Progressive Industrial Policy for Europe: Challenges and prospects for the European Automotive Sector

Publication Type:

Compte Rendu / Report


Report of the Gerpisa monthly seminar, Number 264, Online (2021)


Julia Theresa Eder, Johannes Kepler University, Linz & FH BFI Vienna

Full Text:

This month, Eder’s presentation brought to GERPISA’s attention a crucial debate, which unsurprisingly sparked a lively and engaging discussion. The presentation built on a 2018 paper, co-authored with E. Schneider, titled “Progressive Industrial Policy – A Remedy for Europe?” and on some recent work on the automotive industry conducted by Julia for the German Rosa Luxemburg Foundation (RLF). The seminar engaged with the comeback of the debate on Industrial Policy, more and more relevant in the light of the emergency/reconstruction prompted by the Covid-19 pandemic, and highlighted key elements for a Progressive Industrial Policy.
In particular, it focused on the idea that for a Progressive Industrial Policy to happen, three aspects should be included:
1)     The politics of IP, i.e. an understanding of power relations and hegemony involved in the policy-process;
2)     The substantiation of cross-cutting issues that too often remain simple ‘buzz-words’, including ecological sustainability, labour and democratic participation and gender relations;
3)     The consideration of core-periphery relations within the Eurozone, which affect the policy space available to single countries and their inclusion into specific production chains.
In Eder and Schneider’s view, the comeback of the Industrial Policy debate was determined by important challenges, such as repeated economic crisis, the questions of decarbonisation and digitalisation of manufacturing, geopolitical factors and the growing presence of catching-up economies. Only in Europe, the past few years have led to the discussion of new EC industrial policy strategies, to the European Green Deal (2019), to the 2020 EU Industrial Strategy and to the 2019 German-French Manifesto for a European Industrial Policy.
In the meantime, a rather pluralist debate has emerged around the idea of Progressive Industrial Policy – this has involved both critical scholars and left-leaning organisations, picturing IP as a tool against austerity-driven crisis management. Broadly embracing the objective to decrease the imbalances within the Eurozone, the discussion has included a focus on EU-wide productive investments and a renewed role of the State in steering economic development.
In order to define a really progressive Progressive Industrial Policy, Eder and Schneider begin by drawing on a “Decalogue for a New Industrial Policy for Europe”, delineated by Pianta, Lucchese and Nascia in 2016. This claimed as three, key objectives of a progressive IP environmental sustainability, the development of ICT applications and a strong commitment to the Health, Welfare & Care sector. Within these three overarching objectives, the decalogue included a needed focus on democracy and power diffusion, on employment and on the fair distribution of benefits,  and on the need to rebalance uneven development in the EU, together with the necessity of restricting the financial sector and of disarmament.
Adding to these core ‘ingredients’, Eder and Schneider argue that for a truly progressive Industrial Policy to take place, this should involve the consideration of the three dimensions highlighted above. In particular:
1)     Understanding the politics on Industrial Policy means analysing the structure of the production system and its sectoral composition, plus the balance of forces between capital and labour. This means assuming that IPs are not designed neither implemented in a social and political vacuum, and always generating winners and losers. This is particularly true for selective IPs, whereby horizontal policies tend not to discriminate between different actors. As a policy process, IP involves multiple actors, carrying their own interests. The State, alone, is a “material condensation of forces”. Ultimately, for a progressive IP, building a progressive social alliance is key. As far as the auto industry is concerned, Eder proposes a wide coalition for the socio-ecological transformation of the sector, including Trade Unions, Social Movements, Political Parties, NGOs, Think Tank and Research Networks (like GERPISA). Most importantly, IP should not entail a top-down process.
2)     The Socio-Ecological Transformation of the Auto Industry is also a cross-cutting issue, which stems out of a debate ranging from Green Industrial Policy (innovation-oriented approach) to more radical proposals for Socio-Ecological Transformation (including the disruption of existing industrial models and production/consumption patterns). Another cross-cutting issue is the role of Trade Unions and Labour Issues within IP, which is often a neglected area. While much needed, the inclusion of Labour within IP gives rise to additional challenges, like the increasing tension between job preservation and the transformation of old industries. Finally, another cross-cutting issue is the Gender dimension within IP (which plays an important role in terms of gender segregation among employers, in the labour market, and amongst productive sectors). In this regard, conducting a Gender Impact Assessment before implementing new policies could be important for a Progressive Industrial Policy.
3)     A Progressive IP will have to tackle Uneven and Dependent industrial development within the Eurozone itself, with the objective of overcoming imbalances and the uneven inner-European division of labour. This issue will have to take into serious consideration the problem of deindustrialisation in Southern Europe, focusing on the needed (re)construction of industrial capacities in Southern Europe. As a policy option, such objectives may involve a Transfer Union, or the establishment of ‘pockets of protectionism’, with strengthened cooperation among European peripheral economies (debate on selective delinking and alternative forms of industrial cooperation).
Conclusion: at present, a progressive alliance for a more even industrial development in Europe does not exist as such, it will have to be built and supported by a multiplicity of progressive actors.
The seminar was followed by an interestingly in-depth discussion. To start with, T. Pardi raised the following points:
TP: the Automotive industry is at the core of most of the issues you raise, from the Just Transition to European Industrial Policies, to the problem of regional imbalances, inside and outside the Eurozone. This is also a sector where traditionally union presence has been strong, and wages relatively good – yet, the left has not been capable to steer away from the neoliberal transition you highlighted. This signals the need for unions to re-equip themselves with tools and strategies to face such a transition. Overall, your presentation, rich in arguments and referring to wide literature, makes me reflect on four main points:
1)     The comeback of IP, following the financial, and most recently, the Covid-19 crisis. The revived IP does not seem to be progressive, but more of a neoliberal type of IP, in line with the US model, where the main objective is countering market failures. In this regard, I think there is not only the need to outline a progressive industrial policy, but to keep deconstructing the mainstream idea of IP, which is neither desirable nor efficient. For a proper de-construction to happen, sectoral studies (like those we conduct on the automotive industry) are very important;
2)     Issue of feasibility: we can also design a progressive industrial policy, but if power relations are not favourable, this might not happen (ex. weakened left). To your argument on power relations, I would add the presence of a cultural hegemony in the neoliberal view, which runs against the adoption of progressive tools for industrial transformation. The open question here is – how do we challenge such cultural hegemony, despite the revival of IP?
3)     Question of regional imbalances: even here, the left has been incapable to properly grasp the discontent coming from the regions that were left behind, while right-wing populist coalitions have gained more and more ground (evident in the way blue collars vote for right-wing parties). It is also important to highlight the role that the European Union itself has had in creating these imbalances, which in the last 20 years have definitely increased (with large benefits accruing to Germany).
4)     Reflecting on the role GERPISA can play: the network can leverage on a sort of neutral role, being able to speak to trade unions, to governments, to employers. Connecting all these different actors is extremely important for a progressive industrial policy (ex. crucial but problematic discussion on greening the industry).
TP’s discussion was followed by an open debate, which covered some of the following points:
1)     Why exactly are you embracing the narrow view of IP, more strictly referring to manufacturing, in relation to the European context that has seen both processes of de-industrialisation and widespread delocalisation of manufacturing activities towards non-European settings? Could you expand?
2)     On the mentioned issue of pockets of protectionism and selective de-linking, with reference to Global South literature: while fascinating and ideologically interesting, this is not exactly the suggestion coming from the Global South today, where in most cases the debate focuses on integration within GVCs. How feasible, then? My fear is that even if protectionism and selective de-linking were allowed, in a context of global production and WTO-dominated rules, these would only be allowed to already powerful manufacturing nodes and not to the rest of the world, which is still industrialising.
3)     Could you tell us more on your work on the automotive industry, and on what scope you see to tackle what you define cross-cutting issues? For example, what kind of possible collaboration/cooperation you imagine on gender relations and labour/democratic participation, where European ‘differentials’ have already been allowed (ex. differentials in labour costs between Western and Eastern Europe)?
On specific modes of implementation of progressive IP within the EU: hypothesis that a ‘corporatist’ model and interlocking actors may kind of inhibit transformation and a progressive IP, because of clashing, incumbent interests – I no longer believe this is true (reference to project on France and Germany), we have seen, for example, interesting cases of unions pushing the industry, together with government, for more technological change…what role do you therefore think neo/post-corporatist political economy constellations could have, in Europe, towards the implementation of progressive industrial policies?
Comparison with China: while the IP system is very different, it could be interesting for Europe to look at the local government/regional level experience in China. Chinese local governments closely influence industrial policy practices based on the idea of industrial clusters. Industrial policy tools linked to the clusters experience can then be institutionalised by the central government and implemented at national level. Question: do you see any potential to re-explore the industrial clusters framework, in the future of EU industrial policy?
1)     Concept of transnational solidarity: why the trade unions, that in the 1970s and 1980s were also very powerful, failed to integrate in the European project and its most progressive institutional tools? Today, difficult to build transnational solidarity because of fragmentation of value chains, fragmentation of labour in the workplace, externalisations etc. And the casual, temporary workers are those that bear the heaviest burden of such fragmentation (example on solidarity building within the Uber sector, from our previous seminar)
2)     Disconnect between European level and local governments, which hampers the formulation/implementation of progressive industrial policies.
What is your opinion on the progressive paradigm à la Mazzucato, this idea of mission-oriented innovation policy? Regarding the issue of decoupling, I don’t see any European government taking it seriously, even the most progressive forces, especially with the Covid-19 crisis (discussion of Spanish and Greek cases).



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