Toward an Optimum Level of Income Inequality – II

Mark Friedman

Chapter II: The Philosophy of Inequality and the Proutist Challenge

There is little that has more impact on income and wealth distribution in a society than the attitudes of that society toward the institution of private property. The philosophical origins of attitudes toward private property which are dominant in the U.S. today will be discussed in this chapter, along with the rationale for the proutist challenge.

Locke and the Justification of Private Property

A wide range of income and wealth inequality is tolerated in the United States, and has been since the nation’s inception. To suggest that such inequality does not serve our society well contradicts a long-standing tradition and conflicts with deeply ingrained habitual patterns of thinking. Central to this tradition is an unquestioning acceptance of the absolute validity of the institution of private property.

Early philosophical articulation of modern attitudes toward private property can be traced to the seventeenth century writings of John Locke. While he acknowledged that the bounties of the earth in their natural state were common to all, when transformed by human labor they became private property:

Though the earth and all inferior creatures be common to all men, yet every man has a “property” in his own “person.” This nobody has any right to but himself. The “labour” of his body and the “work” of his hands, we may say, are properly his. Whatsoever, then, he removes out of the state that Nature hath provided and and left it in, he hath mixed his labour with it, and joined to it something that is his own, and thereby makes it his property (quoted in Lekachman 1976, 59).

What is immediately striking about this passage is the duality of its viewpoint. God provides the goods of Nature, and Man appropriates them for his use. But God is separate from Nature, as is Man. Man as an individual, distinct and separate from his fellow men, is also emphasized.

Here is an idealized view of the primitive state of nature and early society that was typical of the social contract thinkers of Locke’s era. These fanciful accounts served as convenient premises to explain and justify the institutions the thinkers were familiar with (Mini 1974, 32). Needless to say, Locke’s account had little to do with the reality of his present or of primitive times. Primitive hunting, gathering, and to a lesser extent craft production were collective efforts. Particular fruits of labour could not be easily attributed to a single individual. By Locke’s own time in his country there were few unowned spaces or natural resources that any person could “mix his labour with” to create something of his own.

Leckachman points out that up to this point, Locke’s philosophy is fairly egalitarian. As he quotes Locke, the doctrine could even be considered environmentally sensitive by contemporary standards:

As much as any one can make use of to any advantage of life before it spoils, so much he may by his labour fix a property in. Whatever is beyond this is more than his share, and belongs to others. Nothing was made by God for men to spoil or destroy…As much land as a man tills, plants, improves, cultivates, and can use the product of, so much is his property (1976, 60).

Here is recognition of the illogic of possession beyond what can be reasonably used or consumed. But Locke goes on to argue that inequality is necessary and inevitable as society evolves. As both people and property goods increase, property must become more removed from the labour which originally produced it. Society codifies systems of exchange and inheritance to regulate the flow and possession of goods. So “private men…by compact and agreement, settled the property which labour and industry began (Lekachman 1976, 60).”

The development of money in particular contributed to inequality. Also “by compact and agreement” humans conferred value to money. By this act they gave consent “to a disproportionate and unequal possession of the earth.” Money could not spoil, negating the necessity for the limits argued in the passage quoted above: “…a man may, rightfully and without injury, possess more than he himself can make use of by receiving gold and silver, which may continue long in a man’s possession without decaying for the overplus (Lekachman 1976, 60-61).”

While the influence of Locke gradually declined in Europe in the century following his death, his social contract thought, and particularly his defence of property, took firm root in the new American republic (Sibley 1970, 413). Property was further seen as the guarantor of liberty — only citizens with their own property and means of livelihood could resist usurpations by the state. Even today the American reverence for the institution of private property may be unequaled anywhere in the world. This is evidenced by an aversion to taxation for government services and amenities, far greater than any seen in other advanced industrialized countries.

One need not look long to find flaws in the Lockean justification of private property. It is true that money itself cannot spoil, but it can allow the purchase of tangible goods in excess of what an individual can use. Furthermore money must be seen as an economic resource that can be hoarded or squandered, with opportunity costs of great consequence to the well-being of society. If one accepts that possession of property is crucial to defend liberty it becomes all the more important that social mechanisms be in place to ensure property is fairly and rationally distributed among all. But this may require compromising the sanctity of the private properties of some individuals (Sibley 1970, 511).

PROUT and Property under Cosmic Inheritance

Deriving from an entirely different epistemology, the ideological system of PROUT challenges the moral validity of private property with the doctrine of Cosmic Inheritance.

In expounding his doctrine, Sarkar begins similarly to Locke, affirming the joint right of all to the gifts of the Creator:

We cannot create anything original…We can change their form and create chemical compounds or physical mixtures… Rudimental factors cannot be created by human beings. Hence ownership lies with the Cosmic Entity and not with the individual. We can only use them (Sarkar 1987, 1).

But soon Locke and Sarkar part ways. Where Locke depicts individuals rightfully taking as their own the resources of the universe by adding their own labour, rightful ownership never leaves the Creator in Sarkar’s system. Human rights to the material world are usufructuary, not those of ownership. The Divinity remains ever-engaged with His creation, inspiring and attracting its individual forms to move toward the unity and perfection of His own being. Physical resources are divided not as by competitors, or even as by contractual partners, but as would be done in a loving family which needs to use its limited resources in a way that best aids the development of each member of the family:

This universe is our common patrimony. Ours is a universal joint family, Supreme Consciousnes being Supreme Father. Like members of a joint family we should live with the policy of “Live and let others live.” The exploited and unexploited potentialities of the world do not belong to any particular person, nation or state. They can only enjoy them. We are to utilize all the mundane and supramundane wealth accepting the principle of Cosmic Inheritance. (Sarkar 1987, 1)

The implications for the kind of economy that arises from this perspective are several. First, in the Sarkarian view the Creator is not separate from the creation, but permeates it and resonates in every particle of it — the Creator and creation are inseparable. There are no inanimate objects, but all is vital with latent consciousness. Human labour need not mix with the things of nature to confer on them value, they have inherent value simply by reason of their existence, or as Sarkar puts it, they have existential value (as opposed to utility value) (Sarkar 1982, 63). Humans do not have the right to destructively exploit plants, animals, and other materials, with no regard for their well-being. The Creator invites humans to use, but not abuse.

Personal property may be recognized as a social convenience, but its absolute moral validity is not recognized. A scarce productive resource, not being owned individually, cannot be used however an individual who finds herself in possession of it likes, according to arbitrary individual standards of utility. Indeed, standards must be defined and policies determined for utilizing the resources and distributing them in order to ensure that they provide maximum benefit for all members of the universal family (i.e., ensure the growth and development of the potentialities of the individual.)

Motivations that drive the economy are no longer simply to accumulate as many material goods as possible, as is assumed in our present economy, and in the Lockean model of private property. We don’t own the vehicle that takes us on life’s journey — we drive a borrowed car. We are grateful to the Owner for providing it for us and recognize that He will be upset if we misuse or damage it. And we need to keep it in good shape so that others in the family can use it. Personal actions are aimed at character growth rather than material growth; development of talents and potentialities, growth in wisdom and knowledge, expansion of consciousness, and spiritual realization. But in keeping with the family metaphor, this growth does not occur under conditions of self-absorption, but in an atmosphere of communitarian concern, with each person helping the other attain their higher goals — just as in a healthy family where all cheer on and help each other attain their potentialities.

Taking the family metaphor still further, it does not exclude all materialism. Every child in every family likes to receive gifts. But wise parents will provide gifts that are not only enjoyed, but encourage a child’s creative and developmental growth. Gifts may also be given as rewards for outstanding accomplishments.

The careful reader can see that these implications of the doctrine of Cosmic Inheritance permeate the principles guiding a Proutist economy that are described in the next section.

Principles Guiding a Proutist Economy

The subject of this paper is efficient and equitable income distribution. But income distribution in any system cannot be understood without seeing how use and distribution of all resources are prioritized. Since a proutist context will be assumed in the model of ideal income distribution to be introduced later in this paper, it will be helpful to be aware of some of the guiding principles of PROUT.

Subjects dealt with here are 1) minimum necessities, 2) the theory of atiriktum, or incentive, and 3) the five fundamental principles of PROUT. These were first introduced by Sarkar in the late 1950s in the last chapter of a book entitled Ananda Sutram. The book was written in the traditional Indian Sanskrit sutra form, which consists of concise aphorisms followed by explanatory commentaries. Here I will give translations of the relevant aphorisms (or sutras), and explain their importance to our subject.

1) “The minimum necessities of all should be guaranteed in any particular age (Sarkar 1987, 23).”

This must be the primary function and duty of any economy. Without the necessities of life — food, clothing, medical care, housing, and education — human beings cannot progress to achieve individual potentialities or develop a high level of culture. Nor can they undertake rigorous spiritual disciplines which can bring their minds to the state of supreme bliss of union with the Infinite Consciousness, which Sarkar would regard as the ultimate goal of individuals and society.

The reasoning here is not unlike that developed by Abraham Maslow in his humanistic psychology (Friedman, 1977). Maslow established a hierarchy of human needs. From lower to higher, they are physiological, safety, belongingness and love, esteem, and self-actualization. Lower needs must be met in order to progress to meeting higher needs. At the level of self-actualization individuals have most physical and psychological needs met and are free to be altruistic and to develop their higher potentialities. Above this level is what Maslow called the transpersonal. Activity here is purely spiritual, characterized by meditative introspection, perfect contentment, complete unselfishness, feelings of harmony and oneness with the universe, and experience of higher states of consciousness. According to Maslow, using this model it is possible to determine “better” or “poorer” cultures, the better ones gratifying all basic human needs and permitting self-actualization (Maslow 1968).

Sarkar stresses that a healthy economy and society require that the basic necessities not be distributed directly by any official agency. Rather they should be purchased in the marketplace with income earned in useful employment. The government must have a policy of one hundred percent employment, with a minimum wage set at a level adequate to purchase the necessities. It should also be understood that the standard for minimum necessities will change with time and place.

2) “The surplus goods and services, after distributing the minimum necessities, are to be given according to the social value of the individual’s production (Sarkar 1987, 23).”

After an economy is able to provide the minimum necessities to all, it will have to decide how to distribute the remaining surplus. To distribute it equally would violate the laws of Nature, argues Sarkar: “Diversity is the law of nature and uniformity will never be…Those who want to equate everything must fail, for this is unnatural (1987, 22-23).”

Neither does Sarkar accept the communist ideal: “‘Serve according to your capacity and earn according to your necessity’ sounds good to the ears, but will reap no harvest in the hard soil of the world (1987, 24).”

Rather, the surplus “will have to be distributed among talented people according to their merit.” This surplus that is used as an incentive to coax greater service for society from the especially capable is known in proutist economics by the Sanskrit word atiriktum. Atiriktum is given in the form of salary, but that is not its only form. Since its purpose is to increase the capacity of those with high potential to benefit society, atiriktum can take the form of special task-related priviledges. For example, a talented researcher may be given access to expensive specialized equipment, such as an electron microscope, or a particularly effective and selfless social service worker may be offered more staff to work under her.

In an article published shortly before his death in 1990, entitled Minimum Necessities and Maximum Amenities (Sarkar 1989, 31), Sarkar expanded on the relationship between minimum necessities and amenities offered the meritorious. He stressed that even with the minimum necessity rule, people should not be left with a bare-bones existence. While amenities need to be provided to the meritorious elite, efforts should be made to maintain the common people at an economic standard that is appropriate for that time and place and allows what most consider to be a reasonably dignified and care-free life.

While Sarkar does not accept equality as an ideal, he insists there must be limits to inequality. As there is a minimum wage, Sarkar also proposes a maximum income. Efforts should be made to close the gap between the two by increasing the minimum.

Sarkar has not defined the meaning of the term “social value” in the aphorism above. In the opinion of this author the connotation is normative, and does not necessarily imply simply technical valuations based on marginal costs, marginal revenue products, scarcity, etc., although those factors may enter into valuation.

3) The following five sutras define the principles by which resources are distributed under PROUT. Together they comprise what are known as the five fundamental principles of PROUT  (Sarkar 1987, 24-28). A unique aspect of proutist thought brought out in these sutras is that resources, human and non-human, are recognized to be trifarious in nature, comprised of physical, psychic, and spiritual qualities.

“No individual should be allowed to accumulate any physical wealth without the clear permission or approval of the collective body.”

This sutra recognizes that physical resources are scarce; hoarding or misusing any resources necessarily diminishes opportunities for others. Accumulating material wealth is inescapably a social act. Letting wealth sit idly rather than investing it directly reduces the opportunities for the wealth of others in society. On the other hand, the nature of investments made in a community also has a direct bearing on the quality of life there. The community must have a say in how resources are invested. Presumably this principle would be implemented through community investment boards that would give permission for raising and investing funds for specific purposes.

Limits on incomes that are in excess of what can normally be consumed help alleviate the problem discussed here. PROUT proposes cooperative banks as the preferred medium for saving and disbursing investment funds.

“There should be maximum utilization and rational distribution of all mundane, supramundane, and spiritual potentialities of the universe.”

Maximum utilization means to make full use of resources at human disposal, with both maximum economic and mechanical efficiency. It is the conviction of PROUT that all can be maintained at a successful standard of living if resources are used intelligently. PROUT agrees with the late R. Buckminster Fuller when he said, “We have enough technological know-how at our disposal to give everyone a decent life, and release humanity to do what it is supposed to be doing — that is, using our minds, accomplishing extra-ordinary things, not just coping with survival (quoted in Friedman, 1977).”

But intelligent use is the key. As the saying goes, we have enough for everyone’s need, not everyone’s greed.

Coming back directly to the topic of our paper, excessive wealth concentration has much to do with poor utilization of the earth’s resources. For example in Third World countries where most land is held by an elite few, it often sits idle or is used to produce profitable exports. Most rural residents are forced to work marginal land, with dire ecological consequences.

Waste of supramundane, or intellectual-oriented, resources occurs, for example, when people are not educated, or are denied opportunities to contribute ideas because of racial or sexual discrimination. One cannot help but wonder what delights would be brought to human life if the creativity employed in advertising to convince us to purchase what we don’t need were instead directed in humanly beneficial directions. The same can be wondered about the engineering skill now used in military design. The spiritual potentialities within each human being, with their capability of bringing peace, harmony, wisdom, wholeness, and lasting happiness to human life, remain undiscovered in materialistic cultures. Mystics of all cultures have made it the goal of their lives to realize this inner treasure, and have developed disciplines and methods to accomplish this.

Rational distribution refers to the system of atiriktum explained above: “…apart from meeting the indispensable minimum necessities of all, the necessities of the meritorious people and those with special requirements must also be met (Sarkar 1987, 25).”

“There should be maximum utilization of the physical, metaphysical and spiritual potentialities of the unit and collective bodies of human society.”

This sutra affirms the interrelatedness of individual and collective well-being. Healthy individuals make up a healthy society and a healthy society fosters the development of healthy individuals. According to PROUT there is no inevitable conflict between individual and collective interests. Rather, their true interests are shared.

The results of excessive individualism can be seen in the breakdown of society now occurring in the inner cities of the U.S. In keeping with the dominant ideology of individualism, most seek to add comfort and wealth to their own lives while ignoring the needs of others. When desperate and resourceless people resort to crime and drug use until it reaches a scale that threatens the safety of all, the political system still refuses to address the underlying problems and opts to build more jails. The crime is seen as an individual moral failing.

Neither does this sutra support abandoning all individualism for the supposed good of collective society. The the demise of communism has amply demonstrated the danger of excessive collectivism. Instead of an ideal society, communism has brought inefficiency while stealing all joy from life, making life mechanical.

The importance of the concept of common individual and collective good behind this sutra to income distribution is obvious. Where there is excessive income and wealth concentration it is not possible to channel resources for the common good.

“There should be a proper adjustment amongst these physical, metaphysical, mundane, supramundane and spiritual utilizations.”

We have seen that PROUT rejects notions prevalent in neoclassical economics, that resources should be distributed and used in accordance with absolutists ownership rules and individual utility decisions. In the commentary for this sutra Sarkar defined alternative criteria for deciding how to use resources when competing possibilities present themselves.

Here physical and metaphysical potentialities refer to those of the individual and society, or human resources, while mundane and supramundane refer to the potentialities of the rest of the created universe. Of the kinds of resources mentioned, the spiritual is most rare and valuable. Metaphysical and supramundane potentiality, having to do with the psyche and intellect, are more rare and valuable than mundane and physical potentialities. Where there are competing uses for any resource the more rare and valuable quality of the resource should be used.

A true saint who is capable of imparting spiritual wisdom is certainly a rarity in today’s world. She may be capable of doing tasks requiring intellect such as research or design, and may be capable of physical labour. But to occupy most of her time in such intellectual or physical labour would be a tragic waste for society. She should be allowed to spend her time with her meditation and in teaching others.

For another example, an area with inspiring scenic beauty would find preferable use as a park rather than a mineral mine.

Sometimes market outcomes are the same as proutist utilization criteria would determine, but often they are not. Where they are not PROUT would support intervention in the market. Where concentrated wealth rules markets outcomes consistent with PROUT are unlikely.

A. C. Pigou, one of the first economists to write extensively on the problems of income distribution, described well the more rational use of resources that results when income inequality is lessened:

If income is transferred from rich persons to poor persons the proportion in which different sorts of goods and services are provided will be changed. Expensive luxuries will give place to more necessary articles, rare wines to meat and bread, new machines and factories to clothes and improved small dwellings; and… other changes of a like sort (Pigou 87).”

“The methods of utilization should vary in accordance with the changes in time, space, and person, and the utilization should be of a progressive nature.”

This sutra acknowledges that change is constant, and affirms that it is better to embraces it and direct it rather than fear it. Technological progress can free human minds and hands for higher pursuits.

It is income and wealth concentration that often lead to the negative consequences of technological change that people often fear. Individuals with great wealth can control the direction of research, and use that power to increase their wealth still more. Again, this market outcome may in some cases be beneficial for society, but often is not. Production technologies designed to profit the few often result in unemployment and environmental degradation.

Toward an Optimum Level of Income Inequality – III

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