Arbitrary action has taken the place of legal action. The state had no legitimate justification for blocking the acquisition of Carrefour.
Throughout history, major transformations have always caused the role of the state to be reshaped: World War I gave birth to the totalitarian state; the 1929 crash made state intervention necessary in order to stabilize capitalism, and reinvented Keynesian regulation which oversaw the intensive growth post-1945; and the oil crises of the 1970s brought about the emergence of globalization. The 2008 crash and then the Covid-19 epidemic have caused the state to make a big comeback, and this calls for capitalist norms to be reset. The new pecking order of countries that will result from these crises of the early 21st century will largely depend on their ability to carry out these changes. France, which has paid the price for its refusal to adapt to the new situation – engendered by globalization and the introduction of the euro – by being left behind for four decades, is about to miss out on this new change. This is illustrated by the Finance Ministers veto on the takeover bid for Carrefour by the Quebec-based Couche-Tard company, which would have made it the third largest retailer in the world with a turnover of €115 billion.
In its form, this decision shows a severe lack of forethought and considerable cynicism; it was ill-informed and the bid was not analyzed. The blatant refusal was not based on any legal or economic logic; it was dictated only by politics and the desire to appeal to the nationalistic and protectionist side of public opinion. It was an assertion of the government’s right to block operations between private companies even though it is powerless to do this in companies in which it is a major shareholder, as was the case when Veolia bought up Engie’s share in Suez. The government is favoring putting out a very short term message rather than considering long term national interests.
Basically, arbitrary action has taken the place of legal action. Within the framework of policy regarding foreign investment, it was perfectly legitimate for the state to oppose the buyout of Photonis – which develops vital night vision technology for the defense industry – by Teledyne, which had the intention of creating a monopoly that was incompatible with our security interests. But it is in no way legitimate for the government to block the acquisition of Carrefour by invoking food sovereignty.
The regulations on foreign investment give the state the possibility of opposing an acquisition. But they refer to food safety – and not food sovereignty – which it defines as follows: “Access to safe, healthy, diversified food of good quality and in sufficient quantity, produced in conditions that are economically and socially acceptable by all, fostering employment, conducive to the protection of the environment and the countryside, and contributing to the lessening of and adaptation to climate change.” The takeover of Carrefour does not violate any of these different objectives.
Joseph Schumpeter believed that innovation was the driving force behind capitalism, through creative destruction. Statist populism, which passes for economic policy in our country, has invented destructive destruction. There is an enormous price to pay for such strong-handed and arbitrary actions on the part of the state. Carrefour is right in the middle of an important turnaround and finds itself deprived of a €3 billion input which would have enabled it to fight off competition from Amazon and Alibaba, and to speed up the transition to organic foods.
Not content with having indebted itself to the tune of 120% of GDP, and having ruined the energy and transportation companies in which it is a shareholder, the state, by its authoritarian and arbitrary actions, continues to reduce entrepreneurial freedom and to create even more constraints and uncertainty for a private sector that now only accounts for 35% of GDP. By cutting French companies off from international capital, the state is depriving them of the chance to adapt to the digital revolution and ecological transition. And yet, investment that is delayed today means layoffs to come in the future.
We need strong government intervention in order to overcome the crisis. But this intervention must go to serve the building of a new development model that is both inclusive and open, and not to enshrine a managed economy, which is the reason why France has been left behind for 40 years. The state must invest in its sovereign functions and rethink the production of essential services – education, healthcare and security, whose quality has crumbled. Instead of saying no to Couche-Tard, it would be better to say yes to all those early risers who intend to work hard towards France’s recovery.
(Column published in Le Figaro, 25th January 2021)