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SARKOZY'S HUGE GAMBLE
by Amir Taheri
Arab News
June 9, 2007

Will they or won't they? The question is whether French voters, going to the polls today to elect a new Parliament, will confirm the rightward trend they established last month when they elected Nicolas Sarkozy as their president.

If opinion polls are to be believed, Sarkozy's party, the Union for the Presidential Majority (UMP) will capture two-thirds of the 577 seats in the National Assembly, thus winning the right to form the government for the next five years. The entire opposition, from the extreme left to the extreme right and passing by the left of center Socialist Party may end up with a maximum of 150 seats.

However, even if Sarkozy does not win so big, he is sure to capture control of the assembly with a majority solid enough to back his agenda for radical reform. What Sarkozy is proposing is an end to more than half a century of West European tradition known under the label of "social market politics".

The philosophy of "social market politics" was forged in the immediate aftermath of World War II, first in Britain under the Labour government of Prime Minister Clement Attlee, and later in West Germany under Chancellor Konrad Adenauer. France itself had had a brief experience of it under Gen. Charles De Gaulle's first government in 1944-46. From the 1950s onward "social market politics" found its most dedicated advocates in the Nordic countries.

Critics of the "social market" claim that it was introduced to defuse class tensions in postwar capitalist societies at a time that the Soviet Communism still appeared to be an attractive alternative to the Western model. Its supporters, however, argue that "social market" system developed in response to the forces and aspirations released by the deadliest war Europe had experienced in its history. It was imperative that the poorest masses, having made great sacrifices during the war be rewarded with a greater share of the wealth that the nation produced.

"Social market" is and has always been about distribution rather than production of wealth. While it rejects the Marxian concept of class struggle as the engine of history, it does believe that society is divided into classes with antagonistic interests. In that context, "social market" tries to put the state above classes, turning it into an arbiter of the broader public interest. In that sense, "social market" draws part of its inspiration from the politics of France's first empire under Napoleon Bonaparte. The state belongs to all classes, and thus to none. It alone can define the best interests of the nation and set the agenda for its politics.

One unintended consequence of the "social market" system was the emergence of the state as the key influence in shaping the economy. In much of Western Europe, the share of the state in the gross domestic product (GDP), the total of goods and services a nation produces in each calendar year, rose from around 20 percent in the prewar years to more than 50 percent in the 1970s. In France today the state, directly or indirectly, controls a staggering 53 percent of the GDP. In that sense, the French economy today is more "socialist", that is to say state-controlled, than that of Poland under Communism.

Critics of "social market" claim that, by focusing on distribution, it has hampered economic growth. For the past six decades, Western European annual economic growth has hovered around an anemic two to three percent, making mass unemployment an almost permanent feature of life in some countries of the region.

Supporters of "social market" point to the fact that Western Europe includes more than two-thirds of nations where it is possible to live a modern, comfortable and safe life. The region has ended mass poverty, raised life expectancy to its highest levels anywhere in the world, created the largest middle classes in history, and written solidarity into the political genes of its citizens. Also, the system has helped keep the region out of wars and revolutions, and produced the longest period of political stability in over 1000 years.

And, yet, the "social market" system has had its critics from the very start. The ideological war against "social market" started to gain momentum in the early 1970s, especially in Britain. Taking a leaf out of Gramsci, critics of "social market" knew that winning the ideological battle is the absolute precondition for winning politics power.

The many failure of the Labour government of Prime Minister James Callaghan in the mid-1970s, the so-called "Winter of Discontent", and the radicalization of British trade unions, accelerated the ideological victory of the opponents of "social market." They won political power in 1979, with Margaret Thatcher assuming the premiership under a new slogan: The "free market" system.

In 1980, the "free market" movement also won power in the United States with Ronald Reagan becoming president.

Because history always like irony, both Thatcher and Reagan used the powers of the "social market" state to dismantle as much of it as possible, pretty much like a wrestler who counters an adversary's tactic by using it to his own advantage. Since then, other champions of the "free market" have emulated Thatcher and Reagan in virtually all European countries by exploiting the power of the state to wind down or eliminate aspects of the "social market" system.

A quarter of a century later, it is safe to say that the "free market" school has won the ideological war. Virtually all Socialist parties in Europe have converted to the "free market" ideology, albeit with varying degrees of conviction.

In a sense, France was the last major bastion of "social market" to resist the onslaught of the "free market" ideology. For even its parties of the right, when in power, always shaped their politics within the "social market" paradigms. Sarkozy, however, wants a clean break with the "social market" ideology, and had the rare courage of advertising with his single word slogan: Rupture!

Rupture in French means tearing away and bears a great physical charge than in English. Sarkozy often cites Britain's reformist Labour Prime Minister Tony Blair as his model. In reality, however, he is closer to Thatcher, Reagan and, of course, President George W. Bush.

He proposes four major reforms: Loosening labor laws, reducing the maximum overall income tax from 60 to 50 percent, halving the number of state employees over the next decade, and reducing the share of the state in the GDP to below 50 percent in five years.

Sarkozy has tried to counterbalance those promises by others designed to woo those who fear the consequences of what would amount to a systemic change. He has pledged to bring unemployment down to levels seen in the UK and US, and matching current American and British rates of economic growth. All this amounts to a huge political gamble. If Sarkozy succeeds in transforming France from the last bastion of "social market" into a new conquest for the "free market" ideology, a model that dominated Western European political thought and action may, at last, become part of history.

 

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