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 unions. On 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.

Financial indicators in the USA
The main financial indicators in relation to the Gross National Product of the United States.

But there is no advantage without disadvantage. A growing money volume causes inflation. Inflation is a secret tax against the people who save money. In the economic science and in the policy are endless discussions about the issue what level of inflation rate is still acceptable for the economy. What is more worse: Five percent inflation or five percent unemployment?
Money policy is in every case a form of regulation. The business banks have the privilege to make credit money or capital through centralbank money. They must respect some restrictions and accept the supervision of a governmental authority in order to keep their privileges.
Now we have considered many factors which influence the rate of unemployment: The bahviour of the Trade Unions the employers, the banks as credit suppliers the budget policy of the governments and the money policy of the central banks. But this are only the main factors. Other factors are the jurisdiction and their laws. The level of regulation of the banks, the level of regulation for the workers and for the employers are additional aspects. The level of regulation for companies which earn their money with contracts and charges is another factor. The best regulation of immigrants or the regulation of the education are also some factors in the struggle against unemployment. The population policy has the task to manipulate the demographic factor in order to lower the main economic problems.
Other people say that the necessary changes in technical products are the causes of unemploymonet. They want know that it is a mistake for a factory to produce more than the limit of the saturation point.
Of course is this list of factors not complete. But this is not essential. In the next chapter we learn something about the permanent phenomena of capitalistic economy the
4. Economic tendencies and their reflection in statistics.