Prout Economics: Economic Democracy in practice
Millions of people are dying of starvation while grains rot in storage silos to create artificially high prices for maximum profit.
So it is not true to say there is a food crisis. Rather there is a crisis in distribution and utilisation of the world’s resources. The Progressive Utilisation Theory or PROUT, has been created to address these gross imbalances as well as many other local and global problems.
The great Indian mystic and philosopher, Prabhat Rainjan Sarkar, realised that spiritual teachings and social work were not enough to remove the root cause of much of today's suffering and injustice. He understood that much of this suffering was caused by a faulty socio-economic system. So in 1959 he introduced a new socio-economic theory called PROUT, as he said, ”for the good and happiness of all”.
This all-inclusive social theory has a uniquely spiritual base, unlike past and present systems such as Capitalism and Communism, which are materially based and benefit only one section of society. PROUT is not just for the wealthy and privileged, or just for the workers--it is for everyone, including animals, plants and the environment.
Since the introduction of Prout it has received praised from many of today's progressive thinkers. This video will explain some of the key economic principles of Prout. You will learn why more and more progressive-minded thinkers around the world are studying Prout for practical and compassionate solutions to present day economic and social problems.
Some key points of Prout Economics:
In this video you will be introduced to seven key economic principles of Prout:
1) Guaranteed minimum requirements of life
2) Increased purchasing capacity
3) Decentralised planning and balanced economy
4) Three-tier industrial system
6) Self-sufficient economic areas
7) Economic democracy and non material emphasises.
1. Guaranteed minimum requirements of life
Prout’s economic system guarantees the minimum requirements of life to everyone. In most situations these will include food, clothing, accommodation, medical care, transport and education. This guarantee can be achieved by ensuring full employment so that everyone has at least a minimum purchasing capacity as well as ensuring availability and appropriate pricing of basic necessities. This means a minimum income will be part of the society’s constitution.
“If you ask anyone if its morally justified to allow someone to die from hunger or cold, anyone, no matter who they were...a head of a corporation or from a small town, but the strange fact of the matter is that wee live in the world were innumerable number of people are dying from hunger and cold and lack of the basic necessities of life. So capitalism simply has never been able to provide the basic essentials of life, and that system has to change. One of the first explicit statements of Prout is that everyone will be guaranteed with the minimum essentials of life.”
Once the minimum requirements have been met, any surplus wealth will be distributed among those who have special needs or special talents. Those with special needs include disabled people and nursing mothers.
Meritorious people, with special skills or greater responsibility, can receive bonuses in pay or preferably will be offered items which enable them to deliver greater service back to the community. This will encourage personal achievements that also benefit society.
For example, if the minimum necessity for transport is a car, some doctors who need to cover a lot of distance quickly may get a helicopter. And just as there is a minimum wage to ensure the minimum requirements can be earned, there must also be a maximum wage to ensure the meritorious are not overpaid.
“The amount of minimum requirements should be progressively increased so that the standard of the general people is always increasing. For example, the standard will vary from community to community, depending on the resources available. For instance, in some third world countries a refrigerator is considered a luxury while in first and second world countries it is considered a necessity. Similarly in many first world countries computers are becoming a necessity while in less developed countries they are considered luxuries , or at least semi-essential.”
The relationship between the minimum and maximum wage may be set at a given rate. For example, if the minimum wage is $10 an hour, it may be appropriate to say that the maximum wage would not exceed $100 an hour or ten times that amount. This will help eliminate extremes in poverty and wealth .
There are already examples of this tier wage system in the world today.
Credit Union worker:
“A firm policy that the Credit Union abides by is that the difference in pay between the highest paid and lowest paid member is no more than three times.”
In summary, society’s resources must first be directed towards ensuring that everyone gets the minimum necessities of life. The remaining wealth is then directed towards semi-essential goods, and then finally towards non-essential or luxury items.
All this is the practical expression of one of Prout’s fundamental principles: There should be maximum utilisation and rational distribution of society’s resources .
“Does Prout exist anywhere in the world? Yes it exists in the most common economic unit of the world, the family unit. In a family first you use your resources for providing the essentials like rent, food, clothing etc.
Only if there is money over would it go to individual family needs like piano lessons or a football uniform. Never at the expense of other family member’s basic needs. Yet in Capitalism this happens, a few are allowed to get very rich while others die of hunger.
If you want to under stand Prout then just understand this concept of the family. Prout is the application of this family spirit to society and economics.”
2. Increased Purchasing Capacity
To ensure that all people continue to receive the minimum necessities of life and to provide dynamism in the economy, Prout advocates a gradual and continual increase in purchasing capacity. To achieve this there must be a continual increase in production through research and development and the appropriate use of progressive scientific ideas.
"What is unique about Sarkar’s vision is that he was not anti technology. We have many movements talking about technology, saying we should avoid technology. Sarkar was very clear that we needed a vision of the future that had appropriate technology that was used for the public good. He would use IT, he would use genetics, but start to see who they are benefiting. So this was not a Luddite vision which rejects technology”
"While Prout is fully supportive of science and technology it is also very mindful of the importance of the environment as plants and animals also have a right to their existence. Science must be for the good of all, not just to make a few people wealthy or for conquering others in warfare. And technology must not be to the detriment of the environment. Prout is about using all resources for creating quality of life for all, rather than for maximising profit for a few, as is the case in capitalism.”
It should be noted that less work, due to technology, in Capitalism usually means less pay or retrenchment. However in Prout, it means less work for the same amount of pay. This fosters a much richer, happier and more meaningful society. This increase in spare time will great more opportunities for more rewarding pursuits that have little or no drain of societies material resources, like sport, art, adventure, religion, philosophy, altruism and spirituality. This fosters a much richer, happier society.
“People naturally want an increasing standard of living, it’s a part of human psychology. No body likes to be stagnant, no body likes to be in the same situation year after year. So its natural that people want to in some way improve their circumstances. This psychological need that people have has to be recognised in a economic system, so it has to be planned for. So Prout would plan for increasing peoples purchasing capacity.”
In many developed countries today we have seen the price of electrical goods actually drop while the quality has risen. Sound systems, TVs and computer are a few examples. Prout would apply this principle of increased production and quality first to all essential goods, thereby ensuring everyone access to the minimum necessities of life.
Rofik A.A. Mominn (Founding member of the African Conscious Movement)
“The fundamental contradiction of Capitalism is that its driving force is greed and self interest. So employees get less and less purchasing capacity or are replaced by machines, to maximise the capitalists profits. But this reduces the capacity of people to buy their goods, which eventually result in a collapse of the economy, which in other words, is called a depression.
Prout on the other hand, removes the possibility of a depression by ensuring everyone has increased purchasing capacity. This keeps the economy healthy and vibrant.”
3. Decentralised Planning & Balanced Economy
Economic planning under Prout is decentralised. This means that decisions for the local economy are made locally and not by bureaucrats or politicians who don’t have economic, cultural or sentimental ties in the area. The definition of a “local person” is someone who has merged their economic interests with the area. When local people are empowered to make the economic decisions for their own area, the outcomes will enhance their own economy and society. They will also have greater concern for the environment if they are living in the area themselves and have to live with positive or negative environmental impacts.
Today, because of the internet, many people are able to work from home, rather than in congested cities. Further advances in this type of science and technology will greatly aid decentralised planning and living.
“The principle of economic decentralised living is important because it ensures that economic power and decision making, and the wealth that is generated, remains in the hands of the local and regional bodies. Otherwise if decentralisation is not followed there is a tendency for wealth to be concentrated in the hands of very few people sitting on top of the economy, as we see today with multinational corporations and transnational financial institutions. Power is sucked out of local communities, wealth is taken out of the hands of local people, and decisions are made about economic resources far away from the needs of local people, and this invariable has a detrimental effect on the standard of living of people in local and regional area. So decentralisation is critical and it means building infrastructure and having power and decision making processes put into place and ensures local people have control over economic activity.”
Inherent in decentralised planning is the concept of balanced economy. Ideally around 25% of the workforce should be engaged in agriculture, about 30% in agriculture-related industries, about 25% in non-agricultural industries, and about 20% in commercial activity and services.
“Prout believes the economy should be balanced between agriculture, industry and the service or white collar sectors. Roughly 20 to 30 % in each sector. If one is too predominant, for example agriculture in third world countries and white collar in first world countries, then this is unhealthy. So countries exploit other countries to meet their imbalanced economy.”
4. Three Tier Industrial System
Prout divides the industrial system into three categories:
-- Privately-owned small businesses
-- medium to large scale businesses which are run by co-operatives, and
-- Very large industries which are concerned with key functions of the economy, and are owned and run by the most local government possible.
Examples of small scale industries are businesses employing only a handful of people such a family businesses or cottage industry. Often they are concerned with luxury or semi-essential goods and services such as jewellery shops, restaurants, small IT businesses, hair dressers and so on.
If the business grows to a certain number of employees, predetermined by the community, then it will either stop growing or turn itself into a co-operative. This is to prevent monopolisation or exploitation by a dominant business. Co-operative only exist to serve a need for the local community or area.
The co-operative would elect its own management committee, with the previous owner likely to be a part of the committee. Wages are paid to workers according to the work they do using the system of minimum and maximum wage scales with sufficient funds reserved for capitalisation, development, etc.
Key industries such as utilities will be government owned and run on a no profit, no loss basis.
“What is quite clear from everything Sarkar has written is that the co-operative method of managing and owning wealth is the norm. One departs from the co-operative method only when there is good reason. Those good reasons might be that some businesses or enterprise are too small for co-operative to work properly.
You can also have large scale enterprises which need to be integrated over large areas of land and which employ more than several hundred people, and which are key components of an economy, then those types of enterprises are better organised on a state level. State level does not mean that the political government of the area is actively involved in the running of the business. State enterprise means that they are statutory bodies, there is legislation which describes what these enterprises do and regulates their activity.”
So as far as possible, trade, commerce, agriculture and industry should be organised through co-operative enterprises. Only those enterprise which are difficult to manage on a co-operative basis because they are too small, or too small and complex, should be left to private enterprise. These private enterprise should produce only non-essential commodities or services
Similarly, enterprises that cannot manage as a co-operative because they are too large or too large and complex , should function as large-scale industries, as part of the public sector. They are generally structured to make a profit, decentralised, and managed as public utilities by the immediate or local government. However, they are always structured as autonomous from the direct management of the government of the day, and function as statutory authorities.
Some of these Large scale industries should be considered as key industries. Key industries should operate on the principle of no profit no loss and be centralised rather than decentralised. Examples include pharmaceuticals, raw material suppliers and large-scale energy.
Co-operatives have the potential to employ many more people than medium and large capitalism businesses, and at a fraction of the cost. In a Proutist system the active support of small-scale business and co-operatives is a major factor in guaranteeing full employment.
Co-operatives are central to Prout’s economic system. Co-operatives bring about community prosperity and a sense of unity in a local area. Co-operatives foster the spirit of community and service while Capitalism fosters selfish individualism. Through co-operatives the wealth of the community goes back into the community, not outside to company directors and their shareholders.
“If you’re a director of a shareholder company your whole ethos is directed towards the shareholders, you have to provide the bottom line for them, even if it might damage the company or those who work for the company in terms of shutting done branches. But if you are involved in co-operatives the whole thing swings the other way. In fact you’re there to help the members.
Shareholder companies are their for the financial bottom line, co-operatives are there for the community bottom line.”
Co-operative enterprises include producers coops, consumers coops and services coops. Producers’ coops include farmer’s coops and farmers-cum-producers coops.
The co-operative sector includes 1)co-operative enterprises, 2)a range of various types of non-government and community groups, and 3)the informal household economy.
The cooperative sector produces all types of goods (essential, semi-essential and non-essential) and provides all types of services(essential, semi-essential and non-essential). In contrast, the private sector is restricted to producing non-essential goods and providing non-essential services.
Successful co-operatives depend on several factors including
-- excellent management
-- ethical leadership
-- and a genuine need in the community for the business provided
Co-operative enterprises have many benefits. The farmers for example, can form producers co-operatives and sell directly to consumers co-operatives. This cuts out the middle person, which significantly reduces the end price. It also guarantees a good return to the producers, something deregulation has not been able to achieve. The farmers also maintain control of the packaging and the selling of their product.
“I think the main benefits of co-operatives are essentially three.-Firstly use all your skills, not just a small part in a assembly line. Secondly, the feeling of networking. That you not only network inside the co-operative, but also with the customers. They cross borders. Thirdly,-an intense feeling of driving history forward and of being useful. This feeling that one is not being dismissed as a garbage and they work and stay in the co-operative far beyond the normal age of retirement.”
“It’s about people getting the confidence to do things they never have done before, and take that as a spring board and keep move on in their lives.”
Under capitalism co-operatives struggle as the capitalist system often works to undermine their endeavours. However many examples of co-operative enterprises working in small and large towns like Maleny, Australia and Mondragon, Spain, exist to show they are a viable alternative to capitalism.
“I think its worth noting that there are 10.6 million housing co-operatives in Europe, a quarter of all houses in the last 20 years in Turkey have been done through co-operatives, in Norway, not a poor community, a high rate of home ownership, 15% of houses are owned co-operatively. Czechoslovakia has 10,000 co-operatives, and in the United Kingdom 2% of all social housing stock are owned co-operatively.
Warwick did a study of the UK housing co-operatives and came away with the conclusion that they were much better managed than strata titled units and condominiums. And that they generated a spin on effect that went beyond housing. I think too this is one of the strengths of housing. Co-operatives form communities, that build houses that then build communities.”
“In summary they can contribute very positively to deliberative democracy, to political accountability and to providing a very sustainable and resilient counterpoint to globalisation.”
“I believe that co-operative are a genuine viable alternative to government and private industry. They are the way of the future.”
6. Decentralised Self-Sufficient Economic Areas
Prout advocates as far as possible the creation of self-sufficient areas known also as units or Zones. These self sufficient areas will empower local communities with their basic necessities of life and form the basis of economic democracy. Where the area can’t meet all the needs of the people it can trade and barter with others areas.
“A socio economic unit is an area where the minimum requirements of life can be provided to those people living in that unit. Now that means it may be a country as we know it today, a part of a country, a region, or it may be several countries together. In other words we start with the needs of people, we look at how these needs can be best met to satisfy the productive capacity, the production and distributions of requirements of those people, and then accordingly demarcate the boundaries of the units based on factors like geography, climate, agriculture, water conditions, history, psychology, culture, all of these factors, while political factors are virtually inconsequential in this kind of demarcation.”
Maximum utilisation of all human and material resources is necessary for local self sufficiency. It is especially important that locally-avail able raw materials should be the basis of local industries. Anyone can move to an area but only those who have merged their economic interests with the area can have a business there. This will prevent outside interests, including multi nationals, from coming in to exploit the area.
“In Prout each economic zone is suppose to be self sufficient. That means outside interests wont be able to enter into the economic zone and establish their business and export the capital and their profits outside the area. The benefits of all the businesses in an economic zone, weather they are small business or co-operatives, need to stay in that economic zone for the benefit of that economic area. For example you don't have to worry about a Walmart like food chain setting up shop and tasking their profits out to another area.”
For the success of self -sufficient areas. decentralisation of planning and the economy is a must. This will bring prosperity and control back to the local people as well as increasing their quality of life, including much more environmentally friendly industries and practises.
“Prout supports centralised politics and decentralised economy. Its like with a game of football, we have one umpire controlling the game but not playing it . The players only play the game but don't umpire the game. The umpire represents centralised politics and the players decentralised economy. So politicians should be kept out of economics and the people given control over their economic lives. This is expressed in this concept of decentralised planning and economics.”
Concerning the environment Prout sees the economy, community and eco-system as one integrated system. One of the serious defects of capitalism is that it tries to separated economics from people and the environment. The end result is a breakdown in communities and the poisoning of the environment.
A Prout economy on the other hand, uses an integral approach, striving for sustainability and and resilience in all three domain, social, economic and environmental.
“The importance Prout gives to socio-economic units and decentralised economy seems like such a radical concept today. The Global economy has taken over our local economy. We don't have local economies any more”
7. Economic Democracy & Non-material Emphasis
All of the six mentions aspects of Proutist economics can be said to be the components of economic democracy. Economic democracy is where the local people have control over their economic destiny.
Political democracy, on the other hand, has given people the right to vote for political leadership, but has also denied people a real voice in the economic decisions that affect their lives. As a result society is plagued with increasing extremes between the rich and the poor, unemployment, chronic food shortages, pollution and environmental degradation, poverty, high crime rates, exploitation and insecurity.
Economic democracy, returns control over vital economic decisions to the people directly affected. Through this everyone can enjoy the communities wealth and resources. It would however, be a mistake to think that Prout is only concerned about creating an affluent lifestyle. The primary reason for proutist economics is to provide an environment where people can devote more of their personal and collective efforts towards greater psychic and spiritually progress.
“It should be remembered that when Sarkar says Prout is for the good and happiness of all’, he is not just talking from a physical point of view. Sarkar wants that once everyone’s basic needs are met, our endeavours are then directed to more creative, intellectual and spiritual areas of life.
This has three benefits:
Firstly we can enjoy as much as we like without it affecting our limited material resources.
Secondly, the quality of our happiness is much richer and more lasting, not being dependant on the availability of limited material resources.
Lastly, it takes humanity from a predominately physical and material level, to a more intellectual, creative and spiritual level. This is a major step forward for our human evolution. And really, this I believe, is the beauty and strength of Prout.”
“Prout also adds a spiritual dimension. The beauty of the spiritual dimension is that we are all in it, its not a question of how much money we have. Of course you can have more or less depth in your spiritualism. But if I get more it will not effect the other guy. So it is a positive growth. I find it beautiful."
1.Prout guarantees the minimum requirements of life which include at least food, shelter, clothing, education and medical care. The minimum necessities of life are guaranteed by providing full employment and assuring that the basic necessities are easily affordable and available with good quality. Any surplus wealth is then distributed among the meritorious and those with special needs.
2.Increased Purchasing capacity is achieved by assuring that the essential requirements of life are available and affordable for all. To achieve this there must be a continual increase in production through research and development and the appropriate use of progressive scientific ideas.
3.Decentralised planning assures that decisions for the local economy are made locally and not by bureaucrats or politicians who don’t have strong ties to the area. A balanced economy will be part of this planning so that agriculture, industry and white-collar work are appropriately developed.
4.Prout advocates a three-tier economic system. This is made up of privately-owned small businesses, co-operatively-owned medium to large businesses, and government-run large key industries that run on a no-profit, no-loss basis.
5.Cooperatives are central to Prout’s economic system and are the basis of economic democracy.
6.Prout aims to create decentralised economic areas that are as far as possible self- sufficient. All businesses will be locally-owned, so there is no room for multi-nationals or outside exploitation of an area.
7. These six points create economic democracy, which gives local people control over their economic lives and assures their basic necessities. Society is then encouraged to pursue more non-material, creative, intellectual and spiritual forms of enjoyment which will ultimately lead society to real progress and happiness.
“Prout can never be imposed. It only works when people embrace it. Of course Prout has its principles but for their practical expression, that depends on the wishes of the society concerned.”
“Communism sees people as workers, Capitalism sees them as consumers, while Prout sees them as humans with a physical, mental and spiritual dimension; all of which have needs that have to be met for a healthy, progressive society to prosper.”
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