Econodynamics: The Theory of Social Production

203 Pages·2012·1.599 MB·English

by  Vladimir N. Pokrovskii (auth.)

Econodynamics
New Economic Windows
SeriesEditors
MARISA FAGGINI, MAURO GALLEGATI, ALAN P. KIRMAN
SeriesEditorialBoard
JaimeGilAluja
Departamentd’EconomiaiOrganitzaciód’Empreses,UniversitatdeBarcelona,Barcelona,Spain
FortunatoArecchi
DipartimentodiFisica,UniversitàdegliStudidiFirenzeandINOA,Florence,Italy
DavidColander
DepartmentofEconomics,MiddleburyCollege,Middlebury,VT,USA
RichardH.Day
DepartmentofEconomics,UniversityofSouthernCalifornia,LosAngeles,USA
SteveKeen
SchoolofEconomicsandFinance,UniversityofWesternSydney,Penrith,Australia
MarjiLines
DipartimentodiScienzeStatistiche,UniversitàdegliStudidiUdine,Udine,Italy
ThomasLux
DepartmentofEconomics,UniversityofKiel,Kiel,Germany
AlfredoMedio
DipartimentodiScienzeStatistiche,UniversitàdegliStudidiUdine,Udine,Italy
PaulOrmerod
DirectorsofEnvironmentBusiness-VolterraConsulting,London,UK
PeterRichmond
SchoolofPhysics,TrinityCollege,Dublin2,Ireland
J.BarkleyRosser
DepartmentofEconomics,JamesMadisonUniversity,Harrisonburg,VA,USA
SorinSolomonRacah
InstituteofPhysics,TheHebrewUniversityofJerusalem,Jerusalem,Israel
PietroTerna
DipartimentodiScienzeEconomicheeFinanziarie,UniversitàdegliStudidiTorino,Torino,Italy
Kumaraswamy(Vela)Velupillai
DepartmentofEconomics,NationalUniversityofIreland,Galway,Ireland
NicolasVriend
DepartmentofEconomics,QueenMaryUniversityofLondon,London,UK
LotfiZadeh
ComputerScienceDivision,UniversityofCaliforniaBerkeley,Berkeley,CA,USA
EditorialAssistant:
AnnaParziale
DipartimentodiStudiEconomici,UniversitàdegliStudidiNapoli“Parthenope”,Napoli,Italy
Forfurthervolumes:
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Vladimir N. Pokrovskii
Econodynamics
The Theory of Social Production
Second Edition
ProfessorVladimirN.Pokrovskii
InstituteofChemicalPhysics
RussianAcademyofSciences
KosyginSt4
Moscow117977
Russia
[email protected]
ISSN2039-411X e-ISSN2039-4128
NewEconomicWindows
ISBN978-94-007-2095-4 e-ISBN978-94-007-2096-1
DOI10.1007/978-94-007-2096-1
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Preface
WhilestudyingandteachingMethodsofMathematicalModellingofEconomicPro-
cesses,Ihavebeenconfusedaboutsomediscrepanciesbetweenvariouspartsofthe
economictheory.Therewasanimpressionthattheeconomictheoryexistsininde-
pendent fragments. Especially upsetting for me, a person who began the study of
economic theory with Das Kapital, was the fact that Marx’s theory seems to have
noconcerninmainstreameconomics.
IrealisedlaterthatIwasnotthesolepersontofeeladeepdissatisfactionwiththe
situationwiththeeconomictheoryanditsabilitytodescribereality.Tosaynothing
ofthenumerouspapers,therearemanybooksdevotedtoacritiqueofmainstream
economics(NelsonandWinter,1982;Kornai,1975;Beaudreau,1998;Keen,2001).
There is a special online Real-World Economics Review (http://www.paecon.net/)
opposingthemainstreamtheories.Thepeoplewhoareengagedinecologyaretra-
ditionallyconfrontingtheconventionaleconomicthinkingandarelookingforphys-
icaltermstoexplainthephenomenaofproduction(Costanza,1980;Odum,1996).
Somephysicistsaretryingtofindnewapproachestotheanalysisofeconomicsitu-
ations(MantegnaandStanley,1999).
Thisbookcontainsnocritiqueofanytheories.Itisdevotedtounderstandingthe
principlesofproductionandcontainsaconsecutiveexpositionofthetechnological
theoryofsocialproduction,whichcanalsobeunderstoodasthetheoryofproduc-
tionofvalue.Inthefoundationofthetheoryarelaidtheachievementsofclassical
political economy. The labour theory of value is completed, after Marx’s hints in
Das Kapital, with the law of substitution. The latter states that, when interpreting
value, one has to consider that the workers’ efforts in the production of things are
substituted with the work of production equipment. A new important concept of
substitutive work, as a value-creating production factor, was introduced and used
toformulatetheappropriatetheory.Theadequacyofthetheoryhasbeentestedby
usinghistoricaldatafortheU.S.economy.
Thebookiswrittenbyaphysicistforthescientificallyliteratereaderwhowishes
to understand the principles of the functioning of a national economy. The book
contains a discussion of conventional models (Leontief’s input–output model, the
v
vi Preface
classicalWalrasmarkettheoryandothers)andcanbeconsideredasatextbookfor
students of various specialities who have the necessary preparation in physics and
mathematicsandadesiretostudyeconomicproblems.Ithinkthemonographcould
beinterestingforenergyspecialists,whoareengagedinplanningandanalysingthe
production and consumption of energy carriers, and for economists, who want to
knowhowenergyandtechnologyareaffectingeconomicgrowth.
The appropriate formulation of the theory has a long history. This monograph
waslaunched,infact,asarevisionandenlargementofmybookPhysicalPrinciples
in the Theory of Economic Growth, issued by Ashgate Publishing in 1999. How-
ever,itappearsthattheproperdescriptionofthetheoryhasrequiredthetexttobe
completelyrewrittenandnewmaterialtobeadded,sothatIhavetheopportunityto
presentanewbookwithanewtitle.Ihaveusedthiseditiontoclarifytheconcepts
andmethodsofthetheoryasfarasitwaspossibleformeatthemoment.
Iamgratefultomanypeoplewhosupportandencouragemeinmywork.Iespe-
ciallywouldliketoseparateafewpersons,withwhomIhavehadtheopportunity
todiscussmanyrelevanttopics:RobertAyres,BernardBeaudreau,SergioUlgiati,
AndreMaisseu,MichailGelvanovskii,GrigoriiZuevandIrinaKiselyeva.Someis-
sues became clearer for me after a discussion on the generalised labour theory of
valuewithmembersoftheSocintegrumforum(http://socintegrum.ru/);Iamthank-
ful especially to Valerii Kalyuzhnyi and Grigorii Pushnoi. Finally, I would like to
express special thanks to my editors Maria Bellantone and Mieke van der Fluit at
Springer.
Moscow,Russia VladimirN.Pokrovskii
References
Beaudreau,B.C.:EnergyandOrganization:GrowthandDistributionReexamined,1stedn.
GreenwoodPress,Westport(1998)
Costanza,R.:Embodiedenergyandeconomicvaluation.Science210,1219–1224(1980)
Keen,S.:DebunkingEconomics:TheNakedEmperoroftheSocialSciences.PlutoPress,
Sydney(2001)
Kornai, J.: Anti-equilibrium. On Economic Systems Theory and the Tasks of Research,
2ndedn.North-Holland,Amsterdam(1975)
Mantegna,R.N.,Stanley,H.E.:AnIntroductiontoEconophysics:CorrelationsandCom-
plexityinFinance.CambridgeUniversityPress,Cambridge(1999)
Nelson,R.R.,Winter,S.A.:AnEvolutionaryTheoryofEconomicChange.BelknapPress
ofHarvardUniversityPress,Cambridge(1982)
Odum, H.T.: Environmental Accounting. Emergy and Environmental Decision Making.
Wiley,NewYork(1996)
Contents
1 Introduction:ConceptofValueandProductionFactors . . . . . . . 1
1.1 ANationalEconomyataGlance . . . . . . . . . . . . . . . . . . 1
1.2 TheConceptofValue . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 ProductionSysteminMoreDetail. . . . . . . . . . . . . . . . . . 5
1.3.1 TheLawofSubstitution . . . . . . . . . . . . . . . . . . . 6
1.3.2 TheGeneralisedLabourTheoryofValue . . . . . . . . . . 8
1.4 TheLawofProductionofValue . . . . . . . . . . . . . . . . . . . 9
1.4.1 EarlierNeo-classicalFormulations . . . . . . . . . . . . . 10
1.4.2 AmendmentstotheNeo-classicalFormulation . . . . . . . 10
1.4.3 TheLawintheTechnologicalTheory . . . . . . . . . . . . 11
1.5 EnergyandProduction. . . . . . . . . . . . . . . . . . . . . . . . 12
1.6 OrganisationoftheMonograph . . . . . . . . . . . . . . . . . . . 14
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2 EmpiricalFoundationofInput–OutputModel . . . . . . . . . . . . 19
2.1 OntheClassificationofProducts . . . . . . . . . . . . . . . . . . 19
2.2 MotionofProducts . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2.1 BalanceEquations . . . . . . . . . . . . . . . . . . . . . . 22
2.2.2 DistributionoftheSocialProduct . . . . . . . . . . . . . . 24
2.2.3 GrossDomesticProduct . . . . . . . . . . . . . . . . . . . 25
2.2.4 ConstituentsofGrossDomesticProduct . . . . . . . . . . 27
2.3 TheNationalWealth . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.3.1 AssessmentsoftheStoredProducts . . . . . . . . . . . . . 31
2.3.2 StructureofFixedProductionCapital . . . . . . . . . . . . 32
2.3.3 EstimatesofFixedProductionCapital . . . . . . . . . . . 34
2.4 LabourForce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.4.1 ConsumptionofLabour . . . . . . . . . . . . . . . . . . . 35
2.4.2 PopulationandLabourSupply . . . . . . . . . . . . . . . 37
2.5 EnergyResourcesintheProductionProcesses . . . . . . . . . . . 37
2.5.1 WorkandQuasi-workinaNationalEconomy . . . . . . . 38
2.5.2 DirectEstimationofSubstitutiveWork . . . . . . . . . . . 39
vii
viii Contents
2.5.3 EnergyCarriersasIntermediateProductsandEnergyasa
ProductionFactor . . . . . . . . . . . . . . . . . . . . . . 42
2.5.4 EstimatesofPrimaryEnergyandSubstitutiveWork . . . . 43
2.5.5 StockofKnowledgeandSupplyofSubstitutiveWork . . . 44
2.6 NaturalProcessesinaHuman-DesignedProductionSystem . . . . 46
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3 MonetarySideofSocialProduction. . . . . . . . . . . . . . . . . . . 51
3.1 ArchitectureoftheSocialProductionSystem . . . . . . . . . . . . 51
3.2 ParticipantsoftheMoneySystem . . . . . . . . . . . . . . . . . . 53
3.2.1 TheCustomersoftheCommercialBanks . . . . . . . . . . 53
3.2.2 CommercialBankasaCustomeroftheCentralBankand
aProducerofCreditMoney . . . . . . . . . . . . . . . . . 56
3.2.3 TheGovernmentasaCustomeroftheCentralBankand
theCentralBankasaProducerofPaperMoney . . . . . . 58
3.3 MoneyCirculationandProduction . . . . . . . . . . . . . . . . . 60
3.3.1 TheDescriptionofProduction. . . . . . . . . . . . . . . . 61
3.3.2 EquationsforMoneyCirculation . . . . . . . . . . . . . . 61
3.3.3 TheSteady-StateSituation . . . . . . . . . . . . . . . . . 62
3.3.4 UnsteadySituations . . . . . . . . . . . . . . . . . . . . . 65
3.4 AbouttheUnitofMeasurementofValue . . . . . . . . . . . . . . 67
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
4 Many-SectorModelofProductionSystem . . . . . . . . . . . . . . . 71
4.1 LinearApproximation . . . . . . . . . . . . . . . . . . . . . . . . 71
4.1.1 TheInput–OutputMatrix . . . . . . . . . . . . . . . . . . 72
4.1.2 StaticLeontiefEquation . . . . . . . . . . . . . . . . . . . 73
4.1.3 ThePlanningofGrossOutput . . . . . . . . . . . . . . . . 73
4.1.4 TheCapital-OutputMatrix . . . . . . . . . . . . . . . . . 74
4.2 EffectsofPrices . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
4.2.1 TheConditionofConsistency . . . . . . . . . . . . . . . . 76
4.2.2 DynamicsofSectoralProductionofValue . . . . . . . . . 78
4.3 DynamicsofOutput . . . . . . . . . . . . . . . . . . . . . . . . . 79
4.3.1 DynamicLeontiefEquation . . . . . . . . . . . . . . . . . 80
4.3.2 BalancedGrowth . . . . . . . . . . . . . . . . . . . . . . 81
4.3.3 PotentialInvestment . . . . . . . . . . . . . . . . . . . . . 82
4.4 EnterpriseandBasicTechnologicalProcesses . . . . . . . . . . . 83
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
5 ProductionFactorsandTechnology . . . . . . . . . . . . . . . . . . . 87
5.1 DynamicsofProductionFactors. . . . . . . . . . . . . . . . . . . 87
5.1.1 DynamicsofCapital . . . . . . . . . . . . . . . . . . . . . 88
5.1.2 DynamicsofSubstitutiveWorkandLabour. . . . . . . . . 88
5.2 MacroeconomicCharacteristicsofTechnology . . . . . . . . . . . 90
5.2.1 TechnologicalCoefficients . . . . . . . . . . . . . . . . . 90
5.2.2 TechnologicalIndex . . . . . . . . . . . . . . . . . . . . . 91
5.3 InvestmentandDynamicsofTechnology . . . . . . . . . . . . . . 92
Contents ix
5.3.1 InvestmentandThreeModesofDevelopment . . . . . . . 92
5.3.2 UnemploymentandPrincipleofDevelopment . . . . . . . 94
5.3.3 DynamicsofTechnologicalCoefficients . . . . . . . . . . 94
5.3.4 DynamicsoftheTechnologicalIndex . . . . . . . . . . . . 96
5.4 MechanismofEvolutionofProductionSystem . . . . . . . . . . . 97
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
6 ProductionofValue . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
6.1 OutputandProductionFactors . . . . . . . . . . . . . . . . . . . 101
6.1.1 SpecificationoftheProductionFunction . . . . . . . . . . 101
6.1.2 PrincipleofProductivity . . . . . . . . . . . . . . . . . . . 103
6.2 ProductivitiesandTechnologicalCoefficients . . . . . . . . . . . . 104
6.3 ApproximationofMarginalProductivities . . . . . . . . . . . . . 105
6.3.1 PrincipleofUniversality . . . . . . . . . . . . . . . . . . . 105
6.3.2 PrincipleofUniformity . . . . . . . . . . . . . . . . . . . 106
6.3.3 MarginalProductivities . . . . . . . . . . . . . . . . . . . 107
6.4 DecompositionoftheGrowthRateofOutput . . . . . . . . . . . . 108
6.5 ProductivityofLabour . . . . . . . . . . . . . . . . . . . . . . . . 110
6.6 TheBestUtilisationofProductionFactors . . . . . . . . . . . . . 111
6.7 OntheChoiceBetweenConsumptionandSaving . . . . . . . . . 113
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
7 ApplicationtotheU.S.Economy . . . . . . . . . . . . . . . . . . . . 117
7.1 ProductionFactors . . . . . . . . . . . . . . . . . . . . . . . . . . 117
7.1.1 PersonalConsumptionandtheTechnologicalIndex . . . . 117
7.1.2 SubstitutiveWorkandtheTechnologicalIndex . . . . . . . 118
7.1.3 EstimationoftheTechnologicalCoefficients . . . . . . . . 119
7.1.4 TrajectoriesofDevelopment. . . . . . . . . . . . . . . . . 121
7.1.5 DecompositionofPrimaryEnergy . . . . . . . . . . . . . 124
7.2 MarginalProductivities . . . . . . . . . . . . . . . . . . . . . . . 127
7.2.1 ProductivityofCapitalStock . . . . . . . . . . . . . . . . 127
7.2.2 ProductivitiesofLabourandSubstitutiveWork . . . . . . . 129
7.2.3 WhatisProductivityofCapital?. . . . . . . . . . . . . . . 130
7.3 ProductionofValue . . . . . . . . . . . . . . . . . . . . . . . . . 131
7.3.1 ExponentialGrowth . . . . . . . . . . . . . . . . . . . . . 131
7.3.2 PulsatingCharacterofProductionDevelopment . . . . . . 133
7.3.3 TrajectoriesofOutput . . . . . . . . . . . . . . . . . . . . 135
7.3.4 NationalWealth . . . . . . . . . . . . . . . . . . . . . . . 137
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
8 DynamicsofProductioninMany-SectorApproach . . . . . . . . . . 139
8.1 DescriptionoftheSectorDynamics . . . . . . . . . . . . . . . . . 139
8.1.1 DynamicsofProductionFactors . . . . . . . . . . . . . . 139
8.1.2 Investment . . . . . . . . . . . . . . . . . . . . . . . . . . 140
8.1.3 SectorProductionofValue . . . . . . . . . . . . . . . . . 141
8.2 RulesofAggregationandStructuralShift . . . . . . . . . . . . . . 143
8.2.1 ProductionFactors . . . . . . . . . . . . . . . . . . . . . . 143
x Contents
8.2.2 ProductionofValue . . . . . . . . . . . . . . . . . . . . . 144
8.3 EquationsofGrowth . . . . . . . . . . . . . . . . . . . . . . . . . 145
8.4 Three-SectorSystem . . . . . . . . . . . . . . . . . . . . . . . . . 147
8.4.1 FundamentalMatrices . . . . . . . . . . . . . . . . . . . . 148
8.4.2 ProgramofDevelopment . . . . . . . . . . . . . . . . . . 148
8.5 TechnologicalCoefficientsandTechnologicalMatrices . . . . . . 149
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
9 MechanismofSocialEstimationofValue. . . . . . . . . . . . . . . . 153
9.1 TheSystemofProductionandConsumption . . . . . . . . . . . . 153
9.1.1 EconomicAgents . . . . . . . . . . . . . . . . . . . . . . 153
9.1.2 ElementaryEconomicSystem . . . . . . . . . . . . . . . . 155
9.1.3 ProblemofManagementandCo-ordination . . . . . . . . 156
9.2 SubjectiveUtilityFunction . . . . . . . . . . . . . . . . . . . . . 157
9.3 DemandFunctions . . . . . . . . . . . . . . . . . . . . . . . . . . 158
9.4 WelfareFunction . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
9.5 TheSimplestMarkets . . . . . . . . . . . . . . . . . . . . . . . . 162
9.5.1 Free-PriceMarket . . . . . . . . . . . . . . . . . . . . . . 163
9.5.2 Fixed-PriceMarket . . . . . . . . . . . . . . . . . . . . . 165
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
10 ValuefromaPhysicist’sPointofView . . . . . . . . . . . . . . . . . 169
10.1 EnergyPrincipleofEvolution . . . . . . . . . . . . . . . . . . . . 169
10.1.1 ThermodynamicsoftheEarth . . . . . . . . . . . . . . . . 169
10.1.2 HumanPopulationandFluxesofEnergy . . . . . . . . . . 171
10.1.3 PrincipleofEvolution . . . . . . . . . . . . . . . . . . . . 172
10.2 ThermodynamicInterpretationofValue . . . . . . . . . . . . . . . 174
10.2.1 ValueofaStockofProducts. . . . . . . . . . . . . . . . . 174
10.2.2 ObjectiveUtilityFunction . . . . . . . . . . . . . . . . . . 175
10.2.3 ThermodynamicsofProduction . . . . . . . . . . . . . . . 176
10.2.4 DoNegativeEntropyandtheUtilityFunctionCoincide? . . 178
10.3 EnergyContentofaMonetaryUnit . . . . . . . . . . . . . . . . . 179
10.4 ThermodynamicsofProductionCycle . . . . . . . . . . . . . . . 181
10.4.1 ASimpleProductionProcess . . . . . . . . . . . . . . . . 182
10.4.2 OutputoftheProductionCycle . . . . . . . . . . . . . . . 184
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
AppendixA NAICSCodesandTitles . . . . . . . . . . . . . . . . . . . 187
AppendixB DataontheU.S.Economy. . . . . . . . . . . . . . . . . . . 191
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195