By Alain Parguez – Emeritus Professor University of Franche-Comté, Besançon, France A tragedy and a mystery or why the so-called neo-liberalism is foreign to the authoritarian bureaucratic State which evolves out of a decadent capitalist system. What h …

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By Alain Parguez – Emeritus Professor University of Franche-Comté, Besançon, France

A tragedy and a mystery or why the so-called neo-liberalism is foreign to the authoritarian bureaucratic State which evolves out of a decadent capitalist system.

What happens in France must be a mystery for many foreign observers. The mystery can be revealed by three dramatic facts:

  • The real economy is collapsing. All data justifies this dire diagnostic: negative rate of growth, outrageous rise in effective unemployment, one of the strongest drop in the share of labour income, accelerating inflation.
  • It is not a recession, it is a genuine systemic crisis unveiling the tendency to die of the capitalist system, its metamorphosis in a parasite rentier economy.
  • What is the main cause of the cumulative fall of capitalism, the commitment of the State to a long-run policy of predatory austerity which is self-worsening.

Why is such a disaster a paradox?

The State is ruled by the socialist party which is, because of its fanatical ideology, destroying society.

It means that France is becoming a black hole in Europe that could impose the collapse of the monetary union. How could such a tragedy be explained?

Herein lies the reason why I wrote this short note. It will be divided in four parts:

I / The economic disaster.

II/  The responsibility of the State very long-run policy.

III/  The connection with the Euro: Is the monetary union the cause or is it the scapegoat of free choices in economic policy early years of the Mitterrand regime for the sake of “ social therapy”.

IV/ At last the ultimate paradox : why is the socialist party that addicted to a self-destroying austerity policy?

I         The economic disaster

High bureaucrats and politicians never stop trying to disguise unemployment. Thereby, one should rely on the concept of true under-employment including all those who are obliged to survive under misery charity incomes, forced early pensions below the minimum wage, forced part time work, forced probations for highly learned students with top grades etc…using this Keynesian definition, the majority of the population barely survives at quasi subsistance incomes. Herein are the outcome of painful computations (1).

Effective under-employment (2)
1967 2006 2013-2014
4 to 5% 36 to 38% 50 to 60%

In percentage of the potentially active labour-force, all predictions are a worse future.

  • Such a social catastrophe is worsened by accelerated inflation caused by factors on which the European central bank has not the least impact, rising cost of housing, rising cost of utilities, rising taxes entirely transferred to workers and employees, price policy of large corporations charging higher prices while demand is falling to attain a higher share of profits sustaining the value of their assets.

Thereby real labour income is falling while productivity is one of the highest in Europe.

  • This metamorphosis of capitalism is revealed by a never-ending drop in domestic investment which can be explained (Parguez and Thabet op cit) by the absolute anguish of former producing capitalists about the future.
  • Together this set of facts embodies a tendency to a negative rate of growth or creation of real wealth.  France is evolving towards a quasi-zero employment.

The French disaster apparently makes sense of Marx and Keynes prophecies of the fatal tendency to decline of the capitalist system (Parguez and Thabet 2014). Indeed, France of 2013 – 2014 is no more a capitalist economy in the Marxian sense. It has transmogrified itself into a weird rentier system fitting the dark prophecy of Keynes.

Let us look at some crucial data taking care of the fact that government technocrats strive to hide the harsh reality:

  • Official unemployment is around 11 or 12% but what about true waste of labour or effective under-employment in Keynes’ sense. As I proved, and it is now widely accepted, since the mid seventies and mainly since the vindicated  fictitious wealth, the mask of poverty, is substituted for real wealth. In this model of the rentier economy, inequality is sharply the twin of what happens in a dying system: rising poverty and despair for all but for a small minority, the ruling techno-rentier class.

II          The responsibility of State long run policy

A long time ago, historians debuted over the German exception. Henceforth, it is time to address the French exception. The decline and fall of French economy and society is not explained by just conversion to neo-liberalism inspired by monetarism. It is the ultimate outcome of the obsessive addiction of the French State to a permanent austerity policy.

There never was any “Keynesian intermission” even in the most mainstream tradition. The French top bureaucrats and economists were always the staunchest anti-Keynesians who ever existed.

The austerity policy has always been imposed out a fiscal policy of which the main tools were accelerating the decrease in public expenditures, accelerating a rise in taxation over labour-income earners even pensioners.

What was the supreme target: to attain a permanent primary fiscal surplus allowing the reimbursement before term of the public debt. The policy of permanent squeeze became the official State policy as soon as 1983 and its ultimate lethal aspect has been attained by the new Hollande regime and his socialist government.

Henceforth everybody should be able to prophetise the disaster:

  • The impact on the private sector is strongly negative, nobody denies this fatal impact.
  • This impact is reinforced by the targeted decrease in public investment and even public employment.
  • What is stunning is that the techno-rentier class ignore so much basic macro-economic laws that they cannot understand why their policy is generating non-wanted deficits. Those “bad” deficits, “bad” because they reveal the failure of governments and raise so much fear about the future that their multiplier effect is negative, generate more squeeze and the system is near the fall into an abyss.

III       The connection with the Euro

One could excuse this addiction to austerity by the necessity to comply with the monetary union legislation.  It is true that the European treaties aimed at imposing permanent austerity, especially the last one, the fiscal consolidation pact of 2012. But one must doubt the official justification. I am now ready to prove that France, especially under the Mitterrand regime, imposed monetary union enshrining fiscal permanent deflation, to protect the choice of the ruling class against any debates.

Thereby, the euro has been, since the start, the scapegoat of the decadent French techno-ruling class. There is more, France hoped to run Europe by being able to impose a policy much more lethal than in any other country. What was targeted was Germany – it was explicit since the start.

IV      The ultimate paradox

Now, one must address the true paradox, why is the French socialist party the eponym of an ultra-bureaucratic authoritarian State?  What means “socialist” in France, and why is François Hollande and his mentor François Mitterrand not even close to the New Labour Party in the UK?

How could a socialist president rely more on his emergency powers than General de Gaulle to impose without debate a treaty openly violating the constitution, the so-called fiscal consolidation pact and turns to neo-imperialism and neo-conservatism in the George W Bush way?

Created after the rupture with the communist party (1920), the then SFIO was strongly anti-marxist, anti-union and lacked any support in the working class and intellectuals. The future socialist party soon absorbed all the center-left, its constituency was mainly top civil servants, the employers petty-bourgeoisie and it had strong links with international banking. Even Leon Blum was extremely conservative relative to economic policy. The 1936 very modest reforms were the outcome of the panic generated by the general strike starting from grassroots revolts of workers.

Socialist technocrats shared a very authoritarian State culture, were adamantly anti-Keynesian, they despised the New-Deal and finally during the Fourth Republic and the early Fifth Republic they were committed to defence of the colonial empire, deflation policies, and the hate of unions (and strikes):

There could be no doubt about the true nature of the party when an ultra-right wing politician, François Mitterrand, became leader and was elected thanks to the vote of a part of the traditional right and because he was awash with money from a large part of the corporate establishment perfectly aware of the commitment of the regime to austerity (Bliek and Parguez). Thereby the mystery is unveiled: the Hollande regime is the perfect heir of the Mitterrand regime and former pre-war SFIO. Herein is the perfect ultra-authoritarian and bureaucratic State despising the people, and confusing absolute power with austerity.

One could ask : But why people elected such a President, on the right of François Mitterrand?

Why there are no debates ? Because the former President Sarkozy was so hated because of his corruption, that people were so despaired that they voted for the sole “plausible candidate”. As for the inexistence of debates, it is the result of a deeply anti-intellectual culture, weak trade unionism and ubiquitous despair.

In his last book, In Defense of Marxism, Leon Trotsky wrote that a catastrophe could generate a worse one. Were he to be reborn in France, he could rightly prophesise some turn to the extreme-Right. The revolt against the destroying bureaucratic State led by the new ruling elite of which the Hollande regime is the incarnation.

 

Bibliography

  1. Bliek, JG and Parguez, A (2006)  Le plein emploi ou le chaos Economica.
  2. Bliek, JG and Parguez, A (2007) “Full employment can it be a key policy objective for Europe”. International journal of Political Economy, vol.36, n°3, Fall 2007, pp.24-46
  3. Bliek JG and Parguez (2008) “ TheMitterrand 1983 turn to conservative economics:a revisionist history”  in Challenge March- April
  4. Parguez, A and Thabet Slim (2013) The twenty first century world crisis . A Keynes moment. A true systemic crisis fitting Keynes prophecy. International journal of political economy vol.42 n°155 pp.6-20 forthcoming

Notes

  1. Methodology leading to those data is explained in Bliek and Parguez (2006) (2007)
  2. It is fully explained in Bliek and Parguez (2008) Data for 2013, 2014 are rooted into personal research out of a lot of sources using this methodology.

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