Once the economic collapse of America has occurred, what then? We need to study what our economic options are. Esteemed economist Shrii Prabhat Ranjan Sarkar has provided to the world a glorious vision of a new economic model called PROUT (Progressive Utilization Theory), which contains guidelines for the creation of a new economy. He says that regional, self-sufficient socio-economic units must be formed on the basis of common cultural, geographic, social and economic factors. These socio-economic units may be affiliated in a federated system, but they must possess sufficient self-determination in their own local economic regions to create and control developmental policy.
Every region’s economy should be organized into three types of enterprises: cooperatives, key industries, and small private enterprises. Cooperatives would form the core of the economy. Except for a few large-scale, key industries and small private enterprises producing non-essentials, all production is to be organized under worker-owned and controlled enterprises. Cooperatives increase worker motivation and job satisfaction because they give workers control of the business as well as a stake in its profits. When cooperatives have access to the requisite inputs of production—capital, entrepreneurship, skilled labor, and competent management—they invariably out-perform private, free-market enterprises. Cooperatives are controlled by their worker members on the basis of one member, one vote. All members must purchase a membership share in the cooperative. This initial capital contribution gives each worker member a financial stake in the business. Thus workers’ ownership rights are based on their functional role as workers, and not on the basis of their capital contribution.
Very complex, capital-intensive industries, such as utilities or industries producing raw materials or goods which are strategic to the regional economy, should be designated as key industries. As they play a crucial role in stimulating production and development for the region, they must come under community control, not worker control. Key industries should be controlled either by the local or regional government, or by an autonomous board. That board or local government operations would hire a plant management team. Participatory team management techniques should be used to insure maximum worker involvement. An effective incentive system should be used to motivate productivity. Key industries should operate on a no profit, no loss basis. The state should not subsidize their operation, nor should the industry reap profits. (25)
Small businesses—those having a maximum of about 5-8 employees—can be privately owned. Private enterprises should not be involved with producing or distributing staple commodities. Salaries of workers and income of owners should be subject to minimum and maximum standards established for the region. (In fact, today in Germany the people are on the streets demanding a minimum wage as well as a maximum wage for all workers!)
Economic planning should take place at the central, regional, and district levels. But, for the most part, planning authority should reside at the local level. The most basic unit of planning is the district. District boundaries should not be determined on the basis of political considerations, but on the basis of geographic factors, socio-economic requirements, common economic problems, and common aspirations of the people.
If planning is undertaken at the district level, it means that planners will better understand the major and minor problems of the area; local leaders can solve problems according to their own priorities; planning will be more practical and more readily implemented; local organizations can play an active role in mobilizing human and material resources; and most important, unemployment can be more easily prevented.
When planning at the district level, the following guidelines can be observed. The unit costs of production (including spillover/environmental costs) should be carefully determined, and the cost of producing a particular commodity should not exceed its market value. Every economic enterprise must be economically viable, and without need of state subsidy. A major objective of planning must be to increase people’s purchasing capacity. Hence there must be: (1) availability of commodities according to local demand, (2) stable prices, (3) periodic increases in wages, and (4) steady increase in collective assets (such as roads, energy generation systems, and communications infrastructure).
The economy should be organized such that it has the capacity to continuously increase its productivity. There should be maximum production according to the collective need, and full utilization of the productive units. Money should be properly invested, and not hoarded or squandered in unproductive ways. No economic development project should be undertaken which decreases the productive capacity of the environment or the vitality of local ecosystems.
Investment capital should be generated from within the region, or through interregional trade. Capital for large-scale development can come from developmental bank loans, worker shareholdings, and government grants. Small-scale enterprises can be capitalized through worker shareholdings, private investment, and loans from cooperative banks.
To avoid trade deficits and the loss of currency, interregional and international commerce should be conducted on a barter basis where possible. Locally produced basic commodities should be protected from competition with cheaper goods produced in other countries. To protect local employment opportunities, international and interregional trade in raw materials should be avoided, and only finished products should be sold outside a region. Regional economies should be largely self-sufficient in the production of basic commodities. Except for commodities protected from foreign competition, there should be free trade.
Workers must have the right to organize independent trade unions, and control of the unions must remain with workers, not with political party interests. Unions should give as much importance to making workers conscious of their responsibilities as they do to protecting their interests. In small and medium-sized cooperatives, there will be less need for worker representation by organized trade unions, as these are worker-managed businesses. But in large cooperatives, key industries, public service institutions, and government administration, unionization should be encouraged. In large cooperatives, unions will serve the interests of workers as workers, rather than their interests as worker-owners.
The prosperity of society depends on worker productivity. Hence incentives are essential to motivate workers to develop and use their full productive capacities. While productivity and talent should be rewarded, rewards should not be so large as to create unnecessary disparity in society. Society should set minimum and maximum income levels. The minimum level should insure sufficient income to purchase basic necessities according to the prevailing standard. The maximum level should balance society’s need to maintain high worker motivation with its need to distribute wealth equitably. Over time, the minimum and maximum income levels would rise with rising purchasing power, and the range between the minimum and maximum incomes should be gradually decreased – unless this has the effect of diminishing worker motivation. The practice of providing incentives should be incorporated into all productive activity. The forms of incentives which have most value and appropriateness can be as follows:
Special amenities. Individuals whose skills have special value to society should receive special amenities, preferably amenities which provide increased opportunity to utilize their talents—for example, special research equipment, or greater opportunities for education and travel.
Wage differences. Workers should be paid according to their skill level and their labor. This can be done through salary gradations, payment for piece work, or bonuses. Workers in cooperatives will receive dividends according to the profitability of their enterprise.
Psychological incentives. Non-material incentives are also very effective. Motivation increases when workers feel compatibility with their job, when their work environment is pleasant and safe, and when their work provides interest and challenge. Perhaps the most important psychological factor for increasing motivation is the ability to influence decision-making. Therefore, all enterprises should implement participatory management processes and teamwork to the greatest extent possible. Teamwork can reinforced by material incentives based on team performance.
Currency should be backed by bullion. If the state is required to guarantee the value of money by issuing bullion upon demand, this will check its tendency to engage in excessive deficit spending and thereby help prevent inflation.
Distribution of essential commodities should be done through consumer cooperatives, not through traders, middlemen, or the state. This reduces the possibility of hoarding, manipulating prices, and bureaucratic inefficiency in marketing essential products. There should also be a free flow of information about consumer products. Decentralization of production and marketing will reduce the possibility of expensive advertising campaigns designed to manipulate consumer demand.
Outside the Boxes
The forthcoming collapse of the American Empire will be disastrous – not only for America but for countries around the world. The reverberations will be global. Today American battleships are moving to the Eastern Pacific Ocean in proximity to North Korea. American bases are springing up all over the Middle East. It is a matter of time until US military activity steps up in the vicinity of Venezuela, Columbia, Ecuador and Bolivia. The costs of these perpetual American wars will be immeasurable. (26) They are unsustainable.
What is required today is the implementation of the above-described Prout principles, or guidelines. They can be implemented at the grassroots level. Struggles against capitalist exploitation can start locally, in each community, by for example demanding the removal of those companies from a region where the companies are not hiring local people but instead are outsourcing. People cannot be complacent or apathetic. Justice never walked through the door without a struggle. We have to fight hard without rest if we want to see justice, and this applies most acutely to economic justice. We need to learn about energy conservation and local grassroots energy production – through wind and solar power. We must make ourselves independent of huge energy corporations as the first step towards giving ourselves economic power – putting economic power into our own hands! In the first decade of the 20th century, 100 years ago, Upton Sinclair was writing vigorously against capitalism and the corporations of those days. How appalled he would be to see what demonic form capitalism has become today! We are seeing the worst excesses of capitalism in every country. We need to crush this demon – if necessary with our bare fists! In each and every region we must throw out the large capitalist businesses and pass laws that permit only cooperatives or small-scale enterprises comprising 5-8 employees. It means the common people, not one or two capitalists, will own the productive assets on which their lives depend. There will be no more illegitimate, exploitative foreign debts meted out by World Bank, IMF and other crooks. The common people will have the right to manage the flow of goods and money across their borders. The people will set their own economic priorities. No longer will rich countries be allowed to bully smaller countries and demand access to their markets or resources. Every business, and every corporation that wants to do business in a foreign country will be subject to the laws of that particular country alone. WTO, World Bank and IMF will be deleted, and replaced by global institutions whose sole goal is benevolence and magnanimity towards the little people of this world! In the Prout economy, unlimited greed will end. There will be a ceiling placed, by the people themselves, on the amount of wealth any one person can accumulate. The common people will establish what should be the minimum wage as well as what should be the maximum wage. This is exactly what people in Germany are demanding today!
“US imperialist wars (be it Iraq, Iran, Venezuela or Columbia) are all a symptom of unlimited human greed of a few individuals at the highest levels of power. That unlimited greed is given free license in the economic system called capitalism and now global capitalism or globalization. The harm to humanity as a consequence of this greed is incalculable, and must be stopped. The way to stop it is to convince the people from the ground up, from the grassroots level, that there are better economic systems being developed by the idealistic lovers of humanity, and these economic systems do not create stark disparities in wealth. These new economic systems cater fully to the largest number of people and particularly to the poorest of the poor. They ensure that every citizen has adequate purchasing power and the five minimum necessities of life, i.e., food, clothing, shelter, education and medical care. We need to go back to local people becoming self-sufficient by growing their own food, producing their own necessities and controlling the conditions of their lives. In this scenario, the issue of price and even GDP becomes irrelevant. It becomes our duty to study these systems and teach them to others, so as to finally put the economic power into the hands of the people.” (27)
We need to climb out of these two economic boxes – one called capitalism and the other called communism – and step outside into the fresh open air of new visions of economic and social understandings that will bring real benefit to the people. We need to spread these visions across continents and oceans and create huge international networks so that the global population moves together to implement these visions! As one global population fighting for moral economic justice, we can fight the WTO, the World Bank and the IMF, defy their so-called laws, and if necessary be ready to go to prison during that fight! We must speak out in protest in order to end the economic domination of these capitalist institutions. The Battle of Seattle was the first step, when more than 1600 organizations from 90 countries on every continent came to protest trade liberalization. They understood the suffering that WTO leaves in its wake! We need to create a massive global second step – leaving a footprint so deep that it cannot be removed. We need to bring the WB and IMF to their knees! This protest movement will have to be both an economic protest as well as a political protest against trade liberalization and those political leaders who greedily push neoliberalism onto third world countries knowing full well that they alone and not those countries will benefit monetarily. Using only the Internet, in 1998 a gigantic coalition of protestors brought enough pressure to bear so as to kill the OECD’s MAI. We need to do this again and again, this time specifically targeting the World Bank and IMF. We need to declare the complete illegality of all laws passed by these institutions, saying their laws do not represent the people of the world, and are hence invalid! We need to demand that the only laws acceptable to the global population are laws created and approved by that population. Those laws will have to do with an alternative, humane and sustainable international system of trade and investment relations. To be rid of unemployment and to rebuild healthy, sustainable societies, we need to take back our local economies. We need to support all-round localization! (28) If we can control our own regional economies, orient them towards serving the basic needs of the people, then the local people will have jobs and will be protected from any future unemployment. We will go back to small, locally-owned enterprises (maximum 5-8 employees) and cooperatives. No more mammoth corporations wherein the benefits of productive assets go to a handful of rich alone with nothing for the masses! Capitalism devours everything in its wake – people, communities, ecology – it becomes a cancer in the society. Margaret Thatcher said, “TINA – There is No Alternative.” Colin Hines along with this author declare today: “TIAA! There is an Alternative!” The great Ralph Nader says, it is now time to fight the good fight – to engage in civil disobedience and mass resistance at every rung of the ladder because, in the words of esteemed economist and lover of humanity, Prabhat Ranjan Sarkar,
“There is only one way to stop economic exploitation and alleviate the plight of the common people, and that is to implement a policy of decentralized economy in all the sectors of the economy. Successful planning can never be done by sitting in an air-conditioned office thousands of miles away from the place where planning is to be undertaken. Centralized economy can never solve the economic problems of remote villages. Economic planning must start from the lowest level, where the experience, expertise and knowledge of the local people can be harnessed for the benefit of the members of a socio-economic unit. All types of economic problems can be solved only when economic structures are built on the basis of decentralized economy.”
Localization means, workers everywhere will be protected. Communities and especially environments will also be protected. Localization translates to minimization of the need to trade with other countries in far off places, if basic goods and services can be produced and provided locally. So we need to change our mindset from the “beggar-your-neighbor” competition of globalization to one of “better-your-neighbor” localization. We will globalize not capitalism but localization! This will work for the people! No more debts to international bankers! We need to drop the flawed economic theory of comparative advantage in neoliberalism and instead move now towards overcoming the opposition of transnational corporations, including agricorporations, while developing and controlling our local economies. Policies will be based on “site-here-to-sell-here,” to guarantee local production. Money can remain local, with safeguards such as control over capital flows, Tobin-type taxes, control of tax evasions, including offshore banking, and the rejuvenation of local banks, credit unions, and LETS schemes. All these steps will lead to a more level playing field. Individuals and companies can be taxed according to their wealth, their income, and their land. Taxes raised will be used to help the poorer people in the society. Sustainable, regional, self-reliant projects and enterprises mean more and more local employment. It is about changing our economies at the grassroots level. With coming huge job losses predicted in the face of deflation (many countries have passed the 40 percent mark in unemployment) followed by huge inflation leading to innumerable bankruptcies, the people will have no choice but to move towards the alternative of economic localization. When the market flounders, when capitalism begins its crash to the ground, we need to be ready at that moment to take back our economy and convert it to an entirely local economy run by the local people. This is the alternative. This is the Prout economic model in action! Prout’s approach is to guarantee minimum requirements of life for all people, to guarantee maximum amenities for all, and to guarantee special amenities for people with special capabilities. These three guidelines will lead to ever increasing acceleration in the socio-economic sphere. These three steps are never-ending processes and will go on increasing according to the collective potentialities of the people. In the words of Shrii Sarkar:
“Prout is the panacea for the integrated process of human society. It aims to bring about equilibrium and equipoise in all aspects of socio-economic life through totally restructuring economics. Without PROUT, socio-economic emancipation will remain a utopian dream. Only PROUT can save the world from [economic] depression …. We are near the last stage of the capitalist era. If an impact is created, it will help the suffering humanity. It is the most opportune moment for creating an all-round revolution!” (29)
1 Chalmers Johnson, Sorrows of Empire,New York, Metropolitan Books / Henry Holt and Company, 2004.
2 Ibid, p. 5
3 Ibid, p. 23.
5 Ibid, p. 58
6 Ibid, p. 60.
7 Ibid, p. 74.
8 Ibid, p. 81.
9 Ibid, p. 199
10 Ibid, p. 261.
11 Ibid, p. 262.
12 Ibid, p. 262
13 Ibid, p. 268
14 Ibid, p. 277
15 Ibid, p. 280
16 Andre Gunder Frank, “Geopolitical Catch 22: Uncle Sam’s Paper Tiger Dollar,” at Center for Research on Globalization, www.globalresearch.ca, 18 January 2005.
17 Chalmers Johnson, Sorrows of Empire, p. 281
18 Chalmers Johnson, “No Longer the ‘Lone’ Superpower: Coming to Terms with China,” in JPRI: Japan Policy Research Institute, Working Paper No. 105 (March 2005).
21 Steve Maich, “Is America Going Broke?” in Macleans-Canada. http://www.macleans.ca/topstories/world/article.jsp?content-20050307_101541_101541
22 Andre Gunder Frank, “America’s Spiraling External Debt and the Decline of the US Dollar,” at Center for Research on Globalizatoin, www.globalresearch.ca, January 12, 2005.
25 Beyond Collectivism and Individualism: Structural Features of the Prout Economy, Prout Globe
26 Garda Ghista, “Economic Consequences of Iraq Occupation,” at World Prout Assembly: http://www.worldproutassembly.org/archives/2005/05/economic_conseq_1.html
28 Colin Hines, Localization: A Global Manifesto, London: Earthscan Publications Ltd. 2000, p. 239.
29 Shrii Prabhat Ranjan Sarkar, Proutist Economics, Kolkata: Ananda Marga Publications, 1992, p. 98-99
Copyright The author 2011