MITTERRAND'S TERM: A BALANCE SHEET

Harrington, Michael

When Francois Mitterrand came to power in 1981, he promised a "rupture with capitalism." If his policies of the first year were not the clean break with the past they were supposed to be, they...

...Even with Giscard's shift, though, the conservatism was primarily in economic policy and the government remained committed to high social expenditures despite lowered growth rates...
...It is, however, of some moment that Mitterrand's France outperformed Thatcher's Britain on just about every economic index of success...
...That spirit, the product of a sudden and stunning victory after years in the political wilderness, did not dispose the new government to probe the weaknesses of the system they had so relentlessly criticized...
...That meant that rapid expansion tended to yield an increasing balance-of-payments deficit as foreign machines were installed in French factories...
...Rather, it would adapt France to the world market, emphasizing those productive activities that it could do best (the "creneaux") and relying on imports for the rest...
...The experience in every case was disillusioning for a movement that once had thought public ownership was the key to justice and freedom...
...It is almost always wrong, Kolm argued, to try to redistribute income through wage increases because there is always the danger that such a policy will become, as it did in France in 1981-82, an employment disincentive...
...Capitalism, they rightly said, had a powerful logic of its own...
...He provided various subsidies and cut the payroll contributions for medical care...
...The blue-collar working class, one of the surest signs of Fordist development, rose by 50 percent, compared to a 33 percent increase in the labor force as a whole...
...The agitator's myth of a sudden, dramatic leap from capitalism to socialism perished the minute such a reality intervened...
...The result of even this meager shift was fascinating, but not too comforting for a leftist...
...If one tries to deal with the crisis of Fordism by raising social benefits and protecting the jobless, which Giscard did, then at a time of falling government income as a result of faltering growth it is necessary to raise taxes...
...So one of the priorities of the new Socialist government was to increase the rights of workers on the shop floor...
...the average wage was increased by 11 percent...
...Even though Fordism was realized through government programs rather than by an agreement among sophisticated capitalists, the fact that the system, for all of the real gains for the people which it entailed, favored the corporate rich was very much in his spirit...
...In the long run the answer is shocking: nothing...
...But when the rhetoric was discounted, the policy prescriptions were Keynesian—radically Keynesian, but Keynesian nevertheless...
...Their real value fell and profits absorbed all the positive gains from productivity...
...There is no need, Rocard and Delors argued, for Paris to pay for 100 percent of an enterprise that is targeted for government ownership...
...Later on, it was realized that it was quite possible such reductions in working hours might reduce the number of firings, which was the social equivalent of new hires, and the rules were relaxed...
...Backtracking with Honor THE DRAMATIC REVERSAL in French Socialist strategy gathered momentum throughout the second half of 1982 and then became official policy in March 1983...
...There are many things that might be done about it— making the French social security tax progressive rather than regressive is an obvious step— but it is impossible, if one takes the tax system as a given, to stimulate growth through a fiscal policy that manufactures employment disincentives for business...
...Perhaps a bit of history is in order to place this into its proper context...
...If that had happened, if the French recovery of 1981-82 had been part of the worldwide surge, then all of the Socialists' problems would hardly have been solved, but they would certainly have been much easier to deal with...
...Rather than simply allowing the jobless rate to soar and to reduce wages in that classic free-market fashion, the government adopted a program of controlled austerity...
...The Socialists easily introduced the fifth week of vacation for all workers as a down payment on their efforts to create employment by reducing hours and as a step in the direction of the new 87 mode of life...
...Between 1981 and 1985, France paid 150 billion francs to the previous owners of newly nationalized property...
...Mitterrand and his comrades had collided with the structural problems of modern capitalism, and these are neither French nor confined to the 1980s...
...The reason was that even those corporations that participated, under the economic conditions in France at that time, did not take on new workers, but simply made do with fewer hands...
...One reason for this error was that the French left had been in opposition too long...
...And yet, even though I am convinced by Kolm's practical advice, it must be added that, if the hoped-for expansion had really taken place, the negative impact would have been considerably less...
...The government would no longer support the "crippled ducks" of industry...
...In 1971, the newly united Socialist party was still relatively cautious in policy matters, even though its language was bold...
...Raymond Barre's "strong franc" to curb "imported inflation" had failed miserably, and when Mitterrand took over, prices were already rising at a double-digit rate...
...But the expansion was nowhere near vigorous enough to compensate for the rise in wage costs resulting from Mitterrand's eminently decent policies...
...The minimum wage was indexed and 83 raised by 30 percent...
...Let me be fair...
...French "indicative planning" has been rightly called a "conspiracy in the public interest" on the part of the corporations and the government—a conspiracy that, not surprisingly, enormously benefited the corporate conspirators...
...As time went on, structural changes that had been undertaken in the name of a radical future became increasingly technocratic...
...Yet the socialist strategy of the one and the supply-side tactics of the other shared a common assumption: that growth on the old Fordist model was still quite possible (Reaganites, like the economist Arthur Laffer, often described themselves as John Kennedy Keynesians...
...But if the budget became more restrictive, there were also programs, borrowed from the Swedish socialists, to create public-sector jobs...
...Unions were weak—their strength rose sharply during the Popular Front but declined quickly after that brief interlude—and national labor legislation, like mandatory vacations, was much more important than collectivebargaining agreements...
...In the economy as a whole, the average hourly wage went up by 16 percent between the first trimester of 1981 and the first trimester of 1982...
...and, as the crisis deepened, the public sector sometimes dug in to resist modernization and change...
...He honored the clenched fist of working-class history and the poetic rose of May 1968...
...There was yet another consequence of the inherited structural weaknesses of the economy: The Socialist stimulus created new jobs in West Germany, Japan, and the United States, as much as, or more than, in France...
...In this view, a concerted shift of technology and funds from North to South would create booms for the affluent as well as justice for the wretched of the earth...
...Then, from 1958 to 1981, de Gaulle and his heirs utterly dominated the Fifth Republic...
...The problem was, the work-sharing idea required the employed labor force to make sacrifices...
...The French Socialists were well aware that 86 such policies would, all other things being equal, increase the cost of labor, particularly in small and medium enterprises (which were more likely to have low-wage workers) and in labor-intensive industries...
...In May of 1981, right after Mitterrand was elected, capital flight reached 2 billion francs a day, and the right belligerently asserted that the Socialists would bring about a ruinous inflation...
...In Mitterrand's case, these problems were exacerbated by the hostility of bankers, national and international, to the Socialists...
...But there was a distinctively French accent to this Fordism...
...This is one of those utterly unfair limitations that 88 the autocratic power of money places upon the democratic power of the electorate...
...The government came out for the latter interpretation...
...Yet the Socialists, at the moment of Fordist failure, looked for the kind of economic growth only attained at the height of Fordist success...
...Brandt's commission on North-South economic relations had urged an international recovery from the "common crisis" of the rich and poor lands...
...They 89 were going to reshape the structure of the economy through an industrial policy based on dynamic nationalized companies...
...That was, of course, precisely when the Reagan administration lucked into its demand-side recovery despite its supply-side policies...
...So it was that, in 1968, a student revolt against the bureaucratic conservatism of the educational system set off a general strike of the working class...
...But, since the cost of health continued to rise, this stimulus helped create the "Mitterrand" deficit of 1982...
...It demanded, for instance, a certain minimal level of profits to make the system work, since even a nationalized enterprise must have a surplus to finance new investment and depreciation...
...But then, in 1975, at the Congress of Pau, and even more dramatically in 1979, at the Congress of Metz, it announced the "rupture with capitalism...
...The "contracts of solidarity" are an excellent case in point...
...90 What then went wrong with such an eminently practical project...
...When the government hit the brakes on consumer spending in the spring of 1982 and declared a pay pause, the smicards were exempted from the new rules, and there were new taxes on income and wealth...
...How does the left gradually and democratically transform a system when it must operate within that system...
...and in France itself, Electricity of France (EDF) and the rail system (SNCF) were fast-moving enterprises...
...BUT ALL OF THESE QUALIFICATIONS, important as they are, are not the central lesson to be drawn here...
...Postwar Capitalism FRENCH CAPITALISM BEFORE WORLD WAR II had been paternalistic, family-controlled, anti-innovative...
...The normal criteria of the management of industrial enterprises will apply to your group: The different activities should realize results that will assure the development of the enterprise and guarantee that the profitability of the invested capital will be normal...
...But then in 1976 Giscard appointed Raymond Barre prime minister and finally made a turn to the right, a move that was facilitated by the breakdown of the Union of the Left when the Communists realized that they had become junior partners in that alliance...
...Ironically, the Socialists' critique of Giscard in the 1981 electoral campaign was too gentle...
...But he did not turn his back on the social-wage policies that de Gaulle had adopted in 1968...
...The "rupture with capitalism" was supposed to create a radical-system logic based upon the creation of a new, decentralized mode of social life and of worker participation in all management decisions...
...The inevitable acronym for the law was le SMIC, and those who received that wage were called the smicards...
...So Mitterrand settled for thirty-nine-hours' work at thirty-ninehours' pay...
...That is clearly a permanent gain achieved by the Mitterrand government, and the opposition in power will not dare to repeal it...
...After all, the experts at the Organization for Economic Cooperation and Development (OECD)—an exclusive club of the rich nations—predicted in June of 1981 that the world economy was on the way to recovery and said that its member countries would experience 2 percent growth in GNP volume in 1982, with a brisk increase in trade as well...
...Indeed, Mitterrand's retreat was even read as a homage to Reagan's philosophy...
...Thus, the crisis of mass production struck a cruel blow at the export sector and was much more gentle with West Germany, which specialized in quality and high-tech goods...
...In part, that failure was accentuated by the position of France—or, for that matter, of Europe—in the world market...
...But given the extremely limited nature of the workers' new rights—and the mood of "moroseness" that settled over the society not too long after the euphoria of May 1981—that pragmatic bonus from living up to an ideal was not forthcoming...
...It would be a major error to reject some of the French Socialists' innovations that failed, not because they were inherently wrong, but because of the impossible conditions under which they were carried out...
...In a sense, Giscard had made France too dependent upon its trade with the Third World...
...Then the semianarchist focus of the 1968 rising revived that suspicion and the emergent Catholic left—sometimes called the "second left"—took it up...
...The economic agreements between the government and the workers (the "rue de Grenelle" compact) had a much more profound impact on France than the graffiti on the Sorbonne walls, symptomatic as the latter were...
...On the day after the Socialist government decided to go ahead with the nationalizations, the newspaper Le Quotidien de Paris headlined a story: "France Entered Socialism Yesterday...
...Then, a policy error played an important role...
...We are not "social democrats," the French insisted prior to 1981...
...They summoned the nation to take a voyage of economic adventure in a leaky boat...
...Proudhon, Jaures, and Guesde were all concerned lest the "cop state" (1'etat-gendarme) turn into the "boss state" (l'êtat-patron...
...Fifty percent is quite enough—and much less expensive...
...Francois Mitterrand proved that a decent and humane version of Keynesianism at the service of the poorest people in his society was not adequate to deal with the crisis of the 1980s...
...Still, on balance, devaluation would have been a positive move, and it was not made because of the euphoria attendant upon a sudden and unexpected gift of power...
...One of the consequences of genuine worker control (or even the illusion of that control) is that productivity goes up...
...During more than half a century, then, one counted the periods of left dominance in months...
...In the days after the presidential election, several of Mitterrand's comrades, including his arch-intraparty rival, Michel Rocard, rightly told him to devalue the franc at once...
...At the beginning of the Common Market, France produced 85 percent of its equipment needs, but when the crisis hit in the 1970s, that figure had dropped to 74 percent...
...The Communists stuck to their beloved Soviet model...
...These did not, of course, come, but there was a considerable transformation in that first period after the Liberation...
...The change in the human character of production was to be implemented through the Auroux laws, giving workers a voice on the factory floor...
...That is to miss the essential...
...Second, although the Auroux laws were unquestionably progressive (and, according to a survey by the London Economist in 1984, have even been accepted by those business circles that originally saw them as Bolshevism incarnate), they fell far, far short of the ideal of selfmanaged socialism...
...In some cases, this was done in the name of socialist (or anti-Fascist) ideals, e.g., Britain, France...
...The point, however, is to learn from the mistakes and partial successes of Francois Mitterrand, so that the next left will not be forced into an honorable, but humilitating, retreat...
...But the Socialists, acting on the basis of a variety of traditions, were hostile to that idea...
...q This article is excerpted, with permission, from a forthcoming book, The Next Left: The History of a Future by Michael Harrington, to be published in the winter of 1987 by Henry Holt and Company...
...The social security system, which was set up in 1945, was supposed to provide a "general regime" for everyone in the country, but Gallic corporatism soon amended that dream...
...Third, the successful restructuring of companies wrecked by private management was a long-term proposition...
...they had reached 33.7 percent by 1980...
...But Giscard did change on the economic front, a fact that was to have fateful consequences for Mitterrand and the Socialists...
...The nationalizations, then, were somewhat schizophrenic: They were to be part of the new mode of life and, at the same time, the Archimedean point for industrial policy...
...In France, however, the tax system is heavily skewed toward levies on employers (in American terms, "payroll taxes...
...Then, in 1975, Giscard's prime minister, Jacques Chirac, launched a government-stimulated recovery with large export subsidies...
...So he failed in the great experiment of 1981-82, and then, ironically, did rather well in following capitalist policies with socialist modifications between 1982 and 1986...
...That explosion was part of a similar phenomenon that occurred throughout the West as the very success of Fordism emboldened both the workers and the emergent social strata...
...yet the Western, and particularly American, press was much more understanding of the problems of Downing Street than of those in the Elysee...
...At the same time, social benefits, measured in real terms, went up by 6.2 percent...
...They did not realize how profoundly he had undercut the Gaullist idea of a self-sufficient France, or how rundown the industrial plant had been allowed to become...
...82 same system...
...Mass consumption, the 1971 program argued in the classic Fordist mode, is necessary for capital accumulation...
...The Socialists, after all, could not manage to follow their own national Keynesian strategy...
...French unions, by contrast, enrolled the smallest percentage of the labor force in Europe...
...What is relevant is that, all the facile assertions of Mitterrand becoming a Reaganite notwithstanding, the French Socialists remained quite socialistic in retreat...
...All this, mind you, under the "right," which has now developed the usual case of amnesia about its own history...
...But then the Socialists had something of an answer to this constellation of problems...
...It talked of both "the dictatorship of profit" and a "new model of growth...
...Reagan did indeed stumble into a demand-side Keynesian recovery that had little to do with his program and much to do with the exceptional position of the United States in the world...
...Between 1928 and 1958, the parties of the left—the Socialists, Communists, and Radicals—had won a majority in every election, but had been unable to unite, and leadership passed to the center-right...
...Copyright 0 1986 by Michael Harrington...
...When de Gaulle returned to power in 1958, and particularly after the Algerian war ended in the early 1960s, there was another period of rapid economic and social transformation...
...The new government practiced a "solidaristic" wage policy, i.e., providing the greatest increases for those at the bottom of the occupational structure in an attempt to decrease inequality in the working class...
...It was almost impossible for a public company to show a profit while carrying such an enormous load of debt or, more precisely, for the state to do so...
...on the other hand he sought to create not simply growth, but a new model of consumption, a qualitative rather than a quantitative change...
...The London Economist summarized the consequences in a 1984 retrospect on Mitterrand's victory: "The Socialists thought they would nationalize a phalanx of rich industrial concerns that could be used to boost output, jobs, and national wealth...
...There was also a considerable nationalization of industry, including the takeover of Renault, destined to be a symbol of leftwing success for years to come...
...One must live in a new way...
...As it gradually became apparent that the American economy was on the move, and France under the Socialists was not only in retreat but stagnating, the contrast between Paris and Washington was all but chiseled in stone on both sides of the Atlantic...
...De Gaulle embraced a supply-side Fordism with a vengeance as the state was mobilized to create large-scale industries capable of competing on the world market...
...Every lack of efficiency would in effect have an impact on the entire French economy...
...An article in the Financial Times noted in early 1986 that "the assets taken over in 1982 for 45 billion francs on the basis of the prevailing stock market prices . . . are now valued at about 150 billion francs...
...History, I believe, will be much kinder to the French Socialists than journalism has been...
...The latter were high-tech capital and consumer goods, and their importance was underlined by an increasing foreign presence within the French economy itself...
...There is obviously a profound irony here and we will return to it when we consider whether Francois Mitterrand might turn out to have been the savior of French capitalism...
...As a result, by the middle of 1982, the soaring hopes that had accompanied the great legislative surge—not just nationalizations, but wage policy, the fifth week of vacation, early retirement and all the rest—ended, and the Socialist government adopted a policy of capitalist rigor...
...If one abandons the Leninist illusion that it is possible in an advanced capitalist democracy simply to "smash" the bourgeois state and proceed to the revolutionary reconstruction of the entire society—as most European communists and all European socialists had done by 1981—then how does one carry out radical change...
...If, then, taxes were increased to deal with the problems of the crisis, hiring a new worker becomes more expensive, profits are reduced, investment falls, and joblessness goes up as a result...
...The Communist-led federation as well as the more traditional business unionists rejected sacrifice...
...One answer has already been given: The Socialists did not know how broken-down the new public properties were...
...The same thing happened, the readers of Karl Marx's Das Kapital will remember, when the British introduced the Ten Hours Law in the middle of the nineteenth century...
...Communists, Socialists, and social Catholics, as well as General de Gaulle himself, were committed to a new beginning...
...Something like that happened in Sweden under Olof Palme's Socialists in 1982 and 1983...
...But when it came to the thirty-five-hour week, things became difficult then impossible...
...The problem had already been posed—and in no way solved—under Giscard...
...The point, however, is not to excuse Mitterrand by indicting Barre, but to say that Fordist assumptions were shared—left, right, and center—in France in 1981...
...Then, even though wages were going up, unit costs would come down because of a huge increase in volume and productivity gains from an optimistic work force...
...It was not enough, the Socialists said, simply to live better...
...At the same time, the French growth rate was more stable than that of any other industrialized country during this period...
...The industrial plant was simply not capable of taking advantage of the burst of prosperity that took place in the second half of 1981 and early 1982...
...Strangely, the French Socialist experience was dramatic proof of an eminently left-wing theory...
...Worse, the "external constraint," above all the limits that a growing balance-of-payments deficit placed upon Paris in its internal economic policy, became one of the principal causes of the failure of the domestic socialist vision...
...Mitterrand, give us some sunshine...
...Alain Gomez, a founder of the Marxist left wing of the Socialist party, CERES, and a new official in the public sector, was even blunter: "My job is to get surplus value...
...But total taxes—adding in social security and consumption charges—were 44.07 percent of the GDP in France as against 31.9 percent in West Germany...
...In the immediate postwar period in Europe, the nationalized sector was expanded in almost every country (the most dramatic exception was Sweden under the Socialists...
...With great imagination, the government offered a subsidy—significantly, a reduction in social security payments for new hires—to businesses that would "contract" to reduce the work day by more than two hours...
...The moderate Fordism of the right had failed—and now the Socialists proposed to initiate a radical Fordism on that structurally flawed base...
...When that happened in the 1970s and 1980s, the acquired company had to be starved of cash in order to finance its own acquisition...
...Fordism" was named after Henry Ford—by Antonio Gramsci, among others—because he was one of the first to realize that mass production required mass consumption...
...This has nothing to do with the techniques that must be put in motion to produce that wealth...
...A goodly portion of those sales was classically "Fordist" goods in public projects (airports, desalination equipment, dams...
...Did it mean thirty-fivehours' work at forty-hours' pay—or at thirtyfivehours' pay...
...Consumption was partially socialized, as it was in every Western nation...
...The letter to the administrators of the nationalized enterprises said: "You will seek, first of all, economic efficiency through a constant bettering of productivity...
...we are "socialists...
...The "planetary New Deal" that the Socialists proposed did not save them from these contradictions...
...There was a vogue among the intellectuals—as trendy and superficial as much of the leftism prior to 198i—for supply-side panaceas...
...One might argue that Mitterrand had discovered, and followed the path of, the radical John Maynard Keynes defined by Joan Robinson and systematically ignored in Britain and the United States...
...That apocalyptic judgment stands in sharp contrast to the actual Socialist policy decreed for the nationalized industries later...
...Now, however, Mitterrand's seven-year presidency and the Socialists' absolute majority in the Assembly did not allow the luxury of such glorious defeats...
...They were stuck with power...
...That is, if one departs from the 1980 levels of unemployment, then joblessness rose between 1981 and 1984 in France by 2 points, by 3.7 points in West Germany, and by 5.2 points in Britain...
...Between March of 1981, shortly before the Mitterrand victory, and July of 1982, when second thoughts had already begun, the smicards saw their pay rise by 29 percent...
...As Alain Lipietz well put it, "to make capital pay . . . when one expects it to create jobs is an insoluble contradiction...
...EXPORTS DID INDEED CLIMB-but weighted in the direction of the Third World—and so did imports...
...That was a case of critics living in glass houses throwing rocks...
...He became president just as the French, and world, economies entered the recession of 1974-75...
...In essence, the workers were given the right to speak up on issues affecting their industry—which was a gain— but they got no power to make decisions...
...Growth had become, in part at least, perverse, as de Gaulle's heirs mortgaged French economic sovereignty and made the general's worst dreams come true—but under circumstances that were to bedevil his most severe critics...
...Transfer payments had accounted for 20.1 percent of disposable income in 1970...
...And so they did, but not at all in the way they anticipated...
...De Gaulle and the conservatives thus responded to the first signs of a crisis by an intensification of the Fordist strategy...
...The system was modified by "special regimes" that favored the interests of particular groups, and it was financed in a way that helped the middle and upper classes and discriminated against the workers...
...This was part of a larger trend whereby the social wage in France went up dramatically throughout the late sixties and seventies...
...Perhaps the most important single disappointment had to do with the failure to move toward the thirty-five-hour week...
...Still, it must be sadly noted that the contracts of solidarity did not even begin to create the employment the Socialists hoped for...
...Or did it...
...Renault was an internationally competitive carmaker...
...It was, however, Valery Giscard d'Estaing who was to face up to the crisis itself in the 1970s...
...91 So it was that, in June of 1985, Jacques Chirac, who had launched an expansion quite similar to Mitterrand's in 1975, declared himself a born-again free enterpriser at a meeting of the opposition in Paris...
...What were they going to do with it...
...As Jacques Chirac, one of the leaders of the anti-Socialist opposition, put it in 1985, "the social democratic model of society .. . more or less inspired all of the governments of our country since the Liberation...
...And in the second half of 1981, France did indeed buck the international trends, in part—ironically—because of Raymond Barre's attempt to put Keynesianism to work reelecting Giscard...
...This was the period when Jean Monnet and his associates introduced the idea and practice of national planning (which they borrowed in part from the American experience with the War Production Board, a success the United States was determined to forget as quickly as possible...
...Under such circumstances, "soaking the rich" by raising taxes on production is selfdefeating...
...In fact, the French Socialists in power were driven to adapt to capitalism to a much greater degree than the social democrats who had come in during the Great Prosperity, when there was room to maneuver...
...Nationalization as Panacea To MANY PEOPLE, nationalization is the sovereign leftist remedy...
...Between 1960 and 1973— the heyday of the Great Prosperity—the GDP rose by 5.6 percent (almost double the rate of the 1970s...
...So the Socialists thought—and the idea was not at all preposterous at the time—that their social expenditures would enlarge the market and encourage business to expand...
...A MAVERICK FRENCH ECONOMIST Who sometimes advised Mitterrand in this period, SergeChristophe Kolm, drew some important conclusions from this experience...
...In the 1970s, the nationalized sector in France had been much more dynamic than the private companies...
...the stimulation of mass consumption within the old Fordist structures will not yield the Fordist results of the 1950s and 1960s...
...So "the struggle for the increase in wages is far from counterposed in itself to the logic of the capitalist system...
...In the first and strictest formulation of the policy, the company only got the tax cut if it actually employed new workers...
...Instead, with 84 one or two exceptions, the state had acquired, at high cost, a collection of debt-ridden, wheezing remnants of the go-go years of Gaullist giantism...
...By 1978, it had climbed to 39.5 percent and in 1980, it reached 42.8 percent...
...Mitterrand and company had insisted strenuously on this point while on the road to power—and then ignored it in the moment of their triumph...
...Nationalization bailed out incompetent private capitalists by compensating them for broken-down mines and factories...
...But they assumed that the virtuous circle of growth would, on the classic Fordist model, save them from that contradiction...
...By 1981, there was hardly a socialist in all of Europe who thought that nationalization was the innovation of the left...
...The French Communists, one of the most Stalinist of parties in the democratic world, were for straightforward nationalization...
...At the cabinet meeting at which the decision was made to go ahead with the nationalizations, there was a fateful debate that pitted Michel Rocard, Jacques Delors, and Robert Badinter against most of the rest of the ministers and (the decisive factor) against the president...
...France, then, was a case in point of the triumph of Fordism* throughout the West...
...It would have cheapened exports but, precisely because Giscard and Barre had so radically weakened France's industrial base, it would also have made all those capital goods that had to be imported that much more expensive...
...In this setting, the vision of France taking the lead in a "planetary New Deal" was consigned to the museum of old rhetoric...
...But Sweden (and Austria, which followed similar policies) has a labor movement that organizes almost the entire work force and is committed to "solidaristic" values...
...Strangely enough, one critical problem with the application of this vision had to do with the Socialists' failure to understand how badly their predecessors had managed the economy...
...Productivity did rise sharply in 1982, but not because enthusiastic workers made greater efforts...
...In the 1980s, income taxes took only 5.6 percent of the GDP as compared to 10.8 percent in West Germany, France's main European competitor...
...They made significant, even wrenching, concessions, particularly in their acceptance of economic firings, but they attempted to mitigate the effect of their own policies at every turn...
...As the democratic Marxist Alain Lipietz put it, "the sacrifices demanded of households were characterized, as far as their allocation was concerned, by considerations of social justice...
...And yet, Mitterrand's version of Fordism was distinctively socialist in both the traditional and new sense of the word...
...The social democrats of Europe, the French left went on to say, had obeyed this capitalist imperative and therefore, even though they had made significant reforms, they had done little or nothing to change the structure of power and wealth...
...But Mitterrand went ahead with the 100 percent buyouts...
...Moreover, it was hardly designed to work at a time when the nonoil Third World was still reeling from the second oil shock of 1979 and the impact of soaring American interest rates on its energy costs and debt burdens...
...Given the double-digit inflation inherited from Giscard and Barre, that translated into an increase in real buying power of 3.5 percent...
...But on his inauguration day, the new president told his prime minister, "One does not devalue the money of a country that has just given you a vote of confidence...
...He simultaneously insisted on an industrial policy that was to be based on a dynamic nationalized sector, and pushed for the reduction of the workweek and year...
...Indeed, there was even a mystique that made a virtue out of this tragedy: It was seen as a glory of the Popular Front that it put through its reforms quickly and then failed...
...But at the same time, there was a considerable growth in the new salaried strata, a harbinger of the coming crisis of Fordism and an important constituency for a revived French socialism...
...If the former were the case, then even the most fervent Socialist advocate of growth understood that the resulting increase in labor costs would act as a massive employment disincentive...
...These programs had the effect of "socializing" a portion of society's consumption by guaranteeing minimal levels of buying power no matter what the state of the business cycle...
...But there was another motive for taking over from private corporations and it was somewhat strange: The Socialists were furious that the capitalists refused to behave like capitalists...
...But if, under full-employment policies, it were once again possible for the left to unite social justice and efficiency, then this way of providing very specific rewards to enterprises that accomplish a public purpose strikes me as imaginative and quite usable...
...Between 1973 and 1978, when the government was vigorously subsidizing exports, commerce with the developing countries rose by a whopping 191 percent (compared to a 99 percent increase with the advanced economies...
...The minimum-wage law in France was baptized the "Salaire Minimum Interprofessionnel de Croissance" ("the Minimum Wage of Growth") after 1968 when all sides were agreed that growth would go on forever...
...Given the fact that, as the Bank for International Settlements so candidly recognized, Reaganomics does not apply in a second-rank economy with a vulnerable currency, one can expect widespread disillusionment on the right in the not-too-distant future if its 1986 campaign promises are kept...
...So part of the Socialist critique of Giscard and the right was that the capitalists had failed to carry out their traditional role of accumulation and innovation...
...Many of the tendencies in the French workers' movement in the late nineteenth and early twentieth centuries were opposed to government ownership...
...For now, we will turn to the bad news, which was much more common than the good in the first years of Mitterrand's rule...
...In a mixed economy, there was a rationale for the socialist promotion of profits in both the public and private sectors...
...That problem was further compounded, because the way in which the Socialist reforms were financed led to a greater deterioration in the employment situation...
...Moreover, one aspect of the French experience can be taken as a very empirical refutation of "supply-side" dogma: When the profits of French capital increased dramatically in 1984, investment stagnated, not the least because the profits had risen as a result of holding down consumption...
...The consequences were, in part, not dissimilar to a corporate takeover with borrowed money in the United States...
...in some cases, it was a result of the nationalization of enterprises that had cooperated with the Nazis, e.g., France, Austria...
...The barricades of revolutionary students in the Latin Quarter got most of the world media attention in France in 1968, but that was only the most obvious aspect of a complex event...
...This, however, is not what he and the French Socialists originally had in mind...
...That problem has been around since the end of World War I when the socialist parties of Europe were suddenly confronted with the contradictions of partial, limited power within a system hostile to that power...
...I do not cite these facts to sugarcoat the bitter pill of Socialist failure...
...In 1981, in France—that is, in the middle of a world crisis in a second-rank economy—these limitations were intolerable...
...But a new accent was heard in a dispute between the Socialists and their Communist partners...
...Even more to the present point, the Socialists succeeded in their efforts...
...In the first half of 1982, imports from West Germany rose by 29 percent, even though the volume of world trade was being reduced...
...This reflects the general increase in share prices on the Bourse which have almost trebled since the left came to power...
...Wage policy, then, for all of its excellent social values, had the unintended consequence of making it more difficult for an enterprise to hire new workers...
...That is, at every point they tried to defend the unemployed, the poorly paid, and the others on whose behalf they had so confidently acted in 1981...
...The Resistance was conscious of these trends and was determined not simply to defeat the Nazis, but to build a new society after the victory...
...Why did the nationalizations fail to meet their goal at that time...
...The "wall of money" so often evoked by the French left is quite real, even if it is sometimes used as an excuse...
...Like Mitterrand later, Giscard faced both a balanceof-payments and an inflation problem shortly after he undertook his expansionist program...
...More broadly, there was social traditionalism even as economic change was radically transforming the country...
...Mitterrand, it is thought, was acting on the basis of a worn-out formula in 1982...
...the nationalizations were to spark investment and competition...
...They were, if truth be told, too modest to raise much revenue, but aggressive enough to make the rich even more surly...
...As Richard Kuisel put it, "What was unique about France was the way a collective sense of national decline and disenchantment with the liberal [free-enterprise] order provided the fundamental impetus for change...
...There was an ironic confirmation of this fact, largely unrecognized at the time, which was to cause Mitterrand trouble after he took power...
...Mitterrand was wrong in this proud position, but that is not to say that devaluation would have solved all his problems...
...During those Gaullist years of modernization and national Keynesianism, real wages were held down in order to finance the rationalization of the economy...
...In part, these "leftist" responses to the crisis—including measures that made it more difficult to fire a worker—were a tribute to the fact that Mitterrand had come within 1 percent of winning the presidency in 1974 and that the Union of the Left, which united the Socialists and the Communists, seemed to have the potential of gaining a majority in the National Assembly in 1978...
...This idea owed much to Mitterrand's comrade, and president of the Socialist International, Willy Brandt...
...That strategy was never put forward as a way out of the crisis for a single, second-rank economy...
...The more powerful a labor movement, the more pervasive its organization, the more likely it is to articulate a "general interest" rather than the particular demands of a section of the work force...
...Moreover, the takeovers were focused on industries that were already semipublic (airplane construction, steel, nonferrous metals, all heavily involved with the state for years) or were considered to be vanguard technologies of national importance (electronics, chemistry, glass...
...Rather, management tightened up its procedures and, through increased discipline, "overcompensated" for the lost time...
...In France, only the Democratic French Confederation of Labor (CFDT) supported work-shar-ing (it was influenced by its own Catholic heritage as well as by the Italian Communist party...
...Wages were deindexed...
...it often operated in a very capitalist fashion...
...On the contrary, Giscard presented himself as a "social democrat" of sorts, paying a visit to a prison where he shook hands with some of the inmates, inviting a group of immigrant workers to breakfast with him at the Elysee Palace...
...One of the centerpieces of the first Mitterrand year—during which practically every campaign promise was redeemed—was the increase in buying power for the least-paid workers...
...If it is fair to argue that Francois Mitterrand inherited many pressing problems from his conservative predecessors, one must add, as Alain Lipietz has remarked, that it was inexcusable for the Socialists to have been ignorant of that fact...
...One should finance transfers from the better-off to the worst-off, he continued, by means that do not have a negative impact on the cost of production (either through income taxes or through profitsharing not proportionate to wages, i.e., benefiting the lowest-paid the most, etc...
...But unlike Reagan, Mitterrand was not temporarily exempt from the rules of the market...
...If, they said, private enterprise would not invest in the future, then the public would have to do so...
...The dependence on capital goods was even more severe, reaching 50 percent under Giscard...
...If they had realized that Giscard and Barre had structurally weakened France so that the old Gaullist dirigisme no longer worked, they might have hesitated in trying to create a much more imaginative, "68-ish," version of that *"Fordism", explained in an earlier chapter of the book, refers to the mass-production technology pioneered by Ford, the blue-collar working class and its political movement that resulted from that technology, and the government programs that were developed in response to these complex shifts—unemployment insurance, Social Security, the provision of a framework for collective bargaining which gave some weight to the wage claims of workers, etc...
...The Socialists stressed decentralization, worker self-management, a new kind of participatory democracy at the point of production...
...So the first program was both "Marxistical" (marxisant in French) and 85 1968-ish...
...In the months prior to the election, the arch free marketeer of France and prime minister under Giscard, Raymond Barre, took some planks from the Socialist program that he was denouncing and attempted to use government power to reflate the economy in time for the vote...
...There was, in short, a very empirical, nonideological argument for what Mitterrand proposed in this area...
...The social policies and priorities of Frangois Mitterrand and Ronald Reagan were diametrically opposed...
...There was a critical ambiguity in the thirtyfivehour week slogan...
...Small wonder that, on the rainy May night in 1981, when the Parisian Socialists celebrated Mitterrand's victory, there were those in the crowd who chanted, "Mitterrand, du soleil...
...To be 'left' is to have a certain idea of the allocation of the national wealth...
...Between 1965 and 1973, the public spending portion of the GDP was around 35-36 percent...
...But if it meant thirty-five hours of work for thirty-five hours of wages, then it was essentially a work-sharing proposal and required that employed workers be willing to take an income cut in order to open up places for their unemployed comrades...
...Worse, they made the same underestimation of conservative failure when they prepared their own plans...
...They were, and are, the rough equivalent of the working poor in the United States...
...That conservatives were responsible for most of the leaks must be taken into consideration in any moral accounting—but it is politically and economically irrelevant...
...With the agreement of the unions, Palme devalued the Swedish krona, made exports more competitive, increased employment, and reduced the real income of those with a job, most of whom had voted for him...
...Still, "Keynesianism in one country" is not possible, except for a brief period in the United States...
...If his policies of the first year were not the clean break with the past they were supposed to be, they were an audaciously consistent and quite socialist version of that Keynesianism which, in its technocratic guise, had dominated France since 1945...
...The French center-right, which dominated the postwar period until Mitterrand's victory, imitated the more conventional Keynes...
...This was one of the reasons why the French Socialists talked of "self-managed" socialism, of decentralization and participatory ownership...
...THERE IS AN IMPORTANT COMPLEXITY HERE, one that Americans, with a union percentage similar to France's, don't normally understand...
...the Airbus, in some ways a spin-off from the Concorde project, had taken a portion of the world airplane market away from the Americans...
...There were those who even expected "the tomorrows that sing...
...I cite them to show that the basic socialist values persisted, even if their application was not very effective...
...So this centerpiece of the Socialist program, a synthesis of the demands of the old and new lefts, turned out to be quite ambivalent and resulted in the creation of very few jobs...
...Additionally, the newly acquired state industrial groups have carried out successful restructuring which as private enterprises they were often unwilling or unable to do—ironically because of heavy interference from the previous right-wing administration of Valery Giscard d'Estaing...
...When Francois Mitterrand first managed to recreate a Socialist party in 1971, the left was still under the spell of the dramatic events of May 1968...
...While de Gaulle had sought to create a coherent and modern economy within France, Giscard and Barre followed a line of "industrial redeployment...
...On the one hand, the benefits he inaugurated were systematically biased toward the poorest people in the society...
...More broadly, the new tactics in 1982-3 did accept, but at the same time sought to minimize, more unemployment...
...There were other attempts to create jobs—more hiring in the public sector, provisions allowing early retirement at age sixty, and the like—but they were overwhelmed by the contradictions of the program and the fact of the worst recession in half a century...
...In the short run, Mitterrand will probably be seen to have been much more competent than the French capitalists— but that was not exactly what the Socialists had in mind when they came to power...

Vol. 34 • January 1987 • No. 1


 
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