While his ideas were sound, it can be argued that his way of applying economic principles -- through dogged negotiations and a tendency towards micromanagement -- could have been more deftly handled. Perhaps, too, he was simply ahead of his time.

What is the role of the state in the economy? Should it direct industrial policy in a heavy-handed, dirigiste way, being deeply involved in state development and acting as a conduit for scarce resources of capital and labour?

Or should it step back, providing only the very lightest-of-touch interventions -- possibly as little as essential market regulation and antitrust -- while allowing the market free rein to allocate resources according to Adam Smith's famous concept of "the invisible hand"?

The question of where on this continuum a state positions itself -- from North Korean-style communism to libertarian free market fundamentalism -- lies at the very heart of the study of the political economy. Of course, it is not only a two-dimensional model -- on every point on the axis of state intervention there are countless variations of exactly what type and what stratagem of state intervention might precisely be applied in practice.

To debate the latest incarnations of industrial policy, some of the world's best-known economists gathered last week at the New Economy Forum outside Berlin, in a conference entitled "Winning back the people -- testing times for a new economic paradigm". Participants such as Dani Rodrik, Branko Milanovic,...