Éric Lombard, France’s Minister of Economy and Finance, makes a negative impression almost every day with his statements on the economy and the role of the state in society. These positions are a perfect reflection of the gulf between the French political class, defenders of socialist statism, and a world that is following a completely opposite path: one of freedom, economic liberalization, eager to reduce the weight of the state in the life of individuals... In short, we are witnessing a revival of liberal ideas in the West while countries like France plunge ever deeper into statism. This theological dogmatism in socialism and statism may prove unwise in a world where political leaders like Milei, Meloni and Trump tend to agree that the excessive presence of the state is precisely the danger.
Statism against Economic Common Sense
In an interview on BFMTV television channel on January 17, 2025, the French Minister of Economy Éric Lombard discussed the government’s economic strategy for 2025. During this interview, he states that:
Climate investments will require a lot of investments that aren’t always profitable, and this will probably lead to a decline in the profitability of companies and they will have to accept it.... These investments are necessary because otherwise global warming will kill the economy.
This short passage perfectly illustrates the extent to which the Minister for Economy knows nothing about economics. These “unprofitable investments” are economic aberrations that should not exist under normal circumstances. In fact, they will mobilize resources, capital, labor, and time in projects that entrepreneurs in a free market would never undertake.
In a free market, entrepreneurial action is always driven by the quest for profit. Is this the wrong way to proceed? Of course not. This pursuit of profit enables the best possible allocation of scarce resources in the productive system. The entrepreneur will have every interest in using limited resources (land, labor, capital, time) efficiently to achieve his goal, which is to satisfy consumers—and thus all of us. Economic calculation and price signals guide the entrepreneur in this quest for profitability. If resources are used efficiently and consumers are satisfied, the entrepreneur is rewarded with profits. Conversely, if he fails to satisfy consumers, he is punished with losses. Mises wrote,
Economic progress…is the work of the savers, who accumulate capital, and of the entrepreneurs, who turn capital to new uses. The other members of society, of course, enjoy the advantages of progress, but they not only do not contribute anything to it; they even place obstacles in its way.
In the case of the unprofitable investments assumed by Éric Lombard, we understand that the state does not intend to conform to the imperatives of reality. It takes the monopoly of the state over money, spending, and investment to successfully justify such projects that go against all economic common sense. For example, the impossibility of postponing the use of the energy produced over time without adequate storage capacity, prohibitive maintenance costs, intermittency and uncertainty of production, etc. In the end, reality will always catch up with these ideological projects, which can only lead to irretrievable wastes of resources and time.
In order to best adapt to the ecological transition and the urgency it may represent, there is only one solution: let the free market respond to these challenges on its own, without any well-meaning “help” from the state. Sound and free economic calculation will promote the optimal allocation of scarce resources. This is also the case for human time, which is the ultimate and scarcest resource in the economy. Only the free market is able to maximize its use to deal in the best manner possible to this “climate emergency.”
“We are a country of the State”
A few days later, the French Minister of Economy reiterated on the LCI TV channel that “France is not a liberal country, we are a country of the state, of protection,” that we should “be wary of people who are reluctant to pay taxes,” and that we are “endangering the future of our children because of our carbon emissions.” “Trump”—by withdrawing from the Paris Agreement—“is putting us all at risk.” Once again, the statement is quite clear: the French Minister of the Economy knows nothing about economics. In fact, liberalism is not synonymous with insecurity, any more than “state protection” is synonymous with security. In fact, it is quite the opposite.
First, by manipulating prices and constantly intervening in the economic process, the state only weakens and destabilizes the free market. Resources are misallocated, price signals are distorted, individuals no longer find their true place in the economy, and crises are inevitable. For example, a society that allows its central bank to manipulate the intertemporal price of capital in a completely discretionary manner will constantly send the wrong signals to entrepreneurs about the real availability of capital and the willingness of consumers to spend their income today or tomorrow.
Although their effects are not immediately noticeable, they are nevertheless disastrous in the long run, since they lead to the inevitable boom-bust cycles. These cycles of economic crisis are characterized by false economic booms that inevitably lead to recession, which are nothing more than a severe and necessary readjustment of the market to the reality of the economy and the real availability of scarce factors of production. In the end, interventionism is always a source of uncertainty and instability even though French bureaucrats are firm believers that it is not the case.
On the contrary, liberalism makes individuals more secure and resilient. The free market allows each individual to pursue his or her own ambitions by integrating a complex system of cooperation based on the division of labor and specialization of skills. A society in which everyone finds their place to best serve others is a prosperous and, therefore, safer society. It is obvious to anyone interested in the studies of human action and economics that progress cannot be planned. It is a spontaneous process, the result of the subjective actions of all individuals in the market, each driven by his own self-interest.
Countless Obstacles to Progress
Progress cannot be organized…. Society can do nothing to aid progress. If it does not load the individual with quite unbreakable chains, if it does not surround the prison in which it encloses him with quite unsurmountable [sic] walls, it has done all that can be expected of it. Genius will soon find a way to win its own freedom.
What Éric Lombard shows with his recent statements is his misunderstanding of the failure of interventionist policies in the economic process that can only always produce mediocre results because it doesn’t follow basic market realities. The results will always be mediocre, because the imperative of real results—profits resulting from consumer satisfaction—is absent. As a result, it doesn’t make sense for the state to invest in a sector in which the private sector is already heavily involved. A sector in which the private sector will always be faster and more efficient, as competition dictates.
The tragedy of such pointless adventures lies above all in the definitive loss of resources and time for the French economy. The tragedy is that the alternative—truly productive uses of capital—will never see the light of day, all because of interventionism. Interventionism is nothing more than a permanent sabotage of true progress, which can only come from the free market. Sadly, with such a Minister of Economy, France’s future doesn’t look too bright. This is a shame for the birthplace of such renowned liberal thinkers such as Turgot, Say, and Bastiat.