Compendium: Paygrade Scaling, Accounting and Distribution (Pt. I of III)

Summarization of Command-Obedience Account Bookkeeping

Command-Obedience Account Bookkeeping relies on every aspect of the Total Productive Potential (TPP) equation to determine the amount of Geld that the Central Bank is allowed to print into circulation. Everything points to the values for the State Budget and People’s Geld under “Income,” RTEP and RTFP under “Production,” and the NSFIs and State Investments under “Mobilization.”

The TPP equation can be written in three different variations. Each one has been explored over the course of the SMP Compendium, but it helps to provide a general frame of reference. Those three are as follows:

TPP = Income + Production + Mobilization

TPP = (State Budget + People’s Geld) + (RTEP + RTFP) + (NSFIs + SI)

TPP = TPP Account + LER-LERE Accounts + SI-EF Accounts

All three of these variants for the TPP equation are valid in their own way. However, there will always be a single variant which the Central Bank is going to rely on the most and that is the third one. In essence, the Central Bank will be determining the sum of the TPP Account, the LER-LERE Accounts, and the SI-EF Accounts to find the TPP value. When it does find the TPP value, the Central Bank will put that same amount of Geld into circulation as rolls of coins and banknotes.     

Imagine that the TPP of the Socialist nation happens to be valued at “23,000,000,000 GDM.” This 23,000,000,000 GDM is not being distorted by changes made to any aspect of economic life in the Socialist nation, whether that is from the State, the Totality or the Central Bank. The Central Bank’s ability to put Geld into circulation is restricted to that given value of 23,000,000,000 GDM.

And under the Work-Standard, the Central Bank is prohibited from printing any more Geld than what is allowed by the TPP value. Anything greater than that value will count towards the “Domestic Sovereign Schuld” (SHd), which needs to be paid with Geld from the State Budget. If the State Budget achieves a negative value as a result, the value of SHd accumulates.

To allow the Central Bank to put more Geld into circulation, the overall TPP value of the Socialist nation must be increased. All of the available methods provided by the Work-Standard is capable of increasing the TPP value. Similarly, certain methods can also decrease the TPP value, some of which can be avoided by both the State and the Totality. There is no exact science on how this can be done, but there is a specific artform that informs everyone of how to create any work of art.

The fastest and easiest way to increase the TPP value is to allow the RTEP and RTFP values to grow gradually. There are plenty of ways for the VCS Economy to improve its own RTEP and RTFP values, which will in turn improve the overall TPP value by extension. Everything begins with what is being done about the Quality of Arbeit (QW) and the Quality of Geld (QM). The performance of a single Enterprise, regardless of its size or its activities, is capable of enhancing the TPP value within their own efforts.

Achieve greater economic growth by increasing the Quality of Arbeit and Quality of Geld. For Quality of Arbeit, boost the Work-Productivity (WP) and the Force Multipliers (FMs) while minimizing the Work-Intensity (WI). Raising the Mechanization Rate (MR) may suffice. And for Quality of Geld, increasing the number of possibilities for Economic Socialization (ES) and maintaining a steady Solidarity Rate (SR) will enhance the effects of an increasing Quality of Geld.

If the prerequisite technologies happen to be available, we can electrify our Arbeit and Geld. Doing so will allow a “Electrified Quality of Digital Arbeit” (EDW) and a “Electrified Quality of Digital Geld” (EDM) to supplement the preexisting Final Quality of Arbeit (FQW) and Final Quality of Geld (FQM) respectively.

Another way of allowing the Central Bank to put more Geld into circulation is for the Currency to be devalued. A “Currency Devaluation” applies under the “Income” side of the TPP equation since the Central Bank will also be indirectly affecting the value of the State Budget and the People’s Geld. It is not the most politically sound decision, but the Totality will recognize why under certain contexts like in Financial Warfare, an actual military conflict, or trying to offset a trade deficit. The same is true for “Currency Revaluation” since that will cause greater dependency on imports for goods and services which the Totality neither needs nor wants.

Then there is the usual array of methods like Taxation, Spending, issuances of NSFIs, State Investments, State Foreignization Investments (SFIs) and Real Trade Agreements (FTAs). But just like QW and EDW or QM and EDM, relying on just one method is not enough. A combination of all of the above will surely lead to an increase in the TPP value.

Regardless of which method has been chosen, the VCS Economy and the Reciprocal-Reserve Banking System will always affect the TPP Account. The State Budget, like the People’s Geld, rises and falls according to overall conditions. For the People’s Geld, this affects how much Geld is allowed by the State Commissariats of Wages and Prices to be allocated toward each Paygrade.

When does the Central Bank calculate the TPP Equation?

To begin, it is vital to understand how the work-week is going to function under the Work-Standard. The average for every work-week in the Socialist nation will strive to maintain a median of about forty (40) hours for everyone pursuing a Vocation. This means that everyone interacts with their Vocations for eight hours on five out of the seven days in an entire week. It is possible for somebody to be working on weekdays and weekends as part of the forty hour work-week. They may have their Sundays and Mondays off, but they are still interacting with their Vocations each week for at least 40 hours.  

The minimum number of hours permitted by the State as part of the work-week is thirty-two (32) hours, where everyone spends eight hours for just four days in an entire week. The maximum number of hours allowed for the work-week in peacetime conditions is fifty-six (56) hours, where everyone spends eight hours interacting with their Vocation on all seven days of the week.

Anyone who has a work-week shorter than 32 hours must receive a direct order from their physicians or else from the courts. Only then can they be exempted. Conversely, anyone who has a work-week longer than 56 hours are deemed as essential personnel committed to specific professions. The nature of those professions demands the need for longer working hours, and it is to be expected by anyone who intends to pursue them as early as their teenage years back in the SSE. The professions in question will include, but may not always be limited to:

  • Medical professions
  • Educational professions
  • Religious professions
  • Military and Intelligence professions
  • Emergency Service professions    
  • Financial professions from the Central Bank to the Kontore
  • Economic inspectors, planners, and accountants
  • Government professions, including members of the State Council
  • Legal professions, including judges, jurors, prosecutors

Each of those professions are related to some aspect of the central government. It is normal to expect somebody from one of those professions to be working longer than 56 hours under certain conditions. This is especially going to be the case in wartime, where the Socialist nation must be able to achieve full combat readiness before engaging the enemy.  

No matter how long the work-week will be, the Central Bank will always have the same work-week as the rest of the Totality. In this case, the Central Bank begins its work-week on Mondays and finishes it on Fridays. The Intent of this is to provide a window of opportunity for the VCS Economy, the SSE, Reciprocal-Reserve Banking System, the Kontore and State Commissariats, and the Council State to send Arbeit and Geld to the Life-Energy Reserve.   

The Central Bank will begin calculating the TPP equation on Saturday. The aforementioned professions which are permitted by the State to work longer than 40 hours will each maintain a consistent contribution of Arbeit and generation of Geld. It applies for both the weekdays and the weekends, when the Central Bank is calculating the TPP equation. Once the TPP equation has been found, the Council State must provide its Central Bank the actual amounts of Geld listed under “State Revenues” and those under “State Expenses.” This must also be done on a Saturday.

As stated earlier in this Section of the Compendium, the State Budget grows or shrinks depending on whether the State Revenues is able to outpace the State Revenues. That equation is written as:

State Budget = State Revenues – State Expenses

Every contribution of Arbeit and every generation of Geld by the entire Socialist nation is counted toward the State Revenue. Every amount of Geld that the entire Socialist nation needed to make those contributions and generations happen will be counted toward the State Expenses. That includes all of the Geld going into each Paygrade which will be wired to everyone’s personal accounts on every Sunday. The State Banks are the ones responsible for overseeing this task under the Reciprocal-Reserve Banking System.  

How does the State decide on changes to the State Budget?

All of this was of course discussed in the Compendium entry “Introduction to Command-Obedience Account Bookkeeping”:

StateTotality + Self
SelfIncome + Net Income + (Dependents + Years) – Geld – Arbeit – Drawings
TotalityIncome + Net Income + (Dependents + Years) – Geld – Arbeit – Drawings
StateHoldings + Geld + Arbeit – Expenses – Net Incomes (Totality + Self)

The Central Bank would reinterpret that State Revenues and State Expenses to the “State” as this:

State = State Revenues – State Expenses

State Revenues = Holdings + Geld +Arbeit

State Expenses = Expenses – Net Incomes (Totality + Self)

Should the State Revenues surpass the outstanding State Expenses, the Geld will be allocated to the State Budget. Any changes to the State Budget, including the removal or addition of Geld to any aspect of life in the Socialist nation, are allowed to be decided on Sunday by the ministerial heads of the Cabinet or the ‘Council of Ministers’. Any decision made by them must be finalized and submitted to the State Council before Wednesday, giving the State Council their opportunity to debate over the budgetary changes before the next Saturday.  

The Intent of allowing the Council State to make changes to the allocations of Geld into any aspect of the Socialist nation on Sunday is straightforward. Since everyone’s work-week occurs between Monday and Friday, that gives the State a chance to broadcast its intentions through all available means of communications on Sunday. Everybody will know what the State is going to do, thus minimizing the possibility of people not being aware enough about the changes to the State Budget.

Everything in the Socialist nation has a required minimum amount of Geld required for its activities. Included is the amount of Geld already being allocated each week and the amount proposed by the State. Under Command-Obedience Account Bookkeeping, we can expect to encounter the accounting of the Geld allocated for an Enterprise to be formatted as this:

Weekly AllocationBudgetary ProposalRequired MinimumWeekly Balance
3,000,000 GDM2,800,000 GDM2,750,000 GDM-200,000 GDM

On the Obedience side, we can see that 3,000,000 GDM is going into a single State Enterprise each week. The State is proposing that this Enterprise should be receiving only 2,800,000 for the next work-week. The State knows it can be done without any repercussions because the proposed amount for the next work-week is still higher than the Required Minimum on the Command side.  

The Command side informs us about how much Geld is required for this Enterprise to function within normal parameters. It also tells us about the Weekly Balance, which is the amount that the Enterprise will be receiving for the next work-week. Since the State is proposing 2,800,000 GDM, the Enterprise will lose 200,000 GDM, this loss reflected as a negative value.

For the State, 200,000 GDM has been added to the State Budget. Exactly what the State does with the 200,000 GDM will vary, depending on specific contexts. We would account for this decision by formatting the accounting as follows:

State BudgetWeekly BalanceState RevenuesState Expenses
97,364,000,000 GDM+6,573,685 GDM21,716,000 GDM15,142,315 GDM
97,364,200,000 GDM+200,000 GDM  

The manner in which I formatted the State’s TPP Account is based on what was discussed earlier.

TPP = TPP Account + LER-LERE Accounts + SI-EF Accounts

State Budget = State Revenues – State Expenses

In essence, the State Budget was originally “97,364,000,000 GDM” at the end of the preceding work-week. We know for certain that the State Budget was “97,357,426,315 GDM” on the previous Sunday. On this Sunday, however, the State Budget had grown by “200,000 GDM” as a result of the State’s decision regarding the Enterprise from earlier. We can tell that this was occurring on a Sunday because nothing has yet been recorded for State Revenues and State Expenses. That “200,000 GDM” will no doubt become larger if we were to include the State Revenues and State Revenues of any essential personnel still working on the weekends.

Even so, the logic behind what has been discussed here is going to become the subject of the next two Compendium should be obvious by now. We are going to consolidate everything discussed in the preceding Compendium entries for this Section, concluding everything by having the final three entries in the Section be devoted to how everything functions in actual practice. That will be our chance to demonstrate how all of the concepts and variables discussed throughout the SMP Compendium came together, featuring a simulation that takes place over the course of a full year.  

In the next two Compendium entries, we will be discussing about how to organize the accounting of the Socialist nation with the Political Organization Problem as our guide. We will begin the next Compendium entry on how the State formats the TPP equation and delve deeper into its decision-making process from the context of Command-Obedience Account Bookkeeping. And then we will conclude with the State Commissariats of Wages of Prices, discussing about how it determines the Income Brackets, the Prices of everyday goods and services, and oversees the Transvaluation of All Arbeit with the economic planners and the VCS Economy in real time.  

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