Economics serving society

La rigidité comme paradigme socio-politique

Gilles Saint-Paul

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Many analysts deplore the rigidities of French society, pointing to an excessive regulation of the market, which affects several sectors, including the labour and housing markets. These rigidities are reflected in political decisions concerning the legislation protecting employment and are characterised by a high level of state control over the economy. Although they have negative effects on the economy, public opinion is not against these interventions and the general attitude of the French population towards the market economy is particularly negative.
In this article, Saint-Paul offers a model that analyses citizens’ preference for a market that is more or less flexible in relation to the importance of their relational networks. In a country in which market rigidities create rationing, individuals are pushed to develop social networks (in the sense of relational networks or social capital), which play an important rôle in accessing resources by facilitating access to transactions. Social capital refers to all the relations of an individual, including family, friends, colleagues and acquaintances, upon whom he or she can call for financial or non-material such as access to information. The author sees it as an annuity that allows individuals to make the most of the advantages inherent in a rationed market. Where individuals are more or less “popular” and have more or less talent for increasing the size of their social network, the fact of living in a rigid society might give birth to a social group which, thanks to its privileged relations is advantaged by that rigidity. This phenomenon occurs when the price charged for a good is less than it would be if allocated by a flexible market, as we see in the case of the allocation of social housing or places in child-care centres: thus a social network can allow privileged access to certain goods at below-market prices. We are talking here of a sort of middle class that is “inferior” economically speaking, but “superior” sociologically, which benefits from an annuity from its social capital and seeks to preserve it through voting for market regulation. This annuity allows this middle class to improve its position thanks to market failures, themselves created by over-investment by private agents in the network. For example, workers reduce their own mobility out of fear of losing accumulated social capital in a certain geographic area. If this interest group is big enough, a rigid society is reproduced although a more flexible society would serve the collective interest.
Original title of the article : “La rigidité comme paradigme socio-politique”
Published in : L’Actualité Economique - Congrès de la Société Canadienne de Sciences économique, Ottawa, 14-16 mai 2014.
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