France in The Twentieth Century - Economy

Economy

By the end of the 19th century, France had joined the industrial era. But it had joined late, and comparatively it had lost in the competition with its war-footing neighbor Germany, and with its trade-based chief rival across the Channel, Great Britain. France had great industry and infrastructure and factories, by 1900; but compared to Germany and Britain was "behind", so that people spoke of and French politicians complained of "the French backwardness (le retard français)".

In 1870 the first signs of French industrial and general economic decline started to appear, compared to their new neighbor in Bismarck's newly-united Germany, appeared during the Franco-Prussian War. The total defeat of France was less a demonstration of French weakness than it was of German militarism and industrial strength; this was in contrast to France's occupation of Germany during the Napoleonic wars. A huge sum had to be paid to Germany to end the war which provided the latter with even more capital.

By 1914, however, German armament and general industrialization had out-distanced not only France but all of its neighbors. Just before 1914, France was producing about one-sixth as much Coal as Germany, made less than a third as much Pig iron and a quarter as much Steel. In a scenario recounted best in Barbara Tuchman's book The Guns of August, France together with Germany's other competitors had entered a "war-footing" rearmament race which, once again, temporarily stimulated spending while reducing saving and investment.

The First World War—the "Great War"—however produced an economic outcome disastrous for all parties, not just for the German losers. As predicted by Keynes in his bitter post-Versailles Conference book, The Economic Consequences of the Peace, the heavy war reparations imposed upon Germany not only were insufficient to fuel French economic recovery, they greatly damaged a Germany which might have become France's leading trade and industrial development partner, thereby seriously damaging France as well.

And their very heavy loss of life, in the "Great War", robbed France of a generation of its youth, and of some of the youthful imagination necessary for facing Germany again, only 25 years later, in the Second World War, when a by-then aged French general staff was ill-prepared and entirely-defensive up against an even more militant German economy and army. Damaged by the Great Depression, the older leaders left in France were reluctant to assume a "war-footing" economy yet again, and France was overrun and occupied by Nazi Germany, and its wartime economy turned entirely to supporting Germany and the German war effort.

The great hardships of wartime, and of the immediate post-war period, were succeeded by a period of steady economic development, in France, now often fondly recalled there as The Thirty Glorious Years (Les Trente Glorieuses). Alternating policies of "interventionist" and "free market" ideas enabled the French to build a society in which both industrial and technological advances could be made but also worker security and privileges established and protected. By the end of the 20th century, France once again was among the leading economic powers of the world, although by the year 2000 there already was some fraying around the edges: people in France and elsewhere were asking whether France alone, without becoming even more an integral part of a pan-European economy, would have sufficient market presence to maintain its position, and that worker security and those privileges, in an increasingly "Globalized" and "transnational" economic world.