ABSTRACT
In 1945, the French leadership proved unable and unwilling to change prewar institutions, leaving the unstable executive branch at the mercy of a parliament driven by special interests. A monetary reform prefiguring Germany’s was aborted. The Treasury, fixated on staying liquid, accommodated claims for resources and its own investment priorities by opaque credit expansion, which has been deemed ‘the overdraft economy’. It delivered Europe’s highest inflation rate, stimulated by indexation on the minimum wage. Urban working classes led by the Communist union CGT were pitched in distributional battles against still numerous and politically potent ‘Malthusian’ farmers. These farmers formed a coalition with an oversized retail and crafts sector and, revolting against tax modernisation, backed Poujade’s reactionary party. This exacerbated political instability. Payment crises led France to cancel import liberalisation twice, making the country one of Europe’s most closed markets. The decision to join the Common Market was the product of a small skilful group of upper civil servants, who, however, left implementation to the de Gaulle government that took over in 1958 after the war in Algeria precipitated the collapse of the Fourth Republic.
