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Capitalisme contre Capitalisme… (Albert 1991) … a tale in two parts …and four chapters.

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Presentation on theme: "Capitalisme contre Capitalisme… (Albert 1991) … a tale in two parts …and four chapters."— Presentation transcript:

1 Capitalisme contre Capitalisme… (Albert 1991) … a tale in two parts …and four chapters

2 The two capitalisms… - mediated capitalism (… les guichets): state committees - central banks - family-led groups - worker participation - high levels of social protection - state savings schemes - national protection of major firms - state led investment… - market capitalism (…liberalisme) direct finance - stock-exchange-led - investuels - institutional investors (les zinzins) - international takeovers (les OPA) - emphasis on capital gain - openness to the global market…

3 from State governance… to nationalisation… to privatisaton… to internationalisation… AND BEYOND…? AND BEYOND…?

4 1998 – France is back! La France va mal mais les Francais vont bien…La France va mal mais les Francais vont bien… scale of biggest companies (Danone, Elf, Sodexho, Michelin…) high level of exports (6.1% of world imports – second highest in EU, behind Germany) slight fall in level of unemployment (but still near 3m > 2.8m) increased rate of growth (from 2% in 1996 to 4% – higher than Germany but lower than the UK)…

5 Back from where? the stagnation of the post-war state model 1966-1973 the stagnation of the post-war state model 1966-1973 the oil crises of 73-4 and 82-3 the oil crises of 73-4 and 82-3 the changes in direction under Mitterrand in the early 1980s the changes in direction under Mitterrand in the early 1980s recession and the collapse of the franc in 1993 recession and the collapse of the franc in 1993 resistance to pension reform in 1995 resistance to pension reform in 1995

6 … in 1998, France undergoing a huge process of change – but still a largely state-run economy Comparison with the UK in 1998 UKFR - Public spending as a % of GNP39.950.2 - Public sector employment as % of total employed (Ger. - 17.2)15.627.7 - Labour costs per hour against 1.0 in Ireland (Ger. - 1.9) 1.1 1.5

7 The French - anti-capitalist…? (Chapter 1) a monarchic and republican tradition a monarchic and republican tradition a triangular system a triangular system -the family -the banks -the State

8 Le capitalisme familial… Les 200 familles… Les 200 familles… Les Henokiens… Les Henokiens… La France se protege… La France se protege…

9 Some of the best known French family firms… (mes fonds propres cest mes propres fonds) RenaultMichelinCitroenPeugeotTaittingerDanoneLegrandTriganoBicServier Yves Rocher Leclerc Mulliez etc…

10 France 1950-1968 >>>1980: a state controlled model The companies borrow… borrow… The bank lends… The citizen saves… saves… The State controls… controls…

11 The formation of the large groups in the 1970s the banks: the banks: Suez, Paribas, Lazard… the industrial conglomerates: the industrial conglomerates: BSN, Saint-Gobain Pont-a-Mousson (SGPM), Pechiney-Ugine-Kuhlmann (PUK), LOreal, La Generale des Eaux…

12 The 1980s – from nationalisation to privatisation (Chapter 2) 1982: the major banks nationalised – the State takes control – demand-led policy… 1982: the major banks nationalised – the State takes control – demand-led policy… 1983: control of the money supply – downsizing - the promotion of enterprise… 1983: control of the money supply – downsizing - the promotion of enterprise… 1986-87: the first major wave of privatisations under the new government of the Right: Paribas, La Societe Generale, Havas, TF1… les noyaux durs 1986-87: the first major wave of privatisations under the new government of the Right: Paribas, La Societe Generale, Havas, TF1… les noyaux durs 1993-95: second wave of privatisations: BNP, Rhone-Poulenc, Elf-Aquitaine, UAP, SEITA, Usinor- Sacilor, Pechiney. 1993-95: second wave of privatisations: BNP, Rhone-Poulenc, Elf-Aquitaine, UAP, SEITA, Usinor- Sacilor, Pechiney.

13 1983-1998… A major shift in the French economy Le paysage du capitalisme francais au debut de 1999 confirme que le recul du secteur public aura ete lun des phenomenes majeurs de la decennie.Le paysage du capitalisme francais au debut de 1999 confirme que le recul du secteur public aura ete lun des phenomenes majeurs de la decennie. (N.Holcblat in LEtat de la France 1999-2000, pp.450-52)

14 The consequences of privatisation greater involvement by French people in the process of production – communication greater involvement by French people in the process of production – communication three types of investor: three types of investor: -the private individual (le petit porteur) -the employee shareholder (lactionnaire salarie) -the institutional investor (le zinzin)

15 The limitation on public engagement – the illusion of popular capitalism Les petits porteurs ne sont que des epargnants, passifs ; ils ne sont pas, pour linstant, des porteurs de capital. Erik Israelewicz Le Capitalisme Zinzin (1999) p.160 Erik Israelewicz Le Capitalisme Zinzin (1999) p.160

16 The employee shareholder means of engaging state employees in the future of their own privatised company –in 1999, more than 50% of companies involved means of engaging state employees in the future of their own privatised company –in 1999, more than 50% of companies involved an alternative form of salary – merit award – sought after by 66% of salaried employees… an alternative form of salary – merit award – sought after by 66% of salaried employees… but limited impact… (2% of total shares held; only 5% of employees in the private sector) but limited impact… (2% of total shares held; only 5% of employees in the private sector)

17 The reasons for non-engagement The belief in security – savings, property (average of 14% in 1999) The belief in security – savings, property (average of 14% in 1999) Taxation on capital gains Taxation on capital gains Reliability of the State (treasury bonds) Reliability of the State (treasury bonds)

18 The rise and fall of the French institutional investor greater involvement in the 1980s and 90s by banks and state-owned groups (les noyaux durs) greater involvement in the 1980s and 90s by banks and state-owned groups (les noyaux durs) lack of French capital towards the end of the century to fund newly privatised companies… lack of French capital towards the end of the century to fund newly privatised companies…

19 From privatisation to internationalisation (Chapter 3) 1999 - the year of mergers and takeovers (les OPA) - pour vivre heureux, vivons couches (Israelewicz) 1999 - the year of mergers and takeovers (les OPA) - pour vivre heureux, vivons couches (Israelewicz) Openness to greater participation from international investors – change in management culture – a loss of ownership Openness to greater participation from international investors – change in management culture – a loss of ownership

20 The main changes… A reduction in the power of the CEO (PDG) A reduction in the power of the CEO (PDG) The internationalisation of Boards The internationalisation of Boards Rule by shareholders Rule by shareholders Short-termism - quarterly accounting Short-termism - quarterly accounting Emphasis on short-term capital gain rather than on investment – economic value added (EVA) – return on investment (ROI)… by takeover and cost-reduction Emphasis on short-term capital gain rather than on investment – economic value added (EVA) – return on investment (ROI)… by takeover and cost-reduction The power of the fund-manager (les Mickey) The power of the fund-manager (les Mickey)

21 And what now? (Chapter 4) three major events… -t he introduction of the Euro - 1999 -the reduction in work time (RTT/les 35 heures) - 2000 -11 th September 2001

22 The consequences of the reduced power of the State Greater dependency on the Central European Bank Greater dependency on the Central European Bank Reduce public deficit…but unemployment? Reduce public deficit…but unemployment? Address the pension crisis Address the pension crisis Maintain Frances representation on Company Boards Maintain Frances representation on Company Boards Promote the development of small and medium enterprises Promote the development of small and medium enterprises

23 Most recent policy objectives… (June 2005) Reduce State deficit to below 3%; Reduce State deficit to below 3%; Increase productivity and the size of the labour force…; Increase productivity and the size of the labour force…; Continue to promote the growth of PMEs; Continue to promote the growth of PMEs; Create infrastructural projects and accelerate privatisation in order to reduce state expenditure by 20,000 m EUROS; Create infrastructural projects and accelerate privatisation in order to reduce state expenditure by 20,000 m EUROS; Reduce the number of state employees (fonctionnaires) – notably in Education… Reduce the number of state employees (fonctionnaires) – notably in Education…


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