By Gary Coyle

The basic principles of PROUT’s economy are part of the 16 principles that encapsulate Shrii Prabhat Rainjan Sarkar’s theory of progressive utilization. The four socio-economic principles eight to eleven, following the earlier seven social principles, are followed by what Sarkar calls the five fundamental principles of PROUT. All these principles are concerned with economics.

The first of the four socioeconomic principles state: “Diversity is the law of nature and sameness will never be.” That is, absolute equality is not possible in an ever-changing world. So although social equality is the key to an expansive and humanistic ideology, and although world federation with a common constitutional structure is a political necessity, diversity must also be recognized and utilized for the collective good.

Economically, diversity is a necessary consideration in the sound policy of both developed and less developed countries. The precarious existence of subsistence peasants must be stabilized, and the living standards raised through diversification – diverse production and production for both consumption and trade. Similarly, the precarious existence of totally trade-dependent economies in both developed and less developed countries must be established by diversification into self-sufficient production. Orthodox economic theory proposes the maximization of specialization and trade, so as to raise total output. However, regional sufficiency must augment trade for: a) strategic purposes, so that production of necessities is maintained in the case of disruption to communications or transport, or in case of war; b) fullest resource utilization, which is impossible in a totally specialized economy, where only the most ‘efficient’ resources of a particular area are exploited – mass employment is the best evidence of this; and c) economic democracy, where communities retain productive control of as much as possible for their basic necessities and so retain control of their lives and help prevent exploitation.

Another economic implication of this recognition of diversity is the question of incentives and income differentials. While no great gap between upper and lower incomes can be tolerated in any society based on equality, some gap must be provided for the maintenance of a certain level of material incentives and thus higher labour productivity. This issue, and the practical harnessing of diversity to serve collective interest, is taken up in the third and fourth principles of this set of four.

The second principle here, the ninth of the sixteen states: “In any particular age the minimum necessities of all shall be guaranteed.” That is, the provision of food, clothing, housing, education, medical care and other necessities to all, is a collective responsibility and must be the cornerstone of economic policy and social effort. While regional self-sufficiency is encouraged, a social guarantee must back such efforts.

Surplus goods and services cannot be provided for anyone while people in general do not have their necessities. Of course, the definition of necessities will vary at different places. For instance, heavy clothing is needed in cold countries and transport requirements will vary from place to place. But a minimum level must be determined and guaranteed to all.

The prime mechanism for this policy in any modern economy is the provision of purchasing power through wages. To ensure that wages carry sufficient purchasing power for necessities, as well as to ensure that income differentials are contained, there must be collective prices and income control.

The third principle of this set, the tenth of the sixteen, states: “The surplus goods and services, after distributing the minimum requirements, are to be given according to the social value of the individual’s production.” Note that it is social value rather than economic value. This principle provides a rational basis for material incentives. It is, of course, better for society if moral incentives and the desire for social service motivate people in their productive work. However the practical reality is that labor productivity is, to a large extent, proportional to material rewards. The need is for a framework that controls such incentives and contains them within such bounds as will best serve the collective interest. The incentives should also be provided in the form of goods and services that can be further applied to social purposes, rather in the form of wealth that is likely to be hoarded. The provision of necessities to all, established by the previous principle, creates an income ‘floor’; this principle creates an income ‘dynamic’; the 12th principle sets an income ceiling.

The fourth socioeconomic principle, eleventh of the sixteen, states: “The increase in the standard of living of the people is the indication of the vitality of society.” So there must be a constant effort to reduce the gap between the income levels of those with earned surplus goods and services, and those with basic necessities. This means an approach, which, from time to time, increases the lowest wage while leaving the higher wages, untouched. This is a check on the expansion of living of society, and the defined level of basis necessities rises. The benefits of science and technology can thus be distributed equitably and people in general can be freed from the more mundane responsibilities. Sarkar notes that mechanization under capitalism means more misery and unemployment to the common people because with the increase in the yield of a machine capitalists retrench labourers mercilessly. However under a collective economy the benefits of technology can be passed on to workers through progressive reduction in work hours.

While Sarkar supports the socialization of the means of production and the socialization of capitalist expropriation, he does not support nationalization or the communist practice of party dictatorship on behalf of society, and advocates socialism in the context of neohumanism.

Sarkar opposes wholesale nationalization on two major grounds. First, the state is entirely dependent upon bureaucrats to administer its affairs. It is impossible for any bureaucracy to run diverse large and small scale industries spread over a whole country. Where a policy of nationalization exists, there persists a smug slackness not only in auditing and accounting, but also in the administrative affairs of the department. Secondly, it is impossible for state run industries to demonstrate as much technological and industrial dexterity and efficiency as either proprietary or cooperative industries. Nationalization is not a prerequisite for socialist transformation or reconstruction, and state ownership should be restricted to those sectors of the economy, which are too large or diverse for effective cooperative management.

Thus Sarkar’s socioeconomic principles are rooted in human values and he seeks to blend the expression of human potentiality with economic efficiency and prosperity in the context of a progressive socialist society.

From New Aspects of PROUT, Proutist Universal Publications, Denmark 1987

Copyright The author 2011