Failed investments ensure industrial deforestation in eastern Germany as well: Haribo in Wilkau-Hasslau, for example, was closed.
Photo: dpa/Sebastian Willnow
Profits, so they are often legitimized, are put back into the company and create new jobs. Karl Marx wrote in the first volume of Capital: “The restless increase in value that the hoarder strives for by trying to save the money from circulation is achieved by the cleverer capitalist by constantly giving it up to circulation anew. « So it is not altruistic when profits are put back into companies, but an immanent part of the capitalist economic order. But does it still happen as described?
The answer of the federal government to a written question by the Left MP and member of the Bundestag Economic Committee, Pascal Meiser, which is available “nd.der Tag”, is that less and less of the profit is put back into the company. Most recently, the so-called net investments in 2020 corresponded to only 3.4 percent of profits. In 1991 it was almost 48.9 percent. Even in the pre-crisis year of 2019, the proportion was only 17 percent.
The corporate profits of non-financial corporations rose from 180.9 billion euros to 515 billion euros between 1991 and 2019, the year before the corona virus. This corresponds to an increase of 285 percent. Even during the corona pandemic, corporate profits amounted to 434.1 billion euros. The difference between profits and net investments thus rose from 92.3 billion to 419 billion euros most recently.
The net investments correspond to the amount that the owners actually put into the company. Because they are the difference between gross investment, i.e. all investments made, and depreciation, i.e. the natural depreciation of capital in the form of wear and tear, for example, which a company has to replace anyway if it does not want to shrink. At the same time, it only expands if the net investments are positive, i.e. more money is reinvested in the company than is wasted on old investments.
If the share of the profits of non-financial corporations in corporate profits, i.e. all corporations with the exception of banks and insurance companies, shrinks across society as a whole, then this means that the real economy is investing less and less in relative terms. So accumulation slows down.
At the same time, employees receive a smaller and smaller share of the wealth produced. The so-called adjusted wage ratio, which indicates the share of employee remuneration in national income, has recently increased from 69.2 percent in 2014 to 73.3 percent in 2020. However, the Corona year 2020 can certainly only be used as a limited comparison value. In 2019, the rate was even lower at 71.1 percent. Above all, it used to be much higher. In the 1990s, for example, the wage share still fluctuated between 78 and 80 percent.
Meanwhile, the business lobby is repeatedly demanding tax cuts that are said to encourage investment activity. “Fewer burdens, less bureaucracy, fewer taxes are needed – and better infrastructure, more incentives for innovation and investment,” demanded the President of the powerful industry association BDI, Siegfried Russwurm, in mid-January at the press conference kicking off the year. The “tax burden” on companies should be reduced to a “competitive 25 percent”.
“Anyone who claims that the reduction in corporate taxation will automatically lead to more private investments is window dressing,” counters left-wing politician Pascal Meiser. The only thing that is certain is that a blanket reduction in corporate taxation increases the profits of companies and their shareholders, while the public sector lacks the money for important future investments, but also for social affairs, health or education. “Instead of further flat-rate tax breaks for companies, there is a need to limit dividend payments and increase state investments so that the transformation towards a climate-neutral economy can take place,” Meiser demands.
Because the companies are obviously more important to the dividends of their owners than investments in the future. This not only makes the answer to Meiser’s written question to the federal government clear. A study by Oxfam Deutschland und Finanzwende published last November came to the same conclusion. Accordingly, the profits of the 30 largest public companies in Germany, the Dax companies, increased by 48 percent between 2009 and 2020. Instead of using this money for necessary investments, reserves or higher salaries, it was primarily distributed to the shareholders. Dividends rose by 85 percent in the same period, even faster than profits. Individual companies even paid dividends in loss-making years.
