Home > Uncategorized > Explicit and tacit explanations of French economic stagnation

Explicit and tacit explanations of French economic stagnation

from Robert Locke

In my October 24 posting, Sapiential Economics, I plug for the inclusion of tacit as well as explicit analysis in the treatment of economics.  This posting illustrates my case through example.

French Revisionism, explicit knowledge and the stagnation thesis

In 1976 Explorations in Economic History published Richard Roehl’s article using statistics to refute the view of French economic stagnation.

“The conventional picture,” he states,

“Is roughly as follows. The French economy in the early modern period, until, say, the late 17th century, is relatively strong and healthy; but by the 18th it is troubled and stagnant. Though the chronology of the transition from 17th century wealth and power to 18th century retarded industrialization is rather imprecise, nevertheless the 18th century usually appears as the period during which those roots of subsequent problems are implanted. I wish instead to maintain here the proposition that something different is occurring in 18th century France-specifically, that modern economic growth has its beginnings there. The 18th century then ceases to be paradoxical and becomes fully explicable: It represents the continuation of a long-term trend of economic growth.” (Locke, 1984, 6)  

This idea echoes conclusions voiced earlier by French and American scholars, conclusions based primarily on econometric studies done in the French institute of Applied Economics. The studies prove that France was, as one of the Ieading revisionists, T. J. Markovitch, asserted, “…the first industrial power in the world, not only in the eighteenth but even in the beginning of the nineteenth century,” that is, well after the British industrial revolution had started. The statistics Roehl utilizes are the first to produce such a radical reinterpretation of French industrialization.  What is the statistical basis for such revisionism? ‘The answer: the definition of industrialization is extended to include proto-industrialization.

The latter refers to the extensive industrialization that occurred in rural Europe in the handicraft or domestic manufacturers from the 16th to the 19th centuries. This industrialization, which fed products into a growing stream of national and international trade, became the productive base of a comparatively rich and powerful, Western European centered world economy. The statistical surveys prepared in the 1840s and 1860s, on which the standard “retardation-stagnation” view of French industry depends, had ignored proto-industrialization. Therefore, they, Roehl and others feel, greatly underestimated the growth of total production and hence overall French industrial development. This “error” has been corrected in recent works of quantification. And the combination of handicraft production with modern factory production has generated dramatic revisionist statistics. Markovitch has, Roehl observes, been able to push the date when French industrial production surpassed agricultural from 1885 back to 1790, a year that compares very favorably with the British (1810). Such evidence convinces Roehl that France went into sustained industrialization in the eighteenth century and continued to industrialize at a quite respectable rate thereafter. The country never had a “retarded” economy, nor, except for very brief periods, did its economy stagnate.

In “The Roehl Thesis Reconsidered,” I argued that protoindustrialization is not the same thing as modern industrialization.  As David Landes said,

“In the eighteenth century something unique happened in that industry responded to a challenge and made, an apparently irreversible technical breakthrough, . . , There was a discontinuity here in a qualitative sense, and…the whole complex of innovations, with the rise in productivity they caused, produced a much bigger change than man had ever seen before. Eventually the alliance of science and technique made possible systematic innovation and a continued flow of productivity increases. This qualitative change was s a great event in human history.” (Locke, 1984, 7)

Roehl’s argument falls short because of this confusion in categorization, especially if one accepts Landes’ view that modern industrialization is dramatically different from protoindustrialization.

The stagnation thesis also fails because of illogical statistical representation even when dealing with machine age industrialization.  The revisionists purport to chart French output in certain key industries in order to overthrow the stagnation thesis when in fact they do not. The output index on the “metallurgical construction” industry, for example, is pegged on four products: steam engines, locomotives, naval ships, and merchant ships.  It not only omits statistics on most products of mechanical construction but overlooks those that, for the late nineteenth century, would have constituted a better source with which to measure entrepreneurial prowess in this industry (e.g., gas engines, electric motors, milling machines, woodworking, knitting and sewing machines, turret lathes, etc.) The output index on the chemical industry, which shows that French production doubled before World War I, is based on the production of pyrite, the principal raw material used in the manufacture of sulfuric acid. But, since sulfuric acid is not the raw material used in the organic chemical industry, the index tells us nothing about production in this, the most technologically progressive branch of thę chemical industry at the end of’ the nineteenth century.”  Statistics do not warrant revising the pace of French high tech industrialization, if they are on the less technologically advanced firms.

But are tacit argument about the prowess of French organizations any better?  I think so, because French organizations suffer by comparison with German. I present my case focusing on military organizations first and then on how they relate to industry.

When the French army met the German in May 1940 results were organizationally predetermined by institutional habit.

In the German army there was flexible command expressed through the Prussian Army tradition that allotted a German Commander and his Chief of Staff co-responsibility in matters of command decision.  Out of co-responsibility the chiefs of staff developed the policy of issuing “mission directives” (Auftragstatik) to subordinates instead of detailed orders, which allowed them maximum freedom in deciding how to achieve the assigned tasks.  This highly decentralized command system meant that tactical and administrative decisions occurred at very low echelons of command by officers in which their superiors placed great trust. (Locke, 1999)

The German army fought battles of encounter with organizations that were well prepared tactically.  The commands of German divisions when they attacked on 10 May in the Ardennes not only trusted their subordinates to bring units up to peak readiness but were in close contact with them, as each armored division possessed a communications battalion formed by two motorized companies, one with telephonists, the other with radio operators. All superior commanders had eight-wheeled communications cars, a rolling command post always ready, independent of each locality.  The communications provisions were essential because German panzers were flexible.  The division’s basic elements broke down into battle groups (Kampfgruppen), mixed and matched to fit situations.  (Lewis. 93-101)  And command through “mission directives” was in full effect.  The Commander in Chief, Rundstedt, attributed German success to Auftragstatik, the delegation of tactical decisions to subordinates. (Bauer, 47-48)

French army doctrine in 1940, the conducted battle (la bataille conduite), shaped the army’s organizational wherewithal.  Doughty explains:

“The French believed that the locus of decision-making had to remain at the higher level, because a higher command has to have control of conducting the action of numerous subordinate units.  The army’s doctrinal and organizational system stressed the point, and the authority of army group, army, and corps commanders.  Each lower level had less room for maneuver than the level immediately above it.  The entire system was designed to be propelled forward by pressure from above.  In contrast to a decentralized battle in which officers were expected to show initiative and flexibility, the French preferred rigid centralization and strict obedience.” (Doughty, 54-56)

French army commanders did not dialogue with their subordinates.  They shot them, as the film Paths of Glory portrays, for insubordination.  Generalissimo Gamblin “had nothing more than a telephone and an occasional courier for communications with his…,during the May crisis.  His subordinates, when forced to move away from equipment that they had installed in localities, lost touch with their subordinates as well as with their superiors.  Petain suggested that they use carrier pigeons to reestablish them.

Military doctrine and organization are connected to the French stagnation debate, if for no other reason than that comparatively poor French organizational performance contributed to the fall of the country in 1940, its humiliation as a great power, and exploitation economically during the occupation.  But the connection is stronger still.  There is a mountain of evidence that the French military mirrored in general, French ideas about organizational prowess in industry, business, and education.  Jean-Louis Barsoux and Peter Lawrence, in Management in France, observe the presence of a chef de file disposition in French management:  (p. 78)

“The notion of the all-seeing, all-knowing boss is fairly wide-spread in France.  This makes it difficult for the bosses themselves to ask the advice of their subordinates, since the patron is suppose to have a monopoly of ideas and solutions.  It is generally bad form for a PDG (CEO) to consult his staff about a problem, to which, by his position, he should know the answer. (p. 148)

Geert Hoftede, in his book about management in IBM, notes that there are substantial differences among countries with regard to their acceptance of power exercised within a hierarchy. (p. 315)  In the French firm there is low emphasis on dialogue, teamwork, and confrontation of opinion, high on formal interpersonal relations, isolation, punctuated by formal meetings in which junior managers rarely speak-up.  Written communications, expressed in highly codified frameworks, are stressed with the information moving from the top down. (p. 78) Subordinates accept the power distance in the hierarchy that chef-de-file enjoy.

The French educational system integrates this chef de file mentality.  Vincent Degot explains how, when he differentiates between the education in grandes écoles and lesser technical schools:

“[T]he grandes écoles aim to produce ‘generalists’ by providing students with abstract scientific training that will rapidly enable them to grasp the techniques involved without going into the details of application.  The engineers of the grandes écoles are fated to rise higher in order to be able to give full proof of their competence.” (Degot, 247-48 )

The education in France’s grande écoles cultivates the intellect through mathematics and encyclopedic instruction; it does not fill the brain with knowledge used to render judgments, based on solid empirical investigation and specialization. Brilliance and intelligence are favored over knowledge.

Is this discussion of the French organizational deficiencies economics?  I think so, but it is about habits of thought and values that have been tacitly assimilated into a culture, subjects that are excluded from econometrics and neoclassical economics.

For an investigation into the French stagnation issue the examples given here of an explicit knowledge as opposed to a tacit know-how approach actually work at cross purposes.  The revisionists statisticians deny, if questionably, that any stagnation has occurred, thereby eliminating the need to look for deficiencies in French organizational culture.

Nonetheless, French reformers have been after the chef-de-file educational and organizational structure for a considerable time, initially on the grounds of social equity, and then of efficiency, for they find French firm competitiveness suffers in comparison to more integrated, democratic firms in foreign countries, especially Germany. (e.g. Lawrence, 1980)

But they find habits of acculturation hard to reform, for as soon as the conduit from grandes écoles into top management comes under attack, the powerful alumni associations of the grandes écoles and their political allies lobby quite effectively against change.

 

Barsoux, Jean-Louis, and Peter Lawrence (1990). Management in France. London: Cassell.

Bauer, Edouard (1962). La guerre des blindé. Vol. 1. “Flux et reflux des panzer.” Paris: Payot.

Degot, Vincent (1980). “Types of French Engineers and the Implementation of Company Policy.” International Studies of Management and Organization.  10: 1 & 2, 165-84.

Doughty, Robert A (1988).  “The French Armed Forces, 1918-1940.” In Allen R. Millet and Williamson Murray (eds). Military Effectiveness, 2, “The Interwar period,” Boston: Allen and Unwin.

Hofstede, Geert (1980). Cultures Consequences. New York: Sage.

Lawrence, Peter (1980).  Management in West Germany.  London: Croon Helm.

Lewis, C. S. (1985) Forgotten Legions:  German Army Infantry Policy, 1918-41.  New York: Praeger

Locke, Robert R. (1981). “French Industrialization:  The Roehl Thesis Reconsidered.” Explorations in Economic History,18:4,  415-433.

___________.(1984). The End of the Practical Man. Greenwich, Conn.: JAI Press

___________(1999). “French and German Managerial Systems Projected into the Military Events of May-June 1940.” Public Lecture, Queen’s University, Belfast. (16 October). Paper available from author as  Lawrence Festschrift.

Roehl, Richard (1876). “French Industrialization: A Reconsideration.” Explorations in Economic History, 13, 233-81.

  1. Manuel Angeles
    October 29, 2017 at 4:41 am

    Roehl would have profited from an engagement with sadi-Carnot

  2. October 29, 2017 at 5:42 am

    “The country never had a “retarded” economy, nor, except for very brief periods, did its economy stagnate.”

    The French Revolution doesn’t happen because an economy is not stagnating. Looking at the US, we grew by less than 10% total from 1920-1932 when we had extreme wealth inequality. Then we swung to the opposite end of the spectrum on the fates of the bottom 90% and grew by 10% per year under FDR. This backed off to 3%-5% from 1945-1970, then 2%-3% until 2000, and 1% to 2% starting in the Naughts as the bottom 90% had less and less leverage in society.

    Similarly in the 1700s, France had inequality so extreme it would make Coolidge blush and people literally lost there heads in the pushback. Rather than trying to find an error in estimates of slow growth in the 18th century, I would consider the slow growth hypothesis the occams razor choice.

  3. October 29, 2017 at 6:49 pm

    This on the French management pioneer Henri Fayol, 1841-1925, product of a state secondary and a mining school, from L Urwick, ed:The Golden Book of Management: A Historical Record of the Life and Work of Seventy Pioneers (Newman Neame, London, 1956).

    “Henri Fayol was the most distinguished figure which Europe contributed to the management movement up to the end of the first half of the present century. … Fayol always maintained that his amazing practical success was due … to the application of certain simple principles which could be taught and learned. These constituted his ‘Theory of Administration’. This isolation and analysis of administration as a separate function was his unique and original addition to the body of management theory. It paved the way for the evolution of the modern approach to problems of higher management by way of functional analysis. It exercises and still continues to exercise a profound influence on all efforts to clarify and organise thinking as to the qualities required for, the nature of, and the correct analysis of ‘top management’.”

    A speech in 1925 denying conflict with Taylorism* led to unification the rival schools as the Comité National de l’Organisation Francaise. [* Summarily, having the right man in a tightly defined job, overseen by the customer, i.e. the next person in the production line].
    By 1925, of course, tightly defined French justice reparations were failing to deliver tightly defined “reparations” and the world was heading for a stagnant economy repaired by resumption of war and its eventual winning by “allies”. None so self-defeating as those who think linearly.
    Going back to what started the French Revolution and the somewhat similar defeat of a somewhat saner Napoleon, didn’t the revocation of the Edict of Nantes (which had opted for peaceful co-existence rather than war between Catholics and Protestants) have something to do with it? Whether the French economy had been stagnant or not before 1685, I get the impression the people had been left very much to look after themselves so long as they paid up, and only when the industrious Huguenots had been kicked out and fled to Britain and the Low Countries (then including German states), did the King have to come looking for wealth and the Queen to suggest those left breadless eat cake. But remember, it was Britain’s Francis Bacon who in 1604 suggested the need for an encyclopedia of scientific discovery, even if the first volume of it was published in France in 1751. I suggest industrialisation owed more to Puritans, single-minded about earning our living, than to simple-minded nationalism.

    It looks as though Operational Research failed post-war economists because it was preaching inhumanity to the converted. In France the tradition was already built on the mathematics of Descartes (d.1650). In Britain a steam locomotive was a work of art, in France a young mathematician revolutionised them by studying the flow of steam in their chimneys. The devil was in the detail. Looking at Professor Locke’s very interesting concluding paragraphs, I’m not convinced a young manager would have solved the problem, chef-de-file or not.

    • robert locke
      October 30, 2017 at 7:02 am

      Dave, there were two national organizations to increase productivity in big country Europe, after WWI, the RKW, The Reichkuratorium fuer Wirtschaftlichkeit, and the CNOP, the one Fayol was involved in creating. The CNOP was a sham organization compared to the RKW (see my discussion of both in The End of the Practical Man, 270-289.) The elitism of grande ecole engineers, vis a vis, those who worked for them, and did not attend grandes ecoles and learned their trade or profession tacitly on the job, is one important reason for the lack of a well organized French efficiency movement compared to the German. German Technik unified skilled, and scientific mental capital into one overarching cooperative community of capabilities, French grande ecoles educated elites were separated from the organizations they headed, in a command and control top down system.

      Of course, when German expertise was put at the disposal of the Nazis, great crimes ensued.

      By the way, Fayol attended the school of mines in St-Etienne, which did not rank with the School of Mines in Paris, but was a grande ecoles, well connected with the mining and metallurgical firms in the Massif Central region, destined to decline when Lorraine rose to dominate in the era of steel.

      • robert locke
        October 30, 2017 at 7:20 am

        About operations research postWWII, it did not fail in France, the ingenieur econmist, graduate of the elite schools of engineering (Mines, Paris, Roads and Bridges, Centrale, Ecole Polytechnique), carried through the renovation of French superstructure after the war, just the sort of civil engineering projects in which French engineering elites always succeeded. Civil Engineering projects are important, but they hardly include the wide panoply of la grandes industrie in France, where the sort of top down elitism was not fruitful. French success in luxury and mass distribution merchandizing (Carrefour) is another matter still.

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