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
Monday, 28 September 2026 | DoW's Office of Strategic Capital, Part I
Wednesday, 30 September 2026 | DoW's Office of Strategic Capital, Part II
- Placement Break -
Friday, 16 October, 2026 | CHIPS, Part I
Monday, 19 October 2026 | CHIPS, Part II
Wednesday, 21 October 2026 | DARPA
[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:
Mariana Mazzucato, Government, TED (2014)
Scott Lincicome & Huan Zhu, "Questioning Industrial Policy," Cato White Paper (2021), the broader systematic case against
EconTalk (podcast), "Lincicome on Industrial Policy"
Today we explore our first contemporary U.S. industrial policy program in detail: The recently established Office of Strategic Capital at the Department of Defense/War. Launched in late 2022, the office's recency gives us a relatively simple storyline for our first program. This first day on OSC will introduce us to DoW's overarching strategy for supply chain resilience and economic deterrence at the time the office was stood up, its authorizing statute, appropriations, and the details of federal credit policy.
Assigned materials:
Foundational reading: Every CRS Report, Overview of the Office of Strategic Capital (2026)
DoD, National Defense Industrial Strategy (2023-2024), read the sections on supply chain resilience and economic deterrance
DoD, OSC's Establishment Memorandum (2022)
10 U.S.C. s. 149 (2025)
Supplemental materials:
Bloomberg, Department of Cerberus (2026)
In this class, we ask the question of whether OSC's performance achieves its stated goals, raising questions of how accurate measurement of policy outcomes is achieved and whether the learning systems thinkers such as Rodrik prescribe exist in this setting.
Assigned materials:
Foundational reading: OSC, FY2025 Investment Strategy
OSC, Equipment Finance NOFA (2024)
SBA-DoD SBICCT Investment Policy Statement (2025)
OSC's first direct loan to MP Materials (2025)
OSC's conditional loan commitment to Energy Fuels (2026)
Defense One, Pentagon requests more than $20B for strategic capital loan program in 2027 (2026), and Defense One, NDAA provisions would reshape Pentagon's use of ownership stakes in private companies (2026)
Supplemental materials:
OSC, Credit Program page (2026)
CNBC, MP Materials Interview (2025)
Today we introduce a program that uses direct funding, loans, tax incentives, and negotiated conditions to reshape an entire industry. We will trace how the Department of Commerce converted broad statutory authority into an application process, milestone-based disbursement, taxpayer protections, workforce commitments, and national-security guardrails. This class brings together the recurring course questions of delegated authority, administrative capacity, conditionality, and the legal form of public investment.
Assigned materials:
Foundational reading: Congressional Research Service, Frequently Asked Questions: CHIPS Act of 2022 Provisions and Implementation, read the Summary; pp. 1–5 and 11–19; skim the semiconductor concepts and production-stage tables in the Appendix
15 U.S.C. § 4652, read subsections (a)(1)–(6), (c), and (g), focusing on application requirements, approval considerations, award forms, clawbacks, and guardrails
Commerce, CHIPS Incentives Program: Commercial Fabrication Facilities NOFO, 2024 amended version, read pp. 4–13, 20–23, and 58–68; focus on the application funnel, award design, policy conditions, evaluation, and decision process
U.S. Government Accountability Office, B-335175 (May 6, 2024), read the full six-page decision on why the commercial-facilities NOFO was a rule for Congressional Review Act purposes
Supplemental materials:
NIST, Taxpayer Protections
In the last class period, we watched Commerce turn a broad statute into an application process, milestone-based disbursement, clawbacks, and guardrails. In this class, we ask what happens to that architecture once the money starts moving and the politics change. Our case study is Intel. In August 2025, Commerce accelerated Intel's remaining CHIPS funding, removed the project milestones Intel had not yet met, and took a 9.9 percent stake in the company in return. The Intel story raises several of the course's recurring questions. Has the program maintained the conditionality that imposes discipline on an awardee? Is there statutory authority that allows a grant program to become a shareholder? Does the government have the internal capacity to oversee a portfolio of awards, not just negotiate them? And in Evans's terms of embedded autonomy, what changes when the government is grantor, regulator, customer, and shareholder of the same company? We close with measurement: what would it take to know whether CHIPS has worked, and does the program have the kind of learning system Rodrik calls for?
Assigned materials:
Foundational reading: U.S. Government Accountability Office, Semiconductors: Commerce Needs Plan to Meet CHIPS for America R&D Requirements, GAO-26-109121 (2026). Read the Highlights page, the section "Commerce and Awardees Have Continued to Make Progress on Incentives Awards and Projects," and the opening of the R&D section through the paragraph on the xLight, SandboxAQ, and I-Pulse awards.
Intel Corporation, Form 8-K (2025). Read Item 1.01 and the risk factors in Item 8.01. Pull out the two funding sources, the issued and escrowed shares, the warrant trigger, the voting agreement, and what happened to Intel's obligations under its Direct Funding Agreement.
The Lawfare Podcast, Scaling Laws: Uncle Sam Buys In: Examining the Intel Deal (2025), Peter Harrell with Kevin Frazier (~48 min.)
Supplemental materials:
Peter E. Harrell, Lawfare, The Legal Bases for Government Stakes in Private Firms (2025). Read the introduction and the sections "The Legal Authority to Take Stakes in Private Companies" and "Are There Any Limitations on the Government's Authority to Take Equity?"; you can skip the history section. Note which statute Harrell actually relies on for CHIPS.
Scott Lincicome, Cato Institute, Intel Again, Unfortunately (2025).
Sarah Abrams, The D&O Diary, Intel Derivative Suit Tests Governance Implications of Government Equity Stakes (2026, with June 2026 update)
Today we extend our deep dive into the U.S. experience by focusing on a longstanding institution -- the Defense Advanced Research Projects Agency -- that buys something different compared to our earlier case studies: technical progress under uncertainty. That progress is achieved by term-limited program managers who design programs, choose public and private sector partners, and end projects that are not working. In this class, we look at the legal tools that make this possible, the broad agency announcement and "other transactions" authority, as questions of delegated authority and administrative capacity. We also read Fuchs's account of the DARPA program manager as an embedded network agent, which builds directly on Evans's embedded autonomy. We then turn to DARPA's limits. Its programs often fail to transition into use. It is hard to measure transformation that unfolds over decades. And an agency that can coordinate technological development cannot, by itself, build manufacturing capacity at scale.
Assigned materials:
Foundational reading: Erica R. H. Fuchs, Rethinking the Role of the State in Technology Development: DARPA and the Case for Embedded Network Governance (2010; open-access reprint 2019). Read pp. 179–89 (§§ 1–2) and pp. 219–23 (§§ 6–7), using the book page numbers printed on the reprint. Focus on how the program manager reshapes networks of researchers and firms, and on what changed when DARPA turned toward established vendors.
Congressional Research Service, Defense Advanced Research Projects Agency: Overview and Issues for Congress, R45088 (2021). Read the Summary, pp. 1–8 (through "DARPA's Role in DOD and Selection of R&D Programs"), and pp. 16–17 ("Transitioning Technologies from DARPA"). Skip the funding tables.
DARPA, The Heilmeier Catechism and Program Managers (2026), two short official pages: eight questions every program must answer, and the program managers who answer them.
Voices from DARPA, Ep. 90: A DARPA Debrief. Six former program managers describe the job. One calls it "less scientist and more conductor of a complex orchestra," close to Fuchs's description of program managers as conductors.
Supplemental materials:
DARPA, Next-Generation Microelectronics Manufacturing (NGMM) (2026), a short program page. It shows DARPA standing up R&D and low-volume pilot production, and explicitly separating that from CHIPS.
Statecraft: How to Run Good DARPA Programs. Interview with a former DARPA program manager on how program managers pitch and run programs, how much autonomy they have, and how they handle failure.
Idea Machines: DARPA and Advanced Manufacturing with William Bonvillian. Bonvillian, an MIT scholar of the DARPA model, explains how it works and why getting from prototypes to manufacturing is the hard part. That fits the NGMM exercise.
These dates apply to all papers, whether you're seeking substantial writing credit or not. All deadlines below are for 10pm MT.
2 October 2026 -- Deadline to submit a paper topic (or small set of possible topics) for feedback
16 October 2026 -- Deadline to submit full outline of paper for feedback
13 November 2026 -- Deadline to submit first draft of paper for feedback
18 December 2026 -- Deadline to submit final version of paper for assessment.