Increasing the Purchasing Capacity of the People

Excerpted from After Capitalism: Economic Democracy in Action by Dada Maheshvarananda (Puerto Rico: Innerworld Publications, 2012): www.aftercapitalism.org

Despite nearly three decades of US economic growth, real wages and purchasing capacity of the population have been falling. The US mini- mum wage, when adjusted for inflation and calculated in 2009 dollars, has fallen from a peak of US$10 per hour in 1969 to less than US$7 in 2010.8 The average American employee works harder and longer for less. Constant economic growth has been won by exploiting workers.

PROUT measures economic health and vitality quite differently: by assessing the actual purchasing capacity of the people and their standard of living. PROUT economists will determine a minimum salary sufficient to provide essential goods and services, such as food, clothing, local transportation, health care fund contributions and monthly housing and utilities bills for a family of four.

“While maintaining the same level of productivity, workers can be paid the same amount for less hours of work each week.”

The government must finance high-quality education at all levels. One way to finance quality medical care for everyone is by a health fund to which all employed workers contribute monthly and which is overseen by the government.

To control inflation, the real wages of people will be regularly reviewed according to the actual cost of all goods and services available. While in capitalist economies the rate of inflation often fluctuates significantly, a cooperative-based economy can keep inflation low for long periods. By guaranteeing the basic requirements of life, capital costs will remain low, allowing capital to be continually reinvested in productive enter- prises, and the wealth generated by cooperatives will be spread equitably throughout society.

Another way to stabilize short-term prices is by stockpiling key and essential commodities. When demand exceeds the supply of a particular commodity, tending to push the price up, the government can reduce its stockpile. Similarly, when there is an excess of goods, the government can increase its stockpile. In the long term, economic planners must anticipate demand levels and restructure production accordingly.

A Proutist economy will guarantee people an increasing purchasing capacity. This means that all workers will have to have their incomes progressively increased at a rate that is higher than the rate of inflation. Thus the minimum wage will have to gradually rise, giving people the opportunity to purchase an increasing range of all types of goods and services.

Another way that wages and salaries could be increased is by increasing their corresponding benefits or by improving conditions. For example, a minimum wage in most countries would probably be set for 40 hours per week, with higher rates paid for overtime work. By introducing improved technology and making cooperatives more efficient, it will eventually be possible to gradually reduce the number of working hours in a week. While maintaining the same level of productivity, all workers can be paid the same amount for, say, 38 or less hours of work each week. This gradual reduction in working time will give everyone more time for cultural pursuits, further education, sports and other hobbies.

Cooperatives would be encouraged to offer their members “flexitime,” allowing them to adjust their working hours and schedules to meet family and other commitments, within certain limits.

It will be illegal for children below the age of fourteen to work in the workforce. Young people between the ages of fourteen and sixteen should be limited to working twenty hours a week, and should be paid hourly according to the just minimum wage, unless they are students and the work is part of their apprenticeship training.

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