Footprints of three great French economists

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Revised to 10:59 am on July 4, 2021 and 5:57 pm on July 24, 2021

Philip Agion (The power of creative destructionOdile Jacob), Patrick Altus (Last chance of capitalismOdile Jacob) and Jean Herve Lorenzi (Great break, Odile Jacob) is one of the most respected French economists. During the Aix-en-Provence Economic Conference, they provide an analysis of ongoing changes, helping Europe and France regain collective growth in which citizens, states and businesses play their respective roles. We are proposing a concrete path.

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Each of you recently published a book outlining desirable capitalism for the future after the earthquake caused by the health crisis. What do you recommend?
Philippe Aghion: The pandemic has exposed the weaknesses of capitalism. In the United States, inadequate protection systems make many Americans poor. In Europe, some countries, including France, were unable to invent vaccines due to insufficient investment in innovation. But thanks to intelligent dialogue between nations, businesses and civil society, it is possible to develop a favorable capitalism that favors innovation and protects citizens.
Patrick Arthur: The current capitalism that empowers shareholders is destined. It was not economically efficient and produced considerable income and wealth inequality: productivity gains are diminishing. It supports a constitution of rent and monopoly. Since the 2008 crisis, public policy support has been needed, supported by the explosive growth in financial creation. It is advisable to return to “Ordoliberalism”, a system based on a market economy, but the state acts to maintain competition and combat inequality.
Jean Herve Lorenzi: The health crisis has accelerated the mechanisms that, if nothing is done, cause great difficulty once recovery is complete. We must harmonize supply and demand. We appeal to Keynes, the advocate of demand and the role of the state, and Schumpeter, the advocate and entrepreneur of innovation. We must act in six areas: readjusting the gap between profits and wages, no longer sacrificing young people for the benefit of the elderly, between state-guaranteed and non-guaranteed savings. Review of distribution, betting on job qualifications, investment issues in education and society and the use of innovation as a source of job creation.

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Pandemic reveals weaknesses in capitalism

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What role do companies have to play in this renewal of capitalism?
Ph. A .: Companies are increasingly expected to take on the role of environmental and social innovation. The days when their sole mission was to make a profit for regulated countries are over.
PA: The business world is changing under pressure from institutional investors. They avoid getting involved unless their social or environmental behavior goes beyond blame. Certain guilt manifests itself not only in unlisted family companies, which have become considerably richer, especially thanks to expanding monetary policy, but also in large listed groups. I think they are ready to redistribute some of this enhancement to their employees through free stock donations. Others think from a training perspective. If every big company hires and trains 500 unqualified young people each year, it will solve many problems.
J.-HL: This spread of guilt is also explained by the deteriorating economic situation in France. Companies know that collective responsibility can reverse this decline. They have to invest a lot in training. In particular, certain shareholder demands for profitability are unreasonable or dangerous.

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If every big company hires 500 immature young people each year to train them, it will solve many problems.

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What specific solution would you suggest?
Ph. A .: Like Denmark, we must develop partnerships between individuals, businesses, and nations. And think about the minimum integrated income for young people.
PA: Companies are beginning to realize that neither public institutions nor national education can deal with this situation without their help. Even if the French paradox remains, 2.7 million jobs will be filled in Japan by the end of the year, but 70% to 80% of companies will not be able to hire. In France, we train people who don’t need training very well … we have to fight this insufficiency.
J.-HL: The apprenticeship reforms that have taken place since the beginning of Emmanuel Macron’s mission have been successful. This shows that companies manage much better youth training than local governments. We must continue on this path. And train employees throughout their careers. It is ridiculous to want to dismiss the elderly early and postpone the retirement age.

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We need more companies to innovate creatively

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Why are European companies not innovating more?
Ph. A .: Even if many countries envy us for research tax credits, we still have to reform them towards small businesses. They have no way to invest in innovation defensively like large groups. These innovations will enable the re-industrialization and regaining of control of the value chain without choosing dangerous protected trade principles. In most cases, they step in by closing the market.
PA: We live in a paradox. Applications and R & D budgets are constantly increasing and we are robotizing the industry, but long-term productivity growth is declining. why? This is because multiple innovations do not enrich them, but rather reduce the quality of work and ignore investments that are useful for maintaining high capital returns. The concentration of heritage hinders the development of more innovative projects.
J.-HL: If too much innovation is being implemented in Europe, rationalization innovation will occur, resulting in job loss. We need more companies to innovate creatively. There is no shortage of subjects, especially regarding the transition of ecosystems.