👉The table of contents so far is here.
Chapter 10: Details of Economic Planning
10.2. Industrial classification and production targets
In formulating an economic plan, it is important to have an industrial classification that serves as a framework for subdividing the plan, since it is required to specify numerically the industrial classification and the production targets for each item for the planning period.
The industrial classification from primary to tertiary by the British economist Colin Clark is well known. This classification was proposed as an instrumental concept to explain economic development from the primary industry centered on agriculture, forestry, and fisheries, through the secondary industry centered on industry, to the tertiary industry centered on intangible services.
The Clark Industrial Classification itself is a very crude classification and does not constitute a framework for a planned economy, but in a sustainable planned economy, the economic plan for the primary industry (Division A) is to be formulated separately from other economic plans.
Incidentally, NAICS (North American Industry Classification System), an standard industry classification system jointly developed by the United States, Canada, and Mexico, uses a six-digit code to classify each industry: the first two digits designate the largest business sector; the third digit represents the subsector; the fourth digit represents the industry group; the fifth digit represents the NAICS industries, and the sixth digit represents the national industries.
While these industry classifications are classifications for the purpose of classification itself, the industry classification in a planned economy is a standard classification framework for specifying the specific goals of planned production in a more dynamic manner.
In this regard, the input-output table by Vasily Leontief was originally a newly devised table inspired by the reproduction table formula devised by Marx to analyze the smooth process of reproduction and distribution of capital, but its purpose of use is to analyze the input/output in actual production and distribution activities. The purpose of its use is to analyze the inputs/outputs of real production and distribution activities.
Since such input-output forecasting is an indispensable process in setting production targets for each planning period, the input-output table will be of great use in a sustainable planned economy.
The Marxian reproduction formula of production sector I and consumption sector II was applied in Soviet economic planning to separate the two major sectors, and industrialization was strongly promoted with an emphasis on sector I.
In our sustainable planned economy, however, the emphasis is not placed on either Production Goods Sector I or Consumption Goods Sector II, but rather economic planning for general consumption goods was separated from the general economic planning for the whole Zone, and is formulated as a consumption plan for each local area.
In addition, a separate, prerequisite plan for energy, which is the source of power for all production activities, would be formulated as an energy plan.
The industrial classification that will serve as a detailed framework for the development of the general economic plan should reflect the greatest emphasis on environmental sustainability in particular, and should be classified in terms of which industries add the main burden to air, soil, water, and biological resources.
The classification would not be based simply on the type of product, such as machinery, metal, or chemical industries, but would be based on a detailed environmental scientific analysis of the production activities of each industry, and would be organized into major categories based on the environmental load, such as air-loading, soil-loading, water-loading, and biological resource-loading industries.
In this regard, industries that emit a large amount of greenhouse gases in the production process or their products, which is currently the primary focus, will be classified as air-loading industries, and the largest number of industries will be in this category. There may also be overlapping classifications.
The industrial classification that will serve as a subdivision framework for formulating general economic plans could be based on whether the industry places the main burden on the air, soil, water resources, or biological resources, reflecting the fact that the greatest emphasis is placed on environmental sustainability.
In that case, rather than simply classifying industries according to the type of production, such as machinery, metals, chemicals, etc., industries would be organized under major classifications based on the target of environmental burden, such as air-burden industries, soil-burden industries, water resource-burden industries, and biological resource-burden industries, based on a detailed environmental scientific analysis of the production activities of each industry.
In this regard, industries whose production processes or products emit large amounts of greenhouse gases, which are the current focus of attention, would be classified as air-burden industries, and this would likely be the largest category of industries. There may also be industries that are classified in overlapping categories.
👉The papers published on this blog are meant to expand upon my On Communism.
