France: Planning in the Market Economy
A. Conflict of
ideologies: "laissez faire, laissez passer"
and "liberté, égalité, fraternité" versus
of mercantilism), Bonapartism
Gaullism (nationalism and state intervention in framework of
private enterprise), étatisme (state
authority), dirigisme (direction,
interventionism), and elitisme.
B. Deep Historic
Class Divisions - Bred chronic political instability and invited
authoritarian central government.
Authoritarianism tempered by:
1. Rule of law. Code
Napoléon, enacted in 1804-1810, based on relatively strict adherence to
2. Professionalism of
the bureaucracy. Elite educational institutions.
Fifth Republic - Postwar instability remedied by strong
presidency. Became model for Russian 1993 constitution.
1958-1981 Coalition of
Gaullists and other conservative parties.
Socialist-Communist coalition led by Francois Mitterrand
of Mitterand (S) and Jacques Chirac (Gaullist)
(S) reelected with Cresson (S)
cohabitation-Mitterand and Edouard Balladur (G)
1995-1997 Chirac wins
presidency, RPR-UDF coalition
cohabitation—Chirac and Lionel Jospin (S)
reelected, reorganizes conservative parties into the new
UMP (Union pour un Mouvement Populaire)
2007-2012 Nicolas Sarkozy (UMP)
succeeds Chirac with François Fillon as his PM. Stronger law/order,
closer to U.S./U.K.
2012-2017 François Hollande (Socialist) has served with three Socialist Prime Ministers.
2017 The first round of the 2017 French presidential election will be held in April. Should no candidate win a majority, a run-off election between the top two candidates will be held on 7 May 2017. A total of 11 candidates will contest the first round and then 2nd round is planned for May 7, and the projected winners are either Emmanuel Macron (En Marche!, a moderate party he created last year, and he is calling for France to take a leading role in reinvigorating the EU) or Marine Le Pen (National Front).
The Plan and Compliance - Planning initiated after World War II to
rebuild the capital stock. Never meant to replace the market, but to
improve its operation. Compliance was voluntary even for nationalized
industries. Ideally, a self-fulfilling prophecy. The government urged
compliance through influence over nationalized industries and banks,
monetary and fiscal policies.
Planning Institutions - Headed by General Planning Commissariat,
much work was performed by Modernization Commissions, with labor,
management, and government representatives.
Planning Procedure - During "options phase," Planning Commissariat
formulated macroeconomic options, and one was chosen by Parliament. During
"specification phase," Vertical modernization commissions prepared plans
for individual industries. Horizontal commissions review these plans for
consistency. The final draft is prepared by the Planning Ministry and
approved by Parliament.
The Planning Record- The Monnet Plan was successful because of
business-labor cooperation, governmental encouragement, and Marshall Plan
aid. Statistical methods improved with subsequent plans, but cooperation
declined. The Ninth Plan established a closer connection to the
governmental budget through Priority Implementation Programs .
Did Planning Help? - The planning process may have been more
important than the final plans. Forecasts inaccurate, over half of the
large firms reported that plan forecasts had a significant impact on their
Today - Role of the Commissariat was weakened by globalization
and by victories of conservative governments. It became a think tank on long-term issues, such as social security
system reform and implementation of EU projects. In 2006, it was
converted to a new Centre
d’analyse stratégique, and then in 2013 into that Commissariat général à la stratégie et à la prospective (AKA "France Stratégie"), still operating directly under the Prime
Minister. This new organization is responsible for forecasting, consulting, and international comparisons of public policies.
Private Sector - Companies are generally small, perhaps because of
market size, finical institutions, culture (“humane living”). Preference
for larger “national champions” arose during 1966-75, and then subsided.
Nationalized Industries - Long tradition of nationalized industry.
Major program after World War II.
nationalized 5 industrial groups, 36 banks, 2 other financial
1983-1986 Program on
hold during economic crisis.
begins under Chirac
Nationalization/privatization often causes little change in management
behavior because of close personal, educational, and business links
among leaders. Cross-holdings of corporate stock, organized around
(noyaux dur) provide capital for privatization, but may
protect elite privileges, avoiding foreign investment.
Labor Market and Labor Relations.
A. Unionization -
Relatively small percentage of labor force, about 10%. Divided between
five major confederations. The oldest and largest, the CGT, has close
relations with the French Communist Party.
B. Worker Participation - Limited law passed in 1969,
strengthened in 1982. All enterprises and companies with more than 50
employees required to establish a works council. State-owned companies
were required to allot one-third of their board seats to staff
representatives. Works councils have sometimes defeated lay-offs in court.
Banking - Bank of France and three largest commercial banks were
nationalized in 1945; joined by 39 other commercial and savings banks in
1982. Many have been privatized since, but control facilitated a
selective monetary policy to support planning.
Securities markets - Traditionally very limited. Liberalization
has led to some development.
Fiscal/Monetary Policy - Stagnation before World War II.
on growth, but with recurring inflation and balance of payments
monetarism, rising unemployment.
Mitterand expansion and crisis
1983- 2005 “Franc
Fort” and Euro - declining inflation, high unemployment
Redistribution of Income - Long tradition of social stratification.
Since 1970s, large percentage of national income devoted to social welfare
programs. Moved from bottom to middle of equality ranks.