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Consumption and Profit from Prout perspective

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by Shriraksha Mohan

The Progressive Utilization Theory or Prout is an alternative, holistic socio-economic system to replace the failing capitalist model of economy. With an emphasis on rational utilization and equitable distribution of the planet’s resources, Prout offers a model to build a world in which all people and the planet thrive harmoniously.

Prout advocates for organization of an economy based on Five Principles of Decentralized Economy.

  1. Control of the local resources: 

Local people control the local resources of a region.

  1. Purpose of production: 

Production is based on consumption, not profit.

  1. Organization of cooperative enterprises:

Local cooperatives produce and distribute essential commodities.

  1. Local labor: 

Full employment of local people in cooperatives and economic enterprises.

  1. Local commodities: 

Regulation of local markets by removing non-locally produced commodities.

The second principle of a decentralized economy suggests, production is based on consumption, not for profit. This raises many questions. What does production only for consumption mean? Why should there not be a profit motive? Does this mean economic enterprises receive no profit at all? How is this implemented and what does it change about how we think about the economy?

What is consumption in a Prout system? 

Answering this question brings clarity about the nature of consumption and production in Prout. Consumerism-based economies like capitalism view consumption of commodities as the primary driver of profits. Hence limitless consumption of goods and services is encouraged, whether one needs them or not. Capitalism encourages a high degree of debt among consumers. Communism, on the other hand, is a command economy in which the nature of consumption is decided by the government or a central authority, without consideration of the diversity of human needs and choices. Prout is a bottom-up economy that starts at the grassroots and works its way up.

In Prout, there are several stages of consumption. Consumption in the first stage is needs-based, to guarantee all the basic requirements of life. Consumption in the second phase provides additional amenities to meritorious people. After everyone’s basic needs are met, these amenities create incentives for individuals to use their skills to contribute to the society.

There must be a constant effort to bridge the gap between basic needs and extra amenities, in an effort to constantly increase the living standard of people. This leads to a progressive increase in consumption in a Prout economy. When viewed in conjunction with the first principle of a decentralized economy, it is apparent that this increased consumption should not overshoot a socio-economic region’s resource capacity to produce goods and services.

Local people of a socio-economic region, who manage their local resources, should be equipped with enough knowledge about the region’s limitations and utilize their resources wisely, to prevent resource depletion or ecological degradation. Local people will plan their local economies based on their needs and the availability of resources.

Consumption can also take the form of common amenities shared by the community and special amenities for the sick and disabled. Any excess production is distributed rationally among people to enrich the living experience. Common amenities can include art galleries, museums, libraries, sports facilities, swimming pools, concert halls and parks. These amenities, in a Prout system, are considered a form of consumption of goods and services and can contribute immensely to increasing standard of living. 

Mindless consumerism is discouraged within Prout’s model of consumption, but Prout honors consumption based on diversity of human needs. Consumption always follows a progressive upward trend.

This brings us to the question, “Why should there not be a profit motive?” 

When profit becomes the motive for production in an economy, economic enterprises fail to make good judgements about their production standards, ecological impact of their economic activity, working conditions of labor force and other such factors that affect lives and livelihoods. We come across many instances where there is a strong correlation between profits and disasters. 

A train carrying toxic chemical derailed in East Palestine, Ohio causing pollution of soil, air and water in the area of the derailment. The damage caused by this event to the environment and people may linger for many years to come. The railroad company operating the train that derailed did not want to assume responsibility for the disaster initially, and later offered minimum assistance.  Railroad companies ignoring critical safety standards to cut costs of operations and maximize profits have been identified as a root cause of many such disasters. 

Similarly, think of the ecological damage caused by society’s excessive reliance on fossil fuels, a reliance orchestrated to enrich some countries and corporations at the cost of worsening global warming and climate change. 

Profit motive leads to production monopolies, the concentration of wealth, and superfluous production that can overshoot a region’s ability to regenerate its resources. In a profit-oriented system such as capitalism, solutions to day-to-day problems are commodified by attaching a price tag to them. For example, healthcare is a basic requirement of life and a human right. But even basic medical care is unaffordable to many in the United States. When an essential industry like healthcare is run for profit, it leads to the situation where people are deprived of their basic right to live. Should this be an outcome of our economic activities? 

A healthy economy should serve the people and the planet. But in a profit-oriented economy, people and the planet serve the economy to maximize the material gains of a few individuals. Prout, on the other hand, prohibits the production and distribution of essential commodities based on profit motive.

Does this mean economic enterprises receive no profit at all?

How would any economic enterprise continue operating without making profits to reinvest in production and operations? Prout places emphasis on rational profits. The suggested upper limit for profits cooperatives can make is roughly 15% of the cost of production. This profit is also based on rational costs of production, taking into account cost of raw materials, cost of labor, cost of transportation and storage, depreciation, etc. 

Most of the production in a socio-economic unit is undertaken by cooperatives which employ local people (principle #3 and #4 of decentralized economy), and non-local commodities are removed from the market (principle #5 of decentralized economy). Progressive growth in local consumption in a Prout model, as discussed earlier, creates incentives for local cooperatives to produce more and grow in safe spaces without competition from external market monopolies. 

The profits enterprises make naturally see an upward trend with an upward trend in consumption and production. Profits are reinvested in the local region as wages for local people, and for more production. Therefore, in a growth-oriented Prout economic model, profits are always ensured even if they are not the primary goal of production. An increased purchasing capacity and economic security follow.

Growth in consumption, growth in production, growth in profits and wages.

Prout also recognizes the need to have key industries operated by the public sector. These are industries like transportation, telecommunications, mining, production of fertilizers, etc., that require a bigger scale of operation and affect the lives of many, beyond the local region. These enterprises must be run on a “no profit, no loss” basis, and must be managed by the immediate local government. 

Private sector should be restricted to goods and services deemed as luxury or non-essential. This ensures private businesses with profit motives are unable to adversely affect the lives of common people. Prout’s system of decentralized economy discourages monolopies that exist solely for profits. Hence, private sector too will be forced to adopt pricing strategies to gain comparative advantage over other competing enterprises and not just focus on profits.

How is this implemented? What does it change about how we think about the economy?

“Production for consumption, not for profits”. This is an idea that calls for a shift of mindset and values. The way we think about structuring our economies will also have to undergo a paradigm shift once we have understood the nature of consumption and production in Prout, both of which evolve progressively based on human needs and changing conditions of life. A shift of values in the psychological sphere translates into a shift of strategies in the practical sphere.

Our personal values determine how we structure our lives. Our values also determine how we structure the larger economy and society. Prout is rooted in Neohumanism, a worldview characterized by love, care and compassion for all beings of the universe. Socio-economic strategies based on this worldview tend to be caring, inclusive, fair, and non-exploitative. When our strategies for consumption and production are based on Neohumanist values, these strategies tend to support the idea of considerate consumption-oriented production, which is not motivated by profits alone.

A shift of values starts with Neohumanist education. Embracing Neohumanism empowers us to take benevolent actions, to recognize the interconnected nature of all life forms, to acknowledge everyone’s right to live a good life, and realize individual wellbeing lies in collective wellbeing. A shift of values that occurs with the wholehearted acceptance of Neohumanism leads to shift of strategies for organizing our society and economy. Prout principles guide the shift of strategies.

A shift of strategies includes education and research to study the society’s consumption and production patterns. Regulatory structures and policies based on such research outcomes become strategies to move our economy away from profit-oriented production. A shift towards Neohumanism helps lawmakers frame laws to protect local cooperatives, human rights and the environment through strong legislation. All these measures go hand-in-hand within a decentralized economy where the focus is on socio-economic empowerment and not on profits. 

Neohumanism, as the bedrock of Prout strategies, inspires inclusive economics. This model of economic growth acknowledges that collective and individual well-being are inter-dependent, and also honors the rights of the natural world. Progressive socio-economic strategies guided by Prout follows a shift of values guided by Neohumanism.

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