1A. “Economic Depressions – The Result of Staticity
In the economic sphere depressions are inevitable in both capitalist and communist countries due to this very inherent, intensive and innate staticity. Economic depressions are actually the net result of suppression, repression and oppression – that is, exploitation. When exploitation reaches the culminating point, the mobility and the speed of the society become virtually nil. In such a stage, that is, in this culminating point, a natural explosion takes place. In the case of the material world the explosion is of a material nature, and in the psychic sphere the explosion is of a psychic order, and so on. Depressions may happen in any of the four eras – the Shúdra, Kśatriya, Vipra or Vaeshya Eras.
Depressions may also take place in the cultural life of society due to suppression, repression and oppression. As a result, every aspect of cultural life becomes perverted and degenerates. This is why we get perverted literature, music, dance, art, architecture, etc.
In both social and economic life this depression becomes unbearable for one and all. Such a depression took place between 1929 and 1931. During this depression in Bengal, five kilos of brinjal were sold for one paisa, and forty kilos were sold for eight paise in the Burdwan market, but there was no one to purchase these items. There were also big curtailments in salaries, and people had to accept salary cuts of ten percent or more.
Today also the stage has almost come for such a severe reaction. The explosion will come in two, three or five years. It will surely come within ten years. The difference between the previous depression and the future depression will be that in the previous one there was little inflation, but the future depression will be associated with inflation. Hence, it will be more detrimental to the integrated development of human society.
This depression will occur in the industrial subsection of the commercial economy. It will have widespread and devastating consequences for humanity.
An endeavour should be made to shorten the span of this economic depression. Before the final culminating point comes, it is possible to avert the disaster and accelerate the speed of social movement. We can do so by creating a socio-economic and cultural impact on the entire social structure through PROUT. As the world is passing through a most critical phase, we should be more active and create an impact. If the positive impact we create coincides with the explosion, the effect will be excellent.
It must be borne in mind that both inflation and depression result from the ailment of staticity. If the production in a country is abundant and the gold bullion reserves are in proportion to the country’s economic position, there is no possibility of inflation. However, if the circulation of the capital decreases as a result of staticity and the quantum of production also goes down, then inflation is bound to take place.
If a country has a constant deficit in foreign trade, in that case also there is the possibility of inflation. In addition, if foreign trade is not conducted according to the barter system and the country has to import foodstuffs and export raw materials, inflation will certainly occur.
On the other hand, if there is sufficient production and adequate supply, but suddenly the quantum of demand falls, then the value of money suddenly increases for the buyer. This is called “negative inflation” or “deflation”.
[1B.] The Causes of Depressions
There are two main causes for economic depressions – first, the concentration of wealth, and secondly, blockages in the rolling of money. If capital is concentrated in the hands of a few individuals or the state, most people will be exploited by a handful of exploiters. As a result of this process of severe exploitation, a serious explosion takes place. This explosion is known as a depression in the economic world. The concentration of wealth, and particularly the concentration of the value of wealth, is the fundamental cause of a depression.
Secondly, a depression may occur when money that is in the possession of individual or state capitalists stops rolling. Money remains inert or unutilized because those capitalists think that if the money is allowed to roll freely then their profits will decrease, even though it will bring relief to the common people. The very psychology of capitalists is to make profit from the rolling of money. When they discover that the investment of money does not bring profit up to their expectations, then they stop rolling money. This keeps money immobile or inert; consequently, there is no investment, no production, no income and hence no purchasing power. The situation becomes so dangerous that there are few buyers to buy commodities.
If there is surplus labour and deficit production, the effect of depression is more acute. Bihar, Andhra Pradesh, especially the Telengana region, and Orissa are surplus labour areas, so during a depression these areas could face indiscriminate closure of business houses and lay-offs. When wages fall, the people in surplus labour areas who used to go to deficit labour areas for employment will be subjected to more hardships. This will aggravate the unemployment problem in surplus labour areas. In such situations, restricting the transfer of food among different socio-economic units could lead to an acute scarcity of food in the deficit production areas, and therefore a cordon system should not be introduced. Countries and regions with surplus production and deficit labour usually suffer less hardships during depression.
[1C.] The Effect of Economic Depressions
An economic depression in capitalist countries will not spare communist or so-called socialist countries, India and the Middle East. India exports many raw materials to industrially developed countries and their satellites. India also purchases raw materials such as raw cotton from other countries, although it used to export such materials in the past. Therefore, to the extent to which India is dependent on other countries for its exports or imports, it will be affected. India also has immense loans, and these loans will put a strain on the Indian economy during the depression. The fire sparks of depression will not spare India. If the financial or monetary trade – or say the trade that affects bullion – is lessened, and barter trade is increased, then the effect of a depression on India will not be much. Therefore, India should try to increase its range of barter trade.
Bangladesh exports manufactured goods, raw jute and hide, and imports foodstuffs and almost all other articles. If Bangladesh wants to avoid a depression, it will have no alternative but to increase its barter trade.
In time the Arab countries – those selling oil – will be the most affected. Even the communist countries will not be spared from the onslaught of a depression. These countries have not been able to solve their food problems. Although they have huge buffer stocks, they depend on Canada, the USA and Australia for wheat. If these dollar-based countries suffer from a depression, the communist countries will certainly be affected by a depression, although not much.
Depression is not a natural phenomenon. Pause is a natural phenomenon. In a Proutistic structure pause may occur but depression will not occur. To save society from depression, the approach of PROUT is to increase purchasing power by increasing production, reduce disparities in the value of wealth, and increase the circulation of money; that is, by keeping money rolling. Empty slogans will not do. Attention will have to be given to increasing the level of production.
In capitalist and communist countries, the mode of production is defective. In capitalist countries, labour does not work in the interest of the management and management does not allow the rolling of money due to the concentration of wealth. In communist countries, labour does not feel one with the job and that is why there is sluggish production.
The cooperative model of PROUT is free from both sets of defects. PROUT is well-adjusted with human ideals and sentiments. Other socio-economic systems are ultravires to human existence and all-round elevation.” – Sarkar, Prabhat, 13 September 1987, Calcutta, Prout in a Nutshell Part 13, Economic Dynamics
2. “Economic Depressions
In the economic sphere, you must know that two factors are very important. The first is that money will have to be kept in circulation. It must be understood that the more the purchasing capacity of money is not utilized or money is kept stagnant, the more the economic stratum is damaged. The second is that money, and indirectly its interest, can bring about disparities in wealth if it loses its ability to be the unit of economic equilibrium and stability. If these two fundamental factors of economics are even partially forgotten, a worldwide economic depression will result.
Even if countries or socio-economic regions which have been maintaining a stable economic standard engage in trade related to bullion with other countries, they will have to suffer such a depression partially if not totally. If countries which are prosperous in various spheres and economically unrelated to other countries undergoing a depression, invest their wealth in enterprises of a non-yielding nature such as excessive defence spending, superfluous construction of large buildings, luxury goods, etc. – investments which do not earn any income in return – these countries will also suffer from economic depression.
However, if a country discontinues trade related to direct or indirect economic transactions and commences barter trade instead with other countries, it will not suffer much from such an economic depression. In this case only a very slight economic depression, which is hardly felt, takes place at the end of every financial year due to imbalances in economic transactions. This type of depression is felt slightly every three years, a bit more every thirty years, and still more every 350 years…
When something, for some reason or other, descends from its universally accepted position, or its natural value is reduced or brought down, we call it “devaluation”. When the leaders of the state find it difficult to balance the value of the currency with bullion, sometimes they officially reduce the value of the currency. This is called “monetary devaluation”. But, an economic depression is felt throughout a country or the world due to some inherent defects in the existing economic systems.” – Sarkar, Prabhat, 17 January 1988, Calcutta, Economic Depressions, Prout in a Nutshell Part 15
3. “Members who purchase shares in the cooperative should have no power or right to transfer their shares without the permission of the cooperative, but their shares may be inherited. If some cooperative members have no descendants, then their shares should pass on to their legally authorized successors who will become members of the cooperative if they are not already members. The reason for this policy is that it prevents capitalists from purchasing large numbers of shares in a cooperative and speculating in the market place. This type of economic activity can easily lead to a depression.” – Sarkar, Prabhat, 18 February 1988, Calcutta, Prout in a Nutshell Part 14, Cooperatives, Farmers Cooperatives
4. “If the percentage of people engaged in non-agricultural industries is kept within twenty to thirty percent of the population, this is the state of balanced economy – a really balanced socio-economic structure. If the percentage goes beyond thirty percent, the area becomes industrially developed. Then, the more this percentage increases above thirty percent, the more over-industrialized the area becomes. In order to procure agricultural produce, over-industrialized countries try to grab productive agricultural regions or countries and make them their satellites. These over-industrialized countries also find it necessary to keep industrially undeveloped countries within their control in order to use them as a market for their finished goods. If they do not get a market to sell the consumer goods produced in their countries, they will suffer from economic depression and growing unemployment.” – Sarkar, Prabhat, 6 April 1986, Prout in a Nutshell Part 12, Calcutta Principles of Balanced Economy – Section A
5. “For a man who always runs after money, what will happen when that money is lost? He will die. Sometimes, due to economic depression or devaluation, many people die because their existence was solely on money. But when your existence is pinnacled, that pinnacled existence comes in contact with the Supreme. So it is said that the devotees are the most cunning fellows. Who are the most cunning fellows? Devotees are the most cunning fellows. Others are fools.” – Sarkar, Prabhat, 26 August 1979, Taipei, Ánanda Vacanámrtam Part 14, Pinnacled Existence