Dirigism means government direction of industrial growth not through ownership of the means of production, but through control of credit, progressive tax policies, and direct subsidy to necessary enterprises in the national interest.
The first great dirigste government was that of France under Louis XIV’s brilliant comptroller general Jean Baptiste Colbert who introduced a protective tariff, built roads and canals, and by thus encouraging industry turned France into an economic dynamo. It was the revival of these policies under Lazare Carnot that enabled Napoleon to mobilize the nation to a previously unimagined level of effort that resulted in the dominance of Europe by France for a generation.
America too, was founded upon Dirigiste principles. Ben Franklin and Alexander Hamilton were both explicit in rejecting the anti-labor policies of Adam Smith and David Riccardo, and the Federalists created a national bank with stated dirigist aims. In the nineteenth century, this tradition was continued by the nation building policies of the Whig Party and expounded by the economists Friedrich List and Henry Charles Carey. Later the early Republican Party was explicitly dirigist, favoring government underwriting of a trans-continental rail-road, state universities, and the opening of the West to settlement through liberal homestead laws.
Fredrich List argued that, in the long run, a societies well-being was determined, not by what it could by, but by what it could produce. “The forces of production are the tree on which wealth grows.”
Japan and most of the “Tiger Economies” of the Pacific Rim are building cutting-edge high-technology industries through the dirigist policies of government support.
The basic purpose of a financial system should not be to enrich speculators, or even investors, but to be the servant of the real economy of production! In Japan this is called a “non-capitalistic market economy.”
• Government direction of credit into modern, efficient, high technology industries.
• A tax policy that rewards genuine investment and penalizes financial speculation.
• Government support for renewable energy, high-speed rail networks, nuclear power generation, and scientific research of all kinds.
• Reform of the financial markets to prohibit leveraged buy-outs, holding companies, and the purchase of stock on margin.
• Carey, Henry Charles, “Principles of political economy,” A.M. Kelly, Bookseller, N.Y.C., 1965. • Fallows, James, “Looking at the Sun: the Rise of the New East Asian Economic and Political System,” Pantheon Books, N.Y.C., 1994.
• List, Fredrich, “The National System of Political Economy,” Augustus M. Kelley, Fairfield, NJ., 1991.
• List, Fredrich, “The Natural System of Political Economy,” Frank Cass, London, 1983.
• Luttwak, Edward, “The endangered American dream : how to stop the United States from becoming a Third World country and how to win the geo-economic struggle for industrial supremacy,” Simon & Schuster, N.Y.C., 1993.