1)From state to market. Discuss with reference to French
state-economy relations during the Fifth Republic.
a)This is about the abolition of French
dirigist policies with Mitterand in 1984 (the U-turn) whether the trend has
continued and whether the trend was there before 1984.
b)Theoretical and historical reasons
i)Historical background Fifth republic
was formed as strong presidency in 1958. Previously National Assembly had tried
to be effective, and largely failed. Now the government first time actually had
an executive capacity, this coupled with de Gaulles nationalism and ideas for
national champions (Renault etc.) set the stage for the interventionist
policies.
ii)Oppose this to Britain historically
conservative, then alternating, with stop-go policies etc and Germany with its
reconstruction, no national pride.
iii)Keynesian theory from economics as
justification for expansion when state spends more than borrows, then the
extra activity created will cause further supporting activity and growth in
welfare. However, the money has to be borrowed from somewhere, raising interest
and crowding out private projects. If there are not enough resources for
government to employ, inflation will occur.
iv)But resources could be attracted from Germany, and devaluations managed to
compensate for inflation and interest rate.
c)Changing conditions
i)Developments in rest of the world -
Germany was becoming an acceptable international power, the financial flows
increased and the dirigist policies became increasingly expensive for Germany.
European Union was set up and its EMU required more monetary control. This
implied that devaluations were not an easy option to restore international
competitiveness after inflation.
ii)Domestic reasons - Inflation accelerated
with oil-shocks and expansive government spending (cost-push and demand-pull).
In addition, it became clear that market based production systems are more
effective at utilizing information and using modern competitive production
techniques.
d)Resulting movement towards markets -
Thus in 1984 Mitterand did a U-turn, and in 1985 right wing coalition with
Chirac came to power. Inflation was curtailed, at the expense of slower
economic growth and European Union partner Germany was satisfied.
e)Movements after 1984
i)However, lately the marketisation of
the economy has slowed. The reforms are costly and create uncertainty among
people. Protective legislation is often preferred by working class instead of
higher salaries, thus Jospin left-wing government in power again.
ii)However, much of the marketisation is
irreversible. Capital flows are free inside European Union. There is a fiscal
stability pact that limits the possibility of government deficit to less than
3% of GDP, except in exceptional circumstances.
f)Extensions - The question is whether an
optimal level of marketisation has reached or whether there is still room for
further liberalization. Personally being a libertarian, I think that after a
period of consolidation and when international conditions become more
favorable, the progress should continue. Although comparing with US is not
popular in France, looking at their better economic performance and more market
based economy, is surely evidence in favor of Americanizing in the future.
2)Why have successive French governments supported further European
integration?
a)France and Germany have been at the
center of European union deepening and widening, whereas Britain has been an
outlier, American Trojan Horse for progress etc. Answer lies in the different
historical experiences, political systems, state-economy relationships and
trading patterns. At the end of the day, they can all be viewed under a common
denominator economic advantages.
b)Historical experiences and political
motives
i)Control Germany, allowing it to rearm.
This required giving part of French sovereignty in return, which halted the
progress (Empty Chair crisis and Luxembourg compromise with de Gaulle).
ii)Good relations with Germany (Adenbauer
and Pompidu) that needed formalisation and cashing in.
iii)Become superpower comparable to USA
c)Economic spillovers and functional explanations
i)Commission was pushing for further
powers, steel community was strong and successful.
ii)Monet and Schuman had envisioned that.
iii)Need for international co-operation to ensure stability of trade and
financial system. USA was unwilling to take the role. France especially
supportive because it had highest regulation and without international
standardization of legislation it would have become uncompetitive.
iv)Design of CAP beneficial to France
d)Political motives no alternative
strategies. If you were left out, decisions were made without you.
e)Still, no matter what, when economic
conditions worsened in 1970-s progress was made to a halt. And all the other
important treaties, SEA and Maasticht, were a result of many package deals to
ensure immediate benefits to each participant.
3)Neo functionalist theories of European integration provide the
most convincing explanation of the establishment and subsequent development of
the European Community.
a)European Union has evolved slowly into
a large and important international organisation, much like predicted by its
founders, Monet and Schuman. They called the theory a functionalism small projects
creating spillovers and causing further integration. Neo-functionalists have
extended the theory and say that the process of integration its-self causes
further integration. So is European Union a process of these spillovers, or is
it more like the neo-realists claim the most optimal rational solution to
current situation? the answer to this question is important in two sense: it
allows us to predict what will happen to the EU in the future, and it also
allows us to define EU more precisely, for example, in the federalist
intergovernmental axis, and thus help to clarify the power centres etc.
i)Define neo functionalism
ii)get the evidence on the neo
functionalism
iii)Get the evidence against neo
functionalism. How much of this is for realism?
iv)Evidence against realism
v)Alternative theories
vi)Conclusions probably a mixture, but
very hard to discriminate as to how much of a mixture.
