Symposium | The New Supply-Side Progressivism

The Productivist Era Has Begun

By Felicia Wong K. Sabeel Rahman

Tagged Biden Administration

“Productivism” has arrived. Economist Dani Rodrik recently declared “a major re-orientation” toward an economics “that is rooted in production, work, and localism instead of finance, consumerism, and globalism.” After almost 40 years of neoliberalism’s markets-first, market-led growth, under which the entire elite political class in the United States came of age, we have turned a corner.

Intellectually, productivism is a major new economic worldview. It puts government at the center of the story of how we make economies serve the public good. Government, not the markets, set a direction. Governments set a north star for, and chart the path toward, an inclusive and purposeful economy, one that is high-care and low-carbon. This productivism is about building: building physical public infrastructure like roads, bridges, and utilities, and building whole new, presumably private industries devoted to clean energy, good jobs, and prosperity. Our vision of a government that builds is also necessarily inclusive. It is focused on the genuine thriving of all people, most importantly those who have been left out by the worst of capitalism—low-wage-chasing trade deals, racialized economic rules, and sexist norms that keep women in low-paid (or unpaid), thankless, invisible jobs.

“Government that can build” is the spirit that animates the American Rescue Plan (ARP), the Bipartisan Infrastructure Law (BIP), the Inflation Reduction Act (IRA), the CHIPS and Science Act, and more. Combined with the Biden Administration’s strong commitment to competition and anti-monopoly policy, which aims to curb corporate excess, this all adds up to a far more progressive post-neoliberal order, centering workers and climate, than we’d have bet on even two years ago.

The new industrial strategy has much economic promise, and perhaps even more social and political promise. At best, Bidenomics’s public investment could begin a genuinely new chapter in our history. This era could be one with more prosperity, more growth, and more political stability in communities locked out by the lasting cruelty of enslavement and Jim Crow, the legacy of NAFTA-led globalization and resultant widespread job losses, and the low-wage, low-hope economy that has become the norm throughout most of the United Sates, outside of superstar metro cities, over the last 20 years.

Strange Bedfellows and Looming Fights

Whether productivism can solve the problems created by neoliberalism remains an open question.

We are at the beginning of the productivist era. Much remains to be done. All of this legislation now requires tricky, high-wire implementation across many federal agencies if it’s to be delivered successfully in ways that the American people understand and feel.

But even more fundamentally, much about the new productivism remains to be imagined, designed, and contested. Ten years hence, will this economic approach, which is explicitly about crowding in private investment—better, more equitable private investment to be sure, but private investment nonetheless—end up being more about filling corporate coffers? Or will it usher in shared bounty for the people and places that neoliberalism failed?

The answer will depend, in part, on winning the continued battle of ideas. Productivism, in its nascent state, brings together many disparate ideas and factions. Many of the people attracted to a paradigm of muscular and direction-setting state power certainly seem, at least today, like odd bedfellows. They include the old anti-globalist left, which always warned that capital would flee to the corners of the planet with the lowest labor costs; Green New Dealers and other social democrats, who see the opportunity for universal health care, a stronger safety net, and a new social contract as part of a new economy; supply-chain hawks, whose emphasis on securing the supply of goods like semiconductors or critical minerals has less to do with price and more to do with national security; and “supply-side liberals” and state-capacity libertarians, who want to build with purpose and understand that the market alone will not provide sufficient supply—especially of non-pure market goods like housing or health care, where economic incentives and price signals just don’t provide goods that ought to be universal.

And even with all the policy successes of the last two years, much remains unfinished. Many people are not yet at the table. Take the advocates—many of them women—who argue for the importance of a publicly supported care economy (child care, home care, health care) and are angry that the backroom deals led by Senators Joe Manchin and Kyrsten Sinema in 2021 left their agenda on the cutting-room floor of Congress. Left out, too, are environmental justice advocates, who argue rightly that a new clean energy economy must not be built on the bones of the old oil and gas infrastructure, which always exploited poor, Black, and indigenous communities.

So these are the stakes: What will trillions of dollars of federal investment actually yield? Which communities will be included and which ones will not be? Where will capital be invested, and on whose terms? The answers to these questions will determine productivism’s fate and our country’s economic reality for years to come.

Productivism as Policy Design

Much of this will be played out in the details of legislative implementation. The realities of how these sprawling programs will actually work turn on technical, often overlooked matters of program design. But these policy details are not minor, and they, too, are about power and access. Among those in the know, the lobbying scrum has already intensified. With such vast sums now up for grabs, a handful of critical design choices will have huge repercussions. This is a moment that will be followed by intense path dependency. The decisions we make now will enable or limit our economic choices for decades to come.

An equitable, transformative productivism will turn on four questions: Will funds to firms, state governments, and cities be unconstrained? Will public and private investments prioritize equity? Will we be able to balance speed, scale, and public input? And will we take national planning and coordination seriously? Let’s assess these one by one.

Conditionalities, or unconstrained cash?

One key design question is whether recipient firms or state and local governments should have to meet particular requirements in order to receive funds.

The Commerce Department’s recent announcement of public investment in semiconductor manufacturing under the CHIPS Act offers an early glimpse of the battles ahead on this question. The funding call requires recipients of more than $150 million to ensure the provision of high-quality, affordable child care options nearby or onsite for workers in the plant. This novel condition has already generated blowback from critics who worry that favoring firms whose workers have access to good child care will slow the flow of funds and the kickstarting of actual production. But at the same time, the CHIPS child care provision is an excellent example of what a more holistic approach to productivism might entail.

For many Americans, particularly women, a lack of child care options is a major barrier to joining the workforce, as the recent struggles with child care access and work during the pandemic have underscored. This new funding offers an opportunity to incentivize catalytic investments in the kinds of services and supports that lift up families and allow people to work in the first place. At the same time, the inclusion of child care in the funding conditions for CHIPS is fairly modest on a practical level. Contrary to what detractors may think, the firms operating at a big enough scale to be eligible for CHIPS funding are large enough that they tend to already have some child care arrangement or capacity. Nonetheless, including child care in the program sends an important public signal that care infrastructure is an essential part of a more inclusive and dynamic economy.

Requirements matter. Consider, by contrast, the American Rescue Plan, which helped insulate the economy from the shock of the pandemic and jumpstarted the incredible jobs recovery. Many of the ARP’s programs were designed to get money out the door and into households, communities, and firms as quickly as possible, with relatively few strings attached. That kind of direct injection of resources can be valuable and fast-acting, but it may also leave too much wiggle room for recipients to absorb the funds without sufficiently using them to help the most Americans. This was the case for some of the COVID relief programs, which, for example, provided huge, unconstrained sums of money to state and local governments without tools to ensure their most effective and equitable use.

By statute, and because of arcane Senate rules, Congress has designed many of the current investment programs, especially the climate programs, as tax credits. These are indirect. By contrast, specific goals, like targeting investment to low-income communities, can be more directly achieved through other means. This raises an important future design question. Should these kinds of investments be made through direct grants or loans, which could be more visible, straightforward, and flexible vehicles for industrial policy?

Equitable investments

Relatedly, how do we ensure that these investments in physical infrastructure and new manufacturing lead to equitable outcomes that reach the most historically underserved communities?

The Administration’s commitment to equity as a core policy design principle was underscored in Biden’s day one executive order on advancing equity. It was recently reaffirmed by a new, updated executive order that specifically calls for the consideration of equity in the context of urban development and the implementation of the new programs passed by Congress. These efforts have led agencies to develop detailed “Equity Action Plans” that highlight the ways in which agencies will consider equity during planning, policy design, and decision-making. It is notable, for example, that at least some of the agencies at the forefront of implementing these programs have made real changes to how they go about designing policies and consulting communities, in ways that ought to have some impact on the outcomes of their grantmaking and funding efforts.

More directly, the Administration has put into motion the President’s campaign promise to ensure that 40 percent of climate and clean energy investments reach the most vulnerable and impacted communities—the “Justice40” program. These commitments have also led to new guidance for federal agencies, and there have been some tangible investments in water systems and toxic site cleanup that the Administration can point to. But these are modest steps at best. With significant dollars flowing into infrastructure (including water systems, power grids, and the like) as well as the creation of a new environmental justice-oriented fund housed in the EPA, there are opportunities (and indeed, demand) for more dedicated equitable investment strategies.

The equity impacts of new manufacturing capacity arising from CHIPS and IRA on workers remain to be seen. The industries at the cutting edge of these investments are more likely to employ those with higher levels of education. At the same time, however, the Administration has put in place policies to encourage domestic and union-based manufacturing, though more could be done to help bring labor to more equal footing with firms and the government in developing these new industries. These programs could also incorporate lessons learned from community benefit agreements, which can, if done right, connect investments to local needs in ways that are effective and efficient.

Speed, scale, and participation

A third design choice stems from the process of planning, permitting, and community participation in these programs. Senator Manchin is not the only one to zero in on permitting reform: A growing chorus of commentators is raising alarm about the burdensome processes surrounding environmental reviews, federal and state permitting procedures, and other requirements that can dramatically slow down the pace of moving investments into real outcomes like new buildings, roads, and plants. Yet while these burdens are undoubtedly real and stem in part from outdated, flawed reporting and analysis requirements, it is also the case that such significant investments ought to engage thoughtfully with impacted communities and stakeholders of various kinds. Despite the Administration’s laudable commitments to more open, participatory, and inclusive government, these promises will be made real (or not) in the context of how these major investment programs are implemented.

As a political and practical matter, the investments these funds enable are popular and tangible. This is rare for government programs. As such, these publicly funded efforts are great opportunities to engage local communities and stakeholders—workers, community groups, and others in the regions potentially benefited by these new investments. While some agencies have begun ad hoc consultations with groups while implementing major initiatives, far more is possible and necessary. Done right, participation could take place early and upstream of individual projects, for example at the regional or sectoral level, allowing for important stakeholder input at a more impactful stage of the process, while still fast-tracking permitting or approvals of individual sites or buildings. At the same time, there are tremendous opportunities for federal agencies to work with states, localities, and other regional intermediaries as hubs for civic engagement. Such engagement can make these investments smarter and head off potentially harmful missteps. It can also help galvanize public support for the programs—and improve trust in government itself.

Project-by-project procedures for community engagement, environmental review, and the rest may well be cumbersome. A better approach would be to take the environmental and democratic demands underlying them seriously by doing better regional planning and goal setting. This would still take time and energy from a range of stakeholders, but we believe it is worth the effort. This would help to ensure that these large investments stay focused on equity and impact while still maintaining speed and efficacy. Agencies would do well to draw on the rich transnational and domestic experience in effective participatory procedures to help guarantee equitable and efficient approaches to these programs. From participatory budgeting to participatory monitoring of environmental harms, some of the most inclusive and effective planning policies have been pioneered in developing countries, despite their limited resources.

Coordination and national planning

A final design challenge lies in how the executive branch will coordinate these gargantuan efforts across agencies. Biden has tapped several senior advisers to lead the process: Gene Sperling was named the ARP coordinator; Mitch Landrieu was brought in to coordinate BIL; Ronnie Chatterji and John Podesta were tapped more recently to coordinate CHIPS and IRA, respectively.

But underneath the tapping of new “coordination czars” lies a bigger challenge. We have largely lacked a national investment planning and implementation apparatus since the wind-down of World War II-era executive authorities. But successful implementation of these new efforts at industrial policy will require painstakingly tracking individual grant awards, each of which comes from an array of different agency programs, each of which in turn has its own idiosyncratic procedures and requirements. Those investments then need to come together into a coherent strategy that creates whole new ecosystems of firms and workers, and of investments in communities that lead to tangible benefits for residents and for those in the region. That kind of ongoing monitoring, coordination, and course-correction is not easy, and it will require a massive amount of talent, data, and acumen. While the coordinators in the West Wing offer a good start, they will need more resources and larger teams to help steer these efforts in the coming years.

The Politics of Productivism

From the beginning, Biden cast his candidacy—and then his presidency—as an effort to restore trust in government and in the very idea of democracy itself. For the President, the effort to deliver tangible benefits to the public is very much part of the larger response to the rising tide of authoritarianism on the far right. In the near term, these efforts at industrial policy will be at the heart of Biden’s reelection bid, even as Donald Trump and even more extreme autocratic right-wingers vie for the Republican nomination in 2024. With public concern about the economy still high, the Biden team has an imperative to deliver clear economic results before 2024, both for the President’s reelection chances and to stave off electoral victories by authoritarian candidates on the right.

Right now, any version of public investment in the economy is little known and little understood by the American public. Will any version of productivism be strong enough, and direct enough, to form a basis for a new and durable political coalition? For productivism’s appeal to break through, the Administration must remain committed to broad-based, inclusive, and equitable design and delivery of the programs intended to build the new economy. If these programs become a new form of corporate welfare, the larger political project of proving democracy’s worth by delivering benefits for working people will fail.

Additionally, the Administration and its allies must not forget the parts of this productivist vision that did not make it into law in 2022. Despite the criticism of Build Back Better as a grab bag of policies, the plan made a powerful moral and political case: It was a program that would have invested not only in physical infrastructure and new industries, but also in the underlying social supports needed to empower workers and families to take advantage of those new opportunities. Investments like reinstating the child tax credit and jumpstarting a new national infrastructure for affordable, high-quality child care, elder care, and preschool did not survive the crucible of the 50-50 Senate, but they remain essential pillars of a genuinely inclusive and holistic productivist vision. They should stay front and center in the electoral campaigns ahead.

The Fight for the New Paradigm

Predictably, the new productivism has gotten plenty of pushback, not just from critics but also from supporters within the broad coalition of industrial policy enthusiasts. Traditional markets-first proponents still wag their fingers at the risks associated with government “picking winners and losers,” raising and re-raising the specter of the solar panel manufacturer Solyndra, which, after receiving hundreds of millions of dollars in government loan guarantees, ultimately went bankrupt and was reportedly investigated for accounting fraud. (They tend not to mention the success of Tesla, which receives billions in state, local, and federal incentives.) Center-left economists hint that “buy American” and “hire American” create inefficiencies and will hinder the development of the infrastructure and green industry we all purportedly want. Still others, further left, worry about “corporate welfare.” Famously, Bernie Sanders argued  in 2022 that the government should not “provide the microchip industry with a blank check of over $76 billion at the exact same time when semiconductor companies are making tens of billions of dollars in profits and paying their CEOs exorbitant compensation packages.”

Other critics support industrial policy but want it to be as limited as possible. Anything else, like requiring companies that benefit from federal industrial subsidies to ensure that their workers have access to child care, is a distraction, a “free lunch.” The pleasant surprise at—and then hand-wringing about—the Commerce Department’s inclusion of child care availability as a component of CHIPS funding is an important harbinger. The fact that such a minor element of the overall policy generated such attention tells us that the fights ahead will be fierce.

More generally, the prospect of government leading on efforts to build has worried many who look at recent history and decide that fewer regulations—or perhaps less bad permitting—is the fight to pick. In their eyes, the permitting intended to empower communities and protect the environment instead gets in the way of building housing and other things the new supply-siders are trying to encourage. We should take seriously concerns that building quickly and equitably will be extremely difficult. But we should not ignore stories of a progressivism that has, in fact, built big things. At the height of the New Deal, progressives successfully electrified the entire country—and did so while limiting corporate concentration and fostering cooperative utilities in many parts of the country. More recently, the launch and proliferation of universal pre-K programs points to government’s ability to stand up major new social programs with lasting effects. We have lessons to learn from successes as well as failures. These are warnings about problems to be solved, not deal-breakers or signs that an equitable productivism should be declared dead on arrival.

In the end, this pushback is all a tell, revealing deep-seated anxieties about the role of the state in managing the economy. It demonstrates clearly that neoliberalism still has a strong hold on many people’s imaginations. To the surprise of many who thought FDR-style government would never return, the state is back. COVID is partly responsible: The pandemic necessitated everything from state purchases of vaccines to unprecedented economic rescue packages, and the obscure white papers and legislative memos that had been central to our long-fought ideas and policy battles suddenly became more relevant.

The new productivism isn’t exactly the New Deal, but in the battle between bold and old, many among this generation of policymakers are rediscovering the virtues of muscular government. But now that possibility needs to be made into reality, and the policy battles of the months ahead will be about what kind of industrial policy we pursue.

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Felicia Wong is President and CEO of Roosevelt Forward.

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K. Sabeel Rahman is an associate professor of law at Brooklyn Law School and faculty co-chair of the Law and Political Economy Project. Most recently, he served in the Biden-Harris Administration, where he led the Office of Information and Regulatory Affairs.

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