In this paper, I track how Democratic Party policy intellectuals shifted their thinking about the nature of technological and economic change and the proper role of the state in fostering American businesses from the 1980s through the 1990s by focusing on the career of lawyer and popular writer on economic topics, Robert Reich. At least partly through a desire to differentiate themselves from supply-side Republicans, Reich and other Democratic Party intellectuals with connections to Harvard and MIT put forward an idea of “industrial policy” in the early 1980s. Reich co-wrote the well-received 1983 industrial policy book, Minding America’s Business: The Decline and Rise of the American Economy, with business consultant, Ira C. Magaziner, who, like Reich, would later work in the Clinton administration. The industrial policy thinkers asserted that the state should intervene in the economy and business practices to enhance the “competitiveness” and innovativeness of US firms, often by imitating traditions in Germany and, especially, Japan. Professional economists—including Paul Krugman, Lawrence Summers, and Jeffrey Sachs at a Federal Reserve meeting in Jackson Hole, Wyoming—eviscerated the idea, however, and it never became an official part of Democratic Party platforms.
By the 1990s, through changes in language and conception, talk of “industrial policy” had evolved into talk of “the New Economy,” including new ideas of “skills-biased technological change,” “human capital,” and “endogenous growth” as well as new technological visions, especially around the Internet and eventually including the so-called “Digital Divide.” . Reich put forward an updated version of his view in his 1991 book, The Work of Nations: Preparing Ourselves for 21st-Century Capitalism, which directly influenced Bill Clinton and Albert Gore’s 1992 campaign book, Putting People First: How We Can All Change America, and its promise to spend $50 billion a year improving US human capital through education and job training. My paper will examine both the continuities and differences between these two moments