France as the Epicenter of Austerity: Sympathetic Thoughts About Parguez’s Contribution on the Origins and Nature of the Euro

Abstract

This paper outlines the way in which during the Mitterrand years the French Socialist technocratic elites built up the institutional framework of austerity centered on competitive disinflation. It then argues that the French template was absorbed by the European Monetary Union in 1999, thereby enshrining wage deflation as the glue holding the Eurozone together. The paper ends by listing the gains that the French ruling elites hoped to obtain from such a Europe-wide “austerian” framework. It also stresses the toxic social and political damages resulting from those policies.

Keywords:

• austerity
• competitive disinflation
• France
• Keynesian
• surpluses
• unemployment
• wage deflation

Notes

Because—as Kalecki and Keynes understood—net external positions siphon off the rest of the world’s effective demand, thereby exporting a part of domestic unemployment.

Tom Ferguson has reminded me that the regents of the Banque de France organized an impressive propaganda machine in support of the—disastrous for Europe—Franc Poincaré, with many journalists on the regents’ payroll.

The ENA was established in 1944 to forge high-ranking public servants and also business executives. Its status is far above that of the universities.

The most significant statement on the spread of social exclusion in France came from prime minister Manuel Valls (2015) a few days after the deadly attacks on Charlie Hebdo and the Kosher supermarket in Paris.

As it was for public consumption (of the Parisian liberal middle classes), the socialists’ declared stance against the rising manifestations of racism. In an article published in Le Monde, Alain Badiou (2012) documented how the socialists gave space to the National Front’s views.

See Storm and Naastepad (2015) for an anti-neoclassical cogent critique of the nexus between wage deflation and competitive gains in the German context.

In the Financial Times of February 15, 2010, Issing wrote: “In the 1990s, many economists—I was among them—warned that starting monetary union without having established a political union was putting the cart before the horse” (Issing 2010).

The translation of grandes écoles to “high schools” is misleading. It should perhaps be the “top schools” because their status is above that of a university.

The statement is simply a synthesis of Kalecki: “It is the export surplus and the budget deficit which enable the capitalists to make profits over and above their own purchases of goods and services” (Kalecki 1971: 86).

Literally, “the France down below”; meaning the populace. It is a derogatory term used by the elites and the “sophisticated” media outlets. It surfaced in particular when in 2002 Jean-Marie LePen beat the Socialist prime minister Lionel Jospin to the second position in the presidential elections.

Additional information

Notes on contributors

Joseph Halevi

Joseph Halevi, a retired faculty member, Department of Political Economy, University of Sydney, Australia, is currently a visiting professor at the International University College, Turin, Italy, and also affiliated with the Research Center CRIISEA at the University of Picardie, Amiens, France.