FRANCE by HELENE VALENTIN & C. LEUCATE Manifestations of the slowdown in world economic activity and of the rise in oil prices have been felt by the French economy in particular forms: 1. Given the great French dependence on outside energy sources, the "oil bill" has been especially heavy: on the order of 56 thousand million - that is, 3% of national production. France consumes less energy, and especially less industrial energy, than the other imperialist countries (West Germany, United States, Britain, etc.), but it is unusually dependent on oil (like Japan and Italy). In 1960 oil accounted for 30% of total energy consumption; by 1972 the figure had risen to 67%. Concurrently, the contribution of the French oil * "Paradoxically, it is in the European economy that is perhaps the most subject to state intervention that the oil firms have most easily controlled the process of energy substitution, by systematically fostering belief in a long-term and continuous tendency toward a decline in the quantity of petroleum products. " (Report of the conference of Frenchspeaking economists of the CNRS, May 1974.) 34 the nument companies to the national energy supply has been reduced: It is now less than 70%, as compared with 100% in 1968. The impact in France of the rise in oil prices will vary according to whether the distortion of the price structures of energy sources persists or not. In the immediate future, however, the oil levy will weigh directly on the formation and division of internal incomes (especially between profits and wages) and will create an enormous disequilibrium in the balance of payments at least for several years. This is all the more true in that France is quite incapable of relying on "invisible exports" to compensate for the deficit in the balance of its commodity exchange and in that capital imports are compromised by the deterioration of the political and economic situation. 2. The recession did not hit the French economy fully at the beginning of 1974. But for some weeks now industrial production has been stagnating and prospects for industry are mediocre; in some sectors they are even bad (the consumer industries, for example). Growth in the volume of industrial production in 1974 will be lower than had been predicted; it will barely exceed 3%. Gross domestic producfion will increase by 4%.
Order books are still being filled in the equipment industry, but everywhere there is a fall in new orders, especially foreign orders. If is no longer assured that exports, which kept up the level of economic activity at the beginning of the year, will continue to grow at the same rate. This is now being reflected in a falling off in utilization of the apparatus of production which, after functioning of full capacity since 1969, is now once again finding its supposedly "normal" rate: about 80%. But the most striking feature of the situation has been a sharp increase in unemployment. The number of unemployed has grown by more than 30% in just a few weeks. The figures for October were even worse than September: There were 100,000 more people unemployed. In one month, August-September, the number of new cases opened by the unemployment insurance system increased 40%. According to official figures, there are nearly 650,000 unemployed in France (twice as many as in May 1968). These figures do not include those who have been unemployed for the longest periods and have been excluded from the labor market without any real guarantee of compensation; nor do they include the hundreds of thousands of workers who are seeking jobs commensurate with their needs but have not been officially counted as unemployed. Concurrently, collective layoffs have risen from 2,000 in the second quarter of 1974 to 6, 000 in the third quarter. At the same time, partial unemployment has taken a leap forward: a 400% increase between September 1973 and September 1974. Nearly all sectors have been affected; even the insurance companies have announced "partial unemployment" (that is, compulsory reduction of the workweek). In the automobile industry the employers thought at first that they could avert massive collective layoffs because of high turnover in the work force (less than two years). They intended to foster voluntary resignations and reductions of the workweek. But the general decline in employment has discouraged workers from quitting on their own initiative, and the increasingly bad situation in the industry has forced the employers to move to layoffs. Women in particular have been hit by the difficulties of the "labor market. " Women account for at least 60% of the unemployed, while they represent less than 40% of the active population.* *Contrary to certain generally accepted ideas, it is the fluctuation in industrial employment that especially affects women. Because of the employers' desire to make use of this less costly labor force, women filled 75% of new jobs created in industry in 1973, while they represented only 30% of the existing work force in industry; women are thus directly hit by stagnation in employment and by layoffs.
Youth seeking their first employment have likewise been especially affected by unemployment, both because they cannot find work and because they do not benefit from unemployment compensation in most cases. This unemployment pattern is directly comparable to the one that prevailed on the eve of 1968. Nothing suggests that the process that has now begun will slow down. Even during periods of upturn, the French economy does not create many new jobs. In preceding years it has been mainly the unproductive sector and transport that have absorbed the excess work force, while industrial employment has remained virtually stagnant. Prospects for 1975 suggest a continued decrease in employment for several additional months. 3. Finally, the effects on industrial prices of the increases in the prices of oil and other raw materials are whipping to a gallop the accelerating inflation that has been going on since 1970, and has driven up the yearly increase of consumer prices by 16% in 1974. This process is more especially affecting all the various industrial products, whereas earlier it was agricultural and food prices that accounted for the most inflationary component of the total index. This is resulting in particular in a very sharp decline in the real income of farmers for the year 1974. As the figures on price increases in October (1.3%) demonstrate, nothing leads us to expect a quick end to this superinflation, the "repercussions" of the various price increases (energy, raw materials) having come nowhere near the end of their course, The year 1975 is thus opening in a clearly "stagflationist" climate a slowdown in economic activity combined with the continuation of inflation). Ten years' accumulated contradictions These immediate factors cannot be properly appreciated except when viewed through the prism of the deeper contradictions that have characterized the accumulation of capital and the economic class struggle throughout the past decade. The past fifteen years have been marked by wide-ranging structural changes, by the re-equipping of the apparatus of production, and by a social reorganization of capital. Fixed productive capital grew by 30% (computed at constant prices) between 1968 and 1972, that is, an increase just as great as that between 1950 and 1959. At the same time, the number of wage workers increased - although much less rapidly - especially in the semifinished and consumer goods industries.
35
FRANCE This expresses a structural tendency toward the rapid rise of the organic composition of capital. This movement was carried out largely under the degis of the monopolist sector of the bourgeoisie, but the trend toward economic concentration should not be exaggerated. Between 1961 and 1969 the rate of concentration (expressed as the share of the four largest companies in total business transactions) did not increase significantly. The middle-sized companies increased their shares the most. The phenomenon of concentration emerged clearly only in a few narrowly defined sectors in which the leading enterprises made their weight felt. Furthermore, this shift developed through phases that varied greatly from the political and social standpoint. This explains to a large extent the specific features of the strictly economic "fluctuations." From the standpoint of the effects of the relationship of forces between the classes and of "economic policy" on the formation of the rate of exploitation (and thus of the rate of profit), several characteristic phases can be isolated: 1. Gaullism's coming to power in 1958 and the turn to the Common Market was marked by a vigorous economic offensive against the workers carried out under the "Pinay plan, " an offensive that allowed for a strong increase in the rate of profit up to 1960. Since 1960, however, developments have been much less favorable for capital: an anarchic growth in investment in face of the opening up of the borders during the period 1963-64. a conjunctural phase of overaccumulation, and a decrease in profitability. 2. The year 1963 opened o period of hardening of class relations during which the contradictions that would later touch off the May 1968 explosion were building up. The miners strike was the prelude to a new mobilization of the workers, while the "stabilization plan" and the "Fifth Plan" inaugurated a very active policy of monopolistic restructuring. The conjunctural policy followed after 1963 (credit restriction, strict price control), whose effects were prolonged by the repercussions of the West German recession of 1967, led to a slowdown combined with a growth in inflation. But this occurred under conditions that were generally favorable for the restoration of the rate of profit. Beginning in 1964 there was a very clear increase in the rate of exploitation, even though the growth of capital was slowing down. (The costs to the working class were a flattening of buying power, which grew by less than 3% per year in 1966 and 1967, and a very noticeable worsening of unemployment, which came as a result of the restructuring and of 36 the extremely intensive economic growth; in May 1968 there were 300,000 unemployed.) It should be stressed that this trend of development, favorable for capital, was not at all halted by the economic consequences of May '68 (the Grenelle accords). In fact, 1969 set a postwar record for the average rate of profit, a result of the combination of a very rapid growth of exports (because of devaluation), a sharp inflation 7%, as compared with 2.9% in 1967), and strong increases in productivity. 3. Nevertheless, this record was a particularly artificial one. Beginning in 1969 there began to emerge the early signs of the difficulties that have characterized realization of capital in the most recent period. The acceleration of inflation has permitted the appearance in recent years of a very rapid nominal growth in the mass of profits. But in reality, in terms of the real division of income and the rate of exploitation, this amounted to an evolufion that had become unfavorable to capital: Under the pressure of increased social combativity, the economic struggle allowed the wage earners to win substantial increases in their buying power (an average of nearly 5% annually); the increases in productivity were unable to compensate for this. In the context of the very high rate of accumulation that continued after the exceptional boom of 1969-70 and began to level off only at the end of 1973, this trend of development in the division of income led to a continuous deterioration in the conditions of financing (the rate of self-financing) and of profitability (the rate of profits) for capital. At the level of individual factories, these effects were partially limited by a greater resort to existing savings and the under-remuneration of savings in a period of rapid inflation. The debt level doubled in just a few years and reached nearly 40% of capital advanced. Low interest rates and a very favorable fiscal policy made massive indebtedness one of the most effective instruments for companies in concealing the decline in their rate of profit. But at the same time, these changes created the conditions for a considerable increase in the share of profits appropriated by the banks, which are the privileged instruments in the transformation of the incomes of wage earners into money capital in the hands of the enterprises. Even before the oil crisis, the growing tensions over the profits-wages division and the consequent effects on the realization of capital (the average rate of profit in 1973 had fallen back to the 1963 level) had objectively placed on the capitalist agenda a new economic offensive against wages, an offensive aimed at restoring the rate of profit, just as previous
offensives had been able to do with some success in 1958-60 and 1963-67. Growing difficulties in 1975 In relation to these developments, the present position of French capitalism appears more and more critical. 1. The overall growth of production and economic activity is increasingly threatened. Continuation of the expansion of exports and a substantial improvement in the balance of frade - hypotheses on which official optimism is based - are not at all assured for 1975. Since 1974 the simultaneous recession in the principal industrial economies has led to an overall restriction in markets, and at the same fime France has been unable to enlarge its share of these markets. This explains its offensive toward the Third World countries and particularly toward the oil-producing countries (notably Iran and the Arab countries), an offensive aimed at exporting arms and industrial equipment. French exporters have certainly carried off "excepfional" performances since the 1969 devaluation, but the advantages they have accumulated are increasingly threatened and will not suffice for allowing France to escape the effects of the world contraction of markets or ro avert the enormous cumulative growth in foreign debt that began in 1974. In the automobile industry, for example, French exports to the Arab countries increased 57% during the first half of 1974, while the rate of penetration by foreign producers had passed from 22% to 16% of the French market by the end of the third quarter of 1974. Thus, production continued to grow, although at a slower rate (on the order of 3%). Nevertheless, the consequences of the slowdown in growth and of sales patterns (an increased share for small cars) are such that at least two manufacturers (Citroen and Simca) have been thrown into grave financial crises, and serious difficulties are cropping up everywhere. * More generally, even under the most favorable variant (a slowdown of internal activity permitting a limitation on imports; defense by French exporters of their current share of the market in the imperialist countries and the oil-producing countries), France would only manage a gradual reestablishment of its balance of trade, which would not al*The Citroen crisis has just been settled through a state subsidy amounting to 1.5 thousand million francs for the incorporation of Citroen into the Peugeot- Michelin group.
low it to "absorb" the enormous debts contracted in 1974-75. In oddition, because of the weak vertical integrafion of French companies, every increase in exports, no matter what kind of policy of assistance is enacted (credits, subsidies, etc.), entails a strong increase of imports (especially of the most costly imports: energy, industrial equipment, etc.). That is what explains the fact that beyond the advantages drawn from the 1969 devaluation, France has not been in position to structurally assure itself a net industrial export capacity of the type West Germany has. Finally, the suddenness of the recession, coming after a long phase of euphoria about markets (196973), has already led entrepreneurs to exaggerate the consequences for their investment and employment policies. It can thus be predicted that there will be a cumulative process of contradiction of internal and external markets, even though this has not yet clearly begun. The breadth and forms of this process nevertheless remain subordinate to the development of the crisis on a world scale and to the manner in which the effects of the slowdown are distributed within the productive apparatus, and this is difficult to predict. 2. In addition, the problem of external financing once again dominates the whole French political and economic horizon. Continued growth in 1974 was made possible only by a significant decline in savings (a combined drop in the rate of private savIngs and in the rate of self-financing of enterprises) whose effect must necessarily be sought in international indebtedness (especially on European money markets). Even in the event of a (forced or voluntary) slowdown in growth, there is no prospect for the reabsorbtion of this debt during the next few years; quite the contrary. This has two consequences: The ability to export capital will be seriously weakened. Capital export, in full expansion since 1965, had essentially served to develop trade networks abroad. Its decline can only aggravate the difficulties in exporting commodities. This also implies a deepening of financial dependence, a cumulative increase in interest charges, and, in the short term, an increasing need to relieve the growing debts of firms abroad by using public financial resources. Whatever forms this takes (interstate loans, use of 1MF resources, European borrowing), it involves significant political promises that will have to be made to the imperialist "partners, " Germany or the United States. The Italian precedent testifies to this. 3. The already existing tensions over division of income and the consequences for the profitability
37
FRANCE of capital have not at all been eased. To be sure, the year 1974 registered a certain slowdown in the growth of the buying power of the wage earners (it was about 3.5%). But this was attained only at the cost of an exceptional level of inflation, for the increase in nominal wage rates during 1974 broke all records since 1968(6.1% in the second quarter of 1974, including a rise in the minimum wage;
4.5% in the third quarter). Moreover, this relative stabilization of real wages was not sufficient to reverse the tendency of the rate of exploitation to decline. In spite of the repercussions of the rise in oil prices on other prices, it can thus be considered that in a definitive sense the essential part of the
"bill" owed to the oil producers had to be paid by the companies. In the course of 1974 this reflected itself as a new deterioration in the conditions for financing investment and in the profitability of capital (the rate of profit).
1. The 1963 "stabilization plan" constitutes a memorable precedent for the man who was then in charge of economic policy: Giscard d'Estaing. Inflation was stopped and the rate of profit restored. But it was done at the price of "wrecking" growth for several years. Retrospectively, the bourgeoisie has become conscious of the fact that the conseauent brutal economic and social effects on the working closs during 1965-68 were directly related to the crisis of 1968. This explains, for example, why none of the political personalities during the last period of Pompidou's rule wanted to take responsibility for a strongly restrictive economic policy. Fear of a new workers uprising and the approach of an electoral race that Pompidou's illness was making more certain every day led al! the candidates for Pompidou's succession, Giscard in the First place, to refuse to take decisions that would have been injurious to their electoral popularity. Moreover, the legislative elections of early 1973 and the presidential election of 1974 took place in an atmosphere of euphoria about the country's economic prospects. In 1973 the Hermann Kahn report was issued. It "predicted" that France would overtake West Germany during the coming decade. In 1974 government propaganda was built around the theme of France as the island of prosperity in a world of economic disorder. " Disregarding probability, the candidate of the bourgeoisie, Giscard d'Estaing, affirmed at one and the same time that the drop in the prices of raw materials had been won thanks to the recession that was hitting every country except France (and that inflation itself would consequently slow down in France) and that the new upturn in economic activity, imminent just about everywhere, would allow for the rapid development of exports and thus the reestablishment 38 of the balance of payments that had been destroyed by the increases in the price of oil. 2. In spite of this atmosphere of permanent electoral campaigning, a few attempts to put the brakes on accelerating inflation were sketched out beginning in 1973. Their failure was not a technical problem, but was directly related to the political difficulties of the regime at the time. After the failure of the contractual policy of the
Chaban government, which sought to integrate a fraction of the working class and its trade-union organizations, the Messmer government tried to base itself primarily on the most reactionary layers: the peasantry, artisans, merchants, etc. That was the moment that the Ministry of Finance chose to launch, in October 1973, an "offensive" against high retail prices. Taxation of the profits of merchants, quickly abandoned, provoked the first merchants strike in twenty years. Limitation of credit was never a policy of tight quantitative restriction. Its principal effect was an increase in the coct of credit, which was reflected in prices and which also allowed the banks to increase their profits significantly. 3. Elected by a hair's breadth, Giscard neither wanted nor was able to take rigorous economic measures immediately. At the end of the spring of 1974, several months after growth had stopped everywhere in the world, the French economy still seemed to be exceptionally prosperous. Hence the new government's attempt to do nothing and to wait for the anticipated upturn in the other countries, hoping to wait out the slowdown just as in 1970. Of course, inflation had to be slowed up a bit, at least in order to obtain the loans that were required because of the foreign trade deficit. Fourcade's "cooling off" plan was above all aimed at convincing West Germany and other possible lenders of the French government's intention to bring inflation under control. There is not sufficient space here to detail all the measures that were taken: the fiscal policy, price controls, quantitative limiting of credit, taking hold of the nationalized banks, etc. These measures could only lead to the strengthening of "anti-inflationary" measures whose ineffectiveness had been generally proven since 1972. Moreover, this belated policy came at the very moment when new difficulties were emerging: the deepening of the world recession and the first signs of slowdown (and aggravation of unemployment) in France itself. But the incoherence of present government policy is not a result of technocratic incompetence. It directly demonstrates the political impotence of the regime in a situation of an extremely tense re-
lationship of forces between the social classes. The political pressure of the employers and the "small and middle-sized companies" led to the dismantling of the project of "conjunctural taxation" and to the elimination of real price controls (of the 1963 type). This reduced the anti-inflationary apparatus to publicity operations and demagogic stunts related to retail prices and merchants' profits. Incapable of holding back inflation, the government is also powerless to implement a policy of "relaunching" the economy in the face of the more and more immediate threat of recession. The goverment is lim¡ted to a few "pump priming" measures in the sectors that have been most affected (especially automobiles). The multiplication of bankruptcies and layoffs, aggravated by the effects of credit restrictions, is lending a "wildcat" character to the devaluation of capital, a character that is very different from the selective and harmonious policy of "redeployment" of the productive upparatus that the powers that be are claiming to be carrying out. An apparent inconsistency is showing up in the regime's attitude to the working class. The working class is beginning to suffer the effects of the crisis on the level of employment (collective layoffs, partial unemployment, expulsion of immigrant workers) and at the level of buying power, at least in certain sectors (especially public services). Since the autumn of 1973, this has given rise to significant sectoral mobilizations of the working class against layoffs (Paquebot France, Titan-Coder, the printing industry) and in defense of buying power (the postal system and public services). The refusal of the workers' leaders to take steps toward a real extension and centralization of the conflicts
(a "general strike until satisfaction of the demands" in the public service sector) has led to a dislocation of the movement, in spite of the "general strike" of November 19. This policy, combined with an active policy of the trade-union leaderships aimed at substituting "negotiation" for any political confrontation that could challenge the existence of the present regime (see the letter of CGT leader Séguy to Giscard, for example) has permitted the regime to refuse to make any concession, even on the strictly economic level, that could challenge its overall policy (especially as to disposition of the budget and wage contracts in the public services). Nevertheless, this cannot conceal the regime's present incapacity - given the current state of working-class mobilization - to impose on the whole of the working class a "peaceful solution" that would Force a division of income in conformity with the interests of the accumulation of capital. The institutions of "social harmony" (incomes policy, profit sharing, and participation) that the Gaullist regime had tried to set up, and their pale reflections under the Pompidou regime ("contracts for progress"), seem less able than ever to provide the regime with the means to bring the movement for economic demands under direct control. The "conjunctural tax" represented an attempt to induce the companies to directly assume the job of "policing wages"; this project failed both because of the contradictions it provoked within the bourgeoisie and because of the very strong pressure of the economic demands of the workers. Despite the very recent failure of the movement in the public services after the November 19 general strike, economic and political accounts between the workers and the regime are far from settled. t
39