Some Specialities of Prout's Economic System

[Nabin]

Dear Brothers and Sisters,
This week we study the second chapter, "Some Specialities of
Prout's Economic System" from the book, "Proutist Economics [a
compilation]". Wish to have your active participation with some
questions, suggestions, understanding or remarks.

Best,
Nabin Kumar Jana

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Some Specialities of Prout's Economic System

There are several specialities of PROUT's economic system. These
include guaranteed minimum requirements, increasing purchasing
capacity, cooperatives, industrial development, decentralization and
developmental planning. PROUT also has its specialities in trade and
commerce.(1)

Guaranteed Minimum Requirements

PROUT's economic system guarantees the minimum requirements of life -
that is, food, clothing, accommodation, medical treatment and
education - to each and every person. Once the minimum requirements
have been guaranteed, the surplus wealth is to be distributed among
people with special qualities and skills such as physicians, engineers
and scientists, because such people play an important role in the
collective development of society. The quantum of the minimum
requirements should be progressively increased so that the standard of
living of the common people is always increasing.

The concept of equal distribution is a utopian idea. It is merely a
clever slogan to deceive simple, unwary people. PROUT rejects this
concept and advocates the maximum utilization and rational
distribution of resources. This will provide incentives to increase
production.
Increasing Purchasing Capacity

To effectively implement this, increasing the purchasing capacity of
each individual is the controlling factor in a Proutistic economy. The
purchasing capacity of common people in many undeveloped, developing
and developed countries has been neglected, hence the economic systems
of these countries are breaking down and creating a worldwide crisis.

The first thing that must be done to increase the purchasing capacity
of the common people is to maximize the production of essential
commodities, not the production of luxury goods. This will restore
parity between production and consumption and ensure that the minimum
requirements are supplied to all.

The Cooperative System

According to PROUT, the cooperative system is the best system for the
production and distribution of commodities. Cooperatives, run by
moralists, will safeguard people against different forms of economic
exploitation. Agents or intermediaries will have no scope to interfere
in the cooperative system.

One of the main reasons for the failure of the cooperative system in
different countries of the world is the rampant immorality spread by
capitalist exploiters to perpetuate their domination.
Cooperatives develop in a community which has an integrated economic
environment, common economic needs and a ready market for its
cooperatively produced goods. All these factors must be present for
cooperatives to evolve. Properly managed cooperatives are free from
the defects of individual ownership. Production can be increased as
required in cooperatives due to their scientific nature.

For their success, cooperative enterprises depend on morality, strong
administration and the wholehearted acceptance of the cooperative
system by the people. Wherever these three factors are evident in
whatever measure, cooperatives will achieve proportionate success. To
encourage people to form cooperatives, successful cooperative models
should be established and people should be educated about the benefits
of the cooperative system.

The latest technology should be used in the cooperative system, both
in production and distribution. Appropriate modernization will lead to
increased production.

Cooperative managers should be elected from among those who have
shares in the cooperative. Members of agricultural cooperatives will
get dividends in two ways - according to the amount of land they
donated to the cooperative, and according to the amount of their
productive manual or intellectual labour. To pay this dividend,
initially the total produce should be divided on a fifty-fifty basis -
fifty percent should be disbursed as wages and fifty percent should be
paid to the shareholders in proportion to the land they donated. Local
people should get first preference in participating in cooperative
enterprises.

Developmental planning should be adopted to bring about equal
development in all regions instead of just some particular regions.
Local wealth and other resources and potentialities should be utilized
in this developmental plan.

The controversial problem of the ownership of land can be solved by
the phase-wise socialization of land through agricultural
cooperatives. Cooperative land ownership should be implemented step by
step in adjustment with the economic circumstances of the local area.
During this process the ownership of land should not be in the hands
of any particular individual or group.

Industrial Development

PROUT divides the industrial structure into three parts - key
industries managed by the immediate or local government, cooperatives
and private enterprises. This system will eliminate confusion
regarding whether or not a particular industry should be managed
privately or by the governnment, and will avoid duplication between
the government and private enterprise.

In many undeveloped and developing countries of the world there is
excessive population pressure on agriculture. It is improper if more
than forty-five percent of the population is employed in agriculture.
In villages and small towns a large number of agro-industries and
agrico-industries should be developed to create new opportunities for
employment. In addition, agriculture should be given the same status
as industry so that agricultural workers will understand the
importance and value of their labour.

According to the wages policy of PROUT, wages need not be accepted
only in the form of money. They may be accepted in the form of
essential goods or even services. It is advisable to gradually
increase this component of wages in adjustment with the monetary
component of wages.

PROUT supports maximum modernization in industry and agriculture by
introducing the most appropriate scientific technology, yet
modernization and rationalization should not lead to increased
unemployment. In PROUT's collective economic system, full employment
will be maintained by progressively reducing working hours as the
introduction of appropriate scientific technology increases
production. This is not possible in capitalism.

Decentralization

To materialize the above economic programme, PROUT advocates a new and
unique approach to decentralization based on the formation of socio-
economic units throughout the world. Socio-economic units should be
formed on the basis of factors such as common economic problems;
uniform economic potentialities; ethnic similarities; common
geographical features; and people's sentimental legacy, which arises
out of common socio-cultural ties like language and cultural
expression. Each socio-economic unit will be completely free to chalk
out its own economic plan and the methods of its implementation.

Within each socio-economic unit there will also be decentralized
planning, which is called "block-level planning" in PROUT. Block-level
planning boards will be the lowest level planning bodies.

One political unit such as a federal or unitary state may contain a
number of socio-economic units. For example, the state of Bihar in
India can be divided into five socio-economic units - Angadesh,
Magadh, Mithila, Bhojpuri and Nagpuri. Based on the above factors the
whole of India may be divided into forty-four socio-economic units.
These units must be guaranteed full freedom to achieve economic self-
sufficiency through the implementation of their own economic planning
and policies.

If the local people in these units organize large-scale programmes for
their all-round socio-economic and cultural liberation, there will be
a widespread socio-economic awakening in the whole of India.
Regardless of whether they are rich or poor, old or young, educated or
illiterate, if the local people are inspired by anti-exploitation and
universal sentiments, they will be able to start powerful movements
for socio-economic liberation. When people merge their individual
socio-economic interests with the collective socio-economic interest,
the outflow of economic wealth from a region will cease and
exploitation will be completely rooted out. The right of full
employment for all local people will be guaranteed, and the employment
of local people will take precedence over non-local people.

Where there is no proper economic development, surplus labour
develops. In fact all undeveloped economic regions suffer from surplus
labour, and when the surplus labour migrates to other regions the
region remains undeveloped forever. In areas of surplus labour
provision should be made to immediately employ the local people.

While providing employment to local people, local sentiments should
also be taken into consideration. Maximum agro-industries and agrico-
industries should be established on the basis of the socio-economic
potential of the region, and various other types of industries should
be established according to the collective needs. This approach will
create enormous opportunities for new employment. Through such an
employment policy, increasing the standard of living of the local
people will be possible.

In a decentralized socio-economic system the modernization of industry
and agriculture can be easily introduced, and the goods that are
produced will be readily available in the market. As each socio-
economic unit develops its economic potential, per capita income
disparities among different regions will decline and the economic
position of undeveloped regions can be raised to that of developed
regions. When every region becomes economically self-reliant, the
whole country will rapidly achieve economic self-sufficiency. Economic
prosperity will be enjoyed by each and every person.

Developmental Planning

PROUT's decentralized economy follows a specific guiding principle.
That is, effective economic planning should be based on four
fundamental factors - the cost of production, productivity, purchasing
capacity and collective necessity. Other related factors include
natural resources, geographical features, climate, river systems,
transportation, industrial potentialities, cultural heritage and
social conditions.

Due to the lack of a well-defined principle of economic planning and
the dominance of various narrow sentiments, India's economy has been
paralysed by inertia. Steel plants have been built where there is no
supply of cheap power, and huge oil refineries like those in Mathura
and Barauni have been constructed where there are no raw materials
within 1,000 miles. Such a policy is not only a great waste and misuse
of resources, it also illustrates the lack of foresight and ignorance
of India's planners.

This situation is reminiscent of the British period when raw jute from
Bengal was sent to Dundee in Great Britain to develop the British jute
industry. When the supply of raw jute from Bengal was stopped, all the
jute factories in Dundee were closed down. If the finished jute
products made in Dundee had not been sold in Bengal, the Dundee jute
industry would not have survived.
This economic history is relevant to the dying jute industry in Bengal
today. The present political climate is full of slogans like, "Let the
closed jute factories be nationalized," and, "Stop the lock-out."
Trade union leaders are amassing great wealth by exploiting this
depressed industry while thousands of unemployed workers are being
subjected to deprivation, starvation and untold suffering. Bengal does
not even supply sufficient raw jute to run its own jute mills, so raw
jute has to be imported from outside the region to supply the existing
mills.

If people want to make the jute industry healthy some clear-cut, bold
steps have to be taken. The number of jute mills should be reduced so
that they correspond to the dwindling supply of raw jute. The
additional mills should be closed down or converted to the production
of other essential commodities. The mills engaged in jute production
should produce mainly jute thread rather than other jute products, and
jute thread should be distributed among farmers and weavers through a
system of jute cooperatives. If such a policy is adopted the large
demand for thread in Bengal will be met, and the surplus production
can be exported. As the industry will be decentralized the wealth
generated from thread production will be spread among the local
people, ending large-scale exploitation by wealthy jute merchants and
raising the standard of living of the local people.

So, on the basis of the above factors, each socio-economic unit should
draw up its own developmental plan for socio-economic self-sufficiency
and then implement it. Grandiose planning which is irrelevant or
inappropriate for the local economic conditions should not be imposed
from the outside. It will not be allowed.

Centralized planning has totally failed in all countries of the world,
including India. In PROUT's system of decentralized planning, there
should be one coordinated plan for the whole socio-economic unit on
the basis of block-level planning. For example, for the entire western
Ráŕh, including Bankura, Purulia, etc., there should be a sub-plan.
Similarly, there should be another sub-plan for Jalpaiguri,
Coochbehar, Siliguri and Goalpara. In addition, there should be proper
block-level planning throughout the socio-economic unit. Thus, the
seed of economic centralization will be destroyed.

Trade and Commerce

PROUT also has its own specialities in the fields of trade, commerce,
taxation and banking. The distribution of essential commodities will
have to be done entirely through consumer cooperatives, not through
the government, businessmen or different levels of middlemen. This
will not leave any scope for manipulation by profiteers. As far as
possible barter should be the basis for trade among self-sufficient
socio-economic units.

Essential commodities will have to be entirely tax free. There will be
no income tax. Instead taxes should be levied at the starting point of
production.

The banking system will have to be managed by cooperatives. The
central or federal bank will be controlled by the immediate or local
government.

The maxim of PROUT's productive economy is, "Increase the purchasing
capacity of the
common people above all." If this maxim is followed in practice, it
will be easy to control the prices of commodities through the
cooperative system and economic decentralization.
June 1979, Calcutta
Footnotes

(1) This discourse was given by the author in June 1979. Subsequently,
more discourses were given on PROUT which can also be considered
specialities of PROUT's economic system. These include: "Economic
Dynamics", "Decentralized Economy", "Economic Democracy", etc. -Eds.
Published in:
A Few Problems Solved Part 9
Prout in a Nutshell Part 13 [a compilation]
Proutist Economics [a compilation]
Chapter 3 Proutist Economics [a compilation]