Cooking the Books 1 – Some reformists never learn
When, after losing the European elections to the National Rally (formerly the Front National), Macron called a snap election, the politicians regrouped to contest it. On the left, the hard-left breakaway from the ‘Parti Socialiste’ France Unbowed, the Communist Party, the Greens and the PS itself formed a New Popular Front (NFP) which emerged as the largest group in the National Assembly.
In an article in the Guardian (2 July), Julia Cagé and Thomas Piketty (yes, him) described its economic policy and the logic behind it. They wrote of its:
‘ambitious policies to improve the purchasing power of poor and lower-middle-class people. These reforms include a substantial increase in the minimum wage, wages indexed to prices and free school lunches. Most importantly the NFP wants to prioritise investment in the future by increasing public spending on infrastructure – throughout the country, including in isolated rural areas – as well as in health, education and research’.
The two are co-authors of a book about elections in France since 1789 in which they concluded that it was people in small towns and rural areas that tended to vote far-right ‘first and foremost because of socio-economic concerns: they lack purchasing power, they suffer most from the lack of investment in public infrastructure’, adding ‘and they feel that they have been abandoned by governments of all stripes in recent decades’. Hence the rise of the far-right.
This seems plausible enough; it’s unlikely to be just because they want to kick immigrants out or stop more coming in (that’s only the false solution proposed by the far-right). Cagé and Piketty reckon that, if the parties of the left increase purchasing power and spending on public infrastructure they can win people away from the ex-Front National.
An increase in people’s purchasing power through higher and indexed wages and benefits and more government spending on public services and amenities is all very well but where is the money to come from? Ultimately, there is only one source: the profits of business enterprises. But the pursuit of profits is what drives the capitalist economy and if you tax them too much to redistribute income to the ‘poor and lower-middle-class’ or to pay for first class health care and education that will provoke an economic slowdown, making this unsustainable. That’s the way capitalism works and can only work: by giving priority to profits over satisfying people’s needs. Despite the political slogan, profits cannot be put before people.
The last time this was tried in France was in 1981 after Mitterrand was elected President and a government including the Communist Party came into office. In June the new government increased people’s purchasing power by putting up the minimum wage, pensions, family allowances and housing benefit but the result was a disastrous failure compared to which what happened under Truss was a storm in a teacup.
The increase in benefits had been paid for by recourse to the printing press; as a result, the internal price level in France got out of line with the international level. The franc was devalued in October and again in June 1982. By this time, the government had learned the lesson that if you are in office under capitalism you must respect its economic laws, and rowed back on its reforms, giving priority instead to trying to revive the profits of business enterprises and adopting a policy of ‘rigueur’ regarding wages and benefits. In March 1983 the franc had to be devalued for a third time.
While, to judge by the programme of the NFP, reformists in France have not learned by their previous failures to improve people’s lives by increasing their purchasing power, reformists in Britain have. The new Chancellor of the Exchequer here is skipping trying to do this and going straight to the ‘rigueur’ stage, called here fiscal responsibility.