Dirigiste

Dirigiste refers to an economic policy or approach in which the state directs a large share of investment, production, and pricing decisions. A dirigiste system relies on industrial policy, planning mechanisms, and selective public ownership to coordinate development and address market failures or strategic needs. Instruments can include long-term plans, regulation of prices, subsidies, development finance, tariffs, and support for national champions, along with state-owned enterprises and public investment in key sectors.

Etymology and usage: The term is French, derived from diriger, meaning to direct. It functions as both an adjective and a noun, describing policies or policy-makers that favor strong state direction of the economy. In English-language discourse, it is often used to characterize a mode of governance rather than a fully centrally planned economy.

Historical context: Dirigisme is closely associated with postwar France, where the state played a central role in economic planning through institutions such as the Commissariat Général du Plan and a network of industrial policies. The concept is also applied more broadly to other economies that employ state-led development strategies, particularly those that emphasize coordinated investment and industrial targeting rather than pure market liberalism.

Characteristics and instruments: A dirigiste regime may set strategic priorities, steer private investment, regulate or guide sectors deemed vital, finance or operate public enterprises, and use development banks to channel credit. The aim is to accelerate modernization, stabilize growth, and ensure resilience in critical industries.

Criticism and defense: Critics argue that dirigisme can distort markets, create inefficiencies, and foster rent-seeking. Proponents contend it can correct market failures, coordinate long-term modernization, and achieve strategic goals that markets alone cannot reliably deliver.