3.1.2.5                        Development of the Economy 

Accumulation of money intended for the economy ensures cash assets for the development of the economy and for depreciation of the means of production.   

The level of accumulation of money intended for investments in the economy depends on entrepreneurial skill of owners of the means of production. The money is created by appropriations from the realized profit of the enterprise. Larger appropriations of cash assets from income allow creation of a larger amount of cash assets for the development of the economy, but reduce the consumption of producers. And vice-versa, smaller appropriations of cash assets intended for development develop the economy to a lesser extent, which allows a larger consumption and, accordingly, a higher standard of producers.  

In the capitalistic form of production, the competition of producers on the market requires permanent investments in the development of economy. Investment in the economy augments the production, the product quality, and reduces the product price, which altogether brings conveniences to the society. On the other hand, a large production creates saturation that results in the lowering of demands and enterprise profits. An enterprise in private ownership that does not realize the profit has no value. The fall in the profit results in dismissal of workers, closing of companies, social and economic problems. Therefore, private entrepreneurship is by its own survival forced to permanently search for new flows of consumption and enrich them by new products. In this respect, it makes an aggressive propaganda that creates the consumerist mentality. As in any system one may sooner or later expect stagnation or fall in interest, private entrepreneurship is thus doomed to withdraw in favor of a system that will in a more appropriate fashion follow the social needs.  

The society has tried to resolve the problems of private entrepreneurship by social ownership of the means of production, which may remove numerous difficulties of the capitalist form of production. The socialist revolution removes the capitalistic exploitation and brings the social policy that ensures employment, education, health-care insurance and other conveniences so that in the beginning the people is highly enthusiastic and believes in a better future. At the very outset, almost entire work is intended for the development of the society, and the results are often spectacular in the societies destructed by exploitation. However, over time, the enthusiasm falls as a general rule, and private egoistic interest of individuals gets stronger and stronger. Then the workers with the right to decision-making in the process of production, as the case was in the Yugoslav self-management, no longer accept the social ownership as their own and, therefore, try to ensure a higher income on account of the accumulation of the economy. Such business operation is irresponsible vis-à-vis one's own future. Consequently, such economy is considerably less efficient than private entrepreneurship.  

A centralized socio-economic system as the one in the former USSR plans in one single centre the production of the entire economic system. The plan may fully define the quantity of work intended for the consumption of the society and for the development of the economy. Such a system may for the first time define the development strategy of the society as a whole, which at a certain level of development of the relations in production can ensure a high increase of productivity in the economy.  

However, the great deficiency of the system lies in the fact that the tailoring of the business activity planning is left over to the centers of power and is as such alienated from workers. The workers not having any influence on the creation of economic policy cannot accept it as their and, consequently, cannot sufficiently advocate its implementation. The centralized system of establishing the development policy of business activity creates a more or less successful macro-economic policy of the social system, while it is fully unable to meet the abundance of everyday necessities of the society due the volume of decisions. Since the centrally planned economy does not allow free entrepreneurship, as it can easily endanger the stability of such form of production, a large quantum of needs remains non-satisfied in the society. Such economic system has no perspective and may only survive as an autarchic economic whole.   

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In the new economic system, enterprises are in a shareholding-social or humanistic ownership of the means of production. The ratio of cash accumulation of the economy and cash assets intended for consumption is determined by direct voting of all inhabitants of the commune in the function of individual voting powers within the possible range of values set by the commune's leaders. 

If a certain inhabitant of the commune would wish the commune's economy to develop to a larger extent, he will then state a larger amount of money intended for accumulation of the economy. As the total quantity of money is limited, he will have to state a smaller quantity of money intended for the consumption of the commune's inhabitants. And vice versa, an inhabitant wishing a larger consumption will state a larger quantity of money intended for consumption, and a smaller accumulation of the economy. The statements of all inhabitants in function of their shareholding-social or humanistic power are entered into computer cards or applications and filed with the computer centre for data processing, which rapidly and easily sums up the stated values of all inhabitants in the commune. In this way the amount of money is created intended for consumption and accumulation of the economy.  

These values are then input into the price of commodities. The sale of the commodities forms the commune's revenue from which is appropriated the amount of money intended for development of the economy, proportionately to the voted statements of its inhabitants. If inhabitants will generally tend to a larger development of the economy, then will be appropriated a larger quantity of cash assets intended for accumulation of the economy in relation to consumption, which would speed up the economic development and reduce income of the population and, consequently, the standard of living. Such economic policy enables each commune, irrespective of the degree of economic development, to accumulate the money for the development of its economy by relying on its own forces. When the economy develops to a point when it will be able to ensure an expansive production that will diminish the need of the society to invest in the development. In this way, the amount of money intended for consumption would increase, as would the standard of living of the society.  

Perhaps, the most important value of such form of distribution is that the money is earmarked in a democratic way, which means that the society as a whole plans its own development. Such form of money distribution will provide direction to the commune's macroeconomic policy because the economy gets the limits of such direction and can efficiently prepare and plan its own development. Moreover, in the process of production surmounted will be the alienation as a consequence of authoritative decision-making in the society.  

Further, the society distributes the cash assets of the economy's accumulation to cash assets intended for the development of the economy and assets intended to amortization of the economy. Cash assets intended for economic development serve for economic investments by which enterprises acquire new machinery, industrial installations and working capital helping them to achieve a higher productivity. Cash assets intended for amortization of the economy serve to maintain the existing means of production.  

Enterprise managers demand assets intended for economic development on the basis of the development programs of their respective enterprises. The program of enterprise development contains a defined quantity of needed cash assets, the mode of the earmarking or of fitting into the existing economic structure, envisaged growth of productivity or cash profit, and the time of implementation.

When the amount of money necessary for economic development is formed, it will be then distributed to those enterprises in the commune that individually, within their free activity, envisage realization of the highest profit within the shortest time interval possible and utilization of the smallest amount of cash assets. The money may be distributed to enterprises according to the C-of development, pursuant to the following formula:   

C-of development =   

It is clear from the formula that a larger profit realized with a smaller amount of needed cash assets and in a shorter time of implementation results in a higher C-of development. The higher C-of development will ensure to enterprises the cash assets intended for the development of the economy. Distribution is performed by computer processing in the way that the largest C-of development ensure the needed cash assets, followed by the next C-of development, in terms of magnitude, and so on, until all assets shall have been distributed. In this way, the most productive enterprises realize cash assets intended for the development of the economy ensuring thereby the greatest conveniences to the society.  

Cash assets are limited so that they cannot be allocated to enterprises that achieve a smaller than necessary C-of development. Such enterprises must wait for other times, or have to increase the envisaged profit with a smaller amount of needed cash assets and a shorter time of implementation. 

As cash assets intended for economic development get renewed in each accounting period from the commune's total cash profit, they are allocated as grants. The commune will become a kind of Humanist Corporation and corporations even in capitalism do not charge itself for investments. This means that the investment will not increase the price of produced goods until such investment is repaid. Such a measure simplifies the accounting system. It suffices that enterprises realize the envisaged profit and that in this way the assets intended for economic development find their social justification.  

Needless to say, that the system would have no sense without an exactly established responsibility of workers for using the collective monetary assets. Before a competition takes place for allocation of the cash assets intended for the development of the economy, the managers disclose their own responsibility for implementation of the program expressed with the C-of responsibility. A higher C-of responsibility may give to workers, inter alia, a greater confidence in the management's plan.  

On the basis of the insight enabled by the management, or on the basis of the confidence in their management workers accept, according to their own estimate, a higher degree of responsibility by stating their own C-of responsibility. Such C-of responsibility is in force from the date of hiring or from the date of last increasing of C-of responsibility until the expiry of the time needed for realization of the envisaged production. The workers in such period cannot change their C-of responsibility. However, they can be released from the work responsibility but only if another worker takes his work post together with responsibilities. A higher C-of responsibility brings greater competitive power for a determined work post and a larger share in the distribution of incomes in the case of rising productivity, while in the case of failure the investment also brings bigger losses in the distribution of incomes.  

Assets intended for the development of the economy augment the productivity of the economy and, accordingly, the value of newly manufactured goods, which requires an increase of money in circulation. The larger amount of money in circulation increases income of the commune and in this way the inhabitants acquire a stronger purchasing power for the newly produced commodities. The growth of money in circulation augments the quantity of past labor income-based points of workers. The new amount of past labor income-based points needs to be distributed among enterprise workers and inhabitants, proportionately to their responsibility for the contribution to the production of the newly emerged value.  

Economic enterprises have the measure of productivity expressed by cash profit on the market. After the expiry of the established implementation period, accounting of the success in operation is made. If an enterprise registers a rise in the cash profit, such profit is then treated as a lasting work improvement that on a lasting basis brings a higher income. In this way, the workers of the enterprise acquire conditions for getting a certain quantity of past labor income-based points. Then the difference between the envisaged and realized company’s gain profit is shown as a profit. In such cases, the workers' quantity of past labor income-based points will be distributed by the magnitude of the net profit incurred in their company.  

However, if some enterprises in the commune fail to realize the envisaged profit with the money intended for development within the envisaged time period, then the difference between the envisaged and realized gains profit is shown as a loss. In such cases, the workers' quantity of past labor income-based points will be deducted by the magnitude of the net loss incurred in their company.  

When the total net quantity of past labor income-based points, which is added to or deducted from all workers together in an enterprise is known, then with the help of computer technology the rewards to or sanctions against each worker are easily 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 easily 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   

Productivity of the commune is realized by economic and non-economic activities, and in the system of work competition both are equally significant. The economy directly realizes the cash profit on the market, while non-economic activities do not. Work products of non-economic activities are free of charge for the population. Such group may include the administration bodies, public protection, education, health-care, and similar activities. Labor productivity of non-economic activities is expressed by success evaluation, given directly by specialized arbitration commissions and by the population.  

Non-economic enterprises also demand money assets for their development but it will come from the collective consumption fund. Evaluation of the success of non-economic enterprises may have a scale of values equivalent to the monetary profit of the economy, so that each improvement in the work production of non-economic activities would increase their success index, and vice-versa. The workers in non-economic companies needs also to be entitled to an increase in the quantity of past labor income-based points in the case of the rise of productivity that is set aside from the gross profit of enterprises in the economy.  

The quantity of income points allocated to non-economy is determined by comparing the realized productivities in the economy and non-economy. By using the coefficients, it is possible to mathematically compare the profit of economy and development of non-economy and to form a balance of awards and punishments for all conveniences and inconveniences coming from work in economic and non-economic activities. In the system of work competition such comparison will be necessarily objective, as each disproportion would result in the spill-over of work to where the work conditions would be more convenient, which would be in nobody's interest.  

Private entrepreneurs are accountable for their business operation with their own capital. The workers employed with private entrepreneurs are accountable for their work directly to the private entrepreneur. As private entrepreneurship does not appropriate any money for collective working assets funds, neither to the fund intended for the development of the economy of commune, it couldn’t use the said cash assets under favorable terms and conditions. Private entrepreneurship has to accumulate the money by itself, or borrow it from banks in the form of interest-bearing loans.  

Taking into account that the economy where the means of production are in collective ownership will, thanks to the work competition requiring the most productive work, be at least equal or more productive than private entrepreneurship, it may be expected that autonomous private entrepreneurship will lose the competitive productive struggle against the shareholding-social entrepreneurship. Moreover, the development of the new form of business activity will also entail the rise of the productive consciousness of workers. They will in this way be willing to make decisions by themselves and to bear responsibility for such decisions. As in the shareholding-social or humanistic form of ownership of the means of production the workers have a significantly larger number of rights and freedoms, it may be expected that private entrepreneurs will lose the labor force.  

Private entrepreneurs will then to a larger extent surrender their own enterprises to the commune in exchange for the equivalent amount of past labor income-based points. A larger quantity of past labor income-based points brings higher income, more possibilities of choosing the work post and, generally, a greater productive power recognition of the society.   

Application of the coefficient of responsibility in the new system represents a favorable substitute for stock-exchange speculations of the capitalistic form of economic activity. Possible gains or losses of past labor income-based points, which are an equivalent for shares, are tied for the successfulness of the future productivity assessment. Such a system puts workers in a more equal position, diminishes alienation in the process of production, while collective responsibility contributes to a 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 means of consumption according to the values of work will definitely remove the deficiencies of the socialist and capitalistic forms of business activity. In this way the means of production in a shareholding-social or humanistic form of ownership open up a possibility for the prosperity of the economy. 

Amortization of the Means of Production 

Assets intended for amortization of the means of production serve for renovation of the worn-out means of production or their elements.  

In classical economic systems, an owner of an enterprise determines the amount of money intended for amortization of the means of production. In the new democratic system of decision-making in production, the amount of money intended for amortization of the means of production is formed by the population. The people will make direct vote statements in the function of voting powers, and in the framework of the needed value intervals determined by the leadership. 

It may be assumed that workers working with the worn-out means of production will opt in their statements for a larger amount of assets intended for amortization in order to renovate the means of production they use and to ensure their own productivity, and vice versa. Workers working with new means of production will opt in their statements for a smaller amount of money intended for amortization of the means of production. The mean value of all such statements in the function of the voting power will form the amount of assets intended for amortization.  

The mass of money appropriated for the needs of amortization of the production is proportionally incorporated into the price of all products of the commune's economy. The turnover of commodities generates the profit from which assets intended for amortization of the means of production are allocated proportionately to the decision of the population. Cash assets are renewed on a continued basis.  

Cash assets for amortization of the economy are accumulated in the commune's administrative centre. Assets are limited, and they are distributed according to possibilities. Leadership of the commune makes the primary distribution of assets intended for amortization of the economy among enterprises, according to the priorities that ensure a greater stability of the commune's production and safety at work. Managements of enterprises make the secondary distribution of assets intended for amortization of the production in such enterprises. In principle, the distribution of money is performed identically to the manner practiced currently in big corporations.  

The commune's administrative center maintains records of all assets for the commune's production. The records will note the lifetime of certain elements or wholes. When the lifetime expires, the orderly condition of the worn-out elements will be examined and replaced in the case of need. Workers will be the ones who will report the worn-out or defective elements of the means of production, while management would replace them on the basis of the importance of the same in the process of production, as well as on the grounds of their cost price.  

Management is responsible for the cash profit of company and, therefore, it is very interested in the replacement of the worn-out parts of the means of production. Management is accountable to workers, managing boards, and to the commune's assembly or council for the distribution of assets intended for amortization of the means of production. If the management due to its own wrong assessment spends money assets prematurely and the shortage of money assets arises when an important element of the production is needed, or if the management would not distribute the money in a sufficiently rational way, it would be sanctioned by bad assessment on the part of workers, the managing board and the commune's assembly, which would reflect on the loss of past labor income-based points.   

Such a form of distribution of cash assets intended for amortization of the means of production allows the most optimal maintenance of the means of production and, accordingly, brings generally great conveniences to the economy.

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