Financialisation and the Financial and Economic Crises: The Case of France

The classification of France in any category is generally very difficult when the time dimension is taken into consideration. Indeed, France has gone through different situations, from current account deficit to surplus, and from surplus to deficit, which makes it difficult to apply to France a one-category-fits-all diagnosis. Nevertheless, drawing on the cyclicality of the public deficit and the steady contribution of households’ consumption to the GDP growth rate, a mild domestic demand-led economy is certainly the best approach to describing the French economy and its connections with financialisation. The 2009 crisis has reduced corporate mark ups, as it is normal during a recession, but we do not observe a long term deviation and the mark-up for the whole economy, on a historical basis, is at a relatively satisfactory level as the share of gross operating surplus in value added has remained higher by one percentage point than the average level of the pre-oil-shocks- period. The crises of the 1990s and 2000s did not cut corporate profitability as the first oil shock did. The idea of a structural deterioration in profitability is therefore not confirmed by macroeconomic data. This is certainly worth being brought closer to the change in income sharing which happened in the early 1980s: the policy of wage restraint implemented in 1982, coupled with rising unemployment, brought back wages evolution at a level consistent with a balanced economic growth, hence in line with productivity growth. France has not gone through financialisationrelated imbalances like, e.g. a real estate bubble. Fluctuations of the French economy can thus be attributed to external shocks, and not to structural imbalances. This conclusion is at odds with the political impetus in favor of the implementation of so-called structural reforms in France.