We’ve heard a lot of about the cost of labour, which is blamed for the crisis. But how much does capital cost? The CGT trade union has launched a project to find out – and aims to use it as a tool in the struggle for a better world at the service of human beings, not profits.
Responding to a request from the CGT union , France’s National Council for Statistical Information (CNIS ), a public body, has began to work for the establishment of a new statistical tool to assess the burden of increasingly heavy corporate spending in material and financial capital. Humanite newspaper interviewed Denis Durand the CGT’s representative on the CNIS working group examining how to measure the cost of capital.
What drove the CGT to request the development of an index of the cost of capital?
There’s a campaign blaming employees [for the crisis] because of labour costs. The CGT is fight against this campaign by showing what really weakens the French economy – it is not that employees are paid too much, on the contrary, it is the cost of capital that hinders the contribution of business to wealth creation in the country.
This cost, to date, remains largely invisible …
This is the reason that led Thierry Lepaon , general secretary of the CGT, to request the starting of statistical work to allow the public to have information on the cost of capital in the form of one or more indicators, as is done to measure other economic and social phenomena.
Specifically, how is it assessed ?
We need a measure that covers all expenditures made by companies to mobilize capital they use for their business. It covers dividends, interest paid to banks, insurance companies, investment funds, but we must also look at the cost of replacement of equipment, or to the considerable increase in the cost of land, which also weighs on business decisions. The work of researchers such as those at the University of Lille, showed that the cost of capital has reached such a level today that it discourages any investment that does not meet a certain level of profitability, most commonly cited as 15% compared to the the capital advanced. This is proof that there is something wrong in the functioning of financial capitalism.
What do you aim to do with this index?
What we want is to create are the arguments for free business decisions from the pressure exerted by the required return on capital. So to minimize material and financial capital, so as to spend more on human beings, training, wages, development of skilled employment, improving public services. It is well known that the solution to problems of the French economy will not be found without a change in the balance of power and struggles. And in these struggles, access to information and knowledge of the economic realities is a considerable weapon. That’s also why the leaders of the financial world do everything to deprive workers of this information.
Translation by Revolting Europe