The Neoliberal Turn — The 1980s

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See also The Neoliberal Turn — The 1990s

 

In a most blatant about-face in March 1983, François Mitterand spearheaded the all-out defection of the left from its traditional social and economic policies in favour of the neoliberal paradigm.  

On the one hand, domestic policy sovereignty was crucial if it was to lower unemployment and this predicated against participating in the EMS.

On the other hand, the desire to undermine German influence and to find a way to subsidise their farmers under the CAP forced them to engage in the European dialogue. They were caught betwixt!

By the third currency realignment in March 1983, the French were at the crossroads and the incompatibility of these competing ambitions was obvious.

At that point, France had a choice. It could retain its policy sovereignty and pursue its legitimate domestic objectives by floating the franc or remain within the EMS and subjugate its domestic policy freedom to the dictates of the Bundesbank.

Unfortunately, for the French and for Europe in general, they chose the neo-liberal path, however culturally alien this was to them.

History tells us that the French government fell lock step into the increasingly dominant Monetarist policy approach that involved using rising unemployment as a policy tool to discipline the inflation process.

That political reality was too stark for the public to accept and necessitated a smokescreen being erected to disassociate the rising unemployment from macroeconomic policy choices.

The rising unemployment was reconstructed by the political and bureaucratic spin doctors as a ‘structural’ problem reflecting a failure of individuals to be self reliant and assiduous in job search and skill development. A bevy of securely employed and highly paid economists pumped out a massive number of ‘research’ papers, which served to give authority and legitimacy to this ideologically tainted and empirically bereft view. 

Most of this ‘authority’ lacked credibility, but then mainstream economics has never really been concerned with its theoretical inconsistencies or lack of empirical traction.

The shift in policy in March 1983, the so-called ‘tournant de la rigueur’ (turn to austerity), took France back to the ‘fight inflation first’ policies of Giscard d’Estaing in the late 1970s and ended the few years of social advance in France.

The shift in language, from ‘d’austérité’ (as coined by Raymond Barre) to the softer ‘la rigeur’ was just window dressing.

The socialists were abandoning their principles to become part of the neo-liberal political convergence that captured social democratic parties in most advanced nations during this period.

Source.

Emphasis added.