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Debates on Social Insurance in the French Liberal School

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Power in Economic Thought

Part of the book series: Palgrave Studies in the History of Economic Thought ((PHET))

Abstract

De Paoli shows how the authors of the French liberal school used their influence upon politicians’ decisions on the issue of social insurance. The analysis brings out the fact that liberal economists fear political power. However, they recognise the weakness of the workers’ position compared to the power of employers. This conflict gives rise to a debate on what remedies to adopt: how to help the workers, without giving too much power to the government? They propose solutions that, while remaining liberal, take the question of social inequalities into account and thus enable the rise of socialism to be contained.

This is a substantially revised and shortened version of a keynote lecture given at the 14th conference of the Italian Association for the History of Economic Thought (AISPE) at the University of Salento, Lecce, 28–30 April 2016. I am grateful to Gérard Klotz, Manuela Mosca, Thibault Guicherd, Alban Mathieu, Patrick Gilormini, Javier San Julian Arrupe and André Tiran for their suggestions on earlier drafts of the chapter.

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Notes

  1. 1.

    On the liberal aspect of this scientific society, we refer to Le Van-Lemesle (2004), particularly, Chap. 3, and Lutfalla (1972).

  2. 2.

    According to Marco (1991 p. 158), he was one the most extremist authors. Guyot has close ties with the political world. He became deputy in 1885 and Transport Minister from 1889 to 1892. He influenced too the ideas of the Alliance républicaine démocratique, main political formation of center left, then center right of the 3rd Republic. In his writings, as in his political functions, he argued for free trade and against socialism.

  3. 3.

    See Baslé (1991) pp. 203–246. Several members of his family, including his father and his brother, had functions of civil servant and were elected deputy. His step-father is Michel Chevalier, one of the authors of the free trade agreement between France and Great Britain in 1860. Leroy-Beaulieu held the Chair of Political Economy at the Collège de France and taught at the Ecole libre des sciences politiques. He was one of the few liberal economists to defend colonisation. In his political and economic writings, he was interested in labour issues and in the fight against socialism.

  4. 4.

    Economist engineers group together with economists trained in one of the French engineering grandes écoles institutes, including Ecole Polytechnique, Ecole Nationale des Ponts et Chaussées and Ecole des Mines.

  5. 5.

    See De Paoli (2017). Colson was professor at Ecole Nationale des Ponts et Chaussées. He is described by Bousquet (1960 p. 1) and Divisia (1951 p. 13) as the greatest French economist of the first quarter of the twentieth century after Walras; he also had a teaching career in French higher education institutes outside the main framework of the university system Les Grandes Ecoles, of which Ecole des Hautes Etudes Commerciales, Ecole Nationale des Ponts et Chaussées, Ecole libre des sciences politiques or Ecole Polytechnique. He was also a civil servant: he was Director of railways in 1894 and 1895 and Vice President of the Conseil d’Etat—the highest function—from 1923 to 1928. In these functions, he advised and trained political and economic leaders (Picory 1989 pp. 680, 703).

  6. 6.

    See Le Van-Lemesle (2005) p. 80, Luciani (1991) p. 584. Cheysson was also an economist engineer (Divisia 1951 p. 444). He was Director of Ponts et Chaussées and Professor of political or social economy at the Ecole libre des sciences politiques and at the Ecole des Mines. He was associated with works of numerous official commissions. In his researches, this specialist of statistic and monographs was interested in issues regarding population and workers’ life conditions.

  7. 7.

    Rueff advised several governments, in particular on monetary issues, especially the Poincaré government from 1926 to 1928 and the general De Gaulle from 1958.

  8. 8.

    Pollet and Dumons (1995), Sécurité sociale (online).

  9. 9.

    This author’s thought on this point will be treated at the same time as the system he proposes.

  10. 10.

    In his opinion, the communists disregard the law of supply and demand (Guyot 1893 p. 43).

  11. 11.

    In this quotation, Colson speaks about pension insurance but his reasoning is the same as for the other types of social insurance.

  12. 12.

    Friedman insisted on the need not to let economic policy at the discretion of politicians (Friedman 1962, Chap. 3). Politicians, to please voters, would be tempted to implement short-term policies to favour their election to the detriment of long-term economic stability.

  13. 13.

    Guyot writes prior to the law of 1898 on workplace accidents being passed.

  14. 14.

    See introduction.

  15. 15.

    According to the law in force up to 1898, the worker has the burden of proving that his employer is responsible for his accident (see introduction).

  16. 16.

    Cheysson writes prior to the law of 1898 on workplace accidents.

  17. 17.

    Cheysson (1894) also presents the system at Société d’économie politique (SEP February 1894 pp. 261–271) and in the Revue politique et parlementaire (Cheysson 1895).

  18. 18.

    Luzzati develops a closely-related system at this congress (Luzzatti 1894). For this reason, economists speak about the Cheysson -Luzzatti system.

  19. 19.

    Cheysson develops the system that he proposes with the example of illness and accidents.

  20. 20.

    Cheysson develops the question of accident compensation in Société d’économie politique (SEP) (March 1888) pp. 427–440.

  21. 21.

    For Cheysson too, the State imposes a method of contingency planning which is against the family but he pays less attention to it since this does not prevent him from being favourable to pension insurance.

  22. 22.

    Leroy-Beaulieu also thinks that this insurance does not reduce unemployment but without further developing this point (SEP November 1909b p. 289). As Guyot is against social insurance, he does not mention this insurance.

  23. 23.

    Alcouffe (1999, 2017) analyses the relation between Keynes and Rueff that will follow from this paper. For Keynes, decreasing wages and removing the insurance is not the only way to face unemployment.

  24. 24.

    Up to 1971, when the United Kingdom adopted the decimal system: 1 shilling is equal to 12 pence.

  25. 25.

    Note that from 1911 to the beginning of the war, England experienced prosperity, thus there is no unemployment. During the war, men are at combat and not at work.

  26. 26.

    We will not go into detail on this theory and its paternity; we will just sum up the result of this theory: the wage rate and interest rate settle at the level where their marginal productivity is equal. If the wage increases, firms will replace the work by capital, if interest increases, firms will replace the capital by work (Colson 1915 pp. 359–372).

  27. 27.

    In the 1890s, one sees a revival of protectionism. In France, there is a calling into question of the free trade agreement signed with Great Britain in 1860. The Méline law is voted on 11 January 1892. A double tariff protectionist customs tariff is adopted: there is a minimum rate for the normal tariff and a minimum rate for State that grants customs privileges to France; it is the end of free trade set up by the 1860 treaty.

  28. 28.

    We can note in France the creation of Confédération Générale du Travail (CGT)—trade union drawing one’s inspiration from socialist ideas—in 1895 and of Section Française de l’Internationale Ouvrière (SFIO)—political party bringing together the different socialist currents in a unique party—in 1905.

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  1. Université de Lyon, Lyon, France

    Joachim De Paoli

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  1. University of Salento, Lecce, Italy

    Manuela Mosca

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De Paoli, J. (2018). Debates on Social Insurance in the French Liberal School. In: Mosca, M. (eds) Power in Economic Thought. Palgrave Studies in the History of Economic Thought. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-94039-7_7

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