Public spending and austerity: The two faces of the French Investor State

This article delves into the paradoxical nature of post-2008 fiscal policies, where there is a simultaneous emphasis on valuing public investment on the one hand, and maintaining austerity on the other. It sheds light on this paradox through the concept of "Investor State," which refers to contemporary states' ambition to redefine their role in the economy by no longer limiting themselves to a regulatory role but rather seeking an active role as "investor." We argue that this redefinition of the state's role is of piece with the elevation of investment as a new standard for legitimizing state actions. On the flipside, by making investment the main criteria of public policy legitimacy, it simultaneously delegitimizes spending that is not deemed an investment. Because the adopted economic definition of investment is limited to traditional "productive investment" related to industrial policy, other policy sectors-that is the majority of state intervention-are subject to spending cuts. Thus the Investor State suggests an evolution of the fiscal order that Streeck described as the "consolidation state": the primary goal is no longer to reduce public debt and deficits. But the neoliberal objective to reduce the "size" of the public sector in the economy absolutely remains. Drawing on the case of France, the article shows how the right-wing government started placing investment at the core of its fiscal policy after 2008. The article then highlights the continuation of this dual fiscal policy discourse to date despite changes in government leadership and the pandemic crisis.