28/08/2017 “Swimming Against the Current: The Rise of a Hidden Developmental State in the U.S.

”: Summary — Great Transformations

“Swimming Against the Current: The Rise of a

Hidden Developmental State in the U.S.”:
Summary
In this article, Fred Block sketches an overview of the U.S. government’s initiatives to support and accelerate the
private sector’s commercialization of new technologies. Together, these initiatives expose what Block, following
O’Riain, refers to as a Developmental Network State (DNS). The programs of the DNS are extensive but also highly
decentralized, and they are carried out in dozens of different government offices. Since these DNS programs do not
follow the more familiar model of Japan’s industrial policies pursued in earlier decades, they have received little
attention. However, a more fundamental reason is they contradict the dominant political philosophy of market
fundamentalism.
The current US DNS has its roots in the Department of Defense’s Advanced Research Project Agency (ARPA) and
the NIH’s support of research and commercialization of genetic engineering. These programs had tremendous success
in assisting the development of the Internet, computer science, and biotechnology in the 1960s, 1970s, and 1980s.
ARPA’s organization as a small, unencumbered group of scientists and engineers with extensive industry and university
ties was particularly effective in achieving its goals. ARPA demonstrated that forming public/private professional
networks with scientists and entrepreneurs is a much better way to promote high technology than speaking from a
bureaucratic platform. ARPA established the growing importance of government industrial policies in fields beyond
military hardware.
Most of the current programs of the US DNS began in the 1980s when the U.S. experienced fierce trade
competition, particularly from Japan. During this time, both Congress and the Executive Branch undertook initiatives
to increase small business innovation, accelerate technology transfers from university and government laboratories,
and help large firms solve industry-stalling technological problems. In contrast to the prevailing perception of
unskilled government bureaucrats, these programs, like ARPA, relied on high levels of expertise among program
managers who are able to understand and evaluate the importance of specialized technologies. Because of their success,
most of the industrial policy experiments initiated in the 80s have been renewed, and still exist today.
Surprisingly, much of the DNS was founded under President Ronald Reagan or George H.W. Bush, both
proponents of market fundamentalist ideology. Because of the continued strength of this ideology, the programs of the
US developmental state have been the subject of a never ending, if largely silent, political battle. Republican leadership
has sought to curry the favor of businesses that have an interest in continued DNS funding, however at the same time,
they have struggled to keep on good terms with libertarians who oppose government intervention on principle. They
have managed this dilemma through a savvy, if unsustainable, public relations effort. In this dance, Republicans cut
funding for publicly visible and controversial programs while simultaneously expanding it for more invisible—but
usually just as expansive—efforts. All the while, they have to battle with Democrats such as Bill Clinton who try to
appeal to certain business constituencies through expanding these developmental initiatives.
Block cites five major challenges for the DNS. One, the “democracy deficit” that comes from a lack of public
knowledge or understanding of DNS programs makes it difficult for the government to push forward those technologies
that require significant institutional restructuring, such as alternative energy. Two, the DNS lacks a firm budgetary base
because the government does not benefit financially from the successful technologies that it has nurtured. Three, the
push by corporations for stricter control over intellectual property rights hampers effective collaboration among firms.
Four, a lack of coordination among the DNS’ administrating agencies leads to wasteful policy duplication and a failure
to learn from the experiences of other agencies. Five, low-road labor practices--particularly the failure to invest in the
education and training of employees—threaten to undermine the commercial achievements of the DNS.
Despite these challenges, the existence of the Developmental Network State is potentially a way towards domestic
as well as international social and economic transformation. Domestically, the reality that government initiatives are at
the core of the modern U.S. innovation economy can be the foundation for more reciprocal partnerships between
business and government, helping to establish the legitimacy of public revenue collection and program expenditures.
Internationally, the existence of the U.S. developmental state undercuts Washington’s efforts to export market
fundamentalism and it opens up strategies by which other nations can accelerate their own processes of technological
development.

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