3.1.2.5                        Working Cash Assets  

In the new socio-economic system, the enterprises in a shareholding-social, or humanistic form of ownership of the means of production will have collective monetary assets. Enterprises in private ownership may keep, according tot heir own will, their own status and, accordingly, their cash assets and resume the business activity autonomously under the principle of classical capitalistic market based form of doing business.

The commune owns, as a general rule, an amount of money significantly larger than needed for the consumption of the population and development of the economy in the accounting period. The surplus of cash assets represents a money accumulation of the commune. The commune has to keep a certain money reserve to cover potential investment disruptions; damages caused by natural or otherwise caused disasters. The commune insures it by such money assets. The rest of the money may be used as working cash assets.

Working cash assets are accumulated assets of the past labour of producers, and serve as a means of payment in trading with other producers for their products, semi-finished products, intermediates and raw materials processed by the economy in its production process.

The commune may allot the non-interest bearing working cash assets to the economy in the shareholding-social, or humanistic form of ownership of the means of production, provided the economy repays the borrowed money in the accounting period. In fact, this will be nothing new. The commune becomes something like a corporation, and big capitalistic enterprises do not charge to themselves for their working capital. The society itself would not have any interest in charging the borrowings.

Non-bearing allotment of credits is convenient as it does not make the production more expensive and simplifies the system of calculation of the price of commodities. Moreover, such funding suppresses the possibility of creating an alienated power based on the possession of money and will; therefore, contribute to disalienation of the society.

If the commune provides non-interest bearing loans to the production the economy is able to postpone the collection for its goods by non-interest bearing credits in accordance with its possibilities and needs of the society. When the commune allots non-interesting bearing credits, then individual creditors could no longer earn by lending the money, and in this way the interest would be abolished as a form of rent. It is worth noting that in the new system the interest will not be abolished in a coercive way. It will still be in place for a while, but the society will create such credit policy conditions that will discourage the interest from lent money.

The interest rate level is falling in the saturated capitalistic social system. Japan is the example confirming this fact. An average Japanese buys almost nothing, as he generally has all he needs. For this reason, the interest is almost non-existent in Japan. When the interest from lent money disappears capitalism will lose the purpose for its existence. However we must form a new system that will replace capitalism and improve relationships in society otherwise we will return back into instabilities.  

By disappearance of the interest, banks would lose their basic function of earning rent on the basis of accumulated money. They would no longer be profitable enterprises, but could perform in the community the function of individual and social bookkeeping of the commodity-monetary transactions. Aided by computer technology, banks may keep records of the state of property of the population, records of earnings and expenditures of the population, and of those pertaining to the commune's economy.   

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In classical economic system, the consumers not having cash borrow money for purchase commodities. Money loans burden the price of commodities with the interest rate determined by the market. Beside that the longer the repayment term of a loan, the higher the interest rate is and, therefore, it is in the interest of the consumer to repay the loan as early as possible.  

By introducing a system on non-interest bearing loans it will be necessary to set up a new system of money distribution that will in trading and financial terms be efficient as the classical interest bearing lending. Since the quantity of working capital is large, but also limited, it may happen that such capital will not be sufficient to cover the needs of all beneficiaries. In this regard, the working capital needs to be distributed among the beneficiaries in the function of the turnover time, which may be presented by the following formula:

C-of working capital =

The working capital beneficiary who repays the borrowed money in a shorter time will realize a larger C-of working capital. All larger working capital   coefficients will ensure non-interest bearing credit finance by the commune, irrespective of the quantity of the assets claimed, as long as the working capital fund shall have become exhausted.  

The system predicts a higher attracting of money to the economy that envisages a shorter time of the turnover of commodities. This is understandable, because the money repayment is faster and may be again used for lending. The production that in a period of one-month payment accounting finds a ready market will by the described distribution system be able to use an unlimited quantity of cash assets, as it will be practically repaying the same promptly.  

The economy collectively owned by the commune's population uses the commune's working cash assets according to its needs, and is bound to repay the borrowed amount of money within the accounting period. The economy can repay the working cash assets provided if gets paid for the produced goods or, to say it more precisely, if it produces the commodities the society needs. In the case that producers fail to sell produced commodities they will not realize a sufficient profit. If the profit is, nevertheless, higher than the quantity of working capital spent, enterprises will still be deemed to operate relatively positively as they are able to repay the working cash assets. The small-realized profit in the accounting period will reduce the income of workers.  

If the realized profit falls below the amount of used working cash assets, the enterprise then registers a loss in working cash assets. Toleration of such a situation would lead to the reduction in the amount of cash assets in the commune's money fund, and producers would have difficulties to renew the production. It goes without saying that no economic system can tolerate the financial indiscipline so that neither the commune can. Therefore the commune introduces the system of measures for bearing the responsibility. In the new system all workers are accountable for the loss of money and compensate such loss collectively by means of past labour income-based points.  

The production intended for an unknown consumer needs not be placed immediately on the market. In that case, the turnover of commodities may last longer than one-month accounting period, and the enterprise may realize the profit smaller than the working capital amount spent in the accounting period. However, as each enterprise operates on a continued basis, it may realize on the basis of the collection for the goods produced in an earlier past period of production, the necessary profit and ensure the repayment of working capital.

The responsibility of workers needs to be taken independently of cyclic monthly oscillations of profits. If regulation of the responsibility for different realized profits were required on the basis of the monthly accounting of an enterprise, unnecessary and inconvenient oscillations in rewards to and in sanctions of workers would take place according to current solvency of the enterprise. Distribution and taking the income-based points should be performed once in a yearly accounting period.  

Over one-year period each enterprise takes the working capital as many times as it needs it, and repays it after realizing the profit on the market. If such enterprise fails to repay within one year the entire working capital, then the difference between the borrowed and repaid assets shall be subtracted from the holding of past labour income-based points of all workers, proportionately to the coefficient of accountability. In the case of losses of an enterprise, a higher coefficient of responsibility of workers brings a larger loss of past labour income-based points and a lower income. And vice-versa, a lower coefficient of workers’ responsibility, in the case of cash losses of the enterprise, brings along a smaller loss of the quantity of past labour income-based points, and a smaller decline in the level of income. An initiator of an erroneous decision will be additionally sanctioned by the bad evaluation given by workers and special commissions. In this way, the borrowing entails a great responsibility of the whole collective, which is a precondition for productive production. 

Each loss in the economy reduces the amount of money in the working capital fund of the commune. It may be assumed, however, that in the system that efficiently conducts the responsibility in business operation the losses will be small and that the commune will renew them by the purchase of new money by way of past labour income-based points and by the increase of profits in productive companies of commune.  

The greatest risk bear the enterprises using a larger quantity of working cash assets in relation to the price of work of workers, such as the case is in trade or in final production, whose purchases of semi-finished goods and intermediates from other producers are larger. The risk of certain producers may be reduced by voluntary pooling of manufacturers that participate in producing the commodities. The pooling of manufacturers of raw materials, semi-finished goods and finished products diminishes the need for working capital, because the producers jointly produce the goods and jointly bear the responsibility for the business performance. In ideal case, a fully associated economy would no longer need the working capital.  

Associated producers jointly bear the responsibility for realization of the production. If a sub-supplier fails in terms of the time of delivery or the quality of its production, then all producers may suffer financial inconveniencies. An enterprise that by its bad business performance has inflicted damage to other enterprises would get from the managements of other enterprises or from arbitrary commissions and courts a lower assessment and, accordingly, all workers in such enterprise would to a certain extent realize a lower income. If for the bad business performance in such enterprise certain individuals were to be blamed, such individuals would receive a low assessment from their fellow colleagues, and would thus realize an even lower income.  

The responsibility of each worker established by assessment is the most acceptable and most efficient, since precise establishment of the value of partial damages or contributions that certain work may inflict is difficult, long lasting and expensive in a system of large productions. In case that due to bad business performance lasting damages have occurred, then the poor assessment given to such workers coupled with the managing Board's arbitration would result in a larger loss of past labour income-based points.  

Non-realization of the envisaged profit due to natural catastrophes such as earthquakes, floods and fires, need not be deemed as losses in the economy. Such losses would be covered from the commune's reserve money fund. For such cases, the commune may reinsure itself by a collective agreement of the Federation of Communes. 

Naturally, the quantity of working assets in the commune's reserve fund is always limited and it may happen that some producers do not get the necessary working cash assets. It is impossible for the economy to produce without working cash assets, and plants would need to be closed down. The commune envisages for such cases a reserve source from which working capital assets will be allocated. Such reserve source is the fund intended for development of the economy. If some enterprises even in such cases do not manage to get the needed working capital, they can seek it from the existing banks, but of course with the market interest rate.  

However on the long term run working capital will become less and less necessary, or since it will be distributed without interest, the holders of accumulated money will no longer be able to take the loan commission. Holders of accumulated money will in this way be interested in having their money exchanged for past labour income-based points. In this way, the commune will realize more cash assets for non-interest bearing lending to the economy and consumers. 

It is worth saying in the end that irrespective of the extent to which the economy will be associated, the market economy will never be insensitive to oscillations in trends. By tightening the requirements concerning risk-bearing that will result from the work competition, the failures of producers may be markedly inconvenient. In this regard, producers will have to seek a higher degree of certainty in doing business and find it in the production for the known consumers.  

Associated producers will question the consumers about their needs and will gradually organize the production in line with the orders to be received. When the consumption is known in advance the economy can successfully organize its activity, and the work competition will allow the most successful realization. Such economy would generate conveniences to the society; however, it has to be noted that it would be a decreasingly market and increasingly planned economy.

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