3.1.2.2.5 Development of the Economy
In capitalism, the amount of money intended for investment depends on the entrepreneurship of the owner of the means of production. It is formed by an allocation from the realized market profit of the company.
In socialism, society achieves the development of the economy by allocating funds for the development of the economy from the revenue of the commune. In socialism, people directly distribute the revenue of the commune on funds intended for the development of the commune’s economy and on funds intended for the spending of people in the commune.
Suppose an inhabitant of the commune wishes that the commune’s economy develops to a more significant extent. In that case, they will then state a more substantial amount of money intended for the development of the economy. As the total quantity of money is limited, they will have to declare a smaller amount of funds meant for the spending of the commune’s inhabitants. And vice versa, an inhabitant wishing for more significant spending will state a larger amount of money intended for spending and a smaller amount for the development of the economy. The statements of all inhabitants in the function of their voting power expressed in points of past work, entered into the Internet application of the centre for data processing, will sum up and form the amount of money intended for collective spending and the development of the economy.
Suppose inhabitants will generally tend to a more significant development of the economy. In that case, a larger quantity of assets intended for the accumulation of the economy concerning spending will be appropriated, which would speed up the economic development and reduce the income of the population and, consequently, the standard of living. Such a monetary policy enables each commune to accumulate money to develop its economy by relying on its forces irrespective of the degree of economic development. When the economy grows to a point where it can ensure an expansive production, the need for society to invest in the development will diminish. In this way, the amount of money intended for spending would increase, as would society’s standard of living.
Perhaps, the essential value of such a form of distribution is that the money is earmarked democratically, which means that society will plan its development. Such a monetary distribution form will guide the commune’s developmental policy. Thus, the economy gets the framework for development direction to plan its development effectively. In addition, this will overcome the alienation in the production process that has arisen from making authoritative decisions in society.
Assets intended for economic development services for economic investments by which enterprises acquire new machinery, industrial installations and working capital, helping them achieve higher productivity.
Enterprise managers demand assets intended for economic development based on the development programs of their respective enterprises. The enterprise development program contains a defined amount of needed assets, the envisaged profit of the company, and the time of implementation.
When the amount of money necessary for economic development is formed, it will be distributed according to the C-of development in the following formula:
It is clear from the formula that a smaller amount of needed assets and a more significant profit realized with a shorter implementation time results in higher C-of development. Therefore, the assets are distributed so that the most significant C-of development will get the needed investments, followed by the subsequent C-of development, and so on. Assets are limited, so they cannot be allocated to enterprises that achieve a smaller than necessary C-of development. Such enterprises must wait for better times or have to increase the predicted profit with a smaller amount of needed assets and a shorter time of implementation.
As the funds intended for the development of the for-profit economy are renewed in each accounting period from the revenue of the commune, they are allocated non-refundable as grants. The commune will become a humanistic corporation, and corporations, even in capitalism, do not charge themselves for their investments. It is enough for companies to realize the envisaged profit, and in this way, the assets intended for economic development find their social justification.
Socialism presupposes precisely determined responsibilities of managers and workers in using funds to develop the economy. For example, suppose the company’s management wants to significantly increase production by proposing to take large amounts of money from the economic development fund. In that case, they must first get approval from senior management so that the economy’s improvement occurs in a coordinated manner with other economies. Then, the company manager will present the development program to the workers and his responsibility for its implementation with K-responsibility. Higher K-responsibility can give workers, among other things, greater confidence in the manager’s plan.
Significant investments will considerably increase the responsibility of workers in production processes, and they will need to declare whether they can accept it. Based on insight into the management program and trust in their management, workers will take the scope of their responsibility by offering their K-responsibility. Suppose workers declare an increase in responsibility for their work. This would mean that they support the management program so that the company will compete for money intended for economic development. If workers reduce their K-responsibilities, it would mean they are unsure of the investment program that managers propose, which could delay or prevent the investment. Managers will need to persuade workers to accept their proposal by explaining the risks and benefits of investing.
The proposed K-responsibilities from workers and management will be in force until the time required to realize the development of production. They cannot reduce or increase their K-responsibility for projected productivity during this period unless the productivity changes are jointly adopted.
Funds intended for the development of the economy increase the economy’s productivity and thus the value of newly-produced goods, which requires an increase in the mass of money in circulation to purchase newly-produced goods. An increase in the amount of money in circulation requires an increase in the worker’s past work points. Therefore, the new amount of past labour points should be distributed among the enterprise’s workers in proportion to their K-responsibility for contributing to the production of the newly created value.
Businesses have a measure of productivity expressed in monetary gain in the market. After the expiration of the time required to realize the projected increase in productivity, the calculation of business success is performed. For example, suppose the company realizes the proposed monetary profit. Such profit is treated as a permanent work improvement that permanently brings higher income. Thus, the company’s workers get the requirements for acquiring points of past work. Then the difference between the achieved realized profit and the profit that the company made before the investment is shown as an increase in profit. Then the past labour points are distributed to the employees in the company in the amount of the projected increase in the company’s cash profit.
However, suppose some companies of the commune do not realize the projected profit in the foreseen time with the use of money for the development of the economy. In that case, the difference between the expected and realized profit is shown as a loss. Then the past labour points are deducted from the company’s employees in the quantity of the company’s non-achieved profit gain. In this regard, if the company makes half of the expected profit, it will earn half of the expected points of past work and at the same time lose half of the expected points of past work. This means that achieving half of the productivity by using assets for economic development does not bring earnings or losses of the points of past work.
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The productivity of a profitable economy makes a direct monetary gain on the market, while the productivity of non-profit and government organizations is realized by the benefits they realize to the commune. Work products of organizations are free of charge for the population. Such a group may include administration bodies, public protection, education, healthcare, and similar activities. In socialism, the productivity of organizations is expressed by the performance assessment of the quality of services provided by the people directly and by specialized arbitration commissions.
Organizations also demand monetary assets for their development, but it comes from the collective spending fund. Therefore, evaluation of the success of non-profit companies may have a scale of values equivalent to the monetary profit of the economy so that improvement in the work performance of organizations would increase their success index and vice-versa. The workers in organizations also need to be entitled to an increase in the number of past labour points in the case of high productivity, which is set aside from the profit economy.
This means that the organizations of the commune will participate in the profit of the 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 organizations. Using the coefficients makes it possible to mathematically compare the profit of the economy and the development of non-profit organizations and form a balance of awards and punishments for all conveniences and inconveniences coming from work in profit and non-profit activities. In the division of labour through work competition, such comparison will be necessarily objective. Each disproportion would result in the spill-over of work, where the work conditions would be more convenient, in nobody’s interest.
When the total amount of past labour points which need to be added to or deducted from all workers in all companies and organizations is known, then with the help of computer technology, the rewards or sanctions against each worker are 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 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
Private entrepreneurs perform independently in the same way as the merged public company of the commune. Private entrepreneurs are accountable for their business operations with their capital. The workers employed by private entrepreneurs are responsible for their work directly to the private entrepreneur. Private entrepreneurship does not allocate money to develop the commune’s economy, so it cannot use these cash assets. Private entrepreneurship has to accumulate the cash by itself or borrow it from banks with interest-bearing loans.
Considering that the work competition in socialism will be at least equal to or more productive than the work in private entrepreneurship, it may be expected that private entrepreneurship will lose the productivity fight against socialist entrepreneurship. In addition, under socialism, the productive consciousness of workers will grow, and they will want to make their own decisions, take responsibility for their own decisions, and participate in the distribution of corporate profits that they cannot achieve under capitalism. As workers will have significantly more significant rights and freedoms in the socialist form of ownership of the means of production, it can be expected that private entrepreneurs will lose the labour force.
Private entrepreneurs will then be forced to surrender their enterprises to the commune 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.
Applying the coefficient of responsibility in socialism represents a very favourable substitution for stock-exchange speculations of capitalism. This is because possible gains or losses of past labour points of workers, equivalent to shares in capitalism, are tied to the successfulness of productivity of their companies. Socialism puts workers in an equal position in production and diminishes alienation in the process of production, while collective responsibility contributes to greater prosperity in doing business.
Democratic planning and management of the economy, full employment and work competition, the resolved issue of workers’ accountability, and distribution of incomes according to work values will remove the deficiencies of the known socialist and capitalistic forms of business activities. This will enable the development of socialism.
