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Maurice Lévy, chief executive of Paris-based advertising giant Publicis, played quite the provocateur in 2006. With the $1.3 billion acquisition of American online ad company Digitas, he is leading his company into the increasingly important Internet market. And he co-authored a controversial report sharply critical of many of postindustrial France's economic policies. He recently talked policy and politics with Time's Peter Gumbel.

You've just come out with a report on France ... France is good at generating three things: unemployment, social security costs and official reports.

You are highly critical of France. Are things really that bad? There's a corporate France that's doing very well. There's a labor France that's not doing well, and there's a political France that is on another planet. We have a Communist Party that continues to create problems, even if it isn't very representative. We have a Socialist Party that still dreams of a socialist economy. We have unions that represent just 8% of the workers but who who scare all governments. And we have a right that doesn't dare assume its role. It's surreal.

Could this change as a new generation of politicians comes to the fore? Both main presidential candidates — Ségolène Royal and Nicolas Sarkozy — are just 50, but have been in politics for 30 years. Their problem will be to prevent their parties, which are still partly living in the past, from laying down the law.

Is either candidate able to break the mold? I have some fears. Every time Royal speaks, someone behind her "corrects" what she means. Every time Sarkozy speaks, there are voices that say: "Yes, but you need to be careful." We are in a situation where the moment of revolution, if it exists, only exists in their heads.

You recommend making better use of France's intangible assets, such as its patents and brands. Isn't that a bit hard to explain? Yes, especially in a country like France where the wealth has traditionally come from the land. Anything that touches on services, money or trade is suspect. But matters are starting to evolve. People know there is a difference between a fake [Louis] Vuitton and a real one. And politicians can see that the immaterial world can have very positive effects on jobs and wealth.

What should be the priorities? We should stop thinking French and think European. We're living in a vast and highly competitive world, and France is not big enough to compete. But we also need to change the model. Take our education system. It doesn't work. Let's change it. The same is true of our legislative and social systems.

What is the role of the state in all this? The problem in France is that once you make an error it becomes a taboo. The wealth tax was a mistake, but you can't touch it in case it provokes negative reactions. The 35-hour workweek was also an error, but don't touch it. The right doesn't dare go back on decisions taken by the left.

So the left has an easier time at introducing reforms? It has always been easier for the left to reform, but that's because the right has never taken its ideas to their conclusion. The best example was in 1995 [when the government abandoned reforms after weeks of transport strikes]. Once you give a sign like that, you tell the French clearly: If I do a reform that you don't like, you go into the street, I promise I'll withdraw it.

Why did Publicis buy Digitas? There is a massive shift taking place from traditional media to online media. We predict that the interactive world will account for 10% of worldwide ad spending in 2010. Combining with Digitas will make us the top buyer on Google, Yahoo and MSN.

Wasn't it expensive? Yes, but we paid at the bottom of the range for these assets. Within four to five years about 25% of our sales will be from digital media, and this operation will seem very cheap.

• Peter Gumbel
• The boss of Paris-based ad giant Publicis, on France's old politics and marketing's new media