In the technological theory of social production, the growth of output, measured in money units, is related to achievements in technological consumption of labour and energy. This theory is based on concepts of classical political economy and neo-classical economics and appears to be a generalisation of the known economic models, such as the neo-classical model of economic growth and input-output model.
Contents
The main relations of the theory
The major variables of any theory of social production are production factors, which are some universal characteristics of production processes and are considered as original sources of value. In classical political economy (Smith, Marx, Ricardo), it is human efforts (labour)
This relation formalised the concept of neo-classical political economy about substitution of labour by capital. There can be different realisation of the above function. The next important step to the understanding of economic growth was done in the middle of the past century. To incorporate into the theory technological progress, which is believed is ultimately the source of economic growth in developed countries in recent centuries, it was suggested to modify concepts of arguments in the production function and consider them to be not capital and expenditures of labour, but services of the capital
The quantity
This function can also be compared with the previous equation, in which capital as variable played two distinctive roles: capital stock as value of production equipment and capital service as a substitute of labour. The only thing which is done is a separation of the two roles of capital: we consider capital stock
Dynamics of production factors
The expansion of production, characterised by changes of the accumulated value
The first terms in the right side of these relations describe the increase in the quantities caused by gross investments
Production Function
Production function, as function of independent variables: labour
where
The productivity of the capital stock
In the multi-sector approach (input-output model), changes in the technological index are related to aggregate sectoral technological change and to the difference in the growth rates across sectors.
This formulation offers two complementary descriptions of the production of value. The first line in equation (2) relates output to the amount of production equipment (capital stock) while the second describes the process of production through property of the same equipment to attract labour and energy (labour and substitutive work). The first line is analogous to the production technology found in the Harrod-Domar growth model, while the function in the second resembles the Cobb-Douglas production function.
Three Modes of Development
The real investments are determined by the assumption that the production system tries to swallow up all available production factors. In any case the rates of real growth do not exceed the rates of potential growth, given as functions of time
so that, in virtue of equations (1), one ought to write for investments
The three lines of this relation define three modes of economic development, for which one has different formulae for calculation of the rates of real growth. The first line in (5) is valid in the case of lack of investment, abundance of labour, energy and raw materials. The second line is valid in the case of lack of labour, abundance of investment, energy and raw materials. The last line of equations is valid in the case of lack of energy, abundance of investment, labour and raw materials.
Dynamics of Technological Coefficients
Assuming also, that the technological coefficients have tendencies to change in such a way that the production system tries to exploit all available production factors, in the first approximation, one can get the equations for the technological coefficients
where
Implementations
The written above relations present a framework of description of economic development, which can be applied in case, if availability of production factors, determined by their rates of potential growth
Productivity of labour
The scientific and technical progress can be reduced to processes of introduction of innovations, that is consecutive replacement of instruments, materials, designs, adaptations and other objects with more perfect from this or that point of view. Among all processes of replacement, the outstanding role is played the process of replacement of alive work by work of machines with assistance of forces of the nature. Substitution of efforts with work of machines is unique process of replacement which influences the labor productivity as the ratio of value of output to expenditures of labour. Productivity of labour depends on the ratio of substitutive work to workers' efforts
Here, output should be measured in value units of constant purchasing capacity, that is, as one speaks, to represent a 'physical' measure of output.
The growth rate of labour productivity is expressed via four quantities as
The labour requirement
Increase in labor productivity cannot be understood without taking into account the phenomenon accompanying progress of production - attraction of natural energy sources (animals, wind, water, coal, oil and others) for performance of works that replaces efforts of the humans in production. The developing of machine technologies appears to give increase, via effect of substitution, in labour productivity. A progressively greater amount of energy is utilised by human societies via improvements in technology.
Exponential growth
The theory can be applied to describe the 'stylised' facts of economic growth, that is, exponential growth of output and production factors. In such, relatively calm periods of development, the rates of growth of production factors can be considered to be constant, which gives, according to equation (1), exponential growth of production factors
To obtain an expression for output, one refers to relations (2) and (8), according to which, the output can be written in the following form
This relation describe a well known fact, that the growth rate of output is equal to the growth rate of capital. The difference between the growth rates of capital and output seems to be quite unreliable, given the rough estimate of the parameters of the problem, though, at more detailed consideration, the difference can be explained by distinction of the growth rates of sector outputs.
The rate of growth of output can be broken on two parts, while on the average a fraction of the rate
Though capital is the means of attracting the production factors to production, increase in consumption of the production factors is connected with increase in capital. One can formally separate the growth rate of capital
.
The principle of evolution
The theory demonstrates that the growth of production is caused by achievements in technological consumption of labour and energy. One can see, on an example of U.S. economy, that the production system, indeed, tries to swallow all available resources. This sentence can be considered as the principle of development of the production system and the human population itself, that has been developing as a self-organising system, trying to catch as much energy as possible. The human population, as any biological population obeys energy principle of evolution, which states that those populations and their associations (ecosystems) which can utilise the greater amount of energy from their environment have an advantage for survival. A lot of energy is used by a human population through improvements of technology, and the managing huge amount of energy allows the human population to survive in every climate zone of the Earth and expand itself in great measure. The enlargement of the human population from a very small group a million years ago till about 7 billion in year 2012 ought to be apparently connected with enhancement of the living conditions. Apparently, it is impossible to explain growth of number of human population, not referring on social production system—the means of adopting the human to conditions of existence.
The technological theory of social production is a starting step of approaching to the problem of development of the human-nature system, the problem in which labour and energy supply are determined by evolution of human population itself, while the development of mankind is treated as result of economic growth based on achievements in technological consumption of energy.