Causes and consequences of the decline of French capitalism

This is a transcript of the introduction to a discussion on ‘Perspectives for France’ held at the Founding Congress of the Revolutionary Communist Party (PCR) on 30 November and 1 December 2024.

Since then, the French government has collapsed. However this talk is just as relevant today, for the profound crisis of French capitalism that it outlines is the real basis for the present political turmoil.

[Originally published on 2 December on marxiste.org]

This is the second time I've had to introduce our discussion on perspectives in a context where the government could fall overnight. The last time was at our Conference last May, six months ago. A month later, in June, Macron announced the dissolution of the National Assembly in the wake of the European elections. We had anticipated this possibility at our National Conference.

This time, things look a little different. The decision is in the hands of Marine Le Pen, who has given Michel Barnier until Monday [2 December] – the day after tomorrow – to respond to the demands of the RN (National Rally), failing which she will vote on censure.

But the most important difference between the current situation and that of last May is the development of the French public debt crisis, which could take on new proportions in the short term, with profound political and social implications.

All this underlines the deep crisis of French capitalism and the enormous political instability into which the country is sinking. I shall therefore devote part of my talk to an analysis of the current situation and its short-term implications. But only part, because the fundamental aim of a discussion of perspectives is not to speculate on the various short-term scenarios; it is above all to understand the most fundamental trends in the process, and the impact they will have on the development of the class struggle and on the political consciousness of young people and workers.

The decline of French capitalism

The starting point for our perspectives is the general dynamic of French capitalism, which has been in what is known as ‘relative decline’ for several decades. This means that French capitalism is declining relative to other imperialist powers.

The most general indicator of this decline is French capitalism's market share, which has fallen steadily in recent decades at every level – global, European and even national.

In Europe, the gap between Germany and France has widened steadily since German reunification in the early 1990s. This gap can be seen in the trade balances of the two countries: the balance of exports and imports. Since 2004, France's trade balance has been systematically and massively in deficit, while Germany's has been systematically and massively in surplus.

The gap between Germany and France has widened steadily since German reunification in the early 1990s / Image: NATO, Flickr

It's true that the German economy has now entered a deep crisis. But this will not mark the beginning of a reversal in the balance of power between French and German capitalism. Why not?

Firstly, because the crisis in the German economy will have a negative impact on French exports to Germany at a time when France is also in the throes of a serious economic, industrial and debt crisis.

Secondly, and above all, because France's lack of competitiveness is such that Germany's decline will not benefit France, but rather other imperialist powers, starting with China.

In short, despite the crisis in the German economy, France's decline relative to Germany is not about to be reversed. In fact, it could get even worse in the years to come.

The key is to understand that the decline of French imperialism is general. It is evident in every market, on every continent, and is not just economic in nature, but also diplomatic and military.

Much has been made of the impressive series of political, diplomatic and military setbacks suffered by French imperialism in West and Central Africa. It continues: the governments of Chad and Senegal have just asked France to withdraw its troops from these two countries, which is a new and bitter setback for French imperialism.

But it's not just West and Central Africa. In the Maghreb, that old ‘preserve’ of French imperialism, the latter is facing growing competition from China and Russia. In particular, the Algerian government – which is sitting on huge hydrocarbon reserves – has made it clear to the French government that it no longer has exclusive rights to the exploitation of raw materials and to the Algerian market in general.

As a result, France is no longer in a position to act as arbitrator between Algeria and Morocco on the question of the Western Sahara. Instead of its traditional position of arbitrator – or, let's say, of false neutrality – in the conflict between Morocco and Algeria, France has decided to support Morocco on the Western Sahara issue, in exchange for French investment in this vast region, but at the risk of further damaging Franco-Algerian relations.

Finally, French imperialism is in trouble in what it calls the ‘overseas departments and territories’ – which, in reality, still have the character of colonies if we take into account the standard of living of the masses, the appalling state of public services and infrastructure, and above all the real economic relationship between these territories and the metropolis. They are subject to the exclusive domination of a handful of French monopolies which sell their goods there at exorbitant prices.

In recent decades, there have been a whole series of major social mobilisations in the French ‘overseas departments and territories’. There was the insurrectionary situation in New Caledonia, which Chinese imperialism followed with interest, but also strikes and mass movements – for example in Martinique since last September.

The crisis of French capitalism can only aggravate the situation of the masses in all the ‘overseas departments and territories’ and provoke new social explosions. This will have the effect of: 1) stimulating the class struggle in metropolitan France; 2) weakening Paris's control over these territories, which are of great strategic and geopolitical importance to French imperialism.

The parasitism of French capitalism

What are the causes of this decline in French imperialism?

There are many, and they are not just to be found in France: the dynamics of the other imperialist powers come into play, by definition. But there is a central element in this equation that is not directly economic; it is political: it is the great revolutionary traditions of the French working class, which for decades forced the French big bourgeoisie to proceed with a certain caution, a certain restraint, in implementing the austerity policy that it needed to defend the competitiveness of its investments in international competition.

The May 68 revolution, in particular, was a trauma for the French bourgeoisie, which was saved at the last minute by the betrayal of the leaders of the PCF and the CGT. Since May 68, the French working class has given the bourgeoisie several wake-up calls:

1) The unlimited general strike of the civil service in December 1995, which was not far from being transformed into an unlimited general strike of all sectors of the economy.

2) The 2006 movement against the Contrat Première Embauche (First Job Contract), which ended up getting out of the hands of the union leaders – hence Chirac's retreat.

3) The gilets jaunes movement which, in December 2018, placed the country on the threshold of a revolutionary crisis. Here again, it was the union leaders who saved the government.

This is why the French bourgeoisie walked on eggshells – limited its attacks – for a whole period, while in other countries governments imposed drastic counter-reforms with the effect of lowering the cost of labour, and therefore increasing the competitiveness of investments. This was the case in Germany in the early 2000s, for example.

This relative caution on the part of the French bourgeoisie was untenable in the long run. Eventually, it had to go on the offensive at all costs. Sarkozy's term in office (between 2007 and 2012) marked the first stage. Then, between 2012 and 2017, François Hollande took over from Sarkozy and implemented a number of drastic counter-reforms, including the first Labour Law. But it was the election of Macron that marked the clearest acceleration of big business's offensive.

It was the election of Macron that marked the clearest acceleration of big business's offensive / Image: IAEA Imagebank, Flickr

The result: between 2012 and 2022, the gap between unit labour costs in France and Germany has narrowed considerably. I even read an article which claimed that this gap had ‘completely disappeared’. But the remarkable thing is that despite this, French capitalism has continued to lose market share. There is a very obvious reason for this: gains in competitiveness in terms of the price of labour – and labour intensity – are one thing, but in themselves they are not enough. The French capitalists still need to invest in production, in the renewal and modernisation of the productive apparatus, but they didn’t do this, because they were faced with a world market that was already saturated and dominated by economies – including Germany – with more modern, more efficient, more productive and more competitive industries.

As a result, the profits made thanks to lower labour costs have mainly translated into orgies of dividends and speculative investments. For many years now, the French bourgeoisie has been the European champion of dividends, which it distributes to the tune of tens of billions every year.

The same can be said of the tax exemptions and subsidies of all kinds from which France's big business benefits: more than 150 billion euros a year. All this public money is given to big business on the pretext of stimulating employment and investment. But no: most of this money ends up in the pockets of shareholders and is spent on tax evasion, which officially amounts to between 60 and 80 billion euros a year.

These figures underline the increasingly parasitic nature of French capitalism. It is completely addicted to public subsidies, which are one of the fundamental causes of the growing public debt.

This debt is now a major problem for the French bourgeoisie. The question of interest rates on French government bonds is becoming extremely worrying for the bourgeoisie.

According to relatively optimistic predictions, the annual payment of the ‘burden’ of the debt, i.e. the interest alone, should reach 55 billion euros in 2025, then 70 billion in 2027 and almost 100 billion in 2028. By way of comparison, the national education budget in 2024 will be €65 billion.

But the figures I have just given are the best-case scenario. They are based on the assumption that interest rates on government bonds will remain relatively stable. But these interest rates could rise sharply in the days and weeks ahead.

The crisis of the regime

What is the bourgeoisie's solution to this problem? It has only one: raise taxes on the poor and middle classes, and at the same time make massive cuts in public spending – except, of course, in subsidies to big business.

This is the programme of the French bourgeoisie. It has no other and it must implement it as quickly as possible. But the bourgeoisie has a problem, which I've already mentioned: the French working class and its revolutionary traditions. Since the crisis of 2008, the workers have been subjected to a policy of continuous attacks on  their living standards, which has provoked a whole series of major mobilisations, but also growing political polarisation and a crisis of regime which crossed a new threshold last June with the dissolution of the National Assembly.

It's important to understand that this crisis of the regime is rooted in the deep crisis of capitalism and French imperialism. Economic stagnation, mass unemployment, counter-reforms and austerity policies have destroyed the well-oiled machinery of alternation between the traditional right and the Socialist Party. The Republicans and the Socialist Party – which have taken it in turns to pursue reactionary policies for years – have collapsed.

In 2017, the centre recomposed itself around Macronism, which won against the backdrop of a sharp acceleration in polarisation towards the right (Le Pen's National Rally) and the left (Mélenchon’s La France Insoumise). This polarisation was further accentuated in 2022, and despite Macron's victory in the presidential election, he lost his absolute majority in the National Assembly.

The survival of his government depended on the goodwill of the Republicans, who announced last spring that they were likely to vote a motion of censure with the left and the RN. So if Macron dissolved the National Assembly, it was not just because he had taken a beating in the European elections, but also because he wanted to get ahead of the game: he wanted to dissolve the National Assembly before being forced to do so by a motion of no confidence.

You know the rest: the result of the early legislative elections was a heavy defeat for the Macronists, who only avoided a complete rout thanks to the so-called ‘Republican Front against the far right’, i.e. thanks to the support of the NFP (New Popular Front). Despite this, despite the NFP's scandalous support for the Macronists, they are even more of a minority than they already were in the National Assembly, and the government no longer depends solely on the Republicans for its survival, but also and above all on the RN.

This unprecedented situation is extremely fragile, and could lead to the fall of the government in the next few days.

To understand this, we need only cite a few recent polls:

- Opinion in favour of Barnier: 45 percent in September, 40 percent in October, 36 percent today.

- Opinion in favour of Macron: 22 percent to date. It has never been so low, even at the time of the gilets jaunes.

- Above all: 53 percent of those polled want the government to fall, including 67 percent of RN voters.

Over the last 20 years, the RN has made headway among sections of the working class who are disgusted by the successive betrayals of the Left in power / Image: European Parliament, Flickr

This is the central element in the calculations of Marine Le Pen and her clique. It's her real ‘red line’ – and not, as she claims, the ‘purchasing power of the French’. The RN is not prepared to upset a large section of its electorate on behalf of the Barnier government.

Here, we need to take into account the internal contradictions within the RN electorate. A fraction of the RN's 11 million voters are reactionary petty-bourgeois who support austerity policies – as long as they hit civil servants, the unemployed, students, immigrants, etc.

But over the last 20 years, the RN has also, and above all, made headway among sections of the working class who are disgusted by the successive betrayals of the Left in power. This is now the majority of RN voters. For example, in the first round of the legislative elections last June, of all those who took part in the vote, more than 50 percent of industrial workers voted for the RN, as did 42 percent of private sector employees and 38 percent of civil servants (compared with just 17 percent in 2017). 

It is true that these figures only concern voters who took part in the vote. It's very important to point this out, because in reality the fraction of the working class that abstains is the largest: it accounted for 45 percent at the last elections. This underlines the depth of the rejection of the political system in general.

Nonetheless, it's working-class voters who now make up the largest proportion of the RN's electorate. But this working-class electorate is not solidly attached to the RN. A significant proportion of them may well leave to abstain – or to join the FI – if the RN appears too obviously, and for too long, to be an active supporter of the government's anti-worker, anti-social policies.

According to a recent poll published by Le Monde, 25 percent of RN voters consider the NFP to be the real opponent of the Barnier government. This is what the RN leadership cannot accept indefinitely. And this explains the increasingly clear threats made by RN leaders against the Barnier government in recent days.

Michel Barnier's desperate arguments

Will these threats be carried out – or rather: when will they be carried out? We'll soon find out. The main thing is to understand the fundamental contradictions in the situation and the general prospects that result. You know the expression: “all roads lead to Rome”. Well, all roads and all scenarios lead to the rapid fall of the current government – probably in the next few days, if not in the next few weeks or months.

In the immediate term, the government and its supporters are trying to put pressure on the RN by trying to blame it, in advance, for a spike in interest rates on the French debt if the government falls. But this is a rather desperate argument. Firstly, interest rates on the debt had already started to rise before Marine Le Pen raised her voice. But above all, this argument is not at all likely to convince the RN electorate.

Barnier is basically telling us that if his government falls, there will be a financial storm – and therefore a policy of drastic austerity. This is indeed possible. And if his government doesn't fall? Then, Barnier tells us, there will be a policy of drastic austerity – to avoid, perhaps, a financial storm!

Barnier is basically telling us that if his government falls, there will be a financial storm – and therefore a policy of drastic austerity / Image: fair use

That's where the government stands. It says: “with me it will be very hard; without me it will be worse”. This is not at all convincing for the mass of workers, many of whom consider that their situation is already intolerable. They burn with hatred for Barnier, Macron and all their ilk – and to hell with their predictions and promises.

Boris Vallaud's ‘solution’

Which government will replace Barnier's? There's no point speculating on that. We need to concentrate on the fundamental processes, which will assert themselves through the various possible and imaginable scenarios.

To illustrate this, I'll take the example of what Boris Vallaud, the leader of the PS (Socialist Party) parliamentary group, is proposing. He has put forward the idea of a government supported by a new parliamentary ‘base’ stretching from the FI (La France Insoumise) to the Republicans.

This would presuppose – among other things – a total capitulation by the FI, i.e. Mélenchon handing over the keys of the Elysée to Marine Le Pen. You never know with Mélenchon, but it's not the most likely scenario. Moreover, Mélenchon immediately denounced Boris Vallaud's statement. In fact, Boris Vallaud was expecting this reaction from Mélenchon. What Boris Vallaud is really proposing is something else: a majority stretching from the right wing of the NFP to the Republicans.

From a purely arithmetical point of view, this makes sense on paper. If you take the whole National Assembly, excluding the FI and the RN, that gives a fairly large majority: over 350 seats, bearing in mind that you need 288 to have a majority. From a political point of view, however, this is no more valid today than it was this summer, when Macron himself demanded such a majority.

It's quite simple: if what Boris Vallaud is proposing were implemented, it would immediately bring millions of votes to the RN and the FI. In other words, Boris Vallaud is proposing political suicide to his PS comrades and to all those who will follow him down this path. And so his chances of success are very slim.

[Since this was written, the PS leaders have seemed willing to commit this political suicide. In any case, if a new majority including the PS leaders is formed, it will be very fragile – and it will immediately benefit both the RN and the FI.]

After Macron

One thing is certain, however. After the fall of the government, the pressure will increase brutally on the most hated man in the country: Emmanuel Macron. The leaders of the RN and the FI – among others – will be calling ever louder for Macron's resignation and the organisation of early presidential elections before new general elections. And this demand will find a broad echo among the mass of the population. According to a recent poll published by BFM, 63 percent of those polled want Macron to resign if the government falls.

Even bourgeois strategists are divided on the issue. Some argue that early presidential elections would have the advantage of giving the winner the momentum and authority to win a majority in the subsequent parliamentary elections. But other bourgeois strategists point out that this is not even certain. They also point out that the crisis between the Macronists and the Republicans is such that the presidential election is very likely to come down to Mélenchon and Marine Le Pen – assuming she can run, and I believe she can because the judges won't dare take the political risk of ruling her out of the race for the Elysée.

Of course, faced with the alternative between the FI and the RN, the bourgeoisie will fully support the RN. This is already the case, and it will be even clearer in the event of a second round between the RN and the FI in the presidential election.

Faced with the alternative between the FI and the RN, the bourgeoisie will fully support the RN / Image: own work

However, a government led by the RN is not the ideal scenario for the French bourgeoisie. It has been preparing for this for years, for want of an alternative, but the RN in power would be a source of great social instability.

Incidentally, this prospect terrifies the leaders of the CGT (The General Confederation of Labour). It was perfectly clear during the legislative elections: Sophie Binet wholeheartedly supported the so-called ‘Republican Front against the far right’, not because she feared the advent of fascism if the RN won, as she claimed, but because a RN government would worsen political and social instability. It would put increasing pressure on the CGT leadership to organise a serious struggle, and it would weaken the CGT leadership's control over the development of social struggles.

The greatest fear of the CGT leaders is a social explosion beyond their control. But the truth is that, with or without Marine Le Pen, the crisis of French capitalism and the bourgeoisie's programme will inevitably steer the class struggle towards movements beyond the control of the union leaders.

That said, let's return to the prospect of a government led by the RN. French bourgeois strategists seek to reassure themselves by citing the example of Meloni's government in Italy. Méloni managed - for the time being - to implement the policies that the Italian bourgeoisie needed without provoking major social explosions. I'm not saying that it's impossible in France, but at this stage it's a very abstract prospect for a whole series of reasons which have to do with the immediate situation of the French economy, the general dynamic of the class struggle in France and the state of the Left and the French workers' movement.

In this respect, there are important differences between France and Italy – important enough, moreover, that even the prospect of a government led by RN, following new presidential elections, is not the only possibility. It's the most likely, given all the right-wing mistakes made by the FI in recent years. But we can't completely rule out the possibility that, despite these mistakes, Mélenchon will win the next presidential election.

The process of political polarisation continues – towards the right, but also towards the left – despite Mélenchon's mistakes, which are certainly serious mistakes, but not as decisive and irreversible as the past capitulations of Tsipras (in Greece), Sanders (in the United States), Iglesias (in Spain) or Corbyn (in Great Britain).

But I won't say any more on the subject. We'll see how things stand on the threshold of the next presidential election.

Youth and the PCR

For the time being, the most important thing from our point of view, from the point of view of building the PCR, is the way in which the crisis of capitalism – in all its dimensions – is reflected in the political consciousness of the different strata of youth and the working class, and in particular in the most radicalised stratum of youth, towards whom we are directing our work and through whom we are going to build the PCR over the coming months and years.

Tomorrow we will discuss our working methods, our priorities and our organisational tasks. But today, as part of this discussion on prospects, we need to understand the changing relationship of the most radicalised young people to the organisations of the left as a whole, in other words to the big reformist organisations and the ultra-leftist organisations.

The two things are linked. It's simple: the longer the crisis of capitalism continues and intensifies, the less the programmes of the reformists can convince the most left-wing fraction of young people. That doesn't mean that these young people won't vote for Mélenchon. In the absence of an alternative, the vast majority of those who are critical of Mélenchon's reformism will still vote for him – and for the FI candidates in general – in the hope of beating the right and the far right.

We are aiming as directly as possible at these young people, offering them an organisation, a programme, methods and ideas that are genuinely revolutionary / Image: PCR

But at the same time, a growing number of these young people are and will be looking for an organisation with a much more radical programme than the FI. That's precisely why we're founding the PCR. We are aiming as directly as possible at these young people, offering them an organisation, a programme, methods and ideas that are genuinely revolutionary.

That said, we need to keep a sense of proportion. We are not in a position, in the immediate future, to win over all the young people who are moving towards communist ideas, or even a majority of them. The scale of the radicalisation process goes far beyond our party. It's true that this opens up excellent prospects for growth, provided we work properly. But it also means that other organisations that claim to be communist will also be able to organise part of the most radicalised layer of youth.

In other words, we can expect the growth of certain ultra-leftist organisations, as has been the case with Révolution permanente in recent years.

This is certainly not a Marxist organisation worthy of the name. It is multiplying opportunist and ultra-leftist errors. But despite this – and in a sense, because of it – it could continue to grow in the period ahead.

In this respect, we need to clarify what we wrote recently. In a previous document, we pointed out that Révolution permanente was following the same path as that taken by the NPA (New Anticapitalist Party) before it, the path of opportunism and theoretical eclecticism, which ended rather badly for the NPA. This comparison is generally accurate, but we need to be concrete and take into account the specificities of the current period.

When the former Ligue Communiste Révolutionnaire launched the NPA in 2009, it hoped to benefit from the discrediting of the PS and PCF (French Communist Party) leaders. Unfortunately for the NPA leaders, just as they were founding their new party, Mélenchon left the PS and founded the Front de Gauche with the PCF. Very quickly, the Front de Gauche crystallised the process of radicalisation that was developing among young people, and at the same time ruined the NPA's dreams of greatness.

This process became even clearer – and more massive – with the creation of La France Insoumise in 2016. The FI was enormously successful with young people, who came en masse to Mélenchon's campaign meetings in 2016 and 2017, and who had many illusions in the FI. This contradicted the perspectives developed by the NPA, and therefore aggravated its internal crisis.

Today, the situation is not quite the same. There are far fewer illusions in the FI among the most left-wing young people, which opens up a lasting space for organisations that claim to be communist and revolutionary. Eventually, of course, the ultra-leftist and opportunist errors of sectarian organisations will undermine their potential for growth and expose them to serious internal crises. But this will not necessarily be the case in the immediate future, which will have the effect of putting pressure on our own comrades, who will sometimes be tempted to imitate the erroneous methods of the most successful sectarian organisations.

We must collectively resist these pressures and stick to our Marxist methods and ideas. The greatest tactical flexibility is indispensable, yes, and our International has excellent traditions in this field, as the ‘communist turn’ has well shown. But tactical flexibility is worth nothing without the greatest firmness in the field of revolutionary ideas, principles and programme. One without the other is useless. We have both and we must keep both. On this basis, our success, our growth and our victory will be guaranteed.