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Economics & Finance

Why the French love social conflict

Theo Vermaelen |

The French are still taught today that class warfare is the nature of their society and will remain, as long as not all classes are equal. However, equality is impossible, writes INSEAD professor of finance.

France is in many ways a unique country. Where else in the world could you see a 15-year-old appear on TV saying that he is striking because he would like to retire at 60 instead of 62? Where else could you see a leading politician such as Segolene Royal, who is considered a mainstream socialist candidate for replacing President Sarkozy in 2012, encouraging 15-year-olds to go on strike? Where else would 71 per cent of the people support strikers who block refineries so that they have to wait hours in line to fill up their cars?

Even supposedly right-wing politicians such as Dominique de Villepin, former prime minister under Chirac, have endorsed the 15-year-olds’ position, claiming that if people retire later, the young will have to wait longer for a job. This statement is probably the most pure form of static economic thinking ever pronounced – that is, the idea that the labour market consists of a fixed number of slots. If this were the case, we could simply eliminate youth unemployment by lowering the retirement age to 45.

After 9/11, many of us tried to understand why so many Saudis supported Islamic terrorism and the answer was often found in school textbooks that openly preached hatred against the nonbelievers. A similar exercise should be done to better understand the French mind. What do the French learn in school to make them support economic terrorism and chaos, as long as it is organised by the working class?

Except for students in a special economics section, French high school students get no education in economics or finance. So one explanation for the French attitude is that the vast majority of the people have no basic understanding of economics or markets. Those who get economics training in high school probably get a muddled message. I got this impression after taking a closer look at the content of the economics courses of the last year of the lycée or high school.

The topics discussed seem more appropriate for a sociology course. Out of the seven courses of the curriculum, four have titles such as ‘Social Stratification and Inequality’, ‘Conflict and Social Mobilisation’, ‘Integration and Solidarity’, and ‘European Integration and Economic and Social Policies’. There is no discussion of microeconomics (demand and supply) or firm optimising behaviour such as profit (or value) maximisation, or discussion of financial markets or free markets in general.

The seeds of anti-capitalism and anti-Americanism can be found throughout the curriculum. In the chapter on ‘Conflict and Social Mobilisation’, after a thorough analysis of Marxist thinking, the authors conclude that the “reasons for conflict with the other social classes remain strong. Although workers participate in mass consumption they use fewer services than other classes: they go less on holidays than others, they have less access to the internet and they don't have maids or nannies.”

In short, French people are still taught today that class warfare is the nature of (French) society and will remain as long as not all classes are equal. Of course, equality is not possible, as it would require that either all maids have maids or that there would be no maids.

The chapter on ‘Work and Employment’ explains unemployment only as a result of technological progress where machines replace workers. Nowhere can a discussion be found on how social charges, taxes, and labour regulations (such as the minimum wage) can contribute to unemployment.

The icing on the cake is the statement in the section on ‘Conflict and Social Mobilisation’, which is supposed to be a consolation for all of us waiting in the queue for petrol. “A priori we often tend to think that conflicts are useless, they are better avoided. Not at all what sociologists think: conflict makes change possible. Social conflicts, because they put individuals into action, also contribute to form identities and develop solidarity. The first difficulty for you in this chapter is therefore the need to consider conflict in a positive role.”

Luckily, the French government has more or less responded as the Saudi government did after 9/11: starting this year, all high school students (not just the ones of the economics section) will have to take a course in economics, and the curriculum will be changed. The goal of the curriculum will be to understand better how companies, households, and the state behave, and how markets allocate resources, including labour and financial markets. So there is some serious hope that in the future, corporations will no longer be depicted as entities to fight, but instead as the ultimate creators of wealth.

Predictably, when the reforms were proposed at the beginning of this year, Francois Dubet, the only sociologist on the curriculum committee, resigned in protest, stating that "the corporation will no longer be seen as a place where people work, or like a social entity, but as a unit of production that has to continuously adapt to a changing environment."

Let's hope Mr Dubet is right. And perhaps then the French will some day understand that when the supply of oil is cut by striking workers, the price of petrol at the pump will rise.

 

Theo Vermaelen is Professor of Finance at INSEAD.

This is an edited version of an article which first appeared in American Thinker.

Comments
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From my personal, and thus subjective, perspective Prof Vermaelen is absolutely right.
Born in 1975 and raised in France, I cannot recall any economics high school teacher delivering another viewpoint than the marxist one. Things got somewhat better - i.e. more balanced - later in preparatory school (French equivalent of the Ivy League), but I was already 18 years old. That said, even there, major less ideologically-biased economists/theorists/thinkers were still squeezed: Allais, Tocqueville, Aron ... Most french students never hear of them ... it's not only a waste but it takes you double time to take your distance from what you are told and create your own survival library. By that time you are 25 or 30 years old. And you had spent much time thinking (and voting) erroneously.

PS: I don't even mention our primary school and high school history and geography textbooks where all you can see about the western capitalism is: deprivation of the third world, pollution and exploitation of the laborious class ... after that no wonder if the horrified French youth does not even think about starting a company. Better sell your soul to the devil.

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Did Mr. Vermaelen even wonder if there is something fundamentally wrong with the inequality that free-for-all capitalism generates???

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You may give a credit to class books that they do not deserve. Do you mean, to make a completely unjustified and theoretical parallel :-), that if US high school students had better history and geography classes, they would be have been less supportive of their governments foreign policies in the last decades?
Unfortunately for your thesis, class books are more probably a reflection of a society's beliefs than they produce social reality.

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Fascinating.
Never heard about this guy.
Is he living on another planet?
As "hands-on" training, he should be trained in economics by, for example, living one month in a Paris suburb apartment with 800 euros...

This would give him an "education in economics".
Welcome to the real world!

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"This is an edited version of an article which first appeared in American Thinker"
Bon, vu le niveau de ce qui passe dans "American Thinker", tout s'explique.
Ce article mérite d'y être.

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Bon chapeau, Prof. I wish I had had your excellent article when I was a visiting lecturer at INSEAD and advisor to then Dean Smith.

More relevant is the value of your research for a current project I have attempting to analyse and evaluate how varying cultural differences have "determined" the national "posture" toward "capitalism", the Corporation and thus the corporate governance system. I, too, got my graduate education at GBS and had both George Schultz and Arnie Weber as my mentors in my early examinations on how and why labor economics, labour unions and their impact on political systems impacted both external and internal corporate governance on a national and individual firm basis. Your research also provides me with valuable new insights into how and why my French son-in-law and I do not seem to find a "common point of view".

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Seen from Switzerland, this reflects perfectly the way we perceive the French economy and behaviour today. In a word: incomprehensible!! The problem: will somebody in France ever start to understand how the economy works and that "la lutte des classes" is somehow antiquated. Having managed ad interim during 2 years a French medium-size company, I strongly doubt that it will ever be possible, at least as long as unions are so stubborn and fighting not in the interest of their members but to protect the positions of their leaders.

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