I am not here to debate whether communism stands good in this part of the world and at this time, or whether people are able to understand the theory behind it. But there is something that impresses me a lot, and that is the concept of “union” – “Union” for the small food stalls, small shops, and grocery shops where the shelf space is very less.
“Union” is not against the government, but for the government where the commoners come together to have their fair share in distributing the profits. Let us dig deep on the fact on how this works.
Let us assume that there are 3 food stall owners: A, B and C.
Let us assume that the profits earned per day for A,B, and C is 200, 250, and 130 INR.
Let us assume the union asks for 150 INR, at the end of the day.
Then A and B are in excess of 50 INR and 100 INR respectively, while C is in deficit of 20 INR.
In that case, the effective surplus is 50+100 = 150 INR.
C gets an weightage of the last profit, i.e. C has 50 INR as a profit.
In that case, profits of A,B and C have ratios 1:2:1 which divides effective surplus 150 INR.
Hence at the end of the day, even if all the profits go to the union, even then the home taken profit is actually effective surplus disbursed, as (150/ 4)*1, (150/4)*2, and (150/4)*1, which is 37.5 INR, 75 INR, and 37.5 INR respectively, or a total of 150 INR.
Effectively, the union gets (200+250+130) INR – 150 INR = 580 INR – 150 INR= 430 INR, which it can save to the contingency fund.
This is called the effective union theory.