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Thursday, February 12, 2009

Another Look at the French Experience

In November 2008, I wrote:

The economic crisis has reversed the post-Soviet process of international integration – so-called "globalization." As with the Great Depression, the economic crisis strikes different economies in different ways. Despite efforts to integrate the world economies, the international division of labor and the differing levels of development foreclose a unified solution to economic distress. The weak efforts at joint action, the conferences, the summits, etc cannot succeed simply because every nation has different interests and problems, a condition that will only become more acute as the crisis mounts… We see great stress on the European Union. Germany's export driven economy is collapsing. France, on the other hand, has yet to feel the full force of the crisis… Indeed, the unraveling of the EU is a possibility. (The Deepening Crisis and the Socialist Option, MLToday 11-28-09)

At the time, the media were hailing the efforts on the part of the major capitalist governments and international organizations to forge a common solution to the economic crisis. Confidence was high that some kind of cooperative solution could be won. In the ensuing three months that confidence has been shattered. As I forecast, economic nationalism has emerged with a vengeance. "Buy American" has returned to spice the speeches and writings of many labor leaders. Limiting bailout funds and stimulus programs to US companies has swept through congressional debates. The same nationalist sentiment has caught fire throughout the world, including the headline-grabbing strike in the UK.

There is no point in lamenting this development since it is a logical feature of capitalism. It is impossible to secure joint action among nations that tolerate collective action only out of self-interest or economic coercion. Roosevelt understood this by stepping away from seeking international solutions and focusing upon domestic policies to attack The Great Depression.

There is however a point in critically analyzing the form that this nationalism takes. Some forms are more defensible than others.

In the US, we see a vulgar, unproductive nationalism that identifies the interests of the nation with the interests of corporations led by CEO's with English surnames or US residence. Never mind that US companies do not exist; they are virtually all multi-nationals. Never mind that these companies have long evacuated factories and jobs to low-wage countries. Never mind that these corporations reward product loyalty with further layoffs and intense exploitation through "restructuring".

Contrast this with the French nationalism expressed by the policy of linking bailout money for corporations to work place retention and job protection discussed in yesterday's ZZ post. Thanks to French labor militancy, Sarkozy - "le Petit Bush" – was forced to impose guarantees upon French auto makers that they would not lay off workers. In return, they are to get $8.4 billion in low interest loans. Today, we learn that the French government will insist that corporations close foreign plants before downsizing domestic enterprises.

It is not the return to nationalism that I admire, but the French labor movement's insistence that corporations cannot benefit from public funds while at the same time bringing desperation to French workers. This is far and away superior to a vacuous, impossible "Buy American" campaign that would not, and could not benefit US workers.

The more advanced level of class struggle in France underlines the bankruptcy of the policy of class collaboration deeply entrenched in the US labor movement. For years, French labor militancy was the butt of jokes by visitors and commentators who mocked the frequent public demonstrations that influence public policy and the comprehensive social safety net won by these actions. I remember well discussing the French 35 hour work week with friends in a Parisian restaurant only to be interrupted by tourists from the US who proceeded to lecture us on France's decline and failure to follow in the footsteps of the US.

Despite the efforts of many of the French to force emulation of the US version of capitalism, France has preserved much of its social democratic legacy, including the world's best health care system according to the UN. The Wall Street Journal concedes today (Feb. 12, 2009) that "France has long resisted textbook free market economics – and it could weather the downturn slightly better than its neighbors as a result." They report that France is the only European country that avoided recession in 2008.

The Wall Street Journal, in part, attributes France's relative immunity from the crisis to its large public sector spending: the French spend 52.7% of GDP, Germany 44.4%, and the US only 37.4% (2007) in the public sector. As the Journal explains, "Because most governments seldom shed workers quickly – particularly during a downturn – a bigger public sector means that a country's overall wages – and thus, consumption – tend to hold up."

Thus, the French do better because they keep workers employed, but we encourage companies to "restructure" by disposing of workers.

Those who study the New Deal should take note. Roosevelt engaged direct government employment by absorbing the unemployed into Federal works projects, conservation, and services without the intermediary of private companies as envisioned by the US government's current stimulus package. The French experience confirms the wisdom of this approach.

Zoltan Zigedy

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