The American government now owns roughly ten percent of Intel. The Department of Defense is the largest shareholder of the company that runs the only rare-earth mine in the United States, and it has guaranteed that company a minimum price for its product for a decade. A "golden share" gives the White House veto rights inside U.S. Steel. The Department of Energy holds a loan portfolio that would make it one of the largest project-finance lenders on Earth. None of this was true ten years ago. Something fundamental has changed in the relationship between the American state and the American market — and it is being built, deal by deal, on legal foundations that are contested, improvised, and largely unexamined.
This seminar examines the return of industrial policy and the emergence of new forms of state capitalism in advanced economies, from the perspective of the legal institutions that shape them.
By the end of the semester you should be able to:
1. Explain the core economic justifications for — and critiques of — industrial policy (market failures, externalities, coordination problems, learning effects) in plain English, and deploy them in legal argument;
2. Map the American industrial policy toolkit — grants, loans, loan guarantees, tax credits, procurement, tariffs, equity stakes, price floors, offtake agreements — to the statutory authorities that enable each tool and the legal constraints that discipline them;
3. Read and critique the primary instruments of implementation: notices of funding opportunity, guardrail regulations, conditional commitments, term sheets, and oversight reports;
4. Compare the U.S. approach with the East Asian developmental-state tradition, the EU’s state-aid regime, and Chinese state capitalism, and explain what is genuinely novel about post-2021 American practice;
5. Execute the working steps of a federal investment process — intake, diligence, underwriting, negotiation, and committee decision — and document them professionally;
6. Use AI tools critically and effectively as a professional accelerant, with a clear-eyed understanding of their failure modes; and
7. Produce a substantial piece of original legal scholarship analyzing a specific industrial policy intervention.
This class does not have a textbook. Rather, we will focus on analyzing original research and primary materials. Readings for each class are listed and linked in the Day-to-Day Detail below. For certain parts of the course, a subscription to an AI chatbot would likely be helpful, though not required. Some free options include:
Google Gemini Pro for Students
Details on the university-wide OpenAI ChatGPT license, which is apparently in the works, will be shared here as they become available.
Building an Analytical Framework
Thursday, 20 August 2026 | Oops
Monday, 24 August 2026 | Orientation to the Class
Wednesday, 26 August 2026 | What Is Industrial Policy?
Monday, 31 August 2026 | An Economics Toolkit for Lawyers, Part I
Wednesday, 2 September 2026 | An Economics Toolkit for Lawyers, Part II
Monday, 7 September 2026 | No class due to Labor Day
Wednesday, 9 September 2026 | The Mechanisms of Industrial Policy and Learning System Demo Day
Testing the Framework in Comparative Perspective
Monday, 14 September 2026 | The Developmental State: Japan and the Invention of Modern Industrial Policy
Wednesday, 16 September 2026 | The Developmental State: Korea, Discipline, and Conditionality
Monday, 21 September 2026 | Governing the Market: Taiwan, Embedded Autonomy, and State Capacity
Wednesday, 23 September 2026 | The Entrepreneurial State and Its Critics
Deep Diving the U.S. Experience
[Details to come]
Simulating State Investment
[Details to come]
This part of the course website provides: (1) high-level summaries of the content covered in a given class period; (2) assigned readings; and (3) supplemental readings and materials.
In this class, the students gained a first hand appreciation for the limits of their professor.
In today's class we discuss the philosophy of the course, level-set on both student and instructor expectations, and discuss some fundamental questions of the course.
Assigned Readings (provided in class):
Réka Juhász & Nathan Lane, "A New Economics of Industrial Policy," IMF Finance & Development (June 2024)
Réka Juhász, Nathan Lane & Dani Rodrik, "The New Economics of Industrial Policy," 16 Ann. Rev. Econ. 213 (2024)
Dorothy Sayers, "Why Work?"
In this class, we take a first look at what industrial policy is, building some intuition for the next couple of classes, which unpack the problems it is meant to solve.
Assigned Readings:
Council on Foreign Relations Backgrounder, "Is Industrial Policy Making a Comeback?"
Dani Rodrik, "Industrial Policy for the 21st Century," HKS Working Paper No. RWP04-047 (2004)
Optional Readings:
Andy Grove, "How America Can Create Jobs," Bloomberg Businessweek (July 2010)
Steven Vogel, "Level Up America: The Case for Industrial Policy and How to Do It Right," (2021)
Today's readings are foundational in nature, and so some time is taken to make sure we have some basic ideas from economics clear in our minds. To bring a little variety to a rather dry literature, I've posted some videos/podcasts as alternatives. The report on the Great Salt Lake is to provide us with a policy setting relating to an externality that is close to home, which we can use for discussion. And Chapter 12 of CORE Econ's The Economy 1.0 is a useful resource for the rest of the class, though only section 12.9 is assigned here.
Assigned Materials:
Marginal Revolution University, Negative Externalities: The Hidden Costs of Air Pollution
Marginal Revolution University, Positive Externalities: The Economics of Covid and Vaccine Policy
Planet Money, Externalities: Scarcity and Pistachios
Abbot et al., Emergency Measures Needed to Rescue Great Salt Lake from Ongoing Collapse
CORE Econ, The Economy 1.0: Chapter 12.9, Market Failure and Public Policy (The rest of chapter 12 provides a more rigorous treatment of the topics discussed in the first three bullets above)
In today's class, we think about the limits of the "market failure" and "externality" framing. Are the problems that industrial policy is meant to address, or the goals it is meant to achieve, broader than solving externalities? How does politics frame industrial policy?
Assigned materials:
Etzel et al., Strategic Economics: Options for Comparative Advantage
Dani Rodrik, Green Industrial Policy
Adam Tooze, The Economic History of the Nazi Regime
Leonard Arrington, Planning an Iron Industry for Utah
The substantive material for today's class walks us through some common mechanisms for executing industrial policy, starting with a short video on the Coase Theorem (yes, I'm afraid you never escape 1L in some ways) for framing. We will also spend a bit of time today demonstrating some learning systems that you might consider using (or approximating) for the course.
Assigned materials:
Marginal Revolution University, The Coase Theorem
Valentine Millot & Łukasz Rawdanowicz (OECD), "The Return of Industrial Policies," OECD Economic Policy Paper (2024)
Gary Hufbauer & Euijin Jung, "Scoring 50 Years of US Industrial Policy, 1970–2020," PIIE Briefing 21-5 (2021)
Michael Kremer, Jonathan Levin & Christopher Snyder, "Advance Market Commitments: Insights from Theory and Experience," AEA Papers & Proceedings (2020)
Supplemental materials:
Today's class introduces us to the industrial policy experience in Japan, which is often considered the start of modern industrial policy (though we already know from our earlier readings that industrial policy predates the post-WWII era). We also encounter the book that more or less created the modern study of industrial policy: Chalmers Johnson's MITI and the Japanese Miracle. To provide some context, and make an otherwise unfamiliar story more accessible, a couple of episodes from an Emmy-winning documentary are also included.
Assigned materials:
Foundational reading: Chalmers Johnson, MITI and the Japanese Miracle (1982), chapter 1
The Pacific Century (Annenberg/PBS, 1992), Episode 5: "Reinventing Japan" or Episode 6: "Inside Japan, Inc." (Episode 6 is the more MITI-focused one)
Original materials: U.S. General Accounting Office, Industrial Policy: Japan's Flexible Approach, GAO/ID-82-32 (June 1982) — read the digest and skim one chapter; this is the U.S. government studying MITI in real time.
Supplemental materials:
U.S. General Accounting Office, Industrial Policy: Case Studies in the Japanese Experience, GAO/ID-83-11 (Oct. 1982)
Mr. & Mrs. Psmith's Bookshelf, "Review: MITI and the Japanese Miracle"
Econlib, "Japan and the Myth of MITI", the compact revisionist case that Johnson overclaimed
The South Korean experience contains an important lesson about program design: How a state may condition support on the enforcement of performance standards.
Assigned materials:
Foundational reading: Alice Amsden, Asia's Next Giant: South Korea and Late Industrialization (1989), chapter 1 and skim chapter 6
Original materials: World Bank, Growth and Prospects of the Korean Economy, Report No. 1489-KO (1977), read the summary and the sections on the Heavy and Chemical Industry plan to see the World Bank assessing a program as it is being executed.
Odd Lots (podcast), "This Is How Industrial Policy Can Go Bad" (Vivek Chibber on Korea versus India, ~45 min.)
Optional materials:
Kim, Lee & Shin, "The plant-level view of an industrial policy: The Korean heavy industry drive of 1973" (VoxEU), modern causal evidence on the very drive the World Bank was assessing
What kind of bureaucracy can run an industrial policy without getting captured? Taiwan's experience provides lessons on how to be in the market but not of the market.
Assigned materials:
Foundational reading: Peter Evans, Embedded Autonomy: States and Industrial Transformation (1995), chapter 1
Robert Wade, "The Developmental State: Dead or Alive?" 49 Development & Change 518 (2018)
Planet Money, "Silicon Island"
Asianometry, "How Taiwan Created TSMC"
Original materials: World Bank, The East Asian Miracle: Economic Growth and Public Policy (1993), read the overview chapter
Supplemental materials:
Bloomberg, "The Story of How TSMC Came to Dominate the World"
Acquired (podcast), the TSMC deep-dive and Morris Chang interview episodes (acquired.fm), 2–3 hours each, so for those of you who really want to deep dive
Today we tangle with the strongest case that the state should be a market maker and not just a market fixer, and with a direct challenge to that thesis. Students should come prepared to take a side -- who has the better argument? We will then take a look at the U.S. SBIR/STTR program as an example of the entrepreneurial state made real -- is this how you would design an industrial policy if given the opportunity?
Assigned materials:
Foundational reading: Mariana Mazzucato, The Entrepreneurial State (Demos, 2011) chs. 1–3 and the conclusion
Alberto Mingardi, "A Critique of Mazzucato's Entrepreneurial State," 35 Cato Journal 603 (2015), the sharpest direct rebuttal
Original materials: 15 U.S.C. § 638 (the SBIR/STTR program), skim for structure only: congressional findings, agency set-asides, the three-phase architecture. This is what an "entrepreneurial state" looks like when it's drafted.
Supplemental materials:
Scott Lincicome & Huan Zhu, "Questioning Industrial Policy," Cato White Paper (2021), the broader systematic case against
EconTalk (podcast), "Lincicome on Industrial Policy"