Economic Dynamics

Economic Dynamics

Due to their inherent staticity, both capitalism and communism are on the verge of extinction from this world. The contradictions in capitalism are due to the self-centered, profit- motivated psychology and the accumulation of wealth for the benefit of a few rather than for the welfare of all. Hence capitalism is not congenial to the integrated growth of human progress. Shrii Sarkar says the day is "therefore sure to come when capitalism will burst like a fire-cracker!"
by Srii Prabhat Ranjan Sarkar

Each and every movement in this universe is systaltic. Nothing ever moves in a straight line. Due to this systaltic motion, internal clash and cohesion take place. The ups and downs of socio-economic life in different phases of the social order are sure to take place due to this systaltic principle. When the period of pause is long, society goes through a phase of extended staticity, and it may lose all its dynamic movement or even cease to exist. If there is lack of dynamic force in the phase of pause, then the stage of dynamicity may not come in the subsequent phase.

The downfall of both capitalism and communism is inevitable due to their inherent staticity. Both capitalism and communism are on the verge of extinction from this world. The external and internal spheres of capitalism have ordinary acceleration, but there is a contradiction between its internal and external spheres. The contradictions in capitalism are due to the self-centred profit motivated psychology and the accumulation of wealth for the benefit of a few rather than for the welfare of all. Hence, capitalism is not congenial to the integrated growth of human progress. A day is therefore sure to come when capitalism will burst like a fire-cracker.

Marxism, too, is a transitory phenomenon. In the external sphere of Marxism there is only ordinary acceleration, and in the internal sphere there is staticity. The result is negative dynamicity. That is why Marxism will never be a success either. Marxism is just like a comet on a parabolic path -- it is not of hyperbolic order. Marxism can only bring society to an omni-static state; that is, the state of nihilism or cynicism -- a sort of negation.

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 worker, warrior, priest or capitalist 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 eggplant/brinjal were sold for one paisa, and forty kilos were sold for eight paisa 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".

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.

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 U.S.A. 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.

Bullion Inflation

In capitalist economies, production is for the profit of the capitalist and the profit goes to individuals, groups and the state exchequer. In socialist economies or so-called communism, the profit goes to the state exchequer and a microscopic fraction of the profit goes to the actual producers. In both cases capitalism exists, and whenever fresh financial investment is required, inflation takes place.

In a Proutistic economy, production will be solely for consumption. As there will not be any profit motive, there cannot be any fresh inflation, and the existing inflation will gradually die out. In Proutistic production or consumption, in the first phase the money value remains constant and full-fledged purchasing capacity will be guaranteed to the people.

In the second phase, when production increases in the revised economic order, money will get back its natural market value. Finally, after consumption, money will get back its actual value. Inflation will be checked and purchasing capacity and the minimum requirements of life will be guaranteed to the people.

The second phase will continue for ten to fifteen years. After the expiry of this period, that is, in the third phase, minimum requirements of life will increase and people will acquire more purchasing power. This power will increase at an accelerating rate.

The printing and issuing of monetary notes having no bullion value must stop immediately, and new notes having bullion value should be issued in new colours and shapes. No monetary notes should be issued by the government from then on without a clear assurance that it is prepared to pay the requisite amount of money in gold coins. This can only be implemented by a Proutistic government.

Production Inflation

The problem of production inflation cannot be ignored either. Production inflation may occur in two ways. First, owing to the application of scientific methods, the production of certain commodities may increase in excess of the demand or need in particular socio-economic regions. Then it becomes a problem how such excess production or overproduction can be marketed or consumed. Secondly, it may also happen that all of a sudden under certain circumstances the production of commodities increases, then it becomes difficult to find a market for such production.

Now a question arises whether or not such production will increase purchasing power as well as elevate the standard of it. In general circumstances such production is not a big problem, not a chronic problem, but if no measure is taken to find a market for such overproduction, then it may take the form of an acute problem. This problem can be tackled by taking three measures.

First, there should be a free trade system so that overproduction can be consumed by other countries or other economic units. In India, excepting the Punjab and Haryana, there is underproduction of milk.

In other states, common people cannot get a sufficient amount of milk. But there are many countries, such as certain European countries, where there is overproduction of milk. In England, Germany and Sweden the authorities even give orders or encourage the public to kill cows.

If in these circumstances free trade is allowed among different countries, the countries having overproduction or underproduction can make respective adjustments among themselves so that the overproduction of commodities may be consumed by under-producing countries. In that case the concerned countries will be benefited. Here free trade means that there should not be any imposition of export or import duties, and thus the prices of these commodities will benefit the consumers when they reach the market for actual consumption.

Secondly, there should be proper arrangement everywhere for the preservation of products which are in excess production. In Malda in Bengal there may be overproduction of mangoes which are perishable commodities. As there is no system of preservation, the ordinary mango growers will have to sell their mangoes at throw away prices. But if they could sell the same products four months later they would get remunerative prices.

Moreover, if processing factories are established, they can then produce dried mango, mango candy, mango juice, sauce, jam, etc., which can be preserved for a longer time. There are many countries in Europe or other parts of the world where there is no mango production. If a system of preservation were available, then mangoes could easily be sold in those European countries, and the mango growers could earn a good amount of money.

In many places in India abundant vegetables are produced in the winter season; for example, in Nadia district, at Ranaghat, Nagi, Bago, etc. In European countries at the same time there cannot be any vegetable production due to the excessive cold. If vegetable processing factories could be installed in those places, then perishable vegetable products could be easily preserved by such processes as canning, and exported to other countries. From Calcutta it takes a maximum of twenty days for a ship to reach Europe, so preservation arrangements could be made for that period. Similar arrangements could be made for betel leaf. If this were done, then the poor growers at Tomluk, Mecheda, Bagnan, etc., would be able to live a well-to-do life.

Thirdly, new diversified styles of consumption should be invented. That is, consumption should be of a progressive nature and the style of consumption should be diversified. For example, there is only limited utilization of linseed at the moment in India. If the oil extracted from the linseed is deodorized, then it can be widely used as an edible oil. Also linen thread can be manufactured from linseed plants, which generally go to waste. Okra is abundantly produced in India, but it is only used as a vegetable. Oil can be extracted from okra seeds, and this can be processed and marketed as edible oil. Also, fine thread can be manufactured from the okra plant, and good quality clothes can be prepared from that thread.

In Bangladesh and West Bengal there is overproduction of jute, which is an acute problem today. This problem can be easily tackled by diversifying the methods of jute consumption. For example, we can get fine thread from raw jute to produce good quality clothes.

In the existing world structure geo-sentiment is an obstacle to the implementation of free trade. Neither the capitalist countries nor the communist countries like the free trade system because it is detrimental to their respective self-interests. But there are some free trade zones in the world which are very bright examples of the success of this sort of system. Singapore is one such example. There was a good proposal to declare Calcutta a free trade zone, but it was not implemented for many reasons, including the failure of the concerned leaders.

Bengal could have been greatly benefited by such a system. In a revised economic structure -- that is, PROUT -- there must not be any import or export duties on consumable commodities. If this is done, then this earth will be converted into a golden earth.

The commune system suffers from the acute problem of chronic shortages of food products, so the communist countries always import food products from capitalist countries, in spite of all sorts of hue and cry raised by them regarding their "isms". Therefore, they oppose the free trade system.

In case there is overproduction of non-perishable goods or raw materials, these raw materials must not be allowed to be exported to other countries. Instead, raw materials must be immediately converted into manufactured goods at the place where they are available. For example, Orissa, the western portion of Ra'r'h, certain portions of Madhya Pradesh, and certain portions of southern Bihar and Telengana are rich in different kinds of raw materials. These economically undeveloped places can easily be converted into advanced areas like the Rhine region of Germany. Poverty stricken people will live an affluent life if factories in these areas convert raw materials into manufactured goods.

The export of raw materials is a sign of an unhealthy economy in a country. If overproduction is caused due to the scientific application of improved methods in industry and agriculture, such as good manuring, then consumption may be adjusted through different methods as suggested above. This will also increase the purchasing power of the people.

In such a stage the bountifulness of nature will ultimately prove to be a boon for the common people. Hence, in a Proutistic structure production inflation would not be regarded as a problem.

The Panacea

PROUT is the panacea for the integrated progress of human society. It aims to bring about equilibrium and equipoise in all aspects of socio-economic life through totally restructuring economics. Without PROUT, socio-economic emancipation will remain a utopian dream. Only PROUT can save the world from depression.

Furthermore, only PROUT is free from the inherent and exherent staticity. In capitalism there is exherent and inherent staticity. In communism there is extensive and intensive innate staticity. People suffer from the ailments of staticity. These ailments will destroy all forms of "isms" in the very near future. Wise people should utilize this moment. We are near the last stage of the Capitalist Era. If an impact is created, it will help the suffering humanity. It is the most opportune moment for creating an all-round revolution. This is a new sub-theory under Proutistic theory and may be called the science of dynamics in PROUT._____________________________
Source: Shrii Prabhat Ranjan Sarkar, Proutist Economics, Kolkata: Ananda Marga Publications, 1999.