Category Archives: Cooperatives

Co-operatives; educational material

10ReasonsCoopsRockThe Toolbox for Education and Social Action web site offers great educational material for evolving cooperatives, democratic businesses, and social justice consciousness. Titles include the board game Co-opoly, educational material Own the Change, and the “fast-paced social justice trivia game” Loud & Proud.

On offer is also a 10 Reasons Co-ops Rock poster, shown here (click on it for larger image).

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Farmers Cooperatives

By P.R. Sarkar

(February 1982, Calcutta) – Providing food, clothing, housing, education and medical treatment is most important for social security. These five minimum requirements are indispensable to raise the living standard of the people. To guarantee these, the principle of production based on consumption has to be adopted. Special emphasis should be placed on agricultural production because the provision of food is of vital importance, and for this the cooperative system should be rapidly expanded.

According to PROUT, too many people should not be engaged in agriculture. Rather, a major part of the population should depend on industry. Not more than thirty to forty-five percent of the population should be employed in the agricultural sector.

"In the fourth phase of implementing the cooperative system, there will be no conflict over the ownership of land."

Land is usually divided into economic holdings and uneconomic holdings, according to productivity. Economic holdings are those where the market price of the produce will exceed the cost of production including capital, labour and machinery. Lands which produce economically viable agricultural wealth – that is, where output exceeds input – are called “economic holdings”.

Uneconomic holdings are those where the market price of the produce is less than the cost of production after including the costs of all the inputs. As uneconomic holdings are not profitable, the landowners usually refrain from producing any crops. In the rural economy of a country such as India, if a village is accepted as a production unit, then there may be many plots of land in a village which are not used for producing crops because they are uneconomical.

While implementing PROUT, the question of agrarian revolution will automatically arise. As I have already said, agricultural land should be brought under cooperative management, but the cooperative system should be introduced in two stages. In the first phase of the socialization of land, PROUT will not raise the demand for land ceilings, but the sale of agricultural land will be prohibited and uneconomic landholdings will be brought under cooperative management. The responsibility for cultivating this land will not lie with the landowners but with the cooperatives under the aegis of the immediate government, and with its assistance.

The landowners of the uneconomic landholdings in each village will become the members of the cooperatives in this phase. Thus, cooperatives will only consist of those who merged their land together to make uneconomic landholdings economic. The landowners will give their land, and in this phase they will remain the owners of the land. In cases where the landowners employ labour for cultivation, fifty percent of the net profit will go to the landowners and fifty percent to the labourers who work in the cooperatives.

In this phase, the rivers and streams in a village should be harnessed for the collective welfare. For instance, by constructing embankments and small dams on the rivers, large-scale irrigation, electricity generation, and industries based on local needs should be established.

The first steps must also be taken to alleviate the population pressure on land. An increasing percent of the rural population will have to be employed in industry by establishing agrico-industries and agro-industries. There should be provision for the preservation of crops by building stores and cold-stores under the control of local administrative boards. The cooperatives should be supplied with tractors, manure, seeds, water pumps and other farming equipment through producers cooperatives. Consumers cooperatives will supply the commodities necessary for daily consumption to the rural population.

In the very first phase of establishing cooperatives, agricultural labourers, landless labourers, day labourers and sharecroppers will come within the scope of cooperatives. From this phase, the education system in rural areas should be thoroughly reformed. To arouse the cooperative spirit among the people, there should be extensive training and education, but moral education must take precedence over everything else so that people do not give greater importance to individual interests at the expense of the collective interest.

In the second phase of implementing agricultural cooperatives, the economic holdings of the landowners should be brought under cooperative management. Only after all the uneconomic holdings in a village are brought within the scope of cooperatives should the economic holdings be brought under cooperative management. In this phase it will be easy to apply science and technology extensively in agriculture, increasing the amount of production.

In this second phase, all should be encouraged to join the cooperative system. The net profit will be increased in favour of the labourers working in the cooperatives so that twenty-five percent of the net profit will go to the landowners and seventy-five percent to the labourers. Here labourers means those who employ either their physical or psychic labour in the cooperative. The landowners will benefit in two ways. First, as landowners, they will get twenty-five percent of the net profit of the produce from the land, and secondly, if they are part of the cooperative labour force, they will be entitled to a portion of the seventy-five percent of the profit distributed among the cooperative members.

In this phase, there must be emphasis on the rapid and large- scale establishment of agrico-industries and agro-industries so that the rural population will be dependent more on industry than on agriculture. With the development of such industries, there should be simultaneous emphasis on educational and cultural reforms to further develop the cooperative mentality of the rural population.

From this second phase, production for consumption will increase the standard of living of the rural population, and the basic criteria of social security – that is, the minimum requirements of life – must be arranged for the people.

In the third phase, there should be rational distribution of land and redetermination of ownership. The rational distribution of land will depend on two factors – the minimum holding of land necessary to maintain a family, and the capacity of the farmer to utilize the land. In this phase, the landowners will not be able to employ individual labourers, landless labourers or sharecroppers for the cultivation of land, so it will be more beneficial for them to participate fully in the cooperative system.

In this phase, it will be easy to establish big cooperatives with the extensive application of science, but these cooperatives will not be anything like the huge collective farms of the Soviet Union or China. If cooperatives are allowed to become extremely large, it will be difficult to utilize natural resources efficiently and this will lead to complications in the sphere of production. One of the main defects of the collective farms in socialist countries is their unmanageable size.

In PROUT, the farmers cooperatives themselves will determine the size of the cooperatives. But while building up the cooperative system, two factors should be kept in mind – first, the high quantity and quality of production should be ensured through the application of science and technology while keeping production costs at a minimum; and secondly, the cooperative members must be encouraged to attain maximum psychic and spiritual development at their highest level in exchange for their minimum physical labour.

In the third phase of implementing the cooperative system, one hundred percent of the net profit will be distributed among the cooperative members. The former landowners will identify fully with the cooperatives in this phase.

Through these three phases it will be possible to reduce the excessive population pressure on land and to engage thirty to forty-five percent of the population in agriculture. In the second phase, the problem of unemployment will be tackled through the large-scale establishment of industry, and by the third phase there will be no unemployment problems for the agricultural labourers. By the end of the third phase, the rural sector will be freed from the vexing problems of agricultural and industrial production, unemployment and social security.

In the fourth phase of implementing the cooperative system, there will be no conflict over the ownership of land. The agrarian problems of every village will be solved. All the social security arrangements concerned with food, clothing, housing, education and medical treatment will be easily provided to the people. In this phase it will be possible to make the maximum utilization of the collective physical, psychic and spiritual wealth of every village.

For the total implementation of the cooperative system, there must be proper psychic preparation through internal urge and external pressure, adjusting with the time factor, because people will never accept a system which is forcibly imposed on them. Such a change in the collective psychology will not occur overnight, but will depend on the sentiment of the people.

The time period from the first phase to the fourth phase of the implementation of the cooperative system can be called the transitional period for the implementation of PROUT.

From: PROUT in a Nutshell Part 20
Copyright Ananda Marga Publications 2012

Agrarian Revolution

By P.R. Sarkar

The economic development of a country depends on the collective labour of different social groups. This is the reason that the system of the division of labour gradually evolves out of the practice of domestic economy. The value of the labour of all groups, including industrial labourers, peasants, carpenters, blacksmiths, goldsmiths, potters, physicians and clerks, is equal in the collective development of the economy. …

Economic Landholdings

According to PROUT, to facilitate increased production economic holdings must first be reorganized. An economic holding means a holding where output exceeds input. It is not possible to predetermine the size of this economic unit. While considering input, output, productivity, etc., to determine the optimum size of an economic unit, factors like the fertility of the soil, climatic conditions, etc., will have to be considered.

“The ownership of the land is inconsequential;
what counts is the production from the land.”

Today many people believe that increased production is possible even if landholdings are small. Increased production depends upon the expertise of farm managers and their correct, timely decisions. If managers are competent, then even very large farms can increase production. Of course, it is not necessary that all farms should become large. The main thing is that the holdings should be economically viable. There is no valid reason why there is a fifteen percent loss in the annual production of the large collective farms in the Soviet Union.

To increase productivity and prevent the growth of large exploitative cultivators, the minimum and maximum size of an economic landholding should be determined. The minimum size of a landholding should be equal to the size of an economic holding in a particular region. Thus, the minimum size of an economic holding will vary from place to place. The maximum size of a landholding will depend upon the fertility of the soil, overall production and the expertise of the management. Economic holdings will generally comprise land of the same topography having adequate irrigation and other agricultural facilities. The size of economic holdings must be progressively increased keeping all these factors in mind.

The size of economic holdings may vary from country to country. At the same time the size may also vary within a country. In the Indo-Gangetic plains, a five acre holding is abundantly productive, whereas in Ladakh or the Chotanagpur Hills, even fifteen or sixteen acres of land may not yield enough produce for subsistence. The size of economic holdings in these two places is bound to vary.

The following should be remembered. First, distributing land to people will not solve their problems. The ownership of the land is inconsequential; what counts is the production from the land. Secondly, merely delegating the management of land to someone will not yield the desired production. It is not always possible for one person to invest the money necessary to cultivate the land according to the most modern methods, so the production of the land is bound to decrease. Above all, in a healthy economy, economic decentralization is essential.

The Cooperative System

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 four phase 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 utilized as boundary lines will no longer be left uncultivated. In certain places in Bihar and Bengal the total area of arable land is less than the amount of land wasted on boundary lines. If this system is implemented, all will benefit.

  • 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.

The leaders of the Soviet Union were ignorant of the collective psychology of the people, so they tried to impose collective farming by force. This produced severe famines and massive civil unrest. While trying to cope with these problems, the administration resorted to brute force instead of adopting psychological measures, and as a result they annihilated many people. Sadvipras will never go against the spirit of a country and cause its ruin.

Many people raise questions regarding cooperatives because in most countries the cooperative system has failed. On the basis of the examples to date, it is not appropriate to criticize the cooperative system. This is because most countries could not evolve the indispensable conditions necessary for the success of the cooperative system. Cooperatives depend upon three main factors for their success – morality, strong supervision and the wholehearted acceptance of the masses. Wherever these three factors have been evident in whatever measure, cooperatives have achieved proportionate success.

Take the case of Israel. Because the country is surrounded by enemies on all sides, the people are extremely aware of the need to be self-reliant. People want wholeheartedly to consolidate the national economy. Thus, they have converted arid deserts into productive agricultural land through the cooperative system.

As this kind of mentality was never created in India, India is a classic example of the failure of the cooperative system. Indian cooperatives were not created for economic development but for the fulfilment of political interests. Under such circumstances it was impossible for the cooperative system to succeed.

Good examples must be established to encourage people to adopt the cooperative system. There should be pilot cooperative projects, machine stations, adequate irrigation systems, and improved seeds and insecticides. At the same time people must be educated about the beneficial aspects of cooperatives. Instead of educating people how to increase the productivity of their land, the leaders of India show films on birth control in the market place. I call such people the greatest enemies of humanity.


PROUT advocates maximum modernization in agriculture and industry. In the cooperative agricultural system, modern equipment must be utilized because such modernization will facilitate increased production. For example, tractors can dig the land very deeply, bring low level soil to the surface and force the the top soil below. The fertility of the top soil is diminished as a result of continuous cultivation, so when the lower soil is brought to the surface through the use of tractors, the productivity of the soil increases. In addition, the depleted top soil has the opportunity to become revitalized for future utilization. This is one benefit of tractors. A second is that farmers do not need to maintain cows for ploughing the fields. Where cows are kept for farming, they are unutilized for six months in a year. During that idle period, many costs occur to maintain them properly. The present age is not the age for utilizing large animals. In Europe horses and elephants are no longer used. To adjust with the times, tractors should be utilized today. One tractor equals the service of at least eight pairs of bullocks. Those who have half an acre or three acres of land need to maintain a pair of bullocks. This is wasteful duplication.

If modern equipment is used in agriculture, agriculture will not remain labour intensive and people can be utilized in other activities to enhance the development of the country. For this, new arrangements will have to be created. If fewer people work in agricultural cooperatives, there will be substantial savings. Simultaneously, women and children will be freed from related work so they will get scope to develop themselves. In addition, increased mechanization will link the villages to the cities and towns, and as a result the standard of living in the villagers will be increased.

No Intermediaries

In PROUT’s system of agriculture there is no place for intermediaries. Those who invest their capital by engaging others in productive labour to earn a profit are capitalists. Capitalists, like parasites, thrive on the blood of industrial and agricultural labourers. Those who act as intermediaries in the agricultural sector are called “agricultural capitalists”. They get their own land cultivated by others and take the profits.

In India, intermediaries have been in existence since ancient times. Different types of landowners such as zamindars, pattanidars, darpattanidars, sepattanidars, jotedars, vargadars and adhikaris constitute the intermediaries. In modern India the zamindary and sharecropping systems have been abolished, but the feudal psychology has not disappeared. The present feudal rulers are not the actual owners of land. They take land on lease from others and pay a certain percentage of the produce to the owner of the land, thus they exploit both the actual owner of the land and the agricultural labourers. The number of these intermediaries is steadily increasing.

PROUT does not support these kinds of intermediaries. Slogans like, “The land belongs to those who work the plough,” or, “Those who sow the seeds should reap the harvest,” are untenable. Policies based on such slogans lead to the creation of a petit bourgeois class.

Agrarian Revolution

According to PROUT, in the first phase of agrarian revolution private ownership of land within the cooperative system will be recognized. People should have the right to employ labour for cultivation, but in such cases fifty percent of the total produce should be distributed as wages to the agricultural labourers who work in the cooperative. That is, the owners of the land will get fifty percent of the total produce 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. Thus, cooperative members can earn dividends in two ways – as a return on the land given to the cooperative and on the basis of their productive labour. For this, the total produce of the cooperative should be divided into equal parts – that is, fifty percent on wages for labour, and fifty percent for the shareholders of the land.

Solving Unemployment

For the development of agriculture there is also a need for agricultural specialists and technicians. Producers cooperatives should employ such skilled labour. Thus, educated people will not remain unemployed, and they will not leave the villages for the cities. This will ensure rapid agricultural development.

PROUT believes in a decentralized economy. So policies must be adopted which not only develop one particular region, but accelerate all-round development at a uniform pace throughout the entire socio-economic area through the planned utilization of all local resources and potentialities. To achieve this aim, local people must first be employed in agricultural cooperatives.

In modern India there are two distinct areas – one of surplus labour and the other of deficit labour. That is why people usually migrate from surplus labour areas to other regions. However, the very concept of surplus labour is a relative one. Where adequate opportunities for proper economic development have not been created, there is surplus labour. Labour becomes surplus in all undeveloped socio-economic areas. When surplus labour moves to another region, the undeveloped area has every chance of remaining undeveloped forever.

According to PROUT, wherever there is surplus labour, top priority must be given to creating employment for all local labour. This policy will raise the standard of living of the local people and the whole area. If this policy is not implemented and surplus labour is allowed to move to other regions, and the Marxist policy that, “those who sow shall reap” is followed, then all tea plantations, coal mines and other natural resources will be controlled by outside labour. Local people will lose control over their natural resources. This will create a very dangerous situation.

PROUT’s opinion is that local people must have first priority in employment opportunities. As long as there is not full employment for local people, continuous efforts must be made until all local labour is fully employed. In addition, no fresh developmental programmes will be started until there is further demand for labour. Scandinavian countries did not commence any new development schemes for this reason.

While creating employment for the local people, consideration must be given to local sentiments. For instance, many areas of India are regions of surplus intellectual labour. People in this category are ready to work as clerks for the very low wage of thirty rupees a month, but they are not prepared to work as porters and earn more money. The problem of surplus intellectual labour is a special one and should be solved in a proper way. In these areas industries which require less manual labour should be established. Thus, different development schemes will have to be adopted in different socio-economic units depending upon time, place and person.

Agricultural Taxation

The present system of collecting revenue on agriculture cannot be supported because it is inconvenient for both the tax collectors and the farmers. Even the zamindary system which was established during the British period for tax collection was defective. Farmers had to pay a specified amount each year to the treasury for the land given to them by the zamindars. In cases of flood, crop failure, or any other reason, this fixed amount still had to be paid to the treasury. The zamindars enjoyed life as social parasites. Even today land tax is determined by the area of land. In cases of crop failure in any year, the government has to reduce its taxes. In cases of abundant harvests, the government has to increase taxes through levies. This system causes great inconvenience to the farmers.

The best system of taxation was in vogue in the ancient Hindu Age. In those days only twenty-five percent of the entire produce was given to the king as taxes. The farmers could also give cows, horses or sheep as taxes. In such a system farmers did not face any inconvenience. Today, however, farmers face much inconvenience because they have to pay their taxes in cash. Farmers cannot always arrange cash by selling agricultural produce, because a proper market does not always exist.

According to PROUT, a certain percentage of the farmers produce should be collected as direct taxes. It is also convenient for the government to realize taxes in the form of goods, because it needs to store produce as insurance against future contingencies. Taxes in such a form can easily be distributed from government stores when the people are in need. Moreover, this system will easily meet the requirements of people in the towns and cities. Such a system can rapidly transform the Indian economy.

If agricultural labourers only raise slogans of agricultural reform and assault and kill the landowners, they will not change the agricultural system. It is only possible to consolidate the economy through a constructive approach. Sadvipras will have to shoulder the great responsibility of implementing this approach to ensure the welfare of all.

Copyright Ananda Marga Publications 2012

Cooperative Production – 2

By P.R. Sarkar

(16 May 1988, Calcutta) – Sharecroppers do not own land, but cultivate other people’s land for a share of the produce. Land usually is given to sharecroppers because it is too small for the landowner to make sufficient income from it. A sharecropper may arrange several hundred acres of land from different landowners. This system was first introduced seven hundred years ago. Sharecroppers are called bargadar or bhagcáśi in Bengali.

“Economic planning should be done on the basis of each block. The present boundaries of blocks should be reorganized or readjusted according to the fertility of the land and other factors such as topography and the similarities of the region.”

The cooperative system is far better than the sharecropping system. It can readily overcome the defects of the sharecropping system by properly utilizing agricultural land, increasing agricultural production and using modern technology. Cooperative members should elect a board of directors which will be able to supervise every aspect of production, thus increasing the out-turn. The maxim of agricultural cooperatives should be: “More production, more dividends and more bonuses.” Labourers will earn wages and bonuses. Wages will be earned according to the amount of labour done by the labourer, while bonuses should be paid on the basis of the net per annum profit of the cooperative according to the amount of a labourer’s net wage.

The sharecropping system may be replaced by different systems – at one pole is the commune system and at the other pole is the cooperative system. In the commune system there are no incentives at all. This system is worse than the sharecropping system. Lack of incentives is the reason why the state run communes have failed in China and the Soviet Union. Even today these countries have to import food grains from capitalist countries like Canada, the USA and Australia. But in the cooperative system there are incentives and a feeling of oneness with the job. Through their own initiative, cooperatives can take large loans from a bank or the government to purchase modern equipment and construct dams, barrages and shift or lift irrigation facilities to increase production. This never happens in the commune system. Thus, the cooperative system is the best system while the commune system is the worst. The commune system is detrimental to anything and everything that is human.

Economic planning should be done on the basis of each block. The present boundaries of blocks should be reorganized or readjusted according to the fertility of the land and other factors such as topography and the similarities of the region. For example, if most of the agricultural land in one block is fertile and the land in the adjacent block is mostly infertile, then the boundaries of these two blocks should be adjusted so that all the infertile land comes within one block. Planning can then be done for that block on the basis of the infertility of the land. A block-level programme can be easily taken to increase the productivity of the land, or to establish suitable agro-industries or agrico-industries for economic development.

In certain parts of India farmers do not cultivate fodder or keep land for rearing cattle, and this adversely affects the health of the cattle and decreases milk production. In the cooperative system a portion of the land may be kept for this purpose. Napier grass, which is fast growing, millet, jawar and non-poisonous khesári pulse can be grown for the cattle.

The varieties of khesári that are presently cultivated in India are very nutritious but contain poisonous alkaloids which cause paralysis in the lower limbs of both cattle and human beings. These poisonous alkaloids reside between the skin and the outer portion of the pulse. They can be easily eliminated if the pulse is soaked in water overnight and the following morning the outer skin is removed by rubbing the pulses together. The inner portion of the pulse can be safely eaten by both cattle and human beings.

Copyright Ananda Marga Publications 2012

Cooperative Production – 1

By P.R. Sarkar

(15 May 1988, Calcutta) – Collective production is a system in which something is produced collectively. In an agricultural society as well as in society at large there are some commodities which are produced collectively. For example, sugar cane farmers in India collectively produce raw sugar from sugar cane grown in their individual fields. They collectively purchase a large vat in which they boil the juice of the sugar cane for the preparation of raw sugar.

The commune system is also a kind of collective production in that people produce something in a collective manner. Cooperative industrial and agricultural production belongs to the same category. Agricultural production by private enterprise is not collective production, neither is agricultural production by the sharecropping system.

In the modern world the cooperative system is the best
system of agricultural and industrial production.”

Of the different systems of production – the cooperative system, private enterprise, the sharecropping system and the commune system – the last one is the worst. The sharecropping system is slightly better than the commune system, and better still is private enterprise, but the best system is the cooperative system of production.

In the commune system individual ownership is denied. In some countries the right of individual ownership may be accepted in principle but not in practice. In such places there is no scope for workers to get either the inspiration or the incentive to fully utilize their skills in either agriculture or industry. There is no opportunity for them to enhance their working capacity. They are like oxen moving around an oil grinding mill with their eyes blindfolded. The oxen may move one hundred miles a day but they make no forward progress. Similarly, the workers in the commune system are confined within the four walls of intellectual staticity. They have no opportunity to develop subtle thoughts, so their lives can never be elevated to higher strata. People living in the commune system are like animals trapped within the vortex of staticity till the last breath of their lives. They have no psychological or human relation with their work. This is the nature of the commune system. The whole system runs counter to human psychology, and consequently production never increases.

Those countries which have adopted the commune system directly or indirectly have utterly failed in agricultural production. This is a most unfortunate fact. Capitalist countries, where agricultural production takes place on the basis of individual ownership, supply food grains to communist countries. Communist countries are compelled to purchase their minimum requirements from countries under private enterprise. The poor masses live a miserable existence of hunger and deprivation, and their lives are nothing but a bad dream. Though the capitalist system is bad, even then the commune system surrenders to it. What a pitiful situation this is. Until communist countries reject the commune system they will not be able to solve their food problems, and they will continue to move from country to country with their begging bowls outstretched.

The sharecropping system is better than the commune system because people get more incentive and freedom. In this system the psychology of “If I can produce more I can earn more” dominates. But this system also suffers from some major defects. Suppose a sharecropper manages to get seven acres of land from three different landowners and thus arranges twenty-one acres of land. He may not cultivate the total acreage due to idleness, want of sufficient labourers or financial constraints. He may think that limited cultivation will provide enough food to meet the demands of his family for a whole year, so he does not bother cultivating the remainder of the land. As a result the owner of the land uncultivated by the sharecropper will be deprived of his share.

The second negative aspect of the sharecropping system is that sharecroppers often hold more land than an individual landowner. As a result some sharecroppers have a higher standard of living than landowners. This kind of sharecropper cannot claim that he works in the fields with his own physical labour. In a round about way such a system encourages capitalism in agriculture.

The third defect of this system lies in the fact that sharecroppers employ hired labourers to work the land, and remain idle themselves.

The fourth defect is that landowners holding very small amounts of land cannot cultivate their land independently because their capacity is limited. Only a sharecropper can cultivate such small plots. Consequently, a new feudalism is created out of the sharecropping system, is this not so?

Another serious defect of the sharecropping system is that in India the owner of a few acres of land is brought under the land ceiling acts whereas the sharecropper, even though he may cultivate a much larger area of land, does not come within the scope of the land ceiling laws at all. He can openly challenge these laws and say that as he is not the actual owner of the land, why should he be served a land ceiling order. Thus, a section of the landholding capitalists who are big sharecroppers escape through the holes in the nylon dragnet of the law.

Individual agricultural production and the sharecropping system both suffer from another major problem. If farmers in these two systems do not have enough capital but have a large area of land, they cannot adopt modern agricultural methods for production. Tractors and power tillers remain beyond their means. By using age-old ploughing techniques these farmers can only cultivate the surface of the land, and this does not help increase its productivity. They cannot utilize better quality fertilizers, high yielding seeds and proper irrigation systems.

There are more incentives for farmers in individual agricultural production than in sharecropping, but in private enterprise there are still drawbacks which prevent the adoption of a modern and progressive system of agriculture. In this system there is not much possibility of increasing agricultural production because up to one hundred percent of infertile land lies unutilized. Often farmers do not have the capacity to utilize the benefits of tractors, power tillers, high yielding seeds and proper irrigation systems due to their lack of finance. Although private enterprise is better than the sharecropping and commune systems, ultimately the state and society cannot be benefited. If an individual cultivator has a large amount of land in his possession (in capitalist countries farmers can hold unlimited amounts of land) he may be able to use high yielding seeds and proper irrigation systems, but the government will have to avoid introducing a land ceiling. However, this is not desirable because it will lead to over accumulation.

In the modern world the cooperative system is the best system of agricultural and industrial production. In the cooperative system members can pressurize the government because of their collective strength and gain financial help and various facilities to increase production. They can pressurize the government to provide better irrigation facilities and high yielding seeds and even make infertile land productive. Land with little fertility can be transformed into fertile farm land with proper care. This will increase total agricultural production and also help a country become self-sufficient in food production and cash crops, freeing it from food shortages.

In addition, plots of land on the same level and of the same fertility can be turned into larger single plots by removing all dividing boundaries. However, if the land is undulating and varies in fertility, the division of land may be maintained, otherwise land cannot be properly irrigated.

I have already said that in the sharecropping system one gets a better output than in the commune system, but in such a system it is not possible to adopt progressive methods of agricultural production. Eventually the level of production will come down to the level of the commune system.

Among all the attachments human beings suffer from, attachment to land is one of the strongest. Out of sympathy farmers can donate large amounts of produce without hesitation, but they will feel tremendous pain if they are asked to donate a few square metres of land. If they have to donate land to somebody, farmers feel that their ribs will break because of the pain in their hearts. Those who donate land do so for three reasons – to save the major part of their land, for a high humanitarian cause or out of spiritual inspiration.

Copyright Ananda Marga Publications 2012

Is Human Nature Competitive or Cooperative?

For a deeper analysis of the following debate, see Ronald Logan’s “Cooperative Economics: In Russia”, opening address at the Symposium on the Humanistic Aspects of Regional Development, held in September 1993 in Birobidzhan, Russia.

By Dada Maheshvarananda

English biologist Thomas Henry Huxley (1825-1895), who popularized Charles Darwin’s ideas of evolution, stated, “The animal world is about on a level of a gladiator’s show… whereby the strongest, the swiftest, and the cunningest (sic) live to fight another day.”[1]

Another Victorian scientist, Herbert Spencer, coined the term “survival of the fittest”, applying it to human society, claiming that competition is our fundamental nature. This belief, known as Social Darwinism, shaped public opinion and policy in Great Britain and the United States for more than a century.

“Many new studies have found that in fact cooperation, not competition, is the norm.”

In 1966, Austrian ethnologist Konrad Lorenz published a bestseller called On Aggression in which he argued that human beings are innately aggressive, competitive, possessive and violent. His work had significant impact on the social and biological sciences. A decade later evolutionary biologist Richard Dawkins published The Selfish Gene, about the human instinct for self-preservation; it sold over a million copies, and was translated into more than 25 languages. These scientists popularized the idea that evolutionary success depends on each person being selfishly preoccupied with their own self.

Hollywood and the U.S. mass media seized on and simplified these theories, reducing them to the notion that people are fundamentally individualistic, selfish and competitive, driven to get ahead by any means necessary. Popular expressions such as the “law of the jungle”, “every man for himself ”, and “dog eat dog” reinforced this theme, stressing winning at all costs. These ideas of innate aggression and selfish genes helped fuel our individualistic, consumer culture, influencing the way people think throughout the world.

Because leading scientists have declared this is the way we are, economists and government officials create policies that favor the largest, most “efficient” companies to survive. “Too big to fail” was the justification governments made for the big bank bailouts during the financial crisis of 2008, bailouts that they did not extend to small and medium-sized companies in trouble.

People who argue that “you can’t change human nature” make the mistake of assuming that because people are led to behave in a certain way in a capitalist society, that behavior reflects the essential nature of human beings. Capitalism rewards selfishness and greed, and winning by any means, fair or foul. Therefore such people conclude that this behavior is natural for all human beings and that it is impossible to establish a society based on anything except a competitive struggle for private profit.

Many new studies, however, point to quite different conclusions. Robert Augros and George Stanciu, in their book The New Biology: Discovering the Wisdom of Nature,[2] found that in fact cooperation, not competition, is the norm in nature, because it is energy-efficient and because predators and their prey maintain a kind of balanced coexistence. They found that “nature uses extraordinarily ingenious techniques to avoid conflict and competition, and that cooperation is extraordinarily widespread throughout all of nature.”[3]

Today most anthropologists and psychologists assert that the question of nature or nurture is not an either/or issue, but one of interrelation-ship.[4] We are born with certain instincts and tendencies, but through education, upbringing and our own conscious choices, we can transform our conduct, nature and personality.

Research now indicates the existence of “selfless genes”–genetic code that favors cooperation, kindness, generosity, and heroism. It is not uncommon for people to risk their lives for strangers. Firefighters, soldiers, human rights advocates and accidental heroes may endanger themselves or even sacrifice their lives in order to save others. In addition, our world is filled with countless smaller acts of kindness: giving up a seat on the train, returning a wallet with money that was lost. Biologists now say these impulses are just as primal as aggression, lust, and greed. Furthermore, they play a powerful role in the survival of the species and the well-being of individuals.[5]

“Mirror neurons”, first described in 1992 by neurophysiologists at the University of Parma in Italy, fire not only when we experience something ourselves, but also when we observe the experience of others.[6]

For example, witnessing a serious injury will cause traumatic reactions in the observer; seeing laughing, loving people will brighten our day. These are neurological mechanisms that develop empathy for others, which builds trust, a prerequisite for cooperation.

Another biological factor related to cooperation is oxytocin, a neuro-peptide that affects social attachment and affiliation. It is key to bonding between mother and child, between lovers, and even among friends. When triggered, it reduces fear and increases trust and empathy–leading to more cooperative behavior.[7]

Alfie Kohn spent seven years reviewing more than 400 research studies dealing with competition and cooperation. In his classic work, No Contest: The Case Against Competition, he concluded that, “The ideal amount of competition… in any environment, the classroom, the workplace, the family, the playing field, is none…. [Competition] is always destructive.”[8]

Even the selection committee for the Nobel Prize in Economics, after four decades of honoring proponents of free-market capitalism, is starting to recognize the importance of cooperation. In 2009 Elinor Ostrom of Indiana University shared the prize, the first woman ever to receive it, for her work focusing on how well groups of users manage natural resources as common property. The traditional view is that common ownership results in excessive exploitation of resources, such as when fishermen over-fish a common pond; and the only solution lies in government-imposed taxes or quotas. However, Ms. Ostrom’s empirical research on collectively-managed natural resources around the world has shown that this explanation is “overly simplistic.” There are many cases in which common property is “surprisingly well-managed” cooperatively, often better than under either socialism or privatization.[9]

As part of the science of yoga, relevant to the idea of improving human behavior, Sarkar used the term “bio-psychology” to describe how the glands, nerves and brain of the body affect our behaviors, thoughts and feelings. He asserted that every human being has the same basic instincts, both negative ones, such as anger, hatred and greed, and positive ones, such as hope, conscience and repentance. The postures of yoga, a vegetarian diet and meditation are all ancient techniques that are used to overcome selfish, negative instincts and to channel the mind in a positive direction. On the social level, Sarkar encouraged society to promote cooperation for economic success and community growth. He suggested that cooperatives are the enterprises best suited to achieve that.[10]


1 Thomas Henry Huxley, “The Struggle for Existence in Human
Society”, Huxley’s Collected Essays Volume IX. 1888. http://aleph0.clarku.
2 Robert Augros and George Stanciu, The New Biology: Discovering the Wisdom of Nature (Boulder, CO: Shambhala, 1987).
3 Quoted in Logan, op cit.
4 Gilbert Gottlieb, Individual Development and Evolution: The Genesis of Novel Behavior (Hove, East Sussex, UK: Psychology Press, 2001).
5 Khaled Diab, “Survival of the Nicest”, The Guardian, 11 March 2009.
6 Giacomo Rizzolatti and Laila Craighero, “The mirror-neuron system”. Annual Review of Neuroscience 27: (2004) pp. 169–192.
7 Zak, Paul, R. Kurzban and W. Matzner. “The Neurobiology of Trust”. Annals of the New York Academy of Sciences, 1032: pp 224-227, 2004. See also
8 Alfie Kohn. No Contest: The Case Against Competition (Boston: Houghton Mifflin, 1992), quoted in Noetic Sciences Review, Spring 1990.
9 Elinor Ostrom. Nobel Prize Lecture: “Beyond Markets and States: Polycentric Governance of Complex Economic Systems”
10 For a deeper, excellent analysis of this topic, see Michael Towsey, “The Biopsychology of Cooperation” in Understanding Prout: Essays on Sustainability and Transformation, Volume 1 (Maleny, Australia: Proutist Universal, 2010).

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

What Makes Cooperatives Successful?

By Dada Maheshvarananda

R.M. Baseman, an associate researcher and advisor to the PROUT Research Institute of Venezuela conducted a passive Internet survey to find worldwide consensus on the question of co-op success. First he found primary-source articles and publications in which authors expressed opinions and conclusions about the success and failure of co-ops. The sources reflected experience from all continents and more than ten countries, including ones by the International Labor Organization, the International Cooperative Alliance and the United Nations. Studying these, he located 175 factors for success that he grouped into 13 categories and prioritized according to the number of similar responses:

  1. Supportive environment
  2. Sound advance planning
  3. Real economic benefits for members
  4. Skilled management
  5. Belief in co-op concepts
  6. Grassroots development and leadership
  7. Financially self-sustaining
  8. Innovation and adaptation
  9. Effective structure and operations
  10. Networking with other co-ops
  11. Communications
  12. Common member interests
  13. Education

Co-ops, much more than corporations, closely reflect the lives and thoughts of the member-owners. If the common interests of the members and the interests of the co-op move apart, the co-op dies.

“Successful cooperative enterprises transform a community by establishing economic democracy.”

All the basic factors for success in any business also apply to co-ops, as would be expected: there has to be a real demand for the product; planning has to be thorough and realistic; and the enterprise has to make money. There are also clear differences between consumer and producer co-ops, making their factors for success also somewhat different. For example, widespread community support of a consumer food co-op is essential, because without thousands of regular customers it will have to close. On the other hand, a co-op that manufactures custom automation solutions for industry is much less dependent on community support.[1]

Examples of Small-scale Cooperatives in Maleny[2]

Maleny is a small town of 5,000 people situated 100 kilometers north of Brisbane on the Sunshine Coast of Australia. Twenty successful cooperatives function there, linking every aspect of community life: a cooperative bank, a consumers’ food co-op, a cooperative club, an artists’ co-op, a cashless trading co-op, a cooperative radio station, a cooperative film society, four environmental co-ops, and several community settlement co-ops.

MCU Sustainable Banking (Maleny Credit Union)

The Maleny Credit Union was started in 1984 with the objective of creating an ethical financial institution which would foster regional financial autonomy by lending exclusively to local people and projects. Initially it was staffed by volunteers, who worked from rented rooms and entered deposits manually into a journal. On the first day of operations, local people deposited more than US$25,000.

Today MCU has grown to more than 5,500 owner members, and US$52 million in assets, including its own building. People from all over Australia invest their money with the Credit Union; about half its deposits come from outside the community.

The services MCU offers include savings, checks, loans, credit cards, term deposit accounts, ethical superannuation and insurance. Since its inception, the Credit Union has made many small loans to local people who would have been ineligible to borrow from major banks. These loans have helped them to buy land, build their own homes, and start more than 100 new businesses that create jobs. Despite some initial difficulties, today MCU is extremely successful, principally because it developed the right balance of financial expertise and cooperative spirit.[3]

Consumers’ Food Cooperative

In 1979 a small group of people, who wanted whole foods and produce grown by local farmers, formed the Maple Street Co-op. Today it oper- ates an organic health food retail outlet on the main street of Maleny, open seven days a week, with 1,700 active members. It has 40 employees and stocks more than 4,500 health products. Although it functions as a consumers’ cooperative, it also sells to the public.[4]

The co-op’s first priority is to provide organic food. It focuses on locally-produced food; if that is not possible, on Australian-grown products. It refuses to stock anything that contains genetically modified material, nor does it stock products from companies that it considers to be exploitive of people or of the environment. It operates on the principle of consensus decision-making.

At first, labor in the co-op was voluntary, but as it prospered, the number of paid workers slowly increased. During its 32 years of operation, it has overcome several major hurdles. At various times in its existence, the co-op dealt with problems such as lacking a viable business plan, operating at a loss, making poor investment decisions, lacking experienced financial management, and spending a lot of time resolving differences of opinion among its members.

Learning from experience, the co-op gradually evolved a sound stra- tegic and financial plan. For the last decade, the co-op has made a profit. However, it is structured as a non-profit enterprise, so the profits are either reinvested to expand the co-op’s services and develop its infrastructure, or are donated to community activities.

In 2006, the Maple Street Co-op chose to share management with the Upfront Club, a cooperative restaurant, bar and entertainment venue located in the shop next door. The club is still operating as a welcoming and friendly “social heart” for Maleny. It regularly hosts film nights, open microphones, art exhibitions, fundraisers and game evenings along with a great variety of live music. Volunteers help in many areas of the Club, from washing dishes, to planning events and beautifying the grounds. The two co-ops together produce over US$2 million in cash flow yearly.

Other Maleny cooperatives

Maleny has one of Australia’s most successful Local Energy Transfer System (LETS) schemes. It functions as a cashless trading co-op whose members trade their products and provide services to each other without the use of money. Instead, they use a local currency: the Bunya, named after the local native pine nut. This allows people with little or no cash to participate in the local economy.[5]

The Maleny Community Kindergarten was built by a group of community volunteers in 1939. Today it still operates in the same premises with a beautifully-landscaped garden out front. The kindergarten is run by an elected board.

Maleny has three environmental co-ops. Barung Landcare is one of several hundred community-based landcare groups throughout Australia; it runs a successful nursery, provides environmental education, and promotes the sustainable harvesting of native timber. Booroobin Bush Magic runs a rainforest nursery, while the Green Hills Fund works to reforest the Maleny hinterland.

There are four community settlement cooperatives in Maleny, includ- ing the Crystal Waters Permaculture Village. Crystal Waters houses 200 residents on private one-acre lots. Two community lots that are owned by a cooperative of residents include buildings for community events, small businesses and a monthly market. The PROUT Community Settlement Co-op has ten families and uses half of their land for the River Primary School, with more than 200 students on 25 hectares of beautiful rainforest land.[6]

The Venezuelan Cooperative Experience

The first legal cooperative in Venezuela was a savings and loan associa- tion formed in 1960. By the end of 1998 there were 813 registered coop- eratives with 230,000 members. Most of these are still active, tough and resilient because they were created by the members with no government support or funding. For example, the Cooperatives of Social Services of Lara State (Cecosesola), founded in 1967, now includes producer and consumer food co-ops that serve 60,000 people each week, credit unions, health clinics and a network of cooperative funeral homes that is number one in the western region.[7]

When President Hugo Chávez took office at the beginning of 1999, he began to emphasize cooperatives in order to transform property into collective forms of ownership and management as a key to the Bolivarian Revolution. In 2005 he called for a “Socialism for the Twenty-first Century”. His job-training program for the unemployed, Mission Vuelvan Caras (“About Face”), included cooperative education and encouraged all graduates to form one. Co-op registration was made free of charge; they were exempted from income tax; micro-credit was made available; and laws were passed directing the government to give preference to cooperatives when awarding contracts.

The goal was to transform the profit-oriented capitalist economy into one oriented towards endogenous and sustainable social development by involving those who had been marginalized or excluded. The result was a phenomenal creation of 262,904 registered cooperatives by the end of 2008, but many of these never became active or collapsed. The national cooperative supervision institute, SUNACOOP, recognized about 70,000 as functioning,[8] which is still the highest total for any country after China.

The majority of cooperatives have few members who are unskilled. Because of the high rate of failure among the registered cooperatives, in 2005 the president shifted the government’s approach from cooperatives to socialist enterprises and worker takeovers of factories. In this way, the government pays the salaries, but keeps the ownership. PROUT on the other hand supports worker ownership as well as worker management.

The PROUT Research Institute of Venezuela designed two surveys, in 2007 and a follow-up one in 2010, to understand the problems and needs of 40 cooperatives in the rural district of Barlovento, a two-hour drive east from Caracas. More than 90 percent of the population there are Afro-Venezuelans, descendants of former slaves, who have historically suffered racism and discrimination. The district has high levels of poverty and unemployment, economic disparity and emigration to the cities.

The objective was to diagnose the problems and challenges that worker-owned enterprises are facing. The results show that:

  • Eighty-five percent of the cooperatives were still functioning three years after the first study, with little or no government support.
  • Those that closed as well as a few that survived were robbed by corrupt co-op managers.
  • Sixty percent of cooperative members have not had training in cooperatives.
  • The majority of workers believe they are receiving the same or lower wages than if they were working for private enterprises.
  • There is little inter-cooperation among cooperatives, and little support from the community in Barlovento.
  • The most stable co-ops are those in which the members provided at least part of the initial capital.
  • Clearly the cooperatives of Venezuela need practical training and professional consultants responsive to their needs.

Guidelines for Successful Cooperatives

The successes of the Maleny cooperatives have been achieved through great struggles over the last two decades. Proutists there, in consensus with other members of the management committees, have drawn up guidelines they consider important in building successful cooperative enterprises:

  1. Fulfill a need. People have to come together in order to fulfill a genuine need in the community. No matter how good the idea, if there is not a community need, the enterprise will not succeed.
  2. Establish a founding group. A few committed people have to take on the responsibility of developing the initial idea through to inception. Usually, however, one person will need to provide the leadership.
  3. Commit to a vision. Commit to the ideals and values implicit in cooperative enterprises, and try to ensure that both the members and the management are honest, dedicated and competent.
  4. Conduct a feasibility study. Objectively evaluate the perceived need, and determine whether the proposed enterprise can fulfill that need by conducting a feasibility study.
  5. Set out clear aims and objectives. The members of each enterprise must formulate clear aims and objectives through con- sensus. These will help direct everything from the founding group’s initial focus to promotional strategies and budgetary processes in the years to come.
  6. Develop a sound business plan. The enterprise will require capital, have to manage its finances efficiently, and at some point will have to make effective decisions about loan repay- ments and profit allocation.
  7. Ensure the support and involvement of the members. The members own the enterprise–at every step their support and involvement are essential.
  8. Establish a location. Secure adequate operational premises for the enterprise, in the best possible location in the community.
  9. Get skilled management. From within the community, bring into the enterprise people who have the necessary management, business, financial, legal and accounting skills.
  10. Continue education and training. Ideally, the members will have the skills–particularly the communication and interpersonal skills–necessary to run the enterprise successfully. If not, they will either have to develop such skills or bring in new members who have them.

Golden Rules for a Community Economic Strategy

  • Start small, with the skills and resources available within the community.
  • Make use of role models, those with experience in community development, whenever possible.
  • Make sure the enterprise involves as many people as possible.

Community Benefits

Cooperative enterprises benefit a community in many ways. They bring people together, encourage them to use their diverse skills and talents, and provide them with an opportunity to develop new capabilities. They strengthen the community by creating a sense of belonging, fostering close relationships amongst different types of people, and empowering people to make decisions to develop their community.

All this fosters community spirit. Working together, a community is able to accomplish much more than when individuals go their separate ways.

On an economic level, cooperatives foster regional economic self-reliance and independence from outside control, empowering local people. They create employment, circulate money within the community, and offer a wide range of goods and services. Because cooperative enterprises are owned by the members themselves, profits stay in the local area. Cooperatives thus increase the wealth and build the strength of the community.

In essence, successful cooperative enterprises transform a community by establishing economic democracy. Cooperative enterprise is the socio-economic system of the future. With global capitalism terminally ill, developing cooperatives as independent alternatives makes a lot of sense. In Mondragón, in Maleny, and in Venezuela, that future is unfolding now.


1 The complete article and database are available at:
2 See Jake Karlyle, “Maleny Cooperatives”. New Renaissance, Volume 12, No 2 (Winter, 2003-4) and the excellent documentary by Alister Multimedia, “Creating Prosperous Communities: Small-Scale Cooperative Enterprises in Maleny”
7 Carla Farreira, “A cooperative where there are no positions, only tasks to be done: Cecosesola, Venezuela”.
8 Dario Azzellini, “Venezuela’s Solidarity Economy: Collective Ownership, Expropriation and Workers Self-Management.” WorkingUSA: The Journal of Labor and Society. Volume 12, Issue 2, June 2009, pp. 171-191.

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

PROUT’s Rational Banking System

By Trond Overland

Modern banking emerged during the Italian Renaissance. The idea behind it was ancient:
To make money out of lending money.

prout banks
(Click image for larger image)

The present situation

Today the money lender has become the master of all trades; giant banks control everything under the sun. Do they work in the interests of the people? The answer is a resounding No.

The main reason for the continuing recessions and depressions all over the world today is that vast deposits of money are not being released to those who require resources. In the words of P.R. Sarkar, “the intrinsic demonic greed of banks has been allowed to jeopardize the life of common people.”(1)

“Banks must not allow unwise administrators or governments to print monetary notes indiscriminately without reserving the proportionate amount of bullion in their treasuries. It destroys the very life of society. It leads to widespread inflation, which in turn jeopardizes internal trade and commerce as well as foreign trade and barter. Even if there is abundant production in a country, the common people do not benefit from it. The rich become richer and get more scope to continue their merciless exploitation.”(2)

PROUT’s proposals

Basically, money is a means of exchange. For instance, if you have got something that I require I may spend money in order to get it from you.

I could also offer you something other than money that may be of interest to you. Exchange of something other than money, such as goods and services, is called barter trade.

A micro-economic example of barter trade:
I paint your house, you do my accounts.
A macro-economic example: Bangladesh exchanges jute and hide exports for food imports.

It may be noted that barter trade excels under certain conditions. On one hand, barter between countries works best at present between industrially underdeveloped – financially poor – countries with a large surplus of raw materials. As they have no means to invest in refining industries under the present global exploitative regime, they should exchange raw materials in order to procure minimum necessities.

On the other hand, the exchange of services between private persons would work very well where no government tax is levied on private income. The abolition of income tax will to a great extent remove the problem of black money and bring about a welcome moral change in the population.

Global capitalism does not encourage barter trade but wants to retain all trade within its exploitative speculative dollar-based paradigm. PROUT encourages both types of purchase – using money or by barter – wherever they may serve people’s needs.(3)

Money value increases with mobility

Money is not meant for piling up purchasing capacity but for paying expenses. Spending money is the natural thing to do; accumulation is unnatural to the point where it becomes a mental disease. Macro-economically, the accumulation of money is a dangerous socio-economic course to the point where it leads to large-scale depression; where we are today.

The more money changes hands, the greater is its economic value. The value of money increases with its mobility. The motivation of PROUT’s banking system is therefore to keep money rolling.

Apart from seeing to it that money is kept in circulation, banks should not act on their own behalf and turn into huge profit-making machines. They should instead serve their community and remain directly associated with particular productive local endeavors.

An economy of the people, not of banks

This is a natural idea: Whenever people join in some productive effort they will soon need somewhere to deposit their earnings, a place where they can administer their common economy. If no suitable means for deposit exists, the natural thing for them to do would be to form a cooperative bank themselves.

People may need to borrow, as well, for both individual and collective needs. PROUT’s cooperative banks will serve as both savings and lending institutions. A cooperative bank may take a large loan from another bank or the government to purchase modern equipment and construct dams, barrages and shift or lift irrigation facilities to increase production, etc.(4)

Under PROUT the banking system will have to be managed by cooperatives.(5) Only the government-controlled central or federal bank should have a greater reach by way of guaranteeing the currency.

In conclusion, the mission of banks under PROUT is to keep money in motion and not become stagnant pools of personal wealth. PROUT’s banks are non-profit cooperative organizations where ideally the balance is zero after all expenses are met.

The Gold Standard

Financial circumstances are changing fast. For instance, the last vestiges of the gold standard were thrown out by the Nixon administration some 40 years ago, and the gold standard has been ridiculed ever since. One reason for this mudslinging is that pinning currencies to gold (“gold standard”) does not allow for free speculation.

Today, as the global speculative system is in chaos and about to end in catastrophe, the gold standard may be staged to make a return. The price of gold usually rise phenomenally during times of economic upheaval and financial crisis. This proves that people in general accept gold as a basic guarantee for financial stability.

PROUT supports a form of gold standard. According to PROUT, a main work of the central bank would be to guarantee the currency in measures of physical gold held by that bank. Central banks must be ready to pay citizens the amount of gold represented by the currency. This is the proper hedge against large-scale inflation. The gold-standard protects against speculative bubbles.


The gold standard is more a question of psychology than physicality. People view gold as the most precious commonly available thing.

In the same way, the entire field of socio-economy is about physicality as well as psychology. For instance, the present financial system is ridden by greed. From a collective perspective the problem of unbridled greed is first a physical one, then a psychological one.

First society has to find ways and means to stop and control the disease in a physical way. Thereafter, when no one suffers anymore at the hands of greedy exploiters, society will be free to think about how to cure their mental disease.

No one should be oppressed or suppressed. Everybody should be allowed to realize their potentialities and attain their goals in life and thereby learn to utilize all sorts of resources to a maximum.

At present the world of banking is dominated by all-devouring colossuses that crave to be fed by public money first thing in the morning (by way of “quantitative easing”) in order to continue their existence as masters of global trade.

In contrast, PROUT’s banking system presents a rational human approach to supplying money wherever and whenever it is needed and required.

The mission of PROUT as a whole is to pave the way for a society where people can express their true self. Only a socio-economic system that allows and supports people’s all-round needs, interests and dreams can be termed as truly progressive.


(1) “Keep Money Rolling – Excerpt B”, P.R. Sarkar, 1986. Published in PROUT in a Nutshell Volume 3, and in Proutist Economics. Ananda Marga Publications. Web:
(2) “Economic Dynamics”, P.R. Sarkar. Published in A Few Problems Solved Part 9, in PROUT in a Nutshell Part 13, and in Proutist Economics. Ananda Marga Publications. Web:
(3) “Trade for Regional Self-Reliance”, Dr. Michael Towsey. Web:
“Cooperative Production – Excerpt B”, P.R. Sarkar. Published in PROUT in a Nutshell Part 14 and in Proutist Economics.
(4) “Some Specialities of PROUT's Economic System”, P.R. Sarkar. Published in A Few Problems Solved Part 9, PROUT in a Nutshell Volume 3, and in Proutist Economics. Ananda Marga Publications. Web:
(5) “Economic Dynamics”, op.cit.

Copyright The author 2012

A Cooperative Economy – What Might It Look Like?

By Jake Karlyle
PROUT Research Institute, Australia 

Paper given at the Hobart conference 'Community, Economy and the Environment:
Exploring Tasmania’s Future', 15 October 2005


The topic for discussion is: “A Cooperative Economy – What Might It Look Like?” Over the last 150 years or so, two socio-economic systems have dominated the world:  capitalism and  communism. Capitalism is synonymous with individual ownership and  private enterprise, and communism is synonymous with state ownership and public  enterprise. All of us are familiar with both systems. However, there is a third model,  sometimes called ‘the third way’ or the cooperative economy, which offers an alternative  future, one that, potentially, should avoid the excesses and disasters of both capitalism  and communism.

To begin, let us briefly look at some examples of successful cooperative models. Next, we outline some well-known cooperative principles. Finally, we discuss what a  cooperative economy might look like.

Examples of Successful Cooperative Models

Robert Owen: The start of the cooperative movement is generally dated to the first half of the nineteenth century, to the time of Robert Owen. Owen was a successful British cotton spinner and industrialist, who demonstrated at New Lanark that a model factory and town based on cooperative principles could run profitably. All of Owen’s New Lanark workers, including many women, received company education and company housing. Owen wanted factory reform, urban reform and educational reform implemented throughout all of England. However, although Owen’s model was well-known and often admired, it was not supported by the British government or adopted by other firms, and so it had little impact on economic development in Britain during the nineteenth century.

Muto Sanji: A century later, at the beginning of the twentieth century, a vision similar to that of Owen’s emerged in Japan. Muto Sanji, who was born in 1867, was a young managing director of a cotton-spinning business. He developed a solution to the twin problems of training and retaining the workers he needed and restraining the cost of their wages. He organised in-house training programs in his factories, and offered good workers a range of benefits, including lifetime employment, promotion by seniority, consultation with managers about their work, and some beginnings of ‘company welfare’ for themselves and their families.

The principal difference between the two models was that Owen advocated cooperative ownership, while Muto advocated simply a cooperative approach to industrial relations.1

Farmers’ Cooperatives: In the first half of the twentieth century in Australia, farmers and rural producers began establishing many farmers’ and farmers’-cum-producers’ cooperatives in order to produce and distribute their produce cheaply and efficiently. Such cooperatives reduced inequalities by removing the need for other, more inequitable, kinds of business, and they captured economies of scale for small producers. The farmers relied on their own initiative and on mutual cooperation to build efficient businesses in the absence of any kind of government support.

Mondragon: In recent times, since the Second World War, thousands of successful cooperative models have been developed all over the world. The Mondragon group of cooperatives in the Basque region of northern Spain is often cited as one of the world’s most developed cooperative models.2

In 1956, Jose Maria Arizmendiarrieta, a Catholic priest, inspired several of his graduate students to establish a small industrial cooperative. It quickly grew to produce domestic appliances and machine tools. From the beginning, the Basque people wholeheartedly supported this initiative. By the 1970’s, over 100 new cooperatives had been established, and the Mondragon Corporacion Cooperativa had become one of Spain’s top ten industrial conglomerates, and the greatest cooperative success story in the world.

After Spain joined the European Economic Union, the Mondragon Corporacion Cooperativa expanded internationally, and now it employs more than 60,000 people and has annual sales of nearly US$8 billion. However, none of its factories outside Spain are run as cooperatives, and today more than one third of the cooperative’s employees are non-members.3

Recent examples

Recent examples of successful cooperative models include the following:

  1. Farmers’ cooperatives: Cooperatives manage 99% of Sweden’s dairy production, 95% of Japan’s rice harvest, 75% of western Canada’s grain and oilseed output, and 60% of Italy’s wine production. 99% of Japan’s fish production is also run cooperatively.
  2. Banking cooperatives: Some of Europe’s major commercial banks are cooperatively owned or organised, including Germany’s DG Bank, Holland’s Rabobank, and France’s Credit Agricole.4
  3. Housing cooperatives: In Europe, there are 10,614,000 housing coops. 15% of Norway’s and 2% of the United Kingdom’s housing stock is cooperative. The Czech Republic has 10,000 housing cooperatives. 25% of housing development in Turkey in the last 25 years has been through the cooperative system.
  4. The National Cooperative Business Association: In the USA, the National Cooperative Business Association includes 47,000 cooperatives serving as many as 100 million people, or 37% of the population.5
  5. Maleny: Australia’s best-known example of a cooperative community is Maleny, on the Sunshine Coast Hinterland. Maleny is a small rural town of 4,000 people, which supports 17 cooperatives, including a cooperative bank, a food cooperative, a cooperative club, a workers’ cooperative, a cashless trading cooperative, four environmental cooperatives, and several community settlement cooperatives. The Maleny Credit Union was started in 1984, and today has more than 6,000 members and more than $15 million in assets.6
  6. The International Cooperative Alliance: Finally, today more than 760 million people throughout the world are members of cooperatives. They are members of the world’s largest non-government organisation, the International Cooperative Alliance, which represents more than 250 national and international organisations.7

International Cooperative Principles

The International Cooperative Alliance defines a cooperative as follows: “A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.”8

There are seven internationally recognized principles of cooperatives:

  1. Voluntary and open membership: Cooperatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.
  2. Democratic control by members: Cooperatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives have equal voting rights, based on one member one vote.
  3. Member economic participation: Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is the common property of the cooperative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing the 4 cooperative, benefiting the members in proportion to their transactions with the cooperative, and supporting other activities approved by the members.
  4. Autonomy and independence: Although cooperatives may deal with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.
  5. Education, training and information: Cooperatives provide education and training for their members, elected representatives, managers and employees, so that they can contribute effectively to the development of their cooperatives. They also inform the general public about the nature and benefits of cooperation.
  6. Cooperation among cooperatives: Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, regional, national and international structures.
  7. Concern for the community: While focusing on member’s needs, cooperatives also work for the development of their communities through policies acceptable to their members.

Former United Nations Secretary-General Boutros Boutros-Ghali, in his 1994 Report to the General Assembly, said: “Cooperative enterprises provide the organisational means whereby a significant proportion of humanity is able to take into its own hands the tasks of creating productive employment, overcoming poverty and achieving social integration.”9

What Might a Cooperative Economy Look Like?

Finally, let us briefly discuss what a cooperative economy might look like if cooperative enterprise became the dominant mode of production and distribution. A dozen or so key areas readily come to mind.

Ownership: As suggested at the outset, there are three fundamental ways to organise a modern economy: it can be based on private enterprise, as in capitalism; it can be based on state enterprise, as in communism; or it can be based on cooperative enterprise, as in the ‘third way’ or the cooperative economy. These are the three basic modes of ownership and production that have been invented by human beings to date. The type of enterprise we choose, meaning the type of ownership and the corresponding mode of production we adopt, to a large extent determines the type of economy we build.

The mixed economies that exist in most developed capitalist countries in the world today are primarily a combination of public and private enterprises. Other types of ownership, such as independent non-profit ownership and forms of collective ownership such as mutual societies, in a cooperative economy would be considered to be part of the cooperative sector. More on the cooperative sector shortly. 5 In a cooperative economy, the principle that governs ownership is the following one: As far as possible, industry, agriculture, trade and commerce – almost everything – needs to be managed through cooperative organisations.

The corollaries are:

  • Only those enterprises that are difficult to manage on a cooperative basis because they are either too small, or simultaneously small and complex, should be left to private enterprises; and
  • Only those enterprises that are difficult to manage on a cooperative basis because they are either too large, or simultaneously large and complex, should be left to public enterprises.10

In other words, in a cooperative economy cooperative enterprise is the norm, and public
and private enterprise only occurs where cooperative enterprise is not suitable. In line
with this principle, cooperative enterprises would produce and distribute all types of
goods – essential, semi-essential, and non-essential or luxuries – and provide all types of

The public sector in a cooperative economy might include large-scale industries, telecommunications, public water supplies, roads, railways, airlines, civil defence, some research and development, public education, hospitals, universities, etc. The role of the public sector would be clearly defined, public sector enterprises would be regulated by the local, state or federal government, and such enterprises would function as statutory authorities, independent of direct government involvement. Workers in a public sector enterprise would have the right to elect their own representatives on to their board of directors.

Generally large-scale public sector enterprises would strive to make a profit. However, some large-scale key industries, such as those that supply raw materials, would function as no-profit-no-loss enterprises. They would supply raw materials at cost to other largescale producers and to producers’ cooperatives.

In a cooperative economy, the exact line of demarcation between public and cooperative enterprises would be a policy and legislative issue, and would include room for flexibility.

The private sector in a cooperative economy would be limited to small-scale businesses, and it would be restricted to producing and distributing non-essential goods and providing non-essential services. Private enterprises that grew too large would be required to transform themselves into cooperatives.

The cooperative sector: The cooperative sector would be the largest sector in a
cooperative economy. The cooperative sector would be divided into three main subsectors: 1) cooperatively-run businesses, 2) a range of community-based organisations,
and 3) households.

  1. Cooperative businesses include farmers’ cooperatives, farmers’-cum-producers’ cooperatives, producers’ cooperatives, workers’ cooperatives, industrial cooperatives, cooperative banks, financial cooperatives, and cooperatives that provide a range of other services, such as health care and legal services. Such cooperatives would be designed to be successful business enterprises and to make a profit. Most small, medium and large businesses that we see in the world today would be transformed into cooperative enterprises in a cooperative economy.
  2. The second branch of the cooperative sector includes a range of community-based organisations. It includes community groups, sporting clubs, charities, cultural and religious organisations, environmental groups, non-profit organisations, nongovernment organisations (NGOs), mutual societies, and other similar types of organisations. This branch of the cooperative sector is important because it reflects the ideals and values of a community, and is a rich source of social capital. It includes the organisations and networks that make up civil society, and which perform many beneficial works not done by businesses or governments.
  3. The third branch includes household economies. Household economies are good examples of cooperative principles at work, and they can give us some useful insights into how a cooperative economy might function. For example, the members of a household generally share resources, cooperate together for their mutual benefit, and enjoy a shared sense of belonging. Household production, household work, child rearing, and the role of mothers and carers, which are generally not included in the formal economy today, all would be recognized in a cooperative economy.

Economic democracy: Economic democracy means that as far as possible people should have the right to make all the economic decisions that directly affect their lives. This right extends to many of the decisions that are currently being made by governments and large corporations. In practice, this means that people would have the right to make economic decisions within the cooperative enterprises in which they work and within their local communities. Local communities can solve local economic problems more easily than either national governments or large businesses because they are closer to the source of the problem and by definition the problems are on a smaller scale.11

The implementation of economic democracy would see competition policy replaced with a policy of cooperation. Economic democracy would be achieved through: a) strengthening the cooperative sector, b) economic independence for women, and c) economic decentralisation.

Economic decentralisation: In a cooperative economy, five principles would guide the process of economic decentralisation: a) local people would have control over local resources; b) production would be guided by local consumption and not by profit; c) as far as possible, production and distribution would be organised through cooperative enterprises; d) local people would have priority employment in local industries; and e) products that can be manufactured locally would not be imported. Economic decentralisation is the practical means by which local communities would take control of their local economies.12

Decentralised planning: Both economic democracy and economic decentralisation require decentralised planning. Local communities and local governments need to have the authority necessary to make the decisions that directly affect their local economies. Economic decision making would start at the grass roots level and devolve upwards. Only local people would sit on local boards.

Decentralised planning would also mean that production and distribution would be done through local cooperative networks, and that local communities would work together for their mutual benefit. There would be no net capital outflows from any local area. In addition, both economic decentralisation and decentralised planning would need to be consistent with the principles of economic efficiency and economies of scale.

Cooperative entrepreneurship: The entrepreneurial drive generally associated with successful business men and women in a capitalist economy would be largely transformed into cooperative entrepreneurship in a cooperative economy. In a cooperative economy, good innovation, quality research and development, and the ability to bring new goods and services to market in a timely manner at reasonable prices, is a role that would be done by cutting-edge cooperatives. Harnessing the cooperative entrepreneurial capacity of a group of capable, community-minded people is generally considered to be one of the greatest potential strengths of a cooperative economy.

New measures of progress: New measures of progress would be adopted in a cooperative economy to evaluate the social and environment impact of development. Such indicators would include: education and literacy levels; health and infant mortality; availability of basic services such as water, sanitation, electricity and telecommunications; suitable accommodation; air and water quality and environmental pollution levels; the levels of depletion of natural resources; biodiversity and species loss; and access to cultural and recreational resources.13 Additional indicators would include: monitoring income distribution, increasing purchasing capacity, deductions for social and environmental costs, accounting for the depletion of non-renewable resources, and capital asset accounts for building infrastructure and public resources. Such indicators are much broader than the indicators used widely today, such as corporate profitability, GDP growth, and wealth accumulation.

New indicators would also need to be devised to evaluate the full range of resources: physical, mental and spiritual. Triple bottom line accounting methods would quantify financial, social and environmental value, and multiple bottom line accounting would also quantify ethical and spiritual value.

Balanced economic development: Balanced economic development would ensure that a cooperative economy would not be either under-developed or over-developed. A balanced economy is one in which the agricultural sector, agrico- and agro-industries
(‘pre-harvest’ and ‘post-harvest’ industries respectively), manufacturing and the service sector all develop in balanced proportion. A balanced cooperative economy would place great importance on agrico- and agro-industries as a means of developing a sustainable economy.14 It would also halt the decline of the agricultural and manufacturing sectors, and encourage the development of the not-for-profit sector in order to develop social capital. As part of its tax policies, a cooperative economy would gradually phase out income tax and introduce a rational system of resource taxes.

Socio-economic units: A socio-economic unit in a cooperative economy may be defined as a natural community which has the potential to be self-sufficient and sustainable. Here self-sufficient has two components. First it requires that the socio-economic unit can produce its own minimum necessities of life so as to sustain the local inhabitants. Second it requires that the socio-economic unit can sustain a balance of trade, that is, manufacture
sufficient exports to exchange for the additional commodities it needs so that the local
inhabitants can enjoy a good standard of living and not just the minimum standard. Clearly, the requirement of sustainability is best met if the socio-economic unit can meet these objectives efficiently.

Since socio-economic units are meant to be natural communities, their boundaries are
defined by economic, cultural and environmental factors. These factors include: similar
economic problems and uniform economic potentialities, a common history and culture, and similar environmental features. As socio-economic units develop, we would expect to see two or more adjoining units merge together, based on factors such as economic parity, cultural mixing and administrative integration.15

A cooperative market economy: A cooperative economy should not be confused with a command economy. A cooperative economy is a market economy, but it is not a capitalist market economy. Consumer preferences, reflected through consumer cooperatives, would govern the production of goods and the provision of services, so production would be determined by consumption and not by profit. Producers and consumers would interact directly with each other, and not through various intermediaries. Trade would be done mostly through cooperatives, but wealth and resources would not be drained from one socio-economic unit to another.

Political reform: For a cooperative economy to work efficiently, political reform is also necessary. Good policies, just laws and a fair regulatory environment are necessary to ensure that a cooperative economy benefits all. However, capable leaders are also essential. Requiring politicians to sign their election manifestos so that they enter into legally-binding electoral contracts with voters, and empowering voters to sue politicians who breached their electoral contracts based on their public statements and voting record, would very quickly elevate the standard of political leadership.

In addition, creating a fourth branch of government, besides the judicary, legislature and executive, that would be responsible for auditing, gathering statistics and fundamental economic management, would separate economics and politics structurally. The role of government would become clearly defined and limited.

Globalisation: As far as possible, a cooperative economy would adopt the principle of political centralisation and economic decentralisation. When local communities around the world have economic security, and socio-economic units provide people with the basic necessities and an increasing standard of living, people will naturally see the advantages of a world administration. A common philosophy of life, a world-wide penal code, and a global constitution that protects local communities and contains a strong bill of rights, can make globalisation work for all.16


So we can see that a well-developed cooperative economy would contain a range of
features that, potentially, can offer a new direction for humanity. The challenge of
integrating communities, economies and natural environments into sustainable systems could well be mastered, if we choose to develop a cooperative economic model.

Finally, I would suggest that the choice we face today is clear cut. It is between, on the
one hand, the status quo, meaning business as usual, and, on the other, actively engaging ourselves in building a sustainable future for our children and our grandchildren. The choice that we make today may well determine the future course of life as we know it on our planet.


1 Stretton, Hugh, Economics – A New Introduction, University of New South Wales
Press, 1999, pp. 105-106.
3 Benello, George, “The Challenge of Mondragon”, 1996,
4 Dyer, Bruce, “Why Cooperatives: The New Zealand Context”, Proutist Universal,
Nelson, 2000, available at
5 National Cooperative Business Association,
6 Karlyle, Jake, “Creating Prosperous Communities – Small-Scale Cooperative
Enterprise in Maleny”, 2002, available at www.proutworld/features/maleny.htm
7 International Cooperative Alliance,
8 Ibid.
9 Boutros Boutros-Ghali, UN Secretary-General, “1994 Report to the General Assembly”.
10 Sarkar, Prabhat Ranjan, Problems of the Day, AM Publications, 1993, pp. 12-13.
11 Sarkar, Prabhat Ranjan, “Economic Democracy”, Proutist Economics, AM
Publications, 1992, pp. 229-237.
12 Sarkar, “Decentralised Economy – 1” and “ – 2”, op cit., pp. 212-228.
13 Calvert-Henderson Indicators.
14 Sarkar, “Principle of Balanced Economy”, op cit., pp. 33-39.
15 Sarkar, “Socio-Economic Groupifications”, op cit., pp. 21-29.
16 Also see, for example, John Pearce, Social Enterprise in Any Town, Calouste
Gulbenkian Foundation, 2003, and Michael Towsey, Economics for Self-Reliant
Communities, Prout Institute of Australia, 2005.

Useful Websites

Mondragon Corporacion Cooperativa
National Cooperative Business Association
International Cooperative Alliance
Cooperatives in Australia
Maleny Credit Union
Cooperative Housing
Local Energy Transfer System (LETS) Australia


“Creating Prosperous Communities – Small-Scale Cooperative Enterprise in Maleny”,
produced by the Prout Community Settlement Cooperative, 2002. The video is available through

The Showdown: Cooperatives Vs. Stock Exchange-driven Exploitation

When you have got a global market, people do not think they can actually impact on the economic situation in which they find themselves. But they can impact on their local environment. There is this huge renaissance of community going on. -Pauline Green, President of the International Co-operative Alliance (ICA).

By Trond Overland
(March 2012) – Ours is a time of increasing collective concern and rapidly decreasing faith in the self-centred capitalist system. While the global market crisis continues on its hazardous journey towards brutal meltdown, the cooperative model emerges as the new, dignified way of doing business.

The incoming system: Cooperatives
The Outgoing system: Stock exchange-driven exploitation
The PROUT position

The Incoming System: Cooperatives

Globally, the cooperative structure is diverse and dispersed, has tens of thousands of member businesses, and employs 100 million people, which is 20 per cent more than the jobs generated by multinational companies. Across the world, cooperatives have 1 billion members, about three times the number of individual shareholders out there, reports The Age*. The 300 biggest cooperatives collectively generate revenue of $US1.6 trillion a year, equivalent to the world’s ninth largest economy, Spain.

“It’s the members who own the business. It’s they who take the strategic direction of the co-operative through their election to the boards. It’s a democratic process. And that is what distinguishes us,” Pauline Green of the Geneva-based ICA said to The Age.

”During the last four years in the financial crisis across the world, co-operative and mutual sector has come through largely unscathed. We have come through with an increased asset-base. We have increased deposits, whereas our high-street competitors have in many countries collapsed,” Green stated. “In the UK, the co-operative bank over the last two years has seen a 79 per cent increase in account switches from our corporate competitors.”

The United Nations has made 2012 the International Year of the Co-operative. It is the first time the UN has given this honor to a business model. UN Secretary-General Ban Ki-moon said: “Co-operatives are a reminder to the international community that it is possible to pursue both economic viability and social responsibility.”

The Outgoing System: Stock Exchange–driven Exploitation

Asked earlier this month what he thinks about the fact that the US unemployment rate is falling right now and companies in the Standard & Poor’s 500 are making more money than ever, David Stockman, the budget director of the Reagan administration, said*:

“That’s very short-term. Look at the data that really counts. The 131.7 million jobs in November was first achieved in February 2000. That number has gone nowhere for 12 years.

“Another measure is the rate of investment in new plant and equipment. There is no sustained net investment in our economy. The rate of growth since 2000 in money put into office buildings, factories, software and other equipment has been 0.8% — hardly measurable. We’re stalled, stuck.”

“Where it is now is totally artificial. It’s the result of massive purchases by not only the Fed but all of the other central banks of the world.

“What’s wrong with that is that it doesn’t come out of savings. It’s made-up money. It’s printing press money. When the Fed buys $5 billion worth of bonds this morning, which it’s doing periodically, it simply deposits $5 billion in the bank accounts of the eight dealers they buy the bonds from.

“The consequences are horrendous. If you could make the world rich by having all the central banks print unlimited money, then we have been making a mistake for the last several thousand years of human history.

“At some point confidence is lost, and people don’t want to own the (Treasury) paper. I mean why in the world, when the inflation rate has been 2.5% for the last 15 years, would you want to own a five-year note today at 80 basis points (0.8%)?

“If the central banks ever stop buying, or actually begin to reduce their totally bloated, abnormal, freakishly large balance sheets, all of these speculators are going to sell their bonds in a heartbeat. That’s what happened in Greece.

“Here’s the heart of the matter. The Fed is a patsy. It is a pathetic dependent of the big Wall Street banks, traders and hedge funds. Everything (it does) is designed to keep this rickety structure from unwinding.

“If you had a (former Fed Chairman) Paul Volcker running the Fed today — utterly fearless and independent and willing to scare the hell out of the market any day of the week — you wouldn’t have half, you wouldn’t have 95%, of the speculative positions today,” Stockman concludes

The PROUT Position

The concentration of great wealth beyond the influence of ordinary citizens is at the heart of the mounting difficulties that now make global capitalism look like the Nexus of Evil. As a first step towards establishing a real economy of real people, stock exchanges and their exploitative trading tools should be banned.

In a seminal discourse in 1984, PROUT founder P.R. Sarkar exhorted:

“Capitalists, in either their singular or collective forms, are the most pernicious economic exploiters today. All over the world they are continually exploiting local economies and draining their wealth. In nearly all cases the profits they accrue are spent outside the local area and remitted to outside stockholders and parent companies. An essential measure to control this economic exploitation is that the speculative markets in all countries of the world should be closed down immediately.”*

Closing down the leading institutions of an exploitative system is a first step. However, the subsequent constructive steps may seem even more important.

The world and its people need a decentralized consumption-oriented economy where profits are for developing the economy of everybody and not only of a few. It will be the job of lawmakers and the people to evolve further such a humanist system out of the present co-operative structure.

Money needs to be kept rolling, otherwise it loses its practical value. Right now, capitalists are holding back as they are not sure where they can get optimum returns. By their present unwillingness to invest they hurt the entire world and threaten to offset an unprecedented depression. But their greed does not allow them to act otherwise. They keep the whole world hostage to their defective mentality. Consequently, the days of capitalism as the dominating world system are numbered.

The future lies in cooperatives!

The PROUT cooperative system
PROUT compared with capitalism and communism

* Sources:
The Age (Australia)
USA Today
“Socio-economic Movements”, PROUT in a Nutshell Part 13, Ananda Marga Publications

Copyright PROUT Globe 2011