For a More Progressively Evolving Society

Friday, April 29, 2011

Select Videos of Alabama Tornadoes

Here are some select videos of one or more of the major tornadoes that hit Alabama on April 27, 2011

This one is from BamaWXCom, covering the Tuscaloosa tornado with its nearly mile-wide swath ["Wrath of Shiva"]

Monday, April 25, 2011

An Alternative Economic And Spiritual Model For The Welfare Of All

  The Progressive Utilization Theory (PROUT): Alternative Economic And Spiritual Model For The Welfare Of All

By Acarya Maheshvarananda, Mariah Branch 


To envision our future, it is vitally important to ask: what kind of world do we want?  Prout (the Progressive Utilization Theory) is a socioeconomic alternative model that promotes the welfare and development of every person, physically, mentally, and spiritually.  This article provides a brief introduction to some of the economic and social concepts of Prout, including guaranteeing minimum necessities to all, the right to jobs, a three-tiered economy, including small-scale private enterprises, cooperatives, and large-scale publicly owned key industries, food sovereignty, sustainable agriculture, proper utilization of natural and human resources, and economic democracy.  Prout promotes an ecological and spiritual perspective that is universal and nondogmatic.  Prout's holistic model provides an overarching framework to effectively measure and compare policies for the greater good of all people, as well as the planet.

“Another world is possible!” is the theme of the World Social Forum, which began in Brazil in 2001, and which has been growing exponentially ever since, with hundreds of thousands participating in global, regional, national, and local events that democratically educate people and rally to create social, political, and economic changes.  At these forums, it is common to proclaim that we are against the unjust global economy, based on profit, selfishness, and greed, which excludes more people than it benefits.  However, the Progressive Utilization Theory, Prout, offers the opportunity to champion what we are for and explore how we can achieve our goals.

When audiences are asked, “What kind of world do you want?” in the Philippines, Poland, the United States, Brazil, or the slums of Caracas, the answers are almost invariably the same: a world without war, hunger, or poverty, with human rights, democracy, environmental protection, etc.  The truth is we all want the same thing: peace and justice on earth!  There is tremendous power in this shared dream, and there are many people who are struggling to help create it.

We believe that the process of answering this question, envisioning what kind of society we want, is so fundamental to creating a better future that students should be asked it in every school from the first year to postgraduate level, plus the society as a whole.

Indian philosopher Prabhat Ranjan Sarkar (1921–1990), author, composer and spiritual master, devoted his life to exploring and answering this question in the most practical way possible.  He first formulated Prout in 1959, and formed an organization called Proutist Universal to work to implement it.  From 1971 to 1978, he was a political prisoner in India due to Prout's stand against corruption, the caste system, the exploitation of women, and political exploitation.

Prout promotes economic self-reliance, cooperatives, environmental balance, and universal spiritual values.  The essential characteristic of Prout is economic liberation, freeing human beings from mundane problems so that all will have increasing opportunities for intellectual and spiritual liberation.  Prout is not a rigid mold to be imposed on any society.  On the contrary, it is a holistic set of dynamic concepts that can be applied appropriately by citizens and leaders to help their region or country prosper and achieve self-reliance in an ecological way.

We provide a brief introduction to some of the economic and social concepts of Prout below, and explain the importance of its nondogmatic ecological and spiritual perspective. 

Minimum Necessities

People in all nations must have their minimum necessities met in order to be productive and develop their full potentials.  The five minimum necessities are: food (including pure drinking water), clothing, housing (including adequate sanitation, energy, communication, and information), medical care, and education.  These must be provided in a sustainable manner so that future generations can also meet their minimum necessities.  The Brazilian spiritual activist Frei Betto called attention to this need when he said, “The degree of justice in a society can be evaluated by the way food is distributed amongst all of the citizens” (F. Betto, letter to the author, Dada Maheshvarananda, 2002).

The right to meaningful employment with fair wages is also a fundamental human right, because it ensures an adequate income to purchase the above basic necessities.  Prout recommends using cooperatives to sustainably produce the minimum necessities as well as other goods and services. 

Physical Wealth

Prout's solution to economic inequality is based on the obvious truth that the world's physical resources are limited.  When certain individuals accumulate too much, there is not enough for everyone else.  We have to make decisions about how wealth is distributed, how our economy is organized, which resources we will use, and which resources we will leave for future generations.

If our goal is to create a fair society that meets everyone's minimum necessities both now and in the future, we need to develop distribution methods to achieve that goal.  Allowing one person or a small group of people to hoard resources, including wealth, is counterproductive.

National and state governments need to determine how much wealth one person can own and how much of that wealth can be passed from one generation to the next.  These laws should be evaluated and adjusted so that they foster a fair distribution and provide economic opportunities throughout society.

National governments should also promote self-supporting decentralized local economies and full employment, with transparent economic opportunities that discourage law breaking and encourage fair salary structures.

Sarkar proposed a three-tier system of enterprise management to create a healthy economy: privately owned small-scale enterprises, worker-owned cooperatives, and state-owned public utilities.

Small-scale private enterprises can produce nonessential or luxury goods and services.  They are a vital component of an economy, because they encourage creativity and personal initiative.  They allow individuals, families, and small partnerships to develop innovations, as well as identify and fulfill needs that benefit their communities and themselves.

Prout recommends that a ceiling be set on sales volume and number of employees for private enterprises, in order to prevent unlimited concentration of wealth in the hands of one person, which would be to the detriment of the community.  If a firm reaches one of those limits, it must then choose whether to transform itself into a cooperatively managed enterprise, to divide itself or to curtail further expansion.

Cooperatives form the second level of a Prout economy: industrial, agricultural, consumer, banks, and services co-ops.  It is a basic right of workers to own and manage their enterprises through collective management.  These cooperatives can produce the minimum necessities and most other products and services, forming the largest part of a Prout economy.  Cooperative banks can invest in local housing, farms, students, and businesses.  They can avoid much of the speculation that has contributed to the recent economic hardships felt around the world.

Large-scale key industries, such as transportation, energy, telecommunications and steel, form the third level of a Prout economy.  They require large capital investment and are difficult to decentralize.  Prout recommends that such key industries should be managed as public utilities, and should never be privatized.

Many economists have suggested that salaries within companies and cooperatives should be tied together to reduce the large wealth discrepancies that we see in many industrialized societies.  Economist John Kenneth Galbraith wrote, “The most forthright and effective way of enhancing equality within the firm would be to specify the maximum range between average and maximum compensation” (Gailbraith 1973).

While some cooperatives choose to evenly share profits among all their members, most choose to simply link their starting salary with their highest salary at a ratio of, for example, three to one.  Thus the people with the most seniority or most skilled jobs are paid a certain percentage more than the basic starting wage.  Thus salaries in a cooperative might range between $30,000 and $90,000 per year, depending on what the members agreed. 

Proper Utilization of Natural and Human Resources

Prout supports the maximum utilization of the planet's resources, which means to make the best use of them, with economic and mechanical efficiency, while still protecting the natural environment.  It is our conviction that everyone can experience a high quality of life if we use our resources wisely.  Mark Friedman quotes the American scientist and visionary R. Buckminster Fuller as saying, “We have enough technological know-how at our disposal to give everyone a decent life, and release humanity to do what it is supposed to be doing—that is, using our minds, accomplishing extraordinary things, not just coping with survival” (Friedman 2001).

The natural resources gifted by nature belong to everyone and are to be used for the welfare of all.  The economically developed nations of the world amassed their wealth by taking natural resources from other nations, first through colonization and later through very favorable trade policies and debt manipulation.  To counter this detrimental practice, local processing industries should be created nearby the sources of raw materials, ensuring full employment for all local people, who can then trade or sell the finished goods to other regions for the economic prosperity of the local people in both areas.

Prout also proposes the maximum utilization of all human resources, emphasizing the value of both individual and collective well-being.  According to Prout, there is no inevitable conflict between individual and collective interests.  Rather, their true interests are shared.  Healthy individuals create a healthy society, just as a healthy society fosters the development of healthy individuals.

In contrast, a materialistic consumer society pressures people to increase their own pleasures and comforts, indifferent to the needs of others.  The results of excessive individualism can be seen in the breakdown of the family and the selfish “me-first” attitude, which is sadly all too prevalent throughout the Western world.

This principle, however, does not support abandoning all individuality for the intended good of collective society.  Communist governments have amply demonstrated the danger of excessive collectivism.  Society needs to respect human diversity, and to allow people the freedom to think for themselves, to express their creativity, and to form diverse relationships.  An important goal of Prout is to encourage individuals to realize their full potential and achieve their dreams and goals.

Wastage of metaphysical or intellectual resources occurs when people lack education, or are denied opportunities to develop their different talents and contribute their ideas because of racial or sexual discrimination or economic exploitation.  How wonderful it will be when all the creativity of human beings is encouraged and channeled toward improving our world, instead of it being wasted or misdirected in advertising to convince us to purchase what we do not need. 

Economic Democracy

Prout promotes economic democracy, which shifts decision-making power away from a small minority of corporate shareholders and vests it with the local people.  It proposes a dynamic economy of the people, by the people, and for the people.  Through democratic cooperatives and decentralization, the people can meet all their basic needs with adequate purchasing power.  In addition, special amenities, facilities, and services should be provided to deserving individuals who contribute to society.  When each region and state, and, as much as possible, each community is self-reliant in food, then the people will not suffer from food shortages or inflated prices due to transportation breakdowns or a rise in oil prices.

Another requirement for economic democracy is that outsiders must be strictly prevented from interfering in the local economy or taking away profits.

In fact, effective political democracy with full political rights is not possible without economic democracy and corresponding economic rights, including the guaranteed minimum necessities.

One of neoliberalism's clever tricks was to put so-called “economic freedom,” which implies the freedom of persons and corporations to amass wealth beyond measure, on the same footing with fundamental human rights.  The idea of “economic freedom” contradicts the reality that the world's resources are limited and that the actions of individuals affect the opportunities others.  In law, we grant individual rights to the extent that they do not harm others.  Prout's concepts incorporate this idea into economics.  Sarkar further states that, “The entire wealth of the universe is the common patrimony of all” (Sarkar 1992)

An Ecological and Spiritual Perspective 

Prout contains an ecological and spiritual perspective that many economic philosophies lack, but which is present in many traditional societies.  Indigenous spirituality throughout the Americas, Africa, Asia, and Australasia invariably revolved around nature.  Indigenous people did not believe that the land belonged to them; rather, they believed they belonged to the land.  Indigenous oral traditions and writing expressed intense pain at seeing miners ripping open the earth, loggers felling all the trees, the water being poisoned, the animals being slaughtered (Giblett 2004; Stevens 1997).  These traditional cultures were mostly cooperative by nature and treated most of the land as a common resource.

Black Elk, Oglala Sioux spiritual leader, said, “The first peace, which is the most important, is that which comes within the souls of people when they realize their relationship, their oneness, with the universe and all its powers, and when they realize that at the center of the universe dwells Wakan-Taka (the Great Spirit), and that this center is really everywhere, it is within each of us” (Neihardt 1932)

Today environmental sciences demonstrate that an interconnected web of living systems and organisms in dynamic balance exists throughout nature.  The interdependence and interrelation of all forms of life is astounding.  From the single-cell bacteria to the most complex animal, each creature inhabits its niche and plays its unique role.  The cycles of birth, life, death, and decay continue in a fluctuating state of balance.  In fact, one can view the environment as a factory that produces no waste at all—everything is recycled.

Prout includes the ecological perspective of traditional peoples that we all belong to the natural world.  Planet Earth, her wealth of resources, as well as the rest of the universe, are the common inheritance of all humanity.  Collectively, like brothers and sisters in a human family, we have a duty and a responsibility to utilize the earth in a sustainable manner and to fairly distribute the world's resources for the welfare of all.  As the elder sisters and brothers in a family, we also have a duty to protect our younger siblings, the animals and plants and Creation.

Prout's notion of ownership is based on this spiritual concept that Sarkar terms “cosmic inheritance” (Sarkar 1993)
.  He reasons that the Creator is not separate from the creation, but permeates and resonates in every particle of it.  There is a divine essence in each human being.  Prout encourages the protection of biodiversity, natural habitats, and reforestation, as well as aggressive control of air, water and soil pollution.  Efforts to reduce carbon emissions and greenhouse gases are supported.  Every living being has existential value in addition to utility value.  Humans do not have the right to destructively exploit plants, animals, or the Earth, without regard for their well-being.  The Creator invites us to use these with respect, but not to abuse them.

The spiritual potentialities of people, that which allows us to develop peace, harmony, wisdom, wholeness, and lasting happiness within, remain for the most part undiscovered in materialistic societies.  Yet throughout history, a few mystics of all cultures have dedicated their lives to practicing spiritual techniques to realize this inner treasure and share it with others.

A spiritual perspective then would include respect for all beings, gratitude for all beings, and eventually ever-expanding feelings of compassion, altruism and unconditional love for all beings.  This involves self-transcendence, wisdom, and connecting with the sacred, the infinite, to reach a state of perfect peace and infinite happiness.  The endeavor to attain this blissful state is the human quest known as spirituality.

“Neohumanism,” a term coined by Sarkar, is the process of expanding one's sentiment or allegiance from one of self-interest to one of empathy and identification with an ever-larger share of humanity.  It stands for the practice of love for all creation, including plants, animals, and the inanimate world ( Sarkar 1982)
.  Prout advocates that education should be based on this, incorporating a harmonious blending of oriental introversial philosophy and occidental extroversial science.  It seeks to redefine the human experience from one that is competitive, desiring to dominate and control, to one that is cooperative.  Neohumanist education unleashes infinite learning capacity into our lives by expanding our understanding of ourselves and our potential.  Spirituality, creativity, and love are at the center of this new force.  (Inayatullah, Bussey, and Milojevic 2006). 

What Spirituality is Not: Dogmatism 

This universal spirituality is different from religion, a particular faith tradition or doctrine.  It is also not about dogmas, which can be defined as any intellectual barrier beyond which one may not question.  Examples of religious dogmas include: the idea that we are the chosen people of God and others are not, that ours is the only way, that we are going to heaven and everyone else is going to hell, that only our holy book is the word of God, that men are spiritually superior to women.  All of these are terribly destructive, dividing humanity by creating a mentality of Us and Them, superiority and inferiority.  Dogmatic leaders have incited fanaticism, hatred, intolerance, and violence.

Unfortunately, fundamentalism and religious fanaticism are increasing in many parts of the world as a reaction to the economic injustice that many people are facing.  Unemployment, debt, insecurity, urbanization, and westernization are marginalizing millions.  When people feel they have no future, when they are alienated because they are not a part of the capitalist dream presented by beautiful, rich, happy American actors and models, they sometimes turn to dogmatic religion in order to reclaim their hope.  Religious institutions sometimes manifest structural violence, instilling fear, guilt, and inferiority.

Sarkar defended Karl Marx's condemnation of religious dogma as “the opiate of the people,” writing: “A group of exploiters loudly object to a remark that was made by the great Karl Marx concerning religion.  It should be remembered that Karl Marx never opposed spirituality, morality and proper conduct.  What he said was directed against the religion of his time, because he perceived, understood and realized that religion had paralyzed the people and reduced them to impotence by persuading them to surrender to a group of sinners” (Sarkar 1963)

Evaluating Social Policies with Prout 

Sarkar's work is exciting because it allows policy makers and activists to effectively measure and compare policies for the greater good of all people, as well as the planet.  The goal is for all people to maintain themselves, to develop their potentialities, and to balance their individual expressions with collective interest, instead of allowing one group's interest to trump the needs of another interest.

Prout's holistic model provides an overarching framework that combines the strengths of many disciplines, including, for example, economics, political science, public health, environmental sciences, sociology, finance, administration, engineering, and law.  Below is a list of sample questions to consider:

  • Are everyone's minimum needs being met in a sustainable way, both now and in the future?

  • Do federal and state governments provide: Support for balanced regional economies?  A fair monetary and banking system?  Rational limits on the personal accumulation of wealth?  A coordinated national infrastructure and public health?  A fair judicial system based on restorative justice and transformation?

  • Are communities able to provide full employment, fulfill their needs, determine their economic future, and process local resources in a sustainable manner?

  • Do individuals have all the personal freedoms included in the Universal Declaration of Human Rights?  Are there continual efforts to expand these rights according to changes in consciousness?

  • Is the structure flexible enough to change as needs change?

Policy evaluators, to accurately answer these questions, will need to draw on varied expertise.  For example, to determine if everyone's minimum necessities are being met, we need to consult social workers and nongovernmental organizations, evaluate indicators of health, poverty, and unemployment, study the pricing of essential goods and whether a person receiving a minimum wage could afford them, survey housing needs, explore issues of class, gender, race, age, and education, as well as check for environmental sustainability. 


Prout proposes the maximum utilization and rational distribution of all natural and human resources, emphasizing the value of both individual and collective well-being.  It is a holistic model of economic, social and spiritual concepts that include guaranteeing minimum necessities to all, the right to jobs, a three-tiered economy, including small-scale private enterprises, cooperatives, and large-scale publicly owned key industries, food sovereignty, sustainable agriculture, and economic democracy.

Normally, a spiritual perspective is considered a personal affair.  However, Prout and neohumanism assert that an ecological and spiritual perspective that is universal and nondogmatic is essential to creating a truly just society.  To feel connected with everyone and everything, to feel compassion for all, to develop even love for all, suggests that our social and economic system cannot exclude anyone.

The authors suggest that an evaluative policy framework based on Prout be developed to effectively measure and compare policies for the greater good of all people as well as the planet.  This would allow both activists and policy makers to decide campaigns and raise awareness about key issues in the best way possible. 

Political Democracy can and will be fortuitous
when Economic Democracy is established.  

Explore this and other articles covering alternative economics, ethical leadership, economic democracy, and a society without the weal and woe of social and economic vicissitudes HERE  
How does PROUT compare or contrast with capitalism or communism?  Explore the answers HERE
What are essential ingredients assuring progressive sustainability bereft of the vicissitudes of economic or political predation, privation or disparity?  Learn more HERE 

Saturday, April 16, 2011

Zeitgeist Moving Forward, The Full Movie

Never doubt that a small group of thoughtful committed citizens can change the world.  Indeed, it is the only thing that ever has.

Zeitgeist: Moving Forward, The Full Movie

Thursday, April 14, 2011

Taxation and Exploitation

PROUT advocates the abolition of income tax. When there is no income tax, nobody will try to accumulate contraband money. All money will be legitimate money. As a result there will be economic solidarity, an increase in trade and commerce, more investment, more employment and an improvement in the position of foreign exchange. Intellectuals should demand the abolition of income tax, for everybody, especially humans, of which corporations are not.  

Tax Meister Mikey sets things straight about taxes and values in our current economic dilemma. 

Human intelligence is subtle and sublime, a threshold of excellence in evolutionary continuum reaching a zenith, perhaps, in human birth, so far, on Earth.  While this progress is extraordinary, it must also continue, progressing from crude toward subtle with maximum utilization and rational distribution in every realm of life.  Material longings are constant while the materiel desired by humans is finite and less sublime than achieving human birth, and can never satisfy humanity's longing for infinity. 

Our rational minds, so evolved and growing, have overcome many obstacles through our evolutionary history, our rationality dispelling misconceptions born of fear, misinformation and misunderstanding, better managed by our evolving rationality, though that same rationality, an extraordinary feat when contrasted to animality, is subordinate to even subtler realms, intuitional realms anchored in conceptual centricity, i.e. subjective approach, while properly utilizing less subtle realms, including the resources of this vast Universe in fair and equitable manner. 

Predator consumptionists and accumulators hinder the evolution of humanity, and all too often other life forms, by their insatiable greed and avarice while treating, at first objects then life forms and finally, humans, as objects of consumption, negating their deservedness, in their own right, of life, their pursuit of happiness, and exploring their lives and this Universe as the mystery that it is, and as the umbilical envelopment of our perpetual and pervasive home, whatever the original reason for life may be. 

PROUT acknowledges the subtleties of life, particularly well expressed in human life, and encourages people and the enterprises within which they work to facilitate personal and collective evolution in subtler, more limitless realms of human endeavor and development, treating such as both a birthright and a responsibility, both personally and collectively. 

The operative structure of contemporary capitalism, industry or production is governed by the profit motive, whereas in the Proutistic structure production will be governed by the motive of consumption.  No need?  No production.  No shoving hyper-titillating anxieties upon society for people to consume things they really don't need. 

More about PROUT's progressive continuity can be found at links on either side, and a more detailed account of PROUT's tax structure contrasted with contemporary practices can be found here: [then click on "File" to download]. 

Across America people of conscience, just like you, are banding together proclaiming solidarity and demanding that corporate and other tax cheats pay their fair share.  Monday, April 18, in particular is a day of demonstrating this moral fortitude. 

Join others in your community HERE, simply enter your Zip code into the box to share in planned events or start your own and announce it to further a more ethical America and more ethical tax code, expected of all entities.

Guiding Principles of Economic Decentralization

Guiding Principles of Economic Decentralization

PROUT proposes five guiding principles for economic decentralization. These are:

1)  There should be local control of resources. This is especially necessary for those resources that are involved in the production of the basic necessities. Raw materials must be utilized as close to their source as possible for maximum efficiency, sustainability and benefit to the local people.       

2) Production is need-based, driven by consumption rather than profit. Commodities should be produced primarily for the local market to prevent the outflow of capital. The socio-economic unit should be of sufficient size to create stability in the local markets and economy in general.     

3) Production and distribution should be organized mainly through cooperatives. Cooperatives are largely incapable of competing in a centralized, capitalist environment. With a decentralized economy, however, the cooperative system will provide the means to ensure that everyone at the local level has employment and decision making power in the economy. This is a critical component of economic democracy.     

4) There should be local employment in local economic enterprises. This is contingent upon strong local education so that skilled people are available in all fields. Cooperatives can play a role in this process by providing on-going educational opportunities for their members as well as opportunities for implementing this knowledge. This also ensures that very talented people can be properly utilized and will not succumb to "brain drain," moving to more developed and affluent areas as is happening all over the world today. Many of the most skilled and talented move from rural areas to urban ones, and from the developing nations to the developed.     

5) As far as possible, commodities pertaining to the basic necessities which are not locally produced, should be removed from the local markets. It is essential to the development of local production that this rule be applied. Initially, people may have to accept lower quality goods, higher prices, or less availability, but with proper development in accordance with the desires of a population, good results can be achieved by retaining capital within an economic unit. If there is enthusiasm and pride in locally produced goods, this process will proceed very well. 


Under PROUT, the issue of trade must be carefully considered. Guidelines should exist so that trade is beneficial to all parties concerned and to the economy as a whole. In an economic democracy, resources are considered the property of the people of that socio-economic unit. Furthermore, one of the maxims of economic decentralization is that refinement and manufacturing should take place as close to the source of raw materials as possible. Hence, the export of raw materials is considered inappropriate in such an economic framework. An exporting socio-economic unit would lose valuable opportunities for the creation of new jobs and economic vitality. Often, economies which depend upon the export of raw materials are economically underdeveloped and have a low standard of living. Depending upon the nature of the raw materials, the importing socio-economic unit might run the risk of overemphasis on industry; or if food is involved, it may harm the socio-economic unit’s ability to become agriculturally self-sufficient. Generally, such kind of trade is not conducive to economic decentralization or to a balanced economy.

However, when a socio-economic unit has insufficient raw materials to meet the minimum requirements of its populace, the importation of raw materials may be allowed. It should be carefully verified that the imported raw materials are indeed surplus to the socio-economic unit of origin.
Once a local economy is able to meet the basic needs of its people, finished goods which are not and cannot easily be produced should be allowed to enter an economic unit. Care should be taken, however, that they do not undermine the market for local goods. It is good if such kind of trade takes place through barter.
As an infrastructure develops for the exchange of manufactured goods, the free trade of surplus, finished goods between fully self-sufficient socio-economic units should be encouraged. This will help to facilitate prosperity and socio-economic parity amongst units. As this occurs, socio-economic units may begin to merge. This is a positive development if decentralized production and economic democracy are not jeopardized. One final and important point should be made in this matter. In order to avoid the emergence of a class of rich traders and middlemen, transactions between socio-economic units should be conducted only through producer and consumer cooperatives.
It should be clear how this approach differs from the capitalistic notion of freedom of trade. In quest of higher profit margins, capitalists seek cheap raw materials and cheap labor while targeting markets for finished goods which can give high returns. This is beneficial neither to the people living near the raw materials (who do not reap the benefits of ownership and may simply be employed in low wage mining, agricultural, or other jobs) nor to the populace of the more affluent market, for employment opportunities decrease as industry moves to cheap labor areas. And it is only marginally better for the areas which provide the labor for manufacturing because labor conditions, wages, and benefits will be as low as the capitalists can get away with. It may or may not stimulate much local economic growth or raise the standard of living. Furthermore, tremendous energy is wasted in shipping goods and raw materials between the sites of origin, sites of manufacturing, and the final markets.  

Decentralization and Self-sufficiency

According to PROUT, economic planning has to begin at the grassroots level in order to make use of and develop the experience and expertise of the local population. This implies that the optimal form of an economy is a decentralized one, rather than the centralized form which is present in both capitalist and socialist countries.

Decentralization is preferred as it is the system which best allows local people to retain power over their own economic destiny. And as previously discussed, decentralization is a crucial ingredient for economic democracy.

In order for decentralization to exist successfully, there must be a cooperative economic structure. In such a structure the profit motive would be replaced by the desire to produce goods to meet the needs of the local people. The desire for profit is often at odds with this idea of production for consumption. Capitalists start industries only where favorable conditions for production and sales exist. They therefore often ignore the real needs of a population insofar as profits are often made at the expense of local people and the local eco-systems. Under the cooperative economic structure, self-supporting economic units will be the norm. Such units must be nurtured and strengthened. This requires a decentralized approach to industry as well as agriculture. Self-sufficiency does not mean only the local production of food - the industrial sector is highly important as well, and cannot be neglected. Hence PROUT advocates the existence of a full range of industries, mostly on a small scale, for every socio-economic unit.

The treadle pump, such as this man uses in Nepal, costs around $20 US, and can increase a farmer's production by $100 US per year. With this technology, many families in Asia and Africa have increased their income. In Bangladesh, their production and sales are now sustainable without any external aid (but not in Nepal or many other countries in which they are used to great benefit). Because treadle pumps would help a local community become agriculturally self-sufficient, PROUT would not prohibit farmers (or, preferably, farming cooperatives) from importing them. It would want them to do so via barter, however — and would discourage the export of surplus yields in exchange for any goods that could be produced locally.

Wednesday, April 13, 2011

Worker Cooperatives


PROUT Worker Cooperatives

By Carla Dickstein, Ph.D. 

Cooperative enterprises—worker, consumer, agricultural and credit—form the core of a PROUT economy. The majority of manufacturing and service enterprises are organized as worker cooperatives.

Cooperatives are a privileged sector in the PROUT economy because they are considered the best structures for human beings to work together.  According to PROUT's founder, P.R. Sarkar, "Human society is one and indivisible.  A human being cannot live alone.  In society human beings have to work jointly with others so that everyone can move forward collectively." Thus, only those things that cannot be done collectively should be done individually.  If individuality dominates human life, it could "adversely affect the environment, the welfare of different groups and even the continued existence of humanity" (Sarkar, PROUT in a Nutshell, 14:38).  

The foundation of the cooperative system is coordinated cooperation where free human beings with equal rights and mutual respect for each other, work together for the welfare of the others.  This differs from subordinated cooperation, where people work individually or collectively but keep themselves under other peoples' supervision.  Subordinated cooperation dominates most cooperatives and communes formed through forced collectivization.  True coordinated cooperation does not exist in any present economic system.

The main reasons that cooperatives have failed in capitalist economies are rampant immorality and economic centralization.  People cannot accept the cooperative system in an environment of exploitation, corruption, and materialism.  Furthermore, cooperatives are forced to compete for markets and supplies with monopoly capitalists.

For cooperatives to succeed, they must have morality, strong management, and the people's whole-hearted acceptance of the cooperative system.  Members must have similar interests:  

they must share a common economic structure and demand similar necessities.  Furthermore, cooperatives need ready access to suppliers and markets for their goods and services.

Thus, developing an integrated cooperative sector requires: moral people with cooperative values, similar material needs, and mutual respect for each other; appropriate organizational and management structures; and a conducive political, social, and economic environment to support small and medium scale cooperative industry and the development of local economies.  A difficult question is whether cooperatives can develop in the absence of a sufficient moral base.  In other words, must the values and support structures first be in place for these institutions to flourish, or do cooperative structures themselves help create moral and cooperative values for those participating in the cooperative? An understanding of this chicken or egg dilemma determines strategies and appropriate settings for developing cooperatives.

This paper offers a PROUT perspective specifically for developing worker cooperatives.  It examines their principles, advantages, internal organizational structures, supportive infrastructure, and wider environmental factors necessary for their development.  It then addresses the difficult questions of strategic priorities.   

Principles of worker cooperatives

Worker cooperatives are firms that are controlled and usually owned by their members, who are the workers.  PROUT cooperatives adhere to the following principles established by the International Cooperative Alliance:

(1) Membership is open and voluntary.  Workers are able to become members, usually by nominal holdings of share capital.

(2) There is democratic control at all levels of the enterprise, on the basis of one member, one vote.

(3) Interest paid on share capital is limited.

(4) Workers share in any surplus, usually in proportion to each member's work contribution.

(5) Some part of cooperatives' surpluses is devoted to worker education.

(6) Cooperatives cooperate among themselves.
Thus, PROUT cooperatives differ fundamentally from private firms.  Control of the firm is based on rights derived from a worker's labor contribution rather than on property rights derived from a capital contribution.   

Advantages of worker cooperatives

In addition to fostering collective work behavior worker cooperatives have the following advantages:

(1) Cooperatives are inherently just enterprises: they broaden the base of property ownership and distribution of wealth.

This is particularly important for creating democratic institutions and true political equality.  Otherwise, those who have the wealth control access to resources, the media, and political power, as we have seen in Western democracies.

(2) Cooperatives have shown that they can outperform comparable private sector firms if they have access to sufficient means of production: capital, labor and entrepreneurial and managerial talent.

Productivity increases for two reasons.  First, workers have greater motivation and morale because of greater individual rewards and because of elimination of the conflict between labor and management.  Second, there is greater flow and use of information to management concerning production and workers' insights for improving production.

(3) Cooperatives enhance worker satisfaction and job fulfillment because of participation in decision making, profit sharing, greater self-expression and dignity, and equality.

Thus, cooperatives are one component of what is known in PROUT as "psycho-economy" or a concern with "increasing the psychic pabula of the individual and collective mind through appropriate economic activity" (Sarkar, PROUT in a Nutshell, 13:19).

(4) Cooperatives provide greater job security than do private enterprises.

In cooperatives, labor is considered a fixed rather than a variable cost over the short run.  This means that workers are not immediately fired or laid off if production is cut back.  Cooperative members in order to maintain employment levels.

(5) Cooperatives are one component of the PROUT economic system that contributes to local control of the economy.

Worker-controlled businesses stay where the workers live and do not sell out to outside owners.  This eliminates problems of absentee ownership and the flow of profits out of a region to outside owners, as experienced in capitalist economies.   

Internal cooperative structures

a. Membership and Control
Membership in a worker cooperative is open only to those who work in the enterprise.  The right of control of the firm and the right to any residual assets and profits is based on the labor contribution rather than the value of capital or property holdings.  Control is based on the principle of one member, one vote, and not on the number of shares or amount of a person's investment in the cooperative.  If non-worker shareholders are allowed to become members, it introduces conflicts of interest that can dilute the worker incentive system.

New workers enter the cooperative on a trial basis before they become full members.

b. Ownership
Several forms of ownership have been used in worker cooperatives:

  1. conventional ownership through share capital;
  2. social ownership where workers have operation control or usufructuary rights, as was true in Yugoslavia;
  3. collective ownership with workers' having the right to the residual assets of the firm through a system of internal capital accounts, as is practiced in the highly successful Mondragon cooperatives in the Basque region of Spain.  
Worker cooperatives that are structured on a share basis invariably revert to capitalist owned firms if they are at all successful.  Workers have an incentive to sell their shares for the best price.  Often people interested in become a working member cannot afford the appreciated value of the share, and the share is sold to an outside owner.  

At the other extreme are cooperatives in England and former Yugoslavia where workers have no ownership stake but merely control the operations of the firm.  The assets are socially owned, and workers have no claim on any increases in the net value of the assets.  This system encourages workers (particularly older workers with a shorter time horizon in the cooperative) to take out profits or surpluses immediately as wages and finance any long-term investments through debt.  

Experience in structuring worker cooperatives shows that in addition to their wages, workers must participate in the growth or decline of the firm's net worth in order to have sufficient incentive for long-term investment in the firm.  They do not necessarily need total ownership or control over the assets.  Thus PROUT cooperatives would be structured according to the Mondragon's model of collective ownership which provides a balance of incentives.  

Members are required to purchase a share in the cooperative and make an equity investment.  It is important that all members have a financial stake in the cooperative.  The cost of the share depends on the valuation of the cooperative.  In a new cooperative start up, it would depend on the need for equity investment to leverage outside capital.  If a new member cannot afford the price up front, it may be possible for the person to pay over time from wages, assuming the cooperative can afford this payout, or to arrange for an equity loan to the member from a cooperative support organization (as discussed below).  

A PROUT cooperative system should adopt the innovative Mondragon system of internal capital accounts that spreads gains or losses in the net worth of the cooperative to individual workers' capital accounts.  The cooperative restricts workers from taking out their balances at will so that it can use the assets for reinvestment in the cooperative.  The cooperative pays yearly interest on each account.  The balances on each member's account are eventually paid out either on a rollover basis at a designated period of time (five years), or when a worker leaves the cooperative.  

Members must sell their shares back to the cooperative in order for control to remain with worker members.  Thus, inheritance of shares is not permitted.  

c. Diversifying Risk and Ownership
One of the primary barriers cooperatives have had in attracting talented people and capital is that workers are poor, risk adverse, and do not want to concentrate both their savings and source of income in one firm.  However, if a cooperative attempts to sell outside shares in order to raise capital and diversify risk, it must then give voting rights to shareholders.  This contradicts the principle of control based on a person's labor contribution rather than capital contribution.

A cooperative also has difficulty offering preferred stock that gives first right to a dividend to the preferred stockholder, but without any vote.  In a cooperative, there are no outside shareholders who have a vested interest in declaring dividends for preferred stockholders.  The workers, who make all decisions, can decide to divide all surpluses as wages and not declare any dividends at all.  

Professor Jaroslav Vanek, an internationally known scholar on economic democracy at Cornell University in the United States, has suggested ways of diversifying risk in worker cooperatives through new financial instruments in order to make cooperatives more adaptable in contemporary settings.  Ideally workers and managers should own 10 percent of the company.  Other interests, including the cooperative support structure, banks, government, the community at large, and outside investors, should hold the other 90 percent.  

Outside investors would buy fixed interest rate bonds or variable rate debentures.  Variable rate debentures would diversify the risk.  Part of investors' return would be paid at a fixed rate; the other part would vary with the profits of the firm so that the investor is sharing the risk.  However, the investor would not have a vote.  Voting rights would still be based on labor and not capital contribution according to one person, one vote.  

Workers would be required legally to pay out a return to investors based on some percentage of their own income.  This would avoid the problem described above whereby workers can take out potential surpluses from value added as wages rather than declaring any profits.  

Another investment option is a mutual fund that diversified its investments in various worker-controlled companies.  

Vanek also sees a potential role for foreign investment through cooperative support structures, particularly in underdeveloped economies.  Foreign investors could have some vote in support organizations, or if they were providing technical assistance as well as capital, then they may have a vote at the enterprise level.  The vote would be based on their labor participation in the enterprise.  

Vanek's model is not yet tested but, if it is capable of attracting outside capital without compromising fundamental principles of worker control, it will be a major contribution to economic democracy.  

d. Incentives and rewards
The incentive system for pay and profit sharing must be fair and at the same time be able to attract competent people to the cooperatives.  PROUT advocates rewarding workers' performance according to their skill and contribution but within a minimum and maximum income range.  Rewards can also be in-kind payments, such as equipment, education and training, foreign travel, that encourage more productive work.  Cooperatives often establish wages according to a ratio between the highest and lowest paid members.  The ratio is determined according to time, place, and person.  The wage differential would be greater under present conditions than would be anticipated in a fully established PROUT economy.  

In addition to wages, cooperatives pay returns on individual capital accounts in proportion to a member's contribution to the growth of the assets.  However, this long-term incentive may not be strong enough, particularly in cooperatives with younger members.  

Cooperatives should also look at annual gainsharing plans as a more immediate incentive to reward worker performance.  These plans devise a bonus formula for performance gains in specific areas of a firm's operations such as labor productivity, cutting costs, improved quality of services or products, or increased customer satisfaction.  

Cooperatives must operate as businesses and reflect business performance in their incentive and reward systems.  If a cooperative is performing poorly, wages must be set accordingly even if it means that workers do not meet their minimum necessities.  The problem of providing a safety net for workers is an issue for the economic or cooperative system as a whole and not for an individual enterprise.  However, cooperatives have the choice of reducing all workers' hours rather than laying off members so that losses are spread equally among the membership.   

d. Hired labor
Worker cooperatives should discourage the use of hired labor unless it is critical for the business' survival.  A dual structure of worker owners and hired labor contradicts the principle of worker control and self-management.  Some cooperatives resort to hired labor because the structure of the industry requires seasonal or part-time labor.  Where possible, cooperatives should offer hired labor bonuses for productive work even if they do not permit voting rights.  

e. Governance and management
The degree of collective decision making depends on the size of the cooperative.  Members can make most key decisions in a small collective (maximum of 10 to 12 people). Larger cooperatives elect boards that make policy decisions.  Boards select a manager who is a member of the cooperative.  The manager is in charge of day to day operations.  Each cooperative, according to the realities of its business, must decide which decisions the manager, the board, or the entire membership makes.  Guidelines are available from other cooperatives' experience.  

To the extent possible workers should participate in all levels of decision making through work teams.  The concept of coordinated cooperation means that workers should participate as equal members.  Their interests should not be subordinated to those of managers, who often possess greater technical knowledge of the firm and are in a strategic position to control information.  Workers build their capacity and confidence to participate effectively in policy decisions through initial involvement in day to day decisions involving routine production tasks.  

Ultimately coordinated cooperation requires that members and management possess mutual respect and trust for each other.  Where cooperatives have been the most successful, managers serve as educators to develop workers' understanding of the cooperative and the management function.  

Formal structures and processes of the cooperative can also help check the power of management.  Workers must have access to records and information about the cooperative and must learn how to interpret that information.  

Grievance procedures and processes for dispute resolution must be in place.  Resolving disputes depends on clear guidelines of behavior and expectations of members, which must be set out in the operating rules of the cooperative and in the performance appraisal process that evaluates each member's work contribution.  In grievance processes, unions have represented the interests of cooperative members as workers (as opposed to their interests as owners).  A cooperative board or union may resort to an outside mediator to resolve conflicts.  A cooperative support organization could possibly undertake the mediation role.  

f. Social goals
Cooperatives should make a continuous effort to raise the education level and moral standard of all members.  In addition, cooper cooperative support organizations to set aside a percentage of any surpluses for community and social purposes.  Whether mandated externally or voted internally, social goals must be secondary to the primary goal of maintaining the cooperative's economic viability.   

g. Dissolution of the cooperative
Any surplus of assets after paying the value of the shares can either be distributed to the current members, to current and past members who can be located, or to another cooperative.  Some cooperative laws require that assets be distributed to another cooperative in recognition of the role that the state plays in developing cooperatives and the social goal of maintaining a strong cooperative sector.  

The PROUT policy on dissolution is to assess the context in which cooperatives are established and determine what is the best practice for establishing a strong cooperative sector.  In some contexts, a policy that prohibits distribution of surplus assets to members may discourage talented people from entering the cooperative sector.  

A supportive infrastructure

Experience in Western economies shows that cooperatives do not survive as isolated enterprises.  They must operate together as a system of enterprises with a supportive infrastructure.  These cooperative support institutions provide cooperative enterprises with financing, technical and management assistance, joint marketing and purchasing of supplies and services, research and development of new products, cooperative education and training, and lobbying and public relations services.  Cooperatives tend to be relatively small enterprises in order to function democratically.  The only way they can afford these services that larger companies can provide internally is through mutual cooperation.  

The design of appropriate structures and functions of the supportive infrastructure should be based on local capacity and context.  From existing experience, two issues deserve particular attention: (1) whether support organizations develop bottom up or top down, and (2) how much control support organizations have over cooperatives.  

The strongest cooperative systems have developed bottom up.  For example, in Mondragon and the kibbutzim in Israel, a base of cooperative enterprises first formed and then created their own support organizations according to their needs.  These support organizations later took on proactive roles of developing and supporting new cooperative start-ups or converting existing businesses to cooperatives.  

In a number of Western countries with few existing worker cooperatives, support organizations have been established top down through government, foundations, unions, and other private sector interests in order to accelerate cooperative development.  These efforts are relatively new with less dramatic results.  Nonetheless, they have had some success in starting cooperatives and providing visible cooperative models.  

A second important issue is the degree of control a support organization takes during early stages of developing new cooperatives.  Ideally a cooperative should be totally worker controlled.  However, if a support organization puts up financing and technical assistance resources, it has a stake in the cooperative's success, both in terms of its economic viability and its ability to function democratically.  A new cooperative often requires strong guidance and oversight in the first few years.  Some cooperative support organizations have placed their own staff as the manager until the cooperative members learn to manage democratically.  Others retain a seat on the board of directors and have a controlling vote over hiring or firing the manager and over the ability to change the cooperative constitution.  Once the cooperative is functioning well, the support organization turns over its control to the cooperative members.  

The Mondragon system maintains control over new cooperatives by requiring each cooperative to sign a contract of association with the cooperative system's bank.  The cooperatives agree to adopt Mondragon's bylaws that establish various operating principles.  Mondragon has the power to do this because the cooperatives need financing from its bank.  

In this way, Mondragon is able to replicate basic cooperative principles and structures throughout the cooperative system.   

A conducive environment for cooperatives

Cooperative models serve a useful role of awakening consciousness and suggesting that there is an alternative way to organize economic activity.  However, successful models are few and far between in an environment hostile to cooperatives.  For cooperatives to develop on any scale, changes are needed in society's values, political support, and the economic system.  

a. Cooperative Values
Cooperative structures and models are very difficult to create if there is no commitment to cooperative principles or values.  The experience of working in a cooperative may help develop those values, but it is far more difficult for those values to develop at a late stage of a person's adult life rather than during their formative years.

Successful cooperative structures require socialization towards cooperative modes of behavior and thinking at an early stage of life.  Family, educational, and social institutions are all potential vehicles for cooperative socialization.  Possibly the strongest leverage for intervention is in the school system.  Children need to be exposed at an early age to team work and rewards for cooperative behavior.   

b. Political Support
The government can implement policies which either encourage or mandate cooperatives.  In a PROUTistic economy, economic democracy should be a constitutional right.  Laws would be passed mandating that cooperatives would be formed in medium scale industries that were not key industries.  However, mandatory legislation is only viable if an ethical foundation is already established.  Legislation itself does not create the value base.  Otherwise forced collectivization is likely to dampen productivity and innovation as occurred in command economies.  

In absence of full-scale support for cooperatives, government can still "privilege" a cooperative sector through subsidies to develop cooperative infrastructure, tax incentives or preferential bidding to cooperatives for government contracts ( i.e. sheltering their markets).  However, if incentives are not designed properly, they can lead to exploiting the cooperative structure for private gain.  This has happened in the so-called cooperatives that received some leeway for private gain in command economies.  

c. Decentralized Economy
External economic systems affect the design and behavior of economic enterprises.  Increasing internationalization and monopolization of the economy undermines the viability of cooperatives.  If they are to operate democratically, cooperatives must be relatively small (not more than 300 to 500 people).  They do not usually have the scale of operations or resources to compete successfully in highly volatile global markets.  Global competition also requires fast response time to changing market conditions.  Cooperatives can adapt to some extent to global markets through mutual cooperation and federated support structures.  Yet the more cooperatives are entrenched in global markets, the more they must adopt the behavior of capitalist firms.  For cooperatives to maintain democratic processes and create desirable work environments, they need greater economic certainty for marketing goods produced and procuring supplies.   

Decentralized, self-reliant economies reduce market uncertainties by minimizing dependence on external markets and exposure to market shocks.  The availability of local raw materials guarantees constant supplies to cooperatives.  If cooperatives produce for local needs, their goods are easily sold in local markets.  Economic certainty creates a positive environment for increasing interest and involvement among cooperative members and fostering acceptance of the cooperative system among local people (Sarkar, PROUT in a Nutshell, 3:36).  

Copyright The author 1999