Main FI Index | Main Newspaper Index

Encyclopedia of Trotskyism | Marxists’ Internet Archive

Fourth International, September-October 1947


Patrick O’Daniel

The Limits of French Economic Revival


From Fourth International, September-October 1947, Vol.8 No.8, pp.250-253.
Translated from Quatrième Internationale, July-August 1947.
Transcribed, edited & formatted by Ted Crawford & David Walters in 2008 for ETOL.


The incurable malady from which French capitalism suffers is almost universally recognized. In France, André Philip, Minister of National Economy, was already warning in March: “We are threatened with total catastrophe on the economic and financial plane;” and Premier Paul Ramadier has let scarcely a week pass without shouting that if this or that is not done, the franc is finished. From abroad that semi-official commentator Walter Lippmann sounded the alarm in April thus:

The crisis is developing because none of the leading nations of Europe – Great Britain, France, Italy, Germany – is recovering from the war, or has any reasonable prospect of recovery with the means at its disposal and on the plans and policies upon which it is now working. The nations of Europe are eking out a precarious existence. They are staving off the collapse of their currencies and of their present standards of life, not by successful production but only by using their dwindling assets and the loans, the subsidies, and doles which come from Canada, the United States, and in small amounts, from the few other solvent countries.

Since the “Liberation,” however, there has been an unquestionable revival from the almost total prostration of French production at that time – a halting, jerky revival, which passes each winter through a severe sag, but a revival nevertheless. It has even impressed superficial observers to the point where they speak of French capitalism’s stabilization. Whence then arise the abysmal lack of confidence, the warnings of disaster, on the part of the most authoritative spokesmen of French and world capitalism? To reply to this question, it is necessary to start with the end of the winter of 1945-46, when France’s reconversion from a war to a peace economy was far enough advanced to offer clear perspectives, and follow them to the present stage of development.

In the basic political document adopted by the April 1946 Conference of the Fourth International, the general perspectives for France were indicated in the following words:

The revival of economic activity in capitalist countries hit by the war, especially the countries of Western Europe, will be characterized by particularly slow rhythms which will long keep it at levels neighboring on stagnation and atrophy.

The economic revival will occur only very slowly and without perspectives ...

In the case of France this analytical summary was founded on two bases: the general consideration that the war, far from having solved the desperate capitalist contradictions which provoked it, had only sharpened them; and a series of economic and financial facts peculiar to France which were perfectly visible to anyone who genuinely wanted to see. It is the latter basis that we wish to develop here.

In March 1946 it was obvious that – provided the reformists and particularly the Stalinists succeeded in continuing to prevent the French working class from passing to action – French industrial recovery would develop gradually to the point where it began to bang its head against the first of a series of technical ceilings. The first was fuel and energy – predominantly coal; and the perspectives for its obtention, domestically or by importation, set on production a limit of between 80 to 90 per cent of 1938. It is essential to make completely clear what 1938 means in this context. It is chosen as an index number of 100 only because it was the last pre-war year, and not because it was a normally productive one. In fact, 1938 was a year of depression in France, with production already a quarter below that of 1929, France’s not very brilliant best year in the period between the wars.

This perspective was realized – owing above all to the success of the Stalinists in getting the French masses to permit the reelection on their exhausted shoulders of the tottering edifice of French capitalism – not the least in Stalinism’s long record of crimes. As a result, production, as foreseen, climbed slowly upward. But, also as foreseen, it hit the waiting coal ceiling. The general production index (1938 = 100) reached a momentary peak of 89 in October 1946; declined to 87, 83, 81, and 79 respectively in November, December, January, and February; and, though final revised indices are not yet available, has probably climbed through March, April, and May to 85, 87, and 89 again. Later another sag occurred all along the line, as a result of strikes and the scarcity of coal and manpower. Is this merely a winter fuel crisis, to be followed by a boom, or does it show a functional flattening out? The answer lies in coal prospects.

Domestic coal production had been driven up by March, under Communist (Stalinist) Party pressure and the use of tens of thousands of German prisoners as slave labor, to 109% of 1938: 4.6 million tons monthly as against 1938’s 3.96 million. There has since been a sag, in April to 4.2 million tons, in May to 3.97, and in June production will be still lower because of the strikes. Thus the 52 million tons which had been counted on this year are not likely to be reached. Best estimates of probable imports from the United States are for a 1947 total of about 8,500,000 tons. From all other sources – Germany, Poland, Czechoslovakia, Morocco, Belgium, and Holland – an additional 4,000,000 tons can be expected. The total of 60 million tons is the maximum prospect for this year, and this, compared to 1938’s approximately 70 million, indicates that French production will still probably be bumping its head in 1947 against a coal ceiling of some 86% of depressed 1938 level – provided the Stalinists succeed in preventing the continuation of strikes and other mass protests – and the symptoms at the beginning of June show, on the contrary, that the working class is beginning finally to overflow the limits of Stalinist control.

The figure of 60 million tons compares even more unfavorably with the minimum of 75,500,000 set by the Monnet Plan for reconstruction and reequipment of French industry. Far from attacking the immense piled-up tasks of reconstruction, stagnant French economy will be unable even to hold its own in terms of 1938. It is no accident that l’Économie of June 19, 1947 writes: “Henceforth there can be no more question of reaching the objectives set by the Monnet Plan for 1947.”

Should French capitalism, by a change in Allied policy toward Ruhr coal or an immense increase in uneconomical importation of US coal, succeed in breaking through the coal ceiling, a manpower ceiling awaits it at somewhere between 100-110% of 1938 levels. The manpower pattern of France is badly out of balance. People occupied in the productive sector, both industrial and agricultural, had fallen from 13,200,000 in 1938 to 11,700,000 (plus some 500,000 war prisoners) in 1946, while government functionaries rose from a 1938 total of 700,000 to some 1,200,000 in 1947. By year’s end, 440,000 of the war prisoners should be released, and 20,000 Polish and Czechoslovak workers (including 8,000 miners) will be repatriated. The Monnet Plan demands, in addition, a minimum manpower increase of 250,000 during the year. Thus, if a manpower shortage is to be avoided, some 710,000 new industrial and agricultural workers must be found.

As against this, French capitalism hopes that the misery in Italy and Algeria will drive 250,000 Italians and, 60,000 Algerians to seek work in France. To date, however, the rate of immigration is far lower; those unfortunate Italians who were lured to the mines are leaving them again in droves after a few weeks; and, even if all the plans were accomplished, the immigration would not suffice. French capitalist “planners” speak also of getting at least 50,000, new workers by cutting down the army; but with Viet-Nam and Madagascar blazing, and North Africa smoldering dangerously, a reduction in army effectives would, to say the least, come as a surprise.

There remain two solutions for French capitalism: to retain German prisoner slave-labor, and to work the French proletariat harder. The former solution depends on whether the US, who “owns” the slaves and has “lent” them to the French, wants them in France or in Germany. The second solution depends on the ability of the Communist Party to persuade the French workers to accept speed-up and increase in the work-week; and at present writing, at the beginning of June, the temper of the French proletariat, outflanking the Communist Party to the left, augurs little success for such an attempt.

The solution of increasing production by a simple increase in the number of workers is forced on the French bourgeoisie by the fact that it has fallen so hopelessly behind its main imperialist rivals in productivity per man. French industry requires, for example, 85 man-days for building an automobile that takes 25 man-days in the US. French 1946 figures show that the extraction of four tons of coal requires one miner in the US, two in the Ruhr, and four in France. The average age of French machines, determined in the same survey, is 27 years. They are in addition far more obsolete than their mere age indicates, since under the Nazi occupation they were run without regard to consequences – pushed to excessive speeds, suffering from inadequate lubrication, not stopped for necessary care, and run far beyond safe repair margins. To replace some 200,000 out of 550,000 in five years, as was tentatively suggested – half by French manufacture, half by importation – not only is a task probably beyond the ability of French capitalism amid its present convulsions, but would even then reduce the average age only to 13 years, far behind the then level of France’s imperialist rivals. The Monnet Plan, which set as its principal aim the achievement of such modernization, has had to be whittled steadily down till it is now so gravely compromised that it bears little resemblance to its former self.

Production, however achieved, is the determinant factor in all sectors of the economy; and the failure of French capitalism to raise its production beyond levels “neighboring on stagnation and atrophy” has meant that, far from being able to remedy the catastrophic effects of the imperialist war on its foreign trade and internal finances, it sees runaway inflation and fiscal bankruptcy looming up terrifyingly near ahead.

By starving the French masses of food and goods and throwing all its energies into a desperate effort to recapture its share of the world market, French imperialism managed to scale down its 1946 unfavorable balance of trade from an expected $2,800,000,000 to $1,105,000,000. In March 1946 it had appeared that the year’s importations would totally wipe out all government holdings of gold and “hard” currencies. But the reduction of the foreign trade deficit, plus Léon Bhum’s obtaining of some $650,000,000 of fresh loans from the US, enabled French capitalism to crawl into 1947 without bankruptcy.

The present year, however, does not look brilliant. Foreign trade estimates are:


[in millions]




Freight charges


Balance of non-commercial payments








Unfavorable balance



As against this, remaining US, Canadian, and other credits, contracted for but not yet spent, stood at last estimates, at $750 million. The new US loan for buying “surplus” army stocks, and the new $250 million loan from the International Bank for Reconstruction, raise available funds to $1,050,000,000, leaving a gap of $650 million to fill. The French government’s holdings, both public and mobilized-private, of gold and hard currencies, which amounted in March 1946 to about $2,764,000,000, have today fallen so low that the authorities do not dare to announce the figure. They confess, however, that it is “less than $1 billion.” Of this they claim that $525 million can be applied to the unfavorable balance, leaving only $125 million to be found, probably from a second International Bank loan.

It is, however, difficult to believe that French capitalism would dare to draw $525 million. from its currency coverage, which had already dropped from 21.3% in March 1946 to 10.7% in March 1947.If this amount were withdrawn, even with the offsetting $25 million just lent by the international currency stabilization fund to help peg the overvalued franc, it would cut currency coverage to about 1.4%, i.e., to no coverage at all. The alternative would be to attempt to drive down still further the already intolerable living standard of the French masses by cutting down imports of food and foreign consumer goods and increasing still further the proportion of French-made consumer goods exported to the world market.

But quite apart from the resistance that may be expected from the French masses to any further depression of their already miserable standard of living, the second half of such a plan runs into the fact that with the massive re-entry of British and American imperialisms on the world market, French exports at present price levels are facing competition which they are increasingly unable to meet. In country after country where France, in her first post-war spurt, had an easy seller’s market, she is being pushed out by British and American products which, quality for quality, are far lower priced.

Thus both its diminishing currency coverage and its weakening competitive position in the world market push French capitalism to still another devaluation of its already dwarfish franc. But to do so means to seriously compromise the already badly shaken Monnet Plan, with its massive importation of machinery to modernize French industry and agriculture.

French capitalism’s external deficit position is, naturally, paralleled by internal finances and fiscal system which are not only on the deficit side but in howling disorder. At the beginning of June, the budget for 1947 was not even voted, and the Treasury was working on successive “provisional trimesters” voted respectively in December and March. The most accurate picture of the Treasury’s situation for 1947 was given by the Minister of Finances near the end of February, as follows:

[in billions of francs]




Fiscal receipts


Ordinary budget


From Impex (import-
export tax-and-subsidy system)


Extraordinary budget


Postponement of payment
of State creditors by using
1-year notes instead of cash


Re-equipment of the
nationalized industries


Treasury bonds
and long-term loans


Other Treasury charges






Uncovered balance



The figure of 135 billion francs expected to be got together by public subscription to government bonds of various sorts is an arbitrary one reached by applying to 1947 the percentage of national income so invested in other years. Public confidence in government paper, however, is not strikingly high, as can be seen from the fact that twenty billion francs more Treasury bonds were cashed in than were bought by the public in the five months ending February, and by the fact that the new bond issue launched last month is visibly getting rapidly nowhere. And as for the term “uncovered balance” applied to the final deficit of 285 billion francs, this is an open admission by French capitalism that it will probably be forced to raise this money by the simple process of printing banknotes to that amount.

Faced with a trillion-franc budget with a deficit like a running sore, the two ministers involved, André Philip for Finances and Robert Schuman for National Economy, have performed prodigies-largely in the shape of accounting acrobatics. Schuman first “blocked” 120 billions (40%) of the “extraordinary” budget, hitting hardest at the industrial modernization program, and began to “slash” government costs everywhere. The results of his Herculean labors turn out to have been that, as against original estimates of 495,000,000,000 francs for the first semester, expenditures of only 433,883,570,000 were authorized, a saving of n-odd billion, or some 2%. His partner Philip then plunged resolutely into his account books, re-arranged all the figures in different columns, shifted items around between the ordinary and extraordinary budgets, and came up triumphantly, amid well-orchestrated fanfares, with “a balanced (ordinary) budget.” The state of the extraordinary budget can only be imagined. The whole French fiscal spectacle, indeed, would be gargantuanly comic were it not for the tragic effects on workers and pensioners.

The bulk of agonizing French capitalism’s government deficits is being financed, of course, by the printing presses. Banknote circulation, which stood at 122 billion francs in August 1939, rose to 444 billions at the beginning of 1946, and the week of writing hit 788,003,000,000, an all-time record. Gold and foreign-currency coverage for banknotes alone, leaving out of consideration government short-term paper and sight bonds, is only 82,816,000,000 francs, or 10.7%. Printing-press inflation has thus been running for 18 months at the rate of over 4,000,000,000 francs a week.

To this must be added a concealed form of inflation called “Provisional Advances to the State” by the Bank of France. Under one account this has added 40 billions, under another 73.7 billions, and increases inflation at the rate of about 1.5 billions per week. The last three weeks [end of May–beginning of June] the weekly average of these advances was 5 billion. The grand total of these advances had reached, by June 12, 1947, 514 billion, over and above the 788 billions in banknotes already in circulation-this gives some idea of the scope of the inflationary process.

On top of this, some 94 billion francs of “Liberation” bonds issued two years ago to enable those who became millionaires, from collaboration with the Nazi war machine or in the black market, to get around the banknote exchange of that date by buying these anonymous securities, are falling due in the next six weeks; and it is evident that the National Assembly must authorize the raising of the legal limit of these “advances” from 100 to 200 billion to round this corner.

Bourgeois Pessimism Is Well-Founded

Figures are dull reading, and I apologize to the readers for having had to drag them through these masses of statistics. But it should now be a little clearer why such well-informed representatives of the French and American capitalists as Messrs. Philip, Ramadier, and Lippmann regard the plight of French capitalism as desperate. It is on such hard facts and cold figures that they base themselves; and not, on the one hand, on impressionistic conclusions drawn from the greater appearance of “normalcy “ in 1947 Paris over the grim winter of 1944-45; or, on the other, of a sectarian schematism whereby, if the imperialist war were not immediately followed by the successful German revolution, the conclusion must automatically be: stabilization of the European bourgeoisie.

The much-touted “Blum experiment” for lowering prices, a device that employed both classic and novel deflationary measures to try to turn the inflationary tide, has proved itself both a failure from the capitalist, and a fraud from the workers’ point of view. Under the famed “psychological shock (treatment),” the vertiginous rise in the indices wavered a month or two, only to resume the upward climb again. As for the worker, whose personal index is “weighted” on the side of food far more than by the multiplicity of products appearing in the official index, he saw, first practically all fresh foods disappearing from the market, and then, with the government yielding to the middlemen’s pressure, a sky-rocket rise as they returned. At latest reports, the retail price index reached 935 in June (against 865 before the Blum experiment, and 837 in April). The food index hit 971. And these are only official figures [for the controlled rationed market].Blum is a very smart operator, but while French production and fiscal system are in their present pass, psychology is no more going to stop the operation of the laws of economics than the brooms of King Canute’s attendants were able to sweep back the sea.

In his Report on the World Economic Crisis and the New Tasks of the Communist International, delivered to the Third World Congress of the Comintern in 1921, Leon Trotsky has an illuminating section on the complexity of capitalist equilibrium, which is well worth re-reading today [The First Five Years of the Communist International, pp.179-181]. Among the components of full capitalist equilibrium he lists:

  1. restoration of the world division of labor;
  2. reestablishment of harmonious relationship between city and country;
  3. reestablishment of harmonious relationship among the various branches of industry within each country;
  4. restoration of relative class equilibrium;
  5. restoration of the equilibrium of the bourgeois political system:
  6. restoration of international equilibrium among the powers.

Let anyone with any knowledge of present-day France apply, one after another, these criteria to the French reality; and the idea that the French bourgeoisie has stabilized itself, has reached equilibrium, becomes obviously absurd.

France for Sale to US Imperialism

It is evident that, if French economy were considered by itself as a hermetically sealed-off entity, it has been doomed ever since the “liberation” to roll at an increasing speed along the inflationary road – to an equivalent of the 1923 German financial smash. But French capitalism stands, not alone, but as perhaps the most important outpost-bastion of world capitalism on a continent where the revolutionary tide, after its first post-war ebb, is massively rising again. It is an important strategic factor in the feverish preparation of world imperialism for war against the Soviet Union. To allow French economy to go to hell in a hack involves revolutionary risks which world imperialism hesitates to incur. Through a generous Lend-Lease settlement, and through a series of US, British, and Canadian loans, world imperialism has shown that it recognizes this in, if not halting, at least slowing down, French capitalism’s dizzy career toward bankruptcy.

On its side, the French bourgeoisie has been forced to abandon definitively those dreams of glory which it hung on to, in the face of all the evidence, between the two imperialist wars, and renewed, as a sort of bombastic nightmare, during the brief de Gaulle period after the “liberation.” For a time it hoped, by combining with British imperialism in a “Western Bloc” including Belgium, Holland, Western Germany, and other nations of Western Europe, to patch together a grouping of sufficient economic strength to be able to play a role independent of the gigantic USA-USSR dichotomy. But this simple aggregation of weakness, it soon found, did not add up to strength: British imperialism, itself fighting a losing battle to keep from drowning, had to let its weaker partner go – to sink or swim. The French bourgeoisie thus faces only one way out: to make the best possible terms with the predatory colossus across the Atlantic.

The terms which the American bourgeoisie, contemptuous of the short-sightedness and incapacity of its French counterpart, will offer, are unlikely to be any more generous than are necessary to try to head off revolutionary developments. It will certainly demand in return political and economic concessions far greater than any hitherto imposed. But it is forced, sooner or later, to come more massively than heretofore to the rescue of French capitalism. The as yet purely general propositions sketched out by Messrs. Marshall, Acheson, and Truman, concerning loans up to $15 billion to a Europe reorganized under the control of American imperialism, are the first step. The modalities, the rhythms, the degrees to which US imperialism hopes to “soften up” the French bourgeoisie and its Stalinist lackeys by letting France continue to sink before stepping in to “the rescue” – these cannot be determined in advance. But the principal fact remains clear: the failure of the French bourgeoisie to achieve genuine recovery and stabilization in the two years since the end of the second imperialist world war reduces it from an independent role to that of a mere pawn, and makes of France a sort of larger Greece, in American imperialism’s titanic and murderous game.

All the foregoing is expressed in terms of the plans of the world bourgeoisie and the Kremlin usurpers, who combine dialectically a grim struggle between themselves with a flexible alliance against the revolutionary proletariat. So far this study has been deliberately limited to the financial and economic aspects of the French conjuncture, because they are apparently not sufficiently well known. But all this is subsidiary to the social and political factors. Cutting across all the bourgeois and Stalinist plans, the French proletariat still has its word to say. The efforts of the French bourgeoisie to restore its rule and recommence the process of capital accumulation, on the backs of the proletariat, could never have made any progress at all had it not been for the tragic faith of the vast majority of French workers in the Stalinist party leadership. Cracking down here, yielding just the necessary amount there, the Kremlin hirelings succeeded in checking the constantly renewed demands of the French workers to break out of their intolerable situation.

But this stage of social peace and class collaboration created by these betrayers of the working class is visibly drawing to its close. With the Renault strike a new stage opened in France. Its central characteristic is the beginning of the submergence of Stalinist control by the French proletariat. Unceremoniously booted out of the cabinet though they were, the Stalinists were not particularly sorry to go over into “opposition.” Their long policy of class betrayal was bearing the bitter fruit of a disastrous loss of influence over the proletariat, and they had at any price to win it back. Cried André Marty: “If we allow this situation to develop, we will have broken our most important tactical rule, which is never to permit our left flank to be turned,” And Maurice Thorez explained point-blank to Ramadier: “The General Federation of Labor, has been overrun, or is in danger of being overrun, by Trotskyist elements.” Discredited above all, and momentarily “overrun” by the disgusted workers, the Stalinist leaders have been forced to raise their ban on strikes and to turn on the faucet of leftist demagogy to try to “regagner leur clientèle” (win back their customers), as the contemptuous French phrase goes. And, not the least significant of all symptoms, the Stalinist union bureaucrats have openly confessed that, even if they wanted to, they are not sure of being able to get the workers back to work once they have downed tools. In a word, the second upsurge of the French proletariat has begun.

The growing crisis, both political and economic, opens opportunities and poses duties to the Parti Communist Internationaliste (French section of the Fourth International) of the greatest scope they have ever experienced. It would be false and adventuristic to say that the grip of Stalinism on the French proletariat has been broken. But it has been seriously shaken. Dozens of times over the years in the columns of the press of the Fourth International it has been written that the advanced workers, sick of reformist and Stalinist betrayal, are seeking a new, a revolutionary, way out. In the past this referred to hundreds and to thousands. Today in France it refers to tens and hundreds of thousands. Whole sectors of the French proletariat are this time involved; an immense wave of militants has overflowed all the Stalinist dams. Without the conscious and audacious intervention of the revolutionary party, this vast spontaneous wave can spend itself in vain and undirected struggle, and ebb again in defeat and demoralization. But if the party knows how to seize this moment of its greatest opportunity, the surge will carry both party and proletariat to advances never hitherto reached in France.

June 9, 1947

Top of page

Main FI Index | Main Newspaper Index

Encyclopedia of Trotskyism | Marxists’ Internet Archive

This work is in the Public Domain under the Creative Commons Common Deed. You can freely copy, distribute and display this work; as well as make derivative and commercial works. Please credit the Encyclopedia of Trotskyism On-Line as your source, include the url to this work, and note any of the transcribers, editors & proofreaders above.

Last updated on 16.2.2009