Reading the responses to my article has been a valuable and eye-opening experience. Brief as they are, they point to how much we still don’t know about production in advanced industrial societies. They suggest new approaches to innovation, inequality, labor markets, demand-side theories of manufacturing renewal, and financial markets. And they show how widely an agreed-upon set of facts about manufacturing and economic performance can be interpreted. I have had my say in both Making in America: From Innovation to Market, the book that summarizes the MIT research, and in my more personal essay here, so I would like to acknowledge the generosity of the respondents and to offer some short replies.

The responses center on three issues: the impact of financial markets on American industry, the value of manufacturing, and the missing attention to labor and jobs.

On the first point, investor pressure to restructure companies in order to lift stock prices is obviously not the only factor driving the decline of manufacturing. I focus on it because it is potent, ongoing, and commonly overlooked in the standard arguments, which hinge on automation and productivity gains, the service economy, and competition from low-wage producers.

All of these have contributed in some measure, though it may not be possible to parse out exactly. As Susan Houseman and her colleagues have shown, productivity gains in manufacturing cannot account for the radical drop in employment. The heavy impact of low-wage imports on U.S. manufacturing employment was felt only after the early 2000s, with China’s entry into WTO. Yet the hollowing out of the industrial ecosystem was underway long before then. The rise of finance in the 1980s is a critical juncture.

To make growth more equitable, we still need public action.

In general, the respondents agree with the emphasis on finance. Houseman lays out the reasons why institutional investors discount long-term performance. Dan Breznitz believes that “finance is even more destructive to American innovation and investment in productive assets (human and physical)” than I suggest. Phillip Thompson also sees the negative impact of finance across the economy but challenges the claim that paying out the pensions of California teachers is connected to institutional finance in ways that systematically lead to outcomes such as the breakup of Timken. He encourages us to organize shareholders to democratize finance: “I suspect that California teachers, if they were informed and had a voice in their pension investment decisions, would be similarly concerned about manufacturing in Ohio.”

It is hard to share this optimism. Legally, the individual pension fund beneficiaries, informed or not about the impact of investment decisions made on their behalf, have no standing in the system. Power resides in the hands of the fund managers, who have no particular industry expertise. In a recent article in the magazine Strategy + Business, James O'Toole reminds us of

the rude reception GM shareholder Michael Moore received in the movie Roger & Me when he pitched up at GM headquarters in Detroit demanding a meeting with ‘his’ company’s CEO. . . . For ownership to be real, the stakes, risks, and duration of investment must be real—and the law recognizes this difference when it allows GM to deny shareholders like Moore access to company property.

Gary Herrigel challenges the claim that finance is a major contributor to vertical disintegration. Instead, he sees finance playing a positive role by reorganizing companies around their core competencies, yielding greater efficiency. I agree that there was a lot of inefficiency, excessive diversification, and “fat” in the old vertically integrated enterprises. But I do not know how Herrigel could substantiate the claim that “for every Timken, there are many ITWs or Danahers”—that is, companies that improved after breakup and restructuring. Nor does Herrigel’s claim about resilience across the business cycle seem to hold up in recent research about performance of conglomerates over the past decade.  Further, Herrigel’s argument that the real problem is income inequality, not finance, appears to discount the evidence of the role of financial markets in driving high levels of inequality between those in the top one-tenth of one percent of the income distribution and everyone else.

A second theme among respondents concerns the value of manufacturing to the economy. I urge that we focus on manufacturing because it is vital to bringing innovation to market. But another perspective, as Dean Baker argues, is to focus on trade deficits—“the low-hanging fruit in efforts to revive American manufacturing.” To deal with them, he argues, we should devalue the dollar. The two obvious difficulties would be the reactions of the foreign creditors who hold U.S. debt and the retaliatory responses of foreign countries whose industries compete with ours. But setting aside the fallout of this beggar-our-neighbors strategy (which is, I believe, what Baker means by describing it as a remedy that is “economically simple even, if the politics are not”), there is the impact on American consumers. Unless we could radically improve American manufacturing, the goods we now import could be made domestically only at high cost.

Breznitz urges a more differentiated understanding of innovation, and distinguishes between renewing incremental, process, and production innovation and the “Silicon Valley” model. He lays out valuable suggestions for encouraging production along the former lines. Catherine Tumber goes further and suggests, “The language of innovation has edged out the values and virtues of productive culture.” As Mike Rose puts it, “Even if a miracle happened and tomorrow a major shift occurred in the relationship of finance and manufacturing, we’d still be faced with a limiting web of cultural assumptions about certain types of work and the workers who do them.” Restoring U.S. manufacturing may indeed require a “cultural turn.”

Dan Luria and Joel Rogers disagree that we should value manufacturing for its role in innovation and doubt that it is a key factor in new product development. They argue that the goal should be creating more good jobs. The demand that could drive this, they say, would have to come from government. There is certainly great need for new public infrastructure of all kinds. But as even the defense budget shrinks, it is hard to see how this scenario could play out with any conceivable set of political players in Washington.

Finally, some commentators note the absence in my article of workforce issues. David Weil points to a critical link between the fissured workplace and widening income inequality. There is little likelihood of reintegrating the outsourced activities into the “mother” firm. And these are problems that rebuilding the industrial ecosystem would not fix. Here, as with Nichola Lowe’s observations on the deficiencies of the training available in small and medium-sized firms, we see weaknesses not likely to be remedied at the firm level or even through private-public cooperation. More or less manufacturing will not do it. At the end of the day, when we focus on the opportunities and the rewards at the top and bottom of the American labor market, we find no substitute for public policies that would directly address skyrocketing inequality.

What we could hope to achieve through rebuilding the industrial ecosystem would be growth in new regions—beyond Silicon Valley, Austin, and Cambridge. To make that growth more equitable, we still need public action.