Industrial Policy and a Socialist Reform Agenda
China’s vast development and export of renewable energy gear and electric vehicles is helping to drive the green transition globally — the transition away from reliance on the burning of fossil fuels. As green tech becomes the cheapest energy source, an economy that sticks with a reliance on burning gas, coal and petroleum derivatives will be a higher cost economy. The price of energy affects costs throughout the economy. Meanwhile, the Trump administration attacks renewable energy and doubles-down on support for fossil fuels. This poses the risk of committing the American economy to a high-cost energy system.
A post-Trump USA could avoid this danger if it uses industrial policy to push through a green transition — moving to eliminate fossil fuels from electricity production, land transport and other sectors of the American economy.
An industrial policy is a set of practices that are designed to change the character of industries for social purposes or to build up industries that are regarded as socially beneficial or “advantageous” in various ways or to phase out industries that are regarded as damaging (such as the fossil fuel industry). Industrial policy could be used as a reform program in the capitalist framework, or it could be implemented as part of a revolutionary re-organization of industry — as part of a process of socialization of the economy.
Because global warming is an emergency that needs to be dealt with now, I’m going to look at how a green industrial policy can be developed as a labor-based reform agenda, pushed from below — but as a reform within the present capitalist framework.
Although the Biden administration touted fossil fuels, they took small steps in the direction of pushing the green transition. The CHIPS Act, the Bipartisan Infrastructure Act and the Inflation Reduction Act were all elements of Biden’s industrial policy. The IRA provided subsidies for purchase of electric vehicles, energy efficient appliances, home batteries and solar and wind facilities. To build up American manufacturing, electric vehicle subsidies required final assembly of the vehicle in the USA as well as other “local content” requirements. Fifty percent of the battery system value had to be made in the USA and 40 percent of the minerals used in battery manufacture had to be extracted, processed or recycled in the USA. The Bipartisan Infrastructure Act also required American manufacture for components used in infrastructure projects (such as bridges). Requiring local manufactured content is a typical industrial policy, to protect American manufacturing.
In elaborating their industrial policy initiatives, the Biden administration said it was necessary to have an “industrial strategy” to promote a number of goals. This included:
- Promote innovation
- Enhance the competitiveness of American products in the world market
- Protect national security
- Meet the science and engineering needs of key industries
- Protect American manufacturing against aggressive Chinese mercantilism.
Officials of the Biden administration pointed out that training engineers and “skilled trades” and doing research and development are “positive externalities.” An externality is a cost or benefit to people other than a company and its customers. For example, if a power company generates electricity by burning coal, that damages respiratory systems downwind of the plant and contributes to global warming. The company pays nothing for those damages. It has externalized its costs onto others. That’s a negative externality. A positive externality is a benefit the company provides but can’t always get re-imbursed for. Thus if a company does R&D and trains engineers, those engineers could go to another company — and other companies may adopt the results of their R&D. But it’s not in the interests of a company to train the engineers of its competitors. This explains why American companies at present fail to do enough R&D. Thus innovation and training of scientists, engineers and “skilled trades” needs to be publicly financed and taken on by public organizations of some kind such as universities and technical colleges. Worker organizations can also play a role here, as with apprenticeship programs.
Counter-planning
Industrial policy pushed by workers and their unions from below would be an example of counter-planning. Counter-planning is where workers develop their own ideas about products to make or methods of production. This can take the form of proposals for products that are less environmentally destructive. An early — and influential — example of counter-planning comes from the of the shop stewards committee at Lucas Aerospace in Britain. In the 1970s various British metal-working and aerospace firms were proposing layoffs and factory shutdowns. The company-wide shop stewards “combine committee” at Lucas Aerospace produced a counter-proposal for “socially useful production” in 1978. This was a plan that included about 150 medical, transport and environmental products the workers felt they could design and manufacture. This was a kind of “peace conversion” plan because these were alternatives to the military products they had been building. Management was intransigent in its “prerogatives” and ultimately fired two of the key shop stewards.
Another example of worker counter-planning is the long-running factory occupation at the GKN auto parts factory in Florence, Italy, which began in 2021. The factory was owned by British firm Melrose Industries. The workers occupied the plant to fight the shut down. They have proposed conversion of the factory to manufacture other products — such as “cargo bikes” used in product delivery — as part of an orientation they call “re-industrialization from below.” In the course of the occupation they have sought ways they could use both their skills and the plant’s equipment that would be socially beneficial, such as production of renewable energy technology.
Industrial policy is another area where unions have the potential to intervene with their “counter-planning.” Unions can potentially act as a mass force from below to push through a government industrial policy that favors working class interests. An example of industrial policy through union counter-planning is a report ( “Organize, Industrialize, Decarbonize! A Pro-Worker, Green Industrial Policy for California”) in 2025 from the United Auto Workers California region (Region 6).
The union’s report defines industrial policy as “coordinated government action to proactively shape what goods and services an economy produces,” as well as “how they are produced and how they are distributed.” The union wants the state government in California to use industrial policy to push through the green transition. But they also want an industrial policy that doesn’t just beef up the profits of the green capitalist sector but also addresses the working-class affordability crisis in the USA. The union report describes global warming, inequality and the crisis of affordability as “mutually reinforcing crises.”
The union backed a bill (SB 787) in the state legislature to develop supply chains and set labor conditions in three priority sectors: electric vehicles and their battery systems, offshore wind, and heat pumps. But billionaire-friendly governor Gavin Newsom vetoed this legislation.
A program to address both global warming and the serious working-class affordability crisis in the USA could be coupled with an industrial policy that could be used to re-build manufacturing employment. For example, consider the housing affordability crisis in the USA. With hedge-funds jacking rents to increase the market value of their buildings and capitalist builders mainly providing housing for the top 20 to 25 percent of household incomes, we can see how the capitalist real estate industry is the cause of the housing affordability crisis. This problem could be addressed by creating a massive fund available to non-profit developers and city housing departments to enable them to enter into contracts with builders to construct buildings as a form of Social Housing. By “social housing” I mean housing that is self-managed by the residents but locked down under restrictions that guarantee permanent affordability (as with limited equity housing coops).
If a major fund were provided by the federal government, the program could require all-electric construction to meet the goals of the fight against global warming. And subsidies and local content requirements could be used to ensure the gear (such as solar panels and heat pumps) is made in the USA.
Self-management and Socialist Reform
But what about a specifically socialist industrial policy? A central goal (but not the only goal) of socialism is to do away with the class subordination of the working class — the subordination of workers to the owning and managing boss classes in the system of social production of goods and services. As R.H. Tawney once wrote, the capitalist firm is “autocracy checked by insurgency.” When workers build unions or go on strike, that’s “insurgency.” This means workers are not accorded any democratic (collective) right to make decisions about the labor process even though they are directly affected by — governed by — these decisions. Back in the 1860s-70s, the first principle of the International Workers Association said: “The emancipation of the working class must be the work of the workers themselves.” The “working class” are the wage-earners who do the work of production of goods and services. And their emancipation would require that they take over collective self-management of the industries they work in. If workers don’t control production, some boss class will.
This is why nationalization is not actually a socialist reform. In the extensive nationalizations in Britain after World War 2, for example, the top-down state managerial bureaucracy was in control, not workers. We need to distinguish nationalization from socialization. Socialization requires two conditions: (1) democratic self-management of workplaces and whole industries by the workers in that industry, and (2) democratic social planning and accountability to the general population.
Could these two conditions actually be achieved as a reform within the existing capitalist and constitutional framework of a capitalist regime such as the USA? Maybe, to some extent. If so, this degree of attack on the power of the owning and managing classes would require a very high level of working class struggle. But even if not, we still need a socialist agenda for change. Here I want to suggest the negotiation model, as we can call it. I can explain this best by contrasting it with the suggested program of Max B. Sawicky in “Socialists Need a Distinctive Economic Policy Agenda.”
To begin with, Sawicky misstates the goal of industrial policy: “The idea is to restructure the economy — to shift the composition of what is produced — in the direction of higher-value-added industries.” An example of an industrial policy for the USA would be to provide extensive public funding for bio-medical research, pharmaceutical development, and a comprehensive program of free to user health care. There is no requirement here that this industry generate profits.
Rather, the idea of industrial policy is to maintain and develop industries that are advantageous for various social reasons — such as health care provision or the fight against global warming or national security.
Sawicky mentions two industries he proposes for nationalization: “Some public services are properly national in scope and require federal design, funding, and management. Examples already mentioned are intercity rail and a national power grid.”
This is where I will illustrate the negotiation model as an alternative to Sawicky’s statist nationalization. In recent years the Public Rail Now campaign has been discussing a proposal for nationalizing ownership of the tracks and right of way of the main Class 1 railroads. This campaign was initiated by Railroad Workers United. Some members of RWU want the railways to be treated the same as the interstate highways. This means the federal government would only have responsibility for infrastructure investment such as grade separations and electrification. The Federal Railroad Administration (FRA) would allow various non-governmental entities — even capitalist firms — to operate the actual freight and passenger services. This would allow competing firms to share the same routes.
Now, let’s suppose that grants — and possibly loans from Ro Khanna’s proposed coop bank — are provided to create regional railway worker cooperatives to operate large regional segments of the American railway network. A coop firm might operate the northern transcon (the former Burlington Northern) from Chicago to Puget Sound and maybe another regional coop to take over the northeastern region from CSX. The regional cooperatives might form a coordinated national railway federation to coordinate services. There could be periodic negotiations between the railway worker cooperatives and the FRA over issues such as infrastructure investment, subsidies for passenger ticket prices and policies affecting the general public.
Another industry where the negotiation model could apply would be the industry comprised of biomedical research, pharmaceutical development and health care provision. We could imagine the creation of a non-governmental, non-profit, staff-controlled, democratically-structured National Health Service to run this industry. The federal government would provide funding for research, free medical school, and free to user health care. We can suppose there is periodic negotiation between the NHS and the public governance bodies and this might involve some type of citizen health councils. The negotiation would cover the issues of government funding and policies affecting patients and the general public.
Sawicky also proposes statist takeovers in the area of housing and the green transition away from reliance on fossil fuels. We could imagine a program for the electric power industry similar to my proposal for railways. The federal government might acquire electric utilities but contract with the workforce in large regional segments of the national grid — with periodic negotiation with the Energy Department over grid investment, funding to phase out coal- and gas-fired plants and other issues.
In my discussion of housing, I’ve already proposed an alternative to the government as landlord: Limited equity housing coops. This implements resident self-management of buildings. We could also propose the setting up of large design and build construction worker cooperatives to bid on housing and infrastructure projects. In this case city housing departments or non-profit community organizations would negotiate over issues like costs, finishes, appliances and so on. The community organizations could even organize prospective residents to negotiate over the character of individual dwellings (as described by Christopher Alexander in The Production of Houses).
But if we’re not talking about small, and possibly marginal cooperatives, but democratically-structured, staff-run non-profit organizations controlling large, strategic industries, is this compatible with the constitutional and capitalist framework of USA or another capitalist country? I think this is doubtful.
We do have an example of large-scale re-organization of industries into worker-controlled industry federations — the Spanish revolution of the 1930s. In that case the militants of the syndicalist CNT union (and often with the support of the members of the social-democratic UGT union) expropriated many industries. In most cases when the workers expropriated a private firm they would not operate it as a stand-alone cooperative. Rather, they’d merge the assets from all the firms in that industry into a single industry federation. They were working to the industrial union principle of “taking wages and conditions out of competition.” They built industrial federations like this in many industries: health care, railways, wood products, telecom, public utilities, fishing, and the entertainment industry.
But this took place in the course of a massive revolutionary struggle. After the Spanish army’s attempted takeover was defeated in the streets of Barcelona in July, 1936, the syndicalist CNT union used the army’s weapons to build a large “proletarian army” under the direct control of the union. The principles of the syndicalist international stated that in a revolutionary situation the goal was for the worker mass democratic organizations to gain control of the dominant armed power in society. Thus the union used its army to defend its expropriation of industry.
Once the Republican state authority was rebuilt with its own army and police by 1937, there began a process of state seizures of industries — reasserting worker subordination to a managerial boss class. We can see here there’s a structural problem. As long as owning and managing classes have power in society — and the ability to control the state — they will try to use that power to keep the working class as a subordinate, exploited class.
Even so I think it may be helpful to have a socialist reform agenda of the sort I described. It helps to clarify what the goals are of the movement. And this is where I think the negotiation model is useful as it allows us to clarify the distinction between socialization and nationalization. In the past various forms of the negotiation model have been used for a socialist program — from guild socialism to participatory economics. Various forms of this model are possible.
