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Thursday, May 10, 2018

piketty:May 1968 and inequality


May 1968 and inequality


Thomas Piketty

Should we burn May '68? Critics claim that the spirit of May '68 has contributed to the rise of individualism, even to ultra-liberalism. In truth, these assertions do not stand up to close scrutiny. On the contrary, the May '68 Movement was the start of a historical period of considerable reduction in social inequalities in France which ran out of steam later for quite different reasons.

Let's go back for a moment. In France the years 1945-1967 are marked by high rates of growth, but also by a movement of reconstitution of inequalities, with, at one and the same time, a steep rise in the share of profits in national income and the reconstitution of highly ranked salary scales. The share of the 10% highest incomes which was barely 31% of total income in 1945 gradually rose to 38% in 1967. The whole country was focused on reconstruction and the reduction of inequalities was not a priority, particularly as everyone was well aware that they had been considerably reduced after the war (destruction, inflation) and the political upheavals of the Liberation (Social Security, nationalisations and tighter pay structures).

In this new context, the salaries of executives and engineers rose structurally faster than the low and medium-range salaries in the 1950s-1960s and at first, nobody seemed to be worried. A minimum wage had been created in 1950, but it was almost never re-valued thereafter, with the result that there was a wide gap in comparison with the evolution of the average wage. Society had never been so patriarchal; in the 1980s, 80% of the total payroll was paid to men. Women were entrusted with numerous tasks (in particular childcare and the provision of tender loving care in the industrial era) but the control of the wallet was clearly not one their domain. Society was also massively geared towards production; the 40-hour week, promised in 1936, still did not apply because the trade unions had accepted to work a maximum number of hours overtime to accelerate for the country's economic recovery.

The break came in 1968. As a way out of the crisis, General de Gaulle's government signed the Grenelle Agreements which included, in particular, a rise of 20% in the minimum wage. The minimum wage was officially indexed on average wage gains in 1970 and, most importantly, all the successive governments from 1968 to 1983 felt obliged to grant very high 'special hikes' almost every year in a social and political climate far from stable. The result was that the purchasing power of the minimum wage rose in all by over 130% between 1968 and 1983, whereas at the same time the average salary only rose by about 50%, whence a very strong compression of pay inequalities. The break with the previous period was clean and wide-ranging; the purchasing power of the minimum wage had risen by barely 25% between 1950 and 1968, whereas the average salary had more than doubled. Driven by the strong rise in low salaries, throughout the years 1968-1983, the total payroll rose significantly faster than did production; as a result there was a considerable fall in the share of capital in the national income. All this took place at the same time as a reduction in the number of hours worked and an increase in paid holidays.

The movement reversed again in 1982-1983. The new socialist government, originating in the May 1981 elections, would doubtless have liked to continue in this direction indefinitely. Unfortunately for them, social movements had already imposed the major catch-up of low wages on right-wing governments thus beating electoral democracy to the post. To prolong the movement of reduction in inequalities, it would have been necessary to invent other tools. Real powers for employees in firms, wide-ranging investment and equality in education, the implementation of a universal system of health insurance and retirement, the development of a social and fiscal Europe. Instead, the government used Europe as a scapegoat when it resorted to austerity in 1983, although Europe was in no way responsible for blocking wage rises: the minimum wage cannot go on rising three times more than production for ever, whether the economy be open or closed.

Worse still: as from 1988, French governments have contributed considerably to the movement at European level of fiscal dumping of corporate tax then, with the Maastricht Treaty in 1992, to setting up a fully-fledged monetary and commercial union with no joint budget or tax system and no political governance. A currency without a State, democracy or sovereignty: a model whose fragility we witnessed after the crisis in 2008 and which contributed to the 10 year recession from which we are only just emerging.

Today throughout Europe social democracy is in crisis. This is primarily the consequence of an incomplete internationalism. During the 20th century and particularly from the 1950s to the 1980s, the implementation of a new capital-labour compromise was re-thought and implemented within the Nation States. This was an undeniable success, but at the same time this process involved considerable weaknesses, because national policies were caught in the increasing competition between countries. The answer is not to turn our backs on the spirit of May 1968 and social movements. On the contrary we must turn to them to develop a new internationalist programme to reduce inequalities.


--
John Case
Harpers Ferry, WV

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