Compendium: Total Economic Potential Formula (Pt. I of II)

In an earlier entry, we discovered the formula for finding the Quality of Arbeit. The Quality of Arbeit governs the Value of Arbeit before any conversions into Geld can be made. Since the Quality of Geld, Total Financial Potential, and Real Total Financial Potential are affected by the economic side of the Work-Standard, we will be exploring the mathematical basis behind the Total Economic Potential. Half of the equations for this formula have been discussed. For those who need to review them, the equations were as follows:

WP(FM) – WI = Arbeit of a single Vocation

[WP (FM) – WI] * Number of all Vocations = Arbeit of an entire Profession

Profession * Mechanization Rate = Quality of Arbeit

(Quality of Arbeit / Vocations) – Paygrades – Dependent Payments = State Revenue

Given these equations, we can deduce how to find the equations needed for the formula to determine the “Total Economic Potential” (TEP). With TEP and given values for the “Total Economic Socialization Rate” (TXR) and the Attrition Rate, the “Real Total Economic Potential” (RTEP) can be found. And if we were able to know all of the above, the formulas and equations used in the financial side of the Work-Standard will also be discovered. The formula and equations for the “Quality of Geld,” “Total Financial Potential” (TFP), “Real Total Financial Potential” (RTFP), and so forth are going to be the topic of a future entry in the SMP Compendium.

To find the TEP, finding the Arbeit of the entire national economy is needed. The equations used in the Quality of Arbeit formula only went as far as finding the Arbeit of a single profession, independent of the rest of the national economy. Going back to the first two equations, they would be formatted as such:

[(WP(FM) – WI) * Number of Vocations] = Arbeit of a Profession

(Arbeit of a Profession – Expenditures) * No. of Enterprises = Arbeit of an Industry

Industry + (Other Industries – Expenditures) = Arbeit of an Economic Sector

[Sector + (Other Sectors – Expenditures)] * Mechanization Rate = Total Economic Potential

Notice that I included an “Expenditures” variable for Professions, Industries, and Sectors. The purpose behind their incorporation into the equations was to reinforce the fact that the Work-Intensity (WI) variable also affected the expenditures. To avoid operating at a loss, the Work-Productivity (WP) variable needs to be greater than the value of WI. Note that WI will remain as an ever-present factor as we go from one Vocation to finding the Total Economic Potential. The Mechanization Rate is used last to find the Total Economic Potential.

With the basic equation for finding the TEP of just one Profession, we can now format work on the rest of the TEP Formula. We reformat our TEP Formula, so that the equations would look something like this:

Total Economic Potential (TEP) Equations

[(WP(FM) – WI) * Number of Vocations] = Arbeit of all All Professions (AAP)

(Arbeit of a Profession – Expenditures) * No. of Enterprises = Arbeit of all Industries (AAE)

Industry + (Other Industries – Expenditures) = Arbeit of an Entire Economic Sector (AAS)

[Sector + (Other Sectors – Expenditures)] * Mechanization Rate = TEP of Economy (AN1)

For the sake of simplicity, let’s assume that we are not trading with anyone. It is just us trying to figure out how we are supposed to calculate the TEP Formula. If we know the TEP of the National Economy, we also need to know the TEP of the Socialist Student Economy, the Financial System, the Central Government, and any known International Trades (to be explored later in this Section of the Compendium). If we know the values for the five important categories of the Socialist nation, we can then find the “TEP of the Whole Nation.” That equation should read:

AN1 + (AN2 * MR) + (AN3 * MR) + (AN4 * MR)+ (AN5 * MR) = TEP of the Whole Nation

AN1 = TEP of National Economy

AN2 = TEP of Student Economy

AN3 = TEP of Financial System

AN4 = TEP of Central Government

AN5 = TEP of International Trades

It should be stressed that in order to find the Real Total Economic Potential (RTEP), an Attrition Rate needs to be uncovered. The whole idea surrounding Attrition is that the source of Currency Depreciation under the Work-Standard is tied to the Quality of Arbeit. What this means is the TEP becomes the metric by which to gauge economic productivity overall and when the Central Bank needs to figure out the real Quality of Arbeit for the entire national economy, not just one specific Vocation, it will rely on the RTEP. The idea there is to inform the Central Bank as where to find the proper limit in how much Currency it can print under the TFP.

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  1. Update (21 September 2021) – The Fourth Estate

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