People Want Economic Democracy

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By Prabhakar T. Overland

    A certain socioeconomic issue seems to be staring the world’s legislators and policymakers in their face: How can a minimum of wealth be distributed to allow people to stay calm so that the economy remains intact? A bit like the Corona virus conundrum then: How many vaccinated people does it take for the pressure on hospitals not to burst into unmanageable chaos and uncontrollable disorder?

    Capitalism and socialism are the two big ideas of the modern socioeconomic world. All countries and their politicians have gone for both. There never was a purely capitalist or socialist state.  Instead, those two opposing ideas—private and collective interest—have blended into innumerable attempts, or experiments if you like, of mixed economy welfare states. 

    According to World Population Review 2024 there are 181 capitalist countries in the world of which the most capitalist are Hong Kong, Singapore and New Zealand. The Organization for Economic Cooperation and Development (OECD) is a collaboration of 38 of the world’s leading capitalist democracies. They spend on average one fifth of their gross domestic product on social security. According to the World Economic Forum, France remains the OECD country most committed to social benefits with almost a third of its GDP spent on social services. The Scandinavian countries spend more than a quarter of their gross domestic product on social security, whereas in 2022 the US federal government spent a quarter of its tax revenues on social welfare. In every one of these so-called democratic capitalist countries capitalism is found leaning on public welfare programs.

    Do you find this odd? See, unadulterated capitalism, should such a thing exist, is not what has allowed the world’s richest countries to maintain their leading positions in the global race for exploiting one and all. Only strong state government intervention has saved capitalism from itself, seeing it through every one of its numerous self-inflicted recessions and depressions.

    Socio-democratic mixed economy is foundational to global capitalism. Till this day such salad socioeconomics have placated the poor in resonance with middle class sentiments while allowing unrestrained commercial interests all the playground they could ask for. It has enabled tax authorities to collect just enough—from the poor and the middle class mainly—to run a minimum of public sector schemes and programs … for the same poor and middle class. Of course, “minimum” means the minimum acceptable to public sentiments and expectations relative to the varying education levels around the world. 

    How about so-called socialist and communist countries? Take China, a self-proclaimed communist democracy claiming welfare for all as its principal aim. Is China communist or a state capitalism superpower extracting profits by undercutting world markets at rates hardly supportive of the welfare of its domestic labour force? Even with its one-party dictatorship communism is apparently not China’s way. Rather, it seems safe to say that every so-called communist country has resorted to mechanisms deemed as capitalist and therefore non-marxist, such as harvesting surplus value for further enterprise.

    Prout signals a stop to any systemic approach to aiding exploitative systems in preventing and quelling social unrest. In its place Prout proposes an entirely constructive approach: “How to increase the standard of living of citizens through the economic prosperity of the state.” Its focus is on people’s welfare and not on maintaining the status quo of private and public sector top brass. 

    What is Prout’s practical follow-up on this proposal? As often is the case, what has long been missing is found in an unexpected place, somewhere no one thought of. Far from being some Florence Nightingale to western industrial-economic supremacy, Prout reconsiders age-old socioeconomic challenges in view of humanity’s current stage of development. At Prout’s core is a new understanding of human individual and collective potential expressed in fresh models of practical socioeconomics: economic democracy with a main cooperative sector and liberating socioeconomic movements as its essential constituents.

    Prout’s answer to political democracy’s economic failure is not located along an axis from the private to the public, or from individuality to collectivity. It is found in the economy itself. Prout deems economic liberation to be far more significant than political rights because in a politically determined system, power falls into the hands of the dominating political class.

    The 1948 Universal Declaration of Human Rights includes many rights described as “civil and political” on the one hand—such as freedom of expression and privacy—and “social and economic” on the other. In practice, under unrestricted capitalism economic rights are “weak” to non-existing for the 99%. The reason for it is that economic proclivity is pronounced in a few whereas most people take only a general interest in the economy. Political demagoguery in the time of capitalism has removed people’s right to economic liberation, and democracy has ended up a smokescreen for capitalism. 

    Prout’s response is to invest the power to decide on local economic matters with the local people. The first requirement for Prout’s economic democracy is that the minimum requirements must be guaranteed to all. Not only is food, clothing, housing, education and medical treatment an individual right, it is also a collective necessity for two reasons: The easy availability of minimum requirements will 1) increase the all-round welfare of society in terms of increased human well-being, and 2) strengthen the economy by shifting the industrial focus from luxury goods and other non-essential commodities to producing goods and services that people actually require and can progress from.

    A second requirement is that increasing purchasing capacity must be guaranteed to each and every individual. Economic democracy means decentralised economy, a system where local people will hold economic power. Local raw materials will be used to promote the economic prosperity of the local people. According to Prout, industrial enterprise should be built up wherever raw materials are available. This will create industries rooted locally and ensure full employment for all local people.

    Another principle of economic democracy is that the power to make all economic decisions must be placed in the hands of the local people. This is Prout’s reply to the defenders of political democracy. Economic liberation is the birthright of every individual, and more significant than political rights because it allows a person to realise the ideals of freedom and progress. To achieve it, economic power must be vested in the local people. In economic democracy the local people will have the power to make all economic decisions, to produce commodities on the basis of collective necessity, and to distribute all agricultural and industrial commodities.

    A fourth principle or requirement is that outsiders will be prevented from interfering in the local economy. The outflow of local capital must be stopped by strictly preventing outsiders or a floating population from participating in any type of economic activity in the local area.

    Under political democracy, an electorate devoid of sufficient moral and socio-economic education soon enough evolves into a “mobocracy” and “foolocracy”. In such senseless political circumstances, the dominating powers of the day soon find it opportune to exploit and serve their own interests rather than allowing for benign governance. Therefore, Prout advises a restricted form of democracy. Under Prout’s restricted political democracy, voting rights are qualified by education and moral and socio-economic consciousness, while political candidates stand against legislation allowing for public scrutiny and their removal from office should it be called for.

    Economic liberation remains vital to all and is key to basic welfare and progress. If we look at what people want, economic matters remain a chief concern. Ahead of the 2024 United States presidential elections, strengthening the economy and reducing the influence of money in politics remain at the top of voter’s wish list with nearly three quarters of voters, 73%, seeing it as the priority, according to the Pew Research Center.

    1. References

    “Does absolute capitalism exist?…Is America capitalist?” World Population Review 2024.

    “These countries spend the most, and the least, on social benefits.” K. Buchholz. The World Economic Forum, 10.2.2021.

    “Biden’s Budget: A Future That’s Built on Government Dependence.” The United States House of Representatives Budget Committee. 15.3.2023.

    “Decentralised Economy-1.” P.R. Sarkar, Proutist Economics. Ananda Marga Publications 1992.

    “Economic Democracy.” P.R. Sarkar, Prout in a Nutshell Vol. 21. Ananda Marga Publications 1991.

    “Economic Rights: Are They Justiciable, and Should They Be?” R. Litinski. The American Bar Association, 30.11.2019

    “Americans’ Top Policy Priority for 2024: Strengthening the Economy.” Pew Research Center, 29.2.2024.

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