fusion

Photo by Carlos de Hoyos/NSIPS
Team leaders for the Riemann-LaRouche economic model project: (from left): Uwe Parpart, director of research for
the Fusion Energy Foundation; Dr. Steven Bardwell, associate editor of Fusion magazine; and David Goldman,
economics editor of the Executive Intelligence Review.
The portion of reinvestible surplus that is allocated to
maintain an increase in that workforce is characterized by
AVAC+V).
5 must be reduced by d, that share of surplus used to
support the portion of the population not employed in
direct production of tangible goods and the material cost
of maintaining that portion of the population at work.
(S - d is known as S' or net profit.) From this standpoint,
military production falls into the category of d although
it may have useful technical by-products and it may be
politically necessary.
Measuring Productivity
The productivity of the workforce then can be considered
as the ratio S/V, but the total productive potential of
the society also depends upon decisions about how that
workforce is deployed. Immediately, the combined ratios
S/V [AV/(C+V)] give the rate at which new surplus will be
generated as a ratio of total output by the industrial
workforce.
If we assume for the moment that the category d
remains constant, the ratio S/(C+V) is a measure of the
productivity of the society. The ratio S/(C+V) less the rate
of d/(C+V), or S'/(C+V), is a measure of the viability of
that society. The rate of increase of S'/(C+V) over the
course of time represents what LaRouche calls negentropy.
V may increase because the workforce has increased
in size, but it will also increase with increases in the
standard of living or an increase in the price of consumer
goods.
There is a direct, demonstrable correlation between the
standard of living of a population and its productivity.
Nonetheless, at any given technological level, the allocation
of AV/(C+V), in other words, the composition of the
reinvestible surplus, is determined. Every employed
worker demands a certain determinate investment of plant
and equipment and raw materials in order to function at
optimal productivity. In the short term, S/(C+V) can be
made to increase by cannibalizing capital reinvestment
(asset-stripping), but this will have disastrous medium- and
long-term consequences. (This is exemplified by the present
condition of the U.S. steel industry. In a period of
recovery from recession, S/(C+V) can increase by utilizing
unused capacity or back inventory, but productivity can
really increase only if S/V is increasing.)
Other economic models use output per manhour rather
than S/V to indicate productivity. The Riemann-LaRouche
model uses the ratio of output per manhour compared to
the output necessary to sustain the industrial workforce.
It further refines this ratio by looking at that surplus
portion of output above the level necessary to merely
sustain production. Output per manhour is a useful indicator,
but it is not a parameter for productivity. It is a
measure in terms of gross output, gross national product.
One of the key features of the Riemann-LaRouche
model is that it further distinguishes the "Helmholtz free
energy" of the economy, S', from gross profit. 5' is net
profit, that portion of production that is reinvestible surplus.
To do this, LaRouche has established the category of
waste and overhead, d. A population of farmers that has
58 FUSION August 1980