We commit a political fault when we tie, even secondarily, the growth and competitiveness116 of a country's economy to job insecurity or to lowering the cost of labor. There are three reasons for this, all decisive:
1) Job insecurity worsens and recedes according to the evolution of the general state of the national economy. Now, to make this evolution favorable, there is a firstly and a secondly.
The firstly is an increase in the stock of capital117 sometimes markedly stronger than that of the stock of enterprises' debts, sometimes at least equal. Just as necessary, the secondly is the long-run application, by common agreement, of two rules for the general management of the public levy.
A poet warned: “Art is long and Time is short.”118. We will sharpen our economic strategy by concentrating on this “firstly” and this “secondly.” On the scale of the long term, many undertakings will surely appear as bouts of ideological fever that do not remedy their causes. In recent decades, the course set on maximizing shareholder value and on incessant public borrowing to make ends meet (which is typical of over-indebtedness) have been, among other things, the effects of such bouts.
All paid jobs are market exchanges, though they are never limited to being only that. Since time immemorial, it has seemed merely shrewd always to buy as cheaply as possible and to sell as dearly as possible. If this tropism, disastrous for the environment and harmful to the quality of social life, still justifies the positions taken by the most influential employers' unions and groups of economists, it is high time they stopped passing off as sound modernity the drifts that came back in force from the 1980s and provoked a severe replica of the great depression of the 1930s, barely more than three quarters of a century later.
The illusion of competitiveness regained through lowering the cost of labor, as through monetary depreciation, masks the fact that leads to sustaining it. A precept of commercial wisdom prescribes: “Sell products that will not come back, to customers who will.” The fact, still masked to this day, is the under-capitalized application of this precept. This shortfall, through the working-capital tightness it produces, makes deadlines so often stressful that lowering the cost of labor becomes a soothing obsession. It is not, then, more credit — especially short-term credit — that durably loosens the grip. It requires the systemic therapy of the “firstly” and the “secondly.”
2) The true economic laws of employment and of its prices remain excluded from the most authoritative doctrines, in our country as elsewhere in the world. Our reluctance to concentrate our efforts on the therapy of the “firstly” and the “secondly” comes largely from that.
The main relationship between the current and future state of employment runs through the earnings distributed in exchange for capital contributions for the permanent financing of enterprises. But the conditions for the full operation of this relationship run counter to the atavisms that seal our prejudices. Yet it is when they are fully satisfied that the increase in the national stock of capital brings about the necessary increase in the stock of lasting jobs.
As for the prices of employment — that is, wages, in every kind of remuneration of labor — they continue to be the object of two mystifications. Their inequalities are said to come from determinants that would govern the formation of all prices. In reality, these inequalities have the specific feature of being keys for distributing total labor income. Through these keys, the social body is able to take part in setting the parameters of the economy. The most just way of collectively managing the remuneration of labor, nation by nation, rests on this recognition. Ever more redistribution through public finances absolves responsibilities, over-bureaucratizes, and does not eliminate the inequalities that destroy social cohesion. Assuming the distribution of total labor income through the equalities and inequalities of wages makes renouncing this “ever more” acceptable.
Wages, officially termed gross — from which the net are derived after subtracting the contributions officially deemed employee contributions — would be the prices of labor. Adding to these gross amounts the contributions officially deemed employer contributions would determine the costs of labor. These costs would be compressed at the base of the pyramid of staff expenses in order to improve competitiveness. In truth, the official designations just mentioned are mendacious language games. The price and the cost of labor are obviously one and the same: the whole wage, in other words the complete wage, the one that, once the transfer of employer contributions into employee contributions takes effect, will become the gross. For in fact, employer contributions are wage-based, entirely wage-based… just as the complete wage is also entirely employer-borne!
Yes, let us reform the labor market — but first by abolishing the fiction of employer contributions. Then this market will at last be regulated by its true prices, which will have become more easily and exactly comparable. In the same move — the one goes with the other — let us reorganize the financing and management of the so-called social economic protections, where employers, as such, usurp the patronage they have carved out for themselves and where colossal sums of money are handled, while also providing a great many direct and indirect jobs. Once the fiction of employer contributions is officially abolished, the demand to lower the cost of labor will appear in broad daylight for what it is: the offloading onto public expenses of part of the price of labor, in disregard of what indispensable mutualist self-regulations lose thereby. In disregard too, just as perniciously, of the increased difficulty of establishing the most important, chronically surplus budgetary result — the one whose “secondly” explains what it is and why this surplus, more often than a deficit, can and must go hand in hand with a high level of public investment — explanations that are so many elements of civic instruction meant to better inform voters on what they have to judge.
3) Tying growth and competitiveness to job insecurity and to lowering the cost of labor runs counter to the emergence of a collective will. Whatever the detractors of every form of market economy may say, the market economy is the most appropriate to maximizing total labor income under the constraint of the sufficiency — with regard to the state of employment in particular — of the average yield of placement in capital119.
On the crucial point of the general distribution of incomes, all that remained, in sum, for economic theory was to explain properly the maximization whose coming into force became manifest, in retrospect, from the first industrial revolution onward. This is now done, thanks to the most universal rule of three that governs market exchanges. It is in the nature of total placement income to be able to be sufficient, and in that of total labor income never to be. In a certain way, the maximization of total labor income can and must be.
It is, however, only under a whole series of conditions that the will to this maximization is most effective. Investments are foremost among these conditions. They multiply economic activity all the more as they are financed in the best way. The best financing of public investment is through the duly remunerated accounts of the public treasury, held by a great many individuals and by non-commercial associations, serving only exceptionally to supplement taxes in paying the expenses of the current budgetary year. The best financing of enterprise investment is through issues of shares of capital, which is attractive and equitable only if these shares pay dividends when there are earnings.
Deploying these forms of financing is no sinecure. Flexibilizing the labor market, raised to the rank of a panacea, reduces the effectiveness of introducing the maximization of total labor income into the common good. The same goes for offloading onto public expenses a part of the complete wages of the private sector. Another swelling works in the same direction, with the falls it causes or aggravates: that of the banking industry, fed by enterprises in every sector that are insufficiently capitalized, by massive public over-indebtedness, and by even more massive monetary doping aimed at avoiding deflation — but at the cost of a pocketed inflation that swells speculative bubbles, one of whose most damaging effects is the rise in real-estate prices, rents included, faster than that of total labor income.
The strategy of the firstly and the secondly carries more benefits than appear on first examination. Apparatuses and corporations will nonetheless see in it, quickly and rightly, threats to their powers, to the point of spending much effort so that it is never applied — or even academically studied. 4) By better harnessing our economic ideas to our civic aspirations, and conversely, we work obstinately. “To lift so heavy a weight, Sisyphus, your courage would be needed! Though one's heart is in the work, Art is long and Time is short120.” By better harnessing our ideas, we work both for the rise of our prosperity and for the pacification of the world through the victory of the coalition of democratic nations. For this Herculean accomplishment, this coalition will have to, through hard struggle both within itself and with its adversaries, satisfy the aspirations of the peoples that make it up, so as finally to extract currencies from the arsenals of offensive and defensive weapons — which they have been since Croesus at least.
Every mind sees the necessity of this conquest, after having reflected deeply and independently enough on the lasting conditions of fair international trade, of the environmental cleanup prescribed by ecologists and increasingly necessary, and of peace between nations and within each one. Si vis pacem, para bellum, “ if you want peace, prepare for war.” Let us prepare and wage war on all the fronts where we must fight coherently to avoid Pyrrhic victories, such as those of a finance based on securitizations, derivatives, continuous quotation, public over-indebtedness, and monetary doping. Let us make wealth less arrogant and poverty less frustrating. Let us lift one another toward approval of the economic and geopolitical strategy of the “firstly” and the “secondly,” so that governments that continually implement it become less improbable.