Distinguishing Features of the PROUT Economy

PROUT is based on different values and has different social objectives than does capitalism, and so its economic system will have characteristic differences. Summarized below are some distinguishing features of the PROUT economy. Socioeconomic Units Regional socioeconomic units would be formed on the basis of common cultural, geographic, social, and economic factors. Socioeconomic units having a regional affinity would be grouped into a federated political state. But while the locus of administrative authority would lie with the federation, self-determination over social and economic aspects of life would lie with the socioeconomic units, so that they could create and control their own developmental policies. Three-tiered Economy The productive economy would be organized into three types of enterprises: cooperatives, key industries, and small private enterprises. 1. Cooperatives. Cooperative enterprises would form the core of the economy. Except for a few key industries and for small private enterprises dealing with nonessentials, all production and service activities would be organized under worker cooperatives that are owned and controlled by their workers. Cooperatives increase worker motivation and job satisfaction because they give workers control of their enterprise and a stake in its profits. Where cooperatives have access to the necessary inputs of production — capital, entrepreneurship, skilled labor, and competent management — they out-perform private enterprises. Worker cooperatives are controlled by their worker members on the basis of one member, one vote. All members would own a membership share in the cooperative, giving them a financial stake in the enterprise. 2. Key industries. Strategic, large-scale industries, such as utilities or industries producing important raw materials, would be designated as key industries. Key industries would be controlled either by governmental or autonomous boards, but their internal workings would be managed as in a cooperative. Key industries would operate on a no profit, no loss basis; that is, the state would not subsidize their operation, nor would it extract profits.

and communications system capacity). These private enterprises would not be involved with producing or distributing staple commodities. without need of state subsidy. 4. sixth. and (d) steady increase in collective assets (such as roads. Sustainability. Cost of production. district. Planners should assure sustainable development by assessing the current and future needs of the community and the current and future availability of it resource base. Third. And. The economy would be organized in such a way that it continuously increases its productivity. Block level planning would consider in particular the following five factors. and not hoarded or squandered in unproductive ways. 1. Economic Planning Economic planning would take place at the central. common economic problems. Productivity. Second. and helps maintain sustainability. If planning is undertaken primarily on the block level. Purchasing capacity. planning authority would reside mainly at the local level. and the cost of producing a particular commodity would not exceed its market value. guarantees basic necessities for all. there must be: (a) availability of commodities according to local demand. Fifth. For this. local grass roots groups can play an active role in mobilizing human and material resources. but on the basis of geographic factors. (c) periodic increases in wages. and on this basis regulating the use of resources. Every economic enterprise must be economically viable. A major objective of planning would be to increase the purchasing capacity of each person. it will have the following benefits: First. . Block boundaries would not be determined on the basis of political considerations. socioeconomic requirements. Economic Decentralization PROUT’s model of development decentalizes economic power in local communities and regional socioeconomic units. planning will be more practical and give quicker results. local leadership can solve problems according to their own priorities. Small businesses would be privately owned. produces ample consumer goods. electrical supply. but. Decentralized development would follow five basic principles. Fourth. and common aspirations of the people. and local levels.3. Small private enterprises. planners can understand the problems of the area. 5. 3. unemployment can be more easily prevented. and full utilization of the productive units. Money would be properly reinvested. regional. a balanced economy can be established more readily. There would be maximum production according to the collective need. so far as is practical. Unit costs of production would be carefully determined. 2. The basic unit of planning for most purposes would be a local area called a block. Collective necessity. (b) stable prices. Planners would determine the current and projected needs of the community and form their developmental plan accordingly. This fosters economic equity.

lose the added value that comes from manufacturing finished goods. and everyday consumer goods prevents dependency on outside economies for essential commodities. And the economy should fully develop and use the skills and potentialities of local people.1. Only local people should work in and control local economic enterprises. Production should be based on consumer need. local people should process raw materials. In a consumption-based economy. Production and distribution should be organized primarily through cooperatives. not maximize profits. worker shareholdings. affordable. economies that export their raw materials. and changing markets. but there will be more circulation of money in the local economy. Capitalization Investment capitalization would be generated mainly at the local and regional levels. product substitution. The resources of a region should be controlled and utilized by local people. Essential commodities should be produced by local enterprises. not for workers from outside the region. The motive for economic activity should be to meet consumer needs. and designed for local tastes and requirements so that human material needs are properly met. Fourth. not profit. there is less uncertainty about product demand. 5. and purchasing capacity. standard building materials. 4. Cooperatives. and government grants. The local economy should provide employment for local people. not only will local people have their material needs better met. equitably distribute wealth and decentralize economic power. The advantages of local control and use of resource include: First. Smaller scale development can be capitalized through worker shareholdings. economies that are dependent on the export of raw materials are vulnerable to price drops from commodity gluts. Local production of staple foods. rather than exporting unprocessed resources. Local people are best qualified to guide the development of local enterprises. The economic stability created by cooperatives gives local people greater economic security. Because cooperatives tend to serve local needs. basic medicines. by their nature. jobs. Capital for large-scale development can come primarily from development bank loans. common clothing. and economic self-determination will be strengthened. excessive import of raw materials leads to drainage of 33capital that would have greater benefit were it to be circulated in the local economy. of good quality. Second. loans from cooperative banks. rather that first processing them. In a consumption-motivated economy goods and services are available. Third. Where practical. outside interests should not interfere with local economies. a local economy based on locally-controlled industries that make use of local resources33 can be planned in a way that assures economic security. and bonds issued by cooperatives or cooperative federations. capital will remain circulating in the local economy. And if goods are locally produced. 3. stimulating production. . 2. the local economy will be stimulated. using these processed materials to produce finished goods.

Minimum and maximum income levels should be set. Regional economies should be self-sufficient in the production of basic commodities. locally produced basic commodities would be protected from competition with cheaper goods produced in other regions. rewards should not be so large as to create unnecessary disparity in the society. which will help prevent inflation. as such taxes have greater impact on those with less disposable income and therefore increase economic disparity. All local enterprises would be able to conduct international trade. this will check its tendency to engage in excessive deficit spending. only finished products should be sold outside a region. If need be. The value of money is in its use. the minimum and maximum income levels would rise with rising purchasing power. The minimum level should be adequate to insure purchase of basic necessities and common amenities according to the prevailing standard. There should be global regulation of currencies so that they maintain standard values with respect to each other. . Trade in raw materials should be avoided. there should be free trade. Money Currency should be backed by bullion. and the range between the minimum and maximum incomes would be dynamically adjusted so as to balance worker motivation on the one hand with economic equity on the other hand.International trade Trade would be conducted in a manner that avoids large trade deficits and drainage of capital. Taxation The primary sources of government revenue would be taxes on the profits of enterprises. Except for basic commodities protected from foreign competition. incentives are essential to motivate workers to develop and use their full productive capacities. Over time. The maximum income level should balance society's need to maintain high worker motivation with its need to distribute wealth equitably. This will prevent speculative currency trading. so its circulation should not remain stagnant. as they encourage a black economy where earnings go unreported and are more expensive to administer. so long as they follow the regulatory trade policies established by the government administration. This will insure that the value added during the processing of resources will go mainly to the local economy. Income taxes would not be used. If the state is required to guarantee the value of money by issuing bullion upon demand. Nor should there be sales taxes on basic commodities. Incentives For the prosperity of society. At the same time.

This reduces the possibility of manipulation of prices. or the government. and bureaucratic inefficiency in the marketing of products that are necessary for consumers and producers. hoarding.Commerce Distribution of essential commodities would be done through consumer cooperatives. rather than through traders. The decentralization of production and marketing will reduce the opportunity for advertising campaigns designed to manipulate consumer demand. . middlemen. There should be a free flow of information about consumer products.

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