Essential reform. When looking at the slowdown forecast in economic growth for the current year, one should take into account the qualitative element instead of making a purely quantitative analysis. By this I am referring to the action aimed at radically modifying the way financial markets work and the way the fruits of growth are distributed. The crisis last August was caused when an aspect of financial speculation broke down, completely altering the nature of economic liberalism and resulting in a considerable part of the wealth created being the product of financial manoeuvring without any link whatsoever to the production of quality goods or improved general well-being.
The unequal way in which the wealth created by economic growth was shared out had already been denounced before the sub-prime mortgage crisis arose, sometimes quite strongly. We only have to look, at European level, at the stances taken by the president of the Eurogroup, Jean-Claude Juncker, who, back in July, had declared before the European Parliament: “One must not be surprised that European employees no longer understand a Europe where some earn a fortune without working for it and others have to resign themselves to accepting encouragement to wage moderation. If the current policies that widen the gap between those who work and those who say they give work are pursued, then we are heading for disaster. We must reflect upon a modern way to allow the largest possible number to enjoy the fruits of growth”.
The excessive profits of large financial institutions and the remuneration paid to the heads of large companies had caused quite a stir. Shareholders had become used to considering it normal that annual earnings should correspond to 15% of the capital invested, which is incompatible with growth that has used all categories of the population to advantage and which encourages job reduction. The mortgage loan crisis in the United States has put the spotlight on the unacceptable shortcomings in the way the financial markets operate, as these did not always relate to the sectors directly concerned; as well as on the generalised lack of transparency, abuse and ineffectiveness of controls. Such facts lead to a double result: a) the requirement of introducing transparency and making controls effective and efficient; b) the statement of fact that the world of finance is not self-sufficient (as those interested and the prophets of integral neo-liberalism would have us believe), and that public intervention was indispensable (and invoked) in order to prevent the system collapsing.
Restoring the balance. Studies, reflection and negotiation underway to correct the situation have, as we know, been on an exceptional scale worldwide, and Europe plays an essential role in this as it has the strongest and most stable currency. Logically, interests differ but no-one challenges the need for cooperation and a number of reforms at world level. In addition to the two main principles universally admitted - transparency and surveillance - opinions differ even within the eurozone. The United Kingdom is endeavouring to play an active role in the work undertaken by Europe after having chosen to keep out of this zone. I shall come back to this eddy of positions and tendencies tomorrow. What seems entirely taken on board is that the functioning and the management of financial markets will be upturned, in a way that is generally positive.
I believe that all political forces and even workers' organisations should deal with and be concerned by the new rules under discussion just as much as by the risk of a slowdown in growth. From last September on, I had noted in this column that the events of August could help to clarify relations between the real economy and creative finance (bulletin No 9494), by placing emphasis on the errors and aberrations of the world of finance. Ensuring a fairer distribution of the fruits of growth, by giving a rightful remuneration for work done, is just as important as combating a slowdown in economic expansion. A better balance must be established, and at the same time Europe must pursue its effort to combat counterfeiting and the harm that this does, and its effort to uphold security and product quality at global level. Progress in these different areas would be long-lasting, which could largely offset the slowdown in growth, on condition that this slowdown remains moderate and short-lived. (F.R.)