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Integrative Journal of Conference Proceedings
Financial Turnover of Cyclical Economy by Reinvesting in Ecological Production of Its Savings
Bryndin E*
Research Center Natural Informatics, Russia
*Corresponding author: Bryndin E, Research Center natural informatics, Russia, Novosibirsk
Submission: January 24, 2020;Published: February 26, 2020
Volume2 Issue2February, 2020
Abstract
Cyclical economy’s financial turnover has investment and accumulation periods. During the investment period, innovative modernization of the economy is carried out by effective competent management, innovative science, creative education, qualified specialists and the high-tech industry. Ecological modernization of the economy gradually increases the solvent demand of the population and contributes to the emergence of new goods and services. The economy is smoothly moving into the accumulative period. Mass robotic production and sale of new goods and services begins. There is accumulation of the capital. Over time, the population is saturated with new goods, and the purchasing demand of the population is gradually decreasing. The economy is smoothly cyclically moving into the investment period of innovative ecological modernization of the economy. The financial turnover of the cyclical economy through reinvestment of its savings increases the rate of ecological modernization of production.
Keywords: Cyclical economy; Competent management; Investment period; High-tech industry, Ecological development; Qualified specialists; Accumulative period
Introduction
For the first time on the cyclical economy spoke in 1970. The authorship of the approach
and the titles are attributed to economists John Lyle and Walter Steiner. The idea of a transition
to a new economic paradigm was developed in the materials of the Swedish non-profit
organization The Natural Step, which promotes the ideas of sustainable development and in
the European Commission [1]. Cyclical economics - closed-loop economics - represents an
alternative to classical linear economics based on the principle of “production - use - disposal.”
The challenge of a cyclical economy is to use renewable resources as widely as possible and
ideally to switch to waste-free production. Repeated use of the same material as raw materials
will help to minimize economic damage to the environment, analysts of the Organization for
Economic Cooperation and Development (OECD)-a “club” of 36 most developed countries of
the world believe. In their study “Business Models of the Cyclical Economy,” they looked at
the major challenges and opportunities of the cyclical economy and how governments can
contribute to its implementation.
The closed-loop economy, also called cyclic or circular, is based on the principle of
resource reuse - the producer must understand at the stage of commodity design how it will
be recycled. A product that is created within a cyclical economy should serve a long time, and
the consumer should be able not to purchase, but to rent. Cyclical business models change
the direction of products and materials throughout the economy, which helps to reduce
the negative impact of mining, use and disposal of these materials for nature. It is not only
about improving a specific production cycle or factory, but in general about changing the
production and consumption process. For example, it is not easy to manage natural resources
more effectively, not to use them at all. Five main directions of such business models can be
distinguished.
A. The model of cyclic supply-replacement of traditional (primary) sources of raw materials
with renewable or biological materials, secondary.
B. Recycling model-recycling waste and subsequent use.
C. The model of life extension-slows down the turnover of
products in the economy, thus reducing the rate of generation
of new wastes.
D. The shering model is the sharing of a single product by different
consumers, which reduces the demand for new products.
E. Service models are built around the provision of services
rather than the sale of products, stimulating the development
of environmentally friendly products and responsible
consumption.
Many companies combine a business model. For example,
an enterprise can produce certain products, process them and at
the same time provide some services within the green economy.
Also, business models do not exist in isolation - if one company
chooses a specific direction for itself, its partners can choose a
related business model. By closing the resource chain and slowing
the movement of products within the economy, cyclic business
models reduce the negative effect of economic activities on the
environment. For example, recycling, rather than non-renewable
resources, can reduce greenhouse gas emissions by up to 90%,
depending on the industry. Restoring fully used products will
reduce waste generation by up to 80%. The use of some models is
growing at a faster rate than the market and this is largely due to the
development of technologies. In order to expand the market share
of proven cyclical models, integrated solutions at the government
level will be needed. Ultimately, the transition to a visibly more
resource-efficient economy, in which the environmental damage
associated with production and consumption is markedly lower
than the current one, will require deep penetration of these cyclical
business models. Government policies can play an important role
in overcoming obstacles to the competitiveness of these models.
For example, ensure that environmental costs of production and
consumption are fully reflected.
Cyclical economy implies sustainable system of financial cyclical
turnover from investment to accumulation, based on numbers.
From socio-economic point of view, this means achieving the
goal is based on parameters that require dynamic quantification:
price, tariff, profitability, costs, liabilities, assets, returns, losses,
dividend, rents, stock index, book value, wages, costs, and others.
Dynamic quantitative assessment of socio-economic parameters
will ensure the necessary measure, number and weight, as well
as the sustainability of the system of financial cyclical turns from
investment to accumulation. As it is written: “You have placed
everything by measure, number and weight” in Solomon’s Book of
Wisdom (11:21). And how could there be anything if You did not
praise? Or how would what be not intended for Toboy survive?
(11:26). The article deals with the financial cyclical turnover,
from investment to accumulation, with ecological technological
modernization, from automation of individual technological
operations to complete robotics of production using artificial
intelligence, providing power and resource technological cycles
Investment Period of Economy
Investment in the economy refers to the direct acquisition of
real capital, which can be expressed in some form or another. Again,
investments will be used for substantial expansion, formation and
reconstruction. In modern times, all processes in the economy
that are connected with investment activities are very important.
It is thanks to these processes that all macroeconomic indicators
can demonstrate positive growth dynamics. Russia (the Russian
economy), like any other country, needs capital investment.
It is desirable that investments be made in industries that are
currently in the process of modernization. For example, the hightech
industry, health care, agriculture, education and others. The
investment sector is the most powerful tool for the whole economy,
as investments allow companies to be technologically rebuilt, to
recruit qualified personnel, to raise wages.
Since the main purpose of almost any investor is to make
maximum profit, the state is obliged to do everything so that
its conditions can satisfy depositors. In order to create a good
investment climate, many countries give state support to such
investors. Support may be, for example, that demand for products
where funds have been invested or pleasant tax conditions for
doing business have been created, etc. Investments can increase
the technological and production capabilities of the economy.
For example, investment in intellectual property or education
can increase productivity. Investments in modern technologies
can affect the growth of the productive potential of the economy.
New inflows of investment, both domestic and foreign, affect
the country’s GDP growth. Investment is a major factor in the
formation of gross domestic product, which reflects the country ‘s
combined economic output. American economist Gregory Mankew
cited investment and economic growth rates in Japan and South
Korea, which had high cash injections that produced very high
economic growth rates. Investment is directly related to the growth
of economic and ecological indicators [2].
Investment takes the lead when it comes to ecological
modernizing and developing the economy, both at the macro and
micro levels. If the potential for investment is misused, the ecology
of modernization of the economy and the production of new
products can be negatively affected. At the macro level, investments
help to expand the reproduction process, accelerate scientific
and technological progress, improve the quality of products in
different sectors of the economy, monitor the effectiveness of social
development, and preservation of ecology. At the micro-level,
investments help to monitor the activities of different enterprises,
organizations that carry out completely diverse activities. Control
means tracking the quality of products and services, maximizing
profits, reducing costs and preservation of ecology. Investments at
this level take an important place when it comes to increasing equity.
After all, it is competent investments in assets of other companies
and securities that help to increase profits and accumulate capital
for environmental automation and robotic production using
artificial intelligence.
Robotics and Automation of Production Using Artificial Intelligence
Modern factories and enterprises have advanced far at the
expense of modern technologies. Automated industrial robots are
used for welding, laying, painting and other operations requiring
repeated and high accuracy. Robots for high-tech work are emerging,
which is on the teeth of artificial intelligence. In most cases, robots
are not replacement assistants. Man is trying to create, for his
robots, artificial intelligence. With artificial intelligence, robots will
be able to independently assess what is happening around them
and make decisions on the actions they need to take.
The development of artificial intelligence and machine learning
technologies and their application in robotics allows to create
useful and smart robots. Statistical methods and machine learning,
including artificial neural networks of deep learning, have had a
huge impact on modern robotics. Current robotics practice shows
that the best results in increasing productivity can be achieved from
the maximum efficiency of the bundle of robot teams and people
working together to achieve a common goal. Increasing social
interaction between humans and robots in everyday and working
life is the subject of numerous studies of many billion-dollar
industries, with the aim of increasing the degree of autonomy of
robots. Industry 4.0 is focused on digital process twins. Automated
production using digital twins is built on a whole set of technologies.
Experts identify three types of twins: Digital Twin Prototype (DTP),
Digital Twin Instance (DTI) and Aggregated Twins (DTA).
Digital twin prototype
(DTP) is a virtual analogue of a reality physical object. It
includes data to comprehensively characterize the model, including
information on how to create it in real-world settings. Enter the list:
A. Production requirements,
B. 3D model of the object
C. Description of materials and their specifics,
D. Performed technological plans and/or services,
E. Disposal requirements.
A DTP twin characterizes a physical object of which it is a
prototype and contains the information necessary to describe and
create a physical version of the object. This information includes
manufacturing requirements, annotated 3D model, material
specification, processes, services, and disposal.
Digital twin instance
(DTI) is a description of a physical object. In most cases, they
contain:
A. Annotated 3D model that includes general dimensions and
tolerances.
B. Material data based on past and present time and components,
C. Information about the running processes in all timelines,
including those performed when creating the object,
D. Results of all test operations,
E. Records of performed repairs (planned, unscheduled,
preventive), maintenance, replaced parts and components,
F. Operational data received from sensors,
G. Monitoring parameters (early, current and expected).
DTI twins describe a particular physical object with which the
twin remains associated throughout its lifetime. Twins of this type
typically contain an annotated 3D model with common dimensions
and tolerances, A material BOM that lists current and past
components A specification for processes listing the operations
that were performed when this physical object was created, As
well as the results of any on-site tests, service records, Including
replacement of components, operational indicators, results of tests
and measurements from sensors, current and predicted values of
monitoring parameters.
Digital twin aggregate
(DTA) is a standard computing system that combines all digital
twins and their actual prototypes, allowing data to be collected and
exchanged. DTA twins are defined as a computing system that has
access to all digital twin instances and can send them requests in
random or active polling mode. The digital twin allows to reproduce
all other indicators of the object by minimum key parameters. With
this technology it is possible to solve various classes of tasks of
diagnostics of object state, forecasting, optimization of operation,
management. The digital model also contains a history of product
maintenance and operation. Taken together, all of this data makes
it possible to predict the behavior of a real object. In addition, it is
possible to monitor and test an entire fleet of facilities and carry
out analysis based on aggregated data. It is important to note that
digital twins also involve machine learning technologies, Because
they are essentially self-learning systems that use information from
a range of sources, Including data from sensors monitoring various
performance indicators of the physical object, Information from
expert experts and other similar machines or car parks, And larger
systems, of which the observed physical object may be a part.
Digital twins can also be created for an entire enterprise along
with all its business processes. Automation methods allow you
to digitize the production process and present it as a digital twin,
which serves to see a situation in development, predict its end
result and try to model the optimal path of development. Digital
twins have become a really strong catalyst for the development
of modern companies. Digital twins together with robots [3-
14] significantly simplify technical support of the production
process, save resources, minimize risks of errors and failures,
which prolongs the period of stable operation of the company.
All this allows get the maximum possible return on investments,
increase competitiveness and profit, provide energy and resource
production cycles and keep ecology.
Accumulative Period of Cyclical Economy
In a cyclical economy, the decision on the size and rate of
accumulation is taken and implemented at the enterprise level
to facilitate reinvestment of savings in enterprises. Accumulation
is a process aimed at expanding the material conditions of
environmental modernization in the current period and thereby
increasing the opportunity for future population consumption
growth. The source of accumulation is the profits of enterprises, the
personal savings of workers and the funds of the State. Accumulation
is a function of the owner of production. The main function of
savings is to promote ecological modernization of production, meet
the increasing needs of the population and reinvest savings.
The increase in accumulation is due to technical prerequisites -
the possibility of mastering the world achievements of scientific and
technological progress, the level of development and the structure
of the national economy. Optimal accumulation is defined as the
ratio between accumulation and consumption, which ensures a
continuous increase in the absolute size of the accumulation fund
and the consumption fund. Optimal accumulation - value variable,
depends on the produced product for consumption. The higher the
efficiency factor of accumulation, the greater the opportunities for
growth of real incomes and consumption of the population of the
country. Increasing production is the basis for meeting the growing
needs of people. In order to increase the size of production, it is
necessary to use part of the produced product for accumulation.
Thus, the objective necessity of accumulation is due to the needs of
extended reproduction of macroeconomics, in the form of capital
accumulation.
At the macro and microeconomic levels, the following additional
sources of accumulation are emerging in the cyclical economy:
A. Part of amortization charges accumulated in monetary form.
For the needs of accumulation, free depreciation charges can
be used, which will not soon be required to restore the old
fixed assets of production. Additional new equipment, raw
materials can be purchased for free depreciation contributions,
i.e. accumulation process will be implemented.
B. Part of the required product. It is involved in savings through
taxation of employees, tax contributions, sale of shares to
employees of corporations and firms.
C. Public Savings Fund. The concentration and prices of capital
and production have led to a powerful and extensive system
for the ecological modernization of production and the public
accumulation fund.
The amount of accumulation depends on many economic
factors. Treat them:
A. Labor productivity and intensity, speed of capital turnover and
renewal.
B. Scientific and technical progress. Replacing waste capital with
new, technically and technologically new capital means that
real factors of simple production are reimbursed at less cost than was necessary for their previous production. And this is
already an expansion of production, or accumulation. Science
and technology impart to a functioning capital a mode of
expansion independent of its present value.
vIn practical implementation, the accumulation process takes certain forms. They are distinguished by characteristics: production and non-production, nominal and real, centralized and decentralized, extensive and intensive accumulation. Productive accumulation, or accumulation itself, includes an increase in fixed and working capital and is a source of increased production of material goods. Non-productive accumulation includes accumulation of consumer property at the population, insurance zapaks and reserves guaranteeing uninterrupted operation of a vosproizkvodstvo in macroeconomic. Nominal accumulation is a cash fund for copying, a monetary amount intended by a firm or a state to expand production. The accumulation money fund is further transformed into material elements necessary for increasing production - machines, equipment, tractors, seeds, fertilizers, that is, real accumulation. Nominal accumulation could become real only if the necessary material elements for increasing production had already been produced. Add-on value can only therefore be converted into additional capital, that the add-on product, worth more than that, already contains the real components of the new capital.
Real accumulation is a real increase in physical-in-kind form of
means of production and objects of consumption. Real accumulation
is determined by the following factors:
A. Size of nominal accumulation. Under other conditions, there is
a direct proportional relationship between them,
B. The level of prices for the means of production. With the
increase in capital asset prices, the monetary amount allocated
for accumulation will be realized in a smaller amount of
tangible assets,
C. Qualitative composition and assortment of means of
production. In the context of the scientific and technological
revolution, the available means of production must embody
the latest advances in technology and technology. As a result,
there will be continuous progress in industrial production,
The centralized form of economy in the market economy
is constantly decreasing. Decentralized savings of firms are
now becoming increasingly important. To that end, they were
establishing a special savings fund from their profits, which was
the most important source of decentralized capital investment;
Extensive accumulation is an expansion of production on an old
technical basis. In the case of extensive accumulation, additional
means of production, labour resources and natural wealth are
involved in the production process. Currently, the possibilities of
extensive accumulation are limited.
Intensive accumulation is the expansion of production on the
basis of more efficient use of available means of production and
labour, mastering the achievements of scientific and technological progress and increasing productivity. Under the conditions of
market relations, the intensive nature of accumulation becomes
natural, which ensures the maximum possible growth of efficiency
of the market economy. The most important task of macroeconomic
development is to increase the efficiency of accumulation. The
higher the efficiency of the accumulation process, the greater the
real opportunities for growth of income and consumption of the
population. In increasing the efficiency of accumulation, improving
the efficiency of capital investments is of particular importance.
The efficiency of accumulation should be improved in the following areas:
A. At the expense of productivity growth. It increases the mass
of consumption costs represented in the total public product,
gross domestic product, national income, additional product
(total income). This increases the volume of real savings with
the constant monetary value of the accumulation fund, that is,
the efficiency of accumulation increases.
B. By improving the quality of production facilities, improving
their use. Scientific and technological progress increases the
real accumulation per unit of value of up to full capital assets,
and at the same time the efficiency of this process.
C. By improving the structure of the accumulation fund. First
of all, the efficiency of accumulation is influenced by the
change in its sectoral structure. Variation of the distribution
of the accumulation fund between industries, agriculture
and transport has a significant impact on the efficiency of
accumulation. This is due to the fact that the efficiency of
accumulation varies from industry to industry. Therefore,
cross-sectoral redistribution of the accumulation fund alters its
effectiveness. The improvement of the intra-industry structure
of the accumulation fund is also important. Here, first of all,
it is necessary to provide what part of the industry fund of
accumulation goes to the construction of new firms, and which
- to the construction and reconstruction of old enterprises.
This section significantly affects the overall industry level of
savings efficiency.
In economic practice, there is a whole system of measures that contributes to improving the efficiency of savings. It includes: improvement of design, reduction of time for ecological modernization of production; Coordination of the accumulation fund (capital investments) in technologically priority areas of development; Improvement of the quality of environmental modernization of production; Faster commissioning of objects of ecological modernization of production and reduction of their development time.
Conclusion
In rapidly changing world, the environmental characteristics of production become one of the main conditions for the success of the enterprise. Today the development of enterprises is impossible without ecological modernization of production, transition to the best available technologies. It is a global trend. The accumulated landfills should be a source of resources and energy for the industrial industry. Special attention should be paid to the creation of environmental technologies for the processing of garbage and waste. The transition to environmental technologies for the processing of garbage and waste, to environmental production and to a cyclical economy with reinvestment of savings should be the main task of all States. These activities will preserve the environment, ensure the cleanliness of air, water and food and get rid of waste and garbage [15]. A cyclical economy with savings reinvestment is a driver of clean cities and agglomerations.
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© 2020 Bryndin E. This is an open access article distributed under the terms of the Creative Commons Attribution License , which permits unrestricted use, distribution, and build upon your work non-commercially.
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