Some Wednesday snippets. First, I juxtapose the political machinations that the EU President is engaged…
The French inferiority complex
The – Battle of Sedan – in September 1870, was a decisive turning point in the relationship between France and Germany, which still resonates to this day and has influences many subsequent historical developments. When I was researching my 2015 book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale (published May 2015) – I read a book by the French linguist and historian – Claude Digeon – which was a published form of his PhD Thesis. He analysed the impact of the loss at Sedan to the Germans on the French intellectual culture. He conjectured that between the loss in 1871 and the start of the First World War, France suffered from a “‘hantise chronique'”, une obsession pour l’Allemagne ou, tout du moins, pour une représentation de l’Allemagne (a ‘chronic obsession’, an obsession about Germany or, at least, about a representation of Germany). The same sense of inferiority continues to drive French behaviour, particularly in relation to Germany. It has created two negative dynamics: (a) it has increasingly divided the French population and opened the door to the Far Right to influence policy; and (b) led to France trying forever to command the world stage which has led to the Eurozone disaster.
I was reminded of Claude Digeon’s work by an article in the German paper, Frankfurter Allgemeine Zeitung on June 12, 2020 – Macron in Der Krise: Frankreichs Deutschland-Komplex – (Thanks Natalie!).
The article by Michaela Wiegel reflects on Emmanuel Macron’s declining popularity and unravelling agenda in France as he attempts, at the same time, to play the role of brokering big deals with the Germans to provide solutions to the catastrophe that the pandemic has exposed in Europe.
The defeat at Sedan – the final act of the Franco-Prussian War – saw the end of the Second Empire and the capture of Louis Napolean (Napolean III) and exile to Britain – and was the result of significant tactical errors by the French and a ruthless, technical campaign waged by the German armies.
The French were outmaneouvred, had inferior forces and armaments, and were humiliated by the loss.
The thesis in Claude Digeon’s work was that this defeat at the hands of the Germans scarred the French intelligentsia .
In the words of American historian, J.L. Boone Atkinson (1960), the major aim of Digeon’s 1959 book – La Crise Allemande de la Pensée Française (1870-1914) (published in 1959 by the Presses universitaires de France) was.
… to analyze the reactions of the generations of French intellecturals to the defeat of France and her subsequent relegation to a secondary role in Europe …
(Boone Atkinson, D.L. (1960) ‘Review: La Crise Allemande de la Pensée Française (1870-1914)’, The American Historical Review, 66(1), 130-131.)
Boone Atkinson wrote that Digeon analysed the developments driven by “an inferiority complex engendered by the defeat which culminated in the Dreyfus struggle and the triumph of the internationalist and republican Left; the final Germanophobia of a new generation, who were convinced of the inevitability of war …”
Digeon argued that the various developments that defined the evolution of France’s Third Republic were conditioned by this sense of inferiority relative to the Germans as a result of the humiliating loss at Sedan and the diminished standing in Europe.
Claude Digeon also speculated on how “this mental construction” would evolve after World War 2.
The Post World War 2 evolution of French inferiority
I considered that question in my 2015 book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale (published May 2015).
I am planning a sequel to that book in the coming years that will drill down into some of the complexity that formed my argument in Eurozone Dystopia but was tangential to the main purpose of that book.
In particular, for those who have not read the book, I argued that while it is popular to cast Germany as the ‘bad guy’ in the Eurozone, the reality is that it was attitudes within the French intelligentsia that drove a lot of the destructive dynamics that led to the creation of the common currency.
There are many examples to validate that contention.
If you go back to the 1961, the French tried to promote the so-called ‘Fouchet Plan’, which would have replaced the emerging supranational European institutions with a system of intergovernmental bodies to run Europe and be dominated by France.
The proposed ‘Union of States’ was also motivated by President de Gaulle’s increasing hostility towards US involvement in European affairs under the Atlantic alliance (NATO).
I cited a famous private conversation between De Gaulle and the French government minister Alain Peyrefitte on August 22, 1962 about the Fouchet Plan:
What is the point of a Europe? he confided Alain Peyrefitte on August 22nd 1962. It should serve to prevent us from being dominated by America or Russia … France could be the strongest of the six members. We could control this lever of Archimedes. We could carry away the others. Europe represents the first opportunity France has to regain what she lost at Waterloo: world dominance.
The desire to regain France’s premier position in Europe drove a lot of its strategies and decision-making.
The rejection of Pierre Werner’s plan for monetary integration, published in 1970, was motivated by the French fear of German dominance and their unwillingness to cede power to supranational institutions.
Within France, there was also the internal struggle for dominance between the French Planning Office and the French Finance Ministry.
The former was dominated by Keynesians and prioritised domestic objectives (such as full employment and a high wage economy), which meant they would allow the exchange rate to adjust (through devaluation) if international competitiveness became an issue.
But the Finance Ministry was more pragmatic and argued that France should aim to create a strong franc (relative to the deutschmark) and this would require suppression of wages and fiscal austerity.
Both views, though quite different in prescription, paradoxically, reflected the same idea that France should try to regain its position in Europe.
The Planning Office, embraced the ‘la tradition républicaine’, which emerged after the French Revolution had disposed of the monarchy.
It created a strong secular state with a central role in economic management from education and training through to final production and sale.
The State elite institutions (the ‘Grandes Ecoles’) were formed, and provided the private sector with cadres trained in the tradition that politics rather than the market would drive economic policy.
The French embrace of the creation of European-level institutions in the 1960s was more about ensuring Germany would never again go to war with them than any grand desire for a supranational entity.
And it was clear that any participation in these supranational institutions would be seen as a vehicle for the French regaining their former ‘glory’, as perceived by the intellectual class.
On the other hand, the Finance Ministry, which was subordinate but ambitious sought French restoration in terms of replicating what they saw as German discipline – a strong currency and inflation control.
Amidst all the currency turmoil in the late 1960s and into the 1970s, a game changer arrived – the rise of Monetarist thought within the academy.
The French franc was highly unstable and as a result of the fixed exchange rates, the government was forced to adopt more austere policies than they desired.
By the mid-1970s, Monetarist logic had infested central bankers and economic policy departments of most governments.
The long-standing dominance of Keynesian policy was thus abandoned by a large number of economists in the 1970s.
Raymond Barre was the first to implement these ideas in France in 1976.
The rise of Monetarism represented a shift from those who consider that state intervention, regulation and spending is crucial for the achievement of a balanced and equitable economy, to those who eschew state involvement and believe, with religious passion, that a self-regulating free market can provide increasing wealth and opportunity for all.
The core Monetarist idea was that excessive growth in the money supply associated with excessive government spending and lax monetary discipline by the central banks (interest rates too low) caused inflation.
Further, price stability required the imposition of deflationary policies, which involved tighter credit policies and cutbacks in fiscal deficits.
Within France, the Finance Ministry thus gained relative supremacy in policy making.
The introduction of the Monetarist-inspired Barre Plan in 1976, by French Prime Minister Raymond Barre, under President Valéry Giscard d’Estaing, showed how far the French had shifted from their Gaullist ‘Keynesian’ days.
Across Europe, unemployment became a policy tool aimed at maintaining price stability rather than a policy target, as it had been during the Keynesian era up until the mid-1970s.
Unemployment rose sharply as national governments, infested with Monetarist thought, began their long-lived love affair with austerity.
The intellectuals driving these changes within France adopted a rather crude approach to what they saw as a ‘German’ strategy for economic prosperity.
So attacks on unions, cuts in government spending and the like – aimed at reducing inflation were adopted.
But the Germans met the inflation challenge (after the OPEC oil price rises) with quite different policies – involving workers in participatory management schemes (‘Mitbestimmung’) and involvement on works’ councils (‘Betriebsrat’).
The German government also dealt with the unemployment with public sector job creation policies and investments in retraining.
In other words, while the French were pursuing what they thought was the German model for supremacy (austerity), the Germans were pragmatic and innovative.
The French government fell lock-step into the increasingly dominant Monetarist policy approach that involved using rising unemployment as a policy tool to discipline the inflation process.
And the austerity embrace by Mitterand in 1983 and the championing of the ‘franc fort’ policy by Jacques Delors as Mitterand’s Economics, Finance, and Budget Minister started France on the path to Maastricht.
Without the rise of Monetarism, which shifted thinking in France towards an approach to monetary union that the Germans could accept, the Eurozone would never have been created with the harsh fiscal rules that restricted the latitude of the national governments.
Delors knew that the fiscal discipline approach would satisfy the Germans. He also knew that the French still harboured ambitions to be the dominant player in Europe and by leaving national governments in charge of fiscal policy he could appeal to the traditional desire by the French to run their own affairs.
Monetarism had bridged the two camps.
The decision to introduce the single currency had very little economic basis and was largely driven by the French desire to be a dominant European force interacting with the obsessive fear of inflation among German policy makers.
This dysfunctional Franco-German dynamic took a turn for the worst when it intersected with the resurgent neo-liberal economic ideology in the late 1980s.
The Treaty of Maastricht was a direct result of this combination of factors.
I go into much greater detail about this in – Eurozone Dystopia: Groupthink and Denial on a Grand Scale.
So Claude Digeon lived to see how the French inferiority complex evolved after World War 2 (he died in 2008).
And I doubt he would have been impressed, although I cannot find any later work from him where he discussed the recent European monetary arrangements.
The fall of Macron
When Emmanuel Macron was elected to the French Presidency he announced a ‘liberalisation’ agenda that was held out to French elites as a way of asserting French innovation to the sclerotic situation that Europe had created for itself as a result of the dysfunctional architecture of Eurozone.
In other words, the agenda played directly into the long-held intellectual view that France had to regain its place in Europe and challenge the seemingly dominant position of Germany in the dynamics of the monetary union.
Macron’s agenda has largely appealed to the Parisien and urban elites in France but fail to cut through with the regional and rural France.
The yellow vest rebellion demonstrated how out of touch this agenda was.
It is all very well for the urban elites who catch the metro to cafes and work to support a rise in fuel tax but for the workers outside of Paris, who rely on the use of cars for work and social life, the move was devastating.
These are the same sorts of tensions which the Brexit issue exposed in Britain
And since the beginning of the year, France’s economic outcomes have deteriorated significantly and its pandemic experience has been in sharp contradistinction to the better German outcomes.
Internal disputes and conflicting agendas within Macron’s party – La République en Marche (LREM) – are also undermining Macron’s political position.
We have witnessed conflicting agendas such as:
– disputes over who should occupy key committee positions.
– a dispute about who should be the mayor of Paris.
– legal changes restricting migrants’ access to public health insurance – driven by far right.
– Disputes about CETA (Canadian Free Trade Agreement).
– green action lagging (the Environment Minister left in 2018).
One green-oriented MP quit saying the party was “prisoner of budgetary constraints and short-term political arrangements” (Source).
The combination of an increasing economic catastrophe, the pandemic and internal disputes has created a situation where Macron’s authority is now severely compromised.
The ‘grand agenda’, which might resonate with the urban elites, has been rejected by French workers, who, as the Frankfurter Allgemeine Zeitung article notes, are:
… less interested in the history of the Great War than in voicing their anger at his economic policies …
The “profound intellectual injury” (a quote from Mona Ozouf who was channelling the work of Claude Digeon), arising from Sedan, was “not only perceived as military, it was more painful and the victory of German science and technology was perceived. In the Elysée Palace, people like to refer to Digeon’s book these days to explain the disaster mood in the waning epidemic.”
The Frankfurter Allgemeine Zeitung article says that:
The parallel to the current French state of affairs is obvious. Almost every day, philosophers, politicians and publicists make France’s decline by comparison with Germany.
French commentators keep still try to claim French excellence relative to Germany – as a sort of dysfunctional delusion.
The FAZ article quotes a French right-wing MEP claiming that German austerity had undermined its “health care system” while France had the “the best health care system in the world”.
The evidence suggests otherwise.
The French would be better focusing on the failures of the systems that they have discretion over rather than continue to aspire in some way to be ‘better’ than Germany, while still intrinsically believing that Germany is a superior force.
Conclusion
The ‘competition’ between France and Germany has long historical roots.
The French intellectual mentality that has driven French policy and strategy has been an important part of this dynamic.
It has led to very destructive outcomes in many ways.
The Eurozone is one of the more damaging manifestations.
A reflection would suggest that France should lead the way out of the Eurozone and craft policy that advances the interest of all French citizens rather than play into the global aspirations for supremacy held by its intellectual elites.
That is enough for today!
(c) Copyright 2020 William Mitchell. All Rights Reserved.
The French also impoverish European nations by letting their government-owned multinationals buy everything and cashing in, plain rent-seeking.
For instance Engie owns Belgium’s nuclear power plants and largest electricity provider.
It’s as if the French took their communist leanings of state control into a super-capitalist state monopolist to gain power over much of Europe, with help from politicians in other countries, I might add.
Though in itself not problematic per se, government control is a problem in a union that prohibits nationalisation.
Basically eurozone countries have been ripped off by the French and the Germans. And even then poverty is rampant in those countries.
Sickening really.
Thanks for this fascinating read, Bill.
In his “Capital and Ideology” Piketty points to Macron’s elimination of the wealth tax and alteration of the tax on capital income from a progressive regime to a flat tax, all paid for with the tax on fuel, as central to the failure of En Marche to retain legitimacy in the eyes of much of the electorate — hence the “gilet jaunes,” the transportation strikes and the furor generated by his proposed pension reforms.
the metro elites much like the regional elites are just that elites less than 1% of the population.
Much of the rest are struggling to pay the rent .Lets not give up on workers in our growing urban
population.
“A reflection would suggest that France should lead the way out of the Eurozone and craft policy that advances the interest of all French citizens rather than play into the global aspirations for supremacy held by its intellectual elites.”
Hence there lies the problem in Greece, Italy, Brexit etc…
The elites love the Eurozone it works for them and they can shrug off any responsibility and just blame the EU for policies that they could never have introduced themselves but always wanted to do.
The whole power structure along with the media are complicit in keeping it that way. They threw everything at trying to overturn the Brexit result and rearranged TV scheduling to try and do so. From 8 in the morning to 2 in the afternoon on the BBC were non stop – stop Brexit shows. Inventing new shows with new presenters to try and change voters minds.
The left need their own version of Farage to keep the liberal left honest. They say it would divide the left but it never done the Tories any harm they keep winning elections. Farage and his followers are on top of the Tories at all times and in some cases now decide policy.
We will always know who wins this battle over the longer term simply by seeing what names are on the ballot box when we go to vote. Keir Starmer on the ballot box instead of Corbyn tells you everything you need to know. Joe Biden on the Ballot box instead of Bernie even more so. Their job is not only to keep the status Quo but entrench it even further.
The liberal left are winning with nobody is there to keep them honest.
Once Boris is gone and Trump is gone… The Liberal elite are doing everything they can to get rid of both.
The last decade will be wiped from our memories it will be a complete reset to how it was before. With the liberal left and liberal right names on the ballot paper. Only difference between them is what they had for breakfast that morning.
The reset of the geopolitics of Neoliberalism – We all know what that means..
Then I think political parties will split for real. The fractures will be too great and deep to heal. Then we will see what type of leader it throws up in the UK. It’s an open goal for Farage he would have the playing field all to himself like Trump did. Unless, the left can produce their own version of Farage.
They had one in Corbyn then assassinated him from within…
I just can’t see how the main parties will survive if the liberal left and liberal right are the only voices we are allowed to hear.
Interesting article. Not to be too picky, but do you have a copy editor? I know you are busier than the proverbial one armed paper hanger, so I suspect not enough time left to edit. Anyway, as an old print journalist, I always valued my editor’s quick ability to ‘clean up’ my writing before it was printed.
Most gripping critique through the lens of MMT! This piece of writing provides insights into the affairs of the past, present and future of Europe, in many important angles, and in a way that one may have never perceived them in that light, but ones that can provoke a lot of discussions/further examinations. This can lead to a good PhD dissertation on French future economic directions (if someone needs one).
Thank you for the insights and analysis again, Bill.
I had hoped the focus could be more towards the future than what has gone before. I don’t doubt your observations – but I’m not that sure how helpful they are to the current circumstances. Also, whilst I fully concur that currency issuing independent countries have great potential to shape a new economy, surely we must consider whether every nation operate under an agreed global framework, otherwise we will simply exacerbate inequality and population migration.
I would suggest such a global framework already exists – only it is far from transparent or benevolent. 99.9% of the world’s population have no idea how government money works – or the potential for good your discoveries in MMT have provided us with. The 0.01% who do know, will do their best to make sure that remains the same.
I may have missed your ten-point plan that had been previously discussed – apologies if I have – but a simple explanation how a country can build its economy from scratch – with a complete refocus on our objectives such as restoration of the natural environment – would be universally welcomed. The 99.9% need hope and that requires a destination and guidance how to get there.
Bill – imagine that next week, you become the Prime Minister in Australia and control all the levers of power in government. How would protect your people and rebuild the country?
A most helpful interpretation of the troubled relationship between France and Germany and its continuing tragic consequences. One line in particular, however, seems to transcend this specific historical issue and provide a concise definition of neoliberalism itself: “a shift from those who consider that state intervention, regulation and spending is crucial for the achievement of a balanced and equitable economy, to those who eschew state involvement and believe, with religious passion, that a self-regulating free market can provide increasing wealth and opportunity for all.” What’s interesting here is Bill’s use of the phrase “religious passion” to describe the driving force of the devolution of what might be called “Fordism” into neoliberalism. This devolution is IMHO not focused upon enough by socialist/communist critics of capitalism (like me), who often speak of capitalism as being of one piece. As someone who lived through this devolution from Fordism to neoliberalism in American society–which soon, of course, became a worldwide phenomenon–I find it increasingly hard in old age to even remember what a Fordist economy felt like to live in during the first third or so of my life. As imperfect as the Fordist socioeconomic system was in many ways, if I had a time machine, I would return to that world in a heartbeat–a world which, while capitalist to the core, had yet to yield fully to the “religious passion” Bill references. This makes me wonder, does the antidote to neoliberalism involve its replacement not only by new ideas like MMT, but also by the emergence of an even stronger “religious passion,” something existential which touches not only the economic but the spiritual?
…or better still. There is a global collapse and you are asked to head a new world bank and implement your suggestions for a new green sustainable global economy using the macro-economic principles that you gained from MMT. What framework would you implement and what guidance would you give for nation states to follow?
Best wishes
Mark
“This makes me wonder, does the antidote to neoliberalism involve its replacement not only by new ideas like MMT, but also by the emergence of an even stronger “religious passion,” something existential which touches not only the economic but the spiritual?”
A very enlightened suggestion, Mr Finn. I’m always fascinated watching starling murmuration – how thousands of birds can fly in incredible acrobatic formation without colliding and in remarkable sequence. It issued to be thought that they simply watched the movement around them, but that’s difficult to imagine, given the speed and collective movement needed to pull such feats,
Recent studies with brain mapping have shown there is a small area in the bird brain that lights-up during murmuration, whilst most other brain activity ceases altogether. The suggested hypothesis is that this area facilitates a collective consciousness and the whole formation functions as a single instinctive entity.
I was part of a research group recently – as a subject! I was monitored playing several pieces on guitar – and it ws a huge surprise to me. Normally when I play, I don’t think about anything – it’s just movement, rhythm, shapes, tone, vibration – but there’s no conscious thought about what I’m doing or where the music is going. I can play for three-four hours and I wouldn’t be able to tell you anything about what I was thinking about during the session.
Yet when I was wired up – the activity levels in every part of the brain were incredible, especially when I was creating something new. I always feel completely relaxed and at ease after playing – but how and why?
There is so much we don’t know about this place, it’s inhabitants – and ourselves. Especially ourselves. We all have these moments when something happens that’s unexplainable – if we’re fortunate, they may provide us with our own Metanoia. I do believe we have the same capacity as starlings – the ability to communicate on a different level. It’s just that we are out of practise!
If we do have an ability for collective consciousness, then it answers so many questions and offers untold potential for good. Couple that to any economic model and you have a new civilisation with very different goals.
Kind regards.
You’re on to something, Mark, at least I desperately hope so. Rupert Sheldrake’s theories of morphic fields and morphic resonance, as you probably know, attempt to address this strange and startling group behavior of our fellow creatures–flocks of birds, schools of fish, colonies of insects, etc.–which, while moving together, sometimes separated by only a fraction of an inch, are able to turn on a dime en masse, change direction without bumping into each other. As you surmise, human beings may share a similar capacity to turn on a dime and move together in a new direction. I sometimes wonder whether MMT is some sort of signal or harbinger to the human species that such a sudden, startling civilizational shift is about to occur. Crazy idea, I know, but are we not living in even crazier times?
Bill, it’s very useful to have a background to why the French elite are so complicit in the Euro mess. Thanks. They were also the main drivers behind the harsh Treaty of Versailles that tried to diminish Germany after WW1, but not alone: the Americans were also complicit fearing the cost and as usual, influenced the UK govt. for the worse (despite Keynes attempts to make the elites act in their own interests as well as those of the lower classes). On another note (unfortunately I’m a week late re. your neo-liberalism article) there are glimpses of hope, e.g. The (UK) Observer’s Manifesto for change pt 6: a civic service scheme offering all 18-25 year olds a guaranteed job paid at the living wage for 6 months. A MMT Job Guarantee for all, it isn’t but it’s a small step in the right direction. I need these tiny signs of light, your blog, the govt u-turn when faced by Marcus Rashford’s campaign to keep from despair when on the other hand we have Will Hutton still talking of printing money, the BBC news making a big play of the massive Public Debt with no explanation, and doubtless the massive majority Tory govt continuing to wreak havoc, with a Starmer neo-liberal party in the wings.
“As you surmise, human beings may share a similar capacity to turn on a dime and move together in a new direction. I sometimes wonder whether MMT is some sort of signal or harbinger to the human species that such a sudden, startling civilizational shift is about to occur.”
I don’t doubt we have the capacity, but whether we have the emotional and intellectual flexibility to adapt to that change, I can’t see it happening harmoniously. Most of the birds that form these murmurations have only been born a few months before. They don’t have a great deal of time to graduate from flying school before taking centre stage and pulling these manoeuvres – which only lends strength to a hitherto unknown communication method.
We need to trust our instincts too. Our greatest burden is the tendency to ignore reality – our cognitive dissonance. The “I’m all right Jack” mentality we all know too well. It hasn’t served us well. But how do we get there?
We may be utterly humbled soon and on our knees for a very different reason to the current fashion. Only when we have been stripped bare and have no other companion but silence, might we contemplate such things – and find the way to answers we so desperately crave.
Or we will find a voice to guide us there – one that provides a frequency where we can all tune in and contribute to something we have long since lost.
A delight to read your thoughts as always.
European civil war, military or political – ever has it been thus. The lulls intervening between the periods of internecine hostilities have allowed new groupings to develop in preparation for the next conflagration.
At the centre of of these movements there has been either a deluded ambitious German or a deluded ambitious Frenchman, overlooked from a distance by an equally deluded ambitious Russian. (Occasionally, a figure will emerge which works to keep the peace such as Metternich and his Concert of Europe although this union was primarily designed to forestall Bonaparte restoration and the progress of liberalism).
How is the current version of deluded ambition any different?
What chance a stable European union free of the historical rivalries?
“What chance a stable European union free of the historical rivalries?”
If you ask me, none at all.
However, that’s the “glass is half-empty” way of defining the problem. The “glass is half-full” version would be that rivalry need not be zero-sum. It can also spur enhanced performance leading to something qualitatively better overall, *provided* it can be channeled – as in athletics for instance.
Just a thought.
Bill a great piece. The French intellectual arrogance among their elite has been their downfall. Newton Finn I believe you are right, we are on the cusp of a new era!