Harmonious Economics or The New World Order

Table 1. Correlation between the actual GDP amount and the privatization rates in Russia 

.

Summing up, it may be admitted that in most cases privatization in Russia has no social benefits. So, the secret of market economy, if any, is not pinned to private property but to development of competition. To demonstrate this idea, let us use the statistics data on the dynamics of the actual GDP in Russia and of the number of enterprises privatized in the first five years after the privatization reform. This data is presented in Table 1. It should be pointed out that privatization was at the core of the 1990s reforms, and in that decade, most of the privatization transactions were passed.

Let us calculate the correlation coefficient between the two factors mentioned in the table to assess their influence upon each other. The resulting figure is negative, and it equals 0.992. This value is so close to 1, that it can be asserted that the more enterprises in the 1990s Russia went private, the worse the economics functioned. And this conclusion is not at all surprising, as “as long as there is any property, and while money is the standard of all other things, I cannot think that a nation can be governed either justly or happily’[42 - Cit. ex T. More, Utopia (Roubert Foulis, 1743), 39.] (Thomas More).

This signifies that the privatization model adopted by Russia was the major reason of the large-scale economic collapse of the country. By consequence, unless the interests of authorities and property owners coincide with those of the people and the state, such occurrences will be frequent. Unless private property is made productive, its further use is destructive. In the industrial development conditions, “Private property is less and less wholly private. Free enterprise has become progressively less free’ (P. Samuelson and W. Nordhaus

).

Such “state policy’ has driven Russian government into bankruptcy. It has lost the capacity to govern the country in the market conditions. That is why all state programmes are poorly financed, and the economics has got out of control. The salaries of civil servants, that is, the salaries assured through the budget, often drop below the living wage, and the population is exploited beyond imaginable. Its purchasing capacity has decreased, but on the other hand, the number of millionaires keeps growing. What is the sense of such politics, and why during the entire reform its course has not once been adjusted, like it was done in China, for instance? Does this mean that despite the lack of social benefit, some people find this situation satisfactory?

In summary, it is exploitation, that is, the parasitism of the few through appropriation of the values created by others, that constitutes the key reason of the accelerating economic degradation in Russia and across the world. Only the most naïve or cynical persons can see any progress in the insatiable egotism of certain people, deprived of any talent, morality, or knowledge, but craving for wealth at any expense. This phenomenon that is behind the majority of human troubles, all the wars, violence and crime, has become a scourge of the humanity.

In addition, it is reasonable to limit the middle class to those who are not exploited by others, but neither exploit anybody themselves. That is, these are the people who earn their living honestly and are not robbed by anybody. The middle class cannot be defined through the concept of the average income, for it is too vague. Thus, if 30% of the richest people and an equal share of the poorest people are excluded, the remaining 40% will constitute the middle class. But if 20% of each of the extremes is not included in the category, then the middle class embraces 60% of the entire population. However, a criterion varies with the statistics trickery is not appropriate for the assessment. Furthermore, the policy of middle class expansion should be given a completely different approach.

One more factor that leads to SLP suppression is usury. Without generating anything useful, it depresses the real economics, forces the producers to support the money owners, and sucks the resources out of production. The source of usury lies in the money deficit, which is inevitable in economics. In the past, when money was guaranteed by gold reserves, the valuable metals available were not sufficient for serving all the trade flows in the country. But even after this guarantee was withdrawn, the said deficit has been artificially maintained. The only reason for this is letting money generate more money, whatever the cost for production and society may be.

Besides, the foreign economic activity influences social performance, SLT and the population’s quality of life, too. If the foreign trade balance is positive, it means that the country exports convertible goods paid for in uncovered paper money. For certain years Russian import exceeded its export by almost three times. Thus, our country was selling its goods at foreign markets for one third of their nominal value. This made certain private individuals richer, but on the other hand, limited the usefulness of such trade. All other people suffer from it, the state is ruined, and social labour productivity decreases. In the end, the country becomes a donor for other states, whose balance of foreign trade with Russia is negative. However, the government makes of the positive trade balance a feather in its cap and does its best to increase it ever more.

1.3.4. Productive economic factors

Social labour productivity depends from many factors; however, it is most significantly influenced by human beings and their interest in the results of the labour. To be precise, it is human intelligence, education, qualifications, knowledge, physical strength and agility, and health that really impact labour productivity, as well as human energy, decisiveness, honesty, discretion, decency, common sense, tact, and communication skills. The desire to work, and the individual and social labour culture also play an important role in the SLP.

That is why everything that helps people develop the above-mentioned qualities, contributes to the SLP increase. Among these: fair wage distribution, efficient education and upbringing methods, the health both of the parents and the child, psychological and moral family, workplace and social environment, physical education and sports, ecology, and the entire infrastructure for life and leisure.

The works of W. Petty, A. Smith, A. Marshall, T. Schultz, G. Becker, and many others reflect the idea that the reproduction of high-quality work force is productive. Thanks to the contributions of these authors, the work of progressive managers to improve people has ceased to be seen as unproductive expenses, but has become the main source of flourishing for companies and the society, not less important than capital investments in the main funds. That is why, in the twentieth century, advanced economies accrued human capital faster than material capital. For instance, the US economic recovery is at least 15—30% due to the increased level of education among the work force.

Thus, in advanced economies human investment exceeds generously the investment in the main production means. Table 2 presents the correlation between the US investment in the so-called “social expenses’ and production investment, taken for 100%

.

Table 2. Correlation between “social’ expenses and production investment in the US, %

The data provided above allows to see that the US allocates as much for healthcare and social security as for education. It is also evident that if these expenses did not pay back, they would not be so significant. The expenses for reproduction of work-force in the US in 1947—1989 alone increase 5.5 times, while those for reproduction of fixed capital – by 3.7 times only. As the UK Prime Minister Tony Blair said, “Knowledge-based economy has people as its main resource’. This idea was supported by Bill Clinton, who believed that “Sustained growth requires investment in human capital, education, healthcare, technology, infrastructure’[43 - Cit. ex J. Godwin, Clintonomics: How Bill Clinton Reengineered the Reagan Revolution (AMACOM Div American Mgmt Assn, 2009), 195.]. However, modern Russia would rather save on its people.

Social labour productivity is highly dependent on the labour and living conditions of workers. Therefore, all measures that improve the labour ergonomics increase its productivity, as well. But one of the biggest impacts on SLP is that of the extent of people’s satisfaction: the higher it is, the more significant their contribution in the production process.

Let us consider a specific example. To keep a worker idle – like a machine – about 2 Mcal of energy is needed. If the worker consumes 3 Mcal, he can use one 1 Mcal for useful work only, that is 33% of the energy received from the food he eats. Then, if the same worker consumes 4 Mcal of food, he can use 2 Mcal for work. This shows how the increase in the amount of food eaten every day by 25% lets the worker do twice the amount of work he did before. This is why academician S. G. Strumilin concludes that “the more we want to save on economy, on income and food norms, the bigger damage we will suffer’[44 - [Translator’s note: Translated by me.]]

.

Eminent entrepreneur Henry Ford believes the same: “Wages is more of a question for business than it is for labour. It is more important to business than it is to labour. Low wages will break business far more quickly than it will labour’[45 - [Translator’s note: The original incorrectly references these words, the quotation is cited from Today and Tomorrow by Henry Ford (Garden City Pub. Co., 1926), 151.]]

. Saving on people is, thus, a costly approach, however promising it may seem. That is why all unpopular measures are, in the end, regressive (sic).

SLP considerably depends on the technical equipment of labour, and this subject has often been brought up by authors. However, there is no definite answer here. In fact, machine production and maintenance require so much effort, that their use does not always help to save social labour. That is why the science that works out progressive principles, machines and technologies is believed to be one of the major production forces of the society. Plato wrote that “there is nothing more powerful than knowledge, it always and everywhere overpowers pleasure and all other things’. “Our economy is not based on natural resources, but on intelligence andapplication of scientific knowledge’ (Philip Handler, President of the US Academy of Sciences). And advanced economies do understand this.

As the result, American companies are the only to spend more than $15 billion on training and education of their personnel annually. For the implementation of the Equal Opportunity in Education Act adopted in the US in 2002 alone $26.5 billion was allocated. The total costs of education in advanced economies amounts to 5—6% of their GNP.

In Russia, however, they have never reached 1%, and in the years of crisis dropped further to 0.23% of the GDP. As the result, the salaries of professors employed at the Russia’s Higher education system were 1.5 times lower than the average for the country. The salaries of other academic workers are too shamefully low to quote here. Teachers in Russia do not earn enough to afford a minimal living standard. Doctors and nurses, however essential their work might be, are struggling to make both ends meet. It is evident that such stimulation neither stimulates the country’s development, nor creates proper conditions for the SLP increase or production acceleration.

Thus, the state as such, in order to assure its proper functioning, relies on quite specific expenses, just like a house or a complex piece of equipment require regular maintenance. Otherwise, they turn into a ruin. That is why a redistribution of the national income to private individuals beyond reasonable level turns out to be mortal for the country.

1.3.5. Labour differentiation and cooperation

The science of equilibrium is the key of occult science. Unbalanced forces perish in the void.

Eliphas Levi[46 - Cit. ex Manly P. Hall, The Secret Teachings of All Ages an Encyclopedic Outline Of Masonic, Hermetic, Qabbalistic And Rosicrucian Symbolical Philosophy Being an Interpretation of the Secret Teachings concealed within the Rituals, Allegories, and Mysteries of all Ages (H.S. Crocker Company, Incorporated, 1928).]

Still, one of the most efficient factors that increase SLP is improvement of labour organisation. It does not require as much time and money, however, it efficiency is superior to that of all other factors combined. Besides, notwithstanding all other conditions, only harmonious organisation is capable of shaping harmonious economics, and of creating conditions for the implementation of all highly-productive advances. This factor remains the backbone of any enterprise or economy restructuring. All the rest is nothing more than its result.

We are not considering here the factors related to the scientific labour organisation, such as specialization, and introduction of rational labour methods and techniques, because all of them have already been studied in great detail. This approach reduces organisation to building an optimal structure for production based on the combination of two dialectically different factors, i.e. labour differentiation and labour cooperation. Without providing an ample description of these phenomena, we will just point out some of their properties that would be interesting for the current analysis.

In the process of evolution, it has been remarked that professional labour differentiation in space and time increases significantly labour productivity. This tactic helps split human activity into specific functions and operations, none of which are meaningful on their own, by all of which when combined creating a completed product. Such organisation makes better use of the individual workers’ capacities, improves their qualification and instruments of production, and assures rational consumption of work time. As the result, among workers there are more and more experts in a narrow field of specialization.

This factor influences the formation of all social organisation structures (see Figure 1). Besides, the more complex and specialized production, the deeper labour differentiation. “How far the productive forces of a nation are developed is shown most manifestly by the degree to which the division of labour has been carried’ (K. Marx and F. Engels

). Thus, the division of labour types according to their functions is one of the most powerful factors of progress.

On the other hand, labour differentiation leads to the need for agreement and unification of separate workers and worker groups within the common working process, for interaction of all levels of production from individual employees and teams to entire enterprises, subindustries and sectors of economy. This association and interaction between the separate specialized workers in the labour process bear the name of labour cooperation (from Latin cooperation). This phenomenon is one of the key factors of labour organisation.

Labour cooperation converts labour quantity into higher quality thanks to “the creation of a new power, namely, the collective power of masses’ (K. Marx

). Cooperation is followed by joining of the results of differentiated labour; as the result, labour productivity increases faster than aggregate labour consumption. It is this correlation that allows resolving global issues: developing science, education, culture, building defence from enemies, constructing canals, dams, roads, and other structures that serve a public purpose, and bring collective benefit.

Rational combination of labour differentiation and cooperation shapes all economic structures. For instance, workers unite to make a team, teams form workshops, which are parts of companies, enterprises, plants, and economic sectors.

On the other hand, the state is a cooperation of its regions, a region is a cooperation of districts, areas, etc. Thus, labour differentiation and cooperation can apply both within production framework, and depending on the territory; they function both in space and time.

In literature on economics this structure is called “organisation hierarchical tree’. Figure 2 shows such tree for a random plant. However, this structure is applicable to other types of organisations as well, including the state. In each case it is determined by a series if objective and subjective factors, by the production and organisation type, its level of development, management, production and human relations, type of property, etc.

At the same time, as it is easy to see, each link, each cell of production has both labour differentiation and labour cooperation. For instance, if we analyse the organisation tree from Figure 2, from top to bottom, we will notice the division of all structures into a number of cells. But when you move from bottom to top, then all the cells combine in cooperation to create a bigger structure. Thus, labour differentiation and labour cooperation are interdependent instruments of organisation. Labour differentiation pattern determines the reasonable level of labour cooperation. And vice versa, cooperation allows to deepen labour differentiation processes. When a worker does not have to do everything in life himself, he can specialize in his profession even more. At the same time, he would be more interested in cooperating with other workers and units.

Fig. 2. Modern enterprise “organisation tree’

This is why labour differentiation contributes to a more intense labour cooperation within professional or territorial unions. Moreover, without cooperation with other structures labour differentiation is not efficient and cannot be allowed. A metallurgist will only work well when a farmer provides him with food to eat. The same level of interdependence is observable with all other professions.

On the other hand, the impact of the above-mentioned factors on people is not uniform. Labour differentiation makes workers more egoistic, and limits their circle of interests to personal problems. Cooperation, on the contrary, makes people part of a bigger entity, more important than a single person. This elevates the man, enlarges his scope of interests including other people in it, helps understand his place in the hierarchy of the community, the society, and the entire Universe. Thus, the man becomes wiser and more far-seeing. The combination of the factors mentioned generates the variety of human characters, promotes a dialectic unity of the humanity, and integrates people within each other, within their communities and the World.

This means that no labour differentiation is possible without cooperation, just as no cooperation is feasible unless the components of the whole are divided. Every unit is created through labour differentiation of a bigger entity, and all divided labour is reunited in a bigger structure. And this does not depend on property form, on fashion, on organisation name, or nature of its activities.

Every enterprise, every organisation possesses dual qualities. On the one hand, its mission is to satisfy the needs of its employees, on the other hand, to satisfy social needs. “Capitalists and workers are equally wrong in thinking that enterprises exist for the sake of income. They disagree on who should have this income. In reality, enterprises exist for satisfying social needs’[47 - [Translator’s note: Translated by me.]] (H. Ford

).

It is evident that without social functions any enterprise loses all sense to exist, as if the workers and the owners were not interested in the results of their own labour. Absence of social functions turns organisations into business mechanisms, that is, hospitals then work for the profit of doctors, schools – for teachers, banks – for their own gain, administrative services become ordinary tools for enrichment, and armies serve the well-being of generals.