On Tuesday, Vince Cable, the business secretary, announced a raft of industrial policy measures. Getting star billing was the proposal to establish a new bank for business lending, but he also proposed investments in skills, proactive government procurement, and the relaxation of health and safety regulations.

There are many questions that need to be asked about his proposals. Why does the government need a new bank when it already owns two of the biggest banks in the world – RBS and HBOS? Why is this new bank supposed to be only a virtual bank – that is, a government pot of money lent through other banks – rather than a proper bank?

Are credits and skills really the only things preventing the country from turning its scientific prowess (the country produces about 10% of world's scientific articles) into industrial competitiveness? Does Cable seriously believe abolishing health and safety regulations will help regenerate British industries, or was that just a sop for the Tory right?

Despite all these, Cable's speech signifies an important break in the history of British economic policy. For the first time in a generation, it has made industrial policy mentionable in polite circles.

For the last three decades, the British policy establishment has rejected industrial policy on three related but separate grounds. First, Britain, like other rich countries, has entered the era of post-industrial knowledge economy, in which industry is not important any more. Second, even if industry is important, it should not be promoted through industrial policy because the market is the most efficient mechanism to decide what should succeed and fail. Third, even in those limited areas where industrial policy may work, it cannot work in Britain because it, being centralising and intrusive, goes so much against the country's cultural grain – "no industrial policy please, we're British" was the idea.

However, after the 2008 financial crisis, the first two premises have been increasingly rejected.

The belief that Britain can prosper without a strong industrial base has been shattered by the revelation of the illusory nature of the country's financial sector wealth and by the inability of its manufacturing sector to stage an export boom despite a 30% devaluation since the crisis.

The crisis has also undermined the view that industrial policy cannot better the market, by showing that countries with a more effective industrial policy – ranging from Germany and Finland to South Korea and China – have been much more adept at restructuring their industries and weathering the crisis.

However, the third premise still survives. Even many of those who admit the utility of industrial policy doubt whether it can work in Britain. The British tradition, they say, values individual choices and diversity over collective goals and centralised solutions while preferring flexibility to rigid targets – all traits that are inimical to the success of industrial policy.

This view of Britishness is superficial and myopic. To put it bluntly, Britain does not do industrial policy well because it does not want to do it well, not because it cannot do it.

Indeed, as many – Brendan Barber, the outgoing general secretary of the TUC, a Guardian editorial yesterday, and Cable himself – have pointed out, Britain's recent Olympic success (from one to 29 gold medals in 16 years) is proof that the country is more than capable of doing all the things that are necessary for a successful industrial policy – setting targets, making the right investments, bringing different actors together, and enhancing skills.

Going further back in time, Britain actually invented modern industrial policy. Robert Walpole and his successors in the 18th century used trade protectionism, subsidies, government procurement and skills policy (mostly consisting of poaching skilled workers from abroad) to develop British industries, especially woollen manufacturing. Without those policies, Britain would have remained an exporter of raw wool, rather than of woollen goods, whose exports paid for the raw materials and food that it needed for the Industrial Revolution.

Walpole's policies were subsequently given a theoretical backing by Alexander Hamilton, the first US treasury secretary. Attracting severe criticisms of his "Walpolean" vision, Hamilton developed the "infant industry" argument, namely, that the government of an economically backward nation – like the US then or Britain earlier – should protect and nurture its industries until they "grow up". Following Hamilton, the US maintained the highest tariff in the world for more than a century, until the second world war. Even after trade liberalisation in the 1950s, the US government never relinquished industrial policy. Under the pretence of public R&D funding, it built up industries as important as computer, semi-conductor, aircraft, the internet, pharmaceutical, and bio-engineering.

Walpole's policies have provided the template for industrial policy not just for the US but for many other industrial policy success stories, from Germany and Sweden in the late 19th century, through France, Japan, Finland and South Korea in the late 20th century, down to today's China and Brazil.

So, there is a further sporting analogy to be had. Like so many modern sports – football, tennis, cricket, rugby, badminton, and what not – Britain invented industrial policy but other people have got much better at it because, well, they have been more serious about it. But unlike in the case of sports, Britain has even forgotten that it invented industrial policy. Only when it cures itself of this historical amnesia will it be able to have a more pragmatic attitude towards industrial policy and begin succeeding at it.