More equity and solidarity in the economy: an equation of economic equity?

If we have published a lot (1) on our vision of fairness and solidarity in and with the company, including on our blog RémiG DPP (see in particular the article “Ideal remuneration model for companies”), the news of the milk and meat sectors leads us to come back to our approach to the equitable distribution of added value in the food sectors. What follows is therefore inspired by the treatment proposed in the book “Proposals for a fair economy” (2).

Proposition of an equation for economic equity

The inequity is particularly flagrant in the case of the producer-consumer sectors for which the producers subjected to a competition without borders and the juggernauts of the distribution clash, where the earthen pot against the iron pot are fighting, via intermediaries who do not want to give up or lose nothing, via dictates from elsewhere. And the news regularly takes care of showing the reality of our allegations even dramas thus generated ...

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Our suggestion seen through the farmer-producer of milk ...

The first of the food chain "milk" and derived products (and which does not make the "weight" to negotiate the price of its own raw materials: fertilizers, hydrocarbons ...) must receive, in all circumstances, that is to- say brought "structurally", in a legislative way, the guarantee of a minimum profit B1 due to its work in relation to the totality of the profit realized by "its endorsement".

Thus, calling Pc is the price for the final consumer of milk, Pf the minimum selling price of the farmer - producer, C his wage-including cost price, B1 his minimum profit (Pf = C + B1) and Bn-1 the whole of the downstream profit, setting λ the value related to the downstream added value, or λ = B (n-1) / (Pc-Pf), then the minimum profit B1 to be guaranteed - in our opinion - for the farmer - producer would verify B1 / (C + B1) = λ, or:

B1 = C.λ / (1-λ)

And Pf = C + B1

(And, calling Bn all the profits of the sector one would always have B1 / (C + B1) = B (n-1) / (Pc-Pf) = Bn / Pc = λ)

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A numerical example:

If C = 0,5; Pf = 1; Pc = 2; B (n-1) = 0,25
Then λ = 0,25 / (2-1) = 0,25
And B1 = 0,25 x 0,5 / 1 - 0,25) = 0,166
(Bn = 0,5)
And Pf = 0,5 + 0,166 = 0,666

We then observe that, according to the suggestion, the value of B1 increases with the cost price C and with the value of the “downstream” benefits. The system allows the farmer-producer to encourage the challenge of quality, avoids abuse of the "downstream" margin achieved to the detriment of the first supplier of the chain, while leaving the latter the freedom of its strategies. optimization for its production cost C (play the qualitative against the quantitative etc.).

At the same time the device lends itself to a formal administrative control (a posteriori).

It can be expected that the generalization of this provision, correct the adverse challenge of the race to the lowest prices in all sectors and would bring a little wisdom in a global business that ruins the planet and the human race.
Rémi Guillet
(1) See in particular ed. Harmattan “For more solidity between capital and labor” (R. Guillet. 2004 and e-book version in 2009)
(2) See ed. the Harmattan “Proposals for a fair economy” (R. Guillet. 2012 and e-book version in 2015)

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