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2020 | OriginalPaper | Chapter

15. From Debt Dirigisme to Debt Markets in France and India

Authors : Anush Kapadia, Benjamin Lemoine

Published in: A World of Public Debts

Publisher: Springer International Publishing



Today, the method by which governments borrow has been normalized to a narrow set of market-based techniques. There is only one legitimate method: to hang out its shingle like any market agent and try and sell its bonds. This chapter uses two historical cases to contest this common sense, that of India and France. It traces how non-market techniques of raising debt through various legal mandates served as a bulwark for postwar industrial policy in both nations. These non-market techniques had their own forms of discipline complete with legitimating discourses. Yet as economies began to open, the institutional conditions under which debt dirigisme worked began to be chipped away. While they might have been repaired under different discursive conditions, the global rise of neoliberal common sense meant that “normal” crises were written up as systemic ones, and a new set of technocrats in both constituencies capitalized on the opening to establish a new, market-based common sense on raising debt.

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“Revised Guidelines for Public Debt Management, prepared by the Staffs of the International Monetary Fund and the World Bank, March 2014, Washington, International Monetary Fund. See also the common framework edited by the staff of the IMF and the World Bank in 2001 and prepared by a working group and task force that included government members, Treasury, and Central bank representatives of many economies of the world.
Christine Trampusch, “The Financialization of Sovereign Debt: An Institutional Analysis of the Reforms in German Public Debt Management,” German Politics 24, no. 2 (2015): 119–136; Andrea Lagna, “Derivatives and the Financialization of the Italian State,” New Political Economy 21, no. 2 (2016): 167–186; Florian Fastenrath, Michael Schwan, and Christine Trampusch, “Where States and Markets Meet: The Financialization of Sovereign Debt Management,” New Political Economy 22, no.°3 (2017): 273–293.
In Canada, from 1946 to 1976, public debt went down from 85 to 37 percent; in the Netherlands from 99 to 61 percent, and in Spain from 100 percent in 1945 to 22 percent in 1978. In France, even throughout the 1970s, three quarters of the techniques of state financing still pertained to the “non-negotiable,” or in other words administered, share of the debt. From 1987 onward, however, the proportion was reversed and the “negotiable” instruments, subjected to the law of the financial markets, became predominant. Cf. S. M. Ali Abbas et al., “Sovereign Debt Composition in Advanced Economies: A Historical Perspective,” International Monetary Fund, Fiscal Affairs Department, September 2014.
Abbas et al., “Sovereign debt composition.”
See the influential paper by Michael P. Dooley, David Folkerts-Landau, and Peter Garber, “An Essay on the Revised Bretton Woods System,” National Bureau of Economic Research, Working Paper 9971 (2003).
See Benedict Anderson, Imagined Communities: Reflections on the Origin and Spread of Nationalism (London: Verso, 1991) and Partha Chatterjee, The Nation and its Fragments: Colonial and Postcolonial Histories (Princeton: Princeton University Press, 1993) for arguments concerning the emulative modularity of nation-state forms.
Vivien Schmidt, “Varieties of Capitalism: A Distinctly French Model?” in The Oxford Handbook of French Politics (Oxford: Oxford University Press, 2016), 11–10. See also Bruno Amable, The Diversity of Modern Capitalism (Oxford: Oxford University Press, 2003).
Science studies scholars observe how technologies and sciences problematize political decision-making and democracy. Langdon Winner, The Whale and the Reactor: A Search for Limits in an Age of High Technology (Chicago: University of Chicago Press, 1986); Brice Laurent, Democratic Experiments. Problematizing Nanotechnology and Democracy in Europe and the United States (Cambridge, Mass.: MIT Press, 2017). This paper extends this scope by considering how public administration devices (such as fiscal tools) perform a trade-off between social categories, transform, and then stabilize a particular political order.
Rawi Abdelal, “Writing the Rules of Global Finance: France, Europe, and Capital Liberalization,” Review of International Political Economy 13, no.°1 (February 2006): 1–27; Eric Helleiner, States and the Reemergence of Global Finance (Ithaca: Cornell University Press, 1994); Barry Eichengreen, Globalizing Capital: A History of the International Monetary System (Princeton: Princeton University Press, 1996).
Cf. the chapters by Alexander Nützenadel and Jérôme Sgard in this volume.
Alice Amsden, Asia’s Next Giant: South Korea and Late Industrialization (Oxford: Oxford University Press, 1992).
Peter A. Hall and David Soskice,Varieties of Capitalism: The Institutional Foundations of Comparative Advantage (Oxford: Oxford University Press, 2001).
Schmidt, “Varieties of Capitalism.”
Éric Monnet, Controlling Credit: Central Banking and the Planned Economy in Postwar France, 1948–1973 (Cambridge: Cambridge University Press, 2018).
Helleiner, States and the Reemergence of Global Finance.
Speech by the Général de Gaulle, 12 September 1944, at the Palais de Chaillot, quoted by Claire Andrieu, Le programme commun de la Résistance, des idées dans la guerre (Paris: Les éditions de l’Érudit, 1984), 114.
Laure Quennouëlle-Corre, La Direction du Trésor, 1947–1967: l’état-banquier et la croissance (Paris: Institut de la gestion publique et du développement économique, 2000), 244; Jean-Pierre Patat and Michel Lutfallah, Histoire monétaire de la France au XXe siècle (Paris: Economica, 1986), 121.
For another presentation of the “circuitist view,” see Éric Monnet and Blaise Truong-Loï’s chapter in this volume (Chap. 19).
See the chapter by Eric Monnet and Blaise Truong-Loï in this volume.
Viviana Zelizer, The Social Meaning of Money. Pin Money, Paychecks, Poor Relief and Other Currencies (New York: Basic Books, 1994); Vincent Gayon and Benjamin Lemoine, “Argent public,” Genèses 80, 2010; Nathalie Daley, “La banque de détail en France: de l’intermédiation aux services” (CERNA, Mines Paris Tech, 2001).
See among others, Pranab Bardhan, The Political Economy of Underdevelopment in India (New Delhi: Oxford University Press, 1984); Michal Kalecki, Essays on the Economic Growth of the Socialist and the Mixed Economy (London: Unwin, 1972); Kakkadan Nandanath Raj, “The Politics and Economics of Intermediate Regimes,” Economic & Political Weekly, 7 July 1973; Partha Chatterjee, “Democracy and Economic Transformation in India,” Economic & Political Weekly, 19 April 2008; Matthew McCartney and Barbara Harriss-White, “The Intermediate Regime and Intermediate Classes Revisited: A Critical Political Economy of Indian Economic Development From 1980 to Hindutva,” Working Paper Series of Queen Elizabeth House, Oxford, 2000; Vamsi Vakulabharanam, “Does Class Matter? Class Structure and Worsening Inequality in India,” Economic & Political Weekly, July 17, 2010.
See Pranab Bardhan, The Political Economy of Development in India (Oxford: Basil Blackwell, 1984) in particular.
See Sanjay Reddy, “A Rising Tide of Demands: India’s Public Institutions and the Democratic Revolution,” in Public Institutions in India: Performance and Design, eds. Devesh Kapur and Pratap Bhanu Mehta (New Delhi: Oxford University Press, 2007).
In France, the expression became famous after the traumatic Treasury crisis faced by the so-called Lefts Cartel government in 1924. Edouard Herriot, then head of the government, coined it to characterize the hostility of the banking and financial milieus to his reformist agenda and their attempts to dissuade him by undermining the French economy. Jean-Noël Jeanneney, Leçons d’histoire pour une gauche au pouvoir. La faillite du cartel (1924–1926) (Paris: Seuil, 1977,22003).
See Stefanie Middendorf’s chapter on Germany in this volume.
Inflation was indeed stable during that period, except for a non-negligible hike of 15.8 percent in 1958. However, it returned to double figures starting in 1974. Thomas Piketty, Les hauts revenus en France au XXème siècle. Inégalités et redistribution (1901–1998) (Paris: Grasset, 2001), 689–90.
September 12, 1944, speech by Charles de Gaulle at the Palais de Chaillot, cited by Andrieu, Le Programme commun de la Résistance, 114.
François Bloch-Lainé, Profession fonctionnaire (Paris: Seuil, 1976), 70.
Bloch-Lainé, Profession fonctionnaire.
François Bloch-Lainé and Jean Bouvier, La France restaurée. Dialogue sur les choix d’une modernisation (Paris: Fayard, 1986).
Bloch-Lainé and Bouvier, La France restaurée, 106.
Wolfgang Streeck, Buying Time. The Delayed Crisis of Democratic Capitalism (London: Verso, 2014).
Monnet, Controlling Credit.
Robert Brenner, The Boom and the Bubble: The US in the World Economy (London: Verso, 2002).
Report of the Committee to Review the Working of the Monetary System (Bombay: Reserve Bank of India, 1985).
Report of the Committee to Review, 146.
Christopher Chivvis, “Charles de Gaulle, Jacques Rueff and French International Monetary Policy Under Bretton Woods,” Journal of Contemporary History 41, no.° 4 (October 2006): 701–720.
The “failed cooperation of the 1970s” that Eric Helleiner emphasizes, States and the Reemergence of Global Finance.
Alain Boublil, an adviser to François Mitterrand, who often defended heterodox positions between 1981 and 1983. Memo by Alain Boublil, 5 April 1982, Elysée Archives. Quoted by Anthony Burlaud, “Les Socialistes et la rigueur” (Master’s diss., University Paris I, 2011), 85.
Rawi Abdelal, Mark Blyth, and Craig Parsons, eds., Constructing the International Economy (Ithaca: Cornell University Press, 2010).
Wolfgang Streeck explains and extends this mechanism to government debt auctions in Buying Time; Benjamin Lemoine, “Democracy and the Political Representation of Investors. On French Sovereign Debt Transactions and Elections,” in The Making of Finance. Perspectives from the Social Sciences, eds. Isabelle Chambost, Marc Lenglet, and Yamina Tadjeddine (London: Routledge, 2018).
David R. Cameron, “From Barre to Balladur: Economic Policy in the Era of the EMS,” in Remaking the Hexagon: The New France in the New Europe, ed. Gregory Flynn (Boulder: Westview Press, 1995), 124–128. On the same period, see David R. Cameron, “Exchange Rate Politics in France, 1981–1983: The Regime-Defining Choices of the Mitterrand Presidency,” in The Mitterrand Era. Policy Alternatives and Political Mobilization in France, ed. Anthony Daley (New York: New York University Press, 1996), 56–82. Giscard and Schmidt and their initiative on the EMS, cf. Eichengreen, Globalizing Capital.
Paul Lagneau-Ymonet and Angelo Riva show the correlation between liberalization and the defence of “popular capitalism”: “La privatisation paradoxale d’un étrange bien public: la bourse de Paris dans les années 1980,” Genèses 3, no.° 80 (2010): 49–69.
Interview by Rawi Abdelal, Capital Rules. The Construction of Global Finance (Cambridge, Mass.: Harvard University Press, 2009), 61.
This language is mobilized across history and sometimes for completely different ends. See, for instance, Nicolas Delalande’s chapter on the First World War in this volume.
Marcos Ancelovici, “The Unusual Suspects: The French Left and the Construction of Global Finance,” French Politics 7, no. 1 (April 2009): 42–55.
Archives of the Centre des Archives Économiques et Financières (CAEF), French Ministry of Finance, consulted by Benjamin Lemoine.
Benjamin Lemoine, L’ordre de la dette. Les infortunes de l’État et la prospérité du marché (Paris: La Découverte, 2016); Mathieu Fulla, Les socialistes français et l’économie (1944–1981). Une histoire économique du politique (Paris: Les Presses de Sciences Po, 2016), 470.
Jérémy Morales, Yves Gendron, and Henri Guénin-Paracini, “State Privatization and the Unrelenting Expansion of Neoliberalism: The Case of the Greek Financial Crisis,” Critical Perspectives on Accounting 25, no.°6 (2014): 423–445.
Roi Livne and Yuval Yonay, “Performing Neoliberal Governmentality: An Ethnography of Financialized Sovereign Debt Management Practices,” Socio-economic Review 14, no.°2 (April 2016): 339–362.
Philip Mirowski and Dieter Plehwe, eds., The Road from Mont Pèlerin: The Making of the Neoliberal Thought Collective (Cambridge, Mass.: Harvard University Press, 2009).
Mirowski and Plehwe, The Road from Mont Pèlerin, 38–44.
Perry Mehrling, “The Inherent Hierarchy of Money,” in Social Fairness and Economics: Economic Essays in the Spirit of Duncan Foley, eds. Lance Taylor, Armon Rezai, and Thomas Michl (New York: Routledge, 2013); Anush Kapadia, “Europe and the logic of hierarchy,” Journal of Comparative Economics 41 (2013): 436–446.
From Debt Dirigisme to Debt Markets in France and India
Anush Kapadia
Benjamin Lemoine
Copyright Year
Springer International Publishing

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