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Planning and Economic Progress in France
Published online by Cambridge University Press: 18 July 2011
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FRANCE, it is said these days, is the “sick man of Europe,” a dubious honor once bestowed on the crumbling Ottoman Empire. To the outside observer it seems as if crisis following crisis is the “normal” state of affairs in France. Within France, the illusion that the post-Liberation social order would somehow be fundamentally different from that of the prewar regime is no more; politically, economically, and socially France today seems distressingly similar to the France of yesterday. Plus ça change, plus c'est la même chose.
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Copyright © Trustees of Princeton University 1957
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* Editor's note: This article was written before the changes in the French economy during 1956 were fully known or those of early 1957 had emerged. While the “sick man” has been showing an encouraging vitality in the last two years, and while the high rate of investment and modernization has held up, France is now suffering from inflation, a weak balance of payments, and a sharp loss in reserves of international liquidity. However, these developments in no way date the major analysis of the article.
1 Luethy's, HerbertFrance Against Herself, New York, 1955Google Scholar, is one of the most penetrating of recent studies of France's chronic crisis; see also Matthew's, RonaldDeath of the Fourth Republic, New York, 1954.Google Scholar
2 Economic planning, it seems accurate to say, has become a permanent structural characteristic of France's economy. The Monnet Plan, originally conceived as a four-year plan (1947–50), was, in 1948, extended for an additional two years to coincide with the expected termination of Marshall Plan aid to France. During 1953 the second modernization plan (1954–57) was drafted, and a third plan for the period 1957–61 is now in preparation. Undoubtedly, the latter will be followed by a fourth plan.
3 On the role that the need for American assistance played in the formulation of the Monnet Plan, see Laurat, L. and Pommera, M., Le drame économique et monétaire français depuis la libération, Paris, 1953, pp. 239ff.Google Scholar
4 Program of the National Council of Resistance, published at Algiers in March 1944.
5 The major post-Liberation acts passed by the First Constituent Assembly were: the law of December 2, 1945, nationalizing the Bank of France and the four most important commercial banks in France; the law of April 8, 1946, nationalizing electricity and gas; the law of April 25, 1946, nationalizing the major insurance companies; and the law of May 17, 1946, nationalizing the coal industry.
6 Commissariat Général du Plan de Modernisation et d'Equipement, Rapport général sur le premier plan de modernisation et d'équipement, Paris, 1946, p. 28.Google Scholar
7 Statement by Jean Monnet. See Commissariat Général du Plan, Rapport du commissaire général sur le plan de modernisation et d'équipement de l'Union française, Paris, 1949, p. 29.Google Scholar
8 In a decree issued on January 16, 1947, the government made the planning commission (Commissariat Général du Plan) a permanent organization and charged it with implementation of the plan.
9 This defect has been remedied with respect to the second plan. The latter received a belated approval from the National Assembly (May 26, 1955), and the Assembly, moreover, voted a three-year budgetary appropriation for about 40 per cent of the planned, government-financed investment expenditures for 1955–57.
10 An interesting and dramatic account of the clash on economic policy between Mendès-France and Pleven can be found in Matthews, , op. cit., pp. 176ff.Google Scholar
11 During the Monnet Plan period, public funds were channeled into the economy through a Modernization and Equipment Fund, set up in 1948, and controlled jointly by the planning commission and the Ministry of Finance. To implement the second plan the Mendès-France government created three special funds, one to aid business firms that wished to convert to modern production techniques, a second to facilitate the retraining of labor, and a third to encourage industrial decentralization.
12 Commissariat Général du Plan de Modernisation et d'Equipement, Projet de deuxième plan de modernisation et d'équipement, Paris, 1954, pp. 26ff.Google Scholar
13 Ibid., p. 161.
14 Commissariat Général du Plan, Rapport sur la réalisation du plan de modernisation et d'équipement de l'Union française, Paris, 1953, p. viiiGoogle Scholar; my translation.
15 Cf. Boris, Georges, “Les problèmes du développement économique de la France et leurs origines,” Politique Etrangère, XIX (April-May 1954), pp. 123–42.CrossRefGoogle Scholar
16 The government has approved a number of measures to encourage economic decentralization. These include the aforementioned decentralization fund, the granting of special subsidies to firms relocating or expanding in specified areas, interest rate reductions to such firms, and various tax privileges. See Commissariat Général du Plan, Rapport annuel, Paris, 1955, pp. 53, 367ff.Google Scholar
17 Cf. Rosa, R. V., “The Problem of French Recovery,” Economic Journal, LIX (June 1949), pp. 154ff.CrossRefGoogle Scholar
18 Cf. Gravier, J. F., Mise en valeur de la France, Paris, 1949, pp. 179ff.Google Scholar
19 Commissariat Général du Plan, Rapport du commissaire général, op. cit., pp. 26ff.Google Scholar
20 French progress in industrial production may be compared with progress in the United States and in other leading industrial nations in Western Europe as follows. The figures given represent percentage increases in industrial output as of 1955 and since: (1) 1948; and (2) 1953. France, 53 and 21; Western Germany, 79 and 29; Italy, 90 and 18., United Kingdom, 33 and 13; and the United States, 36 and 5. Cf. United Nations, Monthly Bulletin of Statistics, September 1956.Google Scholar
21 Between January 1, 1947, and January 1, 1953, France's population rose by 5.5 per cent. France's population of January 1, 1956, was 43,430,000, an increase of 3,270,000 since 1946.
22 France Data Book, 1956 Base Book, Paris, American Embassy, 1956, p. 11.
23 In the building industry there are more than 200,000 small “firms,” with an average labor force of three, including the employer. Cf. esp. Ministère des Finances, Statistiques et Etudes Financières, No. 18, 1953, p. 194.Google Scholar
24 Commissariat Général du Plan, Rapport annuel, Paris, 1954, p. 87.Google Scholar The National Statistics Institute (Institut national de la statistique et des études économiques) has not published any additional data on productivity since 1953.
25 Commissariat Général du Plan, Projet de deuxième plan, op. cit., p. 186.Google Scholar Cf. also United Nations, Economic Survey of Europe in 1954, Geneva, 1955, pp. 191ff.Google Scholar
26 This, for example, is the view expressed in the most recent report of the National Accounts Commission, headed by former Premier Mendès-France. Cf. Ministère des Finances, des Affaires Economiques et du Plan, Rapport sur les comptes de la nation, 1949–1955, 1, Paris, 1955, pp. 55ff.Google Scholar
27 Commissariat Général du Plan, Rapport sur la réalisation du plan, op. cit., p. 69.Google Scholar
28 Avis et Rapports du Conseil Economique, Journal Officiel, April 7, 1954, pp. 386ff.
29 France Data Book, op. cit., p. 21. These changes pertain to wages for a worker with a dependent wife and two children, and include the family allowances to which such a worker is entitled.
30 In 1956 the Communist Party polled 25.6 per cent of the popular vote as compared with 26.4 per cent in 1951.
31 In 1938 “welfare” wages, or social security transfers, amounted to but 2.2 per cent of the total wage and salary bill, whereas by 1951 this percentage had risen to a figure of 15.9. The magnitude of this development can also be seen in the fact mat social security transfers amounted to only 1.4 per cent of the national income in 1938, but had risen to 10.1 per cent of the national income by 1951. Cf. esp. Ministère des Finances, Statistiques et Etudes Financières, No. 18, 1953, pp. 182, 186.Google Scholar
32 Ibid.
33 Cf. esp. Lipsedge, M. S., “The Poujade Movement,” Contemporary Review, Vol. 189 (February 1956), pp. 83–88Google Scholar; and Luethy, H., “Poujade: Hitler or Pierrot,” Commentary, XX (April 1956), pp. 301–10.Google Scholar
34 Between 1949 and 1951 the government had removed import quotas on about 75 per cent of the commodities imported from the OEEC countries.
35 France Data Book, Supplement No. 2 to 1956 Base Book, Paris, July 1956, p. 35. Total holdings decreased by $200 million during the first six months of 1956, chiefly because of a reduction of France's foreign debt, particularly with the United States and Canada.
36 Ibid., p. 31.
37 OEEC, Seventh Report, Paris, 1956, pp. 143, 144.Google Scholar Since the 1951 crisis, import quotas have been eliminated on about 80 per cent of the commodities imported from the OEEC countries. A large proportion of these commodities, however, are still subject to a special “compensatory import tax” to avoid “disturbances” in certain sectors and to give time to industries concerned to implement specialization and investment measures to enable them better to face foreign competition. No formal measures have been taken to liberalize imports from the dollar area, although it is reported that import licenses are being granted more freely.
38 In an immediate sense this would be true, but it can also be argued that in the longer run it might be better for France to get out of areas like North Africa altogether. France has been engaged in colonial wars almost continuously since 1945, and the drain imposed upon the national economy by such wars more than offsets, in all probability, any economic gain to be derived from colonial areas.
39 Price stability is seriously threatened by the continued military struggle in North Africa. On the one hand, there is the budgetary problem of financing military expenditure (for 1956 the cost of military operations in Algeria was expected to be about 300 billion francs, or approximately $850 million); and, on the other, a growing pressure of wage inflation as labor shortages develop in key industries because more and more workers are being called into military service. In the first three months of 1956 the consumer price index (Paris) rose 1.8 points and the wholesale price index 2.5 points. However, the consumer price index dropped a point between March and June 1956, and the wholesale price index declined during June after reaching a peak in April of 142.7 (1949 = 100). As of mid-1956 the economy was in a situation in which either continued price stability or another bout with inflation was possible.
40 Commissariat Général du Plan, Les perspectives de l'économie française en 1965, Paris, 1956.Google Scholar
41 Cf. Haight, F. A., A History of French Commercial Policies, New York, 1941, esp. chap, IIIGoogle Scholar; and Golob, E. O., The Méline Tariff: French Agriculture and Nationalistic Economic Policy, New York, 1944Google Scholar, esp. chap. IV.
42 Ministère des Finances, Statistiques et Etudes Financières, No. 18, 1953, pp. 202ff.Google Scholar
43 Some tax reform has taken place within the last two years. A new tax on value added has been substituted for production and transactions taxes, and the income tax has been amended to allow deduction from taxable income of expenditures for certain types of investment. For more details, see Shoup, C. S., “Taxation in France,” National Tax Journal, VIII (December 1955), pp. 325–44Google Scholar; and Henry Laufenburger, “Technical and Political Aspects of Reform of Taxation in France,” ibid., VI (September 1953), pp. 273–85.
44 On the extent of such agreements in France, see the article, “Monopoly and Competition in France,” by Goetz-Girey, R. in the volume, Monopoly and Competition and Their Regulation, ed. by Chamberlin, E. H., New York, 1954, pp. 21ff.CrossRefGoogle Scholar See also the comments on the extent of cartelization in France by French businessmen in the article by McDonald, John, “French Business Talks Back,” Fortune (April 1952), pp. 120ff.Google Scholar
45 Landes, David S., “French Business and the Businessman: A Social and Cultural Analysis,” in Modern France, ed. by Earle, E. M., Princeton, N.J., 1951, p. 348.Google Scholar
46 The non-competitive character of most French prices in world markets is thoroughly documented in the so-called Nathan report, made public in 1954. Cf. Commission pour l'étude des disparités entre les prix français et étrangers, Rapport général, Paris, 1954, esp. pp. 7ff.
47 Between 1938 and 1952, for example, employment in commercial activities increased by 20.3 per cent. At the same time, however, national income per economically active person in commerce declined by 15.4 per cent. See the writer's forthcoming paper, “National Product and Structural Change in the French Economy,” American Journal of Economics and Sociology. It is significant to note that there has been no increase in the number of commercial establishments since about 1952.