Hollande Out of the Closet

“Social Democracy” – The Hollande Way

Written by Hilary Barnes

Psst! Our President’s A Social Democrat!

Something important, even revolutionary, took place at the press conference held by President Francois Hollande at the Elysée Palace to mark his first sixmonths in office on November 13, but if you did not happen to notice you were not the only one. It was concealed by the subtlety of the language used by the president and was more readily apparent to the French themselves than to outsiders such as myself.

It was summed up in these these sentence from his speech (translated by
your blogger, a bit too literally to make it good English):

There have always been two conceptions (of socialism),  a conception productive – one has even spoken about a socialism of supply – and a more traditional conception where one speaks of the socialism of demand….

Today we have to make an effort to consolidate our supply, to be more competitive – and I accept responsibility for this. At the same time we must try to maintain the demand and make the change, that is to say to understand that the world is changing, that a transformation to a new way to produce, to consume, to transport is taking place. We must undertake this revolution.

Hollande himself referred to a Copernican revolution, but the label he perhaps should have put on this packet of verbiage was: We are all social democrats now, even in France.

Actually to call himself a social democrat was a step too far, but that is what he meant, and by social democrat (or social liberal) we are talking about a social democrat as it would be understood in Germany, the UK and the Nordic countries, to name the most obvious.

The difference is that in these countries the socialist parties, which either call themselves Labour or Social Democratic, shrugged off Marxist hostility to the private enterprise sector as a doctrinaire principle of their policies a long time ago.

They recognise that capital and labour are all in the same boat together and national prosperity depends on a degree co-operation between them, even if their will always be differences of interest.

While there are and always have been many French socialists who think this way, it is not something they stand up and say on plain language at party meetings. Hostility to the business sector has been taken as a defining characteristic of anyone who wanted to be known as a socialist. Hollande himself is and appears always to have been a social democrat by conviction, but during his 11 years as secretary general of the Parti Socialist he carefully avoided acquiring the label.

He was known as the great synthesiser, skilfully holding the party together around anodine statements of principle. No one disagreed so strongly with these that they refused to put a signature to them, but they were not the stuff of which a realistic policy programme could be put in place with everyone’s agreement.

To the real left, of course, social democracy is a betrayal, or as Jen-Luc Melenchon, the left’s leading candidate in France’s spring’s the presidential election (he won about 11 % of the vote in the first round), said of Hollande’s statements at his press conference: unconditional surrender in the face of liberalism.

Several political scientists were on hand to explained that Hollande’s stance is a real break, a rupture with the history of French socialism, and Hollande the first socialist leader openly to accept the interests of those who generate the nation’s wealth must be taken into account by a socialist leader.

And there is was for all to see, Exhibit A – the Pact on Competitivity, Growth and Employment, with a substantial three-year tax credit for enterprises, announced on November 6, and what’s more with no conditions attached.

Once the president has conceded that the interests of business must be considered, the debate on the national debt, the budget deficit, the role of public expenditure, competitivity, labour costs, labour market flexibility and related fiscal policy begins to fall into place.

The rank and file are not enthusiastic. Hollande promised change, but the policies he is following to bring down the budget deficit and stop the steady increase in the government debt, now around 90 % of GDP, were not the change of which they dreamed.

Symptomatic of this disillusion is the importance that is being attached in the media to Hollande’s decision to increase the value added tax by 0.4% points to 20% in 2014 to help finance the tax credits. One might think this was much ado about very little, but in his presidential campaign Hollande took a strong stand against an increase in v.a.t. (which Sarkozy was contemplating) as a way to alleviate the social charges (payroll taxes) paid by the employers.

His change of mind is the symbol of a great and much broader betrayal for many on the left, who cannot see much difference between Hollande’s policies and Sarkozy’s – and in this they are right, of course.

For as long as Hollande is president, one presumes that the Parti Socialist in the National Assembly and the Senate will fall in behind, but the parties to the left of the PS, including the Communists, the Ecologists and sundry others, who backed the formation of the present government with their votes (the Ecologists have a couple of ministers in the government), are already showing signs of falling out.

Read more by Hilary Barnes.

About the Author

Hilary Barnes is a veteran economics and business writer. He was for 25 years the Copenhagen Correspondent of the Financial Times, Nordic Correspondent of The Economist for part of that time, and published a paper newsletter, sold to international companies in the Nordic countries, called The Scandinavian Economies for over 30 years.