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Beyond Collectivism and Individualism: StructuralFeatures of the Prout Economy
The author covers the salient features of Prout, including socio-economicunits, three-tiered economy, cooperatives, key industries and small privateenterprises. The critical feature is that all aspects of the economy aredecentralized in the local people decide their own economic future!
by Trond OverlandThere are several distinguishing structural features of Prout's economic system.Brief description of these follows.
1) Socio-economic units.
Regional, self-sufficient socio-economic units shouldbe formed on the basis of common cultural, geographic, social and economicfactors. These socio-economic units may be affiliated in a federated system, butthey should possess sufficient self-determination in their social and economicsectors to create and control developmental policy.
2) Three-tiered economy.
The commercial economy should be organized intothree types of enterprises: cooperatives, key industries, and small privateenterprises.
a) Cooperatives.
Cooperative enterprises should form the core of the economy.Except for a few large-scale, key industries and small private enterprisesproducing nonessentials, all production should be organized under worker ownedand controlled enterprises.Cooperatives increase worker motivation and job satisfaction because they giveworkers control of their enterprise and a stake in its profits. Where cooperativeshave had access to the necessary inputs of productioncapital,
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 entrepreneurship, skilled labor, and competent managementthey out-perform
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 private enterprises.Cooperatives are controlled by their worker members on the basis of onemember, one vote. All members must purchase a membership share in thecooperative. This initial capital contribution gives each worker member a financialstake in his or her enterprise. Workers must sell their membership share back tothe cooperative upon leaving. Through this system, workers ownership rights
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 are based on their functional role as workers, and not on the basis of their capitalcontribution.
b) Key industries.
Very complex, capital-intensive industries, such as utilities, or industries producing raw materials or goods which are strategic to the regionaleconomy, should be designated as key industries. Because they play a crucial
 
role in stimulating production and development for the region as a whole, theyshould come under community control, not worker control. The cooperativesystem is also inappropriate for key industries as they are generally too large tobe efficiently managed by their workers.Key industries should be controlled either by the local or regional government, or (preferably) by an autonomous board. The board or local government to overseeoperations would hire a plant management team. Participatory teammanagement techniques should be used to insure maximum worker involvement.An effective incentive system should be used to further motivate productivity.Key industries should operate on a no profit, no loss basis. The state should notsubsidize their operation, nor should it extract profits.
c) Small private enterprises.
Small businessesthose having a maximum of 
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 about 5-8 employeescan be privately owned. Private enterprises should not be
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 involved with producing or distributing staple commodities. Salaries of workersand income of owners should be subject to minimum and maximum standardsestablished for the region.
3) Planning.
Economic planning should take place at the central, regional, anddistrict levels. But, so far as is practical, planning authority should reside at thelocal level. The most basic unit of planning for most purposes is the district.District boundaries should not be determined on the basis of politicalconsiderations, but on the basis of geographic factors, socio-economicrequirements, common economic problems, and common aspirations of thepeople.If planning is undertaken primarily on the district level, it will have the followingbenefits: planners can better understand the major and minor problems of thearea; local leaders can solve problems according to their own priorities; planningwill be more practical and more readily implemented; local organizations can playan active role in mobilizing human and material resources; unemployment can bemore easily prevented; and a balanced economy can be more readilyestablished.District level planning should be undertaken on the basis of the following guidingprinciples.
a) Cost of production.
Unit costs of production (including environmental costs)should be carefully determined, and the cost of producing a particular commodityshould not exceed its market value. Every economic enterprise must beeconomically viable, and without need of state subsidy.
b) Purchasing capacity.
A major objective of planning should be to increasepeoples purchasing capacity. For this, there must be: (1) availability of 
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commodities according to local demand, (2) stable prices, (3) periodic increasesin wages, and (4) steady increase in collective assets (such as roads, energygeneration systems, and communications infrastructure).
c) Productivity.
The economy should be organized in such a way that it has thecapacity to continuously increase its productivity. There should be maximumproduction according to the collective need, and full utilization of the productiveunits. Money should be properly invested, and not hoarded or squandered inunproductive ways.
d) Collective necessity.
Planners should determine the current and projectedneeds of the community and formulate their developmental plan accordingly.
e) Sustainability.
No economic development project should be undertakenwhich decreases the productive capacity of the environment or the vitality of ecosystems.
4) Capitalization.
Investment capital should be generated from within the region,or through interregional trade. Capital for large scale development can comefrom developmental bank loans, worker shareholdings, and government grants.Smaller scale enterprise can be capitalized through worker shareholdings,private investment, and loans from cooperative banks.
5) Trade.
To avoid trade deficits and the loss of currency, interregional andinternational commerce should be conducted on a barter basis where possible.Locally produced basic commodities should be protected from competition withcheaper goods produced in other countries. To protect local employmentopportunities, international and interregional trade in raw materials should beavoided; only finished products should be sold outside a region. Regionaleconomies should be largely self-sufficient in the production of basiccommodities. Except for commodities protected from foreign competition, thereshould be free trade.
6) Taxation.
The primary sources of government revenue should be value addedtaxes and excise taxes placed on non-essential goods and services. Payrolltaxes can be used to finance social security expenditures. Income taxes are notrecommended, as they encourage a black economy where earnings gounreported. Nor should there be taxes on sales of basic commodities, as suchtaxes have greater impact on the poor and thus increase economic disparity.
7) Trade unions.
Workers should have the right to organize independent tradeunions. Control of the unions should remain with workers, not with political partyinterests. Unions should give as much importance to making workers consciousof their responsibilities as they do to protecting their interests. In small andmedium sized cooperatives, there will be less need for worker representation byorganized trade unions, as these are worker managed enterprises. But in large
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