Harmonious Economics or The New World Order. Vladimir Emelyanovich Chabanov
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 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 [37] 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