3.1.2.2.4 Money
Money is a means of payment for goods and services in a market economy. Money in circulation is issued by the state apparatus through the central bank. The state seeks to equate money in circulation with the total value of goods and services produced to enable a stable economy. The central bank regulates the money supply on the market through monetary policy. The main instrument of the state’s economic policy in capitalism is the credit interest rate formation.
The government uses low-interest rates to create an expansive monetary policy that stimulates investments. As a result, economic development increases workers’ employment, national income, and society’s welfare. However, the increased mass of money in circulation creates inflation, which raises the prices of goods and leads to instability in the market, which is unfavourable for the economy.
The state controls inflation and stabilizes the economy with a restrictive monetary policy that limits the money supply by raising interest rates. Then comes the deflationary tension that suppresses the market, which leads to a recession in production. The recession reduces companies’ profits, increases unemployment, lowers people’s standards, and leads to economic crises.
Market regulation of the amount of money in circulation does not create a sufficiently stable economic policy because it is challenging to balance a huge number of independent factors that prevail in the economy. Thus, cyclical fluctuations in the economy occur, which is unfavourable for the economy and society. The state’s monetary policy is much more adapted to anarchic changes in the market than it is based on organized economic policy.
A stable economic policy requires a balanced distribution of labour, the known purchasing power of the population, the known needs of society, and an efficient economy that meets society’s needs. A fully balanced economic policy can only be pursued through a developed planned economy, and that is why it will have to be accepted in the future. It will necessarily require creating a monetary policy to ensure adequate money in circulation and democratic control of its use.
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The most suitable situation for any economy would be to have the quantity of money in circulation identical to the value of produced commodities. In an ideal case, the economy produces what society needs, and the money in circulation enables purchasing all manufactured goods. This would create economic stability.
Consumers possess a large amount of money. It is much higher than the value of current production and much lower than the total value of everything the society owns because those values were created by turning over the same money. Part of that money is turned over for the needs of payment transactions of production and distribution, and a large amount of money is accumulated to achieve economic security and investments of people. The big problem is that privately accumulated capital is placed freely, making it difficult for the economy to plan production. Therefore, it is necessary to introduce more order in the economic policy of the commune through the process of production planning.
The commune does not issue money, but it can acquire it by redeeming accumulated money held by the population using past labour points. A larger quantity of past labour points of workers brings higher incomes, so people who own money can find their interest in exchanging money for past labour points. By selling money, the commune’s population loses the possibility of lending money with interest but realizes a rise in income proportionately to the increase in the number of past labour points.
In a socialist society, everyone is materially secured. As a result, the individuals will no longer have to save to ensure their future, so a significant voluntary exchange of money for past labour points may be expected. Each community should establish its public bank. Redeemed money should be pooled into the public bank of the commune. The commune will also pool the entire cash fund of the merged companies of the commune. The money collected from taxes of individuals and private enterprises will be pooled as well.
Thus, the commune will accumulate a large amount of money. The economic policy of socialism will form money intended for the incomes of all the commune inhabitants so that they can buy manufactured goods and pay for the services they use. However, if the amount of money is tied only to the produced value of goods, workers would realize incomes even though the delivered goods are not sold on the market. Such production would create overstock in warehouses and spend accumulated money of the commune, while the commune would not go bankrupt. In this regard, the amount of money for people’s incomes should be formed between the total value produced in the merged public company of the commune and the profit realized on the market in the accounting period. The public bank of the commune should determine the monetary policy to realize the commune’s optimal productivity and economic stability.
Such an amount of money may be called the revenue of the commune. The commune’s revenue is less than the amount of money that the commune possesses. The rest of the funds will be used as working capital and reserve funds for the commune.
Democracy in Economy
In socialism, managers will have the power to make decisions in the name of the people if they dare to do it because they will be directly accountable to people for their decisions. The members of the society will be able to punish a manager who makes decisions that do not serve them. In such conditions, no manager can independently take responsibility for making political decisions that guide the whole society because they cannot know with certainty how much such decisions will suit the members of society.
This primarily relates to the formation of the macro-economic policies of the commune.
For this reason, there is no doubt that the commune’s management will include the commune’s inhabitants in the decision-making process about the commune’s income, fiscal, and development policy. Socialism will introduce a new form of democracy in which commune residents will decide on how much of their income they want to set aside for taxes.
The commune’s management will undoubtedly let the population decide how much of their salaries they want to set for individual and collective spending. The fund on individual expenditures defines the total amount of money for incomes for all commune residents, excluding workers in private enterprises because private enterprises keep their profits and distribute payments themselves. Collective spending defines the amount of money individuals wish to deduct from their salaries for the joined spending of all the commune people.
Individual spending implies workers’ incomes but also includes tax money for workers’ salaries in non-profit companies and unemployed people. The individual salaries of people are determined by the values of past and current work and realized productivity. The social system gives these values, and the voters cannot influence them at this moment. In this voting, people decide on the amount of money they want to intend for their individual and collective spending. Each person will write a statement of their decision in the web application associated with the data processing center of the commune administration.
Since past labour points will determine the size of income, people will share past labour points they possess for individual and collective spending. In this way, each resident will exercise decision-making power in proportion to the possession of past labour points. People with more valuable past work will have more power in decision-making.
The rationale: Considering that all members of society have not equally contributed to the creation of collective wealth, they should not have the same decision-making power regarding the fiscal policy of society. The more productive work should have more decision-making power for better motivation. Economic decision-making power needs to be based on the value of past work determined by the number of past labour points. This will contribute to the development of the economy and society. This measure is equivalent to the power of shareholders’ voting rights in capitalism.
Suppose one wishes to allocate more money for individual spending and a smaller amount for collective spending. They will share the value of their past work points in such a ratio. The commune’s leadership should first define the minimum percentage of tax money so that the commune can meet its basic joined spending needs.
The summarized declarations of all the commune inhabitants for individual and collective spending will determine the total amount of money for individual and collective spending. Thus, society will directly create the income and fiscal policies of the commune.
The total amount of money for individual incomes (workers in private companies excluded) will be distributed to the commune population according to their merits. These merits will be primarily based on the realized productivity and prices of work of workers. This will be addressed in more detail in the chapter: “The Distribution of Income
In the same manner, society may determine the minimum income of individuals, which will regulate the range of incomes among the people. This will regulate the relationship between work merits, solidarity, and income-based work interest. For example, if workers were unwilling to perform undesirable work and thus reduce the productivity of the commune, the people can reduce the minimum income of workers through direct voting. The result would stimulate workers to work more and thus achieve higher productivity and a greater share in the distribution of incomes. On the other hand, if the commune reaches higher productivity than is required, society will increase the minimum income and thus reduce the income stimulation of work.
The system provides a single tax rate because it is simpler to calculate, and in this way, the people can determine it through direct democratic voting. Today’s regulation of progressive taxation, which has the task of establishing social balance, will be replaced with the commune’s income policy, which will later be explained more. Harmful forms of spending for health, such as alcohol and tobacco, might be more effectively reduced through the disalienation of society rather than through tax policy.
The people will further divide the money for collective spending to develop production and collaborative consumption.
Assets intended for the development of the economy provide for the expansion of the productive forces, purchases of new means of production, or complete companies that promote production. A larger quantity of cash assets intended for the development of the economy will engage social work and economic growth to a more significant extent, which would increase the means of production and, accordingly, productivity. More sizeable investments in the development of the economy will ensure major social conveniences in the future; however, cash assets for current spending would decrease, which would also reduce the individual and social standards. Such a system will enable each commune to develop by relying on its forces. The policy of the commune development will be addressed in the chapter: “Development of the Economy.”
Assets for collective spending serve to meet all common needs of society. They are used to maintain the existing structure of the social standard and the building of new social standard facilities. This includes funding commodity spending in public health, education, security, construction, and maintenance of infrastructure, etc. Assets for collective spending may, to a certain degree, be distributed by direct decisions of the population, while interested society members may directly make later partial distributions. However, the authorized management needs to make the final distribution of the smallest spending segments for which it will be directly accountable to society. Increased funding for collective spending would allow a higher common standard at the expense of other forms of spending.
The money for the state spending also needs to be set aside from the funds earmarked by people for the collective expenses. This money is used for the expenditure of the state. The amount of money for federal spending is determined by the Federal Assembly through the delegates or representatives of all communes. Collective spending will be addressed in more detail in the chapter: “Collective Spending.”
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The new voting system will be based on the unlimited validity of the voters’ votes until each voter themselves changes their vote. Also, the new system will enable people to vote whenever they want. Therefore, they will be able to change their voting statements many times per day if they wish, and the system will not have any problem processing such changes.
The proposed system will significantly allow the commune population to determine the collective economic needs. Based on their own experience, the people will notice the advantages and disadvantages of a particular form of money distribution, adjusting so that all individuals and society realize more significant benefits. In this way, all individuals and society will realize greater conveniences. The community will accept the economic policy as its own, which is one of the essential elements of the disalienation of the economy and society.
Identified collective economic needs define the macro spending and thereby determine the production. In this manner, the commune’s population will directly and democratically create the macro-economic policy of the commune. This will be an introduction to creating a stable, democratically planned economy.
