ABSTRACT
In this chapter, the authors describe the evolution of the French economic policy, from 'dirigisme' to 'social anaesthesia', to 'liberal statism', and explore the contradictions deriving from France's problematic partnership with Germany. They illustrate the process of liberalization of the French labour market, the increasing segmentation of the labour market, together with the attempt to anaesthetize the social and economic consequences with a massive expansion of social expenditure. France's European policy was guided by the desire for political leadership within Europe. This was pursued by cultivating a special partnership with Germany, while preserving elements of its statist model. The authors explore the relative structural decline of France focusing on the weakening of a key manufacturing industry – automotive. The liberalization of the financial markets within the European Union and the neoliberal programme implemented by the French governments since the 1980s, which reduced the control of the state on the allocation of resources, favoured the rise of the financial sector.
