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Date: Sat, 18 Jun 1994 11:15:15 -0400 (EDT)
From: PNEWS <[EMAIL PROTECTED]>
Subject: [PROUT] A New Model of Development
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/* ---------- "PROUT: A New Model of Development" ---------- */
PROUT: A NEW PARADIGM OF DEVELOPMENT
by Ron Logan
This report presents a conception for the economic development of
Khabarovsk based on PROUT is a new socio-economic philosophy which
presents an alternative conception of economic development. The
underlying values of PROUT are clearly distinguished from those of
both Marxist-Leninist communism and liberal capitalism. Because of
differences in core values, the structural features of PROUT's
economic system differ from both Marxist command economy and
capitalist free market economy. At a time when the command system
has been rejected and the free market system has proven
detrimental to environment and community, PROUT's alternative
paradigm of development deserves consideration.
Part 1 -- Prout Compared with Capitalism and Communism
To distinguish PROUT clearly from communism and capitalism, the
significant differences between these respective systems are
reviewed below.
1) Human development. Human development under communism
is primarily concerned with the political and economic spheres of
life. Under capitalism there is a pluralistic expression of
personal freedom, with no clear conception of human potentiality.
PROUT promotes the integrated development of the full human
personality.
2) Freedom. Human liberty under communism is limited by
the primacy of the interests of the state Under capitalism, a
licentious freedom of expression is permitted, but not a freedom
from want and material insecurity. In practice, capitalist
societies will restrict freedom of expression when this expression
challenges the interests of capital. PROUT grants full freedom of
psychic and spiritual expression, but recognizes the need for
society to place limits on individual hoarding of wealth. Without
this limitation, collective interests will be violated and
universal freedom from want cannot be guaranteed.
3) Privileged interests. Communism privileges the
interests of the party and state. Capitalism gives primacy to
property rights, and thus privileges the class controlling capital
PROUT gives central importance to promoting the common welfare
while protecting ecological integrity.
4) Progress. Both communism and capitalism regard
material development as the basis of progress. PROUT defines
progress as the increase in inner fulfillment of individuals.
While this is primarily a spiritual conception of progress, PROUT
recognizes that material development is necessary as a foundation
for seeking spiritual fulfillment.
5) Culture. Communism compels culture to be consistent
with state ideology. Under capitalism, mass culture primarily
serves commercial interests. As a result, it is creative but not
authentic, energetic but often destructive of higher values.
PROUT sees need for culture to emerge out of regional and ethnic
experience, and for these diverse cultures to instill values which
give empower the human psyche.
6) Motivation. Communism emphasizes income equality at
the expense of individual productivity. Capitalism's system of
incentives motivates high productivity, but the excess of its
monetary rewards wastes collective wealth, encourages greed, and
disrupts social unity. PROUT strives for balance: maximizing the
efficacy of incentive while minimizing social inequality.
7) Environment. Both communism and capitalism lack a
clear value context for environmental protection. PROUT has
adopted the value framework of neo-humanism, which affirms the
inherent, existential value of all life. Both communism and
capitalism are unsuited to sustaining environmental integrity
because they emphasize short term gain of profit or productivity
and ignore long term costs of environmental degredation. PROUT's
planning system aims to create ever higher orders of balance, and
therefore inherently protects biodiversity and promotes ecosystem
vitality.
8) Planning. Under communism, economic planning is highly
centralized and controlled by the state. Capitalism centralizes
the major part of economic planning in the hands of huge,
transnational corporations. PROUT decentralizes planning authority
to the level at which people are most aware of economic problems
and potentialities, and therefore best able to plan for their
common welfare.
9) Labor. Workers in both communist and capitalist
economies are alienated due to lack of ownership or control of
their workplace. PROUT's enterprise system is based on worker
participation in decision making and cooperative ownership of
assets--conditions which increase motivation and enhance
possibilities for personal fulfillment.
10) Economy. Communism's command economy is responsive to
production quotas. Capitalism's free market economy is profit
motivated. PROUT's economy is consumption oriented. It seeks to
increase in consumer purchasing power and availability of consumer
goods as the means for maintaining economic vitality and meeting
people's amenity needs.
Part 2 -- Principles of Economic Decentralization
In both capitalism and communism there is economic centralization.
Capitalism centralizes economic control in the hands of a few big
capitalists, while communism centralizes control in the hands of
party-dominated planning bodies.
Centralized economies have failed to guarantee ever-increasing
purchasing capacity, or to erradicate exploitation and want.
Economic planning loses efficacy if undertaken by people who are
remote from productive activity. Planning must start at the level
where the expertise of local people can solve economic problems
and create prosperity. In the interest of advancing people's all-
round welfare, decentralization of economic control is essential.
PROUT's economic system follows five important principles of
economic decentralization.
1) The resources of a region should be controlled and
utilized by the local people. At the least, local people need
to control production of the important basic necessities to insure
their economic security. They should also process raw materials
locally so that their natural resource endowment gets used as a
secure basis for their local economy. Excessive dependency on
import of raw materials leads to drainage of capital and
uncertainty of supply.
2) Production should be based on consumption, not
profit. Production should be undertaken to meet the needs of the
general population, not to create profit for a small number of
entrepreneurs. Production should be geared to local markets and
supply of basic commodities, rather than to export or supply of
luxury goods. If this is done, there will be maximum local
circulation of money, creating increased production, more jobs,
and greater purchasing capacity. An economy built up around
production for local consumption will attain much greater vitality
than one based on production for export.
3) Production and distribution should be organized
primarily through cooperatives. Cooperatives, by the nature
of their structure, equitably distribute wealth and decentralize
economic power. At the same time, a decentralized economy is
essential for the viability of cooperatives: allocating raw
materials for local use assures their constant supply to
cooperatives and reduces market uncertainty. Because cooperatives
tend to serve local needs, there is also less uncertainty of
product demand. The economic certainty created by cooperative
enterprise will give local people a sense of economic security.
Because of this they will support the cooperative system.
4) Only local people should work in and control local
economic enterprises. Local people are best qualified to guide
the development of their workplaces so as to promote their own
economic well-being. Outside economic interests should not
interfer with the local economy, and use of outside laborers
should be avoided--especially if there is not full employment of
local people. The economy should provide employment for local
people, and ensure that their skills and potentialities are fully
utilized. Opportunities must exist for employing educated people
in the local economy so they are not forced to search elsewhere
for work which utilizes their talents.
5) Essential commodities should be produced by local
enterprises. Import of basic commodities should be restricted
for a period of time in order to develop local industries and
prevent an outflow of capital. Although locally produced goods may
initially be inferior in quality, more costly, or less available,
it is necessary to shelter their production in the initial stage.
Otherwise, local industry will not develop, leading to decreased
employment opportunities and control of the local economy by
outside interests. If goods are locally produced, the economy will
thrive, and capital will remain in the local area where it can
enhance the prosperity of local people. Free trade advocates feel
consumers should have the right to buy the best or cheapest
products available. PROUT gives greater importance to the right to
be employed and have a stable, vigorous economy. Healthy economic
development generally fosters quality of production. But if local
commodities do not satisfy people's needs, steps should be taken
to improve their quality or decrease their cost.
Part 3 -- Structural Features of the PROUT Economy
There are several distinguishing structural features of PROUT's
economic system. Brief description of these follows.
1) Socio-economic units. Regional, self-sufficient socio-
economic units should be formed on the basis of common cultural,
geographic, social and economic factors. These socio-economic
units may be affiliated in a federated system, but they should
possess sufficient self-determination in their social and economic
sectors to create and control developmental policy.
2) Three-tiered economy. The commercial economy should
be organized into three types of enterprises: cooperatives, key
industries, and small private enterprises.
a) Cooperatives. Cooperative enterprises should form
the core of the economy. Except for a few large-scale, key
industries and small private enterprises producing nonessentials,
all production should be organized under worker owned and
controlled enterprises.
Cooperatives increase worker motivation and job
satisfaction because they give workers control of their enterprise
and a stake in its profits. Where cooperatives have had access to
the necessary inputs of production--capital, entrepreneurship,
skilled labor, and competant management--they out-perform private
enterprises.
Cooperatives are controlled by their worker members on
the basis of one member, one vote. All members must purchase a
membership share in the cooperative. This initial capital
contribution gives each worker member a financial stake in their
enterprise. Workers must sell their membership share back to the
cooperative upon leaving. Through this system, worker's ownership
rights are based on their functional role as workers, and not on
the basis of their capital contribution.
b) Key industries. Very complex, capital-intensive
industries, such as utilities, or industries producing raw
materials or goods which are strategic to the regional economy,
should be designated as key industries. Because they play a
crucial role in stimulating production and development for the
region as a whole, they should come under community control, not
worker control. The cooperative system is also inappropriate for
key industries as they are generally too large to be efficiently
managed by their workers.
Key industries should be controlled either by the local
or regional government, or (preferably) by an autonomous board. A
plant management team would be hired by the board or local
government to oversee operations. Participatory team management
techniques should be used to insure maximum worker involvement. An
effective incentive system should be used to further motivate
productivity.
Key industries should operate on a no profit, no loss
basis. The state should not subsidize their operation, nor should
it extract profits.
c) Small private enterprises. Small businesses--those
having a maximum of about 5-8 employees--can be privately owned.
Private enterprises should not be involved with producing or
distributing staple commodities. Salaries of workers and income of
owners should be subject to minimum and maximum standards
established for the region.
3) Planning. Economic planning should take place at the
central, regional, and district levels. But, so far as is
practical, planning authority should reside at the local level.
The most basic unit of planning for most purposes is the district.
District boundaries should not be determined on the basis of
political considerations, but on the basis of geographic factors,
socio-economic requirements, common economic problems, and common
aspirations of the people.
If planning is undertaken primarily on the district level, it
will have the following benefits: planners can better understand
the major and minor problems of the area; local leaders can solve
problems according to their own priorities; planning will be more
practical and more readily implemented; local organizations can
play an active role in mobilizing human and material resources;
unemployment can be more easily prevented; and a balanced economy
can be more readily established.
District level planning should be undertaken on the basis of
the following guiding principles.
a) Cost of production. Unit costs of production
(including environmental costs) should be carefully determined,
and the cost of producing a particular commodity should not exceed
its market value. Every economic enterprise must be economically
viable, and without need of state subsidy.
b) Purchasing capacity. A major objective of planning
should be to increase people's purchasing capacity. For this,
there must be: (1) availability of commodities according to local
demand, (2) stable prices, (3) periodic increases in wages, and
(4) steady increase in collective assets (such as roads, energy
generation systems, and communications infrastructure).
c) Productivity. The economy should be organized in
such a way that it has the capacity to continuously increase its
productivity. There should be maximum production according to the
collective need, and full utilization of the productive units.
Money should be properly invested, and not hoarded or squandered
in unproductive ways.
d) Collective necessity. Planners should determine the
current and projected needs of the community and formulate their
developmental plan accordingly.
e) Sustainability. No economic development project
should be undertaken which decreases the productive capacity of
the environment or the vitality of ecosystems.
4) Capitalization. Investment capital should be generated
from within the region, or through interregional trade. Capital
for large scale development can come from developmental bank
loans, worker shareholdings, and government grants. Smaller scale
enterprise can be capitalized through worker shareholdings,
private investment, and loans from cooperative banks.
5) Trade. To avoid trade deficits and the loss of
currency, interregional and international commerce should be
conducted on a barter basis where possible. Locally produced basic
commodities should be protected from competition with cheaper
goods produced in other countries. To protect local employment
opportunities, international and interregional trade in raw
materials should be avoided; only finished products should be sold
outside a region. Regional economies should be largely self-
sufficient in the production of basic commodities. Except for
commodities protected from foreign competition, there should be
free trade.
6) Taxation. The primary sources of government revenue
should be value added taxes and excise taxes placed on non-
essential goods and services. Payroll taxes can be used to finance
social security expenditures. Income taxes are not recommended, as
they encourage a black economy where earnings go unreported. Nor
should there be taxes on sales of basic commodities, as such taxes
have greater impact on the poor and thus increase economic
disparity.
7) Trade unions. Workers should have the right to
organize independent trade unions. Control of the unions should
remain with workers, not with political party interests. Unions
should give as much importance to making workers conscious of
their responsibilities as they do to protecting their interests.
In small and medium sized cooperatives, there will be less need
for worker representation by organized trade unions, as these are
worker managed enterprises. But in large cooperatives, key
industries, public service institutions, and government
administration, unionization should be encouraged. In the large
cooperatives, unions would serve the interests of workers as
workers, rather than their interests as worker-owners.
8) Incentives. The prosperity of society depends on
worker productivity, and incentives are essential to motivate
workers to develop and use their full productive capacities. While
productivity and talent should be rewarded, rewards should not be
so large as to create unnecessary disparity in society. Society
should set minimum and maximum income levels. The minimum level
should insure sufficient income to purchase basic necessities
according to the prevailing standard. The maximum level should
balance society's need to maintain high worker motivation with its
need to distribute wealth equitably. Over time, the minimum and
maximum income levels would rise with rising purchasing power, and
the range between the minimum and maximum incomes should be
gradually lessened--unless this has the effect of diminishing
worker motivation. The award of incentives should be incorporated
into all productive activity. The forms of incentives which have
most value and appropriateness are given below.
a) Special amenities. Individuals whose skills have
special value to society should receive special amenities,
preferably amenities which provide increased opportunity to
utilize their talents--for example, special research equipment, or
greater opportunities for education and travel.
b) Wage differences. Workers should be paid according
to their skill level and their labor. This can be done through
salary gradations, payment for piece work, or bonuses. Workers in
cooperatives will receive dividends according to the profitability
of their enterprise.
c) Psychological incentives. Non-material incentives
are also very effective. Motivation increases when workers feel
compatibility with their job, when their work environment is
pleasant and safe, and when their work provides interest and
challenge. Perhaps the most important psychological factor for
increasing motivation is the ability to influence decision making.
Therefore, all enterprises should implement participatory
management processes and team work to the greatest extent
possible. Team work can reinforced by material incentives based on
team performance.
9) Money. Currency should be backed by bullion. If the
state is required to guarantee the value of money by issuing
bullion upon demand, this will check its tendency to engage in
excessive deficit spending and thereby help prevent inflation.
10) Commerce. Distribution of essential commodities
should be done through consumer cooperatives, not through traders,
middle men, or the state. This reduces the possibility of
hoarding, manipulating prices, and bureaucratic inefficiency in
marketing essential products.
There should be a free flow of information about consumer
products. Decentralization of production and marketing will reduce
opportunities for expensive advertising campaigns designed to
manipulate consumer demand.
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PEOPLE BEFORE PROFITS!
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