‘‘Capitalisme contre Capitalisme contre Capitalisme…’ Capitalisme…’ (Albert(Albert 1991)1991)

… … a tale in two partsa tale in two parts

……and four and four chapterschapters

The two capitalisms…The two capitalisms…

- ‘‘mediated capitalism’ (‘mediated capitalism’ (‘… les guichets’… les guichets’):):

state committees - central banks - family-led groups - worker state committees - central banks - family-led groups - worker participation - high levels of social protection - state savings participation - high levels of social protection - state savings schemes - national protection of major firms - state led schemes - national protection of major firms - state led

investment…investment…

- ‘‘market capitalism’ (…market capitalism’ (…‘liberalisme’‘liberalisme’))

direct finance - stock-exchange-led - ‘direct finance - stock-exchange-led - ‘investuelsinvestuels’ - ’ - ‘institutional ‘institutional investors’ (investors’ (‘les zinzins’) - ‘les zinzins’) - international takeovers (international takeovers (‘les ‘les OPA’OPA’) - emphasis ) - emphasis on capital gain - openness to the global on capital gain - openness to the global market…market…

from State from State governance…governance…

to nationalisation…to nationalisation…

to privatisaton…to privatisaton…

to internationalisation…to internationalisation…

AND BEYOND…?AND BEYOND…?

1998 – France is back!1998 – France is back!

‘‘La France va mal mais les Francais vont La France va mal mais les Francais vont bien…’bien…’

scale of biggest companies (Danone, Elf, scale of biggest companies (Danone, Elf, Sodexho, Michelin…)Sodexho, Michelin…)

high level of exports (6.1% of world imports – high level of exports (6.1% of world imports – second highest in EU, behind Germany)second highest in EU, behind Germany)

slight fall in level of unemployment (but still slight fall in level of unemployment (but still near 3m > 2.8m)near 3m > 2.8m)

increased rate of growth (from 2% in 1996 to increased rate of growth (from 2% in 1996 to 4% – higher than Germany but lower than the 4% – higher than Germany but lower than the UK)…UK)…

Back from where?Back from where?

the stagnation of the post-war ‘state the stagnation of the post-war ‘state model’ 1966-1973model’ 1966-1973

the oil crises of 73-4 and 82-3the oil crises of 73-4 and 82-3 the changes in direction under the changes in direction under

Mitterrand in the early 1980sMitterrand in the early 1980s recession and the collapse of the recession and the collapse of the

franc in 1993franc in 1993 resistance to pension reform in 1995 resistance to pension reform in 1995

… … in 1998, France in 1998, France undergoing a huge process undergoing a huge process of change – but still a of change – but still a largely state-run economylargely state-run economy

Comparison with the UK in 1998Comparison with the UK in 1998

UKUK FRFR- Public spending as a % of GNPPublic spending as a % of GNP 39.939.9 50.250.2- Public sector employmentPublic sector employment

as % of total employed (Ger. - 17.2)as % of total employed (Ger. - 17.2) 15.615.6 27.727.7- Labour costs per hour againstLabour costs per hour against

1.0 in Ireland (Ger. - 1.9)1.0 in Ireland (Ger. - 1.9) 1.1 1.1 1.5 1.5

The French - anti-The French - anti-capitalist…? capitalist…?

(Chapter 1)(Chapter 1)

a monarchic and republican a monarchic and republican traditiontradition

a triangular systema triangular system

-- the familythe family

-- the banksthe banks

-- the Statethe State

‘‘Le capitalisme Le capitalisme familial…’familial…’

‘‘Les 200 familles…’Les 200 familles…’

‘‘Les Henokiens…’Les Henokiens…’

‘ ‘La France se protege…’La France se protege…’

Some of the best known Some of the best known French family firms…French family firms…(‘(‘mes mes fonds propres c’est mes propres fonds’)fonds propres c’est mes propres fonds’)

RenaultRenaultMichelinMichelinCitroenCitroenPeugeotPeugeotTaittingerTaittingerDanoneDanoneLegrandLegrandTriganoTriganoBicBicServierServierYves RocherYves RocherLeclercLeclercMulliez etc… Mulliez etc…

France 1950-1968 France 1950-1968 >>>1980: a state >>>1980: a state controlled modelcontrolled model

The companiesThe companies borrow…borrow…

The bank The bank lends…lends…

The citizenThe citizen saves…saves…

The StateThe State controls…controls…

The formation of the large The formation of the large groups in the 1970sgroups in the 1970s

the banks:the banks:Suez, Paribas, Lazard…Suez, Paribas, Lazard…

the industrial conglomerates:the industrial conglomerates:BSN, Saint-Gobain Pont-a-BSN, Saint-Gobain Pont-a-

Mousson Mousson (SGPM), Pechiney-(SGPM), Pechiney-Ugine-Kuhlmann Ugine-Kuhlmann (PUK), L’Oreal, La (PUK), L’Oreal, La Generale des Generale des Eaux…Eaux…

The 1980s – from The 1980s – from nationalisation to nationalisation to privatisationprivatisation (Chapter 2) (Chapter 2)

1982: the major banks nationalised – the 1982: the major banks nationalised – the State takes control – demand-led policy…State takes control – demand-led policy…

1983: control of the money supply – 1983: control of the money supply – downsizing -the promotion of enterprise…downsizing -the promotion of enterprise…

1986-87: the first major wave of 1986-87: the first major wave of privatisations under the new government of privatisations under the new government of the Right: the Right: Paribas, La Societe Generale, Paribas, La Societe Generale, Havas, TF1… ‘les noyaux durs’Havas, TF1… ‘les noyaux durs’

1993-95: second wave of privatisations: 1993-95: second wave of privatisations: BNP, BNP, Rhone-Poulenc, Elf-Aquitaine, UAP, SEITA, Rhone-Poulenc, Elf-Aquitaine, UAP, SEITA, Usinor-Sacilor, PechineyUsinor-Sacilor, Pechiney..

1983-1998… A major 1983-1998… A major shift in the French shift in the French economyeconomy

‘‘Le paysage du capitalisme Le paysage du capitalisme francais au debut de 1999 francais au debut de 1999 confirme que le recul du confirme que le recul du secteur public aura ete l’un secteur public aura ete l’un des phenomenes majeurs de la des phenomenes majeurs de la decennie.’decennie.’

(N.Holcblat in (N.Holcblat in L’Etat de la France 1999-2000, L’Etat de la France 1999-2000, pp.450-52pp.450-52))

The consequences of The consequences of privatisationprivatisation greater involvement by French people greater involvement by French people

in the process of production – in the process of production – communicationcommunication

three types of investor:three types of investor:-- the private individual (the private individual (‘le petit ‘le petit

porteur’porteur’))-- the employee shareholder the employee shareholder

((‘l’actionnaire ‘l’actionnaire salarie’salarie’))

-- the institutional investor (the institutional investor (‘le zinzin’‘le zinzin’))

The limitation on public The limitation on public engagement – the illusion of engagement – the illusion of ‘popular capitalism’‘popular capitalism’

‘‘Les petits porteurs ne sont Les petits porteurs ne sont que des epargnants, passifs ; que des epargnants, passifs ; ils ne sont pas, pour ils ne sont pas, pour l’instant, des porteurs de l’instant, des porteurs de capital.’capital.’

Erik Israelewicz Erik Israelewicz Le Capitalisme ZinzinLe Capitalisme Zinzin

(1999) p.160(1999) p.160

The employee The employee shareholdershareholder

means of engaging state employees in the means of engaging state employees in the future of their own privatised company –in future of their own privatised company –in 1999, more than 50% of companies 1999, more than 50% of companies involved involved

an alternative form of salary – merit award an alternative form of salary – merit award – sought after by 66% of salaried – sought after by 66% of salaried employees…employees…

but limited impact… (2% of total shares but limited impact… (2% of total shares held; only 5% of employees in the private held; only 5% of employees in the private sector) sector)

The reasons for non-The reasons for non-engagementengagement

The belief in security – savings, The belief in security – savings, property (average of 14% in 1999)property (average of 14% in 1999)

Taxation on capital gainsTaxation on capital gains

Reliability of the State (‘treasury Reliability of the State (‘treasury bonds’)bonds’)

The rise and fall of the The rise and fall of the French institutional French institutional investorinvestor

greater involvement in the 1980s greater involvement in the 1980s and 90s by banks and state-and 90s by banks and state-owned groups (‘owned groups (‘les noyaux durs’les noyaux durs’))

lack of French capital towards lack of French capital towards the end of the century to fund the end of the century to fund newly privatised companies…newly privatised companies…

From privatisation to From privatisation to internationalisationinternationalisation

(Chapter (Chapter 3)3) 1999 - the year of mergers and 1999 - the year of mergers and

takeovers (takeovers (‘les OPA’‘les OPA’) - ) - ‘pour vivre ‘pour vivre heureux, vivons couches’ heureux, vivons couches’ (Israelewicz)(Israelewicz)

Openness to greater participation Openness to greater participation from international investors – from international investors – change in management culture – a change in management culture – a loss of ownershiploss of ownership

The main The main changes…changes…

A reduction in the power of the CEO A reduction in the power of the CEO (PDG)(PDG)

The internationalisation of BoardsThe internationalisation of Boards Rule by shareholdersRule by shareholders Short-termism - quarterly accountingShort-termism - quarterly accounting Emphasis on short-term capital gain Emphasis on short-term capital gain

rather than on investment – economic rather than on investment – economic value added (EVA) – return on investment value added (EVA) – return on investment (ROI)… by takeover and cost-reduction(ROI)… by takeover and cost-reduction

The power of the fund-manager The power of the fund-manager (‘les (‘les Mickey’)Mickey’)

And what now?And what now?(Chapter 4)(Chapter 4)

three major events…three major events…

-- tthe introduction of the Euro - 1999he introduction of the Euro - 1999

-- the reduction in work time the reduction in work time ((RTT/les RTT/les 35 heures35 heures) - 2000) - 2000

-- 1111thth September 2001September 2001

The consequences of the The consequences of the reduced power of the reduced power of the StateState

Greater dependency on the Central Greater dependency on the Central European BankEuropean Bank

Reduce public deficit…but Reduce public deficit…but unemployment?unemployment?

Address the pension crisisAddress the pension crisis Maintain France’s representation Maintain France’s representation

on Company Boardson Company Boards Promote the development of small Promote the development of small

and medium enterprisesand medium enterprises

Most recent policy Most recent policy objectives… (June 2005)objectives… (June 2005)

Reduce State deficit to below 3%;Reduce State deficit to below 3%; Increase productivity and the size of the Increase productivity and the size of the

labour force…;labour force…; Continue to promote the growth of PMEs;Continue to promote the growth of PMEs; Create infrastructural projects and Create infrastructural projects and

accelerate privatisation in order to reduce accelerate privatisation in order to reduce state expenditure by 20,000 m EUROS;state expenditure by 20,000 m EUROS;

Reduce the number of state employees Reduce the number of state employees ((fonctionnairesfonctionnaires) – notably in Education…) – notably in Education…