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Assessment of GDP and living standards of countries in the focus of interdisciplinary study
 
PIIS221979310015388-9-1
DOI10.37490/S221979310015388-9
Publication type Article
Status Published
Authors
Ekaterina Shamaeva 
Occupation: Leading Researcher
Affiliation: Institute of Socio-Economic Population Problems of the Russian Academy of Sciences
Address: Russian Federation, Moscow
Konstantin Shadrov
Occupation: PhD student
Affiliation: State University "Dubna"
Address: Russian Federation, Moscow
Journal namePskov Journal of Regional Studies
EditionVolume 17. No3 /2021
Pages3-17
Abstract

For more than a hundred years, science has been applying physical laws to analyze social and economic systems. However, it must be admitted that in the management of social and economic systems there are no systemic connections with natural, economic and social phenomena, expressed in a consistently measurable form, which leads to incorrect estimates and gives rise to crises.

The current complex crisis situation in the world poses the task of the scientific community to develop theoretical and methodological provisions based on measured values or a meter that would be initially adequate for describing natural systems, and at the same time would be sufficiently applicable to assess socio-economic phenomena. For such assessments, it is necessary to rely on the law of nature and use the corresponding meter. Such a measure is proposed in the works of the International Scientific School of Sustainable Development named after P. G. Kuznetsova.

The socio-economic system, including the economy of the country and the world, can be represented as a generalized machine of a certain capacity. In this machine, useful energy is embodied, directly or indirectly, in all manufactured goods and services. Accordingly, some traditional macroeconomic indicators can be expressed in energy units. The article is devoted to the application of energy theory of cost to estimate Gross Domestic Product and living standards of the countries of the world in energy units, the results of calculations for the period 1992–2019 are given.

Keywordscost, money, energy theory of value, standard of living, physical economy, exchange rate, energy-currency zone
Received09.06.2021
Publication date03.11.2021
Number of characters30619
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1 Introduction. To date, there has been a continuous increase in the detachment of monetary circulation from the physical constraints of socio-economic life.
2 The instability of money as an integral measure and the reliance on dominant monetarist theories has been one of the reasons for the poor governance of countries and the world. Crisis phenomena are becoming more and more widespread every time, and their consequences are eliminated with more and more serious losses of time and resources. The current situation forces us to take a closer look at the energy theory of value, which offers a physical quantity as an integral measure of GDP, living standards and some other traditional macroeconomic indicators. Reliance on adequate measures provides reliable information for planning and control in the management of large socio-economic systems. In more detail, the theoretical and methodological foundations of the article are described in several works listed in the list of used references [10; 11; 15; 18; 20 etc.] A few explanations are given during the presentation of the material, as well as in the corresponding section.
3 The object of the research is the GDP and the standard of living of the countries of the world. The subject is the measurement of these parameters in units of energy. The aim of the work is to apply a physical approach to assess the GDP and living standards of the countries of the world.
4 Below is a summary of the calculations and results of the study.
5 1. Theoretical and methodological provisions. Back in the XIX century, S. A. Podolinsky showed that society is an open system that consumes a stream of total energy at the input, converts it and receives a stream of free energy at the output, which is embodied in the social product [16; 17] Nobel laureate F. Soddy demonstrated that the welfare of a society is determined by its physical capabilities, and not by debt-based “virtual wealth” [5; 6].
6 The diagram of S. A. Podolinsky is shown below.
7

 

Pic. 1. Schematic representation of energy turnover in the labor process in the socio-economic system, N — flow of full energy, G  — losses, P  —  flow of useful energy
8 In the 1960s P. G. Kuznetsov proposed to consider any technological process as an energy converter, and the entire set of such converters as a “generalized machine” of the socio-economic system. For this “machine”, the researcher identified the generalized efficiency factor of all links of the technological chain from the moment of energy input to its implementation. He showed that GDP can be measured both in money and in energy, from the ratio of which the energy supply of the monetary unit is derived [13–15]. His contemporary Nicholas Georgescu-Roegen characterized the second law of thermodynamics as the most economic of all laws of nature, since in the production of goods and services, humanity dissipates highly concentrated (low-entropy) free energy into low-concentrated (high-entropy) energy [3]. Similar considerations were expressed by R. Ayres [1].
9 A lot of works of specialists of different profiles (physicists, ecologists, economists, etc.) are devoted to the substantiation of the relationship between GDP and the energy potential of society. Therefore, in 1975, the physicist P. L. Kapitsa pointed out that “... the main factor determining the development of people's material culture is the creation and use of energy sources”. He stated that the size of GDP is proportional to the total energy consumption [12]. Similar theses were set by ecologists G. Odum and E. Odum. They stated that the cash flow and the flow of useful energy embodied in goods and services move in the economic mechanism towards each other and identifying them as two ways of measuring the gross social product [4]. Economist R. Kostantsa showed that “in many sectors of the economy there is a close relationship between energy spent and the value in dollars” [2].
10 In the scientific literature, the interaction of the system and entropy is described through the tendency of the system to the lowest value of potential energy and the greatest disorder1 (the second law of thermodynamics by Rudolf Clausius, the work of R. I. Prigogine). 1. The works of I. R. Prigogine are built on the “order — chaos” alternative. While the applied aspect of the study of living systems is associated with the alternative “free energy — connected energy / power”. A. N. Kolmogorov defined order as the existence of some rule under which the entire sequence can be reconstructed using fewer numbers than a given “random variable”. The absence of such a rule is disorder / chaos. In the work, the principle of stable nonequilibrium of E. S. Bauer and the law of conservation of power in the applied aspect of the study of socio-economic systems act as such a rule (works by P. G. Kuznetsov, B. E. Bolshakov, etc.)..
11 Science's answer to this challenge, which was thrown after the discovery of the second law of thermodynamics by R. Clausius, was the work of S. A. Podolinsky, N. A. Umov, V. I. Vernadsky, E. S. Bauer.
12 Erwin Simonovich Bauer formulated the principle of the existence of living (in the natural scientific sense) systems, which include any socio-economic systems that have an input flow of resources (expressed in units of capacity) and two output flows (the total flow of goods and services produced, also expressed in units of power, and loss, which is a measure of entropy) (Pic. 1).
13 The principle of stable non-equilibrium of E. S. Bauer states: “all and only living systems are never in a state of equilibrium and perform constant work against equilibrium at the expense of their free energy”.

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