Francois Hollande – Moving France Toward A Command Economy

France – a Zwangswirtschaft?

by Pater Tenebrarum

Zwangswirtschaft is the very apt German term Ludwig von Mises used to describe various forms of state capitalism, such as the economy of Nazi Germany. The literal translation is 'coerced economy' and as such it is a decisive step closer to a full-scale socialistic command economy than the severely hampered market economy (a milder form of state capitalism) that is in place in most of the so-called 'free world' today.

Francois Hollande is a typical colorless career bureaucrat-politician who never had a 'real job' in his whole life, this is to say, he never had to prove himself in the private sector. The cabinet put together by the perpetually astonished looking president (we strongly suspect that he is still astonished that he was actually elected) is of similar quality: it is almost a Soviet-stylepolitbureau, with not a single senior minister who is not a career politician or bureaucrat (the two often go hand in hand in Europe). 

German news magazine Der Spiegel, which is normally known to be sympathetic to the center-left, recently published a scathing article on the industrial dirigisme of Hollande's government the title of which leaves little to the imagination: “How Paris Is Killing French Industry”.

What prompted the magazine to take a closer look at France's economic policies was the case of ailing car maker Peugeot, which the president and his 'minister of industrial renewal' (talk about irony), Arnaud Montebourg have decided to micro-manage to death.

It is worth quoting the article at length, as the case demonstrates the attitude of the French government toward the private sector quite vividly:

“Well-meaning people can often be particularly dangerous. Take French President François Hollande and Minister of Industrial Renewal Arnaud Montebourg, for example. They want to rush to the aid of French automaker PSA, which has driven itself into a crisis with its Peugeot and Citroën brands. Representatives of the CGT trade union, such as Jean-Pierre Mercier, also want to help. "We will fight for our jobs and the livelihoods of our families," says Mercier.

The French government and the unions want to prevent Peugeot from closing its plant in Aulnay-sous-Blois, outside Paris, and slashing 8,000 jobs. But if politicians and labor leaders are successful, they will only make things worse. Perhaps they'll manage to save a few thousand jobs in France in the short term. But, by doing so, they will put the company's future into even greater jeopardy.

The company, which has been making cars since 1890, is fighting to survive. Sales have plummeted, and plants are not operating at anywhere close to capacity. PSA is currently losing €140 million ($173 million) a month.

For the 3,000 Peugeot workers in Aulnay-sous-Bois, their work ended temporarily at 10:30 p.m. on July 26. The plant was closed for five weeks, as it is every year for the summer vacation. But, this time, things were a little different. The commencement of the annual vacation period had a bitter aftertaste. Workers had just learned that the plant was to be permanently shut down in 2014.

President Hollande reacted immediately, saying that PSA's downsizing plans were "unacceptable" and had to be renegotiated. Minister Montebourg said that he had little faith in company management and speculated that perhaps the car company was merely playing the "imaginary invalid." He also said that he had a "real problem" with the company's strategy and the behavior of its main shareholder, the Peugeot family, which owns more than a quarter of its shares and received a substantial dividend last year.

Both CEO Philippe Varin and Supervisory Board Chairman Thierry Peugeot were called on the carpet, and the Peugeot family was forced to hear Montebourg deliver a lecture on patriotism. The company, the minister said, doesn't just belong to its shareholders, but also to "the history of France, a territory, a national idea."

The French state owns a share of Renault, the country's second-largest automaker, but not of Peugeot. Nevertheless, the government behaves as if Peugeot actually were a state-owned company. In this respect, it is demonstrating how matter-of-factly French politicians intervene in the management of major corporations.”     (emphasis added)

This, dear readers, is indeed the very essence of 'Zwangswirtschaft'. Nominally the means of production remain privately owned, such as is the case with Peugeot. However, the owners are no longer free to dispose of their assets as they see fit. A government bureau is telling them what they may or may not do. It is quite ironic that Montebourg puts nationalistic sentiments forward as the justification for the intervention. 'Peugeot doesn't just belong to its shareholders' because it is 'a national idea'. So what is Mountebank trying to tell us? That he's not only a socialist, but more precisely a national socialist?

He would probably bristle at the suggestion, but the difference between fascism and socialism is not as great as the enmity between these two camps would suggest. To both ideologies, the State is everything. The rest of us are only of interest inasmuch as we can be useful for serving the State's interests. Frequently this means that one ends up as cannon fodder.

However, even if one generously assumes, as the author of the Spiegel article does, that Hollande and Montebourg are merely misguided, 'well-meaning' and therefore 'particularly dangerous people', who genuinely believe that what they are doing will help workers, it does not alter the fact that their policies are likely to produce an outcome diametrically opposite to their stated goals.

They may well succeed in temporarily saving the jobs of a few thousand Peugeot workers with their intervention, but they are thereby endangering the jobs of many thousands more in the longer run.

Moreover, their dirigisme damages France's economy in  other respects as well. By blithely disregarding property rights, they are sending a signal to all businessmen: you are no longer economically free. In fact, in light of Hollande's tax policies, the producers of France's wealth are apparently only free to serve as milk cows for the bloated bureaucracy.