The chapter summarizes the nature of capital and capitalism. The chapter also highlights concepts related to the role of the State in economic activity, and the nature of industrial policy. The initial concepts dealt with are that of capital as a fund, capital as structure and capital as capabilities. Capitalism necessitates socially organizing production. Assessing organizational and administrative contingencies is important for understanding capitalism. Institutions are the bedrock of capitalism. The broad roles of Government, in designing laws and regulations, building infrastructure and acting as entrepreneur, are discussed. The implementation of national industrial strategies facilitates growth. The nature of industrial strategies is highlighted. Industrial policy activities, as defined by the three facets of institutions, innovation and involvement, are discussed. With respect to India’s industrial strategy, independent India’s founders’ visions of a modern industrial society, grounded in a need to involve Government in institution building, are introduced.
Government versus Markets: The Changing Economic Role of the State
