Some Specialities of PROUT’s Economic System

P.R. Sarkar
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.*

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.


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.


* 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.

Copyright Ananda Marga Publications 2011

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