“To create 100% employment among local people, PROUT supports both a short term and a long term economic plan. In the short term plan, labour intensive industries based on the collective minimum requirements of life should be started immediately or made more productive where they already exist. These industries should be based on the consumption motive. They should also provide a rational profit in order to guarantee adequate purchasing capacity to those employed in them and to ensure their continued existence and growth. In North Bihar, for example, where there is virtually no industry, all kinds of agrico and agro-industries can be developed to alleviate the unemployment problem there.” – Sarkar, Prabhat, 31 December 1984, Calcutta, Prout in a Nutshell Part 13, Socio-Economic Movements, 100% Employment for Local People
“In the capitalist structure, industry or production is governed by the profit motive, but in the Proutistic structure production will be governed by the motive of consumption.” – Sarkar, Prabhat, July 1961, Ranchi, Prout in a Nutshell Part 15, Talks on Prout, CAPITALISM
In capitalist economies, production is for the profit of the capitalist and the profit goes to individuals, groups and the state exchequer. In socialist economies or so-called communism, the profit goes to the state exchequer and a microscopic fraction of the profit goes to the actual producers. In both cases capitalism exists, and whenever fresh financial investment is required, inflation takes place.
In a Proutistic economy, production will be solely for consumption. As there will not be any profit motive, there cannot be any fresh inflation, and the existing inflation will gradually die out. In Proutistic production or consumption, in the first phase the money value remains constant and full-fledged purchasing capacity will be guaranteed to the people. In the second phase, when production increases in the revised economic order, money will get back its natural market value. Finally, after consumption, money will get back its actual value. Inflation will be checked and purchasing capacity and the minimum requirements of life will be guaranteed to the people.” – Sarkar, Prabhat, 13 September 1987, Calcutta, Prout in a Nutshell Part 13, Economic Dynamics, Bullion Inflation
There cannot be a socialistic government under a democratic framework. Those who speak highly of socialism from a democratic platform befool the public. It is just to circumvent the constitution and to secure public confidence that leaders speak on socialism and promise to establish a socialistic pattern of society, which is nothing but an absurdity.(7) These so-called leaders are nothing but socialist show-boys.(8)
If a particular country or district is highly industrialized, that will not help in uplifting or changing the economic standard of other parts of the world or country. Hence industry should be decentralized, but key industries should be centralized. For example, the spinning industry should be centralized, and around it there should be a weaving industry run on [the basis of] decentralization principles. Even in areas where the climate is extreme, industries such as spinning can be established through artificial vaporization. This will help to create a self-supporting economic unit, which is badly needed. The area of self-supporting economic units will increase with the increase of transportation facilities. One day this world will become one economic unit. A day may come when the whole of the planetary world will become one economic unit.
Large-scale and small-scale industries should remain side by side. Key industries should be managed by the immediate government, because it is not possible to run them efficiently on a cooperative basis due to their complexities and hugeness. Small-scale industries should run on a cooperative basis, and the small industries which cannot be managed by cooperatives should be left to private enterprise. Thus: (1) small businesses should be left to individuals; (2) big industries should be owned by the immediate government; and (3) the industries in between the big and small industries should be run on a cooperative basis.
The central government should not control large-scale industries because this may hamper the interests of local people. Where there is a federal system of government, these industries should be controlled by the immediate government, and where there is unitary government, they should be managed by local bodies.
Industrial decentralization is only possible in a collective economic structure. No profit motive will remain in such a structure. Capitalists start industries only where the following factors are available: (1) capital; (2) labour; (3) favourable [economic] climate; and (4) a ready market for sales. They always try to lessen the cost of production, hence they will never support the principle of decentralization. In the collective economic structure the profit motive has no place – here industry is for consumption. In the collective economic structure, self-supporting economic units are to be strengthened.
It is an age of science. Science should be utilized for service and blessedness. There should be rationalization of industry that is, an old machine should be replaced by a new and more scientific one. It is no use continuing with old and worn-out methods such as the carká [spinning wheel] in the age of radioactivity [nuclear energy] and rockets.
It is incorrect to say that rationalization is the root cause of the unemployment problem. Such propaganda is carried out by leaders having little knowledge of socio-economic philosophy. The question of unemployment arises only in the capitalistic framework where industry is for profit. In the collective economic structure, where industry stands for consumption and not for profit, the question of unemployment does not arise. Here the number of labourers will not be lessened; rather the working hours will be reduced and the remaining hours will be used in mental and spiritual pursuits. The reduction in the working hours depends not only on yield, but on the demand for commodities and the availability of labour.” – Sarkar, Prabhat, 19 October 1959, Jamalpur, Prout in a Nutshell Part 4, Discourses on Prout, 3
“The second principle of decentralized economy is that production should be based on consumption, not profit. Most countries in the world have adopted economic systems which are profit oriented – that is, production is undertaken for profit. Producers give first preference to those items which bring maximum profit, so everywhere there is keen competition regarding the production of the most profitable goods. India is no exception. To increase the standard of living of the people, a new system of production will have to be introduced. Consumption, not profit, should be the underlying motive in the field of production.” – Sarkar, Prabhat, 16 March 1982, Calcutta, Prout in a Nutshell Part 21, Decentralized Economy – 1, Principles of Decentralized Economy
“Providing food, clothing, housing, education and medical treatment is most important for social security. These five minimum requirements are indispensable to raise the living standard of the people. To guarantee these, the principle of production based on consumption has to be adopted. Special emphasis should be placed on agricultural production because the provision of food is of vital importance, and for this the cooperative system should be rapidly expanded.” – Sarkar, Prabhat, February 1982, Calcutta, Prout in a Nutshell Part 20, Farmers Cooperatives
“In the second phase of implementing agricultural cooperatives, the economic holdings of the landowners should be brought under cooperative management. Only after all the uneconomic holdings in a village are brought within the scope of cooperatives should the economic holdings be brought under cooperative management. In this phase it will be easy to apply science and technology extensively in agriculture, increasing the amount of production.
In this second phase, all should be encouraged to join the cooperative system. The net profit will be increased in favour of the labourers working in the cooperatives so that twenty-five percent of the net profit will go to the landowners and seventy-five percent to the labourers. Here labourers means those who employ either their physical or psychic labour in the cooperative. The landowners will benefit in two ways. First, as landowners, they will get twenty-five percent of the net profit of the produce from the land, and secondly, if they are part of the cooperative labour force, they will be entitled to a portion of the seventy-five percent of the profit distributed among the cooperative members.
In this phase, there must be emphasis on the rapid and large- scale establishment of agrico-industries and agro-industries so that the rural population will be dependent more on industry than on agriculture. With the development of such industries, there should be simultaneous emphasis on educational and cultural reforms to further develop the cooperative mentality of the rural population.
From this second phase, production for consumption will increase the standard of living of the rural population, and the basic criteria of social security – that is, the minimum requirements of life – must be arranged for the people.” – Sarkar, Prabhat, February 1982, Calcutta, Prout in a Nutshell Part 20, Farmers Cooperatives
“This arrangement is not possible under capitalism. Capitalism will never support decentralization, because capitalist production exists to maximize profits. Centralization means industry for profit, while decentralization means industry for consumption. PROUT’s approach, which will be supported by all rational people, is production for consumption. PROUT’s maxim is, “Production for consumption, not production for profiteering.” ” – Sarkar, Prabhat, 6 November 1988, Calcutta, Prout in a Nutshell Part 16, Decentralized Economy – 2
“10) Question: What is the bonus system and the piece work system?
Answer: In capitalism production is for profit. The amount of the bonus is usually fixed. The actual profit is hidden from the workers and goes directly to the owner, so workers do not get any incentive to work harder and better. In communism production is for the state. Workers do not feel oneness with the job so there is little incentive to work. In PROUT production is for consumption – our industrial system will be based on consumption. Profit will be minimized so capitalists will not get the scope to exploit the workers. There will also be rational distribution of wealth.
The time involved in the production of commodities can be viewed from three angles – the time allotted to complete some work; the time taken to complete some work; and the time saved to complete some work. In the bonus system the calculation of the bonus is on the basis of the time saved, and the money value of this calculation is given to the worker. This is the incentive in the bonus system.
In the piece work system the incentive is calculated in a different way. Suppose you are manufacturing machines. The labour, etc., involved in the cost of production is set, so the market price will be the cost of production plus the profit. That is, price equals cost plus profit. The profit or part of it is distributed among those who manufactured the machines. This is their incentive. This is how incentives work in the piece work system. As workers get more incentive, they try to manufacture more machines. This is not the case in state capitalism because workers get fixed incentives which become part of their wages.
Incentives should encourage greater work and better quality work, so they should be directly linked to production. If this approach is followed, the per capita income and the standard of living of the workers will automatically increase.” – Sarkar, Prabhat, date not known, Proutist Economics, Questions and Answers on Economics – Section C, Question 10
“14) Question: What is the bonus system and the piece work system? Answer: In capitalism production is for profit. The amount of the bonus is usually fixed. The actual profit is hidden from the workers and goes directly to the owner, so workers do not get any incentive to work harder and better. In communism production is for the state. Workers do not feel oneness with the job so there is little incentive to work. In PROUT production is for consumption – our industrial system will be based on consumption. Profit will be minimized, so capitalists will not get the scope to exploit the workers and there will be rational distribution of wealth.
The time involved in the production of commodities can be viewed from three angles – the time allotted to complete some work; the time taken to complete some work; and the time saved to complete some work. In the bonus system the calculation of the bonus will be on the basis of the time saved, and the money value of this calculation will be given to the worker. This will be the incentive in the bonus system.
In the piece-work system, the incentive is calculated in a different way. Suppose we are manufacturing machines. The labour, etc. involved in the cost of production is set, so the market price will be the cost of production plus a rational profit. P = C + Y. A rational profit is about 15%. This amount or part of it will be distributed amongst those who manufactured the machines. This will be their incentive. As they get more incentive, workers will try to manufacture more machines. This is not the case in state capitalism because workers get fixed incentives which become part of the salary. Incentives should encourage greater work and better quality work, so they should be directly linked to production. When this system is adopted the per capita income and the standard of living of the workers will automatically increase. This is how incentives should work in the piece work system.” – Sarkar, Prabhat, date not known, Prout in a Nutshell Part 18, Questions and Answers – , Question 14
“Economic decentralization means production for consumption, not production for profit. Economic decentralization is not possible under capitalism, because capitalist production always tries to maximize profit. Capitalists invariably produce at the lowest costs and sell at the highest profits. They prefer centralized production, which leads to regional economic disparity and imbalances in the distribution of the population. In the decentralized economy of PROUT on the other hand, production is for consumption, and the minimum requirements of life will be guaranteed to all. All regions will get ample scope to develop their economic potentiality, so the problems of a floating population or overcrowding in urban centres will not be allowed to arise.” – Sarkar, Prabhat, June 1986, Calcutta, Prout in a Nutshell Part 2, Economic Democracy, Economic Decentralization
“Increasing Purchasing Capacity
To effectively implement this, increasing the purchasing capacity of each individual is the controlling factor in a Proutistic economy. The purchasing capacity of common people in many undeveloped, developing and developed countries has been neglected, hence the economic systems of these countries are breaking down and creating a worldwide crisis.
The first thing that must be done to increase the purchasing capacity of the common people is to maximize the production of essential commodities, not the production of luxury goods. This will restore parity between production and consumption and ensure that the minimum requirements are supplied to all.” – Sarkar, Prabhat, June 1979, Calcutta, Prout in a Nutshell Part 13, Some Specialities of Prout’s Economic System
“For example, while trying to solve the food problems of any socio-economic unit, the subtriangle of agriculture will have to be created. A proper irrigation system may have to be introduced, and high-breed varieties of seeds may have to be used. By extensive cultivation of land, using tractors and necessary fertilizers, three or four crops may be harvested every year. The proper crops for the proper soils will have to be selected. Agricultural cooperatives and agricultural producers cooperatives will have to be started, and farmers’ brigades will have to be formed. Agriculture should be conducted on the basis of the principle of consumption, and not the principle of profit. There should be a proper preservation and distribution of agricultural products. A proper balance in the lokatrikońa or pramátrikońa of agriculture will help establish balance in the lokatrikońa or pramátrikońa in the physical stratum.” – Sarkar, Prabhat, February 1987, Calcutta, Prout in a Nutshell Part 9, Pramá – 1 / Dynamic Equilibrium and Equipoise, Some Solutions
“Productivity: The economy will have to be organized in such a way that it has its own innate power to produce more and more. Money should be invested – money should be kept rolling rather than hoarded – so that the collective wealth of society is continually increased.
This principle guides planners so that maximum production will occur according to the collective needs. There should be increasing production based on consumption and full employment for all local people. Products should be developed wherever raw materials are available, and under utilization of any production unit should not be allowed.
If people are guided by the needs and potentialities of their socio-economic unit, the law of productivity is benign. Maximum production in the economy will provide a congenial environment for more investment, more industrialization, more employment, increasing purchasing capacity and increasing collective wealth in an ever progressive manner.” – Sarkar, Prabhat, 1981, Calcutta, Prout in a Nutshell Part 12, Block-Level Planning