In Part II of “Total Economic Potential Formula,” I stated it would be permissible for the calculations of TEP and RTEP to also factor in the extent of international trade.
Here, we will be conducting the same operational procedure but with the TXR (Total Economic Socialization Rate) and the NOR (Net Economic Foreignization Rate). To ensure that all Arbeit and Geld are accounted for, the Central Bank will need to calculate the TEP with those two variables included in the equations. Recall the equations needed to find the TEP in Part I:
[(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 = TEP
Of the four preceding equations, the fourth one is where the TXR and NOR variables are to be included. We rewrite the equation as such:
[Sector + (Other Sectors – Expenditures) + (TXR – NOR)] * Mechanization Rate = TEP
As the revised equation demonstrates, we calculate the Arbeit of the Economic Sectors of the national economy and the sum of TXR, subtracted by the NOR, before factoring in the product of the Mechanization Rate to determine the TEP. The TXR refers to the amounts of Arbeit and Geld that the nation-state generates through international trade. Its expenditures, including all outgoing Arbeit and Geld as well any incurred Schuld, fall under the NOR. The equations for TXR and NOR can even be simplified as finding the value of the State Foreignization Investments (SFIs) for the nation’s “National-Socialized Enterprises” (NSEs):
SFI = TXR – NOR
TXR = (Foreign Arbeit – Domestic Expenditures) + (Domestic Geld – Foreign Schuld)
NOR = (Domestic Arbeit – Foreign Expenditures) + (Foreign Geld – Domestic Schuld)
Everything that I had written there is still applicable here. Basically, the RTEP side includes all of the Arbeit and Geld that came from any Real Trade Agreements where our State was allowed to operate one of our Enterprises in a foreign nation. On the RTFP side, the “TXR” and “NOR” variables change of roles. If RTEP’s TXR referred to the Arbeit and Geld that we were generating and its NOR was the Arbeit and Geld that a foreign nation was generating within any Real Trade Agreement, then RTFP’s TXR and NOR pertain to the Arbeit and Geld that we are receiving from any NSFIs and State Investments:
SFI2 = TXR2 – NOR2
TXR = (Domestic NSFIs – Foreign Service Fee) + (Domestic Investments – Foreign Expenses)
NOR = (Foreign NSFIs – Domestic Service Fee) + (Foreign Investments – Domestic Expenses)
The “Domestic” in this instance refers to our State’s NSFIs and Investments to a foreign nation. Conversely, the “Foreign” is that other nation’s NSFIs and Investments. Whenever our State decides to purchase NSFIs and allocates Geld for Investment, the other nation is legally obliged under the terms of the Real Trade Agreement to charge the Service Fee and Expenses to our State. The reverse will always be expected from our State for the other nation. Do note that the RTFP side of NOR and TXR is only applicable if the other nation has already pegged their national currency to the Work-Standard. Any Kapital from Liberal Capitalist regimes or Socialist regimes not pegged to the Work-Standard have their own equations.
Based on the aforementioned important factors, we will not be delving into TXR and NOR in this SMP Compendium entry. Any further discussions of TXR and NOR are to be found in the following Compendium entries: “Domestic Accounts for Inflowing Arbeit, Outflowing Geld,” “Domestic Accounts for Outflowing Arbeit, Inflowing Geld,” “Foreign Accounts for Inflowing Arbeit, Outflowing Geld,” and “Foreign Accounts for Outflowing Arbeit, Inflowing Geld.”
For now, the focus of this entry is the significance of “Total Productive Potential” (TPP) equation. The TPP Equation, it should be recalled, was this equation described towards the end of Part I:
TPP = (State Budget + People’s Geld) + (RTEP + RTFP) + (NSFIs + State Investments)
How would the Central Bank read this equation? The Central Bank begins with finding the sum of the “Life-Energy Reserve and TPP Accounts” (LER-TPP Accounts), followed by the sum for the “State Investment and Economic Foreignization Accounts” (SI-EF Accounts).
The Central Bank’s LER Account refers to all of the Arbeit and Geld that our VCS Economy generates under RTEP and RTFP. The TPP Account denotes the State Budget and the Geld which everyone already owns within their separate personal accounts. Adding to the sum of the LER-TPP Accounts is the Arbeit and Geld from all active NSFIs issued to the Totality of our nation, as well as any Investments which our State has set aside for the VCS Economy. These Investments range from the Revenue of specific Taxes mentioned in Part III of “Taxation and the Work-Standard” to the allocations of additional Geld for the VCS Economy’s activities within our own nation or else for Enterprises operating abroad. Once the Central Bank adds the LER-TPP Accounts and the SI-EF Accounts, it will soon discover the sum of the TPP equation. And when it does, the Central Bank will know how much Geld can be put into circulation at any given period.
Simplifying the original TPP equation, the Central Bank will calculate the equation as this:
TPP = TPP Account + LER Account + SI-EF Accounts
Concluding with our discussion of the Total Financial Potential Formula, I should point out that the “Indices” mentioned in Part I are the ways which we can track the overall performance of the Socialist nation. Our economic planners, banks, State Commissariats, the SSE and the whole VCS Economy are constantly transmitting encrypted information to the Kontore in real time. Another role of the Kontore includes the relaying of information related to the overall performance of the nation-state under the Work-Standard. Earlier in the SMP Compendium, I stated there were various Financial Indices for the Central Bank and the Totality to evaluate while tracking the overall TPP equation in “How the Central Bank sets the Exchange Rates under the Work-Standard”:
For the Quality of Arbeit, there is the Meaningful Work Rating (MWR), the For My People Index (FMPI) and the Civil Service Performance Index (CSPI). The MWR determines the rate at which foreigners are willing to allow their Arbeit be converted into Geld by the Central Bank. FMPI refers to the Geld that they intend to send back to their own nation-state, while the CSPI is the amount of Geld that they will need for their Duties under the terms of a trade agreement. In the latter two categories, they determine how much Geld is capable of improving the Quality of Arbeit by lowering the Quality of Geld.
And for the Quality of Geld, there is the Cost-of-Dying Rating (CDR), the World Improvers Index (WII) and the Ease of Terrorizing Others Index (ETOI). As the Work-Standard version of “Cost-of-Living,” the CDR denotes the amount of Geld that the Totality will need from the Central Bank before Death. The WII refers to the amount of Arbeit that the Totality has devoted to foreign trade and investment. And the ETOI determines how much Arbeit is devoted to serving foreign tourists and investors; a high rating is indicative of the nation-state relying on tourism and foreign investment as sources of Geld. In short, all of these indices increase the Quality of Geld by lowering the Quality of Arbeit.
For both sets of indices, the Central Bank will be coordinating its activities with the Kontore and Commissariats of Wages and Prices. A few additional variables exclusive to this particular codetermination becomes applicable once the State accepts the terms of a Real Trade Agreement. Rather than FDIs (Foreign Direct Investments), the State is enabled by the Work-Standard to allow for the existence of SFIs (State Foreignization Investments). SFIs refer to the influx and outflux of Arbeit and Geld or Kapital and Schuld across the nation-state’s borders through its National-Socialized Enterprises. They are applicable for each NSE and can be factored alongside the indices for Qualities of Arbeit and Geld to find the Total Economic Socialization and Net Economic Foreignization Rates. With all of these variables coming full circle back to TXR and NOR respectively, the Central Bank is now able to calculate how much Arbeit and Geld was gained or lost from foreign trade and how that in turn affects the Value of the Currency within Exchange Rates.
As one will probably notice, the implications for some of these Financial Indices pertain to their effects on the RTEP side and RTFP side of the LER Account, the rest affecting either the TPP Account or the SI-EF Accounts. The general basis behind each Financial Index eventually ties in with the purposes behind TXR and NOR over the course of the next four Compendium entries, investigating how each aspect of the TPP equation interacts with those Financial Indices.