1. A high level of structural underemployment favors a high average rate of profit on capital.
A high unemployment rate compresses or even blocks the increase in the purchasing power of the greatest number of wages. The nations with the highest unemployment rate tend to be those with the highest rates of profits on turnover and capital.
In relation to exploited capital, in the sense of this designation previously stipulated (Chapter 5), a high average rate of profit does not necessarily result in a high average rate of profit, in the sense previously attributed to this word (Chapter 6). It is all the less so since the boards of directors of corporate enterprises favor self-financing through profits.
2. The decline in structural underemployment tends to lead to a decline in the average rate of profit on capital.
As full employment approaches, the brakes on increases in the purchasing power of the greatest number of wages are loosening. As a result, the average rate of profit on capital falls, then it stabilizes.
During this decline, the decline in the average rate of profit on capital is all the more possible and postponed in time as the boards of directors of enterprises in enterprises favor self-financing through profits. We are then in a configuration of the financial economy where profits are assimilated to bond interest.
3. The state of employment cannot be the sole determinant of the average rate of profit on capital.
Even if the self-financing of enterprises in enterprises is reduced to the depreciation of their fixed assets and more frequent capital increases have taken over, the rentier function of the savings placement in permanent enterprise financing makes it impossible for the state of employment to be the sole determinant of the average rate of profit on capital. For the reasons summarized below and too often overlooked, this function is neither parasitic nor obsolete.
4. Savings in capital provide income other than that of new work.
Within this income, there are investment-based retirement pensions that supplement or replace transfer-based pensions. This other function is such as to determine a threshold below which an average national rate of profit on capital does not fall.
Typically, we invest an increasing fraction of our income in the second half of our career and beyond. This fact increases the importance of the threshold below which the national average rate of profit on capital does not fall, even in periods of structural full employment.
5. The rentier function of permanent corporate financing can, however, contribute substantially to enough savings placed in this financing to establish structural full employment and then restore it whenever it is compromised.
Corporate governance, riveted to the satisfaction of immediate interests, evades part of its civic responsibilities, just as public power, alternately prey to visceral anti-capitalism and subjectivist capitalism, avoids its economic responsibilities. The euthanasia of pensioners by holding shares in the capital is contrary to the general interest.
6. The relationship between the state of employment and the average rate of profit on capital can be strengthened.
This reinforcement would be unachievable if there was nothing to strengthen! It is because this tendency tends to exist, even when it is totally unexploited by economic theory and policy, that the following propositions and their arguments can show that this strengthening is feasible and maintainable.
7. Of course, the self-financing of enterprises through their profits creates jobs.
But less self-financing for more profit distributed to the capital agents – more profit (Chapter 6) – ultimately creates more jobs when, as a whole, savers invest more than the profits they received in capital increases.
We can speak of it as the most job-creating detour and the best controller of the level of rate of return around which it is necessary for economic equity and efficiency that all enterprises be kept in competition.