Welcome to another edition of PROUT Gems. Well it certainly is interesting and extraordinary economic times that are occurring. Not to mention the extraordinary circumstances in the entire social arena also, such as increasing frictions around the world with religious dogmas against each other playing out behind other facades, narrow mantras of 'border protection' as a scapegoat for instilling fear into people's lives convincing them that they were apparently unsafe before without the repetition of this mantra, the ongoing social falsity being created as to what is terror and its doublespeak redefinition to potentially include any social challenge to the status quo, and the demise of another mantra being that of 'greed is good'. One will no doubt continue to see assertion of many of these things. However, ultimately it comes down to how expansive you want your mindset to be. A narrow vision based on fear (and loathing) will not anyone any good. A broad vision based on liberation of self and service to humanity - through higher ideations - will be necessary to the advancement of society. This also includes in the economic arena of life. What we see today in economics is the narrowness of the profit motive. The consumer and environmental integrity is forgotten. But my, look at the consequences of that neglect. So let us reliven our thoughts and visions and our higher thinking and our actualisations for achieving the highest in humanity. Economics largely needs rethinking and principles that allow for full recognition of each life and value need to be the basis of that thinking. This can be called the spiritual vision. Dharmadeva -- The economic principles of Prout The basic principles of Prout's economy are part of the 16 principles that encapsulate Sarkar's Progressive Utilization Theory (PROUT). The four socio-economic principles are numbers eight to eleven, and are followed by what Sarkar calls the five fundamental principles of Prout. All these principles are concerned with economics. The first of the four socio-economic principles, the eighth of the sixteen, states: "Diversity is the law of nature and sameness will never be." That is, absolute equality is not possible in an ever-changing world. So although social equality is the key to an expansive and humanistic ideology, and although world federation with a common constitutional structure is a political necessity, diversity must also be recognized and utilized for the collective good. Economically, diversity is a necessary consideration in the sound policy of both developed and less developed countries. The precarious existence of subsistence peasants must be stabilized, and the living standards raised through diversification - diverse production and production for both consumption and trade. Similarly, the precarious existence of totally trade-dependent economies in both developed and less developed countries must be established by diversification into self-sufficient production. Orthodox economic theory proposes the maximization of specialization and trade, so as to raise total output. However, regional sufficiency must augment trade for: a) strategic purposes, so that production of necessities is maintained in the case of disruption to communications or transport, or in case of war; b) fullest resource utilization, which is impossible in a totally specialized economy, where only the most 'efficient' resources of a particular area are exploited - mass employment is possible in a diversified economy; and c) economic democracy, where communities retain productive control of as much as possible their basic necessities and so retain control of their lives and help prevent exploitation. Another economic implication of this recognition of diversity is the question of incentives and income differentials. While no great gap between upper and lower incomes can be tolerated in any society based on equality, some gap must be provided for the maintenance of a certain level of material incentives and thus higher labour productivity. This issue, and the practical harnessing of diversity to serve collective interest, is taken up in the third and fourth principles of this set of four. The second principle here, the ninth of the sixteen, states: "In any particular age the minimum necessities of all shall be guaranteed." That is, the provision of food, clothing, housing, education, medical care and other necessities to all, is a collective responsibility and must be the cornerstone of economic policy and social effort. While regional self-sufficiency is encouraged, a social guarantee must back such efforts. Everyone comes into this world born of the expectation of living a life useful to them and society and that is only achieved by ensuring each person's minimum necessities. Lack of this guarantee today is solely and unequivocally due to economic inefficiencies and economic arbitrage by vested selfish interests alone and it is this that is leads to excess wealth accumulation and the huge disparities and disgusting gross social inequality in society. Surplus goods and services cannot be provided for anyone while people in general do not have their necessities. Of course, the definition of necessities will vary at different places. For instance, heavy clothing is needed in cold countries and transport requirements will vary from place to place. But a minimum level must be determined and guaranteed to all. The prime mechanism for this policy in any modern economy is the provision of purchasing power through wages. To ensure that wages carry sufficient purchasing power for necessities, as well as to ensure that income differentials are contained, there must be collective prices through co-operative structures and income control with ceilings on the wealthy. The third principle of this set, the tenth of the sixteen, states: "The surplus goods and services, after distributing the minimum requirements, are to be given according to the social value of the individual's production." Note that it is social value rather than economic value. This principle provides a rational basis for material incentives. It is, of course, better for society if moral incentives and the desire for social service motivate people in their productive work. However the practical reality is that labour productivity is, to a large extent, proportional to material rewards. The need is for a framework that controls such incentives and contains them within such bounds as will best serve the collective interest. The incentives should also be provided in the form of goods and services that can be further applied to social purposes, rather in the form of wealth that is likely to be hoarded. The provision of necessities to all, established by the previous principle, creates an income 'floor'; this principle creates an income 'dynamic'; the 12th principle sets an income ceiling. The fourth socio-economic principle, eleventh of the sixteen, states: "The increase in the standard of living of the people is the indication of the vitality of society." So there must be a constant effort to reduce the gap between the income levels of those with earned surplus goods and services, and those with basic necessities. This means an approach, which, from time to time, increases the lowest wage while leaving the higher wages untouched. This is a check on the expansion of living of society so that everyone can move in a harmonious way, and the defined level of basic necessities is also allowed to rise. The benefits of science and technology can thus be distributed equitably and people in general can be freed from the more mundane responsibilities. Sarkar notes that mechanization under capitalism means more misery and unemployment to the common people because with the increase in the yield of a machine capitalists retrench labourers mercilessly. However under a collective economy the benefits of technology can be passed on to workers through progressive reduction in work hours. While Sarkar supports the socialization of the means of production and the socialization of capitalist expropriation, he does not support nationalization or the communist practice of party dictatorship on behalf of society, and advocates socialism in the context of neo-humanism. Sarkar opposes wholesale nationalization on two major grounds. First, the state is entirely dependent upon bureaucrats to administer its affairs. It is impossible for any bureaucracy to run diverse large and small scale industries spread over a whole country. Where a policy of nationalization exists, there persists a smug slackness not only in auditing and accounting, but also in the administrative affairs of the department. Secondly, it is impossible for state run industries to demonstrate as much technological and industrial dexterity and efficiency as either proprietary or cooperative industries. Nationalization is not a prerequisite for socialist transformation or reconstruction, and state ownership should be restricted to those sectors of the economy, which are too large or diverse for effective cooperative management. That is state or rather local government holding of key assets on trust for the general public can exist for water, electrical grid and the like. Thus Sarkar's economic principles are rooted in human values and he seeks to blend the expression of human potentiality with economic efficiency and prosperity in the context of a progressive socialist society. The first of the fundamental principles, twelfth of the sixteen, of Prout states: "No individual should be allowed to accumulate any physical wealth without the clear permission or approval of the collective body." This gives effect to the idea of collective property rights - but personal usufructuary rights must certainly exist in term of housing and personal chattels and the like. While individual freedom in all spheres is valuable and to be preserved, economic 'freedom' is of a different nature because it involves the possible misutilization and misallocation of finite resources. That means no freedom for those who do not have the will to accumulate and hoard wealth. Accumulation in one area or by one group necessarily means depletion of the resources available in another area or to another group. Therefore there can be no absolute economic 'freedom' as this only implies the freedom to exploit. The very propagation of such absolute economic license in the name of freedom is part of psycho-economic exploitation. The collective body has to set parameters of individual accumulation for all and then approve the exceptions to these general rules as and when exceptions are necessary. In this way there is a basis for a healthy blending of collective and individual interests. The second fundamental principle, thirteenth of the sixteen, states: "There should be maximum utilization and rational distribution of all mundane, supramundane and spiritual potentialities if the universe." This principle begins the process of defining resources and capacities, to be utilized and distributed, as wider than the purely physical. Through this process an equal footing, in principle, is established for comparing subtle and economic values. For instance, the aesthetic and entitative value of a forest is no less important than its economic value as woodchips. In fact, the fourth fundamental principle establishes the subtle value as more important. Maximum utilization is not, of course, the same as indiscriminate use or exploitation. Utilization means proper use and implies the opposite of misutilization and non-utilization or resources stagnation. When people are starving the production of materials for war is clearly misutilization. In similar circumstances, the hoarding of produce for trade advantages is criminal non-utilization. Maximum utilization of physical resources therefore provides the means of properly generating the basic social requirements and amenities. Economic growth, properly directed, is not a goal but a necessary condition for a society expanding through improvements in the quality and span of human life. Economic development implies proper balance and distribution in this growth process, and maximum utilization of subtle resources implies full consideration of their development and expression in the midst of this economic development. Rational distribution similarly, refers to access to subtle resources as well as an equitable and constantly adjusted income policy. Minimum requirements must first be guaranteed to all and then the surplus can be distributed on merit, provided that the differential gap is progressively lessened to a minimum and the minimum level adjusted upwards. Some socialist countries succeeded in cutting the tails of income distribution - the extreme highs and lows - but failed to maintain constant adjustment and so disparity has grown again. Finally it should be noted that this principle extends to include the requirements of the animal and plant worlds; their requirements as independent life forms and not simply as functions of human existence. This principle thus includes the existential value of all living creatures. The third fundamental principle, fourteenth of the sixteen, states: "There should be maximum utilization of physical, metaphysical and spiritual potentialities of the unit and collective bodies of human society." All human capacities, individual and social, should be fully developed and properly used, and this full expression is for the good of both society and the individual. Sarkar commented that one must not forget that collective good lies in individuals and individual good lies in collectivity, so it is with the sole intention of doing collectively good that one will have to devote oneself to individual good. This flows from the spiritual concept that real individual interest and fulfilment comes from identification with the collective or macrocosm. The principle stresses the integrated development of all human capacities, including the often-neglected psychic, creative and spiritual. Individuals in the society should have the fullest scope for development of their various talents without fear of suppression or oppression - and the expression should elevate the society; rather such expression should be socially encouraged. Such an approach should naturally apply to all, without regard to sex, race, caste or any other sort of categorization. The developed talents, skills and knowledge should not then be hoarded or used for any form of exploitation, but rather be made the collective property of the society that has nurtured them. The fourth fundamental principle, fifteenth of the sixteen, states: "There should be a proper adjustment amongst these physical, metaphysical, mundane, supramundane and spiritual utilizations." The resources and capacities referred to in the second and third fundamental principles must be adjusted in a balance that will have to vary with conditions. An over emphasis of physical culture, for example economics and technology, will lead to mental degradation, exploitation and the suppression of subtler human capacities - and will not elevate society. The degradation of society will lead to socio-economic exploitation and psycho-economic exploitation also. But also, an over emphasis on spiritual culture will lead to material deficiency and, inevitably, exploitation. A proper balance is required in all spheres so that there is no neglect or suppression of essential human or universal resources. In making this adjustment, special attention has to be paid to those capacities that are most rare. In the natural world, rare ecosystems must be given greater value than either their economic worth as common physical resources, or other more common ecosystems. In the human world, rare talents should not be waste by insisting, for instance, that a person of great intellectual capacity performs only physical labour. In general, intellectual talents are more rare than the physical, and creative and spiritual talents are rarer still. So, rare talents must be encouraged individually and collectively, as part of the pursuit of a physical, mental and spiritual development. The fifth fundamental principle, sixteenth of the sixteen, states: "The method of utilization should vary with the changes in time, place and person and the utilization should be of a progressive nature." This stresses the flexibility necessary for Sarkar's ideas to be a code of universal principles and not a dogma or reaction to an existing set of conditions, such as Marxism was. The proper use of all capacities and resources is always relative to the various environmental factors and there has to be a continuous effort to match policy and action to these circumstances. Changes in technology, the natural environment, culture and even human biology will in due course do away with any narrow attempt to comprehend the form of human needs and the conditions for progress. The fundamental principles of Prout provide the foundation for a progressive socialist economy and are intended to endure both flexibility and universality in economic management to guarantee 'the good and happiness of all'. From New Aspects of Prout by Jayanta Kumar -- Decentralized economy 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 in which they live. This is a burning question, especially in those countries that 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 or were 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 third world countries are 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. P.R. Sarkar 16 March 1982, Calcutta Prout in a nutshell 21 -- 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 - which are the decentralized economic enterprises of the future - should decide the policies concerning such things as agricultural production, price determination and the sale of agricultural commodities. Local people should not only control cooperative bodies, but also supervise all activities related to the local economy. The local administration will have to assist the economic development of cooperatives. For example, the price of agricultural commodities should be determined 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. Amazingly, this is still not done properly even now. In addition, this price should include a rational profit of not more than fifteen percent of the cost of production. That would be the maximum one would expect in an efficient market. 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 (eg water, electrical grid, main telecommunications infrastructure) should be managed by the local government but they should be guided by the principle of "no profit, no loss". In this regard, rebates may be available to consumer to ensure this intent. 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. This can apply in all countries, as it is important to note that even in many developed countries in the lesser developed regions of that that country many people are still living at subsistence level and improved cottage industries will be vital to their economic wellbeing. 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, pneumatic energy, electromagnetic energy and tidal power, or any other power (nuclear cannot be entirely ruled out) 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. A local person is anyone who wishes to merge their socio-economic interests in a certain region (be it large or small) - they must be part of a community (be it large or small). If this policy is followed, there will be no surplus or deficit labour among the local people. 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 should be no income tax (it will only be used as a proxy for a wealth tax if need be, and this applies particularly to those who accumulate excess wealth and where a ceiling is required), 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 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 alone, but should be on the basis of consumer needs. 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 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 and encouraged 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. There should be no linguistic imperialism. All official and non-official bodies and offices of a particular socio-economic unit should use the local language or languages 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. PR Sarkar 16 March 1982, Calcutta Prout in a nutshell 21 -- The slide down into the flood The things that were the key determinates for the soundness of the financial system - where are they now? The signals we get are that we are basically witnessing an unfolding implosion of the USA Credit system. This sounds extreme, but there is acute fragility of underlying debt structures. The crisis that has been held at bay for so long has now commenced. One can be very fearful of systemic financial dislocation and a plunging US dollar. It is time to have one's house in order. The run on US financial assets has commenced, although so far financial stress has buttressed the key Treasury, agency and mortgage markets. We continue to look at this as an unfolding dislocation in the 'risk' market, with distress at the fringe having now clearly made it to the core of 'structured finance'. This is an enormous problem. A WorldCom bankruptcy would be a problematic development for the impaired CDO (collateralized debt obligations) and credit default swaps markets. Yet, the implosion of the stocks of some major borrowers such as AOL Time Warner leads us to fear we haven't seen the last of major bankruptcies. At the same time, recent developments at the fringes of the consumer credit bubble signal that consumer lending problems must now also be factored into the equation. It appears the worst-case scenario is unfolding right before our eyes. In the past, we have often used flood insurance as an analogy for the derivatives market. Inexpensive and readily available flood insurance led to a building boom along the river. A long drought made writing flood policies extremely profitable, and speculators rushed into the marketplace. The building boom along the river paralleled the bubble in writing flood insurance. There were a few instances when rain started to come down pretty hard, and the speculators watched nervously as the local authorities constructed makeshift levees that held the floodwaters at bay. But as soon as the weather cleared the emboldened speculators became only more aggressive, and more luxurious structures were built, only closer to the waterway. The authorities were determined to do whatever necessary to sustain the building boom, and liked to trumpet how good it had become in building levees. They were ready to move into action with the first raindrops, and were adored by the insurance companies, speculators and homeowners. Well, today torrential rain is falling, the dikes are giving way, and everyone is getting very nervous - homeowners and those that have been peddling insurance. The authorities maintain a brave face. The speculators always planned on going to the reinsurance market when the heavy rains began to fall, but that market now has a deluge of buyers and no willing writers of flood protection. The flood insurance market is 'dislocated', with players basically stuck with the exposure they have written. Various parties are all the sudden very interested in the financial wherewithal of the cadre of marketplace participants (counterparties). The 'conservative' bankers that lent against the homes on the river are in a panic and won't be financing anymore riverfront building. Confidence in the marketplace is waning rapidly, which only exacerbates the rush to dump exposure to a potential flood. With the flood insurance market in taters, the building boom is doomed. The closer the scrutiny, the more apparent that, in the event of a flood, there is going to be a very serious problem - economic and financial. The bottom line is that incredible amounts of inadvisable building ('risk creation') has occurred over the past few years, and there is nothing that can be done to reduce risk at this point. Unfortunately, the insurance 'industry' has little in the way of the necessary financial resources in the event of a flood, and there is little that can be done about this either. It 's a severe structural problem - both for the financial system and the real economy. At the same time, the local authorities have continued to throw additional sandbags on top of fragile levees, with no one wanting to ponder the dire consequences if this frail structure gives way. They say everything is fine, as it always has been. The nervous homeowners are somewhat comforted, but those in the insurance market know otherwise. They are left to pray that it stops raining. D. Noland --