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The Neoliberal Republic

Neoliberalism, Corporate law, and the Reconstruction of the French State


Dean of International Studies and Voss-Bascom Professor of Law Emeritus, University of Wisconsin-Madison; Senior Research Fellow, Harvard Law School Program on the Legal Profession.

This post is part of our symposium on The Neoliberal Republic by Antoine Vauchez and Pierre France. Read all posts here.

Here is a simple story. France, whose economy was largely in state hands, decides to privatize many state-owned enterprises. This move is inspired both by neoliberal theories promoting the superior economic benefits of markets and by pressures from the EU, itself influenced by neoliberalism.

To ensure that the public interest is protected, the new private corporations are subject to a number of laws and regulations administered by a variety of agencies—what we in the U.S. would call “independent regulatory agencies.” As a result, administration of business takes on a partially legalistic dimension and law firms participate in arenas that shape policy.

This opens up a whole new area of legal practice, creating demands for lawyers who can deal with the complexities of economic regulation. This practice area turns out to be quite lucrative: law firms rush to fill this space and a new specialty called droit public des affaires (public law of business) emerges.

To be effective and competitive, the law firms recruit civil servants with experience in the newly privatized industries. They thus acquire both prestige and expertise that helps them compete for this new business. Naturally, the firms pay special attention to recruiting senior civil servants and politicians, including senior political figures and énarques, graduates of the super elite École Nationale d’Administration (ENA), a school whose very elitism has come under attack in the era of the Yellow Vest protests—and which is about to be closed as a result.

This cross-over process, called pantouflage in French slang, changes the makeup of the firms practicing droit public des affaires. In a detailed study of a sample of 217 civil servants who made the switch from public service to elite law firms, Vauchez and France document this pantouflage. The crossovers come from senior legal posts (32%); important government economic entities (24%); politics (14%); central state ministries of defense, foreign affairs, and the interior (12%); and a handful of other entities. The great majority moved to big law firms, but some work in niche firms, and a few act as solo practitioners. They specialize in regulatory procedure, lending their insider knowledge to the law firms and, in the process, helping to redefine the idea of the “public interest.”

An American reader, familiar with regulated industry practice in DC and elsewhere, might say—so what? Sounds like everyday life in the American legal profession and the famous administrative agency “revolving door,” although rules making it possible for some non-lawyers to make the move into law firms gives the phenomenon a bit of a Gallic twist.

But Vauchez and France think pantouflage poses a threat to French democracy. So it turns out not to be such a simple story after all. Through a rich, multi-dimensional analysis, Vauchez and France chart the development of this new branch of legal practice and its influence on lawmaking and regulation in France. They show how the new law firms, and especially the cross-overs, have helped create what the authors call a “new policy common sense” in which it is taken for granted that private action can serve public purposes and which has contributed to the neoliberal remodeling of the French state.

In this common sense, the market is predominant and legal discourse is enlisted to limit the scope of state action and broaden the role of markets. The cross-overs in the elite law firms play a central role in shaping this discourse because of their prestige and knowledge. Through a series of actions both in the regulatory process and outside of it, the law firms have redefined the discourse of economic law so that the private interest of regulated companies is equated with the “public interest.” Having created this neoliberal discourse of regulatory law, the firms use it to further their client’s interests.

The authors think this leads to a “black hole in democracy” because there is a “[b]lind spot of public oversight, be it political or administrative, and of professional regulations.” The new corporate lawyers, including the highly influential crossovers, are able to pursue the interests of their business clients free from interference by the bar, the agencies, or the central government.

So what is to be done? Here the authors are far less clear. They believe that the public interest cannot be left in the hands of the corporate bar. But they are not suggesting renationalization or calling for renewed reliance on the elite corps of civil servants to discern the public interest. Nor are they proposing a radical reorganization of the system of regulation.

The movement in the United States argued that the “public interest” is not an intellectual concept to be interpreted by mandarins but rather the result of a process in which all affected interests should have a voice.

Would countervailing institutions like public interest law firms be a possible solution? The situation described in the book seems vaguely familiar. Decades ago, people in the United States drew attention to how business and other organized interests had much more clout in regulatory proceedings than other, more diffuse interests. This led to calls to “balance the scales of justice,” the creation of a field of public interest law, and the establishment of public interest law firms.

Behind this development was a particular idea about what constitutes the public interest and how to protect it. The movement in the United States argued that the “public interest” is not an intellectual concept to be interpreted by mandarins but rather the result of a process in which all affected interests should have a voice. Industry and other organized interests are well represented in regulatory processes, but other interests are not. For example, while we all have an interest in avoiding environmental degradation, there may be no one to speak for this interest in regulatory hearings. The solution was the creation of public interest law firms, public advocates, law school clinics, and other countervailing institutions that could represent otherwise unrepresented interests.

In the United States, these mechanisms have made some difference. They are far from perfect, and the whole concept is ripe for a reevaluation in light of new ideas and approaches, including those promoted by the LPE Project. Nonetheless, there are hundreds of examples of U.S. public interest law entities in action and an extensive literature on this approach: one might have thought Vauchez and France would have looked at the US experience, if only to reject it. But there is no mention of this history in the book. Nor is there any discussion at all of countervailing mechanisms like public interest law firms that might offset the influence of the corporate bar in France.

What do the authors propose? While the book does a superb job explaining the problem and how it came about, it has little to say about a solution. The authors call for an inventory of situations where the public interest has been redefined: this, they suggest, will allow appropriate measures to be developed. But they provide little guidance on who might take action to correct the distortions they worry about—or what form such action might take. And they add a depressing note, warning that “[a]ll the institutional apparatus of modern democracy (transparency, access to data, participatory mechanisms, etc.) will not suffice to change matters.” This leaves the reader to wonder—what will?