For the first time that most people here can remember, the purchasing power of ordinary French citizens is about to take a sharp dip. This explains why France's socialist experiment is entering an uncertain and possibly critical phase nearly two years after its inception.
The primary aim of a package of drastic austerity measures announced by President Francois Mitterrand's left wing government two weeks ago, and now under discussion by politicians and the trade unions, is to cut the unacceptably large trade deficit. But even government ministers admit that the inevitable consequence will be a reduction in standards of living, a zero rate of economic growth and a significant increase in the number of unemployed.
All this has painful implications for a socialist administration that came to power in May 1981--after more than two decades of conservative rule--with a visionary program for economic expansion and social reforms. In the view of many analysts here, the coming months could determine not only Mitterrand's own political future but also the long-term prospects for the French Left.
The government's optimistic prediction is that its present economic program will be accepted, albeit grudgingly, by the population. The trade deficit, now running at an annual level of $12.8 billion, will be eliminated within two years if all goes according to plan. That would leave the Socialists with enough time to win back popularity through judicious handouts before the legislative elections in 1986.
The pessimistic scenario is that parts of the austerity package will have to be abandoned in the face of popular discontent. Unable to take the measures necessary for restoring France to economic health and mistrusted by its own voters, the Left then would be condemned to another lengthy period of political opposition.
It still could go either way. But the past week has illustrated some of the difficulties that Mitterrand is likely to face. There have been rumblings of industrial unrest from the trade unions, particularly in the troubled car industry, and murmurs of discontent from his own left wing and Communist allies about the 180-degree switch in government priorities.
The result is that the government already has backed down on one of the most objectionable measures. A compromise was announced last Friday night between the Finance Ministry and travel agents that in effect will allow tourists to go on one package holiday a year, even if the cost exceeds the $275 foreign-currency allocation originally envisaged.
Other elements in the austerity package include "a forced loan" to the government, equivalent to 10 percent of annual tax payments; higher social security charges, and price increases for electricity, transportation and gas. Socialist and Communist ministers are publicly at odds over whether salary earners should be fully compensated for the increase in the cost of living as a result of these price rises.
Given its majority in the National Assembly, the goverment had no difficulty winning the confidence debate on its handling of the economy. But right wing deputies accused Prime Minister Pierre Mauroy of being a "juggler," an "illusionist" and a "cheat." More significant, perhaps, the Communists have threatened not to vote in favor of enabling legislation unless their own amendments are taken into account.
Writing in the independent left wing daily Liberation last week, economist Serge-Christophe Kolm presented the French experience under Mitterrand as a classic example of the pitfalls faced by a socialist government that wants to promote change by democratic means. Kolm wrote that the same process had occurred in Portugal after the 1974 revolution, Chile under Salvador Allende, Australia and Jamaica.
First the government tries to promote its goals for economic growth and social welfare by relying on the mechanisms of the market economy. But it fails to win the confidence of the entrepreneurial classes, runs into economic difficulties and finds itself facing mounting foreign debts. The initial rise in purchasing power is wiped out, and the government is deserted by key factions of the middle classes who helped it into office.
The result, as described by Kolm, is usually electoral defeat or a military coup.
In the French example, the socialist government was forced to abandon its ambitious plans for economic growth in June 1982 following the second devaluation of the franc in less than 10 months. But consumption continued to rise, and it was only last month, with the municipal elections safely out of the way, that measures were unveiled that actually would eat into the pockets of ordinary Frenchmen.
There is disagreement here about the degree to which the latest austerity package can put the economy back on its feet. The government's aim is to halve the trade deficit by the end of this year as a first step toward eliminating it altogether in 1984. Officials hope to save $3 billion worth of imports by cutting domestic demand and almost that much through the drop in the price of oil.
Both these assumptions have been challenged as "over-optimistic" by economists, however, as have the government's estimates of the costs of the operation in terms of higher unemployment and lower growth. The finance minister, Jacques Delors, has said he expects 100,000 more unemployed this year, zero growth and a 1 percent fall in consumption.
Kolm, by contrast, says the present austerity plan is likely to result in 500,000 more unemployed and lead to a 3 1/2 percent fall in consumption. And he predicts even that will be insufficient to put France's trade back into the black.
If the present measures fail to produce results by the fall, one of the likely consequences would be the reopening of a debate over economic strategy that was settled temporarily last month in favor of the technocrats. Supported by the Communists, influential sections on the left wing of the Socialist Party would prefer a "protectionist" solution to France's problems, seeking to promote growth behind high trade barriers.