The French Way (43 page)

“Le capitalisme zinzin” is the way the editor of
Le Monde
typed the French economy that emerged in the fin de siecle.
³³
“Zinzin” meant “nutty,” but it had also come to refer to “institutional investors” like foreign pension funds. This Gallic version of the “Anglo-Saxon economy” featured dependence on foreign investors, a market unimpeded by government regulation, a shrinking public sector, a potent stock market, and almighty shareholders. Its elite were the managers of recently privatized firms who courted stockholders and spiced their speech with imported terms like
les startups.
In his book this prominent journalist urged the French people to face this new capitalism but also to gain control over it.

By the late 1990s France had the same level of openness to trade as Germany, almost as much as the United Kingdom, and twice that of the United States.
³⁴
Entrepreneurship became fashionable: at the end of the decade a survey found that thirteen million people over the age of eighteen wanted to create their own company; only three million had had such an aim in 1992.
³⁵
In 1999 one of the sharpest detractors of French economic policy, the
Economist
, admitted that it had “liberalized beyond recognition.”
³⁶
Looking back at the period, Peter Hall has written, “Within Europe, France stands out, not only because it has liberalized some domains more fully than its neighbors, but because, in so doing, it has dismantled the most forceful system of
dirigisme
in Europe.”
³⁷

What did America have to do with this liberalizing trend of public policy? If the grander forces of European integration and globalization
and pressing domestic problems like a rigid labor market and costly welfare state forced the issue, America served as a foil that both inspired and disguised adaptation and shaped political discourse. Given Gallic reticence to invoke America as a positive reference, it is possible to identify only a few examples of direct influence on social and economic policies. Such a strategy was, to say the least, not politically wise. If America, in only a few instances, served as a disguised model for Gallic innovation, it certainly framed the general political debate on reform.

The principal, but not the exclusive, impetus for American-style reform came from the Right. Among self-proclaimed party loyalists, those who backed right-wing parties expressed more sympathy for America than those on the left. A major reason for this preference was a modicum of respect for the American economy. Where over one-third of right-wing partisans found merit in the American model, only 19 percent on the left did.
³⁸
The Right, more than the Left, associated American economic prowess with innovation and social mobility.

On the mainstream right there was advocacy for free-market liberalism, but not for the Anglo-American version. Edouard Balladur, the Gaullist prime minister from 1993 to 1995, accepted the label of liberal, but denied he was ultraliberal and distanced himself from “the unbridled liberalism of the 1980s”—that is, the liberalism of Ronald Reagan and Margaret Thatcher. Liberalism needed rules, he insisted.
³⁹
Rhetorically he asked, “What is the market ? It is the law of the jungle, the law of nature. And what is civilization? It is the struggle against nature.”
⁴⁰
“What France needs is to invent a model that balances liberty and solidarity,” he explained, adding that he dismissed both “outmoded ideologies: the one based on unbridled and heartless liberalism and the other based on
dirigisme
and protectionism.”
⁴¹
Responding to the protectionist wing in his party, Balladur said the French economy was too open to the world to contemplate closing it to globalization. He blamed relative French decline on the accumulation of restrictions on economic life and sought greater freedom for producers and labor,
noting, “we have still not emerged from social democracy, neither in fact nor, more seriously, in spirit.”
⁴²
The UDF, the other conservative party, held positions close to that of Balladur. As prime minister, he advanced privatization and deregulation; he also introduced a new private pension scheme, eased certain social taxes, and simplified the labor code—all aimed at strengthening market forces and improving French competitiveness. But there were strict limits. As premier he refused any “American-style deregulation of the labor code” that might endanger the minimum wage, claiming “it's not necessary, under the pretext of fighting unemployment, to destroy all our social protections.”
⁴³

Jacques Chirac, like Balladur, tried to bend Gaullism away from its past without abandoning
dirigisme
altogether, noting, “Every society has as much need for stability as it does for flexibility. Because the economy has no sense of serving man, it needs markers, fixed points, as well as continuity. The state must play its role in clarifying the future, in building confidence, in explaining the reforms that accompany change; and it must also avoid ruptures. The state must make the pace of markets and that of men compatible in order to build for the long term beyond the fluctuations of the economy.”
⁴⁴
Yet if the state's role was to create the conditions for economic growth, its function was not “to monitor, frame, or hinder the activities of the country's vital forces. It is not there to play the role of business in the competitive sector of the economy.”
⁴⁵
Addressing the G7 meeting at Lille on employment in 1996 Chirac endorsed a “third way” that was, in theory, equally distant from the Anglo-Saxons and the policies of continental Europeans, which were “a little too social.”
⁴⁶
Such a median course would avoid choosing between the precarite of American jobs and the chronic unemployment of Europeans. But the president of the republic did not specify his alternative: both his notion of supple dirigisme and a “third way” remained vague.

Chirac was curious about American innovation. At the Elysee he welcomed a young French software multimillionaire, a graduate of Stanford University, who instructed the president in the ways of Silicon
Valley and he met with Microsoft's CEO Bill Gates as well as Jean-Marie Messier, the head of the transatlantic telecommunications and entertainment giant Vivendi Universal.
⁴⁷
But advice about the new world of information technology did not lead to action. In fact, Chirac was slow to embrace contemporary telecommunications. He apparently encountered his first computer “mouse” at the opening of the new Bibliotheque Nationale de France in 1996 and did not get his own e-mail address until two years later. The president spoke resentfully of the Internet as “an Anglo-Saxon network.”
⁴⁸

The resident of the Elysee harbored reservations about the American way. When members of President Clinton's economic team lectured him at the G7 meeting in Denver, as we have seen, Chirac insisted on maintaining the European model. And when the U.S. government tried to pry open the EU for free trade, Chirac stubbornly defended agricultural protection. He had once observed, rather poetically, “Farmers are the gardeners of our country and the guardians of our memory.”
⁴⁹
The market, in his estimation, should not hold French identity hostage. At the end of his second term as president he confessed his apprehensions about liberalism and called it as “equally dangerous” as communism: “I am convinced that liberalism is doomed to the same failure and will lead to the same excesses. One and the other are perversions of human thought”—which was, he thought, why an “intermediate solution” was needed.
⁵⁰
Chirac might try to charm Americans with nostalgia for his student days in New England and express interest in Yankee know-how, but American economic liberalism had to be kept at bay.

On the far right the American model was even less popular than it was among the Gaullists and the UDF. The Front National, which had adhered to Reaganomics in the mid-1980s, moved toward protectionism and away from America a decade later. The deteriorating place of France in the world economy, the flight of jobs abroad, the effects of the Maastricht Treaty and the Uruguay Round all called into question the principle of open borders. In order to defend the national
economy and national identity as well as please its electorate of farmers, fishermen, and small business owners, Jean-Marie Le Pen's party inveighed against globalization, the EU, and the US—even if it retained its commitment to programs like privatizations and a leaner welfare state. Globalization, according to a party spokesman, forced France to “accept humiliating conditions
(les fourches caudines)
of American egoism which threatens indiscriminately our steel, our peasantry, not to mention our culture.”
⁵¹
Le Pen proclaimed, “France is at war with the United States.”
⁵²

Bashing the Americans could be politically useful for French conservatives. In February 1995
Le Monde
carried a sensational front-page story about American economic espionage.
⁵³
Five CIA operatives, attached to the U.S. embassy in Paris or working undercover, had been using cash bribes (and sex) since 1992 to gain information from high officials about the government's negotiating strategy during the General Agreement on Tariffs and Trade (GATT) talks, domestic politics, and the French telecommunications network. Instead of letting the wrongdoers slip out of the country according to diplomatic protocol, the affair was leaked to
Le Monde
after Charles Pasqua, the minister of the interior, had summoned U.S. Ambassador Pamela Harriman and confronted her with the spying charges. Why the affair was made public is a bit mysterious. A possible motive was that Pasqua, who backed Balladur's candidacy for the presidency against Chirac and Jospin, sought to cover up a wiretapping scandal of his own doing and to energize the flagging campaign of Balladur. But it is just as likely that the affair was part of a wider, and increasingly nasty, transatlantic espionage war. France was a prime target of the Clinton administration because of competition in sectors like defense, space, aeronautics, and telecommunications. Balladur was so alarmed by American efforts at gathering economic secrets that he created a special advisory committee to protect French companies.

A second Gaullist prime minister, Alain Juppe, who succeeded Balladur from 1995 to 1997, also flirted with liberalism, but he refused
to go as far as his own finance minister, Alain Madelin, in endorsing the market. Madelin, the head of a small party, was something of a maverick who fervently embraced free enterprise, small government, and the American model. The division within the Right over the market surfaced when in early 1995 the outspoken Madelin boldly proposed to trim the welfare state, reduce taxes, and rely on the market to put the three million unemployed back to work. His specific proposals, which featured cuts in the pension privileges of public-sector workers and reductions in welfare benefits, antagonized the more pragmatic Juppe and the rest of the government who preferred to advance in a more cautious and consensual way.
⁵⁴
Trade unions and the political opposition erupted in protest against what they perceived as an attempt at damaging their droits acquis. Rather than risk a confrontation Juppe forced his minister out, explaining his ouster as necessary in the name of republican solidarity to “restore the country's social cohesion.”
⁵⁵
In fact, Madelin's departure represented how little political space existed for a free-market, supply-side minister who celebrated the Anglo-American way, even on the right.

Juppe faced the limits of liberalization himself in late 1995 when he proposed a broad range of reforms aimed at drastically cutting the government deficit so that France could meet the Maastricht Treaty's criteria to qualify for the European currency in 20 00.
⁵⁶
The “Plan Juppe” wisely refrained from mentioning Anglo-American efforts at trimming welfare expenses, but the intent was similar. Juppe proposed new controls on health care expenditures along with cuts in benefits for certain state employees, including the early retirement age of railway and subway conductors, weakening union control over social security spending, and lengthening the years public sector workers paid into the pension system while also advancing their retirement age to sixty-five years. President Chirac announced, “France is at a crossroads. This is the path of reform that has been put off too long.”
⁵⁷

The trade unions took to the streets. Huge strikes, estimated at two million demonstrators, paralyzed rail and subway transportation from
late November until almost Christmas.
⁵⁸
The militants argued that the social contract was at risk because the austerity program would begin stripping away the various subsidies and protections afforded families by republican solidarity. In fact, the strikers projected a bunker mentality: their bywords were “maintain,” “reassert,” and “defend.” They simply opposed the Plan Juppe without offering any alternative.
⁵⁹
Despite the inconvenience caused by the paralysis of transportation, the public displayed at least patience with, if not support for, the strikers. While the American and British press tended to praise Juppe for his courage, the titular leader of the strikes Marc Blondel, the head of a major union, scolded him: “The French do not want to live like Anglo-Saxons and the government has to understand that.”
⁶⁰
In the end the government, even if it held firm on some of its cutbacks and on extending parliamentary control over Social Security, had to back down, making important concessions to the railway workers who spearheaded the strike and canceling the proposal to modify public sector pensions. The conservatives' frontal assault had failed, and serious efforts at trimming
lEtat-providence
were not to be resumed until the early years of the next century. There were many issues that generated the turmoil over the Plan Juppe, including the EU, union rights, acquis sociaux, broken promises, government arrogance, and a general sense of insecurity. But the Anglo-Americans were also present in framing the dispute. Juppe's attempt at liberalization raised the threat among its opponents of turning the republic toward “hard capitalism.”