Alain Alcouffe (Université de Toulouse).
Introduction
After the introduction of economics in 1877, economics professors in the French law faculties became the most numerous group of French economists (Alcouffe, 1989, Le van Lemesle 2004 [1995]). After 1896, these professors were recruited through the agregation du superieur, a competitive examination which has both a written and an oral component, during which candidates have to prepare four lectures on a randomly assigned economics subject (Fourcade, 2009, p.304). Their performance in the field of research was less important than their conformity to the views of the jury. As the first professors had their origins in the law faculty and were faced with the hostility of the French liberal school, they were instilled with a distrust of the major tenets of that school (free trade and laissez faire). They shared with the liberals, however, a distrust in mathematical economics and a hostility to socialism. François Facchini (2015), who has surveyed the economic thought of the economics professors between 1877 and 1969, distributes the professors among three categories, following a doctrinal classification initially proposed by Gaëtan Pirou in 1930. He later distinguishes three types of doctrines: socialist (A), intermediate doctrines (B) and liberal (C). Within each doctrine he distinguishes sub-doctrines, each category being divided in subcategories. The initial values manifested in 1877 (64% liberals [C], 27% intermediate doctrine [B] and 9% socialists-cooperatists [A2]) concerned a very small number of professors but category B will quickly become the largest group (53% in 1913, then 60% in 1940). As these “intermediate” professors were hostile to both liberalism and the socialism, it is not surprising to find among them a growing proportion of social Catholics (27% in 1940). Aversion to liberalism and socialism was indeed a trademark of Catholic economic thought from Rerum Novarum[1] onwards and, unsurprisingly, historians cannot help noting the part played by religious affiliations in the economic ideas of the economics professors. “The influence of social Catholicism is thus a major phenomenon to take into account if we want to understand the positioning of French academic economists until the 1960s” (Pascal Le Merrer, 2011. P. 164-5).
Indeed, Leo XIII’s famous encyclical of 1891, Rerum Novarum, was an attempt to formulate a Roman Catholic response to the social question that kept the working classes away from the church. Leo XIII regretted that workers were exposed “to the hard-heartedness of employers and the greed of unchecked competition”. He rejected any idea that class conflict was inevitable. Turning to solutions, he advocated what was in effect a form of bargained corporatism: “employers and workmen may of themselves effect much in the matter of which we are treating, by means of such associations and organizations which draw the two classes more closely together” (quoted by Grant 1985, p. 5). ln his 1931 encyclical, Quadragesimo Anno[2], which celebrated the fortieth anniversary of the publication of Rerum Novarum, Pius XI praised the earlier encyclical because it had ‘boldly attacked and overturned the idols of Liberalism’ (ibidem, p.6). The two encyclicals did not go into detail about the arrangements of economic systems and they gave impetus to a wide range of proposals for neo-corporatisms that extended from a nostalgia for medieval economy to social-democrat compromises. A comparison of the economic ideas of Maurice Byé and François Perroux provides evidence that a common background could lead to diverse recommendations. In the first section we will present salient features of Byé’s vita. Then the second section we set out Byé’s criticism of Corporatism and his advocacy of “economic magistrature”. In section III, we summarize Byé’s contribution to the analysis of the multinational enterprises. Section IV is devoted to the opposition between the views of Perroux and Byé on European integration.
Section I: The making of an economics professor
Maurice Byé was born 1905 in Marseille, where his father was a civil servant. He studied economics in Lyons, obtaining a doctorate in 1928 with a thick thesis devoted to the law of non-proportional returns. The thesis encompassed the history of the law from the Romans to the 20th century through Quesnay and Turgot to Arthur Pigou, Piero Sraffa, and Allyn Young[3]. It was original enough to be reviewed in the Economic Journal by G.W. Daniels (1929), as well as in the Revue d’économie politique by Pierre Fromont (1930). G.W. Daniels, an economist whose works focused on the cotton industry, admired Byé’s history of the laws of variable proportion despite a slight reservation vis à vis his treatment of the British classicists: “A treatment of the classicists in which more emphasis is laid upon their tentative strivings after a wider generalisation than the law of decreasing returns, and in which the word caution is sometimes substituted for pessimism, would not be altogether inappropriate” (Daniels, 1929, p.608). Daniels was not convinced by Byé’s treatment of the modern contributors (esp. P. Sraffa), but his reservations must be put into perspective as Daniels rejected the modern understanding of the laws of returns. The French reviewer Pierre Fromont, an economics professor who specialized in agricultural economics, for his part, celebrated Byé’s study of the practical applications of the law of variable returns. “The most important of these is that enunciated by Marshall and developed by Pigou (Fromont, 1930, p. 150): subsidies to industries with increasing returns, taxation of industries with decreasing returns; for the latter, the purpose of the tax is to restrict production, and consequently to lower the cost of production.” (ibidem, pp. 150-1). Byé’s thesis follows closely the chronological development of the treatment of the law of variable returns and its theoretical part ended with the presentation of Sraffa’s argument (1925 and 1926) and its rebuttal by Pigou. After a century, this thesis stands out from the French theses of the time for its interest in the most recent English literature and for Byé’s collection of quantitative data in support of his argument.
As a sequel to his thesis, Byé wrote an article devoted to the Cambridge school of economics where he speaks about his meeting with Pigou in Cambridge during the summer of 1929. He was clearly an admirer of Pigou’s Economics of Welfare, whose tools he used later (see, Byé, 1929 & 1930).
In 1932, he passed the “agregation” in the first rank – a competitive national exam with a limited number of seats, given once every other year or so. He began to teach economics to the students of the Toulouse faculty of law, which included only 4 positions occupied by economists and which did not have any noticeable tradition. In October 1933, he married Marguerite Salgues de Géniès, scion of a family with roots in Quercy, increasing his anchoring in the Toulouse region. By the mid-thirties it seems that his roots in the region of Toulouse were becoming deeper as he launched the short-lived Revue de droit rural et d’économie Agricole with Gabriel Marty, a professor of law who later became president of the University of Toulouse. Due to his 1928 thesis, he was familiar with the review’s focus on the law of variable returns in agriculture from Quesnay and Turgot to Alfred Marshall. The two chief editors justified the creation of their review by referring to the importance of the agriculture in the economy – they evaluated the share of agriculture at 50% of total economic activity. As far as economics is concerned, Byé asserted:
“The magnitude of natural movements and the complexity of interventions call for a careful assessment: it is necessary to study the market objectively if one wants to know the magnitude of reactions to consumption and price movements, if one also wants to have the basis for accurate economic calculation, to measure the sacrifices made and to avoid disappointments, of which there are many examples”. Byé Marty, 1939, pp. 7-8.
The two editors, who had gathered the experts[4] available in the region of Toulouse and Montpellier, planned to publish 4 issues yearly – the first two issues were published in January and April but there was only one other issue in 1939 (July – December) as the war obviously interrupted the publication.
The rise of fascism and the Resistance
In Toulouse, Byé joined the milieu of non-conformist Catholicism (See Clement, xxx)[5]. He was clearly on the left wing of this galaxy and close, for example, to Mgr Saliège, who had begun to oppose antisemitism clearly and repeatedly as early as 1933. A speaker at the Conferences of the Semaines sociales de France[6], follower of the Popular Democratic Party (Parti démocrate populaire, PDP, a precursor of the French Christian Democracy) Byé was a founder in December 1938 of the New French Teams (Nouvelles Equipes Françaises or NEF) in Toulouse, whose purpose was to bring together Christian Democrats in the face of the increasing danger of Fascism. As the historian Françoise Mayeur put it, the NEF were the “resistance ahead of its time” (see Mayeur, 1982). After WWII, the NEF were involved in founding the Mouvement Républicain Populaire (French Christian Democracy), of which Byé was nicknamed its “economic guru” (Chappel, 2018, p. 221).[7]
A turning point in his career happened in 1937 when he joined the “French Missions” in Brazil. These missions supported the creation of the university of Sao Paulo in 1934 as France intended to maintain a long tradition of academic cooperation with Brazil. The French ministry in charge of the missions was especially concerned with French prestige in the social sciences. The missions of 1935 included a range of (future) luminaries (Ferdinand Braudel, for history, Claude Lévi Strauss, for philosophy and thereafter the nascent anthropology, and François Perroux for economics). After a first mission in 1937, Byé returned for a second mission on the eve of WW II in Porto Alegre. The mission had not been well prepared and eventually Byé went to teach at the university of Rio de Janeiro. When the war started, Byé wanted to take part but the French Ministry maintained the missionaries in Brazil. Dissenting from the Government of Vichy, Byé tried to join the Free French and he embarked on the SS Ile de France, a French ocean liner seized by the British after the fall of France and used as a troop ship. Byé and his family aimed to go to the Middle East to join the Free French Forces there. Thereafter he took part in the Campaigns in Italy and Germany.
His mission in Brazil had several consequences for the subsequent development of his thought. Two of them are very obvious: he met with Eugenio Gudin (1886-1986), an engineer turned economics professor, during his second stay in Brazil (1939-42). He helped Gudin draft a program for Brazil’s economics curriculum and wrote a preface to Gudin’s lectures (first edition, 1942). Byé emphasizes that “[t]he place taken by industrial agreements and monopoly capitalism, the positions conquered by the workers’ unions, the growing intervention of the State, no longer as guardian or arbiter but as Regent or Entrepreneur, have distorted the chains of classical « automatisms ». Therefore, the classical doctrines cannot be applied in their original form to solve the current problems, according to J.M. Keynes”[8] (Byé 1942, p. xiii). In this preface, Byé projects himself into the post-war period and tries to imagine what monetary framework would be the most appropriate. Unsurprisingly he defends an active monetary policy along the lines of the Cambridge school. His vision was somewhat anticipatory as Gudin represented his country at the Bretton Woods conference. Byé celebrates their friendship in the review of the second edition of Gudin’s book. With Gudin described as “mainly a practical man, essentially concerned with overcoming the underdeveloped condition of Brazil at the time” (Ribas Cavalieri, Cruz e Silva, Curado, 2021, p. 88), Byé had a model of a scholar playing a part in the public affairs of his country. Byé’s involvement with Brazil certainly also explained why he agreed to become Celso Furtado’s supervisor in 1945/6. The latter insisted on his intellectual debt to François Perroux as he had returned to France in exile in 1965 during the military government in Brazil but it is quite possible that the illness and the death of Byé were the cause of Furtado’s apparent neglect of Byé.
These encounters increased his interest in the economic issues of developing countries and played an important part in his original ideas on international exchanges and the multinational firms.
After the end of WWII, Byé taught at the Sorbonne although formally his post remained at Toulouse. Eventually, it was transferred to the University of Paris, whose faculty of law had been less involved in the Resistance during the war. From 1948 onwards he published several editions of the textbook on international economic relations while maintaining an intense political activity in the Mouvement Republicain Populaire for whom he stood unsuccessfully for election as a member of parliament in the department of Ariege. However, he was an active member of the Conseil économique et social (Economic and Social Council), a consultative assembly, until his death. In June 1965, an influential leader of the Socialist Party called unsuccessfully for the formation of a large party including socialists, radicals and Christian democrats. Byé was among the few members of MRP leaning towards socialism who supported the project and committed themselves to continue in this direction even after the failure of the Defferre tentative (Pierre Letamendia, p. 143-5).
Section I. From a criticism of Corporatism to the advocacy of “economic magistrature”
There are many similarities between Byé’s career and that of Perroux but upon closer inspection, differences appear of long lasting nature. Both came to grapple with the interwar economic controversies. Following the 1929 crash, it was time to look for solutions or remedies to the diseases of capitalism. Perroux, who had taught in Lisbon and had befriended Antonio Salazar[9] devoted several studies to the economics of corporatism, as did Gaetan Pirou (1886-1946), another Sorbonne economist, editor in chief, with Charles Rist, of the Revue d’économie politique. Perroux’ Capitalisme et communauté de travail and Pirou’s Essais sur le corporatisme : Corporatisme et libéralisme; Corporatisme et étatisme; Corporatisme et syndicalisme, were reviewed by Byé[10] in the same issue of the Revue d’économie politique under the title ‘Capitalism, socialism, corporatism, command economy’. The reviews were a difficult exercise for a young professor vis-à-vis his older colleagues as even the title was an invitation to take sides between the various competing economic systems. Byé stuck to economic arguments from positive economics but he also unveiled his preferences based on normative economics (welfare economics). Whereas Pirou exhibited at least some understanding, and Perroux gave determined support to various forms, of corporatism, Byé rejected it, saying “the best it could provide would be to obtain the maximum of ophelimity”. Byé added “The value judgment made by G. Pirou on corporatism is much less favorable than that made elsewhere by M. Perroux. This is due, in part, to the fact that the former emphasizes the economic character of the regime, the latter the social character”.
Byé’s reviews were written in 1938, two years after the formation of the Blum government (Popular Front). His reservations vis-à-vis corporatism are well in line with the position he had defended in his article on plans he had published in Esprit in 1936.
In spite of the ideological appeal of vast frescoes, in spite of the necessity of ideal conceptions and revolutionary myths, only possibilist plans seem to be of immediate practical interest, because only they can bring together large enough families of minds, because only close objectives can be clearly conceived, because many forms of the present regime, in particular the principle of credit and the price mechanism, seem to us to be to be preserved [our emphasis], because, finally, the pluralism implied by the coexistence of several sectors corresponds to the reality of all times: do we not have at the present time capitalist, precapitalist, socialist economic regions; can we not think that structural variety is the very law of life?
This quotation illustrates the pragmatic approach that Byé adopted during his life: distrust of revolutionary myths, a preference for feasible plans and attachment to the price and credit system of market economies. Byé soon had an opportunity to reject the practical implementation of corporatism in a PhD he supervised in Toulouse (Mazières, 1938).
Byé had some reservations about a nostalgic or mythical vision of corporatism or an authoritarian conception of it. Nevertheless, some features that can be related to corporatism are to be found in the ideas Byé developed about the management of nationalized firms (Byé 1948a) and the resolution of conflicts involving some economic powers through an economic magistrature (Byé 1948b).
From November 1945 to April 1946 the first elected national assembly in post-war France voted for the nationalization of the Bank of France and four large deposit banks, public utilities, coal mines, and two thirds of the leading insurance companies. The organization of all these companies followed the pattern recommended by the CGT (General Confederation of Labor) in 1920. They were organized as autonomous, financially independent enterprises, and at the head of each was a tripartite board of directors composed of equal numbers of representatives of the state, the consumers and the employees. Three years later, Maurice Byé reported on the consequences of these nationalizations. He noted that, in spite of the disparity of the laws voted for, certain common tendencies could be identified, in particular the employment of the executives of the joint stock company and the adaptation of this corporate form to the public sector. But when going into the details of the organization of the various nationalized companies, he observed profound differences. These could be reduced, moreover, to two major tendencies: the statist tendency, which put the management of the company more or less directly into the hands of the representatives of the State, and the “syndicalist tendency”, which rested on the postulate of the sovereignty of the board of directors: It envisaged a tripartite composition for this board, a composition in which the representatives of the staff groups, on the one hand, and of the users, on the other hand, could not be outvoted by the representatives of the state; the difficulty was then to ensure the unity of management and to cope with changes in the political support from the government[11]. To cope with this issue, in his conclusion, Byé refered vaguely to the responsibility of directors for the “common good”.
A few months later, Byé developed his ideas of an economic magistrature in a lecture presented to the Semaines Sociales, in Lille in 1948. The purpose of the lecture was to determine whether it was possible “to safeguard, along with economic efficiency, fundamental human freedoms”. He asserted that “the reality of imperfect competition, the reality of joint stock companies has necessarily led to this group capitalism” and feared that these economic powers would lead to an authoritarian state just as the absolute monarchy succeeded historically feudality.
In support of his proposal, he invoked Keynes, who recommended also avoiding an excessive concentration of power in the hands of the State:
I believe that in many cases the ideal size for the unit of control and organisation lies somewhere between the individual and the modern State. I suggest, therefore, that progress lies in the growth and the recognition of semi-autonomous bodies within the State – bodies whose criterion of action within their own field is solely the public good as they understand it, and from whose deliberations motives of private advantage are excluded, though some place it may still be necessary to leave, until the ambit of men’s altruism grows wider, to the separate advantage of particular groups, classes, or faculties – bodies which in the ordinary course of affairs are mainly autonomous within their prescribed limitations, but are subject in the last resort to the sovereignty of the democracy expressed through Parliament.(Keynes.1927, p.41).
As possible kinds of organization, he proposed the models of public corporations like the BBC or the British Transport Commission in Britain, or the Tennessee Valley Authority in the USA. He insisted that the directors should not be civil servants obedient to the order of the government. They had to be chosen by the government not only for their expertise but also for their independence. They were given a mission, “but the essential thing is that the mission defined is broadly enough, durably enough so that responsibilities can be established and supported, so that the interpenetration of the political and the economic can be erased” (Byé 1949, p. 207).
In line with the argument for an economic magistrature whose objective was to manage the great public firms, Byé, a long-standing member of the Economic and Social Council, repeatedly scrutinized the Council’s the actual missions and the part they could play in a modern democracy. The Council had no part in the adoption of statutes and regulations, but advised the lawmaking bodies on questions of social and economic policy. It was not elected by the citizens but most of its members were designated by trade-unions, employers’ organizations and various other associations while a few seats were reserved for experts chosen by the government. Byé was a very active member of the Council, which nevertheless inspired in him mixed feelings. The council had a corporatist flavour that he clearly did not appreciate, its functions overlapped with those of several other committees and its usefulness was dubious, for which reason in his conclusion he expressed the wish that it should return to its role defined in 1946 as “a place of confrontation and mediation that is particularly well placed to deal with collective work conflicts and to develop multiple forms of cooperation between groups”. Byé then took one last dig at the corporatist illusions:
It seems that if it correctly fulfilled a consultative function responding to many of these wishes, the Economic and Social Council could not be reproached for being useless without it being necessary, for all that, for France to dissociate itself from the countries with the most reliable democratic traditions by conferring on it rights to which it does not have vocation. Byé, p. 919.
Section III. The origins of the analysis of the MNEs[12]
Maurice Byé, drawing on the traditions of French, and English, economics, developed a stimulating analysis of the international firm in a series of papers, beginning with “The Large Interterritorial Unit in the extractive industry and its plans” (1955), then ‘‘Self-Financed Multi-Territorial Units and their Time Horizon’’ in 1957, published in English in 1958 and eventually included in the subsequent edition of his textbook. It is necessary to say that Byé paid a warm tribute to Perroux at the beginning of his article in the Revue d’économie Politique: “Several among the most important concepts used in this report are due to François Perroux with whom we have been collaborating for many years, or have been elaborated jointly with him. They will be ascertained easily although the reference is not always given in due place”. (Byé 1957, p.1). Nevertheless, the elaboration of the concepts and their integration into economic analysis were clearly done by Byé and has nothing in common with Perroux’ style. Byé describes a ‘‘large unit’’ as ‘‘an organised set of resources depending on a single decision centre capable of autonomous action in the market’’ (Byé 1958a, p. 148). Thus the ‘‘large multiterritorial unit (LMU)’’ may not be a single firm—an important point given current attention to networks of firms (references) following single strategies, or ‘‘global factories’’. Byé however speaks throughout of large firms and concentrates particularly on the extractive industries. His key point is that ‘‘a large firm is one whose plans are to some extent independent of the market and which, by the same token, can choose the length of its planning period’’ (ibidem, p. 148). LMU’s do not simply react to market stimuli. Following Cournot, the firm is seen as a centre of decision making and planning. The conception is dynamic, because Byé, following Joan Robinson (1953), wants to include a theory of expectations.
The decisions made by LMUs therefore depend on prices, the rate of output, the length of the planning period and the rate of investment. The time horizon is seen as a ‘‘strategic variable in the behavior of the large firm’’ (Byé, 1958a, p. 149). Byé explicitly compares the decisions of LMUs with those of governments: ‘‘There is nothing absurd in comparing the decisions of such a firm, its optima, its growth, its foreign trade and its internal financing with those of governments responsible for the long-run objectives, optima, growth and control of the foreign trade of nations’’ (ibidem, p. 150).
Byé (1958a) goes on to provide a model of the LMU in the extractive industries. The model examines the optimum rate of extraction of existing reserves and the tapping of new reserves. The ability of LMUs to self-finance is related to the duration of exploitation—a composite of the time horizon of the firm and the level of uncertainty (including political uncertainty concerning nationalization). ‘‘Uncertainty also encourages geographical diversification’’ (ibidem, p. 159). The firm’s decisions on keeping resources in reserve, exploiting first its high-cost resources or its low-cost resources, depend on the marginal cost of developing resources and the financing of exploitation. Again, Byé comes back to the length of plan of the LMU as critical in developing and exploiting natural resources. Control over reserves is one source of the LMU’s power; the other is control over the market. Byé considers that cartelization is an attempt to coordinate the length of planning periods under the control of big (American) companies (ibidem, p. 167). The planning periods of LMUs may conflict with national governments. This will be reflected in the conflict between the LMU’s ‘‘balance of payments’’ (its exports, imports, profits and capital movements) versus the host countries’ balance of payments. For Byé, this conflict is not ameliorated by the development impact of LMUs on the host country. ‘‘Large international units do not really constitute ‘development poles’ in underdeveloped economies, but are merely very rich taxpayers’’ (ibidem, p. 174).
For Byé, international capital movements implied an over- lapping of ‘‘areas of private control’’ with ‘‘areas of public control’’ (ibidem, p. 174). He utilized the term ‘‘direct investment’’ when discussing U.S. Department of Commerce Statistics (ibidem, p. 175). ‘‘Direct investment is almost entirely financed out of the firm’s own profits and there are practically no transfers at all between one industry and another’’ (ibidem, p. 175). The intra-industry nature of FDI is forcefully noted: ‘‘There could be no other explanation for a situation in which capital returns are 17 per cent in the petroleum industry and 6 per cent in manufacturing industry’’ (ibidem, p. 175). The industrial organization explanation of FDI is latent in Byé’s 1958a paper. The world capital market clearly has strong, definite barriers to movement between industries. Byé also notes a two-way movement of capital within industries and the dualistic nature of development in poor countries caused by the enclaves of LMUs. LMUs are, however, a currency area phenomenon. ‘‘No LMU could cut itself loose from its currency area without modifying one of the fundamental data of its plans, namely its financing conditions’’ (Byé, 1958a, p. 177).
Byé’s final synthesis anticipates the later work of Hymer in suggesting an increasing concentration in the oil (or extractive) industries—‘‘If it is true that self-financing implies that only the most powerful firms can engage in international ventures; if these firms try to optimize their planning periods by maintaining high reserves/output rates; and if long plans can be profitable only in connection with a very large capital market and a very large consumption market—then the firms satisfying all these conditions must tend to acquire a growing part of world reserves’’ (ibidem, p. 177). Byé’s (1958) analysis focuses on (internal) finance and its relation to the time horizon of large firms as a key explanation for FDI, particularly in the extractive industries. Byé’s work places MNEs firmly within the industrial organization mode of analysis but also emphasizes currency area advantages. The solid differentiation between the LMU and its external markets (for finance, for resources) makes this rather curious role fit well within the Coasean internalization tradition. Its inferences for competition and more particularly for the restriction of competition anticipate Hymer’s emphasis on oligopoly and on the increasing power of autonomous MNEs.
Byé’s paper is not referred to in Hymer (1960) although Hymer later contributed a paper to a symposium organised by Byé, acknowledging the seminal significance of Byé (Byé 1958). Byé’s paper did not have a major impact on theorizing FDI and it became a neglected contribution, “largely because of its unorthodox approach” (Buckley, 2013, p. 72).
Section IV: Byé’s spatial and international economics and the European controversies
International economics was the field that Maurice Byé tirelessly explored after 1945 as soon as he became responsible for the textbook of the topic previously authored by or with Truchy (Byé Truchy, 1948). It is also in this field that he owed much to Perroux, while ”marking his originality. Space is a central point; as he put it in 1959: “The world does not represent a homogeneous space. Closer links are established between some regions of nations. These links are manifested, in static terms, by a particular intensity of internal commercial and financial exchanges, and in dynamic terms, by more intensive economic or growth impulses” (Byé, 1959, p.417). Already in 1950, he emphasized: “The importance of the notion of economic space and the absence of a spatial economy were highlighted by F. Perroux [1950]. [..] . On many other essential points, (macro-decision, dominant economy, notion of development) the present article owes much to the printed works, to the lecture notes kindly communicated by our excellent colleague and friend” (Byé 1950, p. 122). Similarly, Byé stressed the importance of the “growth pole, essential, in our opinion, to the understanding of growth and economic development, [..] analyzed on several occasions by François PERROUX” Byé, 1958, p. 197). But in the same place, Byé stressed his “fundamental divergences on the solutions advocated for the « small Europe” (ibidem).
The major divergence between Perroux and Byé can be found in their attitudes to European integration after WWII, which crystalized around the European Coal and Steel Community (ECSC), a European organization created after World War II to regulate the coal and steel industries. Following the Schuman Declaration of May 1950, the ECSC was formally established in 1951 by the Treaty of Paris, signed on 18 April 1951 by Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany. It was based on the principle of supranationalism and started a process of integration which ultimately led to the creation of the European Union, or in Robert Schumann’s words “a first step in the federation of Europe”[13].
It is not easy to disentangle the various arguments around European integration. In his 1950 paper Byé was one of the few economists to discuss the pros and cons of the tariff unions. He was well equipped to deal with these topics, not only because he specialized in international economics, but also because he had experienced the negotiations between France and Italy to create a tariff union between these two countries.[14] In his very complete analysis of customs unions, Byé was the first to note “the possibility of internal and external economies” (Balassa, p. 106). He was very cautious vis-à-vis the general institutional framework of the union but he imagined a case where these economies could be obtained via intra-industry trade without any assumptions about the mobility of factors. It is worthwhile noting that intra-industry trade, which differs from the orthodox models of international trade, was quite new in 1950. Byé imagined the following example:
This would be the case, for example, if French industry specialized in the manufacture of certain models of passenger cars and Italian industry in certain models of tractors, if some weaving was done in Italy and some in France…
External economies of this sort would have the same effect on prices, costs and tariffs as the internal economies previously reported. (Byé 1950, p.135).
Byé’s argument for the customs union did not rely only on the expected economic benefits. He insisted on the necessary convergence of the political union with the economic one as the part devoted to the States would be essential. Indeed, the customs union could be detrimental to some countries involved with the Union and/or to some regions of these countries, as inevitably “any modification of the economic space poses a problem of localization” (ibidem, p. 144). Therefore, any contractual union cannot work without targeting the making of a federal union. Consequently, he recommended “the stepping-up of state intervention” as noted by Balassa (p. 9). The conclusion reached by Byé 1950 runs as follows :
The realization of a union would seem to require effective and continuous intervention by the states, the coordination of these interventions internally if, and as long as, the union is purely contractual, the coordination of the plans of the union and of external plans if important external investments can be assured. (Byé 1950, p. )
Byé repeatedly developed his concerns with regional economies during the following years as it appears clearly in the ECS :
[Byé said] in October 1954 that the government’s new system of regional development aid needed to expand its initial focus on unemployment to include ‘the full measure of inequalities’—revenue, productivity, and consumption of things like cars, electricity and education—’a bit like…evaluations of underdeveloped countries. (Wendel, p. 300).
In 1958, he enlarged his reflections on development and integration as he noted that “to the scheme of a centrifugal distribution of capital the activity of some poles opposes the reality of a centripetal movement. A reality that is not only registered within nations; but also in the international economy”[15] (Byé 1958, p.197).
In order to cope with the fear that “the creation of a European Territory would not start a new process of economic concentration similar to that which built Paris opposite the French desert” (Byé, 1958, p. 196), he concluded that:
since no major investment in Europe today can be considered likely to be determined, directed and located by current market incentives alone, a policy [..] is necessary. But one characteristic, however, of this European spirit, is that it cannot consider as secondary the specific conditions of development of the integrated national economies. Europe must be made for its nations, not against them. It must therefore, whatever the doctrinal postulates, coordinate national investment policies, not destroy them or condemn them to failure (ibidem, p. 212).
The mobilization of spatial and international economics including Perroux’s concepts in favor of “little Europe” was at odds with Perroux’s own stance against the ideas developed in his 1954 L’Europe sans rivages (Europe unbound by seas). As Bartoli (1954) wrote, “The book was a shocker”. Indeed, Perroux gathered every possible argument to criticize the European integration that began with Francital and the Benelux, then the European Coal and Steel Community. Neither the pursued goals nor the feasibility of the project found favor in his eyes and he opposed up front this “little Europa”, which he considered as a rump state proposing a grandiose vision of a Europe unbound. For Perroux, the advocates of « little Europe » were « reactionary » and not « revolutionary ». They proclaimed the nation an outdated economic and social category, but they conceived Europe as another nation. They enclosed Europe in a closed space and did not see that Europe « is not so much a field as a seed that we must germinate, a task that we must accomplish together » (p.395). Against this “little Europe”, Perroux defended another vision of Europe, “this place of the world between all privileged, where have met for a fertile alliance and for too apparent deviations, the technique that enslaves the material world and the ideal of the open society” (p.389). It becomes itself « in the movement by which it imagines, discovers, invents, organizes the world; it is curiosity, desire, construction, radiation, or it is nothing » (p.386).
Actually, the opposition between Little Europe and Europe without shores was included in “the duality of criteria, as laid down in the Treaty of Rome. On the one hand, the European Union is geographically embedded, since it is on the continent of Europe. On the other hand, the criteria for membership – democracy and an economy able to be integrated – are universalistic and point beyond a limitation to contiguous territory. […] But what is the real ‘Europe without shores’ if not the whole planet?” (Pierre Hassner, 2000, p.45).
Half a century later, the debates on the purpose of the European Union are still vibrant and the EU remains fragile, but one has to admit that the proponents of European integration have proved more realistic and successful than Perroux and can boast a remarkable achievement, surpassing Perroux’ fears and criticisms.
Conclusion
The trajectory of Perroux and Byé did not fit perfectly with the definition of Catholic economic thought given by Almodovar and Texeira (2008). Their works did not belong to “the authorized documents by the church hierarchy” nor to the “documents produced by Catholics in an attempt to develop and apply the church’s social teaching”. Neither Perroux nor Byé aimed explicitly “to develop and apply the church’s social teaching” despite the fact that they were regular speakers at the Semaines sociales, which are defined as “a place for meeting, training and debate on Christian social thought”[16]. Nevertheless, they partook in the Catholic economic goal to find a third way between liberalism and socialism, the “twin evils” denounced by Pope Leo XIII. Leo XIII advocated associations of employers and workmen which would draw the two classes more closely together paved the way for various forms of corporatism. Perroux embraced the cause of corporatism and did his best to implement it in Vichy France while Byé, already in the thirties, expressed reservations vis à vis the corporatist proponents. After WWII, their positions were more in line: Perroux’s commitment to corporatism became more discreet and he took part in CES and advocated a role for experts in the determination of plans not very different from Byé’s economic magistrature. Similarly, both became increasingly interested in economic development issues following the evolution of the Catholic church under the impulse of Dominican Father Louis-Joseph Lebret, whose model of “integral development” would eventually find expression in Paul VI’s encyclical Populorum Progressio published on March 26, 1967 (Sarah Shortall, 2021, p. 165).
In the end, the great divergence between the two authors lay in their appreciation of European integration. In the case against the Little Europe stated by Perroux in L’Europe sans rivages, many parts of the arguments seemed aimed at Byé despite Perroux’s repeated protests of friendship. Two decades after the Treaty of Rome, Perroux concluded his re-reading of his book with the reassertion of the utopian character of Europe « the ideal that constitutes it, that gives it its being, the rational activity in the service of the militant universal, is not localized as a material treasure » (Perroux [1979] p. 821). This stance is far away from Byé’s many efforts in favor of European integration, for which he mobilized the tools provided by the welfare economics. Byé’s contributions to economic analysis therefore deserve more attention than merely including him within the Perroux school.
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[1]https://www.vatican.va/content/leo-xiii/fr/encyclicals/documents/hf_l-xiii_enc_15051891_rerum-novarum.html. « Corporatism is a body of normative economics promoted by the Roman Catholic Church from the late 19th century through the mid-20th century as a Third Way, in overt opposition to Protestant liberalism and atheist socialism” (Morck -Yeung, 2010, p.4).
[2]https://www.vatican.va/content/pius-xi/en/encyclicals/documents/hf_p-xi_enc_19310515_quadragesimo-anno.pdf
[3]Byé (1928) includes references to Pigou’s Industrial fluctuations (1927) or ‘Laws of increasing and decreasing costs (Economic Journal), 1927, besides the various editions of The economics of welfare, and to Sraffa’s papers “Relazioni fra costo e quantita prodotta”, Annali di Economia, 1925-6 and “Laws of returns under competitive conditions”, Economic Journal, 1926.
[4]Among the authors, one finds a paper on direct taxes written by Byé’s father-in-law who was a honorary inspector of direct taxes.
[5]The non-conformists of the 1930s were groups and individuals during the inter-war period in France who were seeking new solutions to face the political, economic and social crisis. The name was coined in 1969 by the historian Jean-Louis Loubet del Bayle to describe a movement which attempted to find a « third (communitarian) alternative » between socialism and capitalism (Loubet del Bayle, p. ).
[6]The SSF were launched in 1904 by Marius Gonin, a social Christian activist from Lyons. The SSF are placed under the under the auspices of the local bishop and opened by a Papal message. They are conceived as a travelling university where, each year, in a different city, lectures and debates would be held on issues that questioned Christian social thought. Byé was a regular speaker at most of the SSF from 1936 onwards.
[7]Chappel stresses the evolution of the Catholic economic and political thought after WWII from “the liberation of the human person” to a “developmentalist framework” and illustrates this evolution by a lecture given by Byé to a MRP congress in 1954 (Chappel, p. 220-1).
[8]Byé refers explicitly to Keynes’ criticisms of “Those who see no difficulty in this-like those who saw no difficulty in Great Britain’s return to the gold standard-are applying the theory of liquids to what is, if not a solid, at least a sticky mass with strong internal resistances” page 6, Keynes, 1929. Byé had presented a lecture to the Semaines sociales de Rouen in July 1938 on the topic : “Economic Freedom applied to changes: the three regimes”, https://gallica.bnf.fr/ark:/12148/bpt6k4433766/texteBrut
[9]A Portuguese economist who served as prime minister of Portugal from 1932 to 1968.
[10]Maurice Byé, Revue d’économie politique, Vol. 52, No. 2 (1938), pp. 468-470.
[11]From September 1944 to September 1948, there were seven heads of government, not to mention the change of coalitions.
[12]We follow Buckley 2011.
[13]https://european-union.europa.eu/principles-countries-history/history-eu/1945-59/schuman-declaration-may-1950_en
[14]This projected union called Francital was supported by the two predominantly Christian democrat governments . The aim was to create ”a unified market of 95 million consumers” (cf. Bertrand & alii, 2019). Byé mentioned that he had been the representative of the Conseil économique in the negotiations and had written a report on this topic for the Conseil on 24-25 May 1949 (Byé 1950,p. 121)
[15]Byé used rarely the word “third world”, initially coined by Alfred Sauvy in 1952, but he set out many examples suggesting that the underdeveloped countries suffered from a deterioration of the terms of trade (see Byé 1965) and that they were actually plundered by the developed countries, well in line with the ideas developed by Dominican Father Louis-Joseph Lebret, founder with Perroux of Economie & Humanisme (cf. Giuliana Chamedes,2015).
[16]https://eglise.catholique.fr/approfondir-sa-foi/vivre-sa-foi-a-tous-les-ages/vivre-en-chretien/521015-les-semaines-sociales-de-france/
