Letter From Europe: The French Nationalisations
President Mitterand and his PS/PC government were hoping that the nationalisation measures voted in December would be in force by the beginning of February, but an appeal to the Constitutional Council by the opposition parties in Parliament delayed matters. The Council ruled that, although the nationalisation measures in themselves were not unconstitutional, the compensation terms were not generous enough to comply with the rights of property as laid down in the 1789 Declaration of the Rights of Man. The government was thus obliged to revise this, and certain other aspects of their proposals, and to resubmit them to Parliament. Hence the delay.
The original plan was to nationalise 36 banks, two financial holding companies (Paribas and Suez), the steel industry and five other industrial groups involved in’ such fields as chemicals, electrical goods, telecommunications, electronics, glass and fertilisers. Previously, the state had already acquired by mutual agreement a 51 per cent holding in two armaments firms, Dassault (Mirage jets) and Matra. Three other, mainly foreign-owned, companies—Roussel Uclaf (chemicals), CI1-Honeywcll Bull (computers) and ITT France—are to be nationalised later. The state sector in France is thus being considerably extended.
The last wave of nationalisation in France took place in 1945-6 and was initiated by De Gaulle. It involved coal, gas, electricity, civil aviation, the Renault motor firm and parts of the aircraft and arms industries. A number of banks (BNP, Crédit Lyonnais and Société Générale) and insurance companies were also nationalised. The railways had been virtually nationalised before the war and the manufacture of matches and cigarettes has been a revenue-raising state monopoly since the time of Louis XIV. To this list can be added the state oil company, ELF, set up in 1965.
France will therefore have quite an array of state capitalist enterprises, most of them competing in their fields mainly against foreign-owned firms at home and abroad (as Renault has been doing, fairly successfully for years). Although in their internal documents the PS talks about nationalisation being “anti-capitalist” and part of their strategy of “rupture” with capitalism, before the general public these measures are being justified on quite other grounds. Mitterand, for instance, has said that they will provide France with an “economic strike force”, both to compete on the world market and to “reconquer the home market” from foreign suppliers, so placing these measures squarely within the logic of capitalism. He has been echoed here by his Minister of Industry, Pierre Dreyfus, who speaks from experience since under De Gaulle he was a managing-director of the state capitalist car company Renault.
In a very real sense this is a continuation of the policy pursued by De Gaulle, after his return to power in 1958, and by his successor Pompidou to try to make France a leading industrial power. De Gaulle wanted to encourage the emergence of French-owned industry able to compete on equal terms with the foreign-owned multi-national corporations which were threatening to take over the French market. These enterprises, which remained in private ownership, were brought into being and survived with help from the government, particularly in the form of orders but also by generous loans. These companies (CGE, Rhone-Poulencc, PUK, St. Gobain, Thomson-Brandt) are now being nationalised; but their role is to remain unchanged: to be French capitalism’s “industrial champions” at home and abroad. The new state capitalist concerns that have been set up will join Renault, Elf, SNECMA (aircraft engines), SNIAS (aerospace, headed by the President’s brother. General Jacques Mitterand) and the others—with the exception of the bankrupt steel industry—as pace-makers for technological innovation; at least that’s what the government hopes.
The French capitalist class is well aware that these nationalisations are in no way opposed to their interests; indeed, those facing nationalisation only fought a rearguard action to get the compensation terms increased. Thus the financial daily Les Echos (14 October) headlined its front page the day after the debate on the nationalisation proposals opened in Parliament: “Pierre Mauroy pleads the case for the nationalisations. STATE CAPITALISM AND Till STRATEGY OF PACE-MAKERS”. The accompanying article explained:
The socialist government wants to apply the doctrine of State industrial capitalism in the name of the strategy of large technological pace-makers. Pace-makers for the reconquest of the internal market, for independence and influence. Not a punishment nationalisation, but a move to give more dynamism to the factories of the Hexagon (France).
Shades of Harold Wilson and his “white-hot technological revolution”!
When a company or an industry is nationalised all that is changed is that the top management is henceforth appointed by the state instead of as previously by the biggest private shareholders. Everything else remains unchanged: the workers remain wage-earners selling their labour-power and producing surplus-value; the former owners remain capitalists living off the income derived from the compensation they are paid; the industry continues to be run on capitalist lines, producing for profit.
As practised in the long-established Western capitalist countries, nationalisation does not affect the social standing of the former owners as capitalists living off the exploitation of the workers. For nationalisation takes place within a legal framework which protects the rights of existing property-owners. In France in fact the “rights of property” are enshrined in the Constitution which requires the state to pay a “fair” compensation when it nationalises an industry or a company—something reaffirmed by the Constitutional Court in its ruling on the first version of the current nationalisation law.
Nationalisation is a buying and selling transaction between the state and the former owners. The state buys the assets in question from their owners more or less at their value. The wealth of the former owners is not reduced at all; it merely changes form. Previously they were shareholders, now they become bondholders. This is precisely what is happening in France, as Le Monde (22 January) explains:
The shareholders of the companies to be nationalised are going to have to exchange their property titles for State bonds. These will be redeemed capital and interest over 15 years. The interest on these bonds will be paid by two sinking funds, one for the banks and one for the industrial groups, which will be constituted by grants from the budget but also by “contributions” paid by the nationalised industries if they make any profits. Each year the State will lay down how much of the interest payments are to fall on the budget of the State and how much on the industries themselves.
For 1983 it has already been decided that, of the 5,000 million francs (about £460 million) that will be needed to pay that year’s interest on these bonds, 3,000 million francs will be provided by the Budget and 2,000 million francs from the profits of the nationalised industries. The rate of interest payable will be the same as that paid in other medium-term state bonds. As can be seen, the workers in the nationalised industries will continue to be exploited by the former owners, part of whose interest will come directly from the surplus value they produce. And this is supposed to be a step towards “socialism”!