The unravelling of Hollande’s ‘anti-austerity’ programme and the crisis of French socialism

Sean McDaniel - Doctoral Researcher, Politics and International Studies department, University of Warwick

Winning power in May 2012, François Hollande presented a programme for ‘le changement’.  He was the ‘anti-austerity’ candidate, determined to change the destiny of both France and Europe, which were both suffering at the hands of an Anglo-American neo-liberal ideology, dubbed the ‘Empire of Money’.  Early on, austerity was rejected as a political act designed to ‘break the French model’, large spending cuts were dismissed as ‘un non-sens économique’ and France’s degraded public finances were seen as the product of President Sarkozy’s tax ‘giveaways’ to the wealthy.  Perhaps the most significant element of Hollande’s programme for change was, however, at the European Union-level, where he promised, amongst other things, the renegotiation of the new Fiscal Stability Treaty (Fiscal Compact) to allow for greater fiscal leeway.  Such proposals set out the basis for an alternative, Keynesian-style post-crisis Eurozone architecture, chiming with Hollande’s critique of neo-liberalism, as well as long-standing French socialist ambitions to take centre-stage in ‘Social Europe’.

Yet, underlying this rhetoric and the ambitious plans for change were a number of ambiguities, relating ultimately to a desire to ensure French economic credibility with international financial markets and France’s European partners. These ambiguities have come to be exposed during the last five years, contributing to the crisis of French socialism we are witnessing today.

Coming to power shortly after a period of real turbulence in the European bond markets, ambitious fiscal consolidation was always viewed by the Hollande administration as a necessary component in the ‘signalling’ to both markets and France’s European partners of the new Socialist government’s economic credibility. Upon its formation, the government committed to extremely ambitious fiscal consolidation plans, and thus always walked what Ben Clift has called ‘the growth/fiscal consolidation/economic credibility tightrope’. We can add Hollande’s anti-austerity rhetoric to this balancing act.

Furthermore, despite his campaign pledge to renegotiate the EU’s Fiscal Compact, within just weeks of coming to power the Socialist administration had signed the Compact into French law without modification. This has often been viewed as an inevitable capitulation to Brussels, however, it is not clear that this act was entirely begrudging.  Whilst the public proposal of a renegotiation was an important concession to the left during the election, ultimately for Hollande, the Fiscal Compact did not represent a ‘red line’.  Accepting the Compact was a key component in signalling the new government’s credibility, especially to Germany (who were also never willing to renegotiate, anyway).  Despite this, in a manner befitting Hollande’s image as a pragmatic, consensus-building politician, a level of strategic ambiguity over the future of the European negotiations was allowed to develop in order to avoid the party’s factional courants from openly warring.  Ultimately, however, this only contributed to a sense of confusion at the heart of the Hollande programme.

As growth failed to return to the French economy and Hollande’s Euro-Keynesian posturing unravelled, the government changed the path of its economic programme. It quickly embraced a supply-side reform agenda, a strategy which intensified in 2014 with the launch of the ‘Pacte de Responsabilité’. Rather than deriding Sarkozy’s tax giveaways, the Hollande administration produced its own €30 billion tax cut for businesses designed to ease the cost of labour.  In the place of Keynes, Hollande now justified his programme by invoking the classic liberal economist Jean-Baptiste Say, arguing, ‘L’offre crée même la demande’ (‘supply even creates demand’).  At the same time, the administration altered its discourse on the nature of the crisis affecting France.  Gone was the focus on the ‘Empire of Money’, and instead the Socialist government spoke of the need to adapt France to the inexorable logic of globalising markets à la New Labour; new Economy Minister, Emmanuel Macron, described a longstanding ‘French neurosis’, which had ‘for too long opposed economic efficiency’.

In order to render these policies compatible with its overall deficit reduction targets, the government looked to find €50 billion worth of fiscal adjustment over the period 2015-17, which unlike in the plans set out in 2012, was to be achieved entirely through spending cuts. The government’s initial claims that it was pursuing ‘ni austérité, ni rigueur’ (‘neither austerity, nor rigour’) rang increasingly hollow.  No longer a ‘nonsense’, the cuts were reimagined by new Finance Minister Michel Sapin who stated they were, ‘not only intended to reduce deficits: they also help to sustain our social model’.  The French model no longer needed saving from Sarkozy’s austerity; rather, it seems, austerity would save the model from itself.

Hollande holds the ignominious title of being the ‘least popular president’ of the Fifth Republic, and has taken the historic decision to not re-stand for election. Of course, not all of this is down to the politics of austerity.  There have been innumerable political mistakes, policy u-turns and PR disasters.  Moreover, it would be wrong to suggest that fiscal consolidation and all reform measures have been entirely unpopular; indeed, Macron was at one time the most popular minister in government.  There is evidently a political appetite today for such reform, and clearly some reform is necessary.  Yet, whatever one’s view on this, it is manifest that the Hollande programme and his anti-austerity politics have been profoundly ambiguous, and it is easy to see the impact of this.

Damagingly, the Socialist majority in parliament has been deeply divided, with a group of left-wing rebels (les frondeurs), consistently disobeying the government line ever since the acceptance of the Fiscal Compact in 2012.  From the left, Jean-Luc Mélenchon, a former Socialist Senator who quit the party in 2008 to form the radical leftist Parti de Gauche, has been ever-present in his critique of what he sees as the government’s ‘austerity programme’.  From the far fight, the Front national (FN) has been able to exploit its anti-EU position and disdain for the ruling elites with the message, ‘Austérité : Bruxelles veut, Hollande s’exécute’ (‘Austerity: Brussels wants, Hollande does’).

On the other side of this coin is Emmanuel Macron. Hollande’s former advisor, and architect of the government’s liberalising reforms, now stands as an independent presidential candidate. Many of those who have supported the government’s reforms will follow Macron’s candidacy, leaving the PS with an increasingly narrow sense of policy success ownership.  Bereft of a clear programmatic vision from the beginning, the Parti Socialiste is now squeezed from all sides.  Currently the French left is deeply divided, providing space for Mélenchon to position himself as the ‘true’ left candidate.  Furthermore, with the increasing popularity of the FN, and a seeming new era of centre-ground politics opening up in France around Macron, the position of the PS as a true parti d’alternance is put in to serious question. The PS candidate, whether Hamon or Valls, could easily finish fifth in April in the first round of the Presidential elections.  If the PS loses power altogether, which looks almost certain, the party will once again face the considerable task of redefining itself in opposition.  Yet, this time, it may well even struggle to hold itself together.