PROUT’s Decentralized Economy

Economic decentralization is at the heart of PROUT’s economic democracy. Centralized economies – democratic or undemocratic – have all failed to guarantee ever-increasing purchasing capacity, or to eradicate exploitation and want. In both capitalism and communism there is economic centralization. Capitalism centralizes economic control in the hands of a few big capitalists, while communism centralized control in the hands of party-controlled planning bodies.

Decentralization is a must as economic planning loses efficacy if undertaken by people who are remote from the places and interests of productive activity. Planning must take place at the lowest level where the expertise of local people can solve real economic problems and create prosperity for those to whom it matters the most.

PROUT’s democratic economic system is based on five essential principles for economic decentralization:

1) The resources of a region should be controlled and utilized by the local people. At the least, local people need to control production of the important basic necessities to insure their economic security. They should also process raw materials locally so that their natural resource endowment gets used as a secure basis for their local economy. Excessive dependency on import of raw materials leads to drainage of capital and uncertainty of supply.

2) Production should be based on consumption, not profit. Production should be undertaken to meet the needs of the general population, not to create profit for a small number of entrepreneurs. Production should be geared to local markets and supply of basic commodities, rather than to export or supply of luxury goods. If this is done, there will be maximum local circulation of money, creating increased production, more jobs, and greater purchasing capacity. An economy built up around production for local consumption will attain much greater vitality than one based on production for export.

3) Production and distribution should be organized primarily through cooperatives. Cooperatives, by the nature of their structure, equitably distribute wealth and decentralize economic power. At the same time, a decentralized economy is essential for the viability of cooperatives: allocating raw materials for local use assures their constant supply to cooperatives and reduces market uncertainty. Because cooperatives tend to serve local needs, there is also less uncertainty of product demand. The economic certainty created by cooperative enterprise will give local people a sense of economic security. Because of this they will support the cooperative system.

4) Only local people should work in and control local economic enterprises. Local people are best qualified to guide the development of their workplaces so as to promote their own economic well-being. Outside economic interests should not interfere with the local economy, and use of outside laborers should be avoided—especially if there is not full employment of local people. The economy should provide employment for local people, and ensure that their skills and potentialities are fully utilized. Opportunities must exist for employing educated people in the local economy so they are not forced to search elsewhere for work which utilizes their talents.

5) Essential commodities should be produced by local enterprises. Import of basic commodities should be restricted for a period of time in order to develop local industries and prevent an outflow of capital. Although locally produced goods may initially be inferior in quality, more costly, or less available, it is necessary to shelter their production in the initial stage. Otherwise, local industry will not develop, leading to decreased employment opportunities and control of the local economy by outside interests. If goods are locally produced, the economy will thrive, and capital will remain in the local area where it can enhance the prosperity of local people. Free trade advocates feel consumers should have the right to buy the best or cheapest products available.

PROUT gives greater importance to the right to be employed and have a stable, vigorous economy. Healthy economic development generally fosters quality of production. But if local commodities do not satisfy people’s needs, steps should be taken to improve their quality or decrease their cost.

Copyright PROUT Globe 2011

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