ABSTRACT
INTRODUCTION The modern Austrian school emphasizes the role of market processes in promoting discovery-market processes enable the social mobilization of tacit, inarticulated knowledge through decentralized entrepreneurial activity. The strength of this insight, combined with the historical failure of Soviet-style central planning, has for the last decade and a half placed advocates of strategic intervention in the economy very much on the defensive. Although the manifest failures of the turn to the free market during the 1980s have resulted in a revival of interest in industrial strategy, this is unlikely to be sustained unless the theoretical challenge of the Austrian school is addressed and its central insight is taken into account.
