The enigma of capitalism and the French cul-de-sac

The success of capitalism

Luc Boltanski and Eve Chiapello’s The New Spirit of Capitalism is an elegant, beautifully written, exhaustively researched book. For those qualities alone, it is worth reading, and remains so 15 years after it was originally published in 1999. It has weathered the years well, though not perfectly. It rendered a judgement on the 1990s and the new spirit of capitalism that appeared to balloon during that decade. This was an age, rhetorically at least, of networked flexible capitalism. Boltanski and Chiapello’s thesis was straightforward. Capitalism had evolved through three stages, each marked by a different spirit. The first was family capitalism; the second, industrial capitalism; the third, network capitalism. Boltanski and Chiapello got the first two types right and the third type wrong.

A key part of why they were wrong can be attributed to their methodology. The volume draws on a huge quantity of empirical data, impressively so. At the heart of the book, and its mammoth research, is a comparative study of the French management literature of the 1960s and the 1990s. Sixty management works from each decade are analysed for their characteristic terminology. The comparison of terms is the empirical basis for understanding the rhetoric of the capitalism of each period. Because the use of terminology significantly changes between the 1960s and 1990s, the conclusion, reasonably enough, is that the spirit of capitalism definitively changes between the two eras. This is backed up with a mountain of empirical data looking at the behaviour of French firms and industries in the respective eras and the intervening decades. To a point this is all well and good, and quite illuminating. However, while rhetoric is one thing, reality is another thing. The problem with word analysis is that human beings do not always do what they say they do. Social systems are the same. Simply because the social system tells its actors that they are doing X does not mean that those social actors are doing X. Both individuals and societies have an endless capacity for self-delusion, self-deception, the telling of fairy tales, fantasy, misdiagnosis, false description, happy talk, and comforting illusion. So it was in the 1990s.

The most striking and important observation of Boltanski and Chiapello appears right at the beginning of their door-stop volume. They point out that capitalism is not greed for gold. It is not a piratical system; it is not money hunger; it is not the deification of accumulation. If it was, it would not have been the most successful social system ever. Yet it has been enormously successful, far more so than any of its competitors, because it is enigmatic. It is not just one thing. It is always at least a couple of things simultaneously. It is, as Boltanski and Chiapello point out, an amalgam or alloy of things. It is never just capitalism. It is always X-capitalism or Y-capitalism. Capitalism’s most interesting and productive periods to date have been the eras of family capitalism and industrial capitalism. Family capitalism (or domestic capitalism) is commonplace from the early modern times through to the 1960s. It exists in diminished form today. It is closely associated with the rise and fall of great family dynasties and their companies. Family capitalism has never entirely gone away but it has been in significant part displaced by a form of capitalism that leans heavily on the idea of impersonal organization, replacing the personal face of family capitalism. This was especially true in Europe, North America, Australasia and Japan. It is less true of the Chinese-speaking world. Industrial capitalism or organized capitalism took shape with the emergence of very large firms in the first half of the 20th century, most of them national and eventually international in reach. Closely connected with their rise to prominence was the rise of the social science disciplines of management and human relations.

This very brief history hints at the amalgam or alloy nature of capitalism. In one phase it leans heavily on traditional ideas of family, personal dependence, the firm-as-a-family metaphor, the dynastic nature of ownership, and the selection of family members to run the company. Very old notions of human behaviour, including the boss-as-patriarch, paternalism, and loyalty, are woven into the operation of family companies. The amalgam of family and capital loses ground in the early 20th century. New metaphors rise up along with new structures of human behaviour. Personalized systems fall out of favour. Other, more impersonal systems take their place. The origins of this go back to Henri Saint-Simon and his fascination with engineers. This is filtered through 19th-century philosophical doctrines of positivism into the social science of management pioneered by figures like the great Henri Fayol. Procedural organization begins to replace paternal models of the firm. This is a kind of mathematized capitalism in which not only money and capital is measurable but also human behaviour and interactions. This is an era when the direction of companies tended to pass from patriarchs to engineers. This was capitalism’s most successful era to date. It saw in France, and in all other major economies, a massive increase in real GDP and real incomes.

After this era, beginning in 1970, comes an era of economic disappointment. Capitalism’s arch-rivals communism and socialism fail. But they do so in a period when capitalism’s own performance falls in comparison with its historic peak between 1945 and 1965. Despite under-performance, capitalism is still infinitely better than socialism and communism, both of which are chronically hopeless economic and social systems. The period after 1990 is the age of post-industrialism. It promised much – and delivered much less than it promised. Boltanski and Chiapello paint a distinctive picture of 1990s post-industrialism based on their analysis of management literature. The picture in part is true. The rhetoric of the time partially captured the nature of the underlying reality of the era. Yet in many ways the rhetoric was also misleading – or at least only semi-descriptive of the times. In a way this is inevitable, as the self-understanding of any period is only ever partial. Human societies are not fully transparent to themselves. So any set of descriptors is bound to fail in part. But the limit of the analysis of The New Spirit of Capitalism is also a consequence of the fact that Boltanski and Chiapello do not take their own starting-point as seriously as it deserves. For they say, astutely, that the spirit of capitalism combines in one and the same dynamic the development of capitalism and the critiques that have been made of it (p. 27). This is exceptionally insightful. It explains for instance the power of Max Weber’s sociology of capitalism. Weber paired the religious ethic of Protestantism and capitalism, and said they belonged together. Weber’s insight can be understood as a sub-set of the larger truth of capitalism: that it is based on an amalgam of capitalism and its contraries. The Protestantism and capitalism pairing is one of a series. Many of these pairs (though not all of them) are, like the pairing of religion and Mammon, deeply paradoxical. ¹ That is their strength. It is also the foundation of successful modernity. Successful modern societies are all anchored in deep-going paradoxes. The pairing of family and capital, domesticity and global reach, is one of these paradoxical amalgams. So also is that of the engineer and the price system, science and markets.

Boltanski and Chiapello argue in effect that what they saw as the ‘third’ spirit of capitalism is an amalgam that succeeds the industrial capitalism that had succeeded domestic capitalism. There are a number of problems with this thesis. First of all, it is unclear as to why there are only three sequential ‘spirits’ of capitalism. It is more plausible to say that the spirit of successful capitalism is paradoxical. In its paradoxical state, it combines with one of its opposites to create an uncanny social formation that is seemingly impossible and yet very powerful. This supposes that any number of ‘paradoxical capitalisms’ are conceivable. It further supposes that any number might co-exist at the same time. The next difficulty of Boltanski and Chiapello’s thesis is the character of the purported ‘third spirit’. This is the spirit of something called ‘network capitalism’. Take a step or two back, and think about what made the first and second spirits so powerful. They combined antitheses. Look at the sensitive domesticity of the golden-age Dutch at home contrasted with the worldly calculations of the Dutch merchant-entrepreneur who crossed the globe. Likewise consider the highly developed sales concepts of the early 20th century and the indifference of the growing technical workforce to selling. The term ‘network’ (connexion) rose steadily in popularity from the mid-1920s onwards, rising steeply from the early 1970s. It reached a peak usage in 2000, both in French and English, after which it declined. Boltanski and Chiapello wrote at the moment of its peak. It has become a less-often used term of social self-description. In part at least this is because it illuminates a lot less than its erstwhile spruikers thought it did. This is so not least because it is not a term of antithesis. Something did happen to capitalism in the early 1970s. Conventionally we say that post-industrial capitalism emerged. This happened broadly across the OECD, including France. But whether in fact ‘the network’ was the decisive trait in post-industrial capitalism is questionable.

For one thing, it cannot be said that ‘network capitalism’ combined the dynamic of capitalism and one of its antitheses. It certainly did not do so in any way that might be described as paradoxical. From the 15th century, networks were part of modern capitalism. Furthermore, the claim that 1990s capitalism was dominated by networking personalities and network-type companies is doubtful on a number of grounds. The first is that, notwithstanding Boltanski and Chiapello’s historicism, capitalism is not sequential. Many forms of capitalism co-exist. One spirit of capitalism does not replace a prior one. Moreover, each spirit of capitalism interpolates oppositions. Capitalism is the enigma that absorbs converses and reverses. What is truer of post-industrial capitalism, and closer to Boltanski and Chiapello’s own empirical data, is that capitalism after 1970 re-combines with a number of critiques of capitalism. To a degree it re-invents itself by incorporating aspects of its antagonists and adversaries.

Despite its history of success, industrial capitalism by the end of the 1960s does reach a point of increasing exhaustion. It does not reproduce itself successfully, for whatever reason. At that point there are a number of countervailing trends that, in various ways, coalesce with capitalism. One of these becomes the model of flexible or network capitalism, which Boltanski and Chiapello identify as the third spirit of capitalism. Flexible capitalism, well-essayed in 1990s management literature, was and is a real phenomenon. But it was nothing like as all-embracing as Boltanski and Chiapello suggest. In fact, it was not nearly as subsuming for the reason that a number of other critiques of capitalism were partly successful in being adopted as contrary pairings in competition to the flexible model. In short, post-industrial capitalism might well be described as motley capitalism, with the dynamic of capitalism being spliced with not one but a number of contrary formations. Boltanski and Chiapello are right to point to two influential critiques of capitalism. What I would add is that after 1970 these start to be combined with the dynamic of capitalism. One is the bohemian or aesthetic critique of capitalism; the second is the social critique of capitalism.

Bohemia and socialism both despised capitalism. Both wanted to see the end of capitalism. Both failed miserably in that. The bohemians were the first to surrender. By the 1970s it was evident that forms of hippy capitalism were starting to appear. Style, aesthetic character, and patina were becoming market selling-points. Old neighbourhoods began to compete with the new suburbs for residents. By 1990 socialism was discredited. It failed as a social and economic model. Membership of trade unions declined sharply. But political dreams don’t die easily. In the place of socialism appeared various forms of state capitalism and crony capitalism. The idea of social capital took off in the late 1980s just as the idea of socialism was dying. This was abetted outside the OECD by the new leviathan of Chinese state capitalism. Various social actors, not just the flexible-network ones, offered themselves as partner-pairs with capitalism. It is important to understand that the history of modern capitalism is dotted with capitalism’s alliances with its contraries. That is the way that successful modernity works. Why is this? Boltanski and Chiapello note that the profit motive, by itself, is boring; partner-pairs make it more interesting. Conversely, the aesthetic, religious, science, technology or city impulses that pair with capitalism lack the calculating, measuring, budgeting, double-entry book-keeping, income-expenditure balancing, profit-making, investing and re-investing sense of the capitalist. So each side offers what the other lacks. If the lack, though, is defined simply by money, the pairing won’t and can’t work. It will create no interesting value. If the state gorges on capitalism as a river of money (state capitalism) or if the capitalist firm is a parasite on state revenues (crony capitalism) then all that results is crassness, corruption, perfidy and laziness, of which the contemporary world has no shortage. Not every amalgam creates a productive paradox. Some alliances produce sloth and asininity.

The re-pair of capitalism

The 1990s was an attempt to repair – that is, to re-pair – capitalism. Boltanski and Chiapello recorded the traces of this renovation. It was rhetorically more vocal than it was a practical success. The 1990s re-pair came on the heels of the 1980s, which had seen a revitalization of market economics. This had been the high-point of the economics of Fredrick Hayek (1960, 1973–9) and Milton Friedman (1962, 1980). The market liberal revival had come after the doldrums of the 1970s when capitalism had been through one of its periodic downturns. The 1980s was an era of the mild deregulation of economies. This happened first in the Anglo-American-Australasian world. But it was followed in France and even, in the early 1990s, by Sweden.

Perhaps market capitalism’s greatest triumph was the collapse of the communist economies in 1989–91. Capitalism de-legitimated its mortal enemy. Along with that, socialist economics and social democratic fiscal policies sank into oblivion. But that left two problems. First, what space was left over for left-wing economics when all of its models seemed to be kaput? Second, what was the future of the firm under the newly-revitalized market capitalism? Market capitalism was as old as Adam Smith. What the era of Hayek and Friedman did was to brush away some of the many regulatory cobwebs that had accreted in the age of industrial capitalism. Once a portion of this regulation was out of the way, markets fired again, unemployment declined, technology innovation energized and productivity grew. But that left unclear the role of the firm in deregulated economies. Market economies operate through the medium of contracts. Firms, while they utilize contracts, are organizations. They are structured administratively, through offices rather than promises. They operate in markets but they are not themselves markets. So the question left hanging in 1990 was: what was the future of the firm in a re-charged market environment? Firms make a lot of money in market settings. Yet big firms also feel very comfortable with big government, because both of them have structures that are like each other. A corporate officer is akin to a government office-holder. At the start of the 1990s both were wondering: what is my future? Do I have a future? Will the world be transformed into one large set of contracts, a world with laws but with stripped-down regulation and government?

These questions were answered after a fashion by the re-pairing that went on in the 1990s. What came out of the 1990s were three models of capitalism: 1. Network Capitalism; 2. State Capitalism; 3. Aesthetic Capitalism. Each re-pairing involved capitalism adapting to its critics. It absorbed and internalized critiques of itself and thereby re-invented itself. This, arguably, is consistent with the entire history of capitalism. Capitalism is a chameleon social system that internalizes selected aspects of systems opposed to it. This makes it famously the social system of contradictions. Karl Marx prophesied that capitalism’s contradictions would bring it to an end. This did not happen. It would seem in fact that capitalism’s absorptive capacity keeps it going. It draws its dynamism from its capacity for re-invention which it draws from a remarkable ability to adopt and co-opt certain aspects of anti-capitalism. It has made peace with the social systems of the family, the church, and the firm. Even, in a way, markets were adapted by capitalism to the dynamic end of capitalism. The market of the medieval market town, for instance, is far removed from the abstract market system of capitalism. Almost all human societies have had some kind of market system. Capitalism’s market system, however, is a marked adaptation and abstraction of these. In any event, at the historic turning point of 1990 the enigmatic social chameleon of capitalism changed its colours yet again.

Capitalism in the late 20th century had three major sets of critics: 1. Market Critics; 2. Socialist Critics; 3. Bohemian Critics. Market critics said that industrial capitalism was not flexible enough. Socialist critics complained that it exploited its workers. Bohemian critics said it was anti-art. By 1990 most of the critics had given up hope of replacing capitalism as the prime economic system of a modern society. The vast chronic uselessness of the Soviet economy had finally convinced even the most tin-eared critic of capitalism that any alternative was doomed. There would always be personalities attracted to the idea of an economy without money. Others continued to believe that government transfer payments could function as an economic system. But these were outliers. Most rational actors accepted that capitalism was the central economic institution of a modern society. But there was still huge disagreement about what was capitalism. This was not least because capitalism is an enigma. Capitalism is not just whatever you wish it be; nonetheless, it is sufficiently mysterious at its core to have made friends of Protestants, Catholics, patriarchs, family dynasties, engineers, technologists, and many other kinds of social actor.

Boltanski and Chiapello systematically describe three critiques of French capitalism in the 1990s. In what follows, I want to revisit each of these critiques and the models of capitalism that flowed from them.

Market critics and network capitalism

Post-war France produced many influential critiques of bureaucracy, stemming both from the political right and the political left. All were critical of procedural hierarchy and bureaucracy. These criticisms eventually triggered a rethinking of the structure of French firms. The value of ten tiers of management was questioned. Boltanski and Chiapello consider the management discourse that resulted. It had a number of themes. The most common was the idea of the flexible firm. Flexibility, it was said, was necessary to meet rapid technological change. French firms had to adapt, change and be more competitive. The pervasive metaphor for this was the network. It was a 1990s metaphor that explained everything – and thus also nothing. It took off along with the new information technology that had a network structure. That structure originally had offered a high level of communication flexibility in the event of a nuclear attack. Management consultants advising firms to be flexible told them to act like networks rather than hierarchies. That meant a number of things: organize work on the model of teams and projects rather than departments. Follow Japan’s example and produce goods just-in-time. Continuously improve the production process. Streamline hierarchies. Concentrate on core business. Sub-contract everything that is not core business. Collaborate with other firms. Engage in joint ventures and alliances. Work at a distance – and not just in the physical office. Reduce the number of continuing staff and employ more limited-term contractors and casual staff. Substitute contracts for procedural hierarchies.

Some of this is just market capitalism: viz., rely more on contracts than legal-rational hierarchies to operate effectively. The management literature of the time, though, said it was something new: network capitalism. Boltanski and Chiapello agreed with the literature. The proposition was that a network is different from both a hierarchy and a market. But as large-scale and long-distance markets have always had network characteristics, this was an artificial distinction. Yet what about internally within firms – was the network model a different way of conceptualizing the firm in opposition to hierarchies? Did the firms of the 1990s begin to operate differently in contrast to their predecessors? The answer is: not really. Their self-descriptions may have changed, but that did not mean that the systemic essence of what they did and how they functioned changed. Names and substances are not the same.

The English economist John Maynard Keynes once observed that ‘practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist’. In France, it seems also that management gurus were the slaves of dead philosophers. Much of the language of 1990s management theory – the talk of authenticity and projects – came from Jean-Paul Sartre. Later on the legume root theory of Gilles Deleuze and Félix Guattari was influential. Echoes of Cornelius Castoriadis’s philosophy of autonomy can be heard as well in the literature. French management theory retailed the following: in the new firms of the 1990s, bosses would not give orders. They would inspire, lead, act with intuition, provide vision, do anything but direct. Authority would derive from vision or competence – not from office and hierarchy. Trust would replace the close monitoring of employees. Firms would offer less job security but greater job autonomy. Workplaces would interpolate more change and greater contingency. Mobility would increase, as would informality. Firms would be more flexible and more uncertain, but thus also more creative.

Flexibility meant being able to let go of a project when it finished and move on to something else. Nothing would last a life-time. This no longer implied womb-to-tomb employment or at least no more spending 30 years in one department. Careers would be a succession of projects. (The word project originated with Sartre’s philosophy.) Each project would present novelties. Project employees freed from departmental hierarchies would busy themselves making connections. They would be adaptable, flexible, autonomous, versatile risk-takers who were open to difference – adjustable, friendly, convivial, even-tempered communicative networkers. These employees would adjust to different people. They would be obliging and attentive, and would learn continuously. This was a world in which people interacted outside of departments. It was a world without borders. Organizations existed but these were organizations without autarky. Images of stability, durability, rootedness, attachment, security, life-long work, and vocation were questioned. Persons who could deal with workplace contingency had the quality of ‘employability’. In this world, renting and accumulating debt was preferable to ownership and assets. Projects were more important than procedures. Flows replaced fixed points.

Much of the management language of the 1990s was puerile. It routinely caricatured itself. In place of order-giving and order-taking, the workplace was supposed to become a place of coaching and training. Managers would listen and be receptive. Streamlined organizations needed streamlined people, without attachments – mobile, fluid, changeable, always in transition to something. But putting aside these absurd self-caricatures, was there really anything new amidst this vociferously proclaimed newness – and did it transform the nature of the firm? The answer is: not really. French firms remained organizations with hierarchies and departments. They did not become a swirl of projects. The modern world, from its inception, has been filled with mobile personalities. People have always quit jobs and moved to other jobs. That was the point of the modern employment contract. At the same time, firms exist because they have advantages. They are not like making a film, which has a project structure. Thousands of people are contracted to work for months on a film and then the project ends. Firms instead go on. As such, they provide continuing employment for a lot of their staff. In the 1990s French firms did expand the use of contractors. But firms did not stop being firms. To be a firm means to undertake continuing operations, which means offering continuing employment to staff, and that means instituting a hierarchical structure of employment. Hierarchies can be flattened, rationalized, and streamlined. They can be flexible or rigid, procedural or patrimonial. They can afford autonomy or crush it. But they still exist as long as firms exist.

This implies that the promise of the network firm, and thus of a new model of network capitalism, was a chimera. This does not mean that the French critique of bureaucracy was wrong. In many ways, it was correct. Hierarchies waste energy. This is in contrast to markets and cities: these both multiply energies. A city that doubles in size will be 1.15 times as efficient. An organization that doubles in size will be 0.8 times as efficient (Bettencourt et al. 2007, 2010). Eventually, big companies go out of business. Cities and markets may have hard times periodically but they continue on indefinitely. Firms endure, but not indefinitely. To carry on for any period of time they invariably have some kind of hierarchical structure, more flexible or less flexible as the case may be. Ultimately, flexibility appears to be a function of size: the larger the size, which usually means the older the company, the less flexible, all things being equal. In other words, the network metaphor offered firms an illusion. It was simply rhetoric. The project-type personality was make-believe. Promises in the management literature of Deleuzean-style rhizome firms or Sartre-style authentic employment free of bad faith were ludicrous. These were self-indulgent spinnings of infantile fables.

Rather than this kind of post-modern intellectual pulp, contemporary managers in fact could do no better than read the brilliant work of Henri Fayol (1841–1925), the French engineer turned mining company director turned management theorist. Fayol was the Max Weber of management. His 1917 masterpiece Administration industrielle et générale was translated into English in 1930 and again in 1949 as General and Industrial Administration. He set out cogently that a firm needed planning, organization, command, coordination, and control. At first glance this looks decidedly old-fashioned; but on closer inspection Fayol’s theory turns out to be very subtle and very sensitive to employee needs as well as very clear about what a firm is and how it functions. Command is not the clownish sergeant-major barking out orders but managers who lead by motivating staff and providing effective support for them and by striking a cogent balance between staff needs and the needs of production. Instead of post-modern mush, one is struck immediately by how straightforward and sensible Fayol’s theory is. It is true that engineer-led firms hit a brick wall by the 1970s. But in their wake the post-modern emphasis on fluidity, contingency, coaching and training didn’t work either. Demolishing borders, transitoriness, flow, and project turned out to be either illusion or a waste of human time and energy. In the end, the fluid post-modern company proved to be a poorer performer than the industrial age company. The former lasted for shorter periods than the latter. It contributed to the creation of less real wealth. The problems of the industrial age company, which in the end were real enough, were addressed by pseudo-solutions that created their own long-term problems, and ushered in post-modern economies marked by underwhelming performance.

Socialist critics and state capitalism

The socialist critics of capitalism had a rough time of it in the 1980s. Classic market liberals (Hayek and Friedman) destroyed their economic theories. Right-wing and left-wing governments in the United Kingdom, Australasia, the United States, and France dumped Keynesian policies to good effect; then the Soviet Union collapsed. Running parallel with this, trade union membership after the 1970s fell and kept falling. In each of these cases, classic liberal economics was mirrored across the political fence by a left-wing critique of bureaucracy in France that had its origin in an ex-Trotskyist milieu. ² This was shadowed across the Atlantic in the United States at the opposite end of the political spectrum by the neo-conservative movement which similarly arose out of an ex-Trotskyist milieu and likewise found the expansion of state bureaucracies to be odious. ³ The apostates on the left and the right all agreed that Trotsky was both a totalitarian and a tyrannical figure. Nonetheless, a trace of Trotsky’s critique of Stalinism as a bureaucratic parasite class persisted in the work of the French anti-totalitarian left and the American neo-conservative centre-right. The ironies of all of this are legion. The ex-Trotsky-supporting apostates would go on to coin a series of influential political and social theories. Some of these, especially in France, crossed over into the aesthetic critique of capitalism. Classical market liberals and left-wing anti-totalitarians rarely agreed on economics. But they did agree on the toxic nature of bureaucracy and they shared a respect for human autonomy and self-organization. Left-liberal and socialist regulation, dirigisme, nanny-statism, planisme, and éstatisme left both of these streams cold. Left-wing self-organization rarely acceded much to the self-organizing power of markets, but it generally had a favourable view of the self-organizing power of cities.

As the electoral sway of socialism declined, and its intellectual efficacy waned, socialists had an option: run up the white flag of historic defeat, or else re-launch socialism under another guise. They did the latter. Socialism was re-branded in France as regulation and state capitalism. Part of the inspiration for this was American. America, unlike France, never had a socialist movement to speak of. It had a progressive movement instead. Progressive politics in the United States by the 1990s had become the politics of left-liberalism, what Americans call ‘liberalism’, regularly supported by about 25 per cent of American voters. French socialism mutated into just another stream of modern left-liberalism. It fixated on the regulatory state and fostering state capitalism.

Regulation uses the executive power of the state to enact public policy through regulatory decree. French labour law is the epitome of this. Successive French governments have effectively mandated life-time employment. This has been achieved by means of elaborate procedural requirements. In France, it is difficult for a firm or organization to dismiss an indefinite-term employee – whether for poor job performance or due to the economic unsustainability of a business. In a system where judges determine the economic viability of businesses, businesses are naturally cautious about hiring long-term employees. Thus a system designed to shield long-term employment does the opposite. What it does entrench, though, is the insiders, the generation of people who in the past acquired a long-term job, at the expense of newcomers. This is the very opposite of the promise of fluid post-modern economics or the reality of classic liberal economics.

Conceptually the problem derives from the spirit of 20th-century industrial capitalism which, as Boltanski and Chiapello note, emphasized security and stability as core values. It encouraged the life-time work contract. The difficulty with this was that firms, in spite of first appearance, were not the perpetual entities that they might have seemed to be in 1960. In reality, firms rise and fall. They grow and shrink; start up and go out of business. Size at one point in time cannot stop this diaphragm-like behaviour. Their average life-span has decreased over time since the 19th century. They simply do not last indefinitely, and laws that assume that they do only delay the inevitable and discourage anything but definite-term contract employment. Ironically, the attempt to procedurally engineer life-time contracts has led in France to the opposite outcome. Employers are reluctant to hire employees except for defined periods of time. It is well-known that socialism lacks a sense of humour and so tends not to understand irony very well. This has made it a poor pairing with capitalism, the system par excellence of contradiction and incongruity. Sometimes you have to do the contrary of what seems right in order to do what is right.

Among its many failed dreams, socialism once promised that the state would own the means of production. This had to be given up once the evidence of the bureaucratic sclerosis of state enterprises become overwhelming evident to everyone. So socialism then redacted itself in favour of state capitalism. State capitalism offers another kind of substitute for markets that state ownership once promised. The way that post-modern state capitalism does this is to generate fake markets. It uses taxes to subsidize ersatz markets that would not otherwise exist. This can be markets for solar energy or student places in higher education. The typical adjunct of state capitalism is crony capitalism. Well-connected individuals lobby governments to create subsidized schemes for products that otherwise are uneconomic without a state subsidy. Once a government creates one of these pseudo-markets, the lobbyists (the well-connected cronies of the government) produce goods for the fake market; all of the profit in the market is effectively tax-payer money. This is what is known as rent-seeking by companies. Government money underwrites a substantial part of the purchase price of the good that the company or organization markets.

A classic example of state capitalism was the announcement in April 2014 by the French Energy Minister Ségolène Royal that the French Socialist Party government of François Hollande would create 100,000 ‘green jobs’. A ‘green’ job is a job that is subsidized by the tax-payer in chic wind, solar, biomass, marine energy and building insulation industries. These jobs exist only because of tax incentives and state subsidies. Rarely if ever does the projected number of jobs come to fruition; and the cost to the public per job is typically astronomical. In short, these are fake jobs. They are not viable jobs without huge subsidies. They have no net value for the state; they cost more to create than they generate in tax revenue. They are usually lower-skilled than the average occupation created by normal economic processes. They have value only for the politically-connected who retail their sub-par ersatz industries to governments that cannot manage to create a growth economy which generates real employment.

Regulation and politically-connected capitalism also go hand-in-hand. Today mobile phones are enabling French customers to circumvent taxi companies and deal directly with drivers. This would appear to be a case of flexible capitalism at work to the benefit of consumers and owner-operators. But the established French taxi companies do not like this idea. They don’t like competition. So in 2014 French taxi companies successfully lobbied the Socialist Party government for a regulation to kill off their competition. The government of François Hollande directed the operators of private chauffeured cars utilizing smartphone bookings to wait at least 15 minutes between receiving an order and picking up their customer. It also engineered a housing bill that limited the ability of persons with secondary properties to rent these short-term to tourists. The internet has also made this market possible. Like the established taxi companies, the big hotels do not like competition from new market entrants – so they got the Socialist government to regulate the new market out of existence. This is post-modern innovation, French Socialist style.

Bohemian critics and aesthetic capitalism

Trying to throttle app-based car hire or impeding private owners renting out their apartments short-term is the reductio ad absurdum of French socialism. It also reminds us of why the 1950s and 1960s generated an interesting left-wing critique of socialism. This critique emphasized ideas of self-management and self-organization (Castoriadis 1993; Lefort 1986, 1987). These ideas were squarely anti-bureaucratic. Boltanski and Chiapello note that the criticism of the French trade union bureaucracy inspired by the ideas of self-management contributed to the decline of French unionism. The left-wing self-management stream, though, never developed a serious economic theory. One of its principal intellectuals, the Greek-French philosopher Cornelius Castoriadis, worked as an economist at the OECD for many years. Yet he never wrote an economic treatise and many of his asides about economics in his philosophical and political writings rarely rise above the routine of French socialism of the time.

The further irony is that the theory of social self-organization in Friedrich Hayek’s work (1960, 1973–9) has an uncanny parallel with Castoriadis’s social theory (1997a, 1997b) – excepting that Hayek talks about markets as exemplary social self-organization while Castoriadis talks about cities. Both were right in their own way – that is, both were half-right. Markets and cities (along with publics) are exemplary forms of social self-organization. As with Hayek’s theories (1952), the broader French intellectual discussion of self-organization (Dupuy, 2009; Atlan, 2011) reflected interests in cognitive science and information science. ⁴ This discussion, though, had a persistent blind-spot when it came to economic theory. Strikingly, France never produced a major school of economic thought after the 19th century, which saw significant contributions from the liberal school (Bastiat, Leroy-Beaulieu, J-B Say), the historical school (Jugular, Gide, Simiand, Levasseur), and the mathematical school (Walras, Cournot).

The self-management thinkers appear in Boltanski and Chiapello as the progenitors of the aesthetic critique of capitalism. This label is valid – though it does warrant some explanation as this was not an art movement. The French Situationists, who were inheritors of the traditions of Surrealism and Dada, came closest to an art-inspired social critique (Debord, 1994 [1967]). The notion of an aesthetic critique of capitalism is nonetheless astute and by no means off the mark. Intelligent left-wing intellectuals like Castoriadis already in the 1950s could see that socialism was a failure. But they weren’t going to jump on the band wagon of classical liberalism. So where could they go and still nominally remain critics of capitalism? As well as socialism, there was a long tradition of art underscoring the criticism of capitalism. This derived from 19th-century romanticism. Figures like the Englishman William Morris combined the socialist and aesthetic critique of capitalism into one. Marxism, which had a productivist ontology, sat comfortably with certain aesthetic strands that also were productivist. Both in fact could be traced back to the Hegelian theory of objectivation, from which even today a plausible economics can be derived. Castoriadis pushed the productivism of art and Hegelian Marxism into a theory of creation, and in fact into the most far-reaching theory of creation in the 20th century. Again, this was not an economic theory; but in economics, on a parallel track, it had a family resemblance to the great work of Joseph Schumpeter (1976 [1942], 1982 [1911]).

In Paris of the 1950s and 1960s, the industrial capitalist themes of security and stability were ascendant, and along with them multi-tiered bureaucratic firms and organizations. The nascent self-management literature began to think through alternative themes of initiative, creation, radical originality, inspiration, autonomy, the opposition to procedural hierarchy, social innovation, creative imagination, and free initiative. This was echoed in concrete policy measures to make working hours more flexible, reduce the number of levels of command in organizations and give free reign to people’s creative powers. It downplayed planning and played up intuition. Versatility, commitment, and adaptability all squared with traditional models of creativity that began in the arts but that were just as applicable across society in all domains. Creation was a general human trait that entailed commitment, perseverance, exacting standards, and a sense of quality. Employees in high-technology industries were attracted to models of work that involved high degrees of autonomy and an almost artisan-like rigor in their work product. The degree to which the firm and the larger society were creative – and, in that way, productive – was more important than the bargaining of interest groups; for it was creation that ensured economic and social prosperity. Bargaining could only redistribute the fruits of creation: the less that was created, the less a society could negotiate over.

Every age and every social current has its silly rhetoric. The post-modern neo-managers who pretended that they managed by invention and intuition were pretty comic. The romantic authenticity and liberation side of the artistic critique of capitalism, when it wasn’t simply embarrassing and infantile, was self-indulgent. The third-rate artist had always traded on authenticity and liberation. This was romanticism’s coin. Old patina provided the authentic aura of the bohemian neighbourhood. It gave it a run-down glamour. Romantic sexual libertines thought themselves morally superior to bourgeois fuddy-duddies. In the 1960s capitalism turned both authenticity and libertinage into luxury goods. These become routinized, domesticized, and suburbanized, and therewith romanticism died a death of a thousand purchases. But even once sex and authentication stopped being passports to truth, the marvels of creation still remained. France today excels at the production and export of luxury goods that present a mix of aristocratic, romantic and bourgeois taste in very appealing packages.

In spite of the ludicrousness of third-rate romanticism, the creative motif remains important. Human ingenuity, invention, origination, discovery, innovation, and imagination hold up, even if the rhetoric and claims surrounding these at times can be excruciatingly precious. Essentially they do so because, despite the parodies, caricatures, spoofs and burlesques of creation that management writers and experts of all stripes come up with, the act of creation remains the most potent source of human interest, intellectual stimulation, economic wealth, and social prosperity. ⁵ This was Schumpeter’s point: modern capitalism thrives because it is creative. Castoriadis’s point was similar: modern societies thrive when and where they are creative. The great delirium of the late 1990s though, looking back on that decade, is that it spruiked the rhetoric of creation non-stop. But this rhetoric struck few deep roots in the social soil. A small army of books, articles, manuals, conferences, and seminars were dedicated to making the dull bourgeois work of money glisten with the thrill of bohemian creation.

Words tumbled forth. Promises and prophecies abounded. Tomorrow would be filled with projects propelled by a contingent, non-essentialist, open, un-fixed, and un-stable spirit. But therein lay a problem. Contingency is conditional, dependent, subject and provisional. It is, in other words, like most of the creation of the post-modern age. So it was not that the self-interpretation of the post-modern age was wrong. Rather, its projects lacked substance and staying-power. These projects were, as promised, contingent – and contingency lacks substance. The Sartrean freedom that is born out of nothing ends in nothing. The Deleuzean flow and flux dissipates in vacuity; it terminates in evaporation, dispersal, dissolve and vaporization. A contingent world is not substantial. The promise of post-modern flexibility begged the question then: flexible for what purpose; lithe and malleable to what end?

Post-modern organizations had a habit of losing themselves in the desert of diversity and difference. This was a wasteland in which the idea of creation had been recast. The act of creation in the modern sense is an act as objectivation. It involves the making of objects, be they material or immaterial. Post-industrial societies reconfigured the creative act of objectivation into an act of alternation. Inside firms and organizations, the act of creation accordingly was translated into the act of documentation. Documentation took many forms and was undertaken on a vast scale. Information, after all, was the key word of the age. However, the acme of post-modern documentation was the ‘strategic’ document. Its high status amidst the torrents of post-modern organizational paperwork echoed a deeper social trend. This was the compulsive social search for alternatives, contingencies, changes, choices, possibilities, potentials, opportunities, options, and prospects. ‘Strategy’ was a classic post-modern word. Its usage rises sharply after 1960 in both the French and English languages. ⁶ At the heart of any strategy is a set of contingencies for how future uncertainties may be dealt with. Strikingly, in both French and English, usage of the world ‘plan’ declines after 1960. Plan signifies a much higher degree of certainty. The post-modern era psychologically was less certain. So it focused on contingencies instead. But by their nature, most contingencies never apply and are never realized. They are hollow, futile, or pointless. Accordingly, most strategies bite the dust. They barely rank above wishful thinking. Nonetheless, their promise proved seductive to post-modern personalities. The pursuit of contingency, often in the guise of serious-sounding strategy, became socially pervasive. Post-industrial societies developed an addiction to vacuous promises of opportunity, reform, restructure and reorganization – most of which meant little or nothing in practice. Correlated with this was a widespread decline in the social interest in making and producing. The interest in work, vocations, and occupations waned. The interest in holidays, past-times, hobbies, and welfare meanwhile rose dramatically.

Capitalism today and tomorrow

Fifteen years on after the publication of The New Spirit of Capitalism, we can look back on the 1990s and render our own judgement. Consider the state of the French economy today. It is terrible. It is terrible, arguably, because the new spirit of capitalism was a new spirit and because it was not a new spirit at all. French society dreamed of flexibility, fluidity, contingency and leanness. What it got was the empty flexibility of contingency without substance. This was the world of the holiday in which – in nice, relaxing surroundings – fantasies could be indulged and endless never-to-be realized dreams could be contemplated. Yet the underbelly of post-modern contingency and French society’s adoration of uncertainty was an unyielding fierce social desire for existential certainty and state guarantees. Post-industrial French society passed laws that entrenched employees in firms for a life-time. This was the ethos of the industrial society par excellence. In a similar manner, French society talked about innovation, but when consumers and vendors wanted to happily innovate together and use an app to order a chauffeur service, the French state did all it could to frustrate this little bit of spontaneous ingenious social cooperation. This was not just a regulatory deed. It was a symbol. It was a symbol of Canute-ism. It was a desire to hold back the ineffable flow of all of the little changes spontaneously engendered by human ingenuity.

A handful of modern societies have created unprecedented levels of wealth and social prosperity because they have let loose such ingenuity. But, notably, this is not a universal human trait. Most societies frustrate ingenuity. They outlaw it, obstruct it by regulation, codify it to death, and institute all kinds of orthodoxies to pressure it out of existence. Reading The New Spirit of Capitalism at the time of its original publication one might have concluded that France was on edge of a period of experimentalism. But looking at things now, it is clear that that was not the case.

The French rhetoric of the 1990s was a projection. It was an attempt to quell the nerves that creation induces. ‘Network capitalism’ was not a new spirit of capitalism. Rather, it was a spirit of social anxiety. The demon of creation, it projected, would lead to a transitory society of casually-connected contingency-hopping anomic lost souls. No worries: the French state to the rescue. It would entrench indefinite tenure at work. It would listen to lobbyists and entrench vested interests. It would expand fake markets using tax-payer money to subsidize goods. None of this requires ingenuity or invention. None of this requires imagination, energy or effort. It requires only political connection. This leads nowhere; it has no net social benefit. For whatever else it might be, the state is not an organ of self-organization or even of low-impact hierarchy. It is not the market; it is not the city. The state can usefully provide laws that help markets and cities to work. But the notion that the state can helpfully plan, direct, subsidize, or authorize human energy and ingenuity is an idea well past its time. France’s condition today is poor. This is not because it successfully embraced a productive new spirit of capitalism in the 1990s but because, rhetoric aside, it failed to do so.

The French economy since 2008 has been routinely described by commentators of all political stripes as the sick man of Europe. The problems of the French economy are patent, chronic and well-understood, just as is the disinclination of the French voting population to do anything about these problems. France is a major international economy. It is the world’s fifth largest exporter of goods and services, notably in the transport, machinery, chemicals and perfumes, and food and drink sectors – and principally to Europe and China. Yet France’s unemployment rate has been stuck at 10 per cent for more than a decade. Youth unemployment in 2014 was 25 per cent. Socialist Party Prime Minister Manuel Valls in 2009 called for the Socialist Party to abandon its name: ‘the word “socialism” is without a doubt outdated. It recalls 19th-century ideas’. But neither French elites nor voters are inclined to do so. Indeed many voters prefer the economic nationalism, protectionism, populist statism and welfarism of the far-right National Front. Economic fear over-determines economic sense. Both the French centre-left and the centre-right are equally in love with the super-bureaucracy of the European Union. This has created a political vacuum which the radical-right has adroitly filled. French elites manage to be both nationalistically anti-American and vehemently anti-nationalist in their enthusiasm for the European bureaucratic super-state. Contemporary French politics reduces to an incoherent jumble of bureaucratic anti-nationalism and various ideologies dreaming of a nativist closed commercial state. None of these is capable of generating an effective economic policy.

In lieu of such a policy, what centre-left French elites offer the French voting public is the post-industrial turkey of education-led economics. A classic of this genre was announced by the French Ministry of Higher Education and Research in January 2014. It declared the need to bridge the gap between universities and the corporate world. What were its solutions? State-subsidized jobs schemes for young people and getting France’s academics to better prepare students for the world of work when they leave universities. Françoise Gri, the co-president of Sup’Emploi, the higher education-business advisory group, complained that there was no tourism course in France that trained students for ecommerce (Caulcutt 2014). Gri, in one single sentence, sums up unconsciously the whole cul-de-sac of the modern French economy. That the French universities apparently had not heard of ecommerce points to an institutionalized academic system of chronic organizational inflexibility – one resulting in a motionless, petrified curriculum frozen in time. That business or government could think that the role of universities was to train people for jobs or that training people for jobs results in the creation of jobs (rather than vice-versa) was equally absurd. It is the function of polytechnics to provide certificate-level job training. It is the function of business to create jobs. Only a government and business elite desperately seeking comforting illusions could advocate the converse. But this is not the most pathetic aspect of Gri’s statement. For even sadder is the fact that in the last decade in North America the number of travel agent jobs has halved. People these days go online and book their own travel. The French Ministry of Higher Education and Research wants French universities to prepare university students for jobs that do not exist anymore because of the ecommerce that French universities do not teach.

This encapsulates the impasse of France. It has no viable political economy. The comparison with Germany is invidious ( The Economist 2014): The euro was created in 1999. Since then, France’s GDP per capita has risen by 0.8 per cent a year; Germany’s has risen 1.3 per cent per annum. France’s unit labour costs in 1999 were below Germany’s; today they are higher. French exports in 1999 were worth almost 60 per cent of Germany’s; now they are worth less than 40 per cent. Unemployment in France is near 11 per cent; German unemployment is just over 5 per cent. France suffers from stagnant growth and an over-valued currency. Its debt is approaching 100 per cent of GDP. In 1960–69, France’s growth rate ranked number six in the OECD, Britain’s was 24; in 2000–9, France was ranked 20th and the UK fifth (Wyplosz 2014). Those numbers go to the heart of the matter. France has lost the capacity to grow its economy. It has a skilled work force and high-quality infrastructure. But at the same time it is sclerotic. Its economic body tissues have hardened. It is everything that its 1990 self-image said it wasn’t. The rhetoric of the 1990s imagined its firms and organizations to be fluid, flexible, malleable, elastic and lithe. What they are in fact is the opposite of this. They are rigid, stiff, inelastic, set, and strict.

The result is social and economic failure that is the product of social and economic policies that claim to defend French citizens from social and economic calamity. The medicine is killing the patient. Labour laws make it difficult for firms to terminate indefinite contracts. The result is that unemployment among older French is (by contemporary French standards) low: 7.1 per cent for the over-50s. The equal result is that unemployment among young French is very high: 24.6 per cent for 15–24-year-olds. State-sanctioned employment ‘justice’ creates great employment injustice. The young pay for the protected and privileged position of the old. The young pay for it by carrying a disproportion of the share of unemployment and short-tenure employment. The young are forced out of the country to find work in other countries. The still deeper problem of French society is that the only way to break the vicious cycle of a ‘social justice’ that creates injustice is to have sufficient economic growth that readily accommodates new workers in the workforce. That requires an economic philosophy in which production and creation dominate over distribution. The French statist mentality is highly distributivist. Distribution is what the state does. It taxes wealth in order to distribute it. It does not create wealth. Often it discourages it.

Words in France have a way of meaning what the state chooses them to mean. ‘Decentralization’ is a case in point. It is a word that sounds as if it means the breaking up of power structures. France ‘decentralized’ the state in 1982 and again in 2003. Did this reduce organized power? No. It generated overlapping authority structures, proliferating and expanding sub-national government institutions. The result was the multiplication, not the diminution, of organizational levels; so much for the leanness and flexibility of government. It is no surprise then that 20 per cent of the French workforce works for the state. The state is a habitat of high salaries, short working weeks, long holidays, and permanent employment. It sets the tone for the nation. That tone at times can be more farcical than decorous. In 2014 it came to light that France’s state-owned railway operator, the SNCF, had ordered a new generation of regional trains that were too wide for 1300 of its platforms, 14 per cent of its network. It based its specifications on measurements provided by the Réseau Ferré de France, RFF, which is in charge of all French tracks. Incredibly the RFF based its measurements only on platforms built in the last 30 years. To stop trains getting stuck, the rail operator has had to ‘shave’ the width of its platforms – at a projected cost of €50 million. Even the French Transport Minister declared the fiasco to be ‘comically tragic’, a description that might apply in general to the post-modern state. This specific state formation habitually produces fake measurements of all kinds. It is as if it unconsciously regards metrics as just another post-modern fable. ⁷

Public spending represents 57 per cent of French GDP. Young French who want to start new businesses face a mountain of taxes and regulations. So what do they do? They go to London. The energetic leave the country. The morose remain. Les exilés rose from 0.9 million in 1995 to 1.61 million in 2013 (Floc’h 2014). ⁸ Three to 4 per cent of the population now leaves each year. The number of expatriates who intend to stay away longer than 10 years has grown from 27 per cent to 38 per cent. Fifty thousand live in Silicon Valley. France, socially-speaking, has become a gerontocracy. The baby-boom young revolutionaries of May 1968 turned themselves into an ageing caste of job protectionists, vacationers and gilded welfare beneficiaries. The French economy and society today lack the aesthetic-creative-destructive-constructive force that drives the kind of peak growth that distinguished the prodigious economic upswing of the 1950s and 1960s in the most successful modern economies. France today lacks the kind of economic dynamism that knits together individual and social energy and cultural sophistication, and turns this into economic and social prosperity. The widespread sullenness and defensiveness of the society instead spirals energies and efforts downwards. Accumulating debt and deficits, spending ever-more of the society’s GDP on transfer payments, and employing ever-more state regulators to frustrate the ever-fewer ingenious wealth-creators has a terminal point. It cannot go on forever, except perhaps in the mode of a Venice: that is to say, France could be fated to a slow, irreversible gilt-edged decline of a state rich in cultural patrimony that turns itself into the mausoleum of a tourist economy. The post-modern dystopia of a society of endless holidays is almost within reach.