As a rule, needs exceed the total amount of commodities available, which stimulates people to act and develop, becoming an instrument capable of managing them. There exists an optimal correlation between the needs and the number of commodities to satisfy them. If the correlation exceeds the optimal value, that is, almost all needs are satisfied, this decreases the desire to work, and slows down development. However, if this correlation is below the optimal, then the needs become extinct, and the individuals live through degradation. Countries with huge property inequalities witness both these tendencies, which can lead to catastrophic results.
At the same time, if within a state there exists a tendency to satisfy one’s needs not through labour and productive talent, that is, by way of contributing to the productive efforts of the society, but through appropriation of goods generated by others, this inevitably entails destruction of both the production and the moral systems. Whether it comes from the top or from the bottom, such destruction contributes to the degradation of the state and the society. This has already been the case numerous times and history; similar situation can be witnessed across the world today.
For practical economics the classification of commodities into individual, collective and public is essential, for they are consumed in different manners. Individual commodities include the items that a person and their family members use outside of interaction with other people: housing, clothes, food, household items, cultural items, etc. Collective commodities category embraces the things that a person uses jointly with other people at the place of residence, work, or rest. These are medical services and police; utilities services and public transport; cultural, religious and sport facilities; roads, means of communication and many other things. Finally, public commodities are government entities and the army; higher educational institutions and communications; defensive structure and security systems; scientific, cultural and educational institutions. To sum up – all the services that satisfy the needs of all people belonging to a state and a society.
This classification explains why the distribution has a more significant impact on production, and expenses – on earnings. In fact, all commodities possess a certain duality of nature. On the one hand, they satisfy human needs; on the other – encourage production. Collective and public commodities are consumed by humans differently from individual ones, and the dependence of people on such commodities is quite different. Therefore, for each group of commodities specific distribution forms may be worked out to stimulate as much as possible their production and eventually improve the life quality and the morality of people.
All commodities depend on the production process. And in order to function properly, the production process, in its turn, requires commodities to satisfy its own needs. These needs include work tools and industrial facilities; freight transport and communications; energy, repair base, industrial communication, etc. This signifies that materialized labour and production means are required by enterprises as much as commodities are required by people. They serve as a catalysator that makes live human labour more efficient.
Strictly speaking, the classification of labour products into commodities and production means is rather conventional, because providing a person with commodities corresponds to their productive labour. Besides, production means satisfy natural needs of people for work and development, and influence their mental, physical, and moral state. Moreover, the more productive qualities productive means have, the better their ergonomic properties, the better their design, and the higher their efficiency. This rule serves as yet another argument to support the unity of the World and the reality people live in.
Nevertheless, commodities and production means are not equal. Indeed, only commodities are the purpose of production. The production of production means is only necessary to the extent in which it saves social labour and contributes to the commodities production. Otherwise, production of production means becomes an excessive consumption of labour and resources, and is harmful for the society. This has happened quite often, both under socialist system and in modern capitalist states, due to the desire to optimize monetary flows, instead of regulating social labour consumption.
For example, in the USSR, production was brought to this state thanks to the active application of the “Law of exponential growth of production of production means’ formulated by K. Marx and elaborated by Vladimir Lenin. However, no limits were defined, that is why the production growth rates for group A (production of production means) in the USSR exceeded almost 8-fold those of group B (commodities production). As the result, industry developed rapidly, while the quality of life in the country stagnated.
But then, the more production means are produced, the more resources are required for their servicing, reproduction, and maintenance, not to mention significant social labour expenses for repair. This means a lower amount of labour allocated for commodities production.
Therefore, the absence of real market regulators and social criteria that would help assess objectively the production efficiency in general, keeps pushing the society to the limit beyond which production stops serving people and starts exploiting them. The same happens when economics is tempted to increase the efficiency of money expenditure – a typical desire for capitalism – instead of improving production – the results are completely different.
In reality, the production of production means is an intermediary stage in the process of commodities production. It is similar to semi-finished products and other unfinished goods. Specifying the roles of production means and of commodities helps establish an optimal relation between the two, and propose qualitatively new criteria and methods for economics improvement compared to the principles of profit maximization used at present.
§1.3. SOCIAL LABOUR PRODUCTIVITY AND ITS CONSTITUENT FACTORS
There will come a time when our descendants will be amazed
that we did not know things that are so plain to them.
1.3.1. Structures of modern economics
The choice of economic model, that is, the choice between profit-oriented economics and social well-being-oriented economics, is of significant importance. In fact, it determines everything. In other words, the question is: does economics function to increase the number of millionaires or to decrease the number of the hungry? Accepting one or the other economic concept, the humanity actually becomes its captive. “By choosing our gods we choose our destiny’, warned Virgil. It is the same as taking a tram. A person makes a free choice to board a tram, but then moves along the tram route in the vehicle, whether they want it or not and whatever their opinion of it might be.
When profit is the economic priority, then economics resembles hunting grounds where all seek prey and luck. The economic spheres that generate biggest profit (that is, the territories where more animals live, where more natural resource can be mined, where wage labour is cheaper, etc.) have a higher appeal. Various actors of the economic process employ different tools: the first use production, the second harness finance, the third benefit from property, the fourth resort to deception, burglary, or ideology. But eventually there is not much difference between the groups. Economics that holds profit as a priority inevitable turns into a plant for manufacturing of useful goods. And this is where the difference lies.
When profit is placed above everything, the demand for personality sovereignty emerges. On the contrary, if economics prioritizes public interest, there is a need for state regulation. If the first system is aimed at distribution of commodities, the second contributes to their multiplication. The first system appreciates active, cunning, and lucky people, while the second values those who create useful products, are efficient, fair and professional. Thus, every economics proceeds to a selection of people by their qualities. Only those who conform with the given standards have a chance of being successful. That is why the structures of these two types of economics are absolutely different.