development (Acemoglu et al. 2000; Acemoglu et al. 2005) . Competitive markets, for example, can significantly boost productivity, investment and innovation, by developing economic and social capabilities (Sen 2001) . However, considering an opposite causality, also evolution of such capabilities and improvements of economic opportunities can be crucial for institutional change. As stated by Chang (2011) “Economic development changes institutions through a number of channels. First, increased wealth due to growth may create higher demands for higher-quality institutions (e.g., demands for political institutions with greater transparency and accountability). Second, greater wealth also makes better institutions more affordable. Institutions are costly to establish and run, and the higher their quality the more ‘expensive’ they become. Third, economic development creates new agents of change, demanding new institutions . More generally, development creates economic opportunities and modifies capabilities and the perception of the position occupied by the members within the organization, thus producing new expectations on the outcome to be achieved and encouraging actions and behaviours to change the institutions themselves. In other words, development may modify the distribution of economic power among the actors of the system and generate the conditions for institutional change. As a result, it can be argued that the organizational outcome is the product of a “circular causality” relation between a particular distribution of economic power , institutions and resource allocation, where—as stated by North (1990) —“history matters”. Indeed, distribution of economic power and capabilities among different groups of the society is, to some extent, the result of the quality of the past institutions and of the previous allocating outcome of the system. However, they are also relevant in determining the future institutional change and the subsequent results achieved by the organization.
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As stated, for example, by Bianchi (2017) “Relationships within an organization are relations of power, so that to the push for the change of some, there will be others who will resist. [...] In this conflicting process, therefore, not only [the system] goes from a starting point to an arrival one, but during the transit the social relation rules are changed [...]” (Bianchi 2017) . In this context, after a phase of “revolutionary upheaval” of the organization, it follows an adjustment phase in which each member finds his own repositioning, by restoring operational routines, fixing new forms of incentives and sanctions for those who will be included in the new organization, and managing the turmoil and crises of those who will remain at the margin or even outside the system (Bianchi 2017) .
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A number of contributes shows how industrial system plays a predominant role in the economic and political dynamic of a society. See, among the others, Galbraith John (1967) and Galbraith James (2008) . In particular, manufacturing industries are often deemed at the base of economic growth and prosperity, thanks to peculiar features, such as high productivity of labour, dynamic economies of scale, rapid technological change and innovation and positive externalities (see, e.g. Tregenna 2009, 2014; Bianchi and Labory 2011; Chang et al. 2013; Andreoni and Scazzieri 2014) .
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On this point, see, among others, Galbraith John (1970) .
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Tassinari, M. (2019). Introduction. In: Capitalising Economic Power in the US. International Political Economy Series. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-76648-5_1
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