1. The business profit considered here is the one that can be fully divided into a maximum of four parts.
A maximum of one of the four parts is an allocation to the self-financing of the enterprise, including a contribution to the compulsory reserves — a portion hereinafter noted as A. A second part is a wage supplement for profit-sharing for the benefit of the enterprise of some or all of the staff — part hereinafter noted as I. A third part is a profit for the effective remuneration of the savings in capital — part hereinafter marked P. A fourth part is an overpayment returned to customers in proportion to their recorded purchases — a share hereafter denoted T.
2. The distribution doctrine that prevails today is that of the three parts.
One of the three parts is for the enterprise: self-financing A. Another is for some or all employees Salarie : profit-sharing I. The third part is for the remuneration of the savings in capital: the profit P.
3. The predetermination of the proportions of the shares is often taken for granted.
To consider that the most consistent with distributive justice76 is that these three parts are equal is to prescribe such a predetermination. Another way of predetermining the distribution of net profits is to set quotas, at least one of which is different from the others, for example 40% for share A, 30% for share C, 30% for share P.
4. Which justice or justness is more appropriate in this matter?
Market exchanges are commutations of transferable properties. This is why commutative justice77 is intended to govern these exchanges, if not in full, at least in large part. Based on this observation, the distribution of enterprises' profits raises fundamental questions. What in this distribution is the least arbitrary? Is it to hinder as little as possible the stimulating and regulating functions of profit? Is the importance of these functions, for the economy in general and for the salaried workforce in particular, of primary importance over the long term?
5. Discrepancies give us pause.
In the case of a division into three equal parts, one of which is the Ps (the other two being A and I according to the prevailing doctrine), the rate of profit on capital is three times smaller than the rate of profit on the same basis. For a P of 4% on the operating capital paid to shareholders, 12% of net profit (3 times more) is then required – and 24% of gross profit with a tax deduction of half of the net profit. The prevailing opinion, led by authoritative voices, is to perpetuate both Part I and the subjection of enterprises to a tax on their profits. Such an opinion is inconsistent when it judges that a double-digit gross profit on capital rate is too much in favor of shareholders.
6. Profits and profits are not just leftovers.
For the purpose of calculating an absolute profit target, a board of directors or a self-employed entrepreneur applies a rate that it deems appropriate to the amount of capital. The objective thus set is not the result of a subtraction. In the forward-looking management of the income statement and balance sheet, profit and profit are not leftovers. The share of profit included in a forecast and truly complete cost price prix_de_revient_complet is not a remainder. It is only in general accounting and ex-post management control that profit or loss, as well as all other margins, are only subtractions. A price theory built on the idea that corporate margins are constantly just leftovers is unrealistic, but no such untruth is enough to disqualify an economic theory academically.
7. Part I has a significant disadvantage, but it is easy to remedy.
Profit-sharing I, in addition to wage, has an effect that is all the more important because it is relatively high: different wages, as received on a month-to-month basis, are no longer exactly comparable. The "thirteenth month" (or more) has the same effect, as well as other bonuses and benefits in kind. Chain adjustments are more approximately and slowly made. But the remedy is obvious. The bases of comparison must be the annual all-inclusive wages, even if it means dividing them by twelve or by an annual number of hours of work so that their orders of magnitude are more significant for everyone.
8. The generalization of the I share will have the effect that the P share will remain one of the allocations of an enterprise's profit.
By definition, the I share only exists in the event of a profit. Its generalization will therefore have the effect that the profit will, most often, remain to be divided into at least two parts: the I share and the P share.
9. Part T, that of the overpayment rebated to customers, is fallacious.
In order for an enterprise to be in a sustainable position to give its customers a share of the profit, the provision of this discount must be included in its selling prices. Insofar as this enterprise claims to provide its customers with fair prices through this rebate, it is fallacious because of the provisioning that has just been said. Only an overpayment occasionally returned to customers can be economically true . This point is justified by what is explained further in Chapter 11.