Work-Standard Accounting Practices: Economic Indicators of Profit and Utility Maximization

All of the information obtained from a country’s System of National Accounts (SNA) is then used for three economic indicators of Profit and Utility maximization. Each of the three economic indicators relies on their own formulas and equations. One provides statistical data on how much Kapital is being created by the OECD-Type Student Economy, the Market/Mixed Economy, the Fractional-Reserve Banking System, the Parliament, the digital infrastructure on the World Wide Web (WWW), active Free Trade Agreements (FTAs). The other two describe the Kapital owned by Civil Society and its Private Citizens as well as the Kapital that they are capable of spending on everyday goods and services in the Market/Mixed Economy as well as those from Parliament.

The Three Economic Indicators

The first economic indicator in the SNA should be the most easily recognized as it is the “Gross Domestic Product (GDP).” The GDP serves as Neoliberalism’s equivalent to the Work-Standard’s TPP (Total Productive Potential). The GDP can be divided into three variants: the “Expenditure Approach,” the “Income Approach,” and the “Output Approach.”

  1. The Expenditure Approach is GDP as the sum of Consumer Spending, Investments, Government Spending, and the difference between Exports and Imports.
  2. The Income Approach is GDP as the sum of Wages & Salaries, Rents, Interest Payments, Profits, Taxes, Rate of Currency Depreciation, and Net Foreign Factor Income. The “Rate of Currency Depreciation” refers to any increases in Kapital Accumulation as a result of changes to the Inflation/Deflation Rate. And the Net Foreign Factor Income refers to the Quantity of Kapital earned from running economic activities abroad in foreign countries.
  3. Lastly, the Output Approach is GDP as the difference between the Gross Value of Output and the Value of Intermediate Consumption. The two coefficients refer to the Value of all economic activities being done with Kapital and the Value of all goods and services being consumed with Kapital.
From top to bottom: Expenditure Approach, Income Approach, Output Approach.

The second economic indicator is the “Gross National Income (GNI).” The GNI is used to discover the Quantities of Kapital earned domestically as well as internationally. It is supposed to be reused as part of a related subvariant known as the “Gross National Product (GNP).” Both sets of equations are intended to take the sum of GDP and the differences of Incomes earned domestically and abroad by Nationals as well as those earned by Foreigners.

For GNI, the “A” represents the Kapital that Civil Society and Parliament earned domestically, with “B” being the Schuld that they owe to Foreigners who had emigrated from their own countries. The Foreigners receive their Kapital in the Nationals’ currency, transferring them to their families through overseas accounts. Conversely, for GNP, the “C” denotes the Kapital that Civil Society and Parliament earned internationally, with “D” being the Schuld that they owe to Foreigners living in their own countries. These Foreigners are expecting to be paid in the local currency.

The third and final economic indicator is the “Net National Income (NNI),” which uses the Expenditure Approach of GDP. In addition to finding the sum of GDP via the Expenditure Approach, the Net Foreign Factor Income, Taxes, and Rate of Currency Depreciation are also factored. It is then used to determine how Kapital that Parliament and Civil Society are able to spend on purchasing goods and services as well as other sources of spending. Both factors are related to the “Gross National Disposable Income (GNDI)” and the “Net National Disposable Income (NNDI).” The former involves the sum of GNP and the Net Unilateral Transfers (NUT). The NUT encompasses all Kapital that has been voluntarily contributed through charities, philanthropies, foreign aid, Kapital transferred to other countries, and payments for membership in IGOs (Intergovernmental Organizations).  The latter is meant to demonstrate the Quantity of Kapital that is capable of being earned by Parliament and Civil Society both at home and abroad.

The Taxes (as “T”) used in the Net National Income (NNI) are Indirect Taxes. Unlike Direct Taxes such Income Tax or Property Tax, Indirect Taxes are levied on the transactional sales of goods and services. The most common Indirect Taxes are the Sales Tax, the Excise Tax, the Value-Added Tax (VAT), and Tariffs. Similarly, for GNDI, the Net Current Transfers follow the same criteria as Net Unilateral Transfers, except they are meant for Civil Society and Parliament as opposed to foreign countries. Thus, GNDI and NNDI complement each other.

Implications of the Three Economic Indicators

Granted, there are plenty of proposed economic indicators which one may encounter online or in economics literature which are not covered in this Entry. The vast majority of them are the personal proposals of economists and others convinced of the apparent issues with relying on the three main economic indicators, of which there are too many to discuss in any detail here. What this Entry seeks to understand are the various formulas used to compile economic data for the SNA of a given country.

What else can be discerned from the equations and formulas employed by the SNA? It is clear that the SNA is designed to demonstrate the known sources of Kapital and Schuld as a shared variable. Here, the distinctions between Kapital and Schuld cease to exist. Nowhere is this trend more apparent than in the Expenditure Approach, which is subsequently used to calculate the Quantities of Kapital owned by Civil Society and Parliament. The other two methods, the Income Approach and the Output Approach, are ways of identifying the sources of Kapital Accumulation and how Kapital is being used in the production and consumption of everyday goods and services.  

But the complexities of the SNA’s economic indicators, when compared against the Work-Standard’s TPP (Total Production Potential), does raise some implications. If Kapital and Schuld are capable of becoming indistinguishable from each other, which is what the Expenditure Approach of GDP and the other formulas that rely on it are trying to infer, then it becomes inevitable for economists to in turn determine the empirical effects to which Schuld affects all Kapital owned by Parliament and Civil Society. There needed to be a way to split Kapital and Schuld again to show the extent to which Schuld impacted Parliament and Civil Society’s ability to purchase goods and services domestically and internationally. What applies to the Nationals who constitute Civil Society has to also be applicable to the Foreigners who live, study, and work as members of Civil Society under the terms of Free Trade Agreements (FTAs).

Unlike Arbeit and Geld, which are both capable of avoiding Schuld whenever possible, Kapital is incapable of evading Schuld. Every conceivable economic activity requires Kapital to create more Kapital, which cannot be done without first obtaining Schuld from the Fractional-Reserve Banking System, and the Fractional-Reserve Banking System itself is governed by the Incentives of Supply and Demand. One cannot afford to live within their own means of production. Sometimes, one is compelled and even encouraged in countless different contexts to live beyond those means of production. How does anyone even contemplate the idea of controlling the means of production within the Market/Mixed Economy, if the means of production themselves could be foreclosed or repossessed by the Fractional-Reserve Banking System?   

Thus, Schuld does not just affect how much Civil Society and Parliament are able to spend and consume. It also provides Incentives in the form of “financial obligations” that must be paid off in full with respect to the Inflation/Deflation and Interest Rates.

Categories: Work-Standard Accounting Practices

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