Just 80 years ago, John Maynard Keynes published his “General Theory of Employment, Interest and Money”. Apart maybe from Adam Smith “Wealth of Nations” and Karl Marx “Capital”, no work related to economic matters was as influential on world situation and inspired so many passionate comments than Keynes treatise. But, unlike the previous two, it is still a hot issue since for instance in France where it is a political rift, and not only inside the left. The book was not his attempt. As a civil servant at the British Treasury, he participated to the negotiations which will end to the Versailles Treaty. But he left the delegation and resigned because of his disagreement about the size of the claims against Germany.

His first book, published in 1919 and immediately translated in French, under the title “Les consequences économiques de la paix” relates his arguments: the burden imposed to the defeated country is too heavy to permit it to regain its economic equilibrium and, so, its political stability, which will create a heavy threat on peace in Europe. We know what happened after. At that time, his position is quite isolated. The message will not be heard. What makes the strength of a real statesman is his ability to listen everyone before making his own judgment and taking a decision. We have to admit that, at that time, Europe was lacking of them. It wasn’t the first time and definitely, it has not been the last one.

The essence of Keynes theory was that market could not solve everything. Prices formation mechanisms don’t achieve, contrary to what classical theory pretends, we should say today liberalism, a come back to market equilibrium, especially regarding labor market. Unemployment can be a durable situation. The New Deal which drove the American economy out of the 1929 crisis, would have been launched after a meeting between Keynes and Roosevelt. It is a little overdone but it is recognized that his works had been known by economic advisors to the American president. Keynesianism since that period,  is associated to recovery plans through budget deficits, which were, at that time, one of the main instruments in the hands of the State. This vision is too reductive. Keynes fundamental contribution, and this isn’t challenged, even by the most radical liberals, is that the State has a duty to intervene to cope with market mechanisms failures. The concept of economic policy, which purpose is to define the framework of State intervention, is his legacy. Of course, to repeat a famous formula, the State can’t do everything. But Keynes gave the proof that market, also, can’t do everything.

These issues are, in France, a burning question since they are at the center of the divisions inside the left. For some, Keynesianism would be obsolete. It was the cause of a heavy public indebtedness, without any positive results. And it is more effective to adopt supply-side policies which consist in rebalancing, in favor of business, the sharing of created wealth and to achieve structural reforms, a modest concept used to define the withdrawal of social benefits, obtained, years after years, by workers. Those who pronounce these speeches and who support the economic policy followed by France during the last three years are introducing themselves as the “modern left” which wants to bring in “social-liberalism”. They openly claim they are heirs of Michel Rocard and so, they implicitly criticize the man who symbolized traditional left, François Mitterrand, who deprived their leader from a national destiny.

The others, qualified as “rebels” or “old left”, believe they have not been elected to adopt policies the right never dared to follow. In the same time, they criticize too rigid rules imposed by European treaties which don’t take into account demographic specificities and international duties, with their cost in defense spending, of the different members of the Union. Of course, the State can’t do everything but to completely abandon public action to market mechanisms and to transfer to the business sector full responsibility to achieve growth and full employment is irrelevant, as it can be seen every day.

In fact, Keynesianism can’t be reduced to demand stimulation through budget deficit. In 1981, when the left came into power, French industry was near bankruptcy, foreign trade was in deficit and inflation was ballooning. After the recovery plan adopted by the government in line with the president electoral program, a new policy was launched to modernize industry through a massive recapitalization of nationalized companies and through privileged financing offered to the private sector which needed to invest. The first half of 1982 was characterized by this major turnaround of the economic policy compared both with what has been done the previous months and what were the policies followed by the previous governments. It is what François Mitterrand called, using a metaphor, in June 1982 the “mountain stage” following the “plain stage”. At that time, Keynes money was put on the supply side.

So, a supply side policy is not in contradiction with Keynes thought, if it is targeted. If not, it amounts to water a sandbank. And that policy belongs neither to the right nor to the left. When Nicolas Sarkozy, as a minister of Economy, decided in 2004 to recapitalize Alstom, he follows a supply-side policy. Sure, he couldn’t imagine that, ten years later, the company would be dismantled. When, being elected president, he creates the “Great Public Loan” to encourage innovation, he follows again a supply side policy. As will do his successor, François Hollande, when he increases the size of this tools or when he creates the Public Investment Bank. Peugeot recapitalization, decided later by Ayrault government, follows the same logic and it is difficult to say that this action was not successful.

But, the economic debate, inside the left, has become a politician one instead of concentrating on the appropriated cures needed by the French economy at the moment. There have been electoral pacts with ecologists which had taken some leaders, against any rationality, to propose an exit from nuclear production. Such a measure is still a heavy burden on the future of several jewels of our industry and would have, as a consequence, a loss of our independence. The increase of electricity prices, which would result, should affect household purchasing power. There is also the influence of poll opinions. If, being labeled as “left”, you propose measures supported by the right, you will benefit, in the polls, of favorable opinions which will put you ahead of you competitors inside the left, but which come from people who will never vote for you. Michel Rocard endured this sad experience in 1994. And the more you are close to an election, the more this situation is getting important.

Keynes General Theory most important legacy, 80 years after it was published, is that economic policy is a concept which has not become obsolete. The current debate, inside the left in France, deserves better arguments than those discussions which caricature reality. Leaders from the left should be better focused on the remedies France needs today and will need tomorrow.  If they don’t, electoral punishment would be heavy.