In the hot seat

FRANCE MARC ULLMANN

Paris—`And what do the young people think?' 'I am afraid, mon General, they are not very enthusiastic about your policy.'

'Quite right too. It is totally lacking in interest.'

This, it seems, was the conversation which took place last week between General de Gaulle and the editor of the monthly Esprit, a publication for left-wing Catholics.

Hardly a day goes by without fresh re- proaches from the President of the Republic upon the head of his former Prime Minister, M Georges Pompidou. For six years he carried out the General's orders : yet now we are told that 'he did nothing,' or that 'three weeks of determination are not enough to efface the record of six years' inaction.' Bad faith, or the 'necessary ingratitude' of a statesman? At any rate the General has but one sentence of warn- ing for the new entrants to the cabinet : 'don't tell me all's well.'

There is little danger that anybody would attempt to make such a soothing comment on the state of the economy. Paris has now taken London's place in the monetary hot seat. Un- employment is up, and profit margins have shrunk to the point where industry's investment is threatened. Since May the Bank of France has lost around $2,000 million in gold and foreign exchange, or one third of its reserves. And on top of this France has mobilised all the IMF credits automatically available to her.

Obviously a loss of reserves on this scale is only marginally attributable to the trade deficit. The bulk of it reflects shaken confidence : the confidence of foreign investors, who have with- drawn nearly $1,000 million of short-term funds; the confidence of Frenchmen, who are ready to pay 10 per cent over the odds for foreign shares; the confidence of importers and exporters, who have resorted to the familiar old game of 'leads and lags.'

The government's only answer to the state of mind of businessmen is 'growth.' With $4,000 million still in the kitty, and conditional drawing rights on the Fund still intact, so long as the flight of capital slackens France can run a monthly deficit of several hundreds of millions of dollars for a long time—more than long enough to avoid the constraints of a policy of deflation and austerity.

Yet, ironically, deflation and austerity, although not imposed by the government, correspond to the mood of the nation. Small firms are hardest hit by the massive increase in the lowest salaries. Some are closing, some are cutting down on staff, and some are merging with their competitors. Either way there is a saving of labour, and a rise in unemployment.

41 This stood at 450,000 in April, and perhaps 550,000 now, with an expectation of a seasonal peak of 800,000 at the turn of the year.

So the workers are going in for precautionary saving, and as a result the wage settlements arranged at the end of May have not led to a

big jump in private consumption. In one sense, of course, this is just as well: contrary•to most

people's expectations, prices are unlikely to go through the roof, and the rate of inflation will probably work out at around 4-5 per cent. But it hardly induces a climate favourable to industrial investment.

'I only know two reasonable definitions of the art of government,' the new Prime Minister, M Couve de Murville, said to me the other day. 'There is Mendes's "to govern is to choose"; and there is the other one, far older, according to which politics is the art of the possible. In my view the two definitions are in fact comple- mentary: to govern is to choose between possible solutions.' Which is not exactly the profession of faith of an idealist. The General is going to have to wait for better days before he can hope to translate into reality his dream of the 'middle way between capitalism and socialism.'

Indeed, at the very first cabinet of the new government M Couve de Murville gave his own definition of 'participation.' There was, he suggested, a world of difference between proper communications from management to shop floor and the disorder which would result from the imposition of co-ownership in a country where 'the concept of profitability needs to be re-established, not assaulted.'

So the Minister of Social Affairs, M Schumann, has been told to pigeon-hole all the more ambitious plans for worker participation in management and profit-sharing, and to con- centrate instead on a more mundane reform of trade union law to enable the unions to do their job within the factory more effectively. France, in other words, instead of setting a new example to the world, will make do with catching up on her competitors and correcting a situation in which many employers will agree to meet the unions only outside their own factories, and then only to discuss salary scales in a national context. And the most significant part of the reforms which are to be the subject of a national referendum in January next will be about decentralisation—that is, the right of the regions to enjoy autonomy in certain fields and, up to a point, to levy local taxes. Here, too, it is not so much a matter of blazing a trail as of correcting the excessive bias towards centralisa- tion which has existed since Louis XIV.

Even if this were to be the only tangible consequence of the May revolution it would have served a purpose. For the clearest lesson of the crisis was that France is a nation without a safety-valve, where every local disorder spreads immediately across the country. That is why the emphasis on decentralisation in the government's programme has provoked a degree of optimism in men like Raymond Aron. Aron has argued that each successive French revolution has worsened the bureau- cratic centralisation of the country; and that the opportunity created by the latest one stems precisely from its failure—or rather from the anxiety of some members of the government at least to 'recapture' some of the aspirations to which it bore witness.

Of course it may not work. Imposed ex cathedra, decentralisation could turn out to be precarious, lop-sided or inadequate. The reform of the universities could succumb to the violence of some of the revolutionary leaders (one teachers' union leader said the other day, quite bluntly, that what they were after was 'not reform of the universities, but the sapping of the regime') and the resistance of Gaullist deputies elected in June on a

straightforward ticket of law and order.

So, after ten years of Gaullism the Prime Minister reckons that all is yet to be done. First and foremost, the modernisation of an economy in which one tenth of the national budget dis- appears without trace in farm subsidies and another tenth in subsidies to traditional indus- tries. M Couve de Murville never fails to remind his visitors that the railways' deficit is just as costly as the force de frappe.

The diagnosis is fair enough. But then are not the French—like the British in recent years —experts in fair diagnosis and specialists in self-interested inaction?