The French outdo most other Europeans in many things. Not all are to their credit. They are apt to be volatile, grandiloquent, smug, articulate to the point of glibness and willing to argue that white is black, if only to contradict you. They work hard, but it must be to their own palpable advantage. They have a persistent blind spot where other peoples have their instinctive understanding of elementary economics. Instead, they have either the traditional Catholic antipathy to profit, "speculation" and the "reign of an unbridled market", or more likely Marxist drivel hammered into them at high school and university. Most are convinced that "purchasing power" is not the counterpart of what they produce (so that each strike reduces it), but money the government keeps "blocked", letting the rich help themselves to it but refusing it to the poor, so that it must be frightened by strikes and mass demonstrations into "unblocking" it.
It must be seen and heard to be believed what feverish field days the public has been having in the last few months especially those who make their voices heard and revel in listening to themselves (and the number of such in our electronic world is multiplying by the day).They drive home how and why the country is threatened with complete meltdown, how bankers are "given" billions of public money to replace the capital they stupidly lost in speculations and how they are rewarding themselves with stock options worth millions, how profitable companies are throwing their workers out of their jobs to please the stock market, how a single company (Total) "pocketed" $14 billion of profit last year and was allowed to get away with it, and how all this (and more, far, far more) is not only shamefully wicked and vicious, but also unnecessary, for France could be just and prosperous if only it threw out "the system" of producing for the market and not for human needs and aspirations.
The class war that many had thought extinct is back. It is no longer just a war of words, but also of deeds. Sequestrating management when it announces job cuts is now regular practice and is approved by 45 per cent of poll respondents, while 50 per cent "understands" it. The police are looking the other way. Curiously for a war whose bangs, shrieks and battle cries are deafening, only one side is fighting it. On that side, the shock troops are the public sector unions led by the railwaymen, high school and university students, often egged on by their teachers, and union officials from the private sector who have few members but are paid in complex ways for "helping to administer" social insurance schemes. They are cheered on by the media which are overtly or with sham impartiality break their lances as well as their professional ethics to keep up the fiction that the class war is fought at the behest of the whole people.
Indeed, in this war there is an enemy, "the system", which "the people" and the television networks are attacking, but as good as nobody is defending. There is no discernible conservative, let alone liberal, resistance nor counter-attack. A part of the political Right seems actually to show sympathy for the class warriors, as if it were preparing a partial surrender and appeasement.
This does seem strange, but a relatively simple explanation can be read from recent French economic and social history. Appeasement as the preferred tactic in the class war originated after May 1968, when the government dreaded an alliance between the student revolutionaries and the workers on general strike, led by the Communist union CGT. The latter mistrusted the students as crazed Trotskyists and Maoists. To forestall the alliance, the government offered an undreamt-of deal on wages and "labour rights" to the unions, carrying along the employers who had little choice but to follow. Since that momentous accord that, incidentally, also set off a wage-price spiral and a quarter-century of inflation, the appeasement has proved to be habit-forming. It became frequent during the 1981-94 Socialist administration and an absolutely predictable kneejerk reflex under the 1995-2007 Chirac presidency. During this period, the French economy was being pulled backwards by two main handicaps, chronic unemployment due primarily to the labour code and the social insurance schemes, and the declining standards of public education, particularly of higher education. Year after year, timid attempts have been made to reform both the labour market and the public education colossus (in France, nine-tenths of all education is state-run). No matter how modest and marginal the proposed reform, the answer by the unions that held these systems under their implacable control was always an angry "boo", a stamping of feet in the street and the threat of worse to come unless the proposed reform is unconditionally abandoned. Hearing the first "boo" or soon after it, the government always capitulated and there was armistice till the next attempt at reform.
Any child will learn before walking and talking that if his tantrums pay twice in a row, they will probably pay a third time. If tantrums work thrice, the fourth can only fail if the parents by some miracle suddenly acquire a steely backbone and the patience of elephants. The child will go on acting as if he had no such miracle to fear.
French labour and student unions and interest groups have thoroughly learnt the lesson that tantrums always pay and that after each payoff, it is worth while to throw another tantrum for a bigger payoff. (It is significant that this "game" works only against the government and public enterprises and services. The private sector has not established quite the same reputation for weak knees and soft backbones and if it is blackmailed, it is usually indirectly, by pressuring the government to put pressure on private business).
How to break this vicious circle and how to gain at least a respite by ceasefire in this sterile class war in a country that some believe to have become ungovernable? More precisely, how to bring back sweetness and light without first traversing a painful period where tantrums are met by riot police—especially as today is about the worst moment for embarking on such a painful course?
See An Inquiry into the Nature and Causes of the Wealth of Nations, par. I.2.2, by Adam Smith, for the rest of this famous quote:
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages....
His words have been quoted umpteen thousand times, but we still tend to forget Adam Smith's teaching that it is not from the benevolence of the butcher, the brewer and the baker (and, yes the banker, too) that we must expect our daily dinner, but from their regard for their own. There is now a groundswell of mainly non-party clamour in France (probably more shrilly than elsewhere) for a New Economic Order, for mastering the "blind forces" of the market, for a Moral Capitalism. Nobody seems to be troubled by the utter meaninglessness of these phrases. Nobody notices that the only "moral" capitalism is one of doing the best you can by square dealing and taking calculated risks (also known as long-term profit maximisation). Instead, the idea seems to be that business should be motivated by benevolence, solidarity and fairness. Profit should be sought only to ensure future development and stability.
There is an inner circle in the Elysee Palace, very close to the President, that is launching trial balloons to prepare ground-breaking legislation for a Golden Rule for a sort of purified, moralised, benevolent and above all New Capitalism to end all class wars. Its cornerstone would be the Rule of Three, meaning roughly that profit would not belong to the owner (e.g. the shareholders) of an enterprise, but would have to be divided into three equal parts, one for dividends, one for the wage-earners and one for investment. The future profit yielded by this investment would again fall under the Rule of Three, and so on to eternity. This would serve a "more just distribution of wealth".
Economically, the scheme is incomprehensible (the Golden Rule is a Christmas wish list) and where comprehensible, as in the Rule of Three, it is harebrained. It is certain to undergo much reshaping before it can become a legislative proposal. If and when it does, this column hopes to offer some comment on it. Meanwhile, this country will go on muddling through.
* Anthony de Jasay is an Anglo-Hungarian economist living in France. He is the author, a.o., of The State (Oxford, 1985), Social Contract, Free Ride (Oxford 1989) and Against Politics (London,1997). His latest book, Justice and Its Surroundings, was published by Liberty Fund in the summer of 2002.
The State is also available online on this website.
For more articles by Anthony de Jasay, see the Archive.