What is the heart of decentralized economy?
The welfare of local people is the essence of PROUT’s concept of decentralized economy. In a decentralized economic setup local people should not only control cooperative bodies, but also supervise all activities related to the local economy. It is a bottom-up system as opposed to the centralized approach to capitalist in their system of free-for all anywhere. PROUT’s decentralized economy (see below) requires a politically centralized system where the world government enforces from above the necessary policies required to liberate all in the economic sphere.

What is the first principle of a decentralized economy?
All the resources in a socio-economic unit should be controlled by the local people. Particularly the resources required to produce the minimum requirements must be in local hands. All industries based on these resources must be controlled entirely by local people.

Define local people.
Local people are those who have merged their individual socio-economic interests with the socio-economic interests of the socio-economic unit they live in. It has nothing to do with physical complexion, race, caste, creed, language or birthplace. The main issue is whether or not each person or family has identified their individual socio-economic interests with the collective interests of that socio-economic unit. Those who have not done so should be branded as outsiders.

What is the status of outsiders vis-à-vis a socio-economic unit?
No outsider should be allowed to interfere in local economic affairs or in the system of production and distribution.

What happens to surplus wealth in a socio-economic unit?
Surplus wealth will go to more skilled people such as doctors, engineers, scientists. However, there must be constant endeavor to reduce the economic gap between common people and skilled people.

What is the second principle of a decentralized economy?
Production should be based on consumption, not profit. Most countries have economic systems which are profit oriented. Production is carried out for profit. Producers give first preference to items which bring more profit.

What provides economic security in a decentralized economy?
The fact that commodities produced by that unit will be sold in the local market itself. Consequently there will be no uncertainty in the economic life of the local people. Furthermore, money will be continually circulated locally; hence the chance of economic catastrophe will be eliminated.

What is unique about a decentralized economy based on cooperatives?
The purchasing capacity of the people will continuously increase. No economic system in the world has been able to continuously increase the purchasing capacity of the people, because economic power has always been concentrated in the hands of a few persons.

What is the third principle of a decentralized economy?
Production and distribution should be organized through cooperatives.

What is the fourth principle of decentralized economy?
Local people must be employed in local economic enterprises. Educated people should also be employed in cooperatives so that they do not leave the countryside and move to the cities. Local people should determine what constitutes the minimum requirements of the people. If these principles are followed, the problem of outside interference in local economies will not arise.

What is the fifth principle of decentralized economy?
Commodities or goods which are not locally produced should be removed from the local markets, because decentralized economy aims to develop local industries and create employment for the local population. For this reason, products not produced locally should be banished from the local market as far as possible. If the local population utilizes products made in their own locality (even if initially they may be inferior to outside products), then their economy will become prosperous.

What will be the benefits of local, self-sufficient, socio-economic units?
These local units will work to enhance the all-round welfare of the people in their respective areas. The interests and concerns of local people will be guaranteed. Individual units will merge with other units. Thus these socio-economic units will lead to the comprehensive, multifarious liberation of humanity.

Socio-economic units will fill what human needs?
They will fill the social and economic needs but also their cultural aspirations. Culture denotes all sorts of human expressions. Culture is the same for all humanity, but there are local differences in cultural expression. In this regard, all local languages should be encouraged. None should be suppressed due to linguistic imperialism.

How can we define socio-economic unit?
It can be defined as a cooperative commonwealth. A group of self-sufficient socio-economic units which enhance the all-round welfare of the people in their respective areas and unite humanity on a common ideological base. These units, or this cooperative commonwealth, will facilitate the comprehensive, multifarious liberation of humanity.

What factors should be considered when forming socio-economic units?
The factors that should be considered when forming socio-economic units are:

• Same economic problems
• Uniform economic potentialities
• Ethnic similarities
• Sentimental legacy of the people
• Similar geographic features

What is meant by sentimental legacy?
Sentimental legacy comprises language, historical traditions, literature, common usages and cultural expressions.

What will be the maxim of socio-economic units?
“Know the area, prepare the plan, and serve the people!” These units will give expression to popular sentiments and will fight against all forms of exploitation to meet the demands and aspirations of the local people.

What factors should determine the boundaries of a socio-economic unit?
Natural resources, topography, river systems, cultural conditions, communication and industrial potential all need to be considered when creating a socio-economic unit.

Can there be more than one socio-economic unit in a political unit?
Yes, there can be one or more socio-economic units in a political unit.

How many socio-economic units would there be?
One political unit such as a state may contain several socio-economic units, depending on certain factors. When local people in individual socio-economic units organize programs for their socio-economic and cultural development, there will be tremendous awakening amongst the common people everywhere. Local people can always unite on the common sentiment of anti-exploitation and universalism. In this way they can start powerful movements for socio-economic liberation.

Under what conditions can two or three socio-economic units merge?
They can merge if there is economic parity, cultural mixing, communication facilities and administrative efficiency. Merging will benefit the people. It is preferable for small units or states to merge into larger units. As the units reach higher levels of development, this unification process will gradually lead to one socio-economic unit for the entire country. As this process continues, entire regions such as Southeast Asia or South and Southeast Asia both will combine to form one socio-economic unit.

What will cause socio-economic units to gain great popularity worldwide?
If each socio-economic unit is inspired by a comprehensive ideology and a universal outlook, human society will move ahead with accelerating speed towards a sublime ideal. A sound ideological base is a prerequisite for socio-economic groupifications. Universal humanism can be that sound ideological base. The ideology of universal humanism will include each and every person in the world, as well as animals, plants and inanimate objects. If even a single person remains outside the influence of universalism and becomes a victim of exploitation, then the foundation of universal humanism will be undermined. Thus PROUT’s method of solving socio-economic problems is universal in spirit but regional in approach.

What will happen as each socio-economic unit develops its economic potential?
The per capita income disparities among different regions will decline and the economic position of undeveloped regions will go up until it is the same as developed regions.

How should trade take place between self-sufficient socio-economic units?
Barter should be the basis for trade.

How would trade be organized in a decentralized economy?
Goods should be exported from one region or socio-economic unit to other regions through cooperatives. Exporting local raw materials is not supported by PROUT. Only finished goods should be exported and that too only in certain circumstances. Only after all the requirements of the local people have been met can then surplus goods be exported. Further, those goods should be exported only to a region which has no potential or way to produce those goods and hence is unable to meet the requirements of the people in their region. Free trade is encouraged once self-sufficiency in a region is attained, as this will increase the prosperity of the people and encourage socio-economic parity among regions.

Should there be import or export duties with regard to free trade?
No, because this will drive up prices. Items should be traded which will actually be consumed by the people.

What is the situation in the world today as regards free trade?
Each country thinks for its own benefit first, and hence does not like free trade. Neither capitalists nor communists like the free trade system. The communist system always suffers from food shortages and has to import foods from capitalist countries.