German ordoliberalism versus French Etatism
If a referendum was to be organised in France off the back of a widescale national debate, and if President Macron really wanted to bring the country closer to a politics that clearly favoured growth and therefore buying power, the vote would have to centre around EU regulations on public deficits and on changing the European Central Bank’s main mission.The people of France should be called to the booths to give a mandate to their government to decisively reroute this institution’s remit and the 3% and 60% deficits hurdles that aren’t justified by any fundamental criteria.
But let’s look back to the origins of the European model that has been built, starting in the mid‘50s, by the often-confrontational opposition between Germany’s ordoliberalism and France’s Colbertism (or Statism). Mercantilism and Keynesianism have shed an alternative light on how to draft treaties and first determined the politics of the European Community, then the Union. While France has a long tradition of protecting the least fortunate through wealth redistribution, Germany’s ordoliberalism – theorised and applied by Ludwig Erhard, who became Minister for Finance in 1949 before becoming Chancellor in 1963 – promotes competition at all levels. The ordoliberal impulsion that has been relentlessly advocated by Germany in the construction of Europe has therefore often tried to gain the upper hand, even if France has done its best to counter or moderate this natural tendency of the Germans. Let us not forget the intransigence of President Nicolas Sarkozy, who in 2017 failed to mention “free competition” as one of the objectives and priorities of the Lisbon Treaty. The Maastricht treaty itself was the result of a compromise between the two main principles of the European Union, albeit built to reassure Germany since it had made a major concession – abandoning its deutschmark – in exchange for an independent central bank based in Frankfurt.This did not constitute – by any stretch of the imagination – an undeniable victory for an ordoliberal Germany.The country gave up its treasure trove, though not without demanding in return a clearly quantifiable accounting orthodoxy (the infamous 3% and 60%) to promote fiscal responsibility to the new arrivals who brought with them an endemically weak currency coupled with an inflation rate that was often in double figures. The criteria were thus to impose a general framework – and safety nets – that were meant to allow for free competition within the monetary Union.
Now that the UK and its neoliberal platform that has always had difficulty getting itself heard in Europe will no longer be part of the Union, French interventionism and German ordoliberalism will be let loose, and will therefore remain face to face in their attempts to gain the upper hand over the EU’s economic policy stance. We should therefore have a referendum (after a widescale national debate) that, logically, would give total legitimacy to a mandate granted to President Macron and the government in order to demand that Europe withdraw the criteria on deficits and the changes to the ECB’s statutes. Without getting technical, it is totally realistic to index these public deficit criteria to economic growth such that the public accounts must be brought below certain levels when – and only when – growth reaches a certain threshold. In economics, this is called a counter-cyclical policy stance. As for the ECB, it should be modelled on the US Federal Reserve that is equipped with the well-known “dual mandate” that puts its missions of promoting of growth and fighting against inflation on an equal footing.
This national debate should be rounded off with genuine messages that – they alone – will restore growth and purchasing power: liberation (at least temporarily) from the corpse of the Maastricht criteria and their indexation to growth rates, and a change the European Central Bank’s remit to include an active and streamlining role for the economy, just like in that other country that has always done better than France – the United States of America.