As the previous price-list invariant (gold) and means of payment (figures on bills and bones, and clearing – in the accounts, which represent the nominal paying capacity) were separated and stopped being the same kind of money, the economics for ‘clerks’ has lost its metrological consistency. As a result, we lost a possibility of calculating the financial indicators of production-and-consumption systems, whose spectrum of production and consumption is given on the basis of quantity.
If we do not have a possibility of single-value estimates of figures that have to do with various dates and regions, we are unable to analyze, forecast, plan or manage the economy at micro- or macrolevel. Consequently, the only motive of economics as a whole is a profit-motive; economists try to sell themselves at the top price. All the calculations and recommendations are useless (if not harmful), nobody is interested in them, except a narrow circle of people from the squeezes[4] of economists.
Being the measure of prices of other goods, the price-list invariant, however, in a general case does not act as a price level basis for the rest of the prices, including rates of exchange (the relative prices of foreign money). That is why all the suggestions aimed at the revival of the gold standard come from the grave misapprehension of the fact that the possibilities of distribution are stipulated by its production.
‘An attempt to ‘galvanize’ the dead body of gold standard or even restore the circulation of gold are useless in the йpoque of economic well-being. In Spain, from 1492 to 1600, in the times of perfectly working circulation of gold, the prices for goods tripled annually. It happened because the production spectrum of other products per head remained approximately the same, whereas the amount of gold, including the gold in monetary circulation, loomed drastically due to the gold flow from America, whose robbery had just started.
That historic fact shows how the price of the gold invariant dropped in comparison with the other implicit invariant (grain), which the society did not recognize in that role; however, grain still defined the price levels and all the other relative prices. That takes us to the notion of the ‘price-list foundation.
The price-list foundation is a small group of goods, each of which has the following feature: a short-term perceivable price growth for such goods cause a perceivable growth in production cost figures of the most of other goods. The reasons of the production cost increase of other goods is the direct or indirect consumption of the products from that small group for production of other goods (all or most of them).
Of course, the production cost growth is accompanied by the market price growth. Herein, the price relations between various pairs of goods and the cost-effectiveness of particular sectors undergo changes, because the prices are not only determined by production costs, but also by distribution of always limited effectual demand all over the goods and services supply spectrum.
From what we said above follows that to make economic calculations, long-term economic analysis and forecasts and long-term plans of social and economic development comparable, we have to select a price-list invariant which belongs to its base for the time span in question.
Ordinary people, politicians and economists should remember a well-known definition from the school course of physics:
“Useful work performed by a system” = “efficiency coefficient” ґ “power consumption of the system”
However, we may be interested in ‘useful work’ performed by a system, which is not seen in a sense of ‘mechanical work’ (which is a physical term). In that case, ‘useful work’ and ‘useful effect’ satisfy the same equation, but their dimensions will be different from physical dimensions of mechanical work and energy in physics. In that case the efficiency quotient will not be dimensionless.
[efficiency] = [the unit of measurement of a useful effect] / [the name of the unit of measurement of incoming energy].
Like anything else, the production system of a society obeys the general physical law of energy conservation, a partial form of which is the efficiency coefficient equation.
The useful effect of the production system of a society is represented in a natural form as an end-consumption product manufacturing spectrum.
Abstracting from the span of time needed for the growth of production capacities in each sector, and taking into consideration the whole lot of consumption of intermediate products for manufacturing purposes (because it is impossible to do without them when producing end products with the use of modern technologies), we will see that the industrial output level for each item throughout the production spectrum is limited by efficiency coefficient of technological processes[5] in the corresponding sector and by the amount of incoming energy.
Correspondingly,
The production spectrum as a whole has an upper limit. It is limited by:
the values of sector efficiencies of technologies (the dimension of technological efficiency is [unit of measurement of the output mount] / [kW/hr];
the amount of incoming energy for the whole system;
energy distribution by sectors.
The above means that when we move from physical indicators of a production-and-consumption system to their monetary expression, we can see that the primary base of the price-list is its energy base. In other words, energy prices determine all the other price levels, when the established needs of the society undergo slow changes in comparison to the production dynamics.
The words in italics mean that human needs are primary to pricing, whereas the labour theory of pricing (value) in its historically established form is metrologically inconsistent.
The reason of inconsistency of the labour theory of value, which the public economics has not been able to get rid of, is the fact that all the people seen as workers taking part in diversified production are mutually incommensurable. The progress of professional management sectors, processing of various data, including professional research and design work, led to the state when severity rate (man-hours) as the unit of measurement, or the units of rating of work load needed to gain useful effects, have lost their managerial value not only when we compare different sectors but even within individual sectors.
They used to be managerially valuable until manual labour of great numbers of people was the main basis of economic well-being , and, in the first place, of the ruling ‘elite’, which despised professional gainful activities, considered itself to be ‘free’ and embezzled the fruits of labour and the incomes of the employees enslaved by them.
People can be compared to each other only as the consumers in accordance with the demographically defined needs spectrum. That is why the ‘hour rate’ has the managerial value because it defines the paying capacity of the population, and in turn, its purchasing power as well as most of the consumption spectrum. However that indicator is useless when it comes to evaluation of the output performance.
Another indicator that has the managerial value is the ratio of electricity rate to hour rate in different sectors and regions in comparison with the demographically defined consumption spectrum[6].
The energy base of the price-list has permanently been present all through the span of the history of civilization; however it consists of a changeable composition of power sources, whose component weights are also prone to changes. All the history of the modern global civilization can be separated into two йpoques:
till the middle of XIXth century; it was the period when production was mainly based on the prevailing biogenetic power, which source is photosynthesis in plants (which means that the natural flora and crop production efficiency are the roots of well-being).