In 1947 a young geographer in Jean Monnet's planning commission, Jean-François Gravier, published a best-selling book entitled Paris et le désert français, to highlight the economic disparities between the capital city and the rest of metropolitan France. At that time income per capita in the Seine department of Paris was 80 per cent higher than the national average, while in the poorest parts of France – Brittany, Corsica, the south west and outside the cities in the southern Alps – the average per capita income was less than 75 per cent of the national average. Even worse was the fact that levels of inequality had been increasing rather than declining in the interwar period. After the war the consensus was that it was the central state, with its national plans to promote economic development, that was best placed to correct such disparities. However, disillusionment with the direction that national planning had taken under de Gaulle, illustrated by the sporadic outbursts of violence in the poorest regions, most notably Brittany and Corsica, by groups demanding some devolution of power or complete independence from France, led the Socialist party to consider the question of devolution.

The contraction of large parts of the manufacturing sector from the late 1970s onwards, which was as much a regional as a national economic problem, since most of the industries in question were located in the north and northeast of the country, added urgency to the debate. Under legislation passed in 1982 the new Socialist government promised to introduce local democracy by devolving power from the central state. The question was how much power and to which level of subnational government.

At that time there were 36,500 municipalities (communes) in France and 100 departments. Rather than merge the municipalities, as Denmark and Sweden opted to do, the Socialist government added a new layer of subnational government, that of directly elected regional councils. By 2015, regional inequalities in metropolitan France were judged to have reached their lowest level for 100 years. Average incomes in the Seine department were 35 per cent above the national average, falling to 27 per cent after income tax.

As we saw in Chapter 4, the greatest inequalities after the Second World War were between those living and working across a range of sectors and activities in Paris and those working in the rest of the country, in what Gravier referred to as the French “desert”. Even in that desert there were distinctions within the agricultural sector between the large arable farms in the north and the Île-de-France, which employed paid labour, and the small family-run, mixed farms elsewhere. There were also distinctions between those working in industry, mainly in the north and northeast of the country, and those working in the service sector, spread across France. It was the rapid growth of the economy and the movement of millions of people out of low-productivity jobs into higher productivity ones that led to a rise in living standards and a reduction of the gap between Paris and the rest of the country. It was when growth rates slowed down after the mid-1970s and the tens of thousands made redundant in the traditional industries could not find alternative employment in the expanding service sector that inequality began to rise and mass unemployment became a structural problem. Although it was never as high as in the neighbouring countries of Italy and Spain, unemployment became a persistent problem for France, peaking at 10.8 per cent of the active labour force (2.8 million) in 1997, and reaching a new high of over 3 million people in 2015. On the other hand, income inequality levels, although rising from the 1980s onwards, were also lower than in Spain and Italy, and were much lower than in the United States and the United Kingdom. In this chapter we shall analyse the record of the French government in addressing the main forms of interpersonal inequality over the period since the “30 glorious years” came to an end.

INCOME INEQUALITY

During the early 1980s, when many OECD countries were following the example of the United States and cutting taxes and public spending, the French Socialist government did the opposite. It increased income taxes on middle and high earners while introducing an entirely new tax on wealth to help fund its nationalization and expansionist public spending programme.

The 30 years after 1945 were the longest and most stable period of growth in measured French history bringing to an end years of economic decline. Immortalized by the French economist Jean Fourastié as the “30 glorious years” (trente glorieuses), they were also a time of rapid structural change and economic development. Millions of people moved out of low-productivity jobs in agriculture to work in the industrial and ser-vice sectors. The protective walls of tariffs and quantitative restrictions that had long shielded producers from international competition were gradually dismantled as France participated in the European Economic Community (EEC) and in the trade liberalizing rounds of the General Agreement on Tariffs and Trade (GATT) and of its successor the World Trade Organization (WTO). The direction and economic importance of trade also changed, shifting away from the former slowly growing colonial markets and towards the expanding markets of the EEC. What was traded also changed, with France for the first time running a surplus in some agricultural products and foodstuffs as well as in transport equipment and some manufactured goods. Much of this altered after the mid-1970s, when the postwar boom came to an end at the same time as the developed economies moved into recession. In the 40 or so years since the mid-1970s, growth in France, as in other developed economies, has slowed down and employment in industry and agriculture has shrunk, but the service sector has expanded rapidly. With a return of women to the labour market on a scale not seen since before the First World War, the service sector was unable to absorb the millions of men left unemployed as a result of the contraction of industry and agriculture. At the same time, the cost of redistributing income to offset some of the growing inequalities in society led to a tax burden that was higher than anywhere else in the developed world.

Such momentous changes over a lifetime have stimulated considerable debate among historians but little consensus over the causes. What is undisputed is that what happened after 1945 reversed the long period of economic decline that contributed to the shocking surrender of France in 1940.

Adam Smith died in 1790, just before the French Revolutionary and Napoleonic wars. The long peace of the nineteenth century that followed rested on an implicit geopolitical deal. For decades after the Congress of Vienna of 1815 had established a framework for peace, no one wanted to challenge Britain, in part because they were exhausted from war but also because doing so might upset the balance of power in Europe and strengthen one’s rivals. Furthermore, the world’s leading economies subscribed to the gold standard – fixing their currencies to the price of gold – thereby ensuring a stable international payments system that steadied capitalism. The hope was that trade would now replace military conquest, and that peace and prosperity would be assured. The first half of the twentieth century crushed that hope. It was a time of war and economic catastrophe.

As sociologists, we view capitalism and its optimal needs differently from conventional economists. Ironically, however, our own perspective draws on the work of well-known early economists – sociologically astute, but often misunderstood or neglected in economics today. Those earlier economists provide us with most of the important building blocks for our argument. They also remind us that the foundations of economics are fundamentally different from the widespread contemporary belief that markets work best when political and social forces do not interfere with them. The historical perspective suggests that this contemporary view is wrong and that putting it into practice has caused serious economic damage.

We have seen in the previous chapter that one of the purposes of the postwar reforms was to democratize economic policy-making in France in order to provide a wider range of groups with the economic security that governments of the Third Republic had failed to deliver. This was to be achieved by changing the structure of the economy according to a national economic plan. While the new postwar state was committed to intervening in the economy rather than continuing the combination of economic liberalism and protectionism that had failed to guarantee the living standards even of the agricultural sector under the Third Republic, the instruments and objectives of such an intervention changed over time.

What is clear is that there was nothing automatic about the way in which the French economy caught up with the more technologically advanced economies after the Second World War. The aim of this chapter is to analyse and, based on national accounts, measure how well the French economy performed over the whole period 1945–2018, before focusing on the performance in each of the four sub-periods identified in Chapter 2.

OVERVIEW OF THE PERFORMANCE OF THE FRENCH ECONOMY, 1945–2018

Growth

In contrast to the behaviour of the French economy in the nineteenth century and in the interwar period that had led historians to conclude that for better or worse France was following its own path to economic development, after 1945 it participated fully in the boom experienced across western Europe. Growth rates averaged 5 per cent per annum over the period 1950–73 compared with 1.5 per cent in the period 1870–1913. By 1973 per capita GDP was above that of the United Kingdom and was closing the gap with the United States, the technological leader (up from 48 per cent in 1950 to 73 per cent in 1973).

The postwar boom came to a sudden end in the international recession of 1973–75 but it hit the French economy later and was of shorter duration than the OECD average. Along with the rest of the developed world, the French economy suffered a second recession in 1992–93 and a third in 2008–09.

Let us recall three events that challenged the political status quo in the early part of this century. The first took place in 2000, when Danes were asked in a national referendum whether they wished to join the European Monetary Union, abandoning Denmark’s national currency, the krone, for the euro. Every element of the political elite – both left and right – as well as most intellectuals and the media were in favor of a “yes” vote. But the vote failed, beaten by a vote of “no” most common among less-educated Danish men living outside metropolitan Copenhagen. This was a harbinger of things to come. The second event saw protestors commandeer Zuccotti Park in lower Manhattan’s financial district on a crisp fall day in 2011, setting up a makeshift tent city to protest economic inequality in the United States.

The long and acrimonious Brexit negotiations between the British government and the European Commission representing the 27 member states of the EU succeeded in uniting all the main political parties in France in opposing a similar French exit from the EU. If this seemed to be a ringing endorsement of President Macron's unwavering support for the Union, the Front National, renamed the Rassemblement National in June 2018 by its leader Marine Le Pen, made clear that its change of policy towards membership of the EU was conditional on the latter adopting a protectionist policy in its trade with the rest of the world, and ending the free movement of labour within the European Single Market. With protectionism on the rise across the world, Le Pen's policy was increasingly popular in France, where a growing number of voters were happy to blame the persistently high unemployment and rise in poverty and inequality on immigrants and imports.

As the Covid-19 pandemic began to spread across the world it revealed and widened inequalities both within and between countries. Not only did it expose differences in income and living and working conditions but it deepened the division between the digital and the non-digital economy, thereby revealing the extent of European dependence on the US technology giants that had been its main beneficiaries. There was no European equivalent of Google, Apple, Facebook or Amazon. This was blamed by the French government partly on the tax privileges enjoyed by the US multinationals and partly on the failure of the European Commission to address the problem. Long before the outbreak of Covid-19, indeed since 2013, the French government had been campaigning to win the agreement of the other EU member states to tax the big tech companies in the countries where they made their profits rather than in those where they were headquartered. However, since European tax policies require unanimity, the French were unsuccessful. When Apple and the government of the Republic of Ireland won their appeal against the Commission's demand for a repayment of tax, and with the US opposed to any change in the way that the firms were taxed, the European Commission was unwilling to risk starting a trade war with the US by pressing the case, preferring to leave the issue to the OECD to negotiate.

Appendix

Storm clouds began to threaten the postwar political economy rather quickly. By the late 1960s, war-torn countries had made great strides in revitalizing their economies, while competition was heating up in world markets, challenging the United States’ economic primacy. Then, the price of oil skyrocketed in the 1970s, driving production costs higher. These years came to be dominated by stagflation – a toxic mix of inflation, sluggish economic growth, and high unemployment. On top of that, thanks to dramatic improvements in telecommunications and transportation, consumer demands began to change rapidly, and manufacturers raced to keep up. In 1909, Henry Ford had promised his customers that they could buy a Model T in any color so long as it was black; by 1973, the Ford Mustang came in three body styles, with five engine options, a choice of three transmissions, and more than a dozen colors.