Turning Away From

At a popular new Paris restaurant down the street from the bustling French Bourse, or stock exchange, diners play a different sort of market while they eat. The price of each item on the menu rises or falls by as much as 20% according to consumer demand. An IBM personal computer at the bar continuously recalculates the prices, and a printout from the machine provides steady commentary, like the bulletins on a stock ticker: "Relance de haddock" (Haddock on the rebound) or "Pieds de cochon en vif recul" (Pigs' feet dropping fast). The restaurant is a hit, explains one of the owners, because it reflects the latest rage in Paris: free enterprise.

More than ever, the market economy has been in vogue since President Francois Mitterrand's Socialists narrowly lost the national elections last March. Under a complex power-sharing arrangement that the French refer to as cohabitation, Mitterrand has taken the lead in foreign policy while the newly appointed conservative Premier Jacques Chirac has had the greatest influence on domestic matters. The dynamic Chirac wasted no time in launching a sweeping reform of the French economy, which has been slow to join the current recovery in Western Europe.

Starting with such measures as the removal of price controls and a reduction in taxes, the Chirac administration is trying to spur business activity by easing the constraints of government regulation. In addition, it plans to return some 50 state-controlled banks, industrial firms and other enterprises to the private sector. Said Chirac: "We must now go fast and far. France must change."

To help him engineer this dramatic transformation, Chirac named his longtime friend Edouard Balladur to be the Minister of Economy, Finance and Privatization. The most powerful Finance Minister in decades, Balladur, once a top aide to the late President Georges Pompidou, has been described by the French press as Chirac's alter ego.

While Chirac asked the National Assembly for the authority to begin the process of deregulation and denationalization, Balladur was already outlining other economic reforms. These steps will relax most foreign-exchange and credit controls and reduce interest rates. Balladur is confident that the program will pump new life into France's economy. Says he: "I don't see any more reason to hesitate to invest, to hire workers, to participate boldly in the resumption of growth and investment."

The overhaul was long overdue. "The French economy we found on taking office was in a state of weakness," says Alain Juppe, a Deputy Minister for the Budget. As evidence, Juppe points to a meager 1.1% growth rate in 1985, an unemployment level of more than 10% (25% for youths under 25), a trade deficit of $3 billion, and a mounting budget shortfall that is now expected to hit $20 billion for 1986. The government hopes to solve these problems, says Juppe, with a policy based on "wisdom and economic liberty."

For the French, this "liberty" represents a historic change of direction. Chirac means to free the economy from government-imposed restrictions under which it has labored for no less than three centuries. Known as dirigisme, France's system of economic controls originated in the 17th century with Jean Baptiste Colbert, Louis XIV's Finance Minister.