220.127.116.11 Development of the Economy
Accumulation of money intended for the profit economy ensures cash assets for the development of the profit economy.
In capitalism, the amount of money intended for investments depends on the entrepreneurial skill of owners of the means of production. The money is created by appropriations from the realized profit of the enterprise. Larger appropriations of cash assets from income allow creation of a larger amount of cash assets for the development of the profit economy, but reduce the consumption of producers. And vice-versa, smaller appropriations of cash assets intended for development develop the profit economy to a lesser extent, which allows a larger consumption and, accordingly, a higher standard of producers.
In the capitalistic form of production, the competition of producers on the market requires permanent investments in the development of the profit economy. Investment in the profit economy augments the production, the product quality, and reduces the product price, which altogether brings conveniences to the society. On the other hand, a large production creates saturation that results in the lowering of demands and enterprise profits. An enterprise in private ownership that does not realize profit has no business value. The fall in the profit results in dismissal of workers, closing of companies, social and economic problems. Therefore, private entrepreneurship is by its own survival forced to permanently search for new flows of consumption and enrich them by new products. In this respect, it makes an aggressive propaganda that creates the consumerist mentality. As in any system one may sooner or later expect stagnation or fall in interest, private entrepreneurship is thus doomed to withdraw in favour of a system that will in a more appropriate fashion follow the social needs.
Society has tried to resolve the problems of private entrepreneurship by social ownership of the means of production, which may remove numerous difficulties of the capitalist form of production. The socialist revolution removes capitalistic exploitation and brings a social policy that ensures employment, education, health-care insurance and other conveniences so that, at first, the people are highly enthusiastic and believe in a better future. At the very outset, almost all work is intended for the development of the society, and the results are often spectacular in the societies destructed by exploitation. However, over time, enthusiasm falls as a general rule, and the egoistic interests of individuals gets stronger and stronger. Then the workers with the right to decision-making in the process of production, as was the case in the Yugoslav self-management, no longer accept social ownership as their own and, therefore, tried to ensure a higher income on account of the accumulation of the economy. Such a business operation is irresponsible vis-ŕ-vis one's own future. Consequently, such an economy is considerably less efficient than private entrepreneurship.
A centralized socio-economic system as the one in the former USSR plans in one single centre the production of the entire economic system. The plan may fully define the quantity of work intended for the consumption of the society and for the development of the economy. Such a system may for the first time define the development strategy of the society as a whole, which at a certain level of development of the relations in production can ensure a high increase of productivity in the economy.
However, the great deficiency of the system lies in the fact that the tailoring of the business activity planning is left to the centers of power and is as such alienated from workers. The workers, not having any influence on the creation of economic policy cannot accept it as theirs and, consequently, cannot sufficiently advocate its implementation. The centralized system of establishing the development policy of business activity creates a more or less successful macro-economic policy of the social system, while it is fully unable to meet the abundance of everyday necessities of the society due to the volume of decisions. Since the centrally planned economy does not allow free entrepreneurship, as it can easily endanger the stability of such form of production, a large quantum of needs remains unsatisfied in society. Such an economic system has no perspective and may only survive as a closed, autocratic economic whole.
In the new economic system, enterprises are in a shareholding-social or humanistic ownership of the means of production. The ratio of cash accumulation of the profit economy and cash assets intended for consumption are determined by direct voting of all inhabitants of the commune in the function of individual voting powers within the possible range of values set by the commune's leaders.
If a certain inhabitant of the commune wishes that the commune's profit economy develops to a larger extent, they will then state a larger amount of money intended for the profit economy. As the total quantity of money is limited, they will have to state a smaller quantity of money intended for the consumption of the commune's inhabitants. And vice versa, an inhabitant wishing a larger consumption will state a larger quantity of money intended for consumption and a smaller amount for development the economy. The statements of all inhabitants in function of their shareholding-social or humanistic power entered into the internet application of the center for data processing, sum up and form the amount of money intended for consumption and for the development of economy.
Then, from the commune's revenue is appropriated the amount of money intended for the development of the profit economy, proportionately to the voted statements of all inhabitants. If inhabitants will generally tend to a larger development of the profit economy, then a larger quantity of cash assets intended for the accumulation of the profit economy in relation to consumption will be appropriated, which would speed up the economic development and reduce the income of the population and, consequently, the standard of living. Such an economic policy enables each commune, irrespective of the degree of economic development, to accumulate money for the development of its profit economy by relying on its own forces. When the profit economy develops to a point where it will be able to ensure an expansive production, the need of the society to invest in the development will diminish. In this way, the amount of money intended for consumption would increase, as would the standard in living of the society.
Perhaps, the most important value of such a form of distribution is that the money is earmarked in a democratic way, which means that the society as a whole plans its own development. Such a form of monetary distribution will provide direction to the commune's developmental policy. In such a manner, the profit economy understands the limits of such direction and can efficiently prepare and plan its own development. Moreover, in the process of production alienation will be surmounted as a consequence of authoritative decision-making in the society.
Cash assets intended for profit economic development serve for economic investments by which enterprises acquire new machinery, industrial installations and working capital helping them to achieve a higher productivity.
Enterprise managers demand assets intended for economic development on the basis of the development programs of their respective enterprises. The program of enterprise development contains a defined quantity of needed cash assets, the methods of the earmarking or of fitting into the existing economic structure, envisaged growth of productivity or cash profit, and the time of implementation.
When the amount of money necessary for economic development is formed, it will be then distributed to those enterprises in the commune that individually, within their free activity, envisage realization of the highest profit within the shortest time interval possible and require the smallest amount of cash assets. The money may be distributed to enterprises according to the C-of development, pursuant to the following formula:
C-of development =
It is clear from the formula that a larger profit realized with a smaller amount of needed cash assets and in a shorter time of implementation results in a higher C-of development. A higher C-of development will ensure to enterprises the cash assets intended for the development of the profit economy. Distribution is performed by computer processing in the way that the largest C-of development is ensured the needed cash assets, followed by the next C-of development, in terms of magnitude, and so on, until all assets shall have been distributed. In this way, the enterprises which propose the largest profit will receive cash assets intended for the development of the profit economy ensuring thereby the greatest conveniences to the society.
Cash assets are limited so that they cannot be allocated to enterprises that achieve a smaller than necessary C-of development. Such enterprises must wait for other opportunities, or have to increase the envisaged profit with a smaller amount of needed cash assets and a shorter time of implementation.
As cash assets intended for economic development get renewed in each accounting period from the commune's total cash profit, they are allocated as grants. The commune will become a kind of Humanist Corporation and corporations even in capitalism do not charge themselves for investments. It suffices that enterprises realize the envisaged profit and that in this way the assets intended for economic development find their social justification.
Needless to say, the system would have no sense without an exactly established responsibility of workers for using the collective monetary assets. Before a competition takes place for the allocation of the cash assets intended for the development of the profit economy, the managers disclose their own responsibility for the implementation of the program expressed with the C-of responsibility. A higher C-of responsibility may give to workers; inter alia, a greater confidence in the management's plan.
On the basis of the insight enabled by the management, or on the basis of the confidence in their management, workers accept, according to their own estimate, a degree of responsibility by stating their own C-of responsibility. Such a C-of responsibility is in force from the date of hire or from the date of last increase of C-of responsibility until the expiry of the time needed for realization of the envisaged production. The workers during such period cannot change their C-of responsibility. However, they can be released from the work responsibility but only if another worker takes their work post together with the responsibilities. A higher C-of responsibility brings greater competitive power for a determined work post and a larger share in the distribution of incomes in the case of rising productivity, while in the case of failure, the investment also brings larger losses in the distribution of incomes.
Assets intended for the development of the profit economy augment the productivity of the profit economy and, accordingly, the value of newly manufactured goods, which require an increase of money in circulation. The larger amount of money in circulation increases the income of the commune and in this way the inhabitants acquire a stronger purchasing power for the newly produced commodities. The growth of money in circulation augments the quantity of past labour points of workers. The new amount of past labour points needs to be distributed among enterprise workers and inhabitants, proportionately to their responsibility for the contribution to the production of the newly emerged value.
Economic enterprises measure productivity by cash profit on the market. After the expiry of the established implementation period, accounting of the success in operation is made. If an enterprise registers a rise in cash profit, such profit is then treated as a lasting work improvement that on a lasting basis brings a higher income. In this way, the workers of the enterprise acquire conditions for getting a certain quantity of past labour points. Then the difference between the envisaged and realized company’s gain profit is shown as a profit. In such cases, the workers' quantity of past labour points will be distributed by the magnitude of the net profit incurred in their company.
However, if some enterprises in the commune fail to realize the envisaged profit with the money intended for development within the envisaged time period, then the difference between the envisaged and realized gains profit is shown as a loss. In such cases, the workers' quantity of past labour points will be deducted by the magnitude of the net loss incurred in their company.
When the total net quantity of past labour points, which is added to or deducted from all workers together in an enterprise is known, then with the help of computer technology the rewards or sanctions against each worker are easily calculated by the following formula:
Worker-1 : Worker-2 : Worker-3 : … : Worker-n =
C-of respons.-1: C-respons.-2 : C-respons.-3 : … : C-respons.- n
And the result is easily achievable in the form of:
Worker-1 = +/- Quantity of points-1
Worker-2 = +/- Quantity of points-2
Worker-3 = +/- Quantity of points-3
Worker-n = +/- Quantity of points-n
The productivity of the commune is realized by profit economic and non-profit activities, and in the system of work competition both are equally significant. The profit economy directly realizes cash profit on the market, while non-profit activities do not. Work products of non-profit activities are free of charge for the population. Such a group may include administration bodies, public protection, education, health-care, and similar activities. Labour productivity of non-profit activities is expressed by success evaluation, given directly by specialized arbitration commissions and by the population.
Non-profit organizations also demand money assets for their development but it comes from the collective consumption fund. Evaluation of the success of non-profit companies enterprises may have a scale of values equivalent to the monetary profit of the economy, so that each improvement in the work production of non-profit activities would increase their success index, and vice-versa. The workers in non-profit companies also need to be entitled to an increase in the quantity of past labour points in the case of the rise of productivity that is set aside from the profit of enterprises in the profit economy.
The quantity of income points allocated to the non-profit economy is determined by comparing the realized productivities in the profit economy and non-profit economy. By using the coefficients, it is possible to mathematically compare the profit of economy and development of non-profit economy and to form a balance of awards and punishments for all conveniences and inconveniences coming from work in profit and non-profit activities. In the system of work competition such comparison will be necessarily objective, as each disproportion would result in the spill-over of work to where the work conditions would be more convenient, which would be in nobody's interest.
Private entrepreneurs perform independently the same way as the merged public company of the commune. Private entrepreneurs are accountable for their business operation with their own capital. The workers employed with private entrepreneurs are accountable for their work directly to the private entrepreneur. Private entrepreneurship does not allocate any money for the development of the economy of the commune, so it cannot use these cash assets. Private entrepreneurship has to accumulate the money by itself, or borrow it from banks in the form of interest-bearing loans.
Taking into account that the profit economy where the means of production are in collective ownership will, thanks to the work competition bringing the most productive work, be at least equal or more productive than private entrepreneurship, it may be expected that autonomous private entrepreneurship will lose the competitive productive struggle against the shareholding-social entrepreneurship. Moreover, the development of the new form of business activity will also entail the rise of the productive consciousness of workers. They will in this way be willing to make decisions by themselves and bear responsibility for such decisions. As in the shareholding-social or humanistic form of ownership of the means of production, the workers have a significantly larger number of rights and freedoms, it may be expected that private entrepreneurs will lose the labour force.
Private entrepreneurs will then be forced to surrender their own enterprises to the commune in exchange for the equivalent amount of past labour points. A larger quantity of past labour points brings a higher income, more possibilities in choosing work posts and, generally, a greater productive power recognition in the society.
The application of the coefficient of responsibility in the new system represents a favourable substitute for stock-exchange speculations of the capitalistic form of economic activity. Possible gains or losses of past labour points, which are an equivalent for shares, are tied to the successfulness of future productivity assessment. Such a system puts workers in a more equal position, diminishes alienation in the process of production, while collective responsibility contributes to a greater prosperity in doing business.
Democratic planning and management of the economy, full employment and work competition, the resolved issue of workers' accountability, and a distribution of means of consumption according to the values of work will definitely remove the deficiencies of the socialist and capitalistic forms of business activity. In this way the means of production in a shareholding-social or humanistic form of ownership open up the possibility for the prosperity of the economy.
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November 13, 2013