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

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

Proposal of an equation for economic equity

The inequity is particularly evident in the case of the producer-consumer sectors for which producers subject to borderless competition and the behemoths of the distribution, where earthen pot against iron pot fight, via intermediaries who do not want letting go or losing anything, via dictates from elsewhere. And the news is regularly responsible for 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 "milk" and derived products food chain (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 connection with the totality of the profit realized by "its downstream".

Thus, calling Pc is the price for the final consumer of milk, Pf the minimum sale price of the farmer - producer, C his cost price salary includes, B1 his minimum profit (Pf = C + B1) and Bn-1 the totality of the downstream profit, setting λ the value compared to the downstream added value, ie λ = B (n-1) / (Pc-Pf), then the minimum profit B1 to be guaranteed - in our opinion - for the farmer - producer would check B1 / (C + B1) = λ, that is:

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)

Read also: Involuntary discovery

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 quality challenge, avoids abuses of the "downstream" margin achieved to the detriment of the first supplier in the chain, while leaving the latter the freedom of his 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 work" (R. Guillet. 2004 and e-book version in 2009)
(2) See ed. Harmattan "Proposals for a fair economy" (R. Guillet. 2012 and e-book version in 2015)

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