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This paper analyzes changes in French economic policy over the past twenty years. It describes the movement from the dirigiste state, which sought to steer the economy, to what I call the "social anesthesia state." The social anesthesia state seeks to permit the French economy to reorganize on a more market-rational basis by pacifying and demobilizing the potential victims and opponents of economic liberalization. After describing this shift in French policy, the achievements and limitations of the social anesthesia state, I turn to recent developments. I focus on the strategies of the second Chirac administration, which has been in power since 2002. The Chirac administration has pursued a strategy of limited liberalism that appears to have introduced just enough change to anger the voters, but not enough to resolve France's economic problems. As a result, a debate has opened within the French right between proponents of a "social turn," led by President Chirac, and those favoring a sharper neo-liberal course of action, notably Chirac's main rival, Nicolas Sarkozy ..PAT.-Conference Proceeding [ABSTRACT FROM AUTHOR]