Economics and politics - comment and analysis

Emmanuel Macron and the French elections. Defeating the extreme right by voting for the extreme centre

The first round of the French presidential elections is on April 23th, the run-off takes place on May 7th.  While there are, officially, eleven candidates, in reality, only two remain (or is it only one?): Emmanunel Macron and Marine Le Pen. All polls predict that Macron will win the second round.


Figure 1: Voters’ intentions in the French presidential elections (source: Michael Roberts).


Figure 2: Voters’ intentions. Another poll, first and second round (Source: Odoxa).

It is possible that Le Pen will win, but it is highly unlikely. Last year, in the US, the Democratic Party went to the election proclaiming they did not need the vote of the blue-collar worker. Alienation from what happens in the real work, arrogance and a false sense of invincibility did the rest. Hillary Clinton had all the money, all the political backing she could either buy or threaten into submission, the whole press was behind her, the deep state, she had all the intellectuals on her side, all the movie stars, the pop stars, all the basketball players, Obama and Sanders campaigned for her, Bush supported her candidacy, even the Republican establishment was behind her. Clinton campaigned for the continuation of Obama’s economic policies. As a result, the Democrats lost the blue-collar worker states of Pennsylvania, Ohio, Wisconsin and Michigan and by ten o’clock in the evening on Election Day it was clear that Trump had won (see here). Reality is no longer what it used to be.

Can something similar happen in France? Certainly and it mainly depends on the degree of electoral apathy in the second round. Le Pen can win if enough people vote with their feet. But I do not believe in it. Luckily, a great number of people are abhorred by the idea of a Le Pen presidency and will vote in the second round if for no other reason than to keep her out. Although Le Pen has moved leftwards on the socio-economic scale in recent years (still without making sense), fortunately, a lot of voters find her racism, her anti-immigration rhetoric and her anti-Islamism unacceptable, as it should be. My guess is that some of the disillusioned left – those traditionally voting Socialist or Communist – will vote for Le Pen in the first round. But their numbers will be lower, much lower in the second round. In one word, Macron is pretty incontournable.

One can be short about the other main candidates. Fillon, the conservative candidate of the centre-right Les Républicains promises to eliminate 500.000 public sector positions (10% of all civil servant jobs), abandon the 35-hour week and to carry out € 110 billion in spending cuts, especially in social welfare. It is probably in order to increase employment. Fillon was done after it turned out that he paid his wife and children with parliamentary funds for non-existing work, etc. Benoît Hamon, to his credit, beat the authoritarian Manuel Valls to become the PS candidate. He stands for social welfare, anti austerity, EU economic reform and for green energy (and has the support of the Greens), but it is hopeless anyway. The Parti Socialiste has been too damaged by Hollande and by Valls. No socialist will win, not even Jaures if he would come back (or, rather, and sadly, especially not Jaures). Not even Napoleon would win these days if he would run for the PS. There is Jean-Luc Mélenchon from the Parti de gauche. He stands for redistribution, changing the tax system and an ecological transition (see below).

The good news is that Marine Le Pen seems to be losing support. The bad news is that Macron is gaining momentum. There is no doubt that if Macron wins, France will embark on a neoliberal reform process, similar to Germany’s in 2003 under Gerhard Schröder. The regression has gone so far that the some within the Left consider this good news – this comes of it when you have no policies and no principles of your own. A Macron presidency would create a much more cooperative relationship between France and a newly elected German government, which in turn would relieve the excessive austerity in the eurozone and erode support for Italy’s Five Star Movement, writes Kaletsky in Social Europe (see here). Really.

In the meantime, Macron travels through France, “admitting” he is not a socialist (he was a member of the PS as well as Minister in Valls’ government), educating the French that “Le problème actuel de la France est l’égalitarisme.” (“The current problem in France is egalitarianism”). This excellent site gives a lot of information about rising inequality in France. Guy Verhofstadt fully supports Macron: ‘I could have written his program myself.’ But it takes more than that to frighten the ‘left’ these days.

Who is Macron?  

“Macron’s strong polling in the French election signals a political realignment destined to consolidate elite control,” writes Christiakis Georgiu in Jacobin (see here).  This is absolutely true. According to the IMF, French unemployment has averaged 9% since 1990 – and this is of course the official number – a period that covers the tenure of four presidents and eleven prime ministers. Decline, decadence and incompetence have been themes of French politics for a very long time. Le Pen and others succeeded in making the whole political class look uniformly incompetent (see here). But it is not only the extreme right that talks about the necessity of ‘regeneration.’ The French elite favours a coalition between the “modern left” and the “progressive right” as a way to break the stalemate of the Fifth Republic. Now they have found their man.

Macron served as Minister of Economy, Industry and Digital Affairs under Hollande for two years (see here – biographical info on Macron is taken from this article). During that time, his name became associated with the promotion of shopping on Sundays. Macron deregulated night work, flexibilised rules that govern collective dismissal and sped up the privatisation of the management of regional airports.

Macron graduated from the École nationale d’administration in 2004. He went on to become an Inspector of Finances in the Inspectorate General of Finances (IGF) before becoming an investment banker at Rothschild & Cie Banque. These inspectors are very high civil servants. They dominate the directorates of the treasury and the budget and the French securities and exchange commission. It is those inspectors who designed all major economic policies of the last thirty years, regardless of who is in power. Macron belongs to the inner circle of this French ruling class, what Pierre Bourdieu dubbed the “state nobility.” As Georgiu notices, several sociologists have argued that these high-ranking civil servants constitute the most powerful social group in France.

It was Jean-Pierre Jouyet, a top civil servant under Mitterrand, Chirac, Sarkozy and Hollande, a chief advisor of then president of the EU Commission Jacques Delors and co-author of the Treaty of Maastricht of 1992 who proposed to Sarkozy that Macron should serve as a deputy rapporteur for the Attali Commission – officially the Commission pour la libération de la croissance française (see here). The name alone of this commission is interesting: the “liberation” of French economic growth.

The Attali Commission basically translated EU Commission proposals to the French context. There was going to be less “interference” of government in the economy (hence “liberation”), France had too many civil servants, the pension age would have to increase, bringing the budget deficit under control (as Maastricht stipulates) was to be the priority for all French governments (hence, they would all have to implement austerity), social contributions for employers would have to be lowered, wage agreements with the unions would have to be limited or minimised, it would have to become easier to dismiss employees, the coming governments should have to concentrate upon more temporary and part-work (see here for the full text).

What is more:

“the timescale for the strict implementation of the measures that this report proposes runs over several presidential mandates, regardless of the political majorities” – (see here – my translation)this means, of course, regardless of any electoral results or, as it usually called, democracy.

Macron was also a co-author of the CICE (crédit d’impôt pour la compétitivité et l’emploi) (see here). It resulted in tax credits in the order of tens of billions for big companies, without ANY obligation for these companies. It is true that Macron also wrote the Responsibility Pact (Pacte de responsabilité et de solidarité) of 2013 (see here). The ‘Pact’ substantially lowers social contributions for employers on the condition that they create jobs and respect the social dialogue. If not, well we tried (not really).

Only in this dark age is it possible to consider Macron a “centrist,” although his plans call for a reduction in public-sector employment of 120.000 and cuts in corporation tax. He supports the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union. Macron has notably advocated in favour of decreasing the French budget deficit, hence in favour of austerity. In June 2015, Macron and  Sigmar Gabriel published a “platform” advocating a continuation of European integration. They advocate the continuation “of structural reforms” (in the labour market – this means: lower wages and less social protection) and “institutional reforms (including the area of economic governance)” and a harmonization of corporate taxes and social systems and minimum wages (see here).

A coalition of the ‘modern left’ and the ‘progressive right’

No one explained the “need” (sic!) for a coalition between the ‘modern left’ and the ‘progressive right’ better and simpler than Jean-Louis Beffa, who is called the “pope of French industry” and sits at the center of France’s corporate elite network (see here). Beffa supports Macron’s bid for the presidency and wants him to implement his Schroeder-like reforms. As Beffa explains:

“In France, there are 20 percent on the Left, the Front de Gauche and there are the Greens. These people do not live in reality. There is approximately the same number, 20 percent or maybe more, who are currently at the far right and they do not live in reality either. There remains 60 percent. If they split in two blocks, we will never get a majority for the reforms” (see here).

The idea is to build a broad centrist coalition that changes the political and institutional logic of the Fifth Republic. The purpose is simple: even Hollande did not go far enough. A “centrist” coalition can succeed in the implementation of a quick succession of unpopular measures. The challenge is, of course, to make the center extreme without letting those who do not live in reality, on either side, win too many votes.

Beffa’s proposal is by no means new. Jacques Attali has called for a “national salvation government” and even a “great national salvation party” while Juppé wants to see the formation of a great coalition that would allow “reasonable people to govern together” (see here and here). Macron fits seamlessly into this project. He wants to “confront the real in order to change it.” He sees as the enemies” of the Republic “the dreamers, sometimes criminal ones, the puritans, the utopians of the past.” As the main problem in France is egalitarianism, he advises the youth of France to “become millionaires.” Contribute to a “capitalism that brings economic and social progress.” If we need to cut the minimum wage in order to achieve this, so be it.

The winner of the French election is German capital

In this election, the references to Germany are to be found everywhere. When last week, the main presidential candidates had a chance to outline their plans on how to restore competitiveness of “Made in France” at a “business and politics” event, both Fillon and Macron promised to bring greater stability and visibility to the social and fiscal rules that apply to French companies (see here). They both said they would promote apprenticeships “like they do in Germany” – even Le Pen agreed. Macron focused on the need for “structural reforms” to win back Germany’s trust and relaunch the idea of a European constitution. Concretely, Macron announced labour market reforms building on what had been achieved under Hollande, and the establishment of a new pensions system.

It is more than the French wanting to ape the policies of the land of Dr. Schauble, it is sheer capitulation: if German wage moderation destroys our economy, let us have our own wage moderation and if this creates a social blood bath, who cares as long as the social democrats continue to live in reality? As Christiakis Georgiu writes, the French ruling elites now see German coalitions as a source of strength for domestic capitalism (see here). The French elites are preoccupied, if not obsessed, with reforms that would restore their credibility in the eyes of their German brothers. And this Macron has said openly: French reforms are a prerequisite for German ruling elites to embark on a broad reform of the European Union and the euro zone. This reform should create a system of fiscal transfers managed by a eurozone finance minister, further centralizing power at the supranational level (see here).

The strategy of the Left

Mélenchon is the candidate of the Left in these elections. He is not doing badly at all, just not good enough. Mélenchon proposes a 100 billion euro economic stimulus plan. It would be funded by government borrowing. He proposes to nationalise some sectors and the motorway network and he would raise public spending by 275 billion euros to fund the plan. He would raise minimum and public sector wages, create jobs to reduce the unemployment rate to 6% and decrease the retirement age. The extra spending would fund itself from higher economic growth and employment. Furthermore, Mélenchon promises to ignore the EU fiscal austerity pact, call for a devaluation of the euro, take back national control of the Banque de France from the ECB and leave NATO and the IMF. If these measures are blocked, he would organise a referendum on EU membership (see here).

These measures, the precise content and figures of which one can discuss, mean in effect that Mélenchon is the only Keynesian in the race. Michael Roberts notes that Melenchon’s program is similar to that of Francois Mitterand (although somewhat less radical) when the latter won the presidency in 1981 (see here). He too wanted to take France on an independent line from the rest of Europe in expanding the economy through public spending, nationalisation and more taxes on business and the rich. What happened is political history. In the midst of the slump of the early 1980s, investors fled France and speculated against the franc until Mitterand capitulated and implemented the tournant de la rigueur in 1983. This is what will happen to Mélenchon in the completely unlikely event he wins (see here).

There is nothing extravagant or unreasonable about this prediction. It would take barely a month for Mélenchon to be confronted with a new parliament that will consists of a majority of conservative pro-capital, pro-EU MPs who would be backed by a media campaign from big business and the EU Commission. But this does not mean that nothing is possible. It just adds more weight to a point that I made on several occasions: EU economic governance, austerity and the German dominance in the EU cannot be changed by one country alone.

What we need instead is a leftist victory in several countries and a majority of leftist MPs in the European Parliament. To these who say that this will never happen: a Lexit will not happen either. There are no signs that this idea is gaining popularity. Notwithstanding all the social misery in France, 70 per cent of the French prefer to remain in the EU. And even if there would be a Lexit and, hence, the end of the euro zone, this would not mean that the right would be defeated. It can very well continue to win national elections and implement their anti-social policies. Look at Theresa May.

That is why the European institutional scale of governance does not need to be destroyed, it has to be taken over. And if this cannot be done, at least the Left should fight economic dysfunction all over Europe and not succumb to it, capitulate and eat the crumbs that fall off the table. Because what will be the end result of Macron’s policies if they ever would turn out to be “successful”? Instead of German wage moderation, we would get a German-France axis. These people, who supposedly live in reality, or at least in Beffa’s reality, stand for wage moderation for everybody so that we can all grow and have budget surpluses, just as the Germans do. This is beyond stupidity. German-Franco wage moderation in the Union would continue, and probably even intensify, the social haemorrhage and economic dysfunction. Ask the Greeks how their unemployment figures are evolving. Four presidents and eleven prime ministers. Soon it will be the job of number twelve to introduce more harmful policies. The reason? The political dominance of capital.