Agriculture, Industry, and Services

Part A: AGRICULTURE

Section One:
Economic Holdings

According to PROUT, agriculture is the basis of an economy and, as such, it is given a very high status. We advocate developing as many essential products as possible from organic materials in order to maximally use local resources, reduce toxicity and increase the efficiency of recycling waste. This means that agriculture will provide food as well as household items, building materials, fuels, industrial materials etc.

Agriculture is to be developed in accordance with principles of economic democracy, decentralization, balanced economy, and other relevant factors. In essence, PROUT advocates a revolution in the agrarian sector based upon cooperative, integrated farming, using the most advanced biological techniques.

The first step to enacting a Proutist agricultural system is to address the division of land. Lands must be evaluated according to their fertility, and subsequently classified as economic or uneconomic holdings. Economic holdings are ones which are economically viable – i.e. the cost of all the factors which go into production is less than the market price of the output. An economic holding should be neither too large nor too small, the exact size depending on many agricultural factors. Many farmers in the world have insufficient land to provide subsistence (much less a reasonable living standard), while large farms leave much land poorly utilized. An economic holding should contain land of similar type and fertility, and have sufficient irrigation water available. The size of an economic holding may increase with advances in farming techniques – but the difference between the largest and smallest holdings in an area should be limited. Uneconomic holdings may be developed and made economical using advanced farming techniques.

Each block will, of course, contain numerous agricultural holdings. Block divisions should be adjusted so that lands with similar levels of productivity are grouped together to facilitate planning. A given block should have a certain level of agricultural uniformity, otherwise many unrelated plans will have to be developed for only a small area.

Section Two:
Scientific Accounting in Agriculture

Under PROUT, agricultural accounting will be the same as that used in industry. That is, the pricing of goods will adequately reflect raw material and labor costs, capital, equipment investments, production rates, depreciation, interest on loans, maintenance costs, etc. – all the factors considered in industry. An industry would never price items below their production costs, while farmers are often forced to sell at low prices under the pressure of circumstances. Often in farming families, everyone is working – but is there any calculation of their labor value in pricing? Enacting this reform will ensure stability in the lives of farmers. This will necessitate changes in the economic system, but will have tremendous benefits for the small farmer. This change in economic emphasis recognizes the importance of farmers and their livelihood. Though food prices may rise in proportion to industrial goods, this does not mean that purchasing capacity will be less.

Pre and post-production agricultural industries (agrico and agro industries) must also be treated in a similar way. This will ensure the stability of the agricultural economic sector and pave the way for all-round economic prosperity based on a solid agricultural foundation.

Section Three:
Agricultural Cooperatives

PROUT recognizes the cooperative system as ideal for agriculture. It has been noted that the cooperative system was a failure in communist countries. The large cooperatives in the Soviet Union and especially China had very low rates of production and resulted in drastic food shortages. These state-run communes, however, are not the cooperatives envisioned by PROUT. Their defects were many. Most importantly, they failed to create a sense of worker involvement by denying private ownership and not providing incentives. Secondly, planning was made by central authorities and the local people had no say over their own work. Forceful coercion, including death, was used to implement the commune system.

PROUT does not advocate the seizing of agricultural land or forcing farmers to join cooperatives. Rather, it is recognized that various factors are required for the success of such a cooperative system. For example, it requires an integrated economic environment, common economic needs and a ready, local market. Furthermore, a phase-wise implementation process is also needed. In the first phase, an evaluation of economic holdings would be made. Those farmers owning profitable land would maintain the rights of private ownership if desired, while those with insufficient or deficient land (uneconomic holdings) would be encouraged to join cooperatives. They would also retain the ownership of their land. Those who work as employees on privately owned farms would be entitled to a percentage of net produce or profits as well as salary. For cooperatives, compensation would be a combination of ownership and labor, with roughly equal emphasis on both – i.e. shares would be based upon labor and upon the percentage of land owned within the cooperative. There would also be a bonus system based upon profits. Hence people’s inherent desire for ownership and self-determination would not be violated. There would also be a system of elected management with remuneration for outstanding skills.

The following chart gives an example of percentages of profit that accrue to members in a cooperative, based upon their investment and/or labor, depending upon productivity.
One of the immediate benefits of cooperatives would be the utilization of land currently used for boundaries. In areas where agricultural land is limited or where population density is high, a good amount of land is wasted on boundary fences and underutilized borders. Another major benefit would be the collective purchasing of farm equipment currently beyond the means of the individual farmers. Through collective capital or loans, irrigation facilities, dams, and other modern equipment can also be purchased or developed. Collective planning can also take place for the development of previously infertile land.

In the second phase of forming cooperatives, all would be requested to join them on a voluntary basis as there would be many successful examples and obvious benefits. In the third phase, there would be re-evaluation and rational distribution of land. The minimum amount of land necessary for an agricultural family to earn a decent living, and the capacity of the people involved to utilize land will determine ownership.

In the ideal stage, ownership of land will be less of a consideration as a true collective spirit develops. This can be achieved only by phase-wise implementation along with all-round human development.

Section Four:
Ideal and Integrated Farming

PROUT recommends a system of integrated farming techniques for increased production, higher produce quality, and environmental sustainability. Insofar as PROUT advocates that each block should be self-sufficient, especially in food production, it is best if farming projects integrate many different products. Monocrop agro-industry is viable only with a massive and wasteful distribution system – not to mention its environmental damage and low-quality produce. What is needed is decentralized, integrated farming that will incorporate all types of agricultural production and cottage industries. Only then can real self-sufficiency and sustainability develop. Integrated farming could include many areas such as agriculture, horticulture (orchards), floriculture (flowers), sericulture (silk), lac culture (for ceramics), apiculture (bee-keeping), dairy farming, animal husbandry, pisciculture (fish), pest control, fertilization, and related areas. It is best if the processing of any agricultural products takes place locally for maximum efficiency and self-sufficiency. If energy production (bio-gas, solar, wind, etc.), water management, and developmental research take place locally, self-sufficiency and sustainability will certainly be possible.

The maximum utilization of land is one of the main objectives of integrated farming. The mass breeding of animals for slaughter is both cruel and from a food perspective, inefficient. Land that could easily feed many people on a vegetarian diet can feed only a few people if it is used for rearing animals for slaughter. There is increasing awareness of the ill health effects of meat-based foods in the present age, and growing recognition of the damage caused by mass cattle rearing. From this standpoint alone, PROUT suggests that as far as possible, society should reduce and finally eliminate the usage of meat. While advocating this goal in principle, it is necessary to recognize that people’s psychology can be changed only through inner conviction, rather than imposition.

To achieve maximum utilization of land, three main crop systems are recognized: mixed cropping, supplementary cropping, and crop rotation. Mixed cropping involves the selection of complementary crops for simultaneous growth. This technique can improve space utilization, reduce erosion, conserve water, and utilize the natural complementary plant relationships. For example, one plant uses nitrogen while another replenishes it. Plant groups may include many interrelationships.

In supplementary cropping, one plant is considered main and another minor or supporting. Crop rotation is the alternation of crops that have different suitable growing seasons. Crop rotation results in less soil depletion, and ensures that land is productive year round, depending upon climate.

PROUT advocates a system of sustainable agriculture and ecological balance. As far as possible, organic fertilizers should be used which maintain soil fertility. Advanced composting and plant combination techniques, along with a strong focus on research, will create considerable harmonious progress in agriculture. Many independent groups and individuals are developing and implementing techniques and systems such as organic and bio-dynamic farming, permaculture, microbial composting, radionics, and much more. Decentralized agriculture is much more conducive for such techniques.

Water management is a key issue in sustainability. Riverside and lakeside tree planting, mass afforestation, desert afforestation, rainfall capturing, artificial pond and reservoir creation, and other techniques would be implemented in a Proutistic agricultural framework. As far as possible underground water reserves would be conserved to maintain ecological balance.

Section Five
Rural Development: Agro and Agrico Industries

Rural poverty is a major problem facing most areas of the world. Under capitalism, little attention has been given to the development of rural economies. Industrialization has proceeded in a centralized manner, draining the populations of rural areas and creating ever-expanding urban centers. These cities, especially in third-world nations, give rise to numerous social and ecological problems, and in many respects, fail to provide a decent quality of life to their inhabitants. There also seems to be no immediate solution to the rural exodus and global urbanization crisis in the current economic setup. Hence, measures are needed to develop rural economies and provide incentives for the diffusion of urban populations into smaller, more sustainable and humane communities.

While the long term solution to urbanization and rural poverty is an integrated, decentralized economy, the creation of pre- and post- agricultural production enterprises (agrico and agro industries) is an important step to rural economic vitalization. In most impoverished rural economies, production or extraction of raw materials is the primary source of income, whether food production, plant fiber production or mining. What is needed is to bring all industries related to the processing and production of these resources to the rural areas themselves. This will create a demand for skilled labor in rural areas and raise the living standards. Food preservation and processing, the production of finished fabric from raw materials, oil production, milling, fertilizer manufacturing, tool manufacturing, etc can all be accomplished in rural areas. Combined with educational efforts and the introduction of non-agricultural cottage industries, this will diversify and vitalize the economies and make a decent living standard possible. Combined with modern communications technologies and information accessibility, the possibility of decentralized economies and smaller communities emerges.

Part B: INDUSTRY

Section One:
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.

Section Two:
Three-Tiered Ownership and Economic Democracy

Under the Proutist economic system there are three different scales on which industry can be organized: key industries, cooperatives and private enterprises. The largest of these are the key industries, followed by cooperatives and then individual businesses.

Key industries are those which require large capital investment and are on a large scale. Examples might be the railway system or steel mill. Key industries may also function on different levels of decentralization. While the railway system may be administered at the federal level, energy production or raw material extraction would be administered by a local government. It would be difficult to operate key industries on a cooperative basis due to size constraints or their central role in economic production. As such the government needs to control these industries on behalf of the population. These key industries should be operated on a no-profit, no-loss basis, while providing enough worker incentive to maximize efficiency, quality, and worker happiness.

It is a basic right in an economic democracy for workers to be involved in management. As in agriculture, this is best accomplished through the cooperative system. Producer and consumer cooperatives form the mainstay of a PROUT economy. They are involved in the production and distribution of clothing, housing, food, medicines, appliances, personal transportation, etc. To serve the larger producer cooperatives, many smaller satellite cooperatives should be formed. For example, many of the component parts needed in automobile manufacturing can be produced by a satellite cooperative, and then shipped off to the car manufacturing plant for final assembly. In this way, highly decentralized, specialized industries can be developed on a small scale. There is a high degree of autonomy and individual franchise in such a system.

Entrepreneurs or small businesses form the third tier of a PROUT economy. These may be involved in the production of non-essential or luxury goods and services. Goods such as handicrafts or jewelry, and services such as restaurants might be appropriate for this. If anyone is privately employed in such an enterprise, there will be incentive for the owner to compensate well and provide incentive, for at any time the employees could leave to join a cooperative arrangement. And if a private industry becomes too large it will be required to make a transition to cooperative management.

Section Three:
Rationalization (Scientific Planning and Development)

Under a capitalist system, the benefits of scientific advancement in an industry usually accrue only to the stockholders and often results in a loss of jobs. This is due to the outlook that profits are to be maximized and that human beings are nothing more than another capital input. Since the goal of PROUT is to satisfy the needs of the people instead of maximizing profits, any invention that increases productivity will either lead to an increase in the workers’ compensation or increased leisure time without a resultant loss in income. A reduction in working hours, however, would depend not only on increased production, but also on demand for the product and the availability of labor. We have seen a call for a reduction of the average working hours from time to time in the industrially developed countries. Under PROUT such measures would be built-in.

PROUT strongly advocates regional self-sufficiency, yet it is clear that not all regions are blessed with equal resources. Advances made in science, however can help deficient areas to overcome a lack of natural resources. This will come about through advances in the production of synthetic raw materials, and through new methods of utilizing existing resources.

Part C: SERVICES

Section One:
Taxation and the Banking System

Instead of taxing income, as is customary at the present time, PROUT proposes that taxes be levied at the point of production. Essential commodities would be tax free. Hence, there would be less bureaucratic involvement, reducing government expenditure, and the government’s income would accurately reflect the activity in the economic sector.

The banking system would be under the control of cooperatives. There would, however, also be a central bank controlled by the government. Two points are important to remember in regards to the banking system; the first is that banks exist to serve the people, not to increase the wealth of a few select individuals. As such, careful regulations must exist concerning the income of banks. This problem is also partially solved by using the cooperative or credit union system. Secondly, in the Proutist banking system, money will not be printed unless there is sufficient bullion in the governmental treasury. To do otherwise contributes greatly to the spiral of inflation and all of its attendant problems.

Banks will lend money to agricultural or industrial cooperatives and possibly individuals for productive enterprises – i.e. only for such endeavors which promise to generate revenue. The maxim of a Proutist banking system is, “Keep money rolling.” The more that money circulates the greater its productivity. Idle money makes no contribution to keeping an economy vital. It is, in fact, one of the causes of economic depressions. Therefore, let purchasing and investment be ever increasing, with money moving more and more quickly. The more it changes hands, the more it increases the purchasing capacity of the people and economic vitality. The only factor that should curb the speed of the circulation of money is the sustainability of the biological diversity of the region.

Section Two:
Service and Buyers’ Cooperatives

Service cooperatives are considered very important in PROUT. Service providers, such as doctors, dentists, plumbers, etc., may decide to join forces and form cooperatives in the cases where the individual service provider is unwilling or unable to open their own practice. Thus, there is the scope for certain services to be offered either by private business or by the cooperative system.

Buyer’s cooperatives would be responsible for the distribution of most essential commodities. As far as possible, PROUT seeks to eliminate middle men who take profits but do not contribute to productivity. In a decentralized economy, buyer’s cooperatives become very practical and important. Food cooperatives have become quite popular in many places already, and this success should be extended to other aspects of the basic necessities.

Further Reading:

Ideal Farming Part II.
This book (and its unpublished prequil) provides a basic understanding of the author’s system of integrated agriculture.

Proutist Economics.
Part Three of this book is particularly relevant to agriculture, cooperatives, and rural development. Part Four includes discussions upon industry, services, and banking, while Chapter Four is devoted solely to banking and finance.