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Economic Patriotism and Liberalism in Present-Day France: Changing Role of the State in French Economy

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Book cover Market Liberalism and Economic Patriotism in the Capitalist World-System

Part of the book series: International Political Economy Series ((IPES))

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Abstract

This chapter presents an overview of how the role of the state in France’s economy has been continuously changing since the 1930s. The first section describes the three waves of nationalizations of the past century, and the logic and ideas they were based on. The second section goes through the (re)privatization process of the 1986–2006 period. The third and main section of the chapter, which treats the period since the outbreak of the global financial crisis in 2008, points to the fact that state interference into the economy continues to be a dominant feature of the French policy.

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Notes

  1. 1.

    The royal manufactures developed in France by Colbert can be seen as the first state-owned enterprises (Chevallier 1979, p. 16).

  2. 2.

    It is typical that although people of the French revolution were desperate and upset about unbearably high taxes (especially on peasants), it was not the state but the aristocracy and the clergy, seen as free riders, who they blamed for the country’s economic problems (Meisel 2014, pp. 81–82).

  3. 3.

    Following democratization, each shareholder had the right to attend the general assembly of the Bank of France (BoF), and each had only one vote irrespective of the number of shares he/she held (Banque de France 1936). Before the reform, the 200 biggest shareholders (nicknamed the 200 families) governed both BoF and the country (Brugvin 2009).

  4. 4.

    In the programme’s own words: ‘The big and monopolized assets of the economy – i.e. energy sources, treasures of the underground, as well as the large banks, insurances companies – were to return to the Nation’ (Andrieu et al. 2014).

  5. 5.

    For example, ITT, having allegedly taken part in the CIA-backed coup d’état against the Allende government in Chile on 11 September 1973 (Cohen 1993, p. 793).

  6. 6.

    Protecting strategic sectors is far from being a French specialty. In the US, the 1988 ‘Exon-Florio’ amendment to the ‘Defense Production Act’ gave the president a broad mandate to limit foreign investments in strategic sectors. Since neither France nor the EU has such a legal instrument, state ownership continues to play an important role in protecting industries, deemed strategic for reasons of national security (Cour des comptes 2013, p. 28).

  7. 7.

    There are (or at least used to be) some similarities concerning the use of public utilities as a tool for redistribution in the French conception of public services and German conception of municipal utilities. The latter was best represented by the so-called Stadtwerke (city utilities), the archetype of the German communal company, owned by the city and offering various type of public services like energy (electricity, gas, and district heat), water, sewage and transport, but also libraries and leisure centres. This solution of pooling different activities made it possible for the service provider to cross-finance the less lucrative sectors (like public transport) from the more profitable ones (e.g. energy and water), and thus to save a significant amount of tax money (Bauby and Similie 2014). According to EU regulation about liberalization of the energy market, this system has been transformed since the late 1990s through privatization and corporatization. But when cross-subsidization ceased, selling profitable services in one sector imposed fare increases in others (Kuhlmann and Fedele 2010).

  8. 8.

    State-owned enterprises are defined as companies in which the public has a majority ownership.

  9. 9.

    It is not a matter of chance that the amount of state aid provided to financial institutions in the EU’s biggest economies (i.e. Germany, UK, France, Italy, Spain and the Netherlands) in the context of financial and economic crisis between 2008 and 2014 was, as a share of GDP, the lowest in France (DG Competition 2016). The already mentioned common ‘cultural’ (i.e. elite network) roots of the bank managers prevented them from exposing their institutions to overly risky transactions, or at least from those transactions that gain too much importance relative to their size (Howarth 2013).

  10. 10.

    For example, by 2015, more than two-thirds of the companies in the state’s portfolio (55 out of 81) were already transformed into public limited companies (APE 2016, p. 27).

  11. 11.

    In the wake of these changes, the board members, instead of being appointed from a limited group of senior civil servants, could be appointed from a larger pool of experts which method fit more to companies’ interests, because the number of political nominees were reduced substantially. While in 2013 the state still participated in the nomination of 936 administrators, of which 366 represented the state directly, in 2015 these numbers fell to 765 and 272 respectively (APE 2013, p. 7; 2016, p. 17).

  12. 12.

    We refer to economic patriotism in the sense of ‘economic choices which seek to discriminate in favour of particular social groups, firms or sectors understood by the decision-makers as insiders because of their territorial status’ (Clift and Woll 2012). As already mentioned, five footnotes earlier, there is some similarity between France and Germany. In the case of France, the social groups to be favoured are the French employees, whose interests are to be defended irrespective of the employers’ nationality. In our world of globalization, businesses in France do not necessarily need to be loss-making in order to be relocated. It is enough for them to be just marginally worse in terms of profit margins than their counterparts are somewhere else (in Eastern Europe or Asia). In the case of German cities, the social groups to be favoured are the city dwellers. As fragmentation and privatization of the multipurpose model of German local self-administration have had awkward (unintended) consequences, such as higher prices (and not only for unprofitable services like public transport), declining quality, oligopolistic tendencies—for example, the inexorable rise of the big four (E.ON, Energie Baden-Württemberg AG, Rheinisch-Westfälisches Elektrizitätswerk AG and Vattenfall) in the energy sector—and a general reduction of local council capacity for political steering, a vigorous process of re-municipalization started in German cities in the mid-2000s (Kuhlmann and Fedele 2010; Brandt 2006; Becker 2017), We can deduce that, apart from the differences in tradition and conception of the state (unitary in France and federal in Germany), this new appetite for authorities taking back control over what is considered to be important for the wellbeing of insiders or citizens, either as job holders or consumers, is the same process in both countries. So, if you call it economic patriotism in France, you can call it economic local patriotism in Germany.

  13. 13.

    The value of SOEs to GDP in 2012 was lower than in France in only 6 out of 23 European OECD member countries. Almost all of them happen to be either federal states (like Belgium and Germany) or monarchies (like the UK or Spain), where significant competencies have been devolved to the regions (OECD 2014).

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Authors and Affiliations

  1. Institute of World Economics, Hungarian Academy of Sciences, Budapest, Hungary

    Miklós Somai

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  1. Miklós Somai
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Correspondence to Miklós Somai .

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Editors and Affiliations

  1. Institute of World Economics, Hungarian Academy of Sciences, Budapest, Hungary

    Tamás Gerőcs

  2. Institute of World Economics, Hungarian Academy of Sciences, Budapest, Hungary

    Miklós Szanyi

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Somai, M. (2019). Economic Patriotism and Liberalism in Present-Day France: Changing Role of the State in French Economy. In: Gerőcs, T., Szanyi, M. (eds) Market Liberalism and Economic Patriotism in the Capitalist World-System. International Political Economy Series. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-05186-0_8

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