A condition is not a mechanism. The category error in industrial policy conditionalities: a comment on Mazzucato and Rodrik’s “Industrial Policy with Conditionalities” (2026)

Abstract

Mazzucato and Rodrik’s taxonomy of industrial-policy conditionalities usefully restores public value to public-private economic strategy. This comment argues, however, that the paper commits a category error: it treats contractual conditions as if they were operational mechanisms. A condition can express an obligation, but it cannot monitor decay, detect gaming, or maintain performance through time. Industrial policy therefore needs trajectory diagnostics, including policy-induced turbulence, recovery dynamics, and Stability Overhead, to convert conditionality into governance.