Is There an Alternative to Capitalism?

During the 20th Century, Marxism and capitalism were the contending economic theories and the world was almost engulfed by a Third World War due to this struggle.
However, the collapse of the Soviet Union and the other communist bloc governments laid the way for the triumph of capitalism. But today half of the world’s population lives on two dollars a day or less, and the developed countries are in an economic recession that is reminiscent of the Great Depression of the 1930s. Once again people are asking, “Is there an alternative to capitalism?”

In 1959 P.R. Sarkar, an Indian philosopher, answered this question when he presented the Progressive Utilization Theory (known by the acronym, PROUT). PROUT is an economic theory that addresses the defects of both capitalism and Marxism and offers the promise of a new economic order in which the world’s resources will be distributed in an equitable and rational fashion.

We can understand PROUT by looking at six essential features of this new socio-economic system:

1. Spirituality:

Both capitalism and Marxism are materialist philosophies with a worldview that gives little (in the case of capitalism) or no importance to spirituality. PROUT on the other hand is founded on a spiritual outlook. According to Sarkar, the material world is but an expression of consciousness and humans are stewards rather than ultimate owners of any physical wealth. The goal of society is to provide a base from which humans can expand their full mental, physical and spiritual possibilities. This spiritual basis of PROUT has important implications for the management of physical resources, for the development of human resources and for the establishment of proper government.

When adopt the spiritual world view envisioned by Sarkar then our relationship with the environment will change. Similarly when we regard other human beings as manifestations of that one Consciousness then our relationships with each other will change. Finally, when such a spiritual world view permeates our whole society, we will get the kind of service-minded and self-less government that is currently lacking in the world today.

2. A “Floor and a Ceiling”:

Welfare economists have always emphasized that the minimum necessities of life should be provided for everyone in a properly structured society. Efforts to make a minimum wage or to provide various kinds of welfare systems to help impoverished people are all part of this concern.

P.R. Sarkar agreed with some aspects of welfare economics and stated that the minimum necessities of life should be guaranteed to all members of society. However, he recognized that if the society would just give people a check at the end of the month, with their required income, then this would only encourage laziness. According to Sarkar, the best arrangement is that society should provide people with the purchasing power to procure the minimum necessities of life in exchange for their labor in a job. Full employment providing everyone with the proper amount of purchasing power thus provides the “floor” of the economic system. No one should be allowed to “live in the basement.”

Where PROUT breaks new ground is in its attention to the “ceiling” of the economic system. The poverty of many is tied to the affluence and over-accumulation of a few, and if we really want to bring about a harmonious society we need to think about putting limits on the amount of physical wealth that a person can accumulate. In the first principle of PROUT it is stated that “no individual should be allowed to accumulate any physical wealth without the clear permission and approval of the collective body of society.”

This concept is sure to evoke howls of protest from the super-rich, the very rich and even middle class people who aspire to wealth. The classic argument of the wealthy people is that by their effort wealth is created and this wealth will trickle down to the rest of the society. The apologists of laissez faire capitalism have been very successful in convincing people that this is the truth, but the starving, sick and homeless people of the world have been waiting for a long time for the wealth to trickle down, and it doesn’t seem to be happening.

3. Economic Democracy:

In the past century a great deal was said about making the “world safe for democracy.” But the “democracy” that was talked about was political democracy. In many of the impoverished countries of the world, the same ones where people struggle with $ 2.00 per day, the people have the right to vote but they do not have any say in their economic life. Similarly, even in developed countries a person can vote to decide who will be the next president, but he or she usually has no vote in deciding economic matters that are very close to home, like keeping a job.

According to PROUT theory, society should be organized in a manner that will empower as many people as possible. One of the best ways to do this is reorganize the ownership and operation of economic enterprises. Under capitalism the primary business form is the corporation. The owners of the shares of a corporation have all the votes and decide how the enterprise will be run. Those who work in the enterprise have little or no say in the vital economic decisions that will affect their lives.

The PROUT system would establish the cooperative as the most important business form. Most enterprises, except the very large key industries and very small businesses, would be organized as cooperatives. Those who work in the enterprise will be the owners and will elect management and will vote in elections governing the running of the enterprise.

In a PROUTist economy the very small enterprises with few employees and dealing in non essential goods would be privately owned and operated, and the medium enterprises would be owned and operated as cooperatives. Large scale key industries (energy, communication, transportation, etc.) would be publicly managed either by local governments or by special public bodies (in unitary political systems). This three-tiered system of private, cooperative and publicly run enterprises would provide the base for economic democracy.

4. Economic Reorganization (Decentralized Economy, Balanced Economy and Regional Economic Self Sufficiency)

If we want to bring about the economic well being of all of the people, then we must also make sure that some geographic areas are not depressed while other areas are thriving. The best way to do bring about economic development and prosperity for everyone is to decentralize the economy, develop all sectors of the economy and to strive for regional economic self-sufficiency.

One of the biggest reasons for economic imbalance within any particular country is the modern trend of urbanization. Usually most manufacturing and many other services serving the manufacturing sector are situated in cities. The metropolitan areas thrive, and people in the country side are either unemployed or work in low-wage or subsistence agriculture.

The best way to reverse this situation is to place some industries, and supporting services and industries in rural areas. In this way excessive congestion of urban areas will be avoided and strong regional centers will provide employment and services to previously neglected rural areas.

Economic decentralization should also be coupled with balancing the various sectors of the economy: industry, agriculture and services. In some countries more than 75% of the people work in agriculture and a small minority in industry and services. Underdeveloped countries with poor economies are usually structured in this way. In industrialized countries a huge majority of the population work in industry or in services, and very few people are engaged in agriculture.

P.R. Sarkar said that a more ideal set-up would have 20% of the population in agriculture, 20% in agro industries (producing goods using agricultural produce), 20% in agrico-industries (supplying machinery and tools for agriculture) and the rest of population in industry and services.

A society with this kind of economic balance would be better able to achieve economic self-sufficiency. Currently “globalization” is the buzz-word of the era, and economic self-sufficiency is not in vogue. But is it really healthy for any country to neglect its agricultural sector and rely on imported food? Similarly should some countries remain with little or no industry and rely on far-away countries for all their finished products?

Generally countries which depend solely on agriculture or which export raw materials like wood and minerals remain poor while heavily industrialized countries thrive. This is not good for the non-industrialized areas, but it is also not healthy for the developed countries as well. In times of war or in time of any disruption to transportation, their vital food supplies will be in danger.

On top of this, in a world where climate warming and ecological difficulty have become major problems, does it continue to make sense to rely on centers of supply (for either raw or finished products) that are halfway around the world?

PROUT recommends that countries in a particular geographic region come together and form economic zones that have balanced, decentralized and self-sufficient economies. Such an arrangement would be ecologically advantageous, provide for economic security in times of war or unforeseen disruptions of transportation, and most importantly would insure that no particular country or region will remain in poverty while others thrive.

5. Moral Leadership

The various plans for a better organization of the economy and for economic democracy are good in theory, but the problem of materializing these noble ideas depends on the quality of the human beings in our society. If elected and appointed officials are corrupt then these officials will prevent the implementation of policies designed to bring about social and economic welfare. For example the social equality preached by the Marxists was belied by the reality of corrupt government officials living in luxury while the masses remained in poverty.

The only way out of present economic and political problems is to elevate the moral standard of our society. If people are properly educated, conscious of their social and economic responsibilities and moral, then democracy can thrive and moral leadership will come to the fore. The hope of the future will rest on the shoulders of men and women who will enter public office with the spirit of service and sacrifice rather than for the selfish purpose of lining their own pockets or enhancing their prestige.

A proper spiritual outlook coupled with an educational system that is free from political interference and focused on the all around development of human beings is the best way to bring forth leaders who are moral and work for the good of society.

6. Global Governance

Against the backdrop of the universe, the earth is a small planet and human beings have to learn how to live together in harmony on this small planet. The best way to minimize the possibilities of war and to safeguard the rights of all people is to establish a global government. Previous attempts in the 20th Century in this direction, namely the League of Nations and the United Nations, have not been adequate and it is time to move onto a better level of global coordination.

In his book Problem of the Day, P.R. Sarkar laid out a concept of world government that should be achievable in the near future. He advocated the establishment of a bi-chambered world government. One chamber, the lower house, would have representation based on population and the other chamber, the upper house, would provide equal representation for all nations. The upper house will not be able to pass a law unless it has first been passed by the lower chamber, but the upper house will also have the right to reject bills passed by the lower chamber. Sarkar envisioned a stage-wise movement towards world government.

These are the core economic and political ideas that form the backbone of the Progressive Utilization Theory.

If you would like to learn more about the Progressive Utilization Theory (PROUT) visit the website of PROUT Magazine,

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