Expanding the range of final products to a definite set value requires an increase of full (gross) pr o duction capacity throughout the whole of the production system in a definite proportion between different industries determined by the d e sired expansion of the range of final products.
In order to clarify this statement let us carry on with the prev i ous example. In order to expand produ c tion of cars by a certain amount one needs to expand production in all the supplying indu s tries by the a p propriate amount. In order to expand production in a single supplying industry one needs to expand production in indu s tries that are suppliers of that industry and so on.
Besides, an increase in the number of operated cars will in time cause a growing need for fuel, lubrica t ing oil and hydraulic liquids, for expanding the motorway network, parking lot and se r vicing infrastructure. And those will in their turn require to i n crease production capacity of industries besides the suppliers of the automobile branch.
Consequently expansion of automobile production and the secondary needs for petrochemicals, a better motorway infrastru c ture and servicing, etc. stimulated by this expansion require to produce the means of production necessary for the increase of ou t put as well as for the renewal of equipment, technology, organiz a tion and management and for expanding all the industries i n volved.
And the fact is that production of means of production («i n vestment products») for these industries in some cases must pr e cede the growth of the automotive industry’s capacity though in other cases it may accompany this growth or follow it with a ce r tain delay in time.
The above statements hold true for increasing the production output of any industry, the automotive i n dustry simply taken as an explanatory example.
Besides, when certain technologies and business organization are adhered to proportions between different industries’ capacities are accompanied by certain rigid proportions of professional training and employment. It follows that:
Mobility of the systemic integrity of a macroeconomic system in terms of being capable of a structural reorganization and switching from one product to other products is to a large extent determined by whether the population’s general cultural background enables people to leave their current professions and acquire new skills in a short period of time.[108]
The proportions of the exchange in intermediate products between industries, which is involved in the process of manufacturing a certain range of final products, are described in interindustry balance equations. These formulas are heavily relied on by theories of macroeconomic planning and control worldwide and such theories have got practical proof of their workability.[109]
In terms of mathematics interindustry balance equations are a system of linear equations[110] (i.e. unknown quantities are included into the equations raised to the first power only). In this system the unknown quantities are the gross (full) capacities of industries, and the absolute terms of equations are the desired range of final products (i.e. the industries’ net output). The factors of the unknown quantities in every equation are called the factor costs and are the product volume of every industry of the set considered necessary to produce one registering unit of the industry described by the considered equation of the system (in the example of motorcar production considered above the factors of costs are the quantity of steel per car[111], quantity of glass per car etc.)
Interindustry balance equations can be considered in two forms. First, they can be based on natural calculation of capacities and costs factors in terms of output quantity according to the nomenclature of products and industries on which the balance model is based. Second, they can be based on calculation in value terms also in accordance with the nomenclature of products and industries on which the balance model is based. All these issues are fully covered in literature on the subject.
The following proportions are meant under microeconomic proportions. They are the ratios of full capacities of the different industries, which constitute this multiindustrial production and consumption system, and the ratios of these industries’ net outputs to their full (gross) capacities, as well as the proportions of the population’s professionalism and employment.
A structural reconstruction of macroeconomy is an alteration of these proportions and the absolute values of the production capacities in the entire lot of industries. A structural reconstruction can proceed on the basis of a plan having a clearly set out objective. It also can proceed under the pressure of circumstances, so to say, spontaneously. Though when looking into the matter more deeply one might find that the pressure of circumstances induced by the social and economic «element» turns out to be a process planned and controlled by backstage groups. This option has been predominant during the last few centuries.
Let us now turn from the issue of production to the issue of how products and services are consumed in the society. Consumption turns out to be characterized by its own proportions, which are determined by the two following factors. On the one hand, they are determined by the way needs emerge as such within the society (i.e. regardless of any limitations in satisfying them), and on the other hand, by the limitations imposed on how fully those needs may be satisfied by the system of distributing[112] manufactured products.
All the needs of people and social institutions fall into two cat e gories:
biologically allowable needs conditional on the demography. They comply with the healthy life-style maintained in succession of generations by the population and biocenoses of the regions where the products intended for satisfying those needs are produced and consumed. These needs are determined by the biological nature of the Homo Sapiens species, by the population’s cultural background, age and sexual structure;
degraded parasitic needs. Satisfying them is directly or indirectly detrimental to those engaged in production, to consumers, contemporaries and descendants. It also disrupts the biocenoses located in the regions where the products are manufactured and consumed. These needs are primarily determined by perverted and defective morals and are maintained through those perversion and defects reflecting in cultural tradition and succession of generations.
Though some products may change one category for the another depending on the standards of production and consumption, most products of the modern civilization are unambiguously placed into one of the categories. The category is determined objectively due to the possibility of revealing the cause-effect relations between the product’s kind and the consequences its production and consumption have.[113] Only incorrect attribution of a certain product to one of the described categories is subjective (including mistakes caused by incorrectly determined standards of production and consumption). Yet life will make us face the consequences of those errors exactly because all needs and products are objectively divided into two mentioned categories.