The French Way (6 page)

Liberalization and modest borrowing from the Americans was in Mitterrand's view consistent with socialism, but America was not a model. Modernization and industrial restructuring, he argued after his return from the United States, aimed at supplying the domestic market and gaining international competitiveness had long been his goal.
⁸¹
He said he had no grief with entrepreneurs and “just profits”—meaning gains made by innovation, work, and savings that created wealth for everyone—but he did not concede on his larger agenda: nationalizations marked a “rupture with capitalism” and the “mixed economy” was a transition to socialism. The balance between the public and private sectors in the mixed economy meant France would not subscribe either to “English ultraliberalism or Chinese collectivism.” In the course of his tour of the United States, Mitterrand had taken a swipe at the Reagan administration's economic policy—especially the budget deficits and high interest rates that harmed Europeans. When asked what lessons he found applicable to France, he responded coyly by complimenting the American people on their energy and inventiveness, singling out,
as an example, the cooperation between academic research and private entrepreneurs. But he took issue with calling America a model economy because it benefited from a privileged situation—the size of its market and role of the dollar—and because “the American recovery has been accompanied by considerable disorder and is based on a few tricks
[quelques artifices
].” “I admire the virtues of these people,” he concluded, but the lesson was that France needed to reorganize its own way and not imitate America.

Efforts at turning the economy around, which included stimulus via market incentives, gradually began to show results, but they were not sufficient to convince the French that the socialists were good managers. Mitterrand's reputation plummeted, even among fellow socialists who felt betrayed by
rigueur
, making him the most unpopular president of the Fifth Republic to that date. By the mid-1980s the vocabulary associated with the Left—words like
socialism
and
nationalization
—aroused more hostility than approval, while terms like
competition
and
free market
that were favored by economic liberals were fashionable. Polls showed that the majority of those surveyed, including most socialists, now wanted the development of private enterprise rather than the public sector and that the people also placed the health of businesses ahead of raising individuals' standards of living.
⁸²
Majorities wanted to privatize industrial groups that had been recently nationalized and preferred easing social charges on businesses—even at the cost of some social protection. A plurality asked for a reduction of state intervention in economic and social affairs. One business journal crowed that the French seemed finally to have discovered economic orthodoxy as a reaction to socialist failure.
⁸³

Disappointment with Socialists' efforts at economic revival led directly to their defeat in the legislative elections of 1986. Mitterrand was forced to name Jacques Chirac, the leader of the Gaullist RPR, as his prime minister, and the Fifth Republic embarked on its first experiment with “cohabitation”—that is, with a president and prime minister belonging to opposing parties. The socialist president stepped aside and
allowed Chirac, with a few exceptions, to pursue an antisocialist program that undid much of what had been introduced between 1981 and 1982. Leading the way was the sweeping privatization of many of the firms that the socialists had nationalized, along with tax cuts, including abolishing the new wealth tax; deregulation; the easing of rules on hiring and firing; and a general turn toward bolstering private enterprise and invigorating the market. Economic liberalism was in vogue as interest in the Anglo-American model peaked. What had begun with the socialists during 1983-85 as a grudging concession to the market now became a principle of good governance.

Within Chirac's governing coalition, which included the UDF and its affiliates, were some eager free-market ideologues. Younger UDF leaders, like Francois Leotard, occupied the Ministry of Culture and Communication while Alain Madelin became head of the Ministry of Industry; he rather overreached by proclaiming that “today, everyone is a liberal.”
⁸⁴
The RPR also had a few true-blue liberals, like Philippe Seguin at the Ministry of Social Affairs. But the ideologues were not the dominant faction in the new government; that role belonged to more moderate, or pragmatic, liberals like Chirac himself and his finance minister Edouard Balladur, who represented the dirigiste strain in the Gaullist party derived from their mentor Georges Pompidou; they were less committed in principle to the self-regulating market, but viewed reforms that advanced competitiveness and private enterprise as politically and economically useful. As Balladur famously remarked, “Good sense should temper liberalism.”
⁸⁵

Laissez-faire, laissez-passer as a basis for economic policy has a long history in France even though, ironically, its most fervent advocates have always been the Anglo-Americans. It was no different at the end of the twentieth century when Reagan and Thatcher led the way and Chirac limped behind. The rebirth of what was called “new liberalism” during the 1970s and ‘80s was almost entirely a product of French concerns and traditions and owed rather little to the Anglo-Americans except for a few popularizers like Sorman who, as we have seen, opted to
import the Chicago school. The new liberals, whose reputation soared in the mid-1980s—mainly economists close to the employers' movement like Michel Drancourt and Octave Gelinier or businesspeople like Yvon Gattaz—were largely homegrown. These Gallic true believers, according to Suzanne Berger, arrived at their convictions from an aversion for socialism and communism, a distrust of technocrats, and a concern about an ambient anticapitalism.
⁸⁶
They received an enormous boost from widespread frustration with the interventionist reforms and economic disappointments of socialist governance after 1981. Internal political and economic dynamics created the liberal moment of 1986-88 while the successes of Reagan and Thatcher served, at most, to embolden French proponents.

If the causes of a resurgent liberalism were entirely French, so was the content of their program; it was not a bland copy of that of either the American or British conservatives. For example, French new liberals accepted a far larger role for the state as the guardian of the general good over private interests than did the advocates of Reaganomics or Thatcherism. They assumed that the market, if left unattended, would logically end up in
liberalisme sauvage
and thus attributed a substantial role to government for addressing social problems like poverty and income inequalities.
⁸⁷

The French public endorsed the liberal turn as long as it was strongly flavored with dirigisme and deferred to Republican solidarity. A week after the 1986 election a national survey demonstrated the electorate was prepared for only a modest turn toward the market and remained strongly attached to social protection: if a majority was ready for an end to price controls and privatization of big firms, an equal number or more wanted to retain administrative regulation of layoffs, the new tax on wealth, and endorsed increased aid to large families.
⁸⁸
Even business-people, who opted for denationalization and deregulation, wanted to retain the minimum wage.
⁸⁹

Economic liberalism within Chirac's governing circle, except for a tiny cohort of ministers, displayed little of the ideological zest of the
new liberals. In the hands of Chirac and Balladur, liberalism was more a practical approach to problems than it was a matter of principle or dogma: it could get a stalled economy moving and function as a powerful weapon against socialist rivals. Chirac himself never subscribed fully to the liberal credo and employed market-oriented policies opportunistically. One should be skeptical about his pronouncements as prime minister, such as his claim that “statism and bureaucracy are in the past. The future belongs to free and independent private enterprise” or his earlier endorsement of Reagan and Thatcher declaring that “the only problem with liberalism is that in France it has never been tried.”
⁹⁰
Yet when the government's economic policies faltered, Chirac blamed Balladur for being “too liberal.”
⁹¹
Years later, at the end of his long career, Chirac would tell an interviewer that liberalism, like communism, was a perversion of human thought, led to the same excesses, and was destined to failure.
⁹²
Even a loyal disciple of the Anglo-Americans like the Gaullist Philippe Seguin was circumspect about the market. As minister of social affairs Seguin promoted studies of the American economy aimed especially at finding answers to unemployment. Seguin managed to open the labor market with legislation that, among other reforms, softened the requirement of administrative authorization for layoffs. But even he was reluctant to import Reaganomics, pointing out the risks of tactics like deregulation.
⁹³
The truest of the ideological liberals, Alain Madelin, went to such an extreme in refusing to rescue embattled firms and pruning his own budget that he ended up isolated among Chirac's ministers, who liked to mute their Reaganesque impulses with activism like subsidizing ailing industries and aiding companies in hiring young workers. If the most important liberal departure of the 1980s was the privatizations of industrial firms, banks, and television stations, the way Chirac and Balladur managed the process—for example, by apportioning shares of denationalized firms—was far more interventionist than the way Thatcher achieved the same goal.
⁹⁴
Stanley Hoffmann wrote at the time, “The state is loosening the screws, not removing them.”
⁹⁵
Dirigisme was alive, if rather anemic, even when the liberals ruled.

Well before the presidential election in 1988 the French flirtation with free-market liberalism had flagged. It had brought only mediocre economic results—for example, failing to reduce unemployment or revive growth—and it had antagonized many with its apparent favoritism to the wealthy. It had also left many indifferent because its reforms were so cautious that Chirac seemed little different from his “liberalized” socialist predecessor Laurent Fabius. Then in 1987, Wall Street collapsed, and that collapse carried with it much of the prestige of the “American way” and its French fans. One beneficiary of Chirac's stumble was Mitterrand, who worked his magic, regained popularity and the presidency in 1988, and returned a socialist—Michel Rocard—to the head of government. Opponents of Chirac's liberal turn massively backed Mitterrand and the socialists.
⁹⁶

For the rest of the decade (1988-91) economic policy was in the hands of Rocard, who practiced a sober, if not austere, kind of socialism that was closer to the policies pursued during 1983-85 than to the “rupture” of 1981-82. The new premier attracted a formidable following among American experts on French affairs. In fact, the Radical Left tried to denigrate Rocard by associating him with America. But he was no economic liberal; as Mitterrand's agriculture minister he had been an outspoken critic of Reagan's economic and trade policies.
⁹⁷
Rocard was a cautious socialist who aimed at solid, incremental gains. Ideology and ruptures, whether in the form of socialism or liberalism, gave way to pragmatism and the “mixed economy” that featured participation for entrepreneurs, the state, and the “social partners” as well as an industrial policy to promote sectors like information technology.

By the end of the 1980s the faint glow of Reaganomics had been extinguished and Ronald Reagan's record, though he had left the White House, continued to be smeared by Gallic critics, many of whom had once been associated with the liberal turn. Among the socialists, Laurent Fabius, now head of the National Assembly, insisted that Reagan might have spoken about shrinking the state but actually expanded it and spurred growth with the biggest Keynesian style boost in U.S. history.
⁹⁸
The former head of economic planning, the liberal economist Michel Albert, warned against the consequences of following the flashy “casino economy” of the Americans—for example, the loss in social services. The self-pro claimed Reaganite Jean-Marie Le Pen, who had applauded the free market and privatization and found U.S. global economic domination justifiable in the 1980s, abandoned liberalism and moved toward a protectionist, anti-American stance. In fact, the leader of the Front National had never embraced liberalism in principle: Le Pen regarded it at best a useful economic strategy in certain circumstances.
⁹⁹
The Reagan model had lost its glitter and attention turned to alternative experiments like the “Rhineland model” or to Japanese methods.
¹⁰⁰

The tepid interest in Reaganomics was only one way in which French policy makers watched, and then rejected, trends in America. Below the surface of Franco-American amity during the Mitterrand-Reagan years there was intense rivalry: it ranged over politics, trade, culture, and even medicine. Rather unexpectedly, medical research and practice generated controversy and scandal and marked the most tragic episode of this rivalry. Settling this dispute eventually required the personal intervention of President Reagan and Jacques Chirac, the French prime minister.