Economic Cybernetics

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Contextual Citation

"Today, the whole world is going through a certain shock, and does not understand what to do with the dying economy. The governments of all countries are moving in the direction of management of the people, rather than management of the economy. They are trying to use digital technology to manipulate people and for total control in a collapsing economy. The governments do not use the enormous potential that is contained in IT technologies and in their intended use - to raise the economy for the sake of benefit of the people. The Soviet Union should be honored for its experiment called "socialist planned economy" – for the first time in the world history the task to manage production relations in order to increase the well-being of people was set. Yes, the USSR did not succeed in solving the task optimally, when this unique historical experiment took place. But thanks to the experience of the USSR in modern Russia there is a Scientific and Collective Strategic Planning, based on the principles of economic cybernetics, that teaches how to manage the economy in the direction of growth of the public wealth. Capitalism had been developing over the centuries, manipulating people by means of money, creating financial systems for redistribution of income generated in all countries of the world in order to centralize the world capital. Now, as a result, the world stands on the edge of the abyss."

- Elena Veduta [1]


Description

Elena Veduta:

"Economic cybernetics - as the science of information management in the economy. This science allowed him to create a dynamic model of the IIB, which is a system of algorithms for calculating the cost / release plan using modern digital technologies. This model is based on the knowledge of the objective economic laws that are contained in “Capital”. When you describe the behavior of the system with the help of mathematical algorithms based on the laws of economic development, you get in the virtual world a cyber-system — a reflection of a really functioning economy." (https://zavtra.ru/blogs/rationalization)


Interview

  • Andrey Fefelov: the direction of economic cybernetics was removed in the 1980s, and this was done consciously. Now we are facing a very difficult task of revivification of those developments. How can this direction work and be useful today in the national economy?

Elena Veduta. In fact, everything is much simpler than it seems to be. If we speak in popular language the model can be described very simply. Whom does the economy work for? For the final consumers. What are they? They are: households that spend their cash income at the consumer market and change it for the products offered; a state that finances the defense costs, health care, education, space exploration programs, etc. at the expense of its budget; exporters who supply products in accordance with international contracts.

In order to satisfy the needs of the final consumers, the production of the final product according to their orders and demands must be arranged. For example, the Ministry of Defense says that it needs a defense order: exact number of tanks, missiles, etc. Ministry of Health requires exact amount of materials, hospitals, etc. People need exact amount of milk, meat ... To optimize the structure of the final product for the consumer market, we use feedback information about the dynamics of equilibrium market prices, that provide the demand equal to supply. Thus, we have formed orders for the final product, which meets the needs of final consumers. Then the final product should be produced. How to produce it? To answer this question we need the calculation of production chains with possible adjustment of orders that takes into account the real production possibilities. It means that a plan is calculated for the proportional development of the economy in the direction of growth of public wealth. Production chains are consecutive in time and in space, producers’ interconnections (“input / output balance”) is used for the production of final product ordered. If Russia is a country that respects itself, it needs to rely on its production chains, rather than tail as a raw materials appendage of the global economy with an outstretched hand: please, give us money (foreign investment).

The method of calculation is very simple: to produce something, we calculate how much resources we needed for the production of the final product. These resources do not fall from the sky, they must be also produced. By taking consecutive steps from the final product to the calculations of resources for its production, taking into account the intermediate products, we are gradually approaching the final calculation of all costs necessary to produce the final product.


Since the production capacity (to produce all these products) may not be enough, we must provide in the calculations for the production of additional capacity (enterprises, infrastructure, etc.).


The “input / output balance” is calculated in the same information field. If there are inventions, new technologies at some enterprises, it is necessary to choose the most effective ones that will give the greatest return in terms of the movement of the whole economy of the country in the direction of growth of public wealth. To implement it a block that helps to choose effective technologies is put in this model.

Calculations in the model continue until the optimal balance between production and use of resources is obtained to fulfill the order dictated by the final consumers. We will actually produce the maximum of the desired final product, since we provide the introduction of new technologies that reduce the cost of producing a unit of the final product. Our needs, which we dictate by the final product, are linked to our production capabilities. In this model, the managing parameter is the state production investment, which is destined to the development of industries and the introduction of new technologies in accordance with the requirements of an optimal balance.These investments are not just money begged from foreign investors or from the Central Bank. In this case, the production investment is ensured by material and labor resources that rules out the start of inflation.

The participation of small and medium business is assumed in this cyber-economic model. If we introduce cyber-economy (economy managed with the help of digital technologies), we will get an impulse for development, because the economy will start the sustained development, inflation will stop.

This will turn to be opposite to the current situation, when our corporations are built into the global chains as a raw materials appendage, and today we don’t make any calculations because we don’t need them. We just agree that we can borrow the incidence of crisis development of the civil society.

Using economic cybernetics as the science of management of information processes in the economy, our government will get an effective tool for the economy and state management that moves it forward along the trajectory of the social benefit – the growth of real incomes of citizens (the real solvency of national currency), the strengthening of national security and strengthening of the competitiveness of the state in the global community."


* Andrey Fefelov. Is it true that the model of economic cybernetics is supported by digital capabilities of modern technology?

Elena Veduta. Yes, it is the material and technical basis for the functioning of cyber economics, knocking on all doors today – just the same way the machine had come to our life and had changed the system of feudalism into the system of capitalism. The invention of computer and digital technology shows similar process. Modern digital technologies, with their colossal possibilities for collecting, storing and processing information, make it possible to organize a national economy based on a dynamic model of IIB.

Andrey Fefelov. Recently, I have been constantly talking about digital socialism, digital science as a way of life. I mean the digital economy as a part of digital science in general, because it includes education, government, elections, and anything you like. By the way, the digital economy abolishes corruption completely, since it is a completely transparent system.

Elena Veduta. Of course, even if you concealed the reliable information, the cyber-economic model will reveal everything. However, it is necessary to agree on conditions: the model allows the multi-level access rights to data which is loaded, used, and obtained in the course of operation at different stages, depending on the rights of the user (an ordinary employee of a certain industry or enterprise, the head, the controlling bodies), legal or state secrecy, etc. All such characteristics of the cyber-economic model should be discussed with the leaders of the country, industries, business, security agencies, supervisory authorities ... and then given to programmers for implementation in the current model. At the same time, of course, the model is alive and can be updated and changed in the course of its operation."


More information

eBook

  • eBook: Solving the global crisis requires the approach of economics cybernetics. By Elena Veduta.

URL = [2]

"The book researches the mythology and practice of UN National Accounting Systems, the economic planning of the USSR and the World Bank. It contains a presentation of the dynamic model of interbranch-intersectoral balance as a system of algorithms which coordinates the orders of final customers (state, households, exporters) with producers' production possibilities. Only this system of algorithms can be used as a cybernetic digital platform for efficient decision making of state and global management."