French revolution?

Hollande defeated Sarkozy in this weekend’s presidential election in France. Reporting and commentary is amusingly mixed. The NZ Herald on-line published an article today with the headline ‘Markets brace for French Revolution’. A commentary in The Independent (UK) starts:

France will be waking up today to its first Socialist President for 17 years – and bracing for radical change. There are all kinds of reasons why one might fear a François Hollande presidency, especially if you are a prosperous French person.

But read a bit further, and these articles and many others suggest that little will change. They mention some of the promises: 60,000 more teachers, a higher minimum wage, and higher taxes on a small fraction of high-income earners. Then comes the summary:

But given the constraints of international finance and economic structures, observers said Hollande will not really have room to maneuver to shift France radically to the left.

If there is any doubt of this assessment, let’s ask some actual socialists. From the World Socialist Web Site:

Conservative President Nicolas Sarkozy and Socialist Party (PS) challenger François Hollande faced off last night in the lone TV debate before the May 6 run-off election. Some 20 million people reportedly watched the event. In a confused and argumentative debate, Hollande and Sarkozy both sought to win support from the financial elite on a program of social cuts, anti-immigrant racism, and continuing imperialist wars.

It is important to remember who the Socialist Party (PS) is in France, and the structure of the French elite. The PS is one of the two main political parties and has been near the centre of power for decades. It doesn’t remain close to power by being revolutionary — it must maintain some versus of the status quo. The French elite — and Hollande is one of them — is a cadre educated in the French grandes ecoles who work together, play together, and live together. Sarkozy was a bit of an anomaly in this regard — a mediocre student from second-tier schools.

Looking at Hollande’s promises, this centrism is obvious. As much as he has promised increased spending, he has also promised to move France to fiscal balance over the next few years. If the problem is truly one of aggregate demand — the Keynesian assessment of Europe’s troubles — then fiscal balance puts a severe constraint on government action. Hollande appears to be a socialist in the little things — lower retirement age, more teachers — and a conservative on balance.

The real action is unlikely to be in France. Instead, it is how France and Germany work together that will count. Krugman had some thoughts on this:

The Germans … will no longer have unquestioning support from the Élysée Palace. And that, believe it or not, means that both the euro and the European project now have a better chance of surviving than they did a few days ago.

This will be interesting to watch.

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