Industries

This chapter gives a piece of what is known as ‘industrial economics’ or ‘industrial organization’. It concerns the ‘meso level’, between micro and macro, of industries and markets, where the causality of action really takes place, needed for insight into the ‘real economy’, with the possibilities and limits of markets and issues for regulation, tailored to the specific conditions of industries. Earlier, I proposed that the operation of markets depends on the specific characteristics of industries, in the organization of production, distribution, trade, competition and collaboration. I discuss industries in terms of the process in which value is added, in the ‘value chain’. It would go too far to discuss all industries: here I discuss a few contrasting cases to illustrate their variety, and consequent differences in the need and form of intervention. This serves as an antidote to the oversimplification concerning markets that is often exhibited. Such oversimplification was apparent, for example, in the development of the internal market in the EU. It was announced as a matter of ‘negative integration’: the simple elimination of national regulations, after which markets would automatically lead to simplicity and welfare. The truth was that every industry required its own regulation, whereby on the level of the EU complexity increased, leading to it acquiring the reputation of being a bureaucratic busybody, while on the national level complexity decreased, after it was hived off to the EU, which reinforced nostalgia for the supposedly more simple home country, although that rested on a misconception.