Increasing purchasing capacity - Income or purchasing capacity?Increasing purchasing capacityTo effectively implement this, increasing the purchasing capacity of each individual is the controlling factor in a Proutistic economy. Thepurchasing capacity of common people in many undeveloped, developing anddeveloped countries has been neglected, hence the economic systems of these countries are breaking down and creating a worldwide crisis. Thefirst thing that must be done to increase the purchasing capacity of thecommon people is to maximize the production of essential commodities,not the production of luxury goods. This will restore parity betweenproduction and consumption and ensure that the minimum requirements aresupplied to all.1981 - Prout in a nutshell 13Income or purchasing capacity?Question: What do we want, increase in per capita income or increase inpurchasing capacity?Answer: Prout suggests that increases in per capita income are not asufficiently reliable and scientific index to determine the standard andprogress of a particular unit. Rather, this approach is misleading anddeceitful, because it refers to a simple mathematical calculation of total national income divided by total population. This does not givethe correct picture of the standard of living of the people of aparticular unit, as the wealth disparity in society is concealed. Per capita income shows the mean and not the variation of incomedistribution. If inflation is also considered, the reliability of per capita income is further reduced. On the other hand, purchasing capacityis the real index of how a person's economic needs can be met by their income. All Prout's plans and programmes in the sphere should be aimedat increasing the purchasing capacity of the people.Note that Prout stresses increasing purchasing capacity and not per capita income. Per capita income is not a proper indication of theincrease in the standard of living of the people because while peoplemay have very high incomes they may not be able to purchase thenecessities of life. On the other hand if the per capita income is lowbut people have great purchasing capacity they are much better off. Sopurchasing capacity and not per capita income is the true measure of economic prosperity. Everyone's requirements should be within their pecuniary periphery or purchasing capacity.People will earn their required purchasing capacity through work. Therewill be no unemployment in such as progressive-minded socio-economicsetup as local people on the local level will control the economy. Whenlocal people control the economy there is no chance of outsidersexploiting the local people. That local non-profiteering economy willdevelop self-reliance and it will be easy to keep everyone employed insuch a consumption-motivated economy. Consumption economy produces for consumption needs not for profiteering tendencies. Rational profitsfrom a business are distributed as wages, salary, bonuses, dividends toprovide proper purchasing capacity.
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