Economic Democracy: The Freedom Struggle of the 21st Century

A PROUT Globe presentation

Today as so many people around the world are being thrust into poverty in a new Global Economic Depression, are we not honour-bound as human beings to ask why? Why is it that a few elite bankers playing with banks and stocks can destroy banks and corporations and then ask the people to pay the price by using the people’s money to bail out these corporations. Why should poor people all over the world have to pay the penalty for the crimes of others? Why should poor people have to starve because Western speculators play games with the price of food?

Earlier there was a dual policy of ruthless plunder for non-European nations and American corporate control for Europe – but now there is only one policy of using currency and stock speculation to drive countries like Greece into bankruptcy and then stripping the corpse of these national economies like wolves gnawing on the last bit of flesh of a deer. More importantly the people of formerly rich nations need to ask their conscience why they have tolerated the economic immizerization of countless people in the Third World and the Fourth World (world of stateless indigenous peoples or adivasis)?

Now that the chickens have come home to roost, it is important that we must have genuine global brotherhood and sisterhood. This starts with facing the facts about economic tyranny and having the courage to dream and to fight for economic democracy for everyone, for every community in our global village. Many people from the Social Credit movement, to the anarchist movements to followers of Henry George, like J W Smith have all accepted this noble ideal of economic democracy. This is why our rallying cry is, Economy of the People, By the People and For the People!

Every freedom struggle begins with a vision of freedom and that is precisely what we are trying to ignite by discussing the principles of economic democracy with you in this article. Let us begin by thinking how useful is it to be able to vote for the President or Prime Minister of your country but not to have any role in choosing the directors of your workplace?

One government is changed with another. Perhaps the people get a greater role to participate, but economic life remains undemocratic and unchanged. In the national political sphere we have abolished aristocrats (zamindars) who hoarded power without the common people having any rights. But in the realm of economics – of putting healthy food in your baby’s mouth – we still have artistocrats who hoard economic power while the common people have no economic rights.

Today most companies in our society are corporations with stockholders. It is a type of absentee ownership. The people who own the shares usually are not the same people who work and live in the communities where the enterprises are located. Maybe the directors of your workplace are ready to close down your factory or office if it is deemed in the greater interests of stockholders living in a distant locality.

Or, imagine a place where big industries are setup by acquiring lands of the local people and they remain looking at the outsiders coming to work and enjoy the benefits while locals remain unemployed and will have to live with pollution and health hazards. These people are able to elect members of parliament, but have no chance to participate in decision making process of their future livelihood.

Economic freedom is the birthright of every individual. Most countries in the world – whether capitalist or communist – have adopted the policy of economic centralization. While the economies of the capitalist countries are centralized in the hands of a few capitalists or a few capitalist institutions, the economies of the communist countries are centralized in the hands of the party bureaucrats or military leaders.

After so many years of economic centralization, economic exploitation has neither been eradicated nor have the common people attained the mirage of prosperity or socialism. As this global depression deepens we are going backwards at a faster and faster rate to old levels of economic suffering while seeing unbelievably new levels of rapacious economic violence from the wealthy elite. Even the political rights are being seized back day by day.

Capitalism promotes the right of individuals to amass capital at liberty. The trend of capitalism is increased centralization of private wealth. This does not mean that wealth is being more widely distributed. The number of billionaires may be growing but the number of people who lose out in this race is growing very much more.

A very small number of people own most of the world’s riches. A decade ago, 10% of the US population owned 71% of the nation’s wealth and the top 1% owned 38%. The bottom 40% owned less than 1%. In India, less than 200 families are reported to own more than 20% of nation’s wealth. The centralization of wealth results in recessions and depressions.

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, which ushers economic democracy.

Economic Decentralization

Economic decentralization means giving economic power to the local people of a community instead of giving it to the government (as in socialism) or to the coporations. Here production is for consumption and not for maximizing profit. This does not mean that the majority of the population will be dependent on agriculture for their livelihood or that the other sectors of the economy will remain undeveloped. Rather, each sector of the local economy must strive for maximum development, and all sectors must strive for maximum decentralization.

If a human being overeats out of desire to please their tongue, their other organs will break down and can become cancerous. This is precisely what is happening in the collective life of our global society. It is common sense that each organ of the body should become healthy and self-reliant and similarly it is common sense that every community should become healthy and self-reliant.

Community health starts with economic health because without proper food, clothing, shelter, — cultural, intellectual and spiritual life become impossible for most people. Decentralization does not diminish or dissipate economic potential. Rather, decentralization removes regional disparity because wealth is distributed almost equally everywhere.

We do not find situations where people in some places cry out in agony due to scarcity and starvation, while people in other places become immoral due to excessive affluence and over abundance. In fact, industrial centralization is detrimental to a well-knit social order. The fundamental evil of centralization was revealed in government documents that showed that most of the bombing of US imperialists in the Vietnam War was designed to drive the poor villagers of the forests of Vietnam into the cities and then those half-starved, desperate people would serve as cheap labour for large industries controlled by American capitalists.

Economic decentralization is not possible under capitalism, because capitalist production always tries to maximize profit. Capitalists want to produce commodities at the lowest costs and sell them at the highest prices. They prefer centralized production, which leads to regional economic disparity and imbalances in the distribution of the population.

Communism is state capitalism which means state-controlled industries. The working-class gets next to nothing from the fruits of their labour and the government seizes the profits which it doles out to its corrupt bureaucrats. In other words, in state capitalism industries are centralized in a few hands. Both of these are forms of economic tyranny or economic aristocracy.

Decentralized economy is the only way that people can attain real happiness because it will not only guarantee economic prosperity, but also pave the way for individual and collective psycho-spiritual progress. Once people’s mundane problems have been solved, they will have greater opportunities to develop their potentialities in the psychic (mental, emotional, cultural) and spiritual spheres. With the establishment of decentralized economy, economic and psycho-economic exploitation (exploitation done via corporate pseudo-culture) will be eradicated, the gap between the rich and poor will be minimized and individual and collective welfare will be greatly enhanced. This in turn will create greater opportunities for the psychic and spiritual progress of all members of society.

No economic system in the world has been able to continuously increase the purchasing capacity of the people, because economic power is concentrated in the hands of a few. It is ridiculous and foolish to expect economic justice and freedom from the economic aristocrats or corporations just as it was ridiculous of the poor peasants of the past to expect political justice and freedom from the dukes, earls and rajas of the past.

In the past the religions kept the people dumbed-down so that they could be easily exploited and today this is done by the corporate media and educational system. Economic democracy is essential not only for the economic liberation of human beings, but for the universal well-being of all – including plants and animals. As recent studies by Jason Hribal have shown the rampant exploitation of animals began to increase with the rise of capitalism and hence it is animals who are the greatest victims of capitalism. The same is true for the endless varieties of beautiful plant species of this planet.

It is futile to think that by mere protests or propaganda the omnicide of our plant and animal brethren will end. Unless we eradicate capitalism soon, countless species will become extinct. Unless we eradicate capitalism in the human spirit by meditation we can never end the endless violence of human beings towards the Earth and its children.

Economic democracy will devise ways and means to affect the smooth progress of society by recognizing the unique value of both humans and non-humans alike. People will have to choose a socio-economic system based on either a centralized economy or a decentralized economy. Political democracy cannot fulfill the hopes and aspiration of people or provide the basis for constructing a strong and healthy human society. The only way to achieve this is to establish economic democracy. We can recollect that the path towards capitalism was via the centralization for provincial, national and then global economic power.

Communism claimed to fight capitalism but in fact mere increased the centralization of power. After the barbarism of the Russian Civil War, Trotsky began the militarization of the factories in a way no capitalist had ever been able to do before. So the path to ending capitalism is the path of localization towards economically liberated communities.

Principles of Decentralized Economy

Progressive Utilization Theory (PROUT), propounded by Shri Prabhat Ranjan Sarkar advocates economic democracy, where economic and political powers are bifurcated. It proposes political centralization and economic decentralization. Political centralization is only to be achieved after there is global economic democracy at the grassroot level.

Political centralization in the form of a Global Bill of Rights and a Global Parliament is the creation of these economically sovereign bio-cultural regions (samajas) that will replace the western concept of the nation-state. Currently we are seeing movement towards a global police state to enforce a global economic tyranny. So global political democracy is essential to combat this global police state and to end the endless imperialism of capitalist empires. Political power is vested with the moralists, but economic power is vested with the local people.

Principal goal of the administration is to remove all the impediments and obstacles which prevent the economic needs of the people being met. The local administration exists solely to serve the needs of the cooperative commonwealth of the local community. The universal aim of economic democracy is to guarantee the minimum requirements of life to all members of society. These requirements will increase over time as when human beings are freed from consumer culture and poverty they will rapidly develop in kalidescopic ways in the intellectual, cultural and spiritual realms.

The first principle of decentralized economy is that all the resources in a socio-economic unit should be controlled by the local people. In particular, the resources which are required to produce the minimum requirements must be in local hands, and all the industries based on these resources will have to be controlled entirely by the local people. Local raw materials must be fully utilized to produce all kinds of commodities necessary for the economic development of a socio-economic unit.

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. This concept of local people has nothing to do with physical complexion, race, caste, creed and language or birth place. The fundamental issue is whether or not each person or family has identified their individual socio-economic interests with the collective interests of the concerned socio-economic unit. Those who have not done so should be branded as outsiders. Those who earn their livelihood in a particular socio-economic unit but spend their earnings in another socio-economic unit should be considered as outsiders or non-local people, as this practice is not in accordance with the interests of the socioeconomic unit in which they are employed. It results in the drainage of the capital necessary for the continued growth of that unit and undermines its economic development.

All kinds of industrial activities from key industries to cottage industries should be organized with the cooperation of the local population. Care should also be taken so that private enterprises are set up by the local people. Local people must be given preference in employment, and all local people should be locally employed. If this policy is followed, there will be no surplus or deficit labour among the local people, and if many people do come from outside areas, they will not find a place in the local economy.

No outsider should be allowed to interfere in local economic affairs or in the system of production and distribution; otherwise a floating population will develop, causing the outflow of economic wealth from the local area. If this occurs the area will become vulnerable to outside economic exploitation and decentralized economy will be undermined.

Can “Local People” Manage the Economy?

PROUT says the economy should be controlled by local people. But the art of running businesses successfully and the science of economics require particular skills and expertise; how can we expect “local people” to manage it? Any society, big or small, needs people of various capacities and competence for it to develop in a balanced way. Many people living in far off places have their roots in their native places or they have emotional links with the area. The major reasons for this human resource drain are lack of job and educational opportunities, lack of basic amenities, etc.

If these aspects are taken care of, which is inherent aspect of Prout’s economic decentralization, majority of the people prefer to return to their native places. Traditional knowledge and experience of the local populace which has been neglected, overlooked or bulldozed by the profiteering system, will be revived and utilized in the decentralized planning system. Moreover, the definition of the local people includes the entire socio-economic unit.

The second principle of decentralized economy is Production for consumption, not production for profiteering. Most countries in the world have adopted economic systems which are profit oriented – that is, production is undertaken only for profit. Producers give first preference to those items which bring maximum profit, so everywhere there is keen competition regarding the production of the most profitable goods. During this process the natural and human resources are misused or abused.

For example, electricity will get the preference to be used for a less profitable but essential item like food production in a decentralized economy, where as it will be used for manufacturing alcohol or some luxury items which are more profitable in a capitalist economy. To increase the standard of living of the people, a new system of production will have to be introduced. Consumption (i.e. meeting the actual needs of the people), not profit, should be the underlying motive in the field of production.

The third principle of decentralized economy is that production and distribution should be organized through cooperatives. One of the principal reasons for the past failure of the cooperative movement is economic centralization. It is extremely difficult for cooperatives to succeed in an economic environment of exploitation, corruption and materialism. Cooperatives are forced to compete with the monopoly capitalists for local markets, and the rights of the local people over their raw materials are not recognized. Such circumstances have undermined the success of the cooperative movement in many countries of the world.

On the other hand, decentralized economy is one of the principal reasons for the success of the cooperative system. The availability of local raw materials will guarantee constant supplies to cooperative enterprises, and cooperatively produced goods can be easily sold in the local market. Economic certainty will create increasing interest and involvement among the cooperative members, and as the local people will be confident of their economic security, they can wholeheartedly accept the cooperative system.

As far as possible, agriculture, industry and trade should be managed through cooperatives. In these sectors of the economy private ownership should be abolished in stages. Only where production cannot be undertaken by cooperatives because of the complex nature or small scale of operations should it be undertaken by private enterprises. The distribution of commodities should be done through consumers cooperatives. Adequate safeguards for cooperatives will also have to be arranged.

The cooperative system is a must, and it is only possible through decentralized economy. The cooperative system and decentralized economy are inseparable.

The fourth principle of decentralized economy is that the local people must be employed in local economic enterprises. Unless the local people are fully employed in the local economy, unemployment can never be solved. Local people should determine the quantum of minimum requirements and the basic policies connected with their own economic well-being. If this principle is followed the problem of outside interference in the local economy will not arise at all.

Cooperatives will provide employment for local people, and also ensure that the skills and expertise of the local people are fully utilized. Educated people should also be employed in cooperatives so that they do not leave the local area in search of employment or move from the countryside to the cities.

The fifth principle of decentralized economy is that essential commodities should be produced by local enterprises. Import of basic commodities should be restricted for a period of time in order to develop local industries and prevent an outflow of capital. Although locally produced goods may initially be inferior in quality, more costly, or less available, it is necessary to shelter their production in the initial stage. Otherwise, local industry will not develop, leading to decreased employment opportunities and control of the local economy by outside interests.

If goods are locally produced, the economy will thrive, and capital will remain in the local area where it can enhance the prosperity of local people. If local commodities do not meet the needs and aspirations of the people, immediate steps must be taken to increase the quality, reduce the price and increase the supply of local goods; otherwise illegal imports will be encouraged.

Salient Features of PROUT’s Decentralized Economic System

Economic Democracy is the result of decentralized economy and PROUT has its own ideas, concepts and methodology. With this all regions will get ample scope to develop their economic potentiality benefiting every inhabitant individually and collectively.

  • Guaranteed Minimum Requirements

The basic right of all people to get minimum essentials for their existence i.e., proper food, clothing, housing, education and medical care should be arranged through cent per cent guaranteed employment, not through welfare or dole-outs. Not only is this an individual right, it is also a collective necessity, because the easy availability of the minimum requirements will increase the all-round welfare of society.

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. This will provide incentives to increase production.

  • Increasing Purchasing Capacity

Purchasing capacity is the real index of how people’s economic needs can be met by their income. PROUT stresses increasing purchasing capacity and not per capita income. Increasing purchasing capacity must be guaranteed to each and every individual. 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.

  • 100% Employment to Local People

There should be 100% employment for the local people In economic democracy local people will have the power to make all economic decisions, to produce commodities on the basis of collective necessity, and to distribute all agricultural and industrial commodities Consequently, local raw materials will be used to promote the economic prosperity of the local people. That is to say, the raw materials of one socio-economic unit should not be exported to another unit. Instead, industrial centres should be built up wherever raw materials are available. This will create industries based on locally available raw materials and ensure full employment for all local people.

To create 100% employment among local people, PROUT supports both a short term and a long term economic plan. In the short term plan, labour-intensive industries based on the collective minimum requirements of life should be started immediately or made more productive where they already exist. These industries should be based on the consumption motive. They should also provide a rational profit in order to guarantee adequate purchasing capacity to those employed in them and to ensure their continued existence and growth. In the long term plan, capital intensive industries should also be developed to increase the productive capacity of the socioeconomic unit. As part of the long term economic plan, working hours may also be progressively reduced to maintain full employment.

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.

The question of unemployment arises only in the capitalistic framework where industry is for earning maximum profit. In the collective economic structure, where industry stands for consumption and not for profiteering, the question of unemployment does not arise. Here the number of labourers will not be lessened; rather the working hours will be reduced and the remaining hours will be used in mental and spiritual pursuits.

To solve the unemployment problem in both the short and long term there must be an accurate understanding of the surplus and deficit manual and intellectual labour trends. In most of the countries of the world where there is high unemployment, there is surplus manual labour and labour intensive industries are required to create employment. In some instances where deficit labour exists for an expanding industry, retraining programs may equip workers with the necessary skills for employment.

Another way to help solve unemployment, especially in rural communities, is the utilization of plants for economic self reliance. All socio-economic units have the potential to increase their plant and crop varieties by properly matching these with the soil, topography and climatic conditions etc. in their units. Reforestation can reclaim arid and semi-arid regions, and some unique plants like the Puranica or fern, which has the capacity to attract clouds, can help radically transform the rainfall and weather patterns of a region. Agro- and agrico-industries based upon the productive potential of different plants can also help solve rural unemployment by creating a range of new goods and services. There are many dimensions to this revolutionary plan.

Socio-economic Units

According to PROUT self-sufficient socio-economic zones or units should be established throughout the world. These units should be formed on the basis of the following factors – same economic problems, uniform economic potentiality, ethnic similarity, same sentimental legacy, and similar geographical features. Based on these factors, the whole of India and the entire world can be reorganized into socio-economic units. These units would not merely be geographical areas but also socio-economic areas. The basic consideration is social, cultural and economic and not religious or linguistic. One political unit such as a federal or unitary state may contain a number of socio-economic units.

For example, the state of Andhra Pradesh in India can be divided into three socio-economic units – Telangana, Sarkar and Rayalseema. 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. We see the concept of bioregion or ecozone is essentially the programme of PROUT with the additional emphasis on cultural region.

The justification for establishing socio-economic units throughout the world lies in the fact that any attempt to develop an area economically must start at the grassroots level. That is, the direction of economic development should be from the bottom to the top, not from the top to the bottom. Each socio-economic unit should prepare its own developmental programme to become economically self-sufficient.

Even more important the main method of exploitation today is psycho-economic exploitation in which through vulgar media pseudo-culture and control over the educational system, capitalists destroy the local culture of regions with rich resources. One example is the state of Orissa, India. Some years ago, vans were sent into the villages. The van showed free pornographic movies and also gave free alcohol. After a few months, when the villagers were addicted, money began to be charged. According to PROUT culture is backbone of a society or bioregion and hence if the culture is crushed then no movements for political, economic or social freedom have any chance of success. This is why the pioneer of Prout, Shrii Prabhat Ranjan Sarkar worked tirelessly in eastern India (Angadesh, Bhojpur, Utkal, Chattisgarh and Bengal) to provide grammars, newspapers and movements to demand the use of the local language in the educational and government sectors.

Furthermore rather than devote His time to mere economics or politics, He spent the majority of His later years in creation a spirituo-cultural revolution in the Bengali language as well as a revolution in agriculture and ecovillage (Master Unit) design. It these two revolutions that are at the heart of Prout’s socio-economic movements in bio-cultural regions.

Those powers which directly concern economic decentralization should be in the hands of the states/provinces or concerning lower level governments. PROUT’s fundamental policy is that it is against small nation-states as these become taxing and burdensome to the citizens. Socio-economic units should demand separate development projects, and in order to materialize this they may also demand the separate allocation of resources in the budget. However, if any unit finds that obstacles are being created from some quarters in materializing its development projects, that unit will have no alternative but to demand the formation of a separate unit. Within each socio-economic unit there will also be decentralized planning, which is called “block-level planning” in PROUT.

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.

Free trade (especially in perishiable commodities like food) should be encouraged once self-sufficiency is attained and the era of global capitalist empires (such as British, American or Chinese) has come to an end, as this will help facilitate increased prosperity and encourage economic parity among socio-economic units. It will also lead to the formation of larger socio-economic units.

The size of PROUT’s socio-economic units is ever-expanding. Smaller units will merge together to form bigger ones. A day may come when the entire South-East Asia will become one unit. The following four factors provide the basis for socio-economic units to merge together in the future – diminishing economic disparity amongst the units, the development of science and high-speed communications, administrative efficiency and socio-cultural blending.

The Local Language as the Medium of Instruction

The medium of instruction from primary to tertiary level should be in the local language. The sum total of human expression is culture, and language is the best medium to express human culture. While different socio-economic groups should encourage every language, each socio-economic unit should use the local language to inspire self-confidence and self-respect amongst the local people.

Encouraging a positive cultural identity is an important ingredient in the socioeconomic development of the local area, and is an essential factor in generating a sense of affinity and unity amongst the people. When like in the state of Bihar, India or in Nigeria, the local people lose their culture to a corporate pseudo-culture, all traditional morals vanish and a culture of greed, violence and hedonism dominates the society. This is why Prout support a Renaissance in each and every language of this planet for a cultural revolution encompassing every sphere of life be it moral, linguistic, social, media, economic, political, artistic or spiritual.

The use of non-local languages as the medium of instruction only results in the suppression and subjugation of the local language and inevitably means the suppression of the local culture. This in turn leads to psychic demoralization, inferiority complexes and a defeatist mentality. This mental and emotional stagnancy renders people ripe for exploitation and it also encourages the spread of poisonous dogmas and traditions such as the dowry system, female circumcision, female infanticide as well as religious extremism and violence.

Whenever the sentimental legacy of a group of people is undermined, they become easy prey to the economic, political and psycho-economic exploitation of vested interests. Such a strategy of cultural suppression was adopted by the English, French, Dutch, Spanish, American and other colonial powers. If local people develop a sublime awareness of their cultural heritage they can readily throw off all psychic inferiority complexes which prevent them from attaining socio-economic self-reliance.

The Local Language as the Primary Means of Communication

Local language should be the medium of communication in governmental and non-governmental institutions and offices. When the British were ruling India, they concentrated their economic activities in a few centers like Bombay, Calcutta, Delhi and Madras. The indigenous capitalist class, who were in collusion with the Britishers; usually brought in labourers and managers from outside the local area to disrupt the local economy and make it amenable to their control. The English language was imposed on local people, and the British administration went to great lengths to train up tens of thousands of Indian clerks in the English system of education to ensure British cultural dominance of the Indian economy.

We see Rawanda which used to be a Belgian-cum-French colony and now is an American colony and hence is adopting English and American pseudo-culture.

Block-Level Planning Planning should function on various levels such as the block, district, state, national and global levels, but block-level planning will be the basic level of planning. Block-level planning is essential for economic decentralization, so it should be adopted in all blocks. There should be provision in the constitution for block-level planning for socio-economic development.

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 all 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. The first step to decentralized planning is to make an economic plan according to the needs of the lowest level.

Block-wise planning should be the most basic level of planning. The aim of the planners should be to make each block economically sound so that the entire socio-economic unit will be self-sufficient. Only then will a county or federation become economically strong and developed in the real sense. Block-level planning boards will be the lowest level planning bodies. This system of collective economic planning will be a part of the spread of the cooperative movement as well as part of the fight of local communities for economic freedom from corporate exploiters and their government servants.

Industrial status to Agriculture

In a decentralized economy agriculture will have the same status as industry. The price of agricultural commodities should be fixed on a rational basis by taking into account the price of commodities; the cost of labour, raw materials, transportation and storage; depreciation; sinking funds; etc. In addition, this price should include a rational profit that will enable the progress of the farmers as well as safeguard the purchasing capacity of the general public.

Balanced Economy

In PROUT, the need to have a balance between the agricultural and industrial sectors of the economy is emphasized. Each and every country needs to have a steady and reliable source of food, yet too often, especially in Western society, the agricultural sector tends to be overlooked in favor of the industrial. Over industrialization and urbanization have resulted in many social and environmental problems.

The idea of a balanced economy can be defined by the percentage of people employed in certain industries. PROUT suggests that the following percentages can serve as a guideline for a balanced economy: about 30 to 40 percent of the population should be employed in agriculture (this also includes extraction of natural resources); 20 percent in agrico-industry (i.e., pre-harvest industries serving agriculture such as the manufacture of farming tools and fertilizers); 20 percent in agro-industries (i.e., post harvest industries such as food processing, flour and cloth mills, paper mills, etc.); 10 percent in general trade and commerce; and 10 percent in intellectual and white collar jobs. Those involved in industry should be 20 to 30 percent, drawn from the agricultural sectors.

The veracity of these general figures can only be determined by practical experience but they are based upon the following considerations. If more than forty percent of the population depends directly on agriculture, there is a high probability of excess pressure on the land, and this generally indicates the existence of subsistence farming. In general, the living standard will be low and such an economic unit will not be able to become highly developed. This will also lead to ecological degeneration of the soil due to over-farming as is seen in sub-Saharan Africa and India. On the other hand, if too great a percentage of a unit’s population is employed in industry, that country becomes over-industrialized. Besides the social and environmental effects of over-industrialization, these countries will need to seek raw materials from underdeveloped areas in order to fuel their industries. A parasitic and often imperialistic relationship develops and becomes necessary to maintain.

The quest for cheap raw materials was largely responsible for the crimes of western imperialism of the last centuries. This underlying arrangement continues to exist although its present form has changed. There is no longer political colonization in the form of an elaborate government to support foreign businessmen such as in the case of the British Empire. This model is only used for short periods in the case of recent victims of western imperialism such as Iraq and Libya. Now under the American Empire we have a network of military bases that work in tandem with Western corporations to exploit the world. China is also following this model of “development.” This is all due to an imbalance in the economic system and a loss of the positive traditional values of community sharing and caring.

Three-Tiered Ownership

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 government, and will avoid duplication between the government and private enterprise. In a decentralized economy, all industries, agriculture and services can be effectively managed in a cooperative way. This does not mean, however, that the cooperatives will own the local resources. Rather the public sector will have to control raw materials as well as certain key industries (industries upon which other industries are built) on behalf of the people as a whole.

An example of a key industry is a public utility, an iron and steel mill, a mining operation etc. Another area where cooperatives may not be efficient is in the small-scale private sector. In some instances, individual private initiatives may better foster economic efficiency and productivity. Individual enterprise should be limited to those commodities which are not essential for life, such as betel shops, tea stalls, restaurants, small retail shops, artistic or entrepreneurial ventures, independent research etc. Therefore, according to PROUT there is a three-tiered economic structure. It is composed of key industries controlled by the local government; cooperatives for industry, agriculture and service (including finance) and thirdly, small privately-owned and run enterprises.

There are some special types of key industries which can conveniently function as either small-scale or medium-scale cooperative industries. If some key industries are structured in this way, they must be under state control. Care should be taken to ensure that they are properly organized and widespread. Such key industries should never be controlled by capitalists.

Under PROUT the cooperative sector is by far the largest in volume. Cooperatives may be of wide range both in terms of services and production and in terms of volume. The number of private-sector ownerships may be numerous but their volumes will remain small. Most importantly private control will never be allowed over the vital essentials of life such as food, clothing, housing, medical care, education, media, etc. Public sector enterprises will be few in number and producing very large volumes of typically raw material. Only large and specialized enterprises would be owned by the state.

The Central Government should not control large-scale industries because this may hamper the interests of local people. Where there is a federal system of government, these industries should be controlled by the immediate government, and where there is unitary government, they should be managed by local bodies.

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. 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.

Local people should get first preference in participating in cooperative enterprises. 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. Cooperative ownership cannot stand in open competition with individual enterprise. Thus it requires protective armour – that is, exemption from sales tax, duties, etc. This protection should be withdrawn slowly. Protective armour should be limited to essential commodities only.

Industrial Development

Maximum industries should be developed in the local area according to the availability of raw materials or local consumption. While it may be difficult to establish village-level economic infrastructure at present, there is no insurmountable obstacle preventing us from establishing block-level economic infrastructure. As far as possible, the establishment, operation and distribution of all industries should be done at block level. Only when this cannot be done should industries be organized at a higher level.

Obviously, industries such as iron and steel factories cannot function in every village, block and district, so they should function in a larger area. Several corollaries arise from this principle. First, industries should utilize locally available local raw materials and should not import raw materials from outside the socioeconomic unit. The tyre industry, for example, requires rubber plantations as rubber sap is the basic raw material for this industry. If the topography of the local area favours the ample growth of rubber trees, then industries may be created around this raw material. Or, if alternative synthetic materials are available, a synthetic tyre industry may be developed.

There are several reasons why industries should utilize locally available raw materials. First, not all areas have the same socio-economic potential. Different areas will naturally be conducive to producing different kinds of raw materials, as in the case of plant-based raw materials. Industries based on locally available raw materials can produce commodities cheaply, be located near ready supplies of raw materials, and ensure their self-reliance. These advantages are not apparent where there is a dependence on outside raw materials.

Secondly, raw material producers, especially producer cooperatives, will prosper as there will be ready markets for their products. Thirdly, industries will feel secure when they know that sufficient raw materials are available to supply their needs, and they will be able to plan their future production efficiently. Fourthly, encouraging the growth of local industries based on local raw materials will terminate the dominance individual and collective capitalists exercise over the local markets, ending the drainage of capital vital for the local area’s economic growth.

A second corollary is that local raw materials should not be exported – only manufactured goods should be exported. Local raw material prices in the export market are subject to manipulation and erratic fluctuations as they are currently traded through speculative commodity markets which are controlled by vested interests. Manufactured goods, on the other hand, are generally subject to less price manipulation and command better prices than raw materials. By manufacturing locally finished products, a socioeconomic unit can conserve its reserve bullion and improve the purchasing capacity of the local people.

A third corollary is that if no potential exists to produce the manufactured goods required by industry in the local area, only then should the importation of such goods be allowed. Importation of manufactured goods means that local capital is being transferred to another socio-economic unit which has produced the product. The drainage of capital is always detrimental to the economic growth of a socio-economic unit; therefore unnecessary importation should always be discouraged.

Barter agreements should be arranged between trading units so that no net loss occurs to either of the trading partners. Barter agreements in foreign trade are especially beneficial for those socio-economic units which have very few commodities to sell but a large number of commodities to buy, and their saleable commodities, though few in number, are large in quantity.

In many undeveloped and developing countries of the world there is excessive population pressure on 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. 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. The industrial system must also be reorganized according to the principles of decentralized economy. If a certain part of a country is over-industrialized, it will impede the economic progress of other regions.

Industrial decentralization is only possible in a collective economic structure. If a particular country or district is highly industrialized, that will not help in uplifting or changing the economic standard of other parts of the world or country. Hence industry should be decentralized, but key industries should be centralized. For example, the spinning industry should be centralized, and around it there should be a weaving industry run on [the basis of] decentralization principles. Even in areas where the climate is extreme, industries such as spinning can be established through artificial vaporization. This will help to create a self-supporting economic unit, which is badly needed. The area of self-supporting economic units will increase with the increase of transportation facilities.

One day this world will become one economic unit. A day may come when the whole of the planetary world will become one economic The local administration will also have to arrange for the supply of sufficient power to facilitate industrial production. Every region in a socio-economic unit must strive to be self-sufficient in power generation. The local administration will have to supply locally generated power such as solar energy, thermal energy, bio-gas, hydroelectricity, nuclear energy, pneumatic energy, electromagnetic energy and tidal power, or any other power which is easily available locally.

The generation of power is a key industry which should be run on a no profit, no loss basis so that the cost of production is minimized and the purchasing capacity of the people is increased. For example, if batteries are produced through cottage industries, power should be supplied on a no profit, no loss basis, but the battery producers will be able to sell their batteries at a rational profit. Here the power that is used to manufacture the batteries is not an industrial commodity but a raw material. The power for such things as transportation, communication, schools, colleges and hospitals should also be supplied on a no profit, no loss basis to maintain social dynamism. The immediate government or the state government will have to take the responsibility to supply power as a key industry.

For economic democracy we have to reorganize medium and large industries as cooperatives rather than corporations. The owners of the shares would be the people who work in those enterprises, not investors living in other localities. Establishing worker owned and managed cooperatives will be a big step towards economic democracy and expand the scope of human freedom.

Developmental Planning

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. 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, the economy of Third World nations like India was been paralysed by inertia in the past and at present is characterized by increasingly violent theft of land by corporations. 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 a great waste and misuse of resources. 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.

The local situation should be carefully studied and programmes should be adopted as per the requirements of the particular locality. In many socio-economic groups, local people may demand the construction of bridges and roads to make raw materials more accessible as the first step in developing new industries. And in those places which are dependent on agriculture, small scale irrigation projects may be necessary to increase the availability of irrigation water and thus increase the number of crops grown per year. Geo-psychological characteristics are another important aspect of socio-economic planning. For example, people living in an east-wet area are weak and lethargic, while those living in a west-dry area are strong and active. This may be called the “east-wet Theory”. These characteristics are not due to individual strengths or weaknesses but are the result of geo-psychological factors. In India for example, the Punjabis live in a dry western region and are physically strong and hard working. The Assamese, who live in a wet eastern region, are physically weak and lethargic. Such factors should be given proper consideration when formulating socio-economic plans. In addition, there should be free education for all students up to the highest degree, guaranteed employment for all youth, irrigation facilities for all farmers, and cheap rations. 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.

Trade and Commerce

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. If income tax is abolished and excise duty on excisable commodities is increased by only 10%, there will be no loss of government revenue. When there is no income tax, nobody will try to accumulate black money. All money will be white money and as a result there will be economic solidarity, an increase in trade and commerce, more investment, more employment and an improvement in the position of foreign revenue.

The banking system will have to be managed by cooperatives. The central or federal bank will be controlled by the immediate or local government. An essential measure to control economic exploitation of an area and drainage of wealth to outside is that the speculative markets in all countries of the world should be closed down immediately.

In a decentralized economy the commodities produced by a socio-economic unit will be sold in the local market itself. As a result, there will be no uncertainty in the local economy or the economic life of the local population. In addition, money will be circulated within the local market so there will be no outflow of local capital. The possibility of an economic catastrophe in the local economy will be largely eliminated.

In such a system, people’s income will have an upward trend and their purchasing capacity will continuously increase. Another important characteristic of decentralized economy is that money will always remain in circulation, hence the economy will move with accelerating speed. The value of money depends on the extent of its circulation. The more frequently money changes hands, the greater its economic value. The greater the value of money, the greater the prosperity in individual and collective life, and the greater the opportunities for all-round welfare

Support for Local Products

Outside finished products which can be locally produced should not be imported as far as possible. This point implies that the local people should support their local industries by purchasing their own finished products. They should buy the finished goods of the local industries even if initially they may be of lesser quality than the finished goods manufactured outside the socioeconomic unit, as this will ensure the continued economic viability and growth of the industries in the unit.

With continued local support, the local industries will develop to a stage when they will be able to produce goods of better quality. But, if due to economic, political or psycho-economic exploitation, people purchase finished goods made outside their socio-economic unit rather than those made locally, then local developing industries may be forced to close down creating unemployment and other social and economic problems. Thus, people’s sentiments should be aroused so that they buy locally produced products rather than outside finished products wherever possible. To achieve this, popular movements should be started so that the economic awareness of local people is increased.

Agrarian Revolution

For decentralization, agricultural land should be managed through the cooperative system. However, it is not wise to suddenly hand over all land to cooperative management because cooperatives evolve out of the collective labour and wisdom of a community. The community must develop an integrated economic environment, common economic needs and a ready market for its cooperatively produced goods. Unless these three factors work together, an enterprise cannot be called a cooperative.

After creating a congenial environment, land will have to be handed over to cooperative management. Then, with the help of appropriate scientific technology, it will be possible to increase agricultural production.

There should be a phase-wise plan to introduce cooperative land management. In the first phase, all uneconomic holdings should be required to join the cooperative system so that they will become economic holdings. In this phase, cooperatives will only consist of those people who merged their land together to make uneconomic holdings economic. Private ownership will be recognized. For instance, one person may own one acre, another two acres and a third person three acres within the cooperative. Each cooperative member will be entitled to a dividend based on the total production in proportion to the land they donated to the cooperative. Each individual will retain the deed of ownership of their land, but agricultural activities will be conducted cooperatively. Consequently, land which remained unutilized as boundary lines will no longer be left uncultivated. In the first phase of the plan, those owning land which is productive as an economic holding need not be persuaded to join a cooperative. But if an economic holding comprises land which is dispersed in small plots, the scattered plots should be consolidated into one holding. Alternatively, wherever small, scattered, uneconomic plots are located, they will have to be joined together under cooperative management. In the second phase all should be encouraged to join the cooperative system. In the third phase there should be rational distribution of land and redetermination of ownership.

In this new system two factors will determine the rational distribution of land – the minimum holding of land necessary to maintain a family, and the farmer’s capacity to utilize the land. In the fourth phase there will be no conflict over the ownership of land. A congenial environment will exist due to psychic expansion because people will learn to think for the collective welfare rather than for their petty self-interest.

Such a change will certainly not come overnight. Unless there is suitable psychic preparation through internal urge and external pressure, adjusting with the time factor, people will never accept this system, and it cannot be forcibly imposed on them.

According to PROUT, in the first phase of agrarian revolution private ownership of land within the cooperative system will be recognized. 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. That is, the owners of the land will get fifty percent of the total produce in proportion to the land they donated and those who create the produce through their labour will get the other fifty percent. This ratio must never decrease – rather it should increase in favour of the agricultural labourers who work in the cooperative.

The managerial staff body of the cooperative should only be constituted from among those who have shares in the cooperative. They will be elected. Their positions should not be honorary because that creates scope for corruption. Managers will have to be paid salaries according to the extent of their intellectual expertise. In addition, the members of the cooperative may also employ their manual labour if they so desire, and for this they should be paid separate wages.

For the development of agriculture there is a great need for specialists and technicians, so cooperatives will have to train unskilled rural people so that they can acquire the necessary skills to develop the agricultural sector. In addition, all types of agro-industries and agrico-industries will have to be developed according to the needs and resources of the local area, and these industries should be managed as cooperatives. 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.

Recovering From Economic Depression

In a Proutistic economy, production will be solely for consumption. As there will not be any profit motive, there cannot be any fresh inflation, and the existing inflation will gradually die out. In Proutistic production or consumption, in the first phase the money value remains constant and full-fledged purchasing capacity will be guaranteed to the people. In the second phase, when production increases in the revised economic order, money will get back its natural market value. Finally, after consumption, money will get back its actual value. Inflation will be checked and purchasing capacity and the minimum requirements of life will be guaranteed to the people. The second phase will continue for ten to fifteen years. After the expiry of this period, that is, in the third phase, minimum requirements of life will increase and people will acquire more purchasing power. This power will increase at an accelerating rate.

The Truth Will Set Us Free

However, we must face the truth that no government is going to either implement the Prout system of Economic Democracy and that capitalists will never allow any party based on economic democracy to come to power. Hence to save our communities and our global village from the ravening wolves of corporate capitalism we will have to organize ourselves, unite the moralist and launch countless freedom struggles for local economic freedom.

Economic Svaraj (self-rule) is the birthright of each and every individual on this planet. And in these local struggle we must not forget the global struggle against capitalist empires. Capitalism has always existed in the form of national empires such as the Dutch, the British, the American and the Chinese. These empires are nothing more than a global mafia, a global gang of dacoits. It will be wishful thinking to imagine that simply by fighting one local exploiter we will establish economic democracy.

A threat to economic justice anywhere is a threat to economic justice everywhere. By solidarity, by caring and fighting for justice for all victims of economic tyranny alone can the era of global economic tyranny become part of the horrors of history. For example, this anti-exploitation campaign will not only unite India, but also India with Pakistan and with each of the poor and backward countries of Southeast Asia. A strong nation or group of nations will thereby grow up. It matters little what name is given to that nation or that group of nations. The spread of the ideal of the Cosmos as one Blissful Family (Ananda Parivar) and the ideal of Cosmic Inheritance will unite all of humanity on this planet. The principle of Cosmic Inheritance reveals that since the universe of all created beings is one family, therefore if anyone violates Cosmic Family Values by seizing excessive wealth then they are the predators of the Cosmic Family and are the real heathens, kaffirs or mleechas.

The new consciousness of Neohumanism will use the bliss of mystical love or bhakti or ishq-e-haqiqi to overthrow all narrow national, communal, caste, racial sentiments as well as the sentiment of human supremacy and human violence against the Earth and its plant and animal children. It is with this vision of economic freedom, human brotherhood and sisterhood and omnipotent love that Prout first launched its economic freedom struggle in the past. It is to clarify and adorn this vision with the unique beauty of each culture of this planet that we are offering this small booklet for you to read. Let us read together, talk together, fight together and above all, love together to make this vision the legacy of the children of tomorrow.

Copyright PROUT Globe 2014

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