Evolution News

Decentralized Economy – 1
The most important economic issue before the leaders of all the countries in the world today is how to increase the standard of living of their citizens through the economic prosperity of the state. This is a burning question, especially in those countries which are economically backward. The matter is not very simple because in many countries people are still directly dependent on nature for their subsistence. Only in a few countries have people been able to utilize their knowledge and wisdom to solve their economic problems.

Most countries in the world – whether capitalist or communist – have adopted the policy of economic centralization. While the economies of the capitalist countries are centralized in the hands of a few capitalists or a few capitalist institutions, the economies of the communist countries are centralized in the hands of the party. After so many years of economic centralization, how successful have these countries been in improving the standard of living of the people? To assess this, the main issue is whether or not economic exploitation has been eradicated and the common people have been guaranteed ever increasing purchasing capacity. The fact is that in a centralized economy there is no possibility that economic exploitation can ever be eradicated or that the economic problems of the common people can ever be permanently solved.

As far as India is concerned, the common people have been led astray time and again by vested interests. Innumerable promises have been made by political leaders, but they have proved to be nothing more than cruel hoaxes. The policy of economic centralization stands exposed as merely a strategy to accumulate increasing capital in the hands of the capitalists. On the one hand the incredulous masses are kept in good humour by promising them something negligible, and on the other hand the capitalists go on amassing enormous wealth. If we examine why this is happening, we will find that the cause is clearly evident. All the economic policies in the country are formulated by a handful of people who are pillars of capitalism.

There is only one way to stop economic exploitation and alleviate the plight of the common people, and that is to implement a policy of decentralized economy in all the sectors of the economy. Successful planning can never be done by sitting in an air conditioned office thousands of miles away from the place where planning is to be undertaken. Centralized economy can never solve the economic problems of remote villages. Economic planning must start from the lowest level, where the experience, expertise and knowledge of the local people can be harnessed for the benefit of all the members of a socio-economic unit. All types of economic problems can be solved only when economic structures are built on the basis of decentralized economy.

The basic question is how to remove the unhealthy influence of centralized economy. The real issue is, who will bell the cat? If the vested interests fail to be guided by righteous intellect, then people will have to take matters into their own hands. They will have to create circumstantial pressure from all sides, uniting around the slogan: “Abolish centralized economy to end exploitation; establish decentralized economy.”

Decentralized economy is the only way that people can attain all-round welfare because it will not only guarantee economic prosperity, but also pave the way for individual and collective psycho-spiritual progress. Once people’s mundane problems have been solved, they will have greater opportunities to develop their potentialities in the psychic and spiritual spheres. With the establishment of decentralized economy, economic and psycho-economic exploitation will be eradicated, the gap between the rich and poor will be minimized and individual and collective welfare will be greatly enhanced. This in turn will create greater opportunities for the psychic and spiritual progress of all members of society.

Principles of Decentralized Economy

The first principle of decentralized economy is that all the resources in a socio-economic unit should be controlled by the local people. In particular, the resources which are required to produce the minimum requirements must be in local hands, and all the industries based on these resources will have to be controlled entirely by the local people. Local raw materials must be fully utilized to produce all kinds of commodities necessary for the economic development of a socio-economic unit.

Local people are those who have merged their individual socio-economic interests with the socio-economic interests of the socio-economic unit they live in. Clearly, this concept of local people has nothing to do with physical complexion, race, caste, creed, language or birth place. The fundamental issue is whether or not each person or family has identified their individual socio-economic interests with the collective interests of the concerned socio-economic unit. Those who have not done so should be branded as outsiders.

No outsider should be allowed to interfere in local economic affairs or in the system of production and distribution, otherwise a floating population will develop, causing the outflow of economic wealth from the local area. If this occurs the area will become vulnerable to outside economic exploitation and decentralized economy will be undermined.

The surplus wealth, after meeting the minimum requirements of the people in the local area, should be distributed among the meritorious people according to the degree of their merit. For example, doctors, engineers, scientists and other capable people engaged in various activities require extra amenities so that they can perform greater service to society. While a common person may require a bicycle, a doctor may require a car. But there must also be provision in the economy for reducing the gap between the minimum requirements of all and the amenities of meritorious people. To increase the standard of living of common people, they may be provided with scooters instead of bicycles. Although there is some difference between a scooter and a car, the gap that existed between a car and a bicycle has been partially reduced. The economic gap between common people and meritorious people should be reduced as much as possible, and ceaseless efforts must be made in this regard, but this gap will never vanish altogether. If the gap increases, the common people will be deprived and exploitation will re-emerge in society in the guise of amenities. Decentralized economy leaves no such loophole because on the one hand the standard of the minimum requirements must be increased, and on the other hand the provision of amenities will be assessed from the viewpoint of the collective welfare.

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.

In a decentralized economy the commodities produced by a socio-economic unit will be sold in the local market itself. As a result, there will be no uncertainty in the local economy or the economic life of the local population. In addition, money will be circulated within the local market so there will be no outflow of local capital. The possibility of an economic catastrophe in the local economy will be largely eliminated. In such a system, people’s income will have an upward trend and their purchasing capacity will continuously increase. No economic system in the world has been able to continuously increase the purchasing capacity of the people, because economic power is concentrated in the hands of a few.

The third principle of decentralized economy is that production and distribution should be organized through cooperatives. One of the principal reasons for the past failure of the cooperative movement is economic centralization. It is extremely difficult for cooperatives to succeed in an economic environment of exploitation, corruption and materialism, so people cannot accept the cooperative system wholeheartedly. Cooperatives are forced to compete with the monopoly capitalists for local markets, and the rights of the local people over their raw materials are not recognized. Such circumstances have undermined the success of the cooperative movement in many countries of the world.

On the other hand, decentralized economy is one of the principal reasons for the success of the cooperative system. The availability of local raw materials will guarantee constant supplies to cooperative enterprises, and cooperatively produced goods can be easily sold in the local market. Economic certainty will create increasing interest and involvement among the cooperative members, and as the local people will be confident of their economic security, they can wholeheartedly accept the cooperative system.

As far as possible, agriculture, industry and trade should be managed through cooperatives. In these sectors of the economy private ownership should be abolished in stages. Only where production cannot be undertaken by cooperatives because of the complex nature or small scale of operations should it be undertaken by private enterprises. The distribution of commodities should be done through consumers cooperatives. Adequate safeguards for cooperatives will also have to be arranged.

The cooperative system is a must, and it is only possible through decentralized economy. The cooperative system and decentralized economy are inseparable.

The fourth principle of decentralized economy is that the local people must be employed in local economic enterprises. Unless the local people are fully employed in the local economy, unemployment can never be solved. Local people should determine the quantum of minimum requirements and the basic policies connected with their own economic well-being. If this principle is followed the problem of outside interference in the local economy will not arise at all.

Cooperatives will provide employment for local people, and also ensure that the skills and expertise of the local people are fully utilized. Educated people should also be employed in cooperatives so that they do not leave the local area in search of employment or move from the countryside to the cities.

For the development of agriculture there is a great need for specialists and technicians, so cooperatives will have to train unskilled rural people so that they can acquire the necessary skills to develop the agricultural sector. In addition, all types of agro-industries and agrico-industries will have to be developed according to the needs and resources of the local area, and these industries should be managed as cooperatives.

The fifth principle of decentralized economy is that commodities which are not locally produced should be removed from the local markets. As decentralized economy aims to develop local industries and create employment for the local population, those commodities which are not produced within the local area should be banished from the local market as far as possible. It is essential that the local population utilize the commodities produced in their own area to ensure the prosperity of the local economy. Initially, local commodities may be inferior, more costly or less readily available than outside commodities, yet in spite of this, locally produced commodities should still be used by the local people. If local commodities do not meet the needs and aspirations of the people, immediate steps must be taken to increase the quality, reduce the price and increase the supply of local goods, otherwise illegal imports will be encouraged.

In a decentralized economy, the application of this principle is very important. If it is neglected, the local industries will gradually close down, local markets will go out of the hands of the local people and unemployment will increase. Once locally produced goods are accepted in principle, not only will local industries survive, but with their further development the local economy will thrive. The outflow of capital from the local area will be checked, and because it will remain in the local area, it will be utilized to increase production and enhance the prosperity of the local people. With the increasing demand for local commodities, large-scale, medium-scale and small-scale industries will all flourish.

Economic Transformation

The agricultural, industrial and trade policies of a socio-economic unit will have to be formulated according to the principles of decentralized economy. The maximum utilization and rational distribution of local resources and potentialities to ensure full employment should be given priority, keeping in view that there should be uniform economic development in all regions of a socio-economic unit.

The members of the cooperatives should decide the policies concerning such things as agricultural production, price fixation and the sale of agricultural commodities. Local people should not only control cooperative bodies, but supervise all activities related to the local economy. The local administration will have to assist the economic development of cooperatives. The price of agricultural commodities should be fixed on a rational basis by taking into account the price of commodities; the cost of labour, raw materials, transportation and storage; depreciation; sinking funds; etc. In addition, this price should include a rational profit of not more than fifteen percent of the cost of production. In a decentralized economy agriculture will have the same status as industry.

The industrial system must also be reorganized according to the principles of decentralized economy. If a certain part of a country is over-industrialized, it will impede the economic progress of other regions. Economic decentralization will not allow such a situation to arise. In a decentralized economy, key industries, medium-scale industries and small-scale industries will be managed by different groups of people. In a centralized economy – whether capitalist or communist – these industries are usually managed as either private companies or state enterprises. Most key industries should be managed by the local government but they should be guided by the principle of “no profit, no loss”. Most medium-scale industries should be managed as cooperatives, but they should not be guided by monopoly production and profit. The cooperative sector will be the main sector of the economy. Cooperatives are the best means to organize local people independently, guarantee their livelihood and enable them to control their economic welfare. Most small-scale and cottage industries will be in the hands of individual owners. Small-scale industries should be confined mainly to the production of non-essential commodities such as luxury items. Though privately owned, they must maintain adjustment with the cooperative sector to ensure a balanced economy.

A rural economy should not depend solely on cottage industries, otherwise the economic welfare of the rural population will be jeopardized. If cottage industries are properly organized, rural women will also get ample scope to earn a decent livelihood. Cooperatives and the local administration will have to take the responsibility of supplying cottage industries with raw materials so that they do not suffer from scarcity.

The local administration will also have to arrange for the supply of sufficient power to facilitate industrial production. Every region in a socio-economic unit must strive to be self-sufficient in power generation. The local administration will have to supply locally generated power such as solar energy, thermal energy, bio-gas, hydroelectricity, nuclear energy, pneumatic energy, electromagnetic energy and tidal power, or any other power which is easily available locally. The generation of power is a key industry which should be run on a no profit, no loss basis so that the cost of production is minimized and the purchasing capacity of the people is increased. For example, if batteries are produced through cottage industries, power should be supplied on a no profit, no loss basis, but the battery producers will be able to sell their batteries at a rational profit. Here the power that is used to manufacture the batteries is not an industrial commodity but a raw material. The power for such things as transportation, communication, schools, colleges and hospitals should also be supplied on a no profit, no loss basis to maintain social dynamism. The immediate government or the state government will have to take the responsibility to supply power as a key industry.

All kinds of industrial activities from key industries to cottage industries should be organized with the cooperation of the local population. Care should also be taken so that private enterprises are set up by the local people. Local people must be given preference in employment, and all local people should be locally employed. If this policy is followed, there will be no surplus or deficit labour among the local people, and if many people do come from outside areas, they will not find a place in the local economy. Where a floating population exists in a particular region, the outflow of capital remains unchecked and the economic development of the area is undermined.

Trade in a decentralized economy should be organized by distributing commodities through consumers cooperatives. There will be no income tax, but there should be a tax levied on the production of each commodity. Commodities should be exported from one region or socio-economic unit to other regions or units through cooperatives.

In the decentralized economy of PROUT, exporting local raw materials is not supported. Only finished goods should be exported under certain circumstances. After all the requirements of the local people in a socio-economic unit have been met, the surplus goods may be exported, but only to a socio-economic unit which has no immediate opportunity or potential to produce them, in order to meet the requirements of the people in that unit. And even then, the whole transaction of importation and exportation should be undertaken directly by cooperatives, and the exportation of commodities must not be motivated by profit. If there are insufficient raw materials in any socio-economic unit to meet the minimum requirements of the local people, the necessary raw materials may be imported from another socio-economic unit providing it can be carefully verified that the raw materials in the latter unit are surplus. Free trade should be encouraged once self-sufficiency is attained, as this will help facilitate increased prosperity and encourage economic parity among socio-economic units, and lead to the formation of larger socio-economic units.

Another important characteristic of decentralized economy is that money will always remain in circulation, hence the economy will move with accelerating speed. The value of money depends on the extent of its circulation. The more frequently money changes hands, the greater its economic value. The greater the value of money, the greater the prosperity in individual and collective life, and the greater the opportunities for all-round welfare.

There is a close relationship between the economic prosperity of people and their psychic and cultural development. Improvements in individual and collective life will lead to the all-round welfare of people. If local people do not develop a sense of self-confidence in their economic activities, then they become mentally weak, and this inherent weakness becomes an impediment to their economic well-being. Such a community will become an easy victim of economic, political and psycho-economic exploitation by vested interests. This unhealthy situation must be firmly resisted. Thus, the local language is to be used in all local dealings and transactions. That is, the local language should be used in the administration, the education system, the economy, and in cultural activities. All official and non-official bodies and offices of a particular socio-economic unit should use the local language as the medium of communication.

The overall well-being of society is the ultimate goal of decentralized economy. This is a comprehensive ideal and should be established in each and every socio-economic unit. It will bring about economic prosperity as well as ensure greater opportunities for the psycho-spiritual elevation of all members of society.” – Sarkar, Prabhat, 16 March 1982, Calcutta, Prout in a Nutshell Part 21, Decentralized Economy – 1

Decentralized Economy – 2
At the beginning of civilization, the desire to create arts and crafts arose in the human mind. At that time artisans used to work at home, and arts and crafts were produced in cottage industries. Men, women, boys and girls – all participated in the creation of arts and crafts. Later people realized that some arts and crafts could not be produced in every village, so certain artifacts were produced by a few combined villages. If artisans had not combined together, they would have suffered losses in the market place, and their numbers would have been significantly reduced. So gradually human beings started to go and work in places where production was done collectively, or the first factories. At that time the few industries that existed were decentralized.

In this connection one thing should be remembered – the more that arts and crafts are decentralized, the greater the benefits for human society. Decentralization does not diminish or dissipate economic potential. Rather, decentralization removes regional disparity because wealth is distributed almost equally everywhere. We do not find situations where people in some places cry out in agony due to scarcity and starvation, while people in other places become immoral due to excessive affluence and over abundance. In fact, industrial centralization is detrimental to a well-knit social order.

In a decentralized economy people do not have to leave their homes to work in an industry, and consequently they are saved from the expenditure of maintaining two establishments. Moreover, decentralization increases the possibility of saving labour, because people can earn their livelihood while simultaneously taking care of their household responsibilities.

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.”

Capitalists want to produce commodities at the lowest costs and sell them at the highest prices. To produce commodities cheaply, there must be efficient transportation, cheap raw materials, cheap labour, cheap energy, adequate water supply, etc. No matter what form capitalism takes – individual capitalism, group capitalism or state capitalism – capitalists will always prefer centralized production. All these forms of capitalism are essentially the same.

Thousands of industries have mushroomed around Calcutta, Bombay, Ahmedabad, Delhi, Kanpur and Madras in India due to this capitalistic mentality. Remote places such as Khairasol in Birbhum district, Puncha in Purulia district, Goghat in Arambagh district and Nakashipara in Nadia district have been neglected. They have gone to sleep, crying in cimmerian darkness. Perhaps only a few people have even heard of these places. How could they? The people living there are extremely poor. They are incapable of purchasing a woollen wrapper for winter, what to speak of expensive woollen clothing.

In India regional disparity is increasing. Calcutta’s per capita income is twenty percent higher than the rest of Bengal, while the Punjab’s per capita income is higher than Haryana’s and Orissa’s. The people of Delhi enjoy much greater liberty and comfort than the villagers of Purulia district. Regional disparity is detrimental to the cause of a healthy social order. PROUT is the only panacea. There is no other solution.

Communism is state capitalism which is why it is not free from the defects of capitalism. State capitalists, like individual and group capitalists, control industries. State capitalism means state controlled industries. In other words, in state capitalism industries are centralized. Communist countries support state capitalism, which means centralized production. While communism appears to differ from capitalism on the question of popular liberation, capitalism and communism are the same internally. Fruits of the same variety may have different colour skins, but their seeds are the same. Capitalism and communism are fruits of the same variety.

To ensure the social and economic liberation of human beings, the maximum amount of socio-economic decentralization is essential. While it may be difficult to establish village-level economic infrastructure at present, there is no insurmountable obstacle preventing us from establishing block-level economic infrastructure. As far as possible, the establishment, operation and distribution of all industries should be done at block level. Only when this cannot be done should industries be organized at a higher level. Obviously, industries such as iron and steel factories cannot function in every village, block and district, so they should function in a larger area.

There are some special types of key industries which can conveniently function as either small-scale industries or medium-scale cooperative industries. If some key industries are structured in this way, they must be under state control. Care should be taken to ensure that they are properly organized and widespread. Such key industries should never be controlled by capitalists, otherwise the interests of the people will be partially if not fully ignored. Moreover, if they are left in the hands of capitalists, many different kinds of problems will arise. Normally only very large-scale key industries should be under state control, and these industries should be centralized instead of decentralized. But industries which cannot be readily decentralized today may be decentralized in the future due to changing circumstances. At that time the decentralization of key industries must be implemented.

There are also many other adverse effects of industrial centralization. For example, in large cities it is difficult for people to remain healthy because of the scarcity of fresh fruits, vegetables and milk. Immorality and corruption are rampant. Thieves, criminals, drug addicts, alcoholics and antisocial elements easily conceal themselves and prey on innocent people. Malnutrition, air pollution, water pollution as well as other problems also exist. All large industrial centres presently suffer from these defects.

In ancient times, people who travelled great distances to reach their place of work in order to earn their livelihood were called gandhahárin. Women and girls did not usually work outside the home. They normally stayed at home, took care of their household duties and worked as well. Highly skilled people do not often get proper recognition and adequate facilities if they live in remote areas. Rather, they usually have to travel long distances just to arrange their livelihood.

In medieval times skilled ivory artisans used to live in Burdwan district, but there was no market for ivory there. There was a large ivory market in Murshidabad, and smaller markets in Bankura, Vishnupur and Dhaka, consequently the skilled ivory artists of Burdwan were compelled to travel to those places.

Skilled artisans who are compelled to travel to another place for work are called gandhahárik or gandhaháriká in Sanskrit. ” – Sarkar, Prabhat, 6 November 1988, Calcutta, Prout in a Nutshell Part 16, Decentralized Economy – 2

To materialize the above economic programme, PROUT advocates a new and unique approach to decentralization based on the formation of socio-economic units throughout the world. Socio-economic units should be formed on the basis of factors such as common economic problems; uniform economic potentialities; ethnic similarities; common geographical features; and people’s sentimental legacy, which arises out of common socio-cultural ties like language and cultural expression. Each socio-economic unit will be completely free to chalk out its own economic plan and the methods of its implementation.

Within each socio-economic unit there will also be decentralized planning, which is called “block-level planning” in PROUT. Block-level planning boards will be the lowest level planning bodies.

One political unit such as a federal or unitary state may contain a number of socio-economic units. For example, the state of Bihar in India can be divided into five socio-economic units – Angadesh, Magadh, Mithila, Bhojpuri and Nagpuri. Based on the above factors the whole of India may be divided into forty-four socio-economic units. These units must be guaranteed full freedom to achieve economic self-sufficiency through the implementation of their own economic planning and policies.

If the local people in these units organize large-scale programmes for their all-round socio-economic and cultural liberation, there will be a widespread socio-economic awakening in the whole of India. Regardless of whether they are rich or poor, old or young, educated or illiterate, if the local people are inspired by anti-exploitation and universal sentiments, they will be able to start powerful movements for socio-economic liberation. When people merge their individual socio-economic interests with the collective socio-economic interest, the outflow of economic wealth from a region will cease and exploitation will be completely rooted out. The right of full employment for all local people will be guaranteed, and the employment of local people will take precedence over non-local people.

Where there is no proper economic development, surplus labour develops. In fact all undeveloped economic regions suffer from surplus labour, and when the surplus labour migrates to other regions the region remains undeveloped forever. In areas of surplus labour provision should be made to immediately employ the local people.

While providing employment to local people, local sentiments should also be taken into consideration. Maximum agro-industries and agrico-industries should be established on the basis of the socio-economic potential of the region, and various other types of industries should be established according to the collective needs. 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.

In a decentralized socio-economic system the modernization of industry and agriculture can be easily introduced, and the goods that are produced will be readily available in the market. As each socio-economic unit develops its economic potential, per capita income disparities among different regions will decline and the economic position of undeveloped regions can be raised to that of developed regions. When every region becomes economically self-reliant, the whole country will rapidly achieve economic self-sufficiency. Economic prosperity will be enjoyed by each and every person.” – Sarkar, Prabhat, June 1979, Calcutta, Prout in a Nutshell Part 13, Some Specialities of Prout’s Economic System, Decentralization

“Economic Decentralization
In economic democracy, economic and political power are bifurcated. That is, PROUT advocates political centralization and economic decentralization. Political power is vested with the moralists, but economic power is vested with the local people. The principal goal of the administration is to remove all the impediments and obstacles which prevent the economic needs of the people being met. The universal aim of economic democracy is to guarantee the minimum requirements of life to all members of society.

Nature has been kind enough to provide abundant natural resources to every region of this earth, but she has not given guidelines on how to distribute these resources among the members of society. This duty has been left to the discretion and intelligence of human beings. Those who are guided by dishonesty, selfishness and mean-mindedness misappropriate these resources and utilize them for their individual or group interests rather than for the welfare of the whole society. Mundane resources are limited but human longings are limitless. Hence, for all the members of society to live in peace and prosperity, human beings have to adopt a system which ensures the maximum utilization and rational distribution of all resources. To achieve this, human beings will have to establish themselves in morality and then create a congenial environment for morality to flourish.

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.

Unless a country attains optimum development in industry and other sectors of the economy, it is impossible for it to be highly developed. If more than thirty to forty-five percent of a country’s population is engaged in agriculture, there will be excessive pressure on the land. Such a country cannot become highly developed, nor can there be balanced, decentralized development in all sectors of the economy. India is a classic example of this. About seventy-five percent of India’s population is dependent on agriculture for its livelihood.

In some democratic countries such as Canada and Australia a large percentage of the population is engaged in agriculture, and although these countries are regarded as agriculturally developed, they depend on industrially developed countries because they themselves are industrially undeveloped. For instance, Canada has traditionally been dependent on the USA, and Australia on Britain.

As far as India is concerned, as long as around seventy-five percent of the population is engaged in agriculture, the unbearable economic plight of the people will continue. Any country confronted with such circumstances will find it very difficult to meet its domestic and international responsibilities. The purchasing capacity of the people will keep decreasing, while economic disparity will go on increasing. The social, economic and political environment of the whole country will degenerate. India is a clear example of all these evils.

So, economic decentralization does not mean that the majority of the population will be dependent on agriculture for their livelihood or that the other sectors of the economy will remain undeveloped. Rather, each sector of the economy must strive for maximum development, and all sectors must strive for maximum decentralization.

In all the democratic counties of the world, economic power is concentrated in the hands of a few individuals and groups. In liberal democracies economic power is controlled by a handful of capitalists, while in socialist countries economic power is concentrated in a small group of party leaders. In each case a handful of people – the number can be easily counted on one’s fingertips – manipulates the economic welfare of the entire society. When economic power is vested in the hands of the people, the supremacy of this group of leaders will be terminated, and political parties will be destroyed forever.

People will have to opt for either political democracy or economic democracy. That is, they will have to choose a socio-economic system based on either a centralized economy or a decentralized economy. Which one will they select? Political democracy cannot fulfil the hopes and aspiration of people or provide the basis for constructing a strong and healthy human society. The only way to achieve this is to establish economic democracy.” – Sarkar, Prabhat, June 1986, Calcutta, Prout in a Nutshell Part 21, Economic Democracy, Economic Decentralization

Experiments in centralized planning tried to solve such problems, but they inevitably failed. The only alternative is to adopt decentralized economic planning.

Decentralized Planning

Proutistic economic planning is based on the ideal of the welfare of all. This guiding ideal will illuminate the path of socio-economic liberation for human beings. Capitalist planning is not based on collective welfare but on individual or group interests. A principal characteristic of capitalist exploitation is that capitalists gain control over the raw materials in a region in the pursuit of profit. This should not be allowed to continue. Rather, available resources must be utilized for the socio-economic development of local people.

In Proutistic economic planning, every section of society will come within the scope of planning. Not only will it be possible to fulfil the economic hopes and aspirations of the local people, but individual, group or party interests will get no scope to control the economy. Through this approach, it is possible to effect the all-round growth of individuals and the collectivity. The formation of such a socio-economic environment will not only fulfil the material needs of human beings, but will also provide a firm foundation for their psychic and spiritual elevation.

Those powers which directly relate to economic decentralization should be in the hands of the states or the concerned lower level bodies. If this is not done, it will not be possible for them to materialize the economic programmes that are vested in them by decentralization. So the first step in decentralized planning is to make an economic plan according to the needs of the lowest level.

Economic plans and programmes should never be imposed from the top. On the contrary, there must be adequate scope for them to emerge from the grass roots. Each and every economic plan should be prepared in the concerned local area. For example, the economic planning for Pundibari in the Coochbehar district of Bengal cannot be formulated sitting at Begunbari in Jalpaiguri district. The developmental plan for Pundibari must be prepared in Pundibari itself on the basis of the intelligence, expertise and resources within the locality. While formulating economic plans and programmes, the hopes and aspirations of the local people must be taken into consideration.

Thus, to develop an area economically, planning must start at the grass roots level – the direction of economic development should be from the bottom to the top, not from the top to the bottom. The latter approach is impractical and a utopian myth.

In drafting the economic plan of a particular region, local engineers, economists, scientists, professionals, technicians, farmers, industrial labourers, intellectuals and other specialists should be consulted, but the responsibility for implementing the economic plan should be in the hands of local moralists. They will have to play the leading role. The duty for materializing each and every item of planning should be vested in those established in morality and spirituality.

Proutistic economic planning will reorganize the structure of the population on a scientific basis from the very outset. A floating population will have to either merge its individual socio-economic interests with the interests of the region or return to its own region. Those who share a similar cultural legacy and uniform socio-economic potential will then be well-established in each region. In every region, socio-economic problems can be solved by the maximum utilization and rational distribution of the resources and potentialities in that region.

Until now, no serious effort has been made by the leaders of India, either in the pre-independence period or in the post- independence period, to bring about the economic development of the country. The post-independence period can be divided into three main phases – the Nehru era, the Gandhi era and the Janata government. All these eras came within the jurisdiction of the Vaeshya Era or capitalist rule, and they all had one thing in common – they had a soft state policy towards the capitalists. The Janata government represented a counter movement within the Vaeshya Era. It was neither an intellectual revolution nor an intellectual counter-evolution, but simply a movement of capitalist mentality. It was a reformist intellectual approach motivated by capitalist interests. To strengthen its position, the government tried to give the capitalists better scope to chew the bones and marrow of the shúdras, kśatriyas and vipras. As it was a counter movement, it was short-lived and brought shúdra revolution nearer, hence there was no economic development during that period. Consequently, there is no alternative for Proutists but to form socio-economic units.

Socio-Economic Units

Socio-economic units should be formed throughout the world on the basis of the same economic problems, uniform economic potentialities, ethnic similarities, common sentimental legacy and similar geographical features. The whole of India and the entire world can be reorganized into socio-economic units based on these factors. These units should not merely be geographical areas but self-sufficient socio-economic groupifications. The fundamental basis of these groupifications is social, cultural and economic, and not religious or linguistic. Socio-economic units will have to adopt economic decentralization so that the local people will be able to obtain all the requirements necessary for their physical, psychic and spiritual progress. This concept is an important aspect of applied PROUT.” – Sarkar, Prabhat, November, 1979, Proutist Economics, Developmental Planning

Experiments in centralized planning have been made to try and solve such problems, But they have inevitably failed. Those powers which directly concern economic decentralization should be in the hands of the states or concerning lower level governments. If this is not done, it is not possible for them to materialize the economic programmes that are vested in them by decentralization.

The first step to decentralized planning is to make an economic plan according to the needs of the lowest level. Block-wise planning should be the most basic level of planning. The aim of the planners should be to make each block economically sound so that the entire socio-economic unit will be self-sufficient. Only then will a county or federation become economically strong and developed in the real sense. This approach to planning is the special, unique feature of PROUT’s economic decentralization.

The question is, how can decentralization be implemented? What exactly will be the procedure or basis for creating socio-economic units? According to PROUT self-sufficient socio-economic zones or units should be established throughout the world. These units should be formed on the basis of the following factors – same economic problems, uniform economic potentiality, ethnic similarity, same sentimental legacy, and similar geographical features. Based on these factors, the whole of India and the entire world can be reorganized into socio-economic units. These units would not merely be geographical areas but also socio-economic areas. The basic consideration is social, cultural and economic and not religious or linguistic. This concept of establishing strong, self-sufficient socio-economic units is an important aspect of applied PROUT.

The justification for establishing socio-economic units throughout the world lies in the fact that any attempt to develop an area economically must start at the grassroots level. That is, the direction of economic development should be from the bottom to the top, not from the top to the bottom. The latter approach is impractical and a utopian myth.” – Sarkar, Prabhat, June 1979, Calcutta, Prout in a Nutshell Part 15, Some Aspects of Socio-Economic Planning


We cannot neglect even a single living being in this creation, nor can we ignore the smallest part of the universe. So, as far as possible, the industrial system should be organized according to the principle of decentralization.

Industrial development in one part of the world cannot satisfactorily eradicate poverty or unemployment in another part. Therefore, in the industrial system, it is necessary to build up numerous self-sufficient units, at least for those industrial and agricultural commodities which are considered to be essential for maintaining life. Otherwise people will have to suffer tremendous hardships during war and other abnormal circumstances. With the development of transportation and communication, the size of these units can be expanded.


In the field of industry, the necessity of both small-scale and large-scale industries will have to be accepted. For example, the requisite amount of yarn needed to meet the demand for cloth in a self-sufficient unit may be produced by many big yarn mills. Here the production of yarn can be treated as a large-scale industry, and with the help of this industry, numerous small-scale industries will prosper. Viable weavers’ cooperatives can be established, centred on each yarn mill. Weavers will then get the opportunity to weave cloth while remaining in their own homes. They will no longer be required to leave their homes at the call of a distant large-scale industry. At the same time the weaving industry will not suffer even during times of war, because everything will be within easy reach.

The acceptance of both small-scale and large-scale industries does not mean that old machinery is to be encouraged. With the development of science, advanced machinery will have to be utilized. The attempt to stop the use of sugar by advertising the benefits of molasses, or to campaign against mill-made cloth by extolling the virtues of khadi [hand-spun cloth], is senseless. As long as advanced mechanization and scientific decentralization have not been adopted, molasses, hand-spun cloth and similar enterprises should be encouraged, and their importance to the rural economy must be accepted.

Where industrialization is intended to plunder profits, obviously the policy of decentralization is not likely to be supported. But where industrialization is intended to meet the requirements of society, there can be no objection to the policy of decentralization.” – Sarkar, Prabhat, 26 January 1958 RU, Trimohan, Bhagalpur, Prout in a Nutshell Part 3, Problems of the Day

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. These so-called leaders are nothing but socialist show-boys.

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.” – Sarkar, Prabhat, 17-22 October 1959, Jamalpur, Prout in a Nutshell Part 4, Discourses on Prout

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