UA monetary zone like the euro zone is doomed to crisis if the economic priorities of the countries that make it up are fundamentally different. However, since 1945, Germany has been practicing a neo-mercantilist policy, and France a policy of supporting demand, with, at intervals, more restrictive policies when the external constraint becomes too strong.
These opposing strategies, the source of our persistent external deficits and German surpluses, have divergent theoretical foundations. From the 16the in the first half of the XVIIIe century, mercantilism accompanied the beginnings of French industry. It was a question both of organizing an industrial policy geared towards the production of goods intended for export and of discouraging imports of finished products, via protectionist measures. Germany has been inspired by this doctrine for decades, if not since Bismarck (1815-1898). Its mercantilism is expressed not so much by protectionist measures as by a supply policy based on a compression of demand, which aims both to ensure the competitiveness of companies (with in particular long phases of wage moderation ) and limit imports. The social consensus makes it possible to apply this strategy with the agreement of the trade unions, anxious to preserve the competitiveness of German industry.
” Live beyond its means “
While the external balance is a priority for Germany, for France it is more of an adjustment variable. We can see the influence of classical theories of international trade, which has always been very strong with French economists. The theories of “absolute advantage” by Adam Smith (1723-1790) and more by “comparative advantage” by David Ricardo (1772-1823) were constructed in response to the mercantilist theories in vogue at the time: it was a question of moving from a world where everyone tries to maximize their commercial surpluses to a world where everyone has an interest in ‘exchange. No matter what is produced, the division of labor must allow each country to grow richer, each specializing in the productions for which it has a comparative advantage. In a world where everyone has an interest in trade, trade deficits are no longer a problem: they are even advantageous, because they make it possible to ” live beyond its means “that is to say to be able to consume more than what is produced.
In reality, these mechanisms never worked as Ricardo and his successors described them. The nature of the products that a country exports is far from indifferent, and, in practice, most countries have developed via a strategy of moving upmarket in exports. Moreover, these neoclassical approaches neglect the dynamic effects of trade deficits on production structures, and in particular the fact that external deficits and deindustrialization are intimately linked.
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