From market failures to systemic failures: the evolving rationale for European industrial Policy

The resurgence of manufacturing in the Fourth Industrial Revolution and increased state intervention in response to rising global tensions have reignited the debate on European industrial policy. The European Commission’s focus on aligning industrial renewal with digital transition and technological sovereignty has led some scholars to posit a departure from neoliberalism. This article adopts a long-term perspective to investigate the evolution of the European Commission’s narrative on industrial policy, particularly regarding the digital transformation of manufacturing. Through a qualitative analysis of 84 Communications from 1967 to 2022, we argue that the greater prominence of state intervention signifies a reconfiguration of European industrial policy, not a paradigmatic rupture with the past. Notably, the shift from a ‘market failure’ to a ‘systemic failure’ rationale provides the European Commission with greater discretion in directing state aid and policy initiatives, even while maintaining core principles of market regulation.