18.104.22.168. Income Distribution
The commune provides all its residents with incomes as a measure of their guarantee of existence. All residents of the commune are involved in the system of income distribution with the exception of workers in private companies because they retain the realized profit. Private companies pay taxes like they do today. These taxes belong to the people of the commune. They are used, among other things, for the salaries of all the inhabitants of the commune.
Distribution of joint operating results represents a problem in all forms of relations in production, as each worker aspires for a larger share in the distribution of a collectively produced commodity. In authoritative systems of economic operation the manager regulates the distribution. The manager is an authority who in the broadest sense assesses the work burden of the work posts and determines, on the grounds of established productivity, the level of workers' incomes. The manager is privileged by their status and easily makes decisions to their own favour and to the detriment of the workers. Unjust differences in the distribution of operating results always create tensions in the process of production, which are harmful for the production and bring inconveniences to the society.
In the proposed system where the means of production are in the communal shareholding-social, or humanistic form of ownership, distribution of collective operating results is performed by distribution of income. The level of income of each worker is based on the price of work and realized productivity. The level of income can be determined by a coefficient with the following formula:
C-Income = (Work price) x C-income_W x C-income_E x C-income_C
Work price = (Value of past labour) x (Value of current labour)
The work price is determined by the product of past labour or quantity of past labour points of a worker, and the price of current work. The quantity of points that each worker holds is equal to the value of their past labour together with the value of past labour of their predecessors. The quantity of past labour points is the specific condition of the system where the worker with a higher value of past labour realizes a proportionately higher income, irrespective of what work they are performing. Past labour points present a humanistic form of shares that will bring profit based on the value of past work. Such a profit may be large but it will not be a burden to companies because it will be distributed on the level of the commune as it was already explained in the chapter “Commodity price”.
Each worker autonomously determines the price of current labour by comparing the work conveniences and inconveniences with other forms of work. They ensure the objectivity in valuing the current work price by the work competition where the right to work is exercised by the worker who in the circumstances of equal productivity asks for a lower current work price.
In the new system, all inhabitants realize the safety of their survival by income and it is, therefore, necessary to also set the current work price of unemployed inhabitants. Since unemployed inhabitants of the commune do not directly perform any profit economic or non-profit activity, they cannot autonomously set the prices of their current work. Such price will be determined by the leadership of the commune with the consent of the assembly or council of the commune, according to the commune's working needs and possibilities, or in the manner that will enable balance between the supply of and demand for the work in the commune. If the commune's inhabitants would not be sufficiently interested in work, the leadership would reduce the price of current work of the unemployed population. This would result in their lower income, which would on its part increase interest in work of the inhabitants. Conversely, if the interest in work by workers was excessive, the leadership may increase the current work price of the unemployed, and the workers' interest in work based on income would go down. The leadership may give a higher price of current work to pupils and students, which would stimulate education. The price of current work of invalids and of elderly people is regulated by the commune's social policy. The people in this commune will not need a pension plan as retirement insurance any longer because the new system provides the individual with an income regardless of whether they work or not. Besides, the individual will be able to work as long as they wish or can without limit of their age.
Finally, the level of income of each worker depends on the C-of income. The C-of income of each worker depends on the proportion of realized and envisaged productivity of workers, enterprises and the whole commune in the function of workers' accountability for the realized productivity. C-of income of a worker can be presented by the following formula:
C-income_W = (f-of Accountability)
C-income-W establishes the relation of the realized and envisaged productivity of workers in the function of workers' accountability.
Productivity is expressed in any accepted work magnitudes that indicates the number and quality of products in profit economic enterprises, and of services in non-profit work organizations. Where productivity cannot be exactly established by the quantity and quality of products or services, it can be established by assessing the labour productivity. The system of assessment will be designed in a manner that will allow that the range of assessments indicate work productivity in the same way as in the case of exact establishment of the quantity of produced commodities.
The mutual assessment of inhabitants brings each inhabitant an equal power of decision-making, which introduces a new form of anarchic-democratic behaviour in the society. Each individual, thanks to equal assessing power, may become both a prosecutor and the accused without the right to complaint. The impact of individual assessment on the income of the population cannot be great. Quite to the contrary, it will be little, because the accused will not have the right to defend; however, it will be sufficiently strong to form respect of the individual for the individual. Such respect will pave the way for major conveniences in the society. The system of assessment will force the individual to diminish their own shortcomings and augment their virtues in their behaviour toward the society in the broadest sense.
If the realized productivity becomes equal to the necessary productivity, then the C-income-W = 1. In that case, the realized income will correspond to the envisaged income. If the realized productivity is higher or lower than the one needed, the income of the worker will be higher or lower than the envisaged.
Finally, the level of the C-income-W is determined by the C-of responsibility of a worker determined by the worker themselves. It is easy to mathematically determine that for a small C-of responsibility, the worker gets their required income irrespective of the envisaged and realized productivity. With the rise in the C-of responsibility, income will increase more intensively in the case of the rise in productivity, and income will more intensively decline in the case of a fall in productivity. Naturally, a higher C-of responsibility gives a stronger competitive power to workers for performing any work.
Workers also bear responsibility for the productivity of an enterprise. The enterprise productivity may be shown in the same way as the productivity of a worker. The formula may have the following form:
C-income_E = (f-of responsibility)
C-income_E establishes the relation of the realized and envisaged enterprise productivity in the function of worker's responsibility.
The productivity of profit economic enterprises is shown by the realized monetary profit on the market. Monetary profit represents the most efficient way for assessing productivity, or more precisely, the values of the operating results in the present-day society.
Workers realize the envisaged income in the case of the realization of the envisaged productivity or, to say it differently, if they sell the entire current production on the market. Of course, that would require a high speed in assets turnover or practically, pull production for known customers.
As it is difficult to sell the produced commodities in whole during the accounting period, a certain portion of such commodities will be sold in another accounting period and will thus realize its profit in another accounting period. Such enterprises would in the current accounting period realize a profit smaller than necessary and, consequently, their income would need to be lower. However, it may be assumed that the commodities remaining from the past labour period are sold in the current accounting period and generate profit in the current period.
If the profit an enterprise realizes on the market is equal to the envisaged monetary profit on the market, then the C-income_E will be equal to 1 (one), and the enterprise's realized income will be identical to the envisaged income. If the formula establishes a C-of income_E larger or smaller than 1 (one), then the enterprise's income will be proportionately larger or smaller than the envisaged one.
The system of work competition on the labour market ensures an even distribution of employment benefits and disadvantages in each company. But if one company has a significantly better means of production than another company, employees in the better equipped company may also in new system achieve a much higher income than workers in the company that has outdated technology. In this case, workers would be more interested to work in better-equipped companies. The leadership of the commune will organize production in enterprises of the commune in the way that an equal value of work based on productivity and past labour points achieves equal income. In this matter, managers may improve technology in companies that have redundant equipment or may overflow the incomes between companies in order to ensure a uniform income interest of workers in all workplaces.
It is further possible to regulate with the coefficient of productivity other forms of success of production, which cannot be presented by cash profit on the market, and which would regulate: the protection of the environment against pollution, the deviation from all standards of the quality of goods, etc.
Most states already have regulations that determine the standards for various kinds of products and production processes, but now it will be necessary for such regulations to get involved with the new communal system. Special commissions will accept the standards of the state, analyze possible declines from such standards, and propose the intensity of influences of such declines to C-income_E. It will be especially important to take into account all criterions for protecting the individual and their environment from pollution. In the end this regulation will need to be accepted by commune’s assembly or council. On the basis of such standards the consumers of commodities, consumer associations, professional institutions, specialized arbitration commissions at the level of the commune or of the federation of communes, or international arbitrations will give their own evaluations in regard to the quality of work of profit economic enterprises.
It is noteworthy that the system does not envisage a bureaucratic evaluation of all producers, because an enormous bureaucratic administrative apparatus would be formed in that way. The system envisages a customer’s free evaluation of those enterprises whose products deviate either positively or negatively from the determined standards. The system also provides the evaluation on the basis of the analysis made by expert services of randomly selected or reported enterprises. The enterprises that do not get any assessment will be treated as they operate within the envisaged productivity and adopted economic operation standards.
Analogously to the profit realized on the market, the enterprises with the production of more socially acceptable products will receive a productivity assessment higher than 1 and will realize a higher total income. And vice versa, the socially unacceptable enterprises will realize an assessment lower than 1 and, consequently, a smaller income. Calculation of the realized productivity may be presented in an indefinite number of factors that will by mutual product in the end give the final value of the coefficient K-Income_E.
By using the coefficients, economic enterprises can efficiently bear responsibility with their income for the pollution of the environment or a bad quality of products. Enterprises polluting the environment or producing low-quality products will, dependent on the influence that such declines from the standards have, realize a lower income than they are supposed to receive according to the realized profit. Workers will also be additionally sanctioned by the loss of past labour points. In order to remove the shortcomings in their profit economic activity, such enterprises will have to compete for assets intended for the development of the economy in the function of non-profitable increase of productivity expressed by assessment.
Even though the developed countries in the world have developed significant improvement in the environmental protection of the world it is still not enough. It is hard to make a consensus for the enforcement of environmental protection on the international level because it costs a lot. Today, many regulations that determine the protection of people and their environments are still unenforced, thus, pollution is still rising. The new system will certainly and efficiently ensure clean rivers, air, healthy food, etc. Due to the quality of life the system offers to the society it may be accepted by all the communes around the world. Needless to say, this will enable a healthy planet Earth.
Generally, non-profit companies do not have presently a standard of work productivity, responsibility or of the value of their operating results. The group of such enterprises includes education, health-care, administration and all other technical and service-rendering activities that do not realize income directly on the market, but are funded by the budget.
Non-profit companies need to be placed in business activity conditions equal to those prevailing for profit economic enterprises. The users of services, consumer associations and professional institutions assess their production. The assessment of the success of non-profit companies’ performance may be shown by the coefficient as successfully as the presentation of the for profit enterprises' performance. The use of the coefficients enables precise comparisons of the success in the activity of for profit and non-profit companies, and to make rewards on that basis according to the values of realized work.
As in the associated labour, each work is non-separable from another work, each worker also bears responsibility for economic activity of their enterprise by stating their own C-of responsibility. A worker stating a higher coefficient of responsibility also assumes a greater responsibility for the enterprise's productivity, and will realize a higher income in the case of the enterprise's rise in productivity, and vice versa.
All inhabitants of the commune are responsible for the productive orientation of the commune. The coefficient of the commune's realized productivity can be expressed by the following formula:
C-income-C = (f-of Responsibility)
C-income_C establishes the relation of the realized and envisaged productivity of the commune in the function of responsibility of each individual worker.
This coefficient does not have a strong impact on the distribution of income within the commune. Differences occur only vis-ŕ-vis the degree of responsibility that an individual worker assumes for their own and collective productivity. Establishment of the C-of realized productivity of the commune would be highly important in the association of the communes and in the distribution of income among the communes.
At the level of the commune, the productivity is expressed by the total realized cash profit of the economy. It is possible to expand the measure of the commune's productivity by a poly-functional system that evaluates quality of life such as pollution-non-pollution, literacy-illiteracy, legality-illegality in the acting of the population. By using C-income_C is also possible to make subvention to less developed communes. That would increase interest of workers to work in such communes. In the same manner, regulating even the birth rate of the population of commune will be possible. If the commune has too low or too high a birth rate, it may be adjusted by decreasing C-income_C by an appropriate value.
The definition of such categories and their regulation will be the task for the state parliament. Defined categories of the coefficients of values would allow a more efficient implementation of social, economic, ecological, cultural, and all other policies of associated communes.
The income of each worker in the associated labour or of the commune's inhabitants can be presented by the following formula:
C-income = (Work price) x C-income_W x C-income_E x C-income_C
It clearly arises from the formula that C-of income of each worker depends on the envisaged work price and the coefficient of realized productivity at the level of the work post, enterprise and the commune, in the function of responsibility for the realized productivity. By applying computer technology, the level of income of all workers can be quickly calculated, regardless of the number of factors determining the income. A worker who, for example, realizes a 10% rise in productivity at their work post in the enterprise that registers a 5% drop in productivity, will realize a C-income of about 5% higher. It may be assumed that workers will be most responsible for their own work because oscillations in the enterprise productivity are smaller, while they are minimal at the level of the commune.
The above socio-economic system represents a shareholding-social, or more precisely, a humanistic form of ownership of the means of production; however, it also allows the production of independent private entrepreneurship. Private entrepreneurship understands an independent production where the means of production are in private ownership. Work posts in private entrepreneurship are owned by private entrepreneurs, and are not subject to work competition. The owner of an enterprise employs workers according to their needs and possibilities.
Upon realizing cash profit on the market, private entrepreneurs keep working cash assets according to their needs. They also keep cash assets for the upgrading and amortization of the production. They are bound to pay income tax, and property tax as is the case today. These cash assets are intended for the employed workers in the non-profit economy, unemployed workers, the commune's collective consumption, and the federal consumption. The tax level for independent private entrepreneurs will be identical to the taxes of the associated labour. The population of the commune will directly determine the level of appropriations. The owner of a private enterprise may decide to autonomously determine the income level of their workers and pay them autonomously, or may integrate into the collective distribution of incomes of the commune's inhabitants.
If an independent private entrepreneurship uses in its work a production technology unknown to the public, and realizes through the use of such technology a cash profit higher than the associated labour with the shareholding-social or humanistic ownership of the means of production, it will realize a higher income. Such private entrepreneurship can survive and attract labour force in the new system as well.
However, the newly proposed economy will invest money in its development as much as it is needed. The system of work competition will develop the economy to such an extent that it will become more productive than independent private entrepreneurship. When independent private entrepreneurs realize incomes lower than enterprises in the collective ownership, the number of workers interested in employment with private entrepreneurs will drop. In addition, if we take into account the right of workers to freely choose the work they want, to make all decisions about their work, to choose their salaries, and to share the profits of the companies that the new system offers, the number of workers interested to work with private enterprises will be even lower. In short, the new system will out compete the private companies from the free market and take over their workers. It may be expected with high certainty that independent private entrepreneurs will surrender the ownership of the means of production to the society in exchange for an equivalent quantity of past labour points. A larger number of past labour points will ensure a higher income, a stronger competitive power in choosing work, and therefore a stronger power in the society.
The money intended for incomes of all inhabitants is formed at the level of the commune's administrative centre from the revenue of the commune. The quantity of money is determined by direct voting of the population and is appropriated from the total amount of money intended for the turnover of commodities in the commune.
The obtained amount of money intended for incomes of the commune's population needs, in principle, to correspond with the envisaged quantity of money intended for the incomes of the population, because the system is based on the price of work corresponding to the income of workers. However, deviations are possible due to differently realized productivities. Therefore, there might be more or less money available for the overall income of all inhabitants in comparison with what the system originally anticipated.
Such deviations will be adjusted in the manner that the whole amount of money for incomes be distributed among workers proportionately to the defined C-income of workers. In this way, the shortage or surplus of money intended for incomes cannot exist. Bank loans will no longer be needed to cover a lack of money. The amount of money intended for income will be distributed to people in proportion to their share in production and everyone will be convinced that the distribution of incomes is fair.
The technique of income distribution may take place from the commune's computer centre. Actual income can be established according to the extended proportion formula:
Income-1 : Income-2 : Income-2 : … : Income-n =
C-income_1 : C-income_2 : C-income_3 : … : C-income_n
From the overall quantity of money envisaged for incomes and the shown extended proportion that may include millions of members, by using computer technology, the income of each worker can be quickly and precisely calculated in the form of:
Income-1 = Value-1
Income-2 = Value-2
Income-3 = Value-3
Income-n = Value-n
The obtained income shows the operating result value of each commune's inhabitant in a certain monetary amount.
Centralization of the income distribution systems allows the application of uniform distribution criteria according to the principle that equal incomes pertain to equal work. The profit that in the classical economy brings conveniences to the owners of the means of production is now, in a socially acceptable manner, distributed to all inhabitants of the commune. Exploitation is no longer in place.
No work is independent and, therefore, income arising from the collective operation result needs not be independently distributed. Income distribution by means of prolonged proportion and coefficients allows that the entire quantity of money intended for incomes in the commune is elastically distributed among the commune's workers and inhabitants, proportionate to with the price of the invested labour and the workers' responsibility for the realized production, without a surplus or deficit of money assets in the annual balance sheet.
Possible abrupt changes in the realized income of workers due to a high increase or strong decrease in productivity may be amortized by a mathematical function that will not allow a sudden rise or sudden fall of income, which would contribute to a more steady economic stability of the society.
The final say in income distribution has to be that of the commune's inhabitants by their direct statement of the minimum income level. The obtained mean value stated by all inhabitants in the function of their decision-making voting power would represent the guaranteed survival subsistence minimum that each worker or inhabitant of the commune receives in the accounting period regardless of the size of their share in the production, and the price of their work.
A lower minimal income of inhabitants would with the established income-related amount of money intended for all incomes create a larger range among incomes, which would increase work engagement and, accordingly, the productivity of the economy and social standard. The high standard and high productivity can result in saturated markets, which diminish the working needs. The population then could, by its own free will, increase the minimal income of the population, thus reducing the range among incomes, and the workers, due to the decreased income-related stimulation in the process of production would reduce their own work engagement to the point where the supply and demand of work would come into balance.
The corrections can be applied by the computer technology easily and rapidly, where the smallest C-of income would ensure a democratically established minimal income. Application of the extended proportion will proportionately increase or decrease the differences in the level of income, according to the needs of the society.
This requirement finalizes the complex approach to the establishment of income distribution of the commune's inhabitants excluding the workers in private enterprises who would keep their profits. The obtained value expresses the definite final income value and also the purchasing power of inhabitants in the commune. Incomes of workers may be presented to the public or kept secret depending on the wish of the people and every individual. Each inhabitant uses their own income according to their free wish.
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November 13, 2013