The rate of return of a legal-entity enterprise is at its sufficient level when its height is the one required, today, in the country in question, for the restoration or maintenance of full employment through EPCE feedback.
For a monopoly established by the legislator to sell its supplies as close as possible to their sufficient prices, its supervisory authority must not only require it to generate a sufficient rate of return. It must also ensure that, within this enterprise, the equalization of the direct rates of return of the same systemic level is pursued continuously.
A further condition is that employment in such a monopoly be on the same terms as those in force with most other employers, through employment contracts that carry the same reciprocal commitments, notably as regards whole wages.
Suppose that activities A and B are carried out, for the first time, by a single enterprise E, legally constituted. The rate of return of E remains comparable to that of any other legal-entity enterprise, including for monopolies established by the legislator.
But the new activity A, though markedly less profitable than the new activity B, proves to have the higher rate of return of the two. By altering its selling-price schedules and through other measures, enterprise E opens up the possibility of reducing the rate of return of activity A and raising that of B. In doing so, E will become more competitive in A while reducing and then eliminating the subsidization of B by A.
Among the practices that constitute dumping are those that consist in selling well below or well above the full cost prices (profit margin included) that equalize the direct rates of return of the same systemic level. As soon as the combination of activities or outlets enables an enterprise to sustain, over the long term, dispersions of direct rates of return of the same systemic level, authorizing such a combination contravenes the regulation of prices by competition.
Agreements whose object (or means) is the offsetting of rates of return of the same systemic level reduce competition. The market authorities and legislative bodies that make the equalization of rates of return of the same systemic level a norm of the full-exchange economy acknowledge this.
Foremost among the most harmful concentrations is the so-called model of the concentrations_banque_universelle">universal bank. Aggregating “investment banking” onto “retail banking” makes sense only where it yields, from the whole, a contribution to the general interest greater than the one that prohibiting the combination of these two activities provides.
The same holds for aggregating onto “retail banking” another business line such as that of insurer or, conversely, for aggregating a bank or a credit institution onto an insurance company or a chain of stores:
If the aim is to have the whole yield a rate of return higher than the average rate of return these activities would have when the legislator makes them non-combinable, this can be achieved only through institutionalized dumping that obstructs the market law of the tendency to equalize the direct rates of return of the same systemic level.
With the pursuit of very high profits through the combining of business lines characteristic of the universal bank, there inevitably come the blurring of risks and the organizational opacity that result from calamitous governance138.
It is particularly inconsistent to let a network of cooperative banks be topped by a stock-exchange-listed holding company, so as to turn this network (its own holding company included) into a universal bank.
Entrepreneurial deconcentration contributes to the deconcentration of the ownership of enterprises, and in so doing to a less unequal distribution of wealth. For the same reasons, the same holds for the blocking of entrepreneurial concentrations on grounds of obstruction of the equalization of rates of return of the same systemic level.
Taxation is not the most appropriate means of deconcentrating the holding of shares of capital. And this seems to hold particularly for progressive taxation and the wealth tax.
In any event, the best studies of this economic-policy problem are necessarily those that set at least one scenario for reducing wealth concentration through fiscal measures against a scenario seeking the same result through organic measures that establish full exchange on the primary markets — shareholding, see above; wage-earning, next chapter — and on the markets where enterprises sell to their customers. But this comparison is all the harder to conduct well when the fiscal scenarios are framed in the light of one political economy and the full-exchange scenario in the light of another.