The French left needs a “New Deal”

Daniel Cohen 13 June 2007

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Let us start with a paradox: the Left is better in office than in the opposition. Despite a programme on ideology (the nationalisations in 1981 and the 35-hour work week in 1997), the Left in power demonstrated solid pragmatism. It was the Left that orchestrated the disinflation of the 1980s, which the Right had not been able to do. It was the Left that gained France entry into the euro ten years later. During the last 25 years, it is under Centre-left governments that economic growth has been the strongest.

The Left is less talented in the opposition. The nationalisation program of the 1980s was a half-hearted compromise with the then powerful communist party. The emblematic legislation of the Jospin Government, the 35-hour work week, was added to its programme in extremis when the anticipated legislative elections were called by President Chirac. The failure of Jospin in 2002 was largely due to the absence of a convincing programme, just as Ségolène Royal’s failure was mostly because her proposed agenda was difficult to decipher. How should we understand this inversion between what ought to be the Left’s strong point (its programmes) and the actual exercise of power, which turns out better?

It is not to be found, a priori, in a hesitation about the goal sought after. The Left has a simple litmus test: to reduce social inequalities. To use Norberto Bobbio’s expression, the Left must constantly “denaturalise” inequalities vis-à-vis the Right, which is more inclined to consider them as a natural phenomenon. For the Left, inequality is fundamentally a social phenomenon, which explains why, for example, the inheritance tax is for the Left the equitable tax par excellence.

If the Left’s problem is neither its practice in government nor its ambitions, then where does it reside? It can be found in the difficulty of renovating its thoughts on the proper instruments to be used. The Left remains a prisoner of a sequence according to which regulating the economy is key to correct inequalities. Now, that equation is invalid twice over. First, it is more and more difficult to regulate the economy. Second, even if this were possible, the result would no longer suffice to attenuate the new social inequalities.
The point is worth stressing. Yesterday, the economy was a means of social integration. Today, it no longer is. In the language of economists, the old equilibrium between the markets and firms (hierarchies) has been shattered in favour of the markets. Outsourcing is only an extreme and visible form of a more profound process in which systematic recourse to subcontracting is the model. New capitalism externalises any job that can be externalised, thus scientifically dismantling the former industrial landscape. Nationalising the companies in the CAC 40 today would not have any significant impact on workers’ living conditions. In today’s world, small and medium-sized companies create new jobs, large firms destroy existing ones.

Bereaved at its loss of the nationalisation instrument, the Left is pining to find a new culture of public action. The French Left does indeed suffer from a double handicap, with respect to the lack of trade unions on the one hand, and to the over-performing state machinery on the other one. The French Left does not originate from an organised labour movement. This is why it does not have the culture of compromise that can be found for instance in Scandinavia. The debate on the issue of work contracts is, in this respect, emblematic. The Right inaugurated and then annulled the administrative authorisation for workers’ dismissal (by the one and same Chirac in 1974 and 1986); the Left chose to leave the situation as it was each time it assumed office. On the issue of retirement, the Left proclaimed that it wanted to abrogate existing laws but was unable to define their replacement. Deprived on the playing field of signposts indicating the just and the reasonable, it preferred the status quo over a search for new policies.

Fearing to add to the “flexibility” in the air, the Left dares not propose socially innovative policies such as those tried by the Danes. The macroeconomic strategy of the Left always seems to swing back to a tropism whose aim is to reduce the labour supply by retirement at 60 or the 35-hour work week, or by making dismissals forever more difficult, in hopes each time that such steps will reabsorb unemployment. These purely defensive measures alleviate the pain only temporarily and produce perverse effects that the Left fails to anticipate correctly.

While it lacks strong links to organised labour, the French Left at least has at its disposal recourse to the apparatus of a State that is reputed to be the best in the world. But this instrument reveals its limits as well. It has no culture for evaluating the policies that it puts in place and this makes it impractical to assign it tasks that are specifically adapted to the population strata in difficulty. The much-missed economist Jean-Jacques Laffont summarised the French contradiction with respect to the State. In France, he wrote, we make “the general postulate of the benevolence of politicians, of the administration, and of all the civil servants and assimilated personnel.” Despite this widely held postulate, Laffont notes that it is contradicted by the standard practises of the State itself. “In spite of the systematic recourse to benevolence as a principle of public service, fear of embezzlement of public funds by a few ‘black sheep’ has led to considerable bureaucratisation aimed at eliminating the possibility of discretionary behaviour, source of corruption.”

The Left makes the same contradictory statement: it worships the State but allows no autonomy to its various branches. A reform such as the independence of universities, even if Ségolène Royal eventually included it in her programme, makes it hesitate. The Left is reluctant to put competitive pressure on the universities for fear of introducing a market logic that could divert them from their missions. However, it is not the market that is in question but a new relationship to the means of public action, made up of a compromise between the independence of public services and the evaluation of their missions with respect to demanding criteria.

A political boulevard lies open before the French Left. Never have social inequalities appeared so threatening, whatever the sphere – professional careers, urban segregation, wealth, etc. However, the last election shows that the Left cannot only rely on the mistakes of the Right to return to power. It needs a new deal for addressing the challenges that it faces. The issue is not to reconcile the Left with the market: that was done long ago. It is to favour active programmes towards persons rather than trying to regulate the way firms operate. It is to decouple public policies and the public sector. Simple things, it would seem, but critical ones that could enable the French Left to become "modern".

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Topics:  Europe's nations and regions

Tags:  social inequalties

Professor of Economics, Ecole Normale Supérieure and Paris School of Economics, Director of CEPREMAP and a member of the "Conseil d'Analyse Economique", which reports to the Prime Minister of France. CEPR Research Fellow

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