Socialists hope economic gains will pay dividends at the polls

When Jacques Dubost starts his car in the morning these days, he smiles. Last year it cost him 75 francs ($11) to drive the 93 miles from his home here to his office in the Bresse. Today, thanks to falling gas prices, it costs him 60 francs ($9). ``The economy is getting better,'' Mr. Dubost says. ``I'll be able to go skiing a lot more.''

France's ruling Socialists are fighting an uphill battle in the campaign for Sunday's legislative elections. They're expected to lose their parliamentary majority to a coalition of conservative parties.

Still, the Socialists are actively campaigning, largely on the strength of the economic improvements. Lower oil prices and the decline of the American dollar are promoting faster economic growth, holding down inflation, and helping balance the country's foreign trade.

The Socialists' success also signals a change in the electoral debate over the economy. Almost everyone now agrees that neither anticapitalism nor state controls, but free enterprise is the best system. The argument centers on what degree of free enterprise is best.

``The Socialists have legitimized business,'' says Jean Chemin, Director of the Lyon Chamber of Commerce. ``They have made profit, private savings, and work flexibility respectable.''

What a change. When Socialist President Fran,cois Mitterrand came to power in 1981, he tried to reflate the economy and implemented a wave of controversial reforms, including the nationalization of banks and industrial enterprises.

The rush for economic growth soon crashed. President Mitterrand clamped on austerity measures. These included increasing taxes and cutting state expenditures, and closing down ailing industries and laying off workers. Proposed pro-labor reforms were quietly shelved in favor of incentives for business. The link between pay increases and inflation was cut and most controls on prices were dropped.

As the economic outlook for many industrial countries has brightened, France's austerity measures have begun to pay off. Inflation has fallen from 13.5 percent in 1981 to 4.5 percent today. Economic growth is expected to rise this year by between 2.5 percent and 3 percent. And thanks to a falling oil bill the trade surplus could hit $7 billion. The only blot on the record is a high unemployment rate, which hovers at around 10 percent.

The allied opposition isn't satisfied with the Socialists' initiatives, however, and wants to lift more government controls from the economy. Among its proposals:

Denationalizing banks, insurance companies, and the five big industrial groups taken over by the Socialists, including steel, aluminium, and chemical production, and telecommunications.

Ending all price and foreign-exchange controls.

Cutting government spending by $10 billion, while at the same time increasing defense spending.

Cutting taxes and eliminating the Socialist ``wealth tax.''

Giving businesses more freedom to fire workers.

The opposition remains careful, however, not to touch some key social benefits introduced by the Socialists, such as: a reduced workweek, the right to retire at age 60, and five weeks paid vacation.

Straightforward political reasoning lies behind this caution. Opinion polls support assertion of the president of Grenoble's Chamber of Commerce, R'en'e Michal, that the French prefer a diminished state role in the economy, but are in no mood to let the marketplace rule their lives.

In campaigning, the Socialists have been playing to this desire for government protection. They have been warning workers that the conservatives will take away their hard-won labor benefits. To the middle class, they have added that the opposition's planned tax cuts and deregulation measures will drive up unemployment and threaten their jobs.

Jacques Dubost hears the message -- but he remains uncertain whether to believe it. While he likes the lower gas prices which make it possible for him to afford an extra week's ski vacation, he doesn't know whether to give most of the credit to Arab oil producers or to the Socialists for relaxing price controls on gasoline.

He does know that jobs are scarce. His own year-long search for a new job ended in failure. In the end, that failure may lead him to vote for the opposition.

``Should I really thank the Socialists?'' he asks. ``The economy may be in better shape, but it's not in that much better shape.'' Next: The immigrants