Abstract

"Reinvention of Capability-informed Macroeconomic Policymaking "

Michael Best, University of Massachusetts (michael_best@uml.edu)

The time has come to build a decarbonized industrial structure that delivers employment, high productivity, new products and processes. It requires the reinvention of economics and policymaking.
It is often said that President Roosevelt did not contribute to economics. This is wrong. The policy dilemma, then as now, was the tension between the power of giant companies to deploy their huge productive resources and their lack of democratic accountability. Roosevelt’s team of economists addressed the dilemma with a creative solution. They invented extra-firm infrastructures to facilitate new product development and technology management capabilities not within a single enterprise but across a national population of enterprises. Government funded R&D labs were linked to manufacturing enterprises to unleash innovation processes.
The idea of extra-firm infrastructures broadens the policy framework. To material infrastructures such as transportation, energy, water supply, communication, social housing and healthcare were added to organizational infrastructures critical to business development including access to human capital, long-term finance, science and technical expertise, and a machine tool/software engineering sector.
In fact, no president has ever done more to advance the production capabilities of the nation’s population of enterprises as a whole to achieve a national goal. He did so, in part, by disempowering the monopoly titans of big business and empowering the production engineers, management, and labour force to participate in the conversion of a vast number of enterprises from civilian to wartime products.
In this, the WWII success story was about transitioning to a tripartite business organization featuring empowerment of production engineering leaders and worker co-determination. It thrived particularly in the government-owned, contractor-operated factories by which much of the armaments industry was organized.
Roosevelt’s economists invented a capability-informed macroeconomic policymaking framework to assist the nation’s enterprises to become producers that built the Arsenal of Democracy.