Harmonious Economics or The New World Order. 2nd edition by supplemented

In order to describe the peculiarities of social labour differentiation and its various forms, let us split the Production cycle into the following stages. First, humans have to obtain resources (by growing, rearing, catching them). Then these resources are processed (i.e. are transformed into a sale-ready product). Afterwards, the products are distributed (transported, advertised, sold, etc.). And only then they may be consumed by human beings. These are the stages of the Main production complex that forms the trunk of the social production organisation tree, as well as its roots and nutritional medium.

But these factors alone do not define the nature of commodities production process. Efficient functioning of the system described above it is essential to employ Labour ensuring production factors. This means development of science, which broadens human capacities and finds the best ways of natural potential realisation. Besides, the production complex should be supplied with energy (energetics), production means should be reproduced (i.e. machines should be built and technologies should be implemented (mechanical engineering). Industrial premises, roads and communications should be constructed; transport and communication means should be updated. The system should be protected from aggression by country’s neighbours or even certain citizens (law enforcement agencies and defence). Well-coordinated work of this complex organism of labour differentiation is supported by finance and trade that assure exchange of commodities between different economic actors. The process described above cannot be productive without reasonable management. Moreover, special measures to protect the natural habitat of humans should be undertaken (ecology).

However, all this is not sufficient. For human beings are not only the object every economic system serves, but also the main production force of economics. This is why there should also exist Labour ensuring human factors. These include, first and foremost, human procreation and reproduction of work force, without which any economic activity becomes senseless and unfounded. Besides, this category embraces the upbringing of the population and shaping of its moral principles through increasing awareness, developing culture, and giving education. For the work force to be productive, it should be capable of working and healthy (healthcare). It should practice physical education and sport, and have access to true information. As opposed to mechanical labour factors, human beings need rest and useful leisure – prerequisites of any production activities. Besides, people should continuously broaden their knowledge regarding the vision of themselves and of the World; the human soul should be harmonized and cured to reinforce man’s moral principles, make him more human (religion), etc.

The functioning of this system of social labour differentiation and cooperation is determined by the state of production forces; however, it is evident that without the factors listed above, neither efficient work, nor normal vital activity of humans are possible in the given conditions. Therefore, poor functioning of the mechanical engineering sector impacts social labour results as much as low qualification, poor culture, low morals, and poor heath of the workers do. Moreover, none of the labour types is self-sufficient, and cooperation is what makes them efficient. At the same time, one should not forget that no type of labour except Main productive labour has any value alone. Only increase of labour by way of increasing the quantity and the quality of commodities can justify its existence.

Under socialism, only labour in the sphere of material production was deemed productive, while other types of labour were considered auxiliary. Under capitalism, only labour that generates income and profit is seen as productive; there is no demand for other types of labour. Within harmonious economics any labour is considered productive as long as it is socially required (academician S. G. Strumilin

). And any labour is declined the qualification of productive when it does not contribute to increasing labour productivity. Such labour should be done away with.

In accordance with the harmonious principles, the key problem consists in assuring coordinated functioning of all the links of the social labour distribution chain in order to minimize human efforts employed for production of all types. Otherwise, the system presented in Figure 1 turns into a collection of poorly related elements, of selfish and competing industries, enterprises, and individuals. The struggle of such different economic sectors that do not share any executive functions is indeed impossible. What could healthcare and mechanical engineering, science and education, culture and transport compete for?

Then the economic symphony all these parts are to perform turns into a cacophony, and destructive competition takes place of coordinated actions. This is the main issue with the social production organisation, and the efforts of all producing structures as well as individuals should be directed towards resolving it. It is evident that neither money accumulation, nor the income of intermediaries or renters alone increase the productivity of social labour. On the contrary, they distract part of the work force from real values production, and creates additional hindrances for it.

From the graph presented above it follows that only the proper functioning of all of the parts of the system allows favourable conditions for general economic prosperity. If the work of any of the parts is disturbed, the total system efficiency drops. While capitalism prioritizes the financial sector, socialism puts production sector above all. Neither of the approaches contributes to better functioning of economics.

1.3.2. Social labour productivity (SLP) as key indicator of state functioning

In order to work out measures for increasing the productivity of human labour, it is necessary to select a single criterion for the functioning of the entire economic system presented in Figure 1 as a self-consistent whole. It would be the first step towards organizing efficient work of individual structures. Without such indicator, any human or enterprise activity would be subordinated to limited market objectives, and would lose its global direction. Only the existence of a criterion with all of the mentioned qualities, capable of bounding all economic sectors together, makes it easy to understand what is right and what is wrong in the society organisation; where progress is made and where it is substituted by regression; what should be done and what should be avoided. Thus, this criterion should serve as a compass to indicate the right direction and to warn about any deviations.

Unfortunately, not all modern economic macro indicators, such as GDP (gross domestic product), GNP (gross national product), or national income, possess to a sufficient extent the qualities discussed above, therefore, they cannot serve as valid criteria of total economic productivity. The reason is that these indicators are tightly related to money, the financial sector and income, they are all profitability-oriented. However, money is an ambiguous category.

In fact, GDP – general indicator of goods and services production – is based on the aggregate wages in a country, income and rent, profits and amortization payments, that is, a real mixture of different things. As the result, it depends both on sources of real values and on others that utilize them, such as interest rate, property and rent, – and generate nothing real at all.

In fact, it is estimated that in the past 1,000 years the GDP of some countries has grown 100- to 500-fold. Does this mean that their population has consumed equally more bread, meat, or milk, or worn as many times more clothes? And if this is not so, then what is the actual sense of this indicator? As academician S. G. Strumilin

wrote, 1,000 years ago a wage worker in Constantinople could buy a sheep with the daily wage; 500 years ago, he could buy but half a sheep; now he does not even earn enough in a day to buy a sheep leg. This is true for other similar indicators as well. Therefore, the real progress economics has made in this time remains quite unclear.

This should not come as a surprise, as these indicators are typical products of the liberal economic philosophy that is aimed at profit generation, and the way these indicators are achieved does not seem to be important. This conceals the real influence of economic factors on the indicator, and makes it more suitable for drawing comparisons than for actual assessment. An increase in the GDP does not always correspond to an equal improvement of the life quality of the population, or an increase in its real labour productivity.

There is no merchandise or service that would be fully manufactured by one producer. Even a farmer uses farming tools that have been manufactured by others. Besides, farming requires fuel and lubricants; managers, builders, and financial experts. The worker should be protected from the inner and outer aggression; legal framework should be worked out, etc. This is true for all other products of human labour, too. As the result, in reality, the entire society is engaged in the production of any goods or services. And only the result of works of all participants of the labour process can determine the efficiency of the production process.

A universal indicator of the functioning of the entire economics and organisation system as presented in Figure 1 – not tied to intermediary results – is the final effect of the system. This means the total number of commodities that are produced by the society, per one citizen. This indicator characterizes the efficiency factor of social labour, and serves as the result of all economic activities. All other products of labour – machines and equipment, raw materials and semi-ready goods, resources and scientific research, even finance, are intermediary; they are only necessary to the extent where they contribute to increasing the quantity and the quality of commodities produced. Current indicators reflect this criterion only to a certain limited extent, as much as they conform with it.

As a standard for measuring the actual efficiency of human labour we suggest using Social labour productivity (SLP), which depends on the quantity of commodities (whether tangible or intangible) produced in the entire state by one average (generalized) worker in a unit of time. It is important to remember that any labour that is required in the society is deemed productive.

This indicator is integral and directly related to the main purpose of economics – satisfaction of human needs. The social indicator ignores intermediary results that masque this purpose (quantity of coal mined, steel, machines or equipment produced, amount of profit, income, level of inflation, etc.). On the contrary, it is based on the objective of economic activity formulated above, i.e. satisfaction of human needs. Moreover, it does not depend solely on production but on distribution as well; on level of wage labour exploitation; on the economic and political doctrine implemented in the country; on the quality and intensity of labour differentiation and cooperation; on the functioning of all state structures and social institutes. This indicator bounds all of these factors into only coherent system.

The SLP is determined not only by the state of development of science and technology, of education and culture, of medicine and sport, but also by the social and national state policies, by their morality and humanity, by ecology and demography. It depends on the types of property existing in the country, on security and diplomacy, on economic relations and types of money used, too. In this light, let us elaborate on some features of this indicator.

Obviously, with SLP we are dealing with a qualitative indicator, not a quantitative one. Consequently, direct assessment of SLP is impossible, for it is impossible to assess quantitatively all human needs and to compare the commodities that satisfy these needs. However, this type of assessment is often used in everyday life, when we distinguish between “warm’ and “cold’, “good’ and “bad’, without saying exactly how warm or cold something is. Besides, almost all economic indicators cannot be measured precisely, be is labour, money, GDP, GNP, exchange, or consumer cost. This is quite logical, as economics is interested in the qualitative description of these factors, not their quantitative assessment. It is the dynamics, the dependence on various circumstances, and their impact on economic situation that matter, not the numerical result of their measurement.

At the same time, the SLP can be fairly precisely assessed right now. Suffice it to observe that the higher the SLP, the higher the quality of life in the country. Therefore, the closest similar indicator – one measurable from the point of view of quantity and dynamics – would be the nominal average income of a worker. This corresponds to the actual value of the consumer basket (including both its tangible and intangible contents) for an average worker.

Moreover, further we will provide a description of the method of calculating the social labour intensity of commodities (SLIC) to assess its value and dynamics, which can be implemented at any enterprise separately (Subsection 3.1.2). This value is directly related to SLP, as any decrease in the SLP, all other conditions being equal, leads to an automatic SLIC increase, and vice versa. This allows stimulating the dynamics of production development, as well as determining the factors that condition it.

The unit of time for which SLP is calculated may be equal to one hour, one year or the average life expectancy. Thus, one can consider hourly, daily, monthly, yearly or secular SLP. Each of the values provides different information. For instance, secular SLP allows assessing the total quantity of commodities that a person produces in a lifetime. Besides, it helps establish the impact on SLP of such factors as average life expectancy, quality of nutrition, daily schedule, and balance between labour and rest. It also depends on the length of work leaves, the functioning of sports, healthcare and wellness facilities, ecological situation, etc.

Yearly SLP may be used to assess the efficiency of social labour differentiation and cooperation, the impact of various reforms and reorganisations. Hourly SLP is more flexible and dynamic. It helps to study the influence of various small and big organisational measures, psychological factors, technical equipment and many other factors in the labour efficiency at enterprises. None of these indicators contradict the other, on the contrary, they form a single information data base useful for optimisation of social labour in general, as well as of specific parts of this system. Besides, they make it possible to assess the actual efficiency of economic and other structures.

SLP is significantly different from the industrial and other specific criteria of labour productivity which are used nowadays. Indeed, as the production of any item or service engages the entire society, and not just a part of it, specific criteria will not be able to correctly assess the real labour productivity of the society as a whole. Moreover, they often do more to conceal it, for many of these criteria are interdependent. For instance, income increase in financial or trade sector often entails suppression of other sectors of economics, etc.

It is obvious that a single social criterion is free of this drawback. This means that all kinds of technological and organisational novelties, property limits, and new state institutes are useful provided that they contribute to SLP growth. By consequence, economy has no place for selfishness, politics, ideological speculations, clan struggle, etc.

Thus, SLP is not solely an economic, but also partially a philosophic criterion related to the vision of the world. If any type of activity does not increase SLP, then it should be diminished or altogether abolished. If the social value of any type of labour is low, the share of income it produces should be limited. If the salaries of scientists, engineers, doctors, teachers, and the wages of workers are lower than the average in the country, this means their labour is in low demand. But when the income of government officials, businessmen, finance experts, tradesmen and criminals are much higher than the average, then these activities conform more with the nature of the existing state. Now is it realistic to expect, in such conditions, that the real production would be restored, the country – renewed and start developing to pass to the industrialized category?

The notion of SLP is based on the assumption that all saving of social labour is useful, and vice versa. Therefore, this indicator may be used to optimize the work of various services, to assess the efficiency of administration, the reliability of public transport; to adjust the salaries of various categories of workers, etc. For example, is a train carrying 1,000 passengers is half an hour late, is there an excuse for the circumstances that caused the loss of 500 pers./h of social labour? If production increase does not entail SLP increase, then production rates should be slowed down. If reorganisations, measures and reforms implemented cause SLP to drop, they are, without any doubt, too aggressive. If a nanny at the kindergarten helps save the efforts of dozens of parents, this is her actual labour productivity. And this has nothing to do with the work force cost, as it does now.

Another example: today advertising consumes the time of millions of people, as well as enormous material resources amounts, while it generates profit for an insignificant number of businessmen who want to sell their products, often foreign-made. Similarly, traffic congestions take huge time, increase the fuel consumption, and accelerate destruction of roads and vehicles. Besides, they increase the demand for these commodities, and by consequence – the income of certain individuals and the tax revenue for the budget. Products of low-quality foods and counterfeit drugs kills people, but then it also helps boost the income of their producers. Consumption of tobacco and alcohol ruins the nations’ health; however, it increases the profitability of their manufacturers, excise tax revenues for the state, etc.

1.3.3. SLP suppressing factors

The accelerating decrease in the social labour productivity in most countries as “world civilisation’ develops and establishes there, despite considerable scientific and technological progress, indicates the existence of some underlying phenomena that actively counteract progress. What are they?

In order to understand this situation, let us turn back to the labour differentiation scheme presented in Figure 1. Why does the performance of this industrial relations mechanism continuously get worse? What prevents this system from being properly efficient? What are the main drawbacks of the current economic doctrine, why is its ideology deformed?

This issue is difficult to understand not only because of its multifaceted nature, but also because its causes and consequences have intertwined into such a tight knot that untying it turns out extremely complicated. Moreover, should we even try to do that? To find out, let us start by drawing a simple list of the key SLP suppressing factors.

As it has already been mentioned, none of the structures present in Figure 1 is self-sufficient, and only united they have force. Nevertheless, the current economic model does not provide a clear order for distribution of jointly produced income, which further complicates the work of the forces that bind these structures together. Administration has failed to manage it, and the present-day monetary mechanism aimed at executing this function works poorly in the current conditions (for more details, see Subsection 3.2.2).

For this reason, each of the economic sectors pursues its proper interests, and does not care for the common benefit. This breaks the coordination of actions, and constructive cooperation is replaced by destructive competition. The desire to appropriate the bigger part of public income overpowers the task of increasing its aggregate value. Modern experts in the sphere of finance, energetics, trade, housing and utilities and others, with their absolute lack of restraint, are a vivid example of this tendency. For instance, the share of energy-related expenditures in the Russian enterprises price structure has already exceeded 50%, which does not correspond to the number of work force employed in the sector and, therefore, undermines the competitiveness of national economics.

If across the world the correlation between the income of producers and trade in the prices of items is about 70% to 30%, in Russia this proportion has literally been reversed. The profit from management, trade, and credit and financial services has become incommensurably higher than the income of science, education, awareness, light industries, or healthcare. It would be erroneous to assume that the most prosperous economic sectors employ the most intelligent, hardworking, experienced and qualified people. Besides, it seems too naïve to believe that such system better stimulates real values production.

Furthermore, the result of such confrontation is easily predictable. Russian fable writer I. A. Krylov described this situation in his fable: “A Crawfish, Swan and Pike combining | resolved to draw a cart and freight… However much they work, the load to stir refuses. | It seems to be perverse with selfwill vast endowed; | The swan makes upward for a cloud. | The crayfish falls behind, the pike the river uses…’. That is why “… the cart remains there, still’[41 - Cit. ex I. A. Krylov, Crawfish, Swan and Pike. Translated by C. Fillingham Coxwell. (Librivox recordings).]. However, the ideologists of modern economics seem to be completely unaware of this; at least, they do their best to ignore the problem.

Another global factor suppressing SLP is the actual lack of interest on the part of all economic structures in seeing real (non-monetary) results of their activities. This applies not only to wage workers and administrators, but also to politicians and businessmen. The actual result of their work is concealed by financial success, personal benefits, fixed salary, profit, preferences, which belong to a different category. That is why the existing incentives for work organisation often fail to help social production to flourish, moreover, they end up suppressing and degrading it.

Indeed, money as a purpose of economic activity does not constitute a real value; it is nothing but a trade instrument. It is a generally accepted equivalent for exchange of commodities, a social convention, artificially enabled to substitute real goods. Unless backed by real things, money is empty, and at present no backing is provided for it. That is why the general acceptance of such “conventions’ cannot contribute to actual prosperity. For instance, various forms of rent, racketeering, crime, corruption, inflation, drugs, etc. generate significant income for some people, but is far from benefiting the society in general, rather, they destroy it.

Huge losses are also born by the humanity as the result of disharmony between production and Nature, i.e. as the result of the desire to use up the natural rent, to make momentary profit without taking global consequences into account. As the result, modern expanded production is by no means expanded. On the contrary, it shapes vital activity by way of destroying its very foundation, i.e. natural habitat. Thus, for the past several decades we have shamelessly live at the expense of Nature, squandering, like thoughtless barbarians, the wealth it has accumulated over millions of years. We now live at the cost of future generations.

Therefore, if the natural mark-up is included in the cost price of products, the profitability of the major part of modern enterprises will be negative! To quote an example, in order to return the Volga river to its pre-industrial state, to restore fisheries and farmed lands, to rebuild the houses and the infrastructure of all submerged territories, much more energy would be required than has been generated by the hydropower plants constructed on the river. One might wonder: what kind of economics are we dealing with, and what is the actual efficiency of its production relations?

And still, one of the most powerful influences on the structure, the ideology, and the very lifestyle of the society is exerted by exploitation, i.e. by unequal exchange of products of labour between economic actors and individuals. Born as simple cannibalism, this phenomenon has by now acquired most sophisticated forms; it is not only revered, it is universally desired. The market itself, in its current form, fully connives in this. As the result, a capitalist system has evolved, within which poverty is strongly tied to the excessive wealth of certain individuals.

The extent of exploitation is truly planetary, this phenomenon knows no borders. One finds it in the way economic structures and the state itself are organized, and in the ways the ruling elites are selected. It is behind the destructive wars, which break out or smoulder across the globe; behind the suicidal consumption of human and natural resources.

The existence of exploitation, as well as that of any complex phenomenon, can be explained by a number of reasons. Among these, physical violence: threats, burglary, gangsterism, theft, and indemnities. Besides, there is ideological pressure, through deception, fraud, ideologic and religious dogmas, and intellectual slavery. Moreover, one should not forget about administrative racketeering in the form of bribery, extortion, corruption, and distribution of privileges. Financial factors also enter into play here, among them, usury, speculations, monetary and price swindles, and stock exchange speculations. Even private property of production means often poorly stimulates production, but suppresses it rather effectively. Money capital is also engaged here: it represents the easiest to become dependent on, and the simplest scheme to deprive people of what they have earned.

In fact, neither power, nor property or capital on their own have a positive or a negative charge. They are like a sword, which can serve the good or the evil, depending on who holds it. All depends on who, where, and how acquires them, and the purpose they are used for. If their mission is to fulfil their natural function – increase the productive capacities of the society and improve life quality – then they are useful. And if they are only employed for personal enrichment, then they could be dangerous. Eventually, this is what determines the entire image of the society, the expedience of its existence of the administration itself, of private property, of labour, and capital as we know them today.

And this situation has always existed. Plato wrote, “Whenever they’ll possess private land, houses, and currency, they’ll be householders and farmers instead of guardians, and they’ll become masters and enemies instead of allies of the other citizens; hating and being hated, plotting and being plotted against, they’ll lead their whole lives far more afraid of the enemies within than those without. Then they themselves as well as the rest of the city are already rushing toward a destruction that lies very near’ 

.

In reality, private property is a complex phenomenon with lots of positive and negative qualities. However, it cannot be attributed any exceptional qualities, as modern ideologists do. Therefore, it would be erroneous to assume that everywhere where private property exists the society is prosperous, and stagnates in its absence. In fact, “The property theory is mostly a science about morality’ (Léon Walras). And the property phenomenon itself reflects a specific combination of rights and liabilities of the owners before the society that has created these production means (not to be confused with private property!).