Why stop at industrial policy? Why not full socialism? Its no different.
The only thing keeping countries from becoming socialist is they believe in the same liberal propaganda that is used to discredit state capitalism. Its all just bluff and propaganda like religion. Some of the slaves actually believed that the plantation system was the best system for them simply because they believed their masters propaganda of no alternative.
Whenever people realize that Wall Street is the world's biggest bully and push back will there be any change.
This is a good reminder that development doctrine is rarely just about development.
It often functions as a coordination technology for maintaining a particular hierarchy in the world economy, then gets revised once that hierarchy starts shifting.
Over-industrialisation across industrial economies and short-term industrial strategy have made productivity decline within western hemisphere. Neoliberalism policy and incoherent bargain-power approach make advanced industrial economies to outsource their manufacturing toward East Asia countries, while these countries embraced state intervention on regulating the markets and mitigating the risks for local manufacturers with strong policies on industrial policy. This should have been the straightforward strategy advanced industrial economies but instead, they're more confidence on deregulation and free markets while embracing strong egalitarian state without productivity or diversification on economy.
Jostein, your dissection of the World Bank's hypocrisy is surgically precise, but your deduction stops halfway up the mountain.
In 2026, the World Bank is simply repeating its 1993 mistake: Misattribution.
In 1993, its "East Asian Miracle" report deliberately erased the decisive role of "state intervention" in the early rise of South Korea, Taiwan, and even the US and UK, forcibly attributing their success to "free markets." In 2026, it declares that industrial policy should be included in all countries' toolkits. Is this U-turn an "admission and correction of error"? No, it is yet another misattribution.
System A (the US/West) cannot effectively replicate System B's industrial policy because the underlying evaluation codes of the two systems are mutually exclusive.
1. System A’s Fatal Straitjacket: ROI (Return on Investment)
"Free markets" work seamlessly in System A because the underlying driver is Wall Street's capital allocation efficiency and shareholder value maximization. But in the "hardcore industrial war" of the Great Bifurcation, this becomes a fatal flaw. When the US government distributes tens of billions in CHIPS Act subsidies, the funds flow to publicly traded companies (like Intel) tethered to the quarterly earnings cycle. Capital's inherent instinct is to resist long-cycle, high-friction, low-margin, asset-heavy investments. The inevitable result: industrial policy funds mutate into stock buybacks and executive bonuses, rather than physical semiconductor fabs.
2. System B’s Dimensional Strike: Physical Scale Over Financial Statements
The reason System B's industrial policy is so formidable is that, at the national strategic level, it essentially ignores ROI in the financial sense. To build UHV power grids, high-speed rail networks, and a complete lithium battery supply chain, System B is willing to endure unimaginable capital misallocation, overcapacity, and decades of financial losses. It treats "infrastructure and baseload manufacturing" as thermodynamic public goods necessary for national survival, not as profit-making tools. It pursues "absolute occupation of physical market share," not "pretty numbers on a balance sheet."
3. Systemic Rejection of Hardware by Software
You cannot forcefully insert a piece of "cost-blind industrial infrastructure" code into a financial ecosystem that worships "quarterly earnings." When System A attempts to copy System B's subsidy policies, exorbitant union costs, environmental permitting friction, and Wall Street's arbitrage-seeking will bleed the capital dry long before it can be converted into actual "physical capacity."
The World Bank's bible can be rewritten overnight, but the physical laws of financial capitalism cannot. System A's greatest helplessness lies here: when it finally decides to swallow its pride and copy System B's homework, it discovers it simply cannot afford the civilization-level bill of this "ROI-blind" state system.
[The Underlying Operating System of Chinese Manufacturing: The R.I.C.E. System]
You're right that World Bank economists are driven more by donor interests than by evidence—but I'd argue it's even worse than you suggest. The Bank doesn't just follow evidence selectively; it systematically perpetuates whatever intellectual fashion is currently in vogue in the West onto the developing world.
The pattern is clear. Post-WWII: big-push industrialization. The 1980s: neoliberal structural adjustment and anti-corruption crusades. The 2010s: childcare mandates, anti-nuclear stances, and renewable energy advocacy. Now the 2020s: industrial policy is suddenly back in fashion—though Justin Lin, as Chief Economist in the 2010s, was already calling himself a "neo-structuralist" and supporting selective interventions.
But your confidence in industrial policy's developmental benefits deserves serious scrutiny. Most celebrated cases—from American industrialization to East Asian miracles—were primarily driven by military competition, not development goals. The empirical literature is far more mixed than you acknowledge. Spectacular failures are common, and the most consistent finding across contexts is that industrial policy gets captured by political cronies and rent-seekers.
Mainstream economics textbooks devote chapters to market failures while barely mentioning government failures—despite the latter being more common and often more destructive in practice.
Here's a question: if you genuinely believe the IMF and World Bank are so destructive, why not advocate for their abolition? Developing countries can access commercial capital markets without these institutions—from lenders not owned by the supposedly malevolent Western powers you critique.
Frankly, these institutions primarily prop up dysfunctional states that would otherwise face market discipline. Perhaps we'd all be better off letting serial defaulters like Argentina, Pakistan, and Egypt finally face the consequences of their choices rather than perpetually bailing them out.
It's because of AI. When AI drive the world now, and information widely available, the west must correct themselves before being corrected further. And AI will get high demand for countries that need industrialization therefore make their tech industry even richer.
Human capital - the wellbeing of humans for the purpose of being used as labor - has been in steady decline under WB policy - will this new grand awakening of theirs address the need for investment in human capital as well? Healthcare, education, transportation infrastructure, access to nutritious food and wages that allow them to buy the food. I’m not seeing that in the report.
Please forgive my free riding for the moment. Yes, I read high level anecdote, Paul Kingsnorth in South Africa talking to government in the immediate post-apartheid period. Note now the geopolitical postition of SA given the deadly wars and atrocities in what we might more rightly call W. Asia, let alone the propaganda that saturates 'the West', including EU/UK and wider Europe. Look for motives, look for policies? It may not be 'singularites' await us in short time, but tipping points, irreversible damage, who looks to secure a safer position given planetary boundaries and extractive economies?
Why stop at industrial policy? Why not full socialism? Its no different.
The only thing keeping countries from becoming socialist is they believe in the same liberal propaganda that is used to discredit state capitalism. Its all just bluff and propaganda like religion. Some of the slaves actually believed that the plantation system was the best system for them simply because they believed their masters propaganda of no alternative.
Whenever people realize that Wall Street is the world's biggest bully and push back will there be any change.
This is a good reminder that development doctrine is rarely just about development.
It often functions as a coordination technology for maintaining a particular hierarchy in the world economy, then gets revised once that hierarchy starts shifting.
True, the political context matters. But we can go further and call out the World Bank for being an instrument of Western (and capitalist) hegemony.
Over-industrialisation across industrial economies and short-term industrial strategy have made productivity decline within western hemisphere. Neoliberalism policy and incoherent bargain-power approach make advanced industrial economies to outsource their manufacturing toward East Asia countries, while these countries embraced state intervention on regulating the markets and mitigating the risks for local manufacturers with strong policies on industrial policy. This should have been the straightforward strategy advanced industrial economies but instead, they're more confidence on deregulation and free markets while embracing strong egalitarian state without productivity or diversification on economy.
Jostein, your dissection of the World Bank's hypocrisy is surgically precise, but your deduction stops halfway up the mountain.
In 2026, the World Bank is simply repeating its 1993 mistake: Misattribution.
In 1993, its "East Asian Miracle" report deliberately erased the decisive role of "state intervention" in the early rise of South Korea, Taiwan, and even the US and UK, forcibly attributing their success to "free markets." In 2026, it declares that industrial policy should be included in all countries' toolkits. Is this U-turn an "admission and correction of error"? No, it is yet another misattribution.
System A (the US/West) cannot effectively replicate System B's industrial policy because the underlying evaluation codes of the two systems are mutually exclusive.
1. System A’s Fatal Straitjacket: ROI (Return on Investment)
"Free markets" work seamlessly in System A because the underlying driver is Wall Street's capital allocation efficiency and shareholder value maximization. But in the "hardcore industrial war" of the Great Bifurcation, this becomes a fatal flaw. When the US government distributes tens of billions in CHIPS Act subsidies, the funds flow to publicly traded companies (like Intel) tethered to the quarterly earnings cycle. Capital's inherent instinct is to resist long-cycle, high-friction, low-margin, asset-heavy investments. The inevitable result: industrial policy funds mutate into stock buybacks and executive bonuses, rather than physical semiconductor fabs.
2. System B’s Dimensional Strike: Physical Scale Over Financial Statements
The reason System B's industrial policy is so formidable is that, at the national strategic level, it essentially ignores ROI in the financial sense. To build UHV power grids, high-speed rail networks, and a complete lithium battery supply chain, System B is willing to endure unimaginable capital misallocation, overcapacity, and decades of financial losses. It treats "infrastructure and baseload manufacturing" as thermodynamic public goods necessary for national survival, not as profit-making tools. It pursues "absolute occupation of physical market share," not "pretty numbers on a balance sheet."
3. Systemic Rejection of Hardware by Software
You cannot forcefully insert a piece of "cost-blind industrial infrastructure" code into a financial ecosystem that worships "quarterly earnings." When System A attempts to copy System B's subsidy policies, exorbitant union costs, environmental permitting friction, and Wall Street's arbitrage-seeking will bleed the capital dry long before it can be converted into actual "physical capacity."
The World Bank's bible can be rewritten overnight, but the physical laws of financial capitalism cannot. System A's greatest helplessness lies here: when it finally decides to swallow its pride and copy System B's homework, it discovers it simply cannot afford the civilization-level bill of this "ROI-blind" state system.
[The Underlying Operating System of Chinese Manufacturing: The R.I.C.E. System]
https://chinarbitrageur.substack.com/p/the-underlying-operating-system-of?r=71ctq6
You're right that World Bank economists are driven more by donor interests than by evidence—but I'd argue it's even worse than you suggest. The Bank doesn't just follow evidence selectively; it systematically perpetuates whatever intellectual fashion is currently in vogue in the West onto the developing world.
The pattern is clear. Post-WWII: big-push industrialization. The 1980s: neoliberal structural adjustment and anti-corruption crusades. The 2010s: childcare mandates, anti-nuclear stances, and renewable energy advocacy. Now the 2020s: industrial policy is suddenly back in fashion—though Justin Lin, as Chief Economist in the 2010s, was already calling himself a "neo-structuralist" and supporting selective interventions.
But your confidence in industrial policy's developmental benefits deserves serious scrutiny. Most celebrated cases—from American industrialization to East Asian miracles—were primarily driven by military competition, not development goals. The empirical literature is far more mixed than you acknowledge. Spectacular failures are common, and the most consistent finding across contexts is that industrial policy gets captured by political cronies and rent-seekers.
Mainstream economics textbooks devote chapters to market failures while barely mentioning government failures—despite the latter being more common and often more destructive in practice.
Here's a question: if you genuinely believe the IMF and World Bank are so destructive, why not advocate for their abolition? Developing countries can access commercial capital markets without these institutions—from lenders not owned by the supposedly malevolent Western powers you critique.
Frankly, these institutions primarily prop up dysfunctional states that would otherwise face market discipline. Perhaps we'd all be better off letting serial defaulters like Argentina, Pakistan, and Egypt finally face the consequences of their choices rather than perpetually bailing them out.
It's because of AI. When AI drive the world now, and information widely available, the west must correct themselves before being corrected further. And AI will get high demand for countries that need industrialization therefore make their tech industry even richer.
https://openknowledge.worldbank.org/server/api/core/bitstreams/661135c3-3a0c-44a5-afe3-5217dd58e0d8/content
Human capital - the wellbeing of humans for the purpose of being used as labor - has been in steady decline under WB policy - will this new grand awakening of theirs address the need for investment in human capital as well? Healthcare, education, transportation infrastructure, access to nutritious food and wages that allow them to buy the food. I’m not seeing that in the report.
Nice reflection
Thank you for sharing
Having just finished reading Helleiner's Forgotten Foundations of Bretton Woods, this is, a very interesting 'development'...
Please forgive my free riding for the moment. Yes, I read high level anecdote, Paul Kingsnorth in South Africa talking to government in the immediate post-apartheid period. Note now the geopolitical postition of SA given the deadly wars and atrocities in what we might more rightly call W. Asia, let alone the propaganda that saturates 'the West', including EU/UK and wider Europe. Look for motives, look for policies? It may not be 'singularites' await us in short time, but tipping points, irreversible damage, who looks to secure a safer position given planetary boundaries and extractive economies?