Proutist Economic Development by Dada Maheshvarananda

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Poverty is arguably the number one problem in the world today. Povertycauses not only much human suffering. It also contributes greatly tosocial conflict, war and environmental destruction.There are levels of poverty in all countries around the world.Interesting points to note are:1) New Zealand does have some poverty but its rate is less than 1%.2) The USA, the richest country in the world, has somewhat more povertythan China, which was considered until recently an underdevelopedagricultural country.3) Venezuela, which has far more wealth and natural resources thanKenya, has almost the same rate of poverty as Kenya.Poverty is clearly on the political agenda in Venezuela. PresidentChavez has an aim, shown through promises made during his electioncampaign in 1998, to remove poverty.Standard economics text books give various reasons (exceptneo-colonialism) as causes of poverty. Some relevant points:1) The poor generally do not have enough to consume, let alone to save.So the explanation of low rates of savings and investment is triviallytrue, but not helpful.2) Poverty and low education standards are tightly correlated. Theaverage child in Venezuela has 5 years of schooling. In Australia theaverage is 10, and in the USA 12 years. Poverty cannot be solved withoutincreasing education but is poor education the cause of poverty?3) While many argue that overpopulation causes poverty, there is goodevidence to believe that poverty causes overpopulation. And China with amuch higher population than the USA has less poverty.4) Countries in the equatorial belt tend to have lower per capita GDP,than temperate countries. It is generally agreed that tropical diseases,especially malaria, are a serious obstacle to economic development. Butthere are obvious exceptions. Singapore and Malaysia have developedremarkably in recent years, despite being tropical countries. Climate isnot an insuperable obstacle.5) Corruption has to be considered a factor in the poverty of somecountries. Consider the billions of dollars stolen by President Marcosof the Philippines and President Suharto of Indonesia.6) Some more honest text books of economics give due space to the longterm effects of colonialism. India for example, was one of thewealthiest countries in the world until the British arrived to plunder it.7) Neo-colonialism is just an extension of colonialism to modern timesusing different techniques to extract wealth. The WTO and the IMF arethe global institutions that administer neo-colonialism. Standardeconomics text books studied in Western countries do not generally evenmention neo-colonialism as a cause of poverty.From a Prout perspective, we need to be aware of the dynamics of povertyat all levels, global, national and local.Over the last few centuries the movement of wealth has been from themostly southern hemisphere countries to the two centres of imperialpower in the world today, Europe and the USA. In an analysis of imperialism, the relevant terminology is "the centre" to describe thecentral seat of power of an empire, and "the periphery" to describe the

countries from which wealth is extracted. Neo-colonialism is the modernpractice of imperialism and the dominant empire in the world today isthe USA. These concepts are required in order to understand thedistribution of poverty around the world.At the national level, the movement of wealth from rural areas intocities is a common problem in all countries, even rich countries such asa Australia. Here the cities may be considered "centres" of power towhich wealth is concentrated, and the surrounding rural areas are the"periphery". Rural poverty has become an increasing problem in Australiaover recent years, particularly since the introduction of neo-liberaleconomic policies over the last 20 years.Even within cities we observe the flight of wealth from poorer suburbsinto the elite suburbs - localism. In Sydney, Australia, the elitesuburbs enjoy ocean views and fresh sea breezes. The poorer areas of Penrith, Blacktown and Bankstown are known for lower education andhealth standards, crime and gang warfare. While it is natural that themore desirable inner suburbs will attract richer families, in recentyears this concentration of wealth in desirable suburbs has beenunnecessarily exacerbated by government policy. For example, increasingresources diverted to wealthy private schools and private hospitals inAustralia.The common factor at each of the three levels, global, national andlocal, is the bleeding of wealth. We may define bleeding of wealth asthe wastage or removal of wealth from a locality so that it isimpossible to maintain the capital base required for further development. Clearly the bleeding of wealth from a locality must bechecked if poverty is to be solved. But we must consider the three typesof capital, physical, human and social. Another way of thinking aboutthe bleeding of wealth is to consider its flip side - the concentrationof wealth. The extreme concentration of wealth and poverty go hand inhand.The levels of income inequality in countries of the world reflects ahuge social and economic disparity, eg South America. Income inequalityis a mechanism of wealth concentration within a nation, the flip side of which is poverty. The ratio used to measure income inequality is theaggregate income of the highest 10% of income earners divided by theaggregate income of the lowest 10%. These ratios are a measure of thepoverty gap, or the gap between rich and poor. Note that the ratios inSouth America are very high compared to a wealthy developed country suchas Norway. In New Zealand, the income ratio increased markedly after theintroduction of neo-liberal economic policies - compare the figures for New Zealand in 1986 and 2000. This increase was sufficiently noticeablythat it became an election issue. When the New Zealand figures arecompared with the South American countries, it is not hard to understandwidespread poverty in South America.On the global scale it is considered that imperialism is a technique of wealth concentration. The basic methods of imperialism have not changedmuch over 2000 years - but they have become more subtle and morepsychological! The Roman empire simply plundered peripheral countriesusing military power. It also received tributes and taxes throughcompliant local administrators selected by Rome. And of course slavery

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