Based on a forthcoming book, Professor Preiss discussed the normative aspects of industrial policy, which he defined as “government policies aimed at transforming the structure of economic activity to achieve a public goal.”
He started the lecture with an overview of economic liberalization, for which he identified five critical features: A jump in world exports and global value chains, the rise of the global middle class, rising inequality, declining labor share of income, and an explosion of the finance sector. This introduction led to the central argument of his lecture: global liberalization does not give workers enough freedom and dignity.
Professor Preiss held that the era of liberalization diminished the power of ordinary workers in developed societies, transferring power from workers and citizens and people who are more democratically accountable to people who are less democratically accountable. „If the way you do liberalization euthanizes labor movements, chances are this will concentrate the power in the hands of a few and make the society less free“.
Moreover, a common argument for liberalization is that Western countries have to abolish labor laws to stay competitive in a globalizing world. Preiss criticized this, saying that we have “traded freedom for credit” by ceding power and accountability. Industrial policy then is about getting “some kind of control back.”
Professor Preiss subsequently related his argument to Adam Smith. Smith valued markets because according to him, humans gain dignity and respect by engaging in equal trade with each other. Dignity is of central importance: What matters is how you relate to other people in your country. Preiss contended that when workers’ dignity gets eroded, their happiness decreases, even if their purchasing power increases in nominal terms. Attacking the common conception of utility as income or willingness to pay, Professor Preiss therefore advocated for including dignity in analyses of the costs and benefits of new (industrial) policy. This approach would not only consider improvements in income, but also status developments, all the while focusing more on domestic inequality than global equality.
After the talk, the floor was opened for questions from PPE students. Topics spanned from the role of a tight labor market for workers’ rights and American individualism to the question of why liberalization often involves more regulation than less. Preiss also engaged in a lively discussion with Roland Luttens, the Dean of the John Stuart Mill College, who remarked that “every time markets get attacked, my economist's heart bleeds a little“. After discussing the difference between typical price markets and auction markets, Preiss contended that „the general question is not markets yes or no, the question is markets how?”. How we can reform the already existing market system is the central puzzle for him. An important part of demanding dignity is future-oriented, and Preiss concluded his talk with a hopeful outlook for the future. „I‘m an optimistic guy“.