The authors start from a question old but once again central question: how to distribute the wealth created between labour and capital in such a way as to simultaneously promote growth, employment and social cohesion? In their view, the contemporary debate on taxation, purchasing power or inequality cannot be understood without returning to this fundamental question of the distribution of income.
In particular, they challenge the idea that an increase in the share of profits would automatically end up benefit the economy as a whole through increased investment and growth. Their reasoning is that high profits do not in themselves not in themselves a guarantee of growth: if too large a share of wealth is captured by capital to the detriment of wages, consumption and therefore demand weaken.
Conversely, an economy that overly prioritises wages at the expense of profits would risk reduce the profitability of companies, their capacity to invest and, and, above all, their ability to finance innovation. Keynes and Schumpeter must be reconciled Schumpeter within the same growth model.
Based on their work and comparison with economic history, particularly in the USA and South Korea, they arrive at a balance: this balance would be particularly conducive to sustainable and job-rich growth. It would make it possible to both maintain sufficiently buoyant demand and leave companies the resources they need to invest and innovate. This balance is approximately two-thirds of income for wages and one-third for profits.
The authors also introduce an important distinction between the different forms of investment. In particular, they believe that rationalisation investments, which aim to increase productivity by substituting capital for labour, should account for no more than around one-third of total investment.
In the second half of the book, the analysis becomes more specifically French. Lorenzi and Villemeur link the question of distribution with the problems of an ageing ageing, the financing of social protection and the situation of young people, including the growing difficulties in accessing employment and housing. They consider that these imbalances risk fuelling conflict not only between employees and capital holders, but also between generations.
The book ultimately turns to the subject of taxation. The authors propose eight tax principles designed to bring the French economy closer to this distribution, which they consider to be optimal. Their aim is to reorganise tax incentives in order to further encourage work, employment, productive investment and innovation, with the aim of putting France back on a path combining growth and social progress without an overall increase in the tax burden.
Jean-Hervé Lorenzi, Professor Emeritus at Paris Dauphine, President of the Economic Meetings of Aix-en-Provence.
Alain Villemeur holds a PhD in Economics from Paris Dauphine University
Ph Alezard