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The definition of the main purpose of economic activities provided above is, in fact, incomplete, for it does not specify what human needs are, nor gives a list of them, nor explains the conditions of their existence and satisfaction.

Needs shall be understood from here on as an inner state of psychological or functional feeling of insufficiency of certain factors becoming evident depending on the situation. These are typical both of individuals, and communities, social groups or even the society in general. Needs act as inner incentives for human activity.

Indeed, needs are the main driving force for a human being. Depending on their nature, needs can be divided into vital, spiritual and, social needs. The first category is related to the body’s need for food, dress, dwelling place, motion, rest, health, etc.

The spiritual human needs include the aspiration for personal freedom, for knowledge, for satisfaction of intellectual requirements, aesthetic tastes and harmony, for beauty, culture, morality, and for kindness and empathy. Among spiritual needs we find love and hatred, passion, and level of satisfaction. An important role in every man’s life is played by procreation, communication with other people, friendship and competitiveness. Moreover, factors of psychological comfort are classified among spiritual needs of human beings: self-confidence, prestige, self-realisation, self-respect, authority, etc.

Among social human needs there are security, equality, personal safety and the safety of one’s children, and confidence regarding one’s future. We all want to live surrounded by healthy, happy, kind-hearted, beautiful, and confident people. Besides, we demand from others a high level of mass culture and morality. There also exist specific social needs, such as need for labour, for mental and physical activity, for creativity and creation of new values.

These series are, undoubtedly, conditional and do not cover the entire range of human needs, nor delineate exact borders between different needs.

The needs depend on individual features of people, their living conditions, their gender and age, culture and education, their health, experience, traditions, religion, and national preferences. Besides, the needs are not immutable. With time, they develop, change, and evolve. They are influenced by the social environment of a person, by weather and nature, by the season and the place of residence, by the level of production development, and by the level of personal satisfaction. Moreover, the more one has, the more one needs.

Every individual, as a member of the human species, has certain needs similar to those of other people, human communities, or the society in general. For instance, all reasonable people wish to live in a clean and orderly place, in a country with a low crime rate, with a fair and experienced government, with a strong state structure, with a sound legislation and public order. At the same time, it would be hard to find two people with identical needs.

In fact, the individual perception of each need by different people varies; what some consider the sense of life, other discard as insignificant. Take music away from a melomaniac, there is nothing you could substitute it with. “The stifling of the individual may well be the stifling of the god in man’ (Sri Aurobindo, ^[16]). This is why there should be respectful attitude to the entire range of human needs. It is evident that satisfying just the needs of an average person, as conceived by planned economy and practiced by the current market economy, would not make anybody happy enough.

On the other hand, human needs cannot be studied just as a random set of factors. In fact, they constitute a harmonious complex that reflects the person. Besides, some needs only exist together with other. For instance, the desire for luxury cannot emerge unless the hunger is satisfied. A trendy hat demands a fashionable dress to be worn with. Nevertheless, the level of correlation and interchangeability of various needs is different and does not impact their importance. The failure to satisfy some needs for a long time might disrupt the inner harmony of a person, and even disfigure them.

However, not all needs may be easily welcomed. For example, thirst for power and selfish ambitions of certain individuals often mean loss of freedom and poverty of others. From the social point of view, only the needs that can be satisfied without violating moral and ethical norms, trampling the rights of other people, of the society, or descendants, are worthy of respect. And it is such needs that we are going to address in this monograph. Other needs should be managed with the help of educational or psychiatric institutions, or law enforcement agencies. Furthermore, the impossibility of their satisfaction should be enshrined in the basic principles of economics and state organisation.

It should be mentioned that when the interests of an individual, a community, and the society match each other and combine harmoniously, this condition is observed without failure. And the fuller the implementation of this principle, the higher the level of society civilisation, and the more grounds to class it as a human society.

On the other hand, human needs are not abstract, they are made evident through certain conditions, things, and services that a human being requires. Therefore, everything that satisfies human needs, everything required for a decent living, that supports and restores human health, increases life tonus, encourages and assures procreation, etc. is classified in the group of commodities. Among these we find food and water; clothes and housing; medical assistance and sport facilities; spiritual wealth and clean nature. Besides, this group includes the goods and services that are provided to people by service sector actors, as well as by spheres that satisfy social needs (such as governance, science, education, healthcare, and defence).

Human labour is also classified among commodities, because, on the one hand, it satisfies human needs related to self-realisation; on the other hand, it is the driving force of production. Though, in fact, all other commodities can be described in this way, too. That is why the more they satisfy human needs, the more productive human labour is. Many things can be obtained by humans directly from nature without additional effort, the rest are produced by the people themselves. In the remaining part of this monograph this latter category will mostly be considered.

As a rule, needs exceed the total amount of commodities available, which stimulates people to act and develop, becoming an instrument capable of managing them. There exists an optimal correlation between the needs and the number of commodities to satisfy them. If the correlation exceeds the optimal value, that is, almost all needs are satisfied, this decreases the desire to work, and slows down development. However, if this correlation is below the optimal, then the needs become extinct, and the individuals live through degradation. Countries with huge property inequalities witness both these tendencies, which can lead to catastrophic results.

At the same time, if within a state there exists a tendency to satisfy one’s needs not through labour and productive talent, that is, by way of contributing to the productive efforts of the society, but through appropriation of goods generated by others, this inevitably entails destruction of both the production and the moral systems. Whether it comes from the top or from the bottom, such destruction contributes to the degradation of the state and the society. This has already been the case numerous times and history; similar situation can be witnessed across the world today.

For practical economics the classification of commodities into individual, collective and public is essential, for they are consumed in different manners. Individual commodities include the items that a person and their family members use outside of interaction with other people: housing, clothes, food, household items, cultural items, etc. Collective commodities category embraces the things that a person uses jointly with other people at the place of residence, work, or rest. These are medical services and police; utilities services and public transport; cultural, religious and sport facilities; roads, means of communication and many other things. Finally, public commodities are government entities and the army; higher educational institutions and communications; defensive structure and security systems; scientific, cultural and educational institutions. To sum up – all the services that satisfy the needs of all people belonging to a state and a society.

This classification explains why the distribution has a more significant impact on production, and expenses – on earnings. In fact, all commodities possess a certain duality of nature. On the one hand, they satisfy human needs; on the other – encourage production. Collective and public commodities are consumed by humans differently from individual ones, and the dependence of people on such commodities is quite different. Therefore, for each group of commodities specific distribution forms may be worked out to stimulate as much as possible their production and eventually improve the life quality and the morality of people.

All commodities depend on the production process. And in order to function properly, the production process, in its turn, requires commodities to satisfy its own needs. These needs include work tools and industrial facilities; freight transport and communications; energy, repair base, industrial communication, etc. This signifies that materialized labour and production means are required by enterprises as much as commodities are required by people. They serve as a catalysator that makes live human labour more efficient.

Strictly speaking, the classification of labour products into commodities and production means is rather conventional, because providing a person with commodities corresponds to their productive labour. Besides, production means satisfy natural needs of people for work and development, and influence their mental, physical, and moral state. Moreover, the more productive qualities productive means have, the better their ergonomic properties, the better their design, and the higher their efficiency. This rule serves as yet another argument to support the unity of the World and the reality people live in.

Nevertheless, commodities and production means are not equal. Indeed, only commodities are the purpose of production. The production of production means is only necessary to the extent in which it saves social labour and contributes to the commodities production. Otherwise, production of production means becomes an excessive consumption of labour and resources, and is harmful for the society. This has happened quite often, both under socialist system and in modern capitalist states, due to the desire to optimize monetary flows, instead of regulating social labour consumption.

For example, in the USSR, production was brought to this state thanks to the active application of the “Law of exponential growth of production of production means’ formulated by K. Marx and elaborated by Vladimir Lenin. However, no limits were defined, that is why the production growth rates for group A (production of production means) in the USSR exceeded almost 8-fold those of group B (commodities production). As the result, industry developed rapidly, while the quality of life in the country stagnated.

But then, the more production means are produced, the more resources are required for their servicing, reproduction, and maintenance, not to mention significant social labour expenses for repair. This means a lower amount of labour allocated for commodities production.

Therefore, the absence of real market regulators and social criteria that would help assess objectively the production efficiency in general, keeps pushing the society to the limit beyond which production stops serving people and starts exploiting them. The same happens when economics is tempted to increase the efficiency of money expenditure – a typical desire for capitalism – instead of improving production – the results are completely different.

In reality, the production of production means is an intermediary stage in the process of commodities production. It is similar to semi-finished products and other unfinished goods. Specifying the roles of production means and of commodities helps establish an optimal relation between the two, and propose qualitatively new criteria and methods for economics improvement compared to the principles of profit maximization used at present.