 So what was there afterwards was the Fifth Republic. I'm now completing my discussion on state tradition and historical perspective. Here we have from 1958 till 1981. So for more than for about 60, almost 25 years, right? Almost a quarter of a century. We had right-wing governments coming to power. Pompidou, Villegiscar d'Estaing, and others coming to power. But only in 1981 the French Fifth Republic was really tested. Because one would think, OK, strong executive, weak parliament, plus a change, like nothing would change. Every time a new government would come to power, every time a new president would come to power, it was in the right-wing coalition. So all right-wing parties or right-wing candidates of the right-wing parties or center-right candidates of center-right parties were coming to power. But in 1981, a socialist contended power. And the socialist president came to power being elected. So it was the real test, the litmus test, for the regime. It was when Mitterrand really challenged the conservative coalition that had been reigning all throughout the Fifth Republic since then. And it was with this peaceful, what's called alternation, alternation, that the system looked stable after centuries of instability. So this was in a way, I mean, just imagine what was passing through the minds of citizens. All right-wing or center-right governments coming to power one after another since the 50s. And the entire world is going towards the right. The conservative revolution is sweeping with its all kinds of tides across advanced industrialized societies and also in developing nations elsewhere, not only in Europe, but elsewhere worldwide. But we have the French electing a socialist president. So it was a true test of stability in that respect. And it was through this what's called alternation, which means alternation of power from right to left or left to right, that we saw the Fifth Republic where political scientists or political sociologists tended to believe that the Fifth Republic became more durable. But until then, everybody was expecting some change. With the changing of power, changing hands in the executive power, one would have thought, the system will change again. There will be some imbalance, some rupture with the old system. But it continued, which was new in the history of French state tradition. It was a peaceful transition. It was a peaceful what's called alternation. So that's 1981. Then 2002, another highlight, another milestone was Jean-Marie Le Pen. He was the leader of Front National Front, ultra right wing party, who targeted Muslims, Muslim immigrants, Jews, and all mainstream politicians. And he said, hey, I don't believe in this system anymore. The system looks rigged. So we need to change the system entirely. So what happened was that there were three candidates running for presidency, for the president. There was the socialist Lyonnais Jospin. There was the right wing or right center right representing UMP, the right wing party, or center right party, the other mainstream party in the system, Jacques Chirac, who was previously the mayor of Paris. And third, we had Jean-Marie Le Pen, who was representing ultra right wing political party National Front. So what everybody was expecting was that, by the way, France has a two ballot system. Let me first talk about that. France has a two ballot system. What's a two ballot system? Two ballot system? Uh-oh. Two ballots. Oh, in a way, it works in a winner-takes-all system. But what's the two ballot in Turkey? Yes? What's a two ballot system then? Shares. It depends. If no candidate wins absolute majority, 50% plus one, there will be a run-off election. So what happened in this election in 2002 was that there were three candidates, Lionel Jospin representing the left, social democratic left, Jacques Chirac, who was representing center, center right, and that the foremost right was Jean-Marie Le Pen, nationalist, ultra nationalist, right wing, ultra right party representing National Front. So everybody was expecting these two guys to be running in the second round. That the first, I mean, none of the two, neither Lionel Jospin nor Jacques Chirac, would gain 50% one plus one of the votes. So everybody expected these two to run in the second round. But what happened was Jean-Marie Le Pen came second right after Jospin. So it was a shock to the entire nation, an ultra nationalist leader coming to the idea of France having an ultra nationalist leader, the possibility of electing an ultra nationalist leader, or at least the incidence, the existence of this vote was a shock, was quite traumatic for many, that he came second. But later on, in the second round, the majority of votes, I think it was 70% or something, went to Monsieur Chirac. So he couldn't do well in the second round. That everybody voted to outmove, outmaneuver Monsieur Le Pen. Monsieur Le Pen's daughter, Marine Le Pen, is now contending in French politics. Anyway, then 2002, with the Dutch, the French said no to the European Constitution, the EU's new governing treaty, which would consolidate all the texts under one single roof, that there would be one single body of treaties, that it would serve as the constitution of the European Union, but the French for highly domestic reasons said, no, we don't want that. But this was also a shock to the system. France was one of the founding fathers of European integration. Those of you who are taking or who will be taking, hopefully, the Jean Monnet Fellowship Exam, the Jean Monnet Fellowship Entrance Exam, some of you will be taking this to do a master's in Europe. Who was Jean Monnet? Any ideas? Jean Monnet, doesn't ring a bell? You haven't been preparing for this fellowship thing? No. It's not on your minds yet. I'm talking to a third year group. Next year, you'll get to learn about this. He has an idea of European integration. He is heading what's called the commissariat du plan. He is the chief of the planning, French planning office, who dreams of Europe. With Robert Schumann, who was the French foreign minister, who dreamt of Europe, who declared the infamous, the famous Schumann Declaration. So we want to build a new, we have a new ideal, we want to build a Europe. And these guys, citizens, 50 something percent, I think 52% saying no in a referendum to further European integration. Or it was perceived as that this would further European integration, consolidate European integration largely. And the French saying no was a shocker, was a shock to the entire system. So it was, in that respect, another milestone in the 2000s. Then came Monsieur Sarkozy, right wing or center right president, with a new approach to economy, new approach to crime, new approach to unemployment, immigration, and new redefinition of French identity. So this was, again, a new type of leader coming to power. And also, it had many ramifications for not only French politics, but politics in the EU, politics between France and the EU, France, Turkey, EU, Turkey, and all that. So I think this concludes my discussion on French state and, I mean, critical junctures, milestones in French history when we look at state tradition from a historical perspective. Any questions so far? Once again, what I wanted to highlight here is the idea of instability, the idea of frequent regime change. The idea of frequent regime change with lots of blood, even in the 19th century. Shall we discuss this? We may discuss this later on. Sure. Why the French said no to further European integration. So all of this really shows that there is a huge contrast between the first case we've studied, which went really in increments in change, gradual evolution. We see quite the polar opposite of gradual evolution. We see erratic, imbalanced ruptures and revolutions, peaceful evolution, incremental change versus ruptures, path-dependent change, path departures. So the swinging back and forth, the pendulum swinging back and forth between different versions of how to organize your political system. That's about it for the state in historical perspective. Now I'd like to start my discussion on political economy of economic as well as social policies. Failure to resist the Nazi occupation was a trauma for the French in 1940. And behind this, for many, was failure to industrialize, failure to expand the manufacturing sector. So because we couldn't develop an industrial base, we couldn't resist the Nazis. So this was highly traumatic, huge trauma for the French. Slow industrialization was, or underlying slow industrialization, was still large peasantry. France was still an agricultural economy, even at the turn of the 20th century. France was also characterized by low levels of entrepreneurial spirit, entrepreneurial activity, slow population rise, lack of resources, or weaker resources, and all kinds of protection against competition, which brought with it all kinds of inefficiencies and lower levels of productivity. So all of these meant that France was slow in responding to the needs of the 20th century. I mean, industrialization was continuing. There were spurs of industrialization. Starting from the 19th century, France was a case of late industrialization, but still it wasn't enough to compete with their new rival, Germany. When we look at Germany by the year 1900, it wasn't Britain anymore in the manufacturing sector. By far, Germany had surpassed manufacturing output anywhere or any country that is neighboring herself. So by about 1900, we had Germany being a strong powerhouse, industrial powerhouse in advanced industrialized societies in Europe. So France could not resist this. How could we not fight against the Germans? So how do we jumpstart industrialization in a country which was bombarded by the Germans? So they thought, OK, from the Fourth Republic, let's do this with the Fourth Republic, 1946. But how do we do it? We had inherited what's called an etatist policymaking or administrative tradition, economic policymaking tradition, which means that, yes, we can have industrialization, but with the very visible hand of the state behind it. So we needed the state to jumpstart the industrialization process. And there was path-dependent factors. The French had always had a large intervention in the economy even before the 20th century. So the idea of etatism, what does etat mean? State, OK, the idea of state-led growth, the idea of statism was very important, all throughout the 20th century. If there would be any economic modernization, it would certainly stem from state and state activity itself. And state-led modernization, state-led industrialization, was seen as the only way to economic prosperity and also military might or military power against any possible intervention by others. So 1940s, 1950s, 1960s, the new French Revolution, which was an economic miracle, sometimes referred to as an economic miracle, through economic planning by the state. So the system, the entire industrialization process was jumpstarted and also sustained by the French state through all kinds of planning. And this was a certain type of planning. It didn't look like the Soviet style planning that was the name of the game in the Soviet Union after the 1920s. It was called with a different qualifying adjective, indicative planning, in which we do not have a command economy. We had markets. Prices were not set by the state. Prices were set by the markets. And it's not a coercive system. We still work with a market. It's a democratic system. It's democratic planning. We had four to five years of planning, national plans. And these plans would be designed, formulated, and also implemented by democratic procedures. Therefore, we see a different kind of state-led development, state-led growth, through indicative planning, which is quite different from what we see in Britain. There was state intervention, but not through any kind of planning as such. And with this kind of planning throughout the Fifth Republic, we see this administrative style, or we name this administrative style, dirige-ism. Dirige, the verb dirige means manage, administer, govern, where the state sponsors social and economic progress. It manages social and economic progress. It manages production, and also, to a certain extent, distribution. It manages the state through the state apparatus. It manages the economy, I'm sorry, through the state apparatus. And the state, by doing so, creates and finances what's called national champions. And these national champions are in different sectors. They're generally state economic enterprises, or state-owned enterprises, in critical key sectors. Renault, Citroën were all state economic enterprises. Peugeot, these were all state economic enterprises. But later on, France Telecom, Air France, French Airways, National Flag Carrier Company, which later bought KLM. So in transport, in railways, SNCF, railways, mining, banking, banks, they were all state-owned, to a certain extent, or wholly-owned. They were run by the state, sponsored by the state, that the French government would create and pick national champions. And through different means, the state would subsidize production. The state would make a market for these firms. Even the president or president's office would purchase the last model produced by the French firm, as opposed to a Mercedes or any other foreign brand. So the state provides a guaranteed market for these firms. It picks, identifies sponsors, supports, subsidizes all these production units. And it provides all kinds of loans or cheap credit to these firms. And in addition to all those, it provides these firms tax concessions in the sense that, OK, in the first five years, you won't be paying much corporate income taxes. You will be exempt from those taxes. Therefore, I'm not pushing you to compete with your competitors. And all of these would be done through bureaucratic decisions. And here is the emphasis on diligence and managing, which basically means managing by the state, directing by the state, governing by the state, so through bureaucratic decisions. And these state-owned enterprises, state-operated enterprises, have flourished. And they have been the strongholds of technical progress. And they have also been responsible for producing a massive amount of wealth in the French economy. So this is a different type of state intervention, as opposed to what we've seen in France. This is more direct state intervention. Yes, you work with markets. But you do first indicative planning. But your approach as a state, you are really supporting your firms. You're really sponsoring industrialization yourself. Please. An indicative plan. You mean through the colonization process until the 60s, French had many, many qualities, not only elsewhere, but also right down south in Algeria, that this was a process of not only subordination, but also oppression. You mean that? So basically, democracy at home, but no democracy elsewhere. Is that what you meant? Sure. No, I mean, that's a good comment. The French ideal of Republican ideals versus what the French government does elsewhere, or what the French government promotes elsewhere, or fails to promote elsewhere. OK, so the role of the state in the economy, it's quite different from what we see in Britain. Although there are parallelisms in terms of, remember we talked about collectivist consensus, that the state would also be supporting markets. But here, we see a more active or proactive state stepping into the economy and start producing, OK? When you compare the state economic enterprises or state-owned enterprises in France versus Britain, you see massive differences. In France, the size of the employment, for example, in the state economic enterprises have always been much higher than those in Britain. OK, what kind of outcomes did this regime produce in the Golden Age, so-called? The 30 glorious years, let's not glorious. We had very high rates of economic growth, which was highest in Europe, which surpassed 5.5% per year for about 30 years or so, which was only surpassed by Japan if I'm right. I think it was almost 10% every year during the 50s, 60s, 70s, which was almost double what Europe was growing. Then May 1968, we had strikes, demonstrations by masses against the Gauls regime, which was really repressive or turning repressive or non-consulting with a more or less autocratic attitude or semi-authoritarian attitude and arbitrary rule. So masses were on the streets, students were on the streets, Jean-Paul Sartre was on the streets. And workers were on the streets, professionals were on the streets, artists were on the streets, demonstrating against the regime. Labor was mobilized, and French women increasingly got politicized, birth of feminism, French style, especially in this period. And from the late 60s onwards, we see a labor force participation among women, women participating in the labor force increasing or coming at a very high level around this time. France gets caught up in the world economic crisis, 1970s, where growth plummeted, but this was happening against the background of structural change. What do I mean, or what do we mean by structural change? Change in the economic structure, what may be changing here, 1960s, 1970s? Not yet, that was a good guess, but not yet. Structural change. We tend to talk about structural change when we see a transition from an emphasis on agriculture to industry or from industry to services. So this was, think about a country which was a late comer to the ball game of industrialization because it was a peasant economy. I mean, the peasantry was very strong. We had an agricultural sector which was very dominant in France, although we had an expanding, massively industrial base. So 60s, 70s, we still see a large agricultural sector in France diminishing in time with industrialization as well as a process of industrialization in terms of both output and also in terms of the number of people employed, the share of the workforce employed, excuse me, we see expansion of the industrial sector. So industry is growing. There is all kinds of change. These kinds of changes bring with them socio-political forces that are prone to conflict. At the same time, we had with the OPEC shocks what happens in 1972, 73, and later 78, 79. What happens to the price of oil? It rises. Why does price of oil rise in 1972, 73, 78, 79? What happens? Oil crisis. But why did we have the oil crisis out of the blue? What happened? So how did they collectively make decisions, these oil-producing countries? What was the venue? What was the international organization that brought these oil OPEC, Organization for Petroleum Exporting Countries? OK, they organized and they said, I'm sorry, they said, will reduce output supply if supply of a certain product, which is extremely important, demand for which, as you shall remember from microcourses, microeconomics, demand for which is highly inelastic. You can't do without it, that means. Demand for oil is humongous. You can't stop it. You can't live without it. You had even plants, factories running on oil. You were producing electricity out of coal and sometimes oil. So you're so dependent on oil and its supply is going down. What happens to its price? So price increases. And the price of oil is so important that it is used in almost every sector. All prices increase. If all your prices increase and you have those in East Asia and to a certain extent in Latin America, producing at lower prices the newly industrializing countries competing against your products, what do you do? You'll try to compete, but they'll outsell you in world markets, which means your production levels are plummeting. So oil crisis translating into a recession, one recession after another, not like a depression, but economic activity decelerates, does not grow. In fact, there were years of negative growth. If you guys are firms, you're employers, you know that you are producing less. Will you be recruiting more workers or recruiting less workers? You start recruiting less workers. With recruiting or recruitment of less number of workers, we have job losses because of massive competition from the newly industrializing countries. So they're outselling you, you're being undercut by others. So you lose jobs back home. And you still have conservative governments all throughout the 60s, all throughout the 70s. When the crisis hits, you have conservative governments who are turning a blind eye to the workers' demands in France. Then what happens, quite the opposite of what happened in Britain, we had, for the first time in the history of the Fifth Republic, a socialist president coming to power, François Mitterrand coming to power for the first time as a French socialist president. After all those years with conservative governments, one after another, dominating French society, French politics, was there any concern of the or against Mr. Mitterrand that they were cooperating with the Soviet Union? There were reports, I remember. Of course, there was some said, oh, France is turning to become more like a command economy. France is turning more like a communist state. There were some worries. But the state had always been very influential. In the French markets, in the French economy, and also, there was a history of indicative planning. There was a history of etatism. So this was no alien, not an alien system in general. And at this juncture, Mr. Mitterrand says, I am going to turn France, or I'm going to implement socialism in one country. So this was his slogan. I'm going to implement socialism, socialist goals in the heartland, in the European heartland. I have a different program. I pledge different goals, different strategies to you. And he does, in fact, implement these reforms, many, many, many radical socialist reforms after having defeated Balegis Gardistan. And there was modernization. So social benefits in France had been expanding. The minimum wage had been expanding. So he was really listening to the voices of the masses. He wasn't really turning a blind eye to what the workers wanted, those who were on the streets. Public employment in the state economic enterprises expanded. The state assisted high tech advanced technology firms. And he starts nationalizing some parts of the French industry. But with the nationalization of parts of the industry, with the state competing against the business groups, or so they thought, business said, hey, stop. We can't work like this. They oppose reforms. They really try to counter those reforms. And with their resistance, there emerged an economic recession. With this economic recession in the early 1980s, exports started to go down. So French competitiveness was undermined. Social spending was going up. It was expanding. But imports were increasing. French reserves were being depleted. So the French economy came almost near to bankruptcy. And this was the time when Monsieur Mitterrand and others thought, OK, delegism is being really undermined here. So we need a new system, a new economic way, or a new way of organizing our economies. And it was about 1983. Jacques Delor was aiding Mr. Mitterrand. And they engineered, they designed a U-turn. So as you can see, socialist reforms, nationalization expanding the role of the state. So they were going towards their ideal of one, or socialism in one country. They were going towards the left. But they made a U-turn in line with what the business leaders wanted. So yes, let's continue modernization. But let's continue a neoliberal type of modernization. So a new type of economic regime was put into place by a socialist president. So that was also a shock to the system. One would have thought it was Margaret Thatcher who came to power, who engineered neoliberalization. It was Helmut Kohl who came to power, who continued with neoliberalization of the German economy. But it was a French socialist president who U-turns and who engineers a different kind of economic regime than he pledged. So it was a shock to the system. Any questions so far? I think I should end here. OK, I'll see you on Friday. Thank you.