3. The problems and consequences of capitalistic money allocation
In the last chapter wie did see the difference of income
through the ownership of material things and the income through
the ownership of rights. It is possible to be a shareholder on
other income or to be a shareholder on other material property.
If somebody is the shareholder of material property, the value of
the share can be calculated with a price and itself can be selled
only after an agreement. The real problem exists, if somebody is
the shareholder of other income. This is in capitalistic
economies the true and sad reality. Therefore the dependant
workers establish coalitions and they name such organizations trade
the other side are standing the unions of the employers.
They know, that the income of every company can be distributed only one time to the workers and the owners. But first the companies must pay the taxes to their government and in most times premiums to the assurances. Usually for the future of the industrial company it is necessary to repair and to substitute machines and robots. Hence a big part of the income of company is not available for consuming purposes. That means the distribution of the remaining money is not easy. Usually the struggle about the money of the companies is only an affair of the representatives of the workers and the employers. After long and hard negotiations they confirm their agreement with a contract. But sometimes an agreement is not possible without strikes of the workers or lockouts of the employers. In every case the situation of the firms in a labour dispute are difficult. The management of the companies calculate the wage of the workers and the salaries of empoyees as fix costs like the prices for raw materials. Only their own income and the income of the employers of course is not bound with contracts. Therefore the management has to defend more the interests of the employers than the interests of the workers.
In order to fulfill the contracts with the workers and to keep the level of dividends with the employers and to defend their own privileges it is a wellknown practice to ask the banks for credits. Usually they get easily financial support of the bank for new investments. And it is usual too, that the private firms have to pay redemption and interest to the banks. Capitalistic economy is not thinkable without the power and the credits of the banks. Oftenly the banks are more the owners and deciders of a company than the official employers. That means the most firms must pay much more interest to their creditors than dividends to the stockowners and oftenly the stocks are also property of the banks.
The struggle about the distribution of the income of private companies is a struggle with consequences. Such companies have less money available than it is necessary for their optimum existence. Therefore they have not enough possibilities for new investments and to sell their products with lower prices. They don' t offer more jobs although many unemployed persons ask for jobs. Why?
Usually the company has not enough demand and credits from the banks reached the limit and therefore the managements of the company can' t lower the prices of their products. These and similar answers reflect the situation of the most companies in a depression. And if we ask an economist or an politician about the origin of such economic situation, oftenly they tell us, that many jobless don't want work because of their laziness and because they get to much unemployment benefit.
But not all economists and politcians are convinced that the laziness of the workers depends only from the business cycle. They remenber to one of the most famous economists. John Maynard Keynes 1883-1946 maintained that the responsible politicians especially the secretary of state for the finances should make an anticyclical policy with their national budget. That means in boom times the secretary of state for the finances should save money. This is possible, if the amount of the tax revenues is higher than the amount for the expenditures. In the era of the next step of the cycle, in the times of depression, the politician can neutralize the depression with the instrument of deficit spending. If the government distributes more money to the people through the salaries of the government employees and through social benefits investments in state-owned buildings und so on than it gains through the taxes and social contributions, the state can supply the private companies with the necessary money.
There is no dispute by the politicians and the science that an anticyclical financial policy with the national budget is a necessary instrument for steadiness of the economic development. But with this form of financial policy the problems are not solved. Because it seems to be that the capitalistic economies stay much more in the bottom of a cycle than at the top of the cycle. Depression is the norm and boom is the exception. And even if a boom goes many years it is not enough to eliminate unemployment.
Now we can recognize another instrument to help the private companies. Beyond the treasury policy with the national budget it is possible to make monetary policy with the central bank. The central banks lend the business banks coins and banknotes and they demand a discount rate. From the discount rate depends the volume of the available banknotes and the level of the interest rates. A growing volume of the central bank money is a requirement for a growing volume of the capital in form of bonds and stocks. In the economic science they talk about the money volume M0, M1, M2, M3 and M4.