PROUT Self Sufficiency

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PROUT Institute of AustraliaIn this presentation, we outline the features of a decentralisedeconomy. There are five main characteristics.So far we have discussed how poverty is caused by the bleeding of wealthfrom a community. Removal of poverty requires that an economy bestrongly linked to the whole of its community and environment. That is,it must be a people's economy, which is the answer to poverty. Thisrequires socio-economic units to function as the smallest communitiesthat have potential to be economically self-sufficient.An economy is a living system. In economic terminology, economicplanning attempts to maintain an internal balance in the form of constant supply of essential goods and services at constant prices,despite an external fluctuating global economy.Economic power can be differentiated from political power. Indeed, oneof the most important concepts in Prout is the idea of the separation of economic power from political power. This is similar to the notion of the separation of powers in a political democracy. That is separationof legislature, executive and judiciary. Better still, the audit officeshould also be wholly independent.Prout achieves separation of economic and political power by strivingfor economic decentralisation at the same time as recognising a need for political centralisation. Perhaps a good analogy is that of a footballmatch. The referee, like the politician, is responsible for setting therules and making sure that the rules are followed. However it is theplayers who decide on their strategies and who play the game.Economic decentralisation is Prout's strategy to achieve full employmentand to remove poverty. This is in stark contrast to the highlycentralised economies of the modern capitalist world and of communism.One defect of centralised planning is that it allows unscrupulouspersons to divert wealth into their own pockets. Another is that theplanners are seldom sitting in the localities for which they areplanning.The initial objective of a decentralised economy (a people's economy) isthe guarantee of minimum necessities for all persons. These include thefive basics of:- food (including water);- clothing;- housing;- medical care;- education.This is to be accomplished through increased purchasing capacity. Thisis a fundamental human right. But it is also a collective necessity,because the easy availability of minimum requirements (through adequatepurchasing capacity) will increase the all-round welfare of society.The first feature or requirement for a decentralised economy is thenotion of local economy. The purpose of identifying a local communityand its local economy is to strive for economic self-reliance. Let usassume that one type of local community is the nation of Venezuela.

However, in certain cases the principles of decentralisation can alsoapply at the lowest level, the third tier of government, being localgovernment.When contemplating economic self-sufficiency, the question arises aboutforeign investment. According to the neo-liberal agenda, economicdevelopment is not possible without foreign investment from wealthier nations. It is necessary to distinguish two kinds of foreign investment.The first kind is foreign portfolio investment (FPI) in the local stockexchanges, bond markets and in foreign currency trading. This has anelement of speculation. The second kind is foreign direct investment(FDI) in factories and productive activity.Prout is opposed to the former (FPI) but would, on an interim as neededbasis, accept the latter (FDI) under certain conditions. That is, in thecurrent environment, if foreign multi-national companies want to investin productive activity within a host economy they would be able to get areasonable return on their investment. In Prout it is called a rationalprofit. BUT the investment has to be in the interests of the hostnation. Also, it must be consistent with the local development plan andshould not allow local resources to be controlled by the investingcompany. In particular the project should be accompanied by technologytransfer. This is how Japan and China developed into powerful economicnations. The transistor was invented in the USA but the technology waslearned by Japan and developed with great success.It is essential that an investment arrangement should have a fixed lifeand fixed objectives and should not allow the investing company towithdraw its capital, at will, to the detriment of the local economy.When a person obtains a mortgage, and is not at fault, the bank is notallowed to return the next week and demand its money back. The mortgagecontract specifies regular payments of both interest and principal. Inthe same way, a FDI arrangement of a contractual nature should specifyappropriate allowable returns/earnings for a company and the originalinvestment amount.The current practice is that multinational companies (MNCs) continueextracting wealth from their investments indefinitely. Profit is soughtabove consumer welfare. If MNCs must operate in a host country, thenlike a bank loan, a FDI agreement would only permit, over a fixed number of years, the return of the invested wealth (or its equivalent) and areasonable rate of return based on an acceptable interest rate.Technology transfer and growth in the host economy should permit theinterest repayment without hardship.It is easy to find negative examples of foreign direct investment thatexist due to the profit motive and not having a focus on consumer welfare. There are few positive examples because in the capitalist worldall production is motivated purely by profit. The emphasis in adecentralised economy is, however, on meeting local needs first.The second feature of such a decentralised economy is that productionshould be based on consumption demand, not the profit motive. It shouldbe noted that the profits obtained from the junk food industry areobtained only because the external costs of declining public health arenot recognised or accepted by the private producers of junk food.

Instead they are borne later by taxpayer funded public health measures.The same applies to tobacco industries.Production focused around the consumption motive would, however, yieldbenefits for the whole community. The development of urban agricultureand green pharmacy crops in Cuba during the 1990s is a positive example.The third feature of a decentralised economy concerns cooperatives. P RSarkar, the founder of Prout, says that a decentralised economy cannotbe achieved without cooperatives and cooperatives cannot be achievedwithout a decentralised economy. Prout promotes cooperatives within its'three tier industry' framework (i.e. small private businesses;cooperatives as the norm; and key industries regulated and managed bylocal government authorities where essential services are concerned).The fourth feature of a decentralised economy has to do with localemployment. The question arises about who is a local person and who isa foreigner. Prout answers this question by invoking the notion of aperson who has identified their personal 'socio-economic interest' withthat of their local community. Such an identification would bedemonstrated by a contribution to the local community, taking upordinary or permanent residence and, equally as important, theapplication of one's money to primarily benefit the local community.Sarkar draws attention to the problem of floating populations in somecommunities. That is, the existence of large numbers of persons who earntheir money in one place but send it back to their families in their place of birth. This practice is detrimental to both the local community(which suffers a loss of financial capital) and the home community(which suffers a loss of productive labour).How local will local ultimately be? Local is a relative factor. In duecourse, as socio-economic units reach parity with each other, then over the course of time they will expand. When parity is achieved, thesocio-economic units merge. Eventually the whole world can be onesocio-economic unit and all persons could be considered 'local'.However, parity must be reached, before this is achievable.This fifth principle of economic decentralisation deals with trade(imports and exports). Prout discourages the import of commodities thatcan be made within a local community and in particular it discouragesthe import of foreign raw materials to promote local economicdevelopment. Rather Prout promotes the use of local resources to supportlocal development. The concept of food and medical sovereignty ariseshere. When Argentina considered defaulting on its international debt, itwas informed that this would result in a trade embargo. On the list of prohibited imports was insulin. How can a country adopt economic policesin its own interests when subject to this kind of blackmail?Sarkar advocates the use of tariffs (temporarily) to protect developinglocal industries. What if locally produced goods are inferior or moreexpensive to the imported ones? Then take immediate steps to improvequality and reduce costs. This is where technology transfer becomesimportant. Efficiency and quality will never improve if the industry isnot allowed to get off the ground.Note: cornflakes made in Chile appears on Australian supermarket shelves

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