The Role of Relations in Development of Society and State

I’ll be speaking about ways a society develops so that you can understand where we are now. For that purpose I`ll start with explaining terminology I have used. Market is a place where relations of exchange had been established, though these relations do not exist anymore in civic society. Money is a kind of commodity that was used to service relations of exchange which ceased to exist.  A debt security “I promise to pay” is created by loan relations, payments by debt security reflect accounting in loan relations – who and how much credited the issuer of a financial obligation (by a banknote, or a bank account). That`s why it is necessary to distinguish relations of exchange from loan relations that service income distribution in society. In exchange operations money represents ownership rights to negotiable commodity in payer’s assets. In loan operations a financial obligation represents a debt security in payer’s liabilities, which may have no circulation - the same as with a commercial bank`s book-entry debt security used only for claiming debt redemption and for transfer of creditor`s rights (check, credit card).

These are the relations that guide labor distribution in a society. That`s why their nature and dependence on turnover amount (production) are so important. I will start from generical (bloodline) community where communist society (community) existed. The source of everything that brought income as a means of consumption, that is assets, belonged to community (tribe). There were no pairs in community relations; community was guided by maternity right. No one knew his father, but everyone knew his mother. The creation of mating pairs was accompanied by an obligation for a man to seek his wife outside his clan. Children were distributed among generic clans as there existed no families.

Industrial development and creation of a family destroyed generic community, as private property appeared, and this led to creation of a state as a public institution. Generic property ceased to exist. Private property stimulated a transfer towards paternal right and creation of a monogamist family. Introduction of a state is a result of emergence of rich and poor in a society which was impossible in a generic community. Rich people acquired surplus as a result of specialization in entrepreneurial activity that led to relations of exchange as a way of labor distribution in a society. Production development and turnover have created money as a cash equivalent of commodity.     «The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment with which it is anywhere directed, or applied, seem to have been the effects of the division of labour» - this is how Adam Smith started his famous book. Division of society into exploitators and exploited began with public division of labor. The generic society exploded by the society`s division into classes. It changed into a state which represents an institution of power and economic leading class.

Relations of exchange have created a specific class – merchants. This class has acquired a state reflection with the rise of commodity turnover. The state represented means of exploitation of hired labor by capital, the so-called capitalist society.  However commodity money could not service turnover exchange which was a result of synergy of public production. This started credit relations for servicing production turnover that created debt money (“I promise to pay” which is written on Bank of England bills). A class of issuers of debt money as loaners of means of consumption came into existence as this class does not take part in production activities. Accounting by debt papers shows how someone who does not produce anything can make a payment. Relations of exchange and capitalist society were destroyed by loan relations. This class of issuers of debt money has received state reflection as analogue with a society based on slavery where state power belonged to owners of slaves.

However a state where there were no producers and no owners of capital as members of society appeared. This was the Soviet Union representing a state without free citizens in a society. That public institute had an administrative-command system of labor distribution by order as a qualification scale for those who were obliged to work. The order has received a reflection in a money paper thanks to the qualification scale. However the administrative-command system could be supported by a society only in wartime and such a society perishes during peace. That is what we saw in dissolution of USSR and creation of a circle of enemies by RF. An order, though it may service any amount of turnover, creates low labor productivity among slaves because of class antagonism. “I`m a boss and you are dumb, you are a boss and I`m dumb”, - was a popular saying among Soviet people.

The relations based on forceful loan and administrative-commanding relations equally create an immoral organization of society. Is this clear? The societies based on these relations face an inevitable collapse. Only a formation of relations of exchange among entrepreneurial institutions that are served by an equal measure – labor - may save the civilization. This suggestion made by Marx helped me to create the rule of usage of asset derived from relations of exchange, but not as a commodity. Participants of production make settlements by a share of aggregate labor for production of end products. The asset that is created by end products’ delivery is presented as a right of claim of purchase price for end products’ delivery. I have provided this asset with all money properties – circulation, divisibility into shares, commodity impersonality – in the right of money claim. The aggregate income from sells of the end products is distributed among the producers by the transfer of a share of this money equivalent.  Money as an asset revive the relations of exchange when the producer of consuming commodity again returns to state power and not a debitor, a boss or a slave owner.

“The state inevitably collapses with the falling of classes. The society which organizes production anew on the basis of free and equal association of the producers will put the whole state machinery where it will then belong–into the museum of antiquities, next to the spinning wheel and the bronze ax ” – wrote F. Engels in his work “The origins of Family, Private Property and the State”. This kind of association is being created not on the bases of administrative-commanding relations with the support of the head public institution, but based on legal filed of exchange relations among the producers.

Labor is measured in public relations by money. Labor has become a reflection of public relations because the means of payment (a debt paper, commodity, order) is the product of these public relations (that of loan, exchange, hire). In his “Critique of the Gotha Programme” K. Marx wrote: “The right of the producers is proportional to the labor they supply; the equality consists in the fact that measurement is made with an equal standard, labor. … . Right, by its very nature, can consist only in the application of an equal standard”. This right is the right to claim payment for a certain valuable item, which becomes impersonal due to combination of agreements of transfer of this valuable item into a combined payment claim. This is provided by my operational system of accounting between entrepreneurial entities.