The Progressive
Utilization Theory (PROUT) is the basis for an economic system
which is an alternative to both capitalism and communism. PROUT was
conceived by P.R. Sarkar in 1959 who in the article below outlines
some of the basic features of a decentralised, cooperative economic
system built upon the principles of PROUT.
Guaranteed
Minimum Requirements and Purchasing Power
PROUT stands to
guarantee the minimum requirements of life, that is, food,
clothing, accommodation, medical treatment and education, to each
and every person. After the minimum requirements have been
guaranteed, the surplus wealth is to be distributed amongst people
with special qualities and skills, such as physicians, engineers,
scientists, etc., because these people play a crucial role in the
collective development of society. The quantum of these minimum
requirements should be progressively increased so that the standard
of living of ordinary people is ever increasing. The concept of
equal distribution is a utopian idea, a clever slogan to deceive
simple, unwary people. PROUT rejects this concept and advocates the
rational distribution of economic wealth. Such a system will
provide incentives to increase production. To effectively implement
such an approach, PROUT advocates progressively increasing the
purchasing power of each individual. In fact, the increase in the
purchasing power of each individual is the controlling factor in a
Proutistic economy. Because the purchasing capacity of the people
has been ignored in many undeveloped, developing and developed
countries of the world, economic systems are breaking down and
heading towards a crisis. To increase the purchasing power, the
production of essential commodities--not the production of luxury
goods--for consumption by the ordinary people must first be
maximized. This will restore parity between production and
consumption and will ensure that the economic needs of the people
are met.
The Co-operative
System
According to PROUT
the co-operative system is the best system as far as the production
and distribution of commodities are concerned. Co-operatives, run
by moralists, are the only safeguard against capitalistic and other
types of exploitation. Agents or intermediaries will have no scope
to interfere in the economy in the co- operative system. The main
reason for the failure of the co-operative system in different
countries of the world is rampant immorality which has been
perpetrated by capitalist exploiters so that they can maintain
their economic exploitation.
A co-operative
usually develops out of the collective labour and intellect of a
community who live within the same economic structure, who have the
same common needs and who have a ready market for the goods
produced on a co-operative basis. If these three factors are not
present, a co-operative cannot be developed. Properly managed, the
co- operative system will be free from the defects of individual
ownership, and through scientific methods it will be possible to
increase the quantum of production. The success of co- operative
enterprises depends on three factors - morality, strong
administration and the whole- hearted acceptance of the
co-operative system by the people. Co- operative enterprises become
successful in proportion to the degree that co-ordination between
these three factors is achieved. To encourage people to form
co-operatives successful co-operative models should be established
and people should be educated about the benefits of the co-
operative system. The latest technology should be used in the
co-operative system, both in production and distribution.
Appropriate modernization will lead to increased
production.
In the co-operative
system, managers should be elected from amongst those who have
shares in the co-operative. The members of a co-operative can get
dividends from the co- operative in two ways-- according to the
amount of land they have donated to the co-op, and according to the
amount of their productive, manual or intellectual labour. To pay
this dividend, the total production should be divided on a 50-50
basis--that is, 50% of the produce should be spent on wages and 50%
as a return on the donated land. Developmental plans should be
adopted to bring about equal development in all regions instead of
just a particular region, and local wealth and other resources and
potentialities should be utilized in this developmental plan. Thus,
local people should get first preference in participating in the
development of cooperative enterprises. PROUT has given an ideal
solution to the controversial problem of the ownership of land by
advocating the phase-wise socialization of land through
agricultural co-operatives. This socialization programme should be
implemented step by step in adjustment with the economic
circumstances of the local area. During this process, the ownership
of land should not be in the hands of any particular individual or
group.
Industrial
Development
PROUT has divided
the industrial system of production into three categories--key
industries, managed by the immediate or regional government,
co-operatively managed medium scale industries, and small scale
privately owned industries. This system will not create any
confusion or duplication between the government and private
enterprise. An important aim of PROUT is to reduce the excessive
pressure on agriculture presently occurring in many undeveloped and
developing countries of the world. Not more than 40% of the people
should be employed in agriculture under any circumstances. In
villages and small towns a large number of agro- and agrico-
industries should be established. In addition, agriculture should
be given the same status as industry so that agricultural workers
can realise the real value of their labour. PROUT's wages policy
advocates that wages need not only be received in the form of
money. Wages may also be received in the form of essential goods
and services. This component of wages should be gradually increased
in relation to that portion of wages received as money. PROUT also
supports maximum modernization in industry and agriculture. This
can be achieved by introducing the most appropriate and scientific
technology. Yet modernization and rationalization should not lead
to increased unemployment. While there should always be an effort
to maintain 100% employment, this is not possible in the capitalist
systems. However, in PROUT's collective economic system full
employment will be maintained by progressively reducing working
hours as the introduction of appropriate technology increases
production.
Decentralisation
In order to
implement the economic ideas outlined above, PROUT advocates a new
and unique approach to decentralisation. It recommends the
formation of socioeconomic groups or units throughout the world.
These socio-economic groups should be formed on the basis of
factors like common economic problems, uniform economic resources
and potentialities, ethnic similarities, common geographical
features, and the sentimental legacy of the people, which arises
out of common socio-cultural ties, like language, cultural traits,
etc. Each socio-economic group should be free to chalk out its own
economic plan and the methods of its implementation. Within each
socio-economic group there should also be decentralised planning
which PROUT calls block-level planning.
A block is the
lowest level planning authority in PROUT's socioeconomic system. In
PROUT's system one political unit, like a state or a province, will
normally contain a number of socio-economic regions. For instance,
the state of Bihar in India may have five socioeconomic regions,
such as Angika, Magahii, Maethilii, Bhojpuri and Nagpuria. Based on
the aforesaid factors, the whole of India may today be divided into
approximately forty- four socio-economic units. These units should
be guaranteed the full freedom to achieve economic self-
sufficiency through the implementation of their own economic
planning and policies. If these socio-economic groups start a full
scale programme to achieve all-round socio-cultural and economic
emancipation, there will be a widespread socio- economic awakening
in the whole of India. All people-- regardless of whether they are
rich or poor, old or young, educated or illiterate, inspired by a
common anti-exploitation sentiment, will start a powerful movement
for socioeconomic liberation.
If those living
within one socio-economic unit merge their individual
socio-economic interests into the collective socio- economic
interests, the outflow of economic wealth from any region will be
stopped and exploitation will be completely rooted out. In PROUT's
system the right of employment for the local people will be fully
guaranteed, and the employment of local people will take precedence
over non-local people. Where there are no opportunities for proper
economic development, surplus labour develops. In fact, in all
undeveloped economic regions surplus labour occurs, and when this
surplus labour migrates to other regions, the surplus labour area
remains undeveloped forever. Wherever there are surplus labour
areas, provision should be made to employ the local labour
immediately. While providing employment to local people, the local
sentiment should also be taken into consideration. Maximum agro and
agrico-industries should be established on the basis of the socio-
economic potential of the region. Also, various other types of
industries should be established on the basis of the collective
needs of the region.
This approach will
create enormous opportunities for new employment. Through such an
employment policy, increasing the standard of living of the local
people will be possible. The modernization of industry and
agriculture can be readily introduced in a decentralised socio-
economic system and the goods that are produced can be easily
marketed. If a socio- economic unit develops its economic
potential, per capita income disparities in different regions will
be reduced and the economic position of undeveloped regions will be
raised to that of developed regions. Economic prosperity can be
enjoyed by each and every person. When every region becomes
economically self-sufficient, the whole country will rapidly
achieve economic self-sufficiency.
Another unique
feature of PROUT's decentralised economic system is its guiding
principles of planning. According to PROUT, effective economic
planning should be based on four fundamental factors--
productivity, cost of production, purchasing power and collective
necessities. Other related factors are natural resources,
geographical features, climate, river systems, transportation,
industrial potentialities, cultural heritage and social
conditions.
Trade and
Commerce
PROUT also has its
own unique features in trade, commerce, taxation and banking. The
distribution of essential commodities should be done entirely
through consumer co- operatives, not through the government,
businessmen or different levels of "middle men", thus leaving no
scope for manipulation by profiteers. As far as possible, barter
should be the basis for trade between self-sufficient
socio-economic regions. Essential commodities should be entirely
tax free except for some special circumstances. Income tax should
be abolished, and instead taxes should be levied at the starting
point of production. The banking system should also be managed by
co- operatives, and the central or federal government bank should
be controlled by the immediate government or the local government.
In the productive economy of PROUT, which aims above all else to
increase the purchasing power of the people, it will be easy to
control price levels through the co- operative system and
decentralisation at all levels.