Traditionally, state intervention has characterized the French economy, assuming peculiar characteristics that lead to speak of “French-style planning”. The objective of the 3rd floor (1958-61) was that of a significant improvement in productivity, combined with a development of professional training and the balance of foreign exchanges.
The 4th and especially the 5th floor emphasized the adaptation of the French economy to international competition and the changes that this entailed. Since 1958, with the start of the European Common Market, France has found itself open to foreign trade, in a situation of competition. The competitiveness of a little industrialized economy in relation to some of its competitors (USA, Germany and Japan) has become the main concern of French economic policy. Competitiveness was maintained at the price of multiple write-downs, which reflected the need to rebalance the external accounts.
In the search for a development path adapted to the desire to obtain full employment without compromising the fundamental equilibrium, education has progressively created a system of mixed economy, in which the role of the market remains essential, and the intervention of the state is only to correct and complete the functioning of the market. Even in this limited perspective, however, the state has a profound and continuous influence on economic development; some figures will serve as an example: 33% of the investments are made, subsidized or controlled by the state, more than two thirds of the credit goes to public institutions and 40% of the income is taken to be used or redistributed by the administration. This intervention remained very marked, throughout the 1960s,
However, at the beginning of the seventies, France was still among the less industrialized countries, which explains the emphasis placed in the 6th floor (1971-75), on the objective of industrialization and the realization of a large surplus. in trade in industrial products.
These aims, already outlined in the previous plans, are the basis of the current guidelines. In fact, attempts have been made to encourage the concentration of national companies in large private groups, concentrating their development at the international level. In other words, an attempt was made to create French multinationals in competition with the American ones. The recession came at a time when this goal, which involved substantial public and private investment, had not yet been achieved, which has placed French companies in difficulty.
Credit was one of the privileged instruments during this period (1971-75): combined with a maneuver of control in exchanges, the credit policy tried to dampen, on the internal level, the negative effects that the movements of capital, linked to the upheavals of the international monetary system, have determined, trying to reconcile the contradictory needs of the fight against inflation and support for economic activity. The growth of the money supply observed during this period, however, gives us the measure of the difficulties encountered, indicating that public power has not always succeeded in its attempt.
Efforts aimed at obtaining control over the increase in incomes have proved even more difficult, both for technical reasons (insufficient statistical knowledge of non-wage incomes and the impossibility, therefore, of effectively combating tax fraud) and political reasons.
The limits and shortcomings of efforts appear in the persistence of inflation and the maintenance of price control for that period.
The period of the 4th and 5th five-year plan, which spans the entire decade of the 1960s, is characterized by France’s great industrialization effort.
Even though the French economy defended itself well in this competitive situation, its competitiveness remained uncertain and its improvement required numerous adjustments in monetary parities. In 1962-64, the increase in demand following the end of the Algerian war, combined with the disappearance of the beneficial effects of the monetary measures of 1958, had led to a severe deterioration in the balance of payments, with a reduced expansion of production.
With the drastic stabilization plan put in place in 1963 with the wage freeze, growth resumed at a rate of around 5-6% for the years up to 1967.
Already at the beginning of 1967, however, there were the first signs of decay, such as the deterioration of the balance of payments, due in part to a decrease in the surplus of invisible accounts (particularly services and private transfers), but above all due to the deficit of the balance. trade, caused by a more rapid increase in imports over exports. The rates of utilization of the means of production in the enterprises were lowering more and more and therefore the new investments diminished.
According to Ehistorylib, wages continued to rise at an annual rate of increase of 6.5%. The reform of the Social Security, carried out in the autumn of 1967, had a strong impact on the amount of family income, and the tax concessions granted to small taxpayers during the winter had only partially offset the effects of this reform.
Furthermore, the growth in consumers’ real purchasing power had been limited by the acceleration of the price increase due to an increase in the tariffs of public services, a decrease in reimbursement in medical expenses and an extension of TVA (VAT).. The situation on the labor market continued to worsen, and at the beginning of 1968 there were 400,000 people looking for their first job, ie 2.6% of the active population. In this situation, a wave of strikes broke out which paralyzed French economic activity for a week (June 1968) and which led to a rise in wages much higher, however, than the trend rate of productivity growth in that period. In this situation, the government, based on the size of the manpower reserves and on the amount of unused production capacities, decided not to slow down the increase in demand, in order to facilitate an increase in productivity that would help the gradual reabsorption of the increase in wage costs, paying particular attention to dominating the evolution of prices, and granting financial aid to businesses. One of the main concerns of the government was to safeguard the parity of the franc, with measures designed to act directly on foreign trade, while at the same time trying to re-establish exchange control. and by granting financial aid to businesses. One of the main concerns of the government was to safeguard the parity of the franc, with measures designed to act directly on foreign trade, while at the same time trying to re-establish exchange control. and by granting financial aid to businesses. One of the main concerns of the government was to safeguard the parity of the franc, with measures designed to act directly on foreign trade, while at the same time trying to re-establish exchange control.
Against this background, in August 1968 the government announced the devaluation of the franc by 11.1%. This policy succeeded in determining a rapid recovery of economic activity and the containment of the increase in prices and the deterioration of the balance of payments, within acceptable limits.
However, during most of the post-strike period, the push for inflation and capital outflows continued. When, in the course of the international monetary crisis in November, caused in large part by the revaluation of the Deutsche Mark and the devaluation of the franc, the speculative waves seemed to threaten the national monetary parity, the government modified its economic policy. He strengthened export aid, intensified price controls and adopted more stringent budgetary and monetary measures; took, on a temporary basis, some measures of exchange control and quota restrictions on some imports, which lasted until November 1968. The public reserves of gold and currencies, between the end of April and 25 November, decreased by 3, 1 billion dollars.
