since the beginning of XX century – the йpoque of production based on the prevalence of technogenic power.
There was a transitional period that lasted for several decades, during which a transition from biogenic to technogenic power sources was made, when we could witness a superposition of both.
It follows from what was said above that the society of the Hammurapi period did not make a mistake choosing grain as a price-list invariant. At that time grain was the main source of biogenic, power both for people and draft-cattle. It was easily available for consumption grain amount that determined the upper limit that could not be exceeded by the contemporary production capacities with respect to the engineering capabilities of the time.
Modern professional economic science and ordinary people make a grave mistake having chosen an American dollar – a currency of one of many countries - as a pseudo-invariant, despite the fact that none of the modern monetary units belong to primary (energy-based) price-list foundation; what is more, it is not a sovereign participant of production-and-consumption exchange of commodities, but only follows and supports it.
Since the second half of the XXth century, the best choice for the price-list invariant of technologically developed countries has been kWh of energy consumption, because:
the overwhelming majority of businesses are electric power consumers;
electric power tariffs are a part of energy base of a price-list.
Herein, financial and economic analysis and the forecasts gains the metrological consistency and comparability for long-lasting time intervals in case all the calculated and real prices, costs and other financial indicators are measured in kWh.
But even if we have accepted the electric power invariant, we should remember that in other sectors beyond agriculture the number of workers is limited by the ability of agricultural infrastructure to feed its personnel (otherwise the coverage of the deficiency of own products has to be guaranteed by means of imports). Therefore, the dynamics of the ration of the number of people dealing in agriculture to the number of people dealing in other industries ought to be targeted at the efficiency growth in agriculture, first and foremost at crop production and natural flora (photosynthesis is the core of everything).
Nowadays and for the foreseen future, the best choice for the invariant seems to be kWh, but not ‘a ton of fuel equivalent’, for ‘a ton of fuel equivalent’ represents an abstract notion created as a result of vain attempts to find the proper foundation for comparability of economic reports and business analysis without rejecting the hangover of public economic science ‘for clerks’.
‘A ton of fuel equivalent’ may have a limited right-to-life when used in analysis of the energy complex sector; however it is not applicable for long-term economic analysis, forecasting or planning, because the way it is linked with real energy carriers transforms together with the changes in technological foundation of production, predominantly in energy industries. Unlike that unit, kWh of consumption remains the same and does not depend on the particulars of primary energy source spectrum lying in the foundation, or how the spectrum responds to the consequences of technological progress.
Having selected an unchangeable kWh of power consumption as a price-list invariant, belonging to its energy base, we can deal with long-term planning of production in accord with the demographically dependent needs spectrum by means of simulation and optimisation of distribution options in the continuity of production cycles of energy consumption among the specialized sectors, which produce goods and services.
We should remember that the plan is to determine the minimum production levels in the sectors, below which the output should not fall. It is not supposed to chose record targets, the attempts of achieving which will lead the diversified production to an inevitable fall, for in such a case it will not be provided with the necessary amounts of power and raw materials.
The above approach implies that a stability margin is, institutionally and purposively, put in the plan, which lets some resources to remain in a free state to be used for compensation of possible errors and emergency situations (natural disasters, catastrophes, etc). In that case, the technological progress as a whole is the growth of ergonomic features and durability (where it makes sense) of the output; the increase of efficiency coefficients in sectors, the higher efficiency of household and other types of appliances, as well as the outgrowth (in comparison to the plan) of the power availability per sector. They all make a plan to be stable. As a result, real life cannot be worse than it was planned if the state supports intersectorial and interregional solvency proportions by means of tax-and subvention policy to implement the plan of the social and economic development of the country, by controlling the profitability threshold of businesses in accordance with the plan, and by responding to the real changes of market prices.
The main methodological fault of the planning system of the former USSR and of Soviet economic school caused by ill-will of Soviet ‘elite’, especially ‘scientific elite’, was that the Soviet Gosplan:
did not refuse from metrologically insolvent Marxist political economy, based on categories that could not be measured, so it could not be linked with practical accounting tasks;
tried to assimilate to the conditions of the USSR managerially-illiterate economic theories and models of the western science for ‘clerks’;
did not come ON TIME (having a great practical experience at hand), off its own bat, to the same conclusions that we are making here.
Since the ‘elites’ want to target the macroeconomics of the society to a knowingly unpredictable degradation-parasite needs spectrum, not only is the system of demographically-defined long-term planning necessary, but it is also a direct obstacle to implementation an ill-will policy. That thesis, which is true for the modern global economy of the humankind, explains the moral background and the character of the reforms in the USSR and in Russia from 1985 till 1999.
In a multi-industry system of production and consumption, the prices for goods from the base of the price-list, are among the factors which determine, directly or indirectly, the profitability threshold, that is the profitability values corresponding to minimum prices; if the prices drop lower than such values, the production and modern renewal of productive forces becomes detrimental. The price-list bases play that role whether the invariant is obvious, or unidentified.
Issuing and acceptance of paper money, so called, ‘credit money’, led to separation into the obvious price-list invariant (at that time it was gold) and the main payment facilities – the carrier of nominal solvency value, mutually recognized by the participants of the exchange of goods (paper slips). The appearance of a means of payment which does not have any value outside the credit-and-finance system led to a drastic change in pricing comparing with the йpoque of barter trade (which had lasted until the gold circulation age).
Because of the separation into the obvious invariant and means of payment, the purchasing power and nominal paying capacity turned into different economic indicators, which could change independently. This is how they are different:
nominal paying capacity is represented directly by the amount of means of payment;
purchasing power is represented only in the consumption spectrum, in some kind of ‘consumer goods basket’ which can be purchased for a particular sum of the means of payment when there is an established nominal price-list.