After the Jerusalem Embassy: What’s Next for the Palestinians and Israelis?

The United States recently moved its embassy to Jerusalem, a highly controversial move which was part of the pre-electoral promises made by Donald Trump during his presidential campaign. Widely condemned globally, this action led to an uprising in Gaza, where more than 60 Palestinians were killed by Israeli forces.

There are few topics which raises more passionate opinions as the conflict between the Israelis and the Palestinians. Opinions are usually strong and set, and emotions run high. So what should be the Proutist view regarding this complicated conflict?

Before we can answer that, let us first take a step back in history and look at some of the background issues behind the conflict.

The Origins of Modern Israel

The kingdom of Israel can be traced back to the Iron Age (1200 – 500 BCE). According to the bible, Israel split into the kingdoms of Israel and Judea shortly after the reign of Solomon (estimated to 970-930 BCE).  Israel was destroyed around 720 BCE by the Neo-Assyrian Empire. Judea was later conquered by Babylonian, Persian and Hellenistic empires but remained an autonomous Jewish province. In 110 BCE, a successful revolt led to the creation of an independent kingdom, but the independence did not last long. In 63 BCE the kingdom was invaded by Rome and became a client state. After unsuccessful revolts between 66 and 136 CE, the Jewish population was disseminated and scattered throughout Europe. Since then, up to the end of the First World War, when Palestine came under British control, the area has been controlled by Muslim rulers, apart for a short period during the Crusades when it was under European control.

Towards the end of the 19th century, the Zionist movement was born. This movement was aimed at creating a Jewish homeland for all Jews effected by the diaspora. Large groups of Jews gradually returned to what was to become Israel, and they started to actively pressure Britain to hand over the territory to them. The struggle was partly political, and partly physical, and even included what we today would describe as terrorist acts. In 1943, Yitzhak Shamir, who later became Prime Minister of Israel, wrote in the journals of Lehi, the terrorist organisation he headed, that terrorism is a legitimate weapon. “Neither Jewish morality nor Jewish tradition can be used to disallow terror as a means of war,” he wrote. He continued, “We are very far from any moral hesitations when concerned with the national struggle… First and foremost, terror is for us a part of the political war appropriate for the circumstances of today.”

The attacks were very effective, and included some of the worst terrorist incidents in the 20th century. Shortly after the end of the Second World War, Britain declared its intention to withdraw from Israel, as it saw no hope of finding a solution that would satisfy both Jews and Arabs. On November 29, 1947 the General Assembly of the United Nations agreed to a plan to partition Palestine into a Jewish and a Palestinian state, and on May 14, 1948, the State of Israel was declared.

The local Palestinian population, as well as the Arab neighbours, opposed the creation of Israel. In the ensuing war with Egypt, Syria, Transjordan and Iraq, which Israel won, over 80% of the Palestinian population fled or were expelled, and Israel expanded the original territory the United Nations had allocated the Jewish population with 60%. The remaining territory, which was supposed to constitute a Palestinian state, was divided by Egypt and Jordan. The 20% of Palestinians who remained became Arab citizens within the state of Israel.

The tension between Israel and its Arab neighbours after the 1947 war was never resolved. In 1967, Egypt blocked the straits of Tiran, a crucial shipping lane and Israel’s only access to the Red Sea, to Israeli shipping. This led to the second Arab-Israeli war, known as the Six Day War, which was also won by Israel. After the war Israel controlled the Gaza strip, the entire West Bank, Sinai as well as the Golan Heights. The Sinai was subsequently returned to Egypt following the Camp David Accords in 1978.

Over the years, numerous settlements have been created throughout the West Bank, and in reality the Palestinian Authority has now lost control over much of what was left of the West Bank. This is the current territorial situation.

Palestinian Resentment

As the original plan to partition the country into a Palestinian and Jewish state failed early on, it left the Palestinians in a very difficult position. Israel in reality took over all the land, both that land which was supposed to constitute the land of Israel, and the land that was supposed to be owned and ruled by the Palestinians. With most of the Palestinian population today living as refugees in their own land, their desire to live and rule in their home land is very strong. Many different political and military movements has arisen among them, such as the Palestinian Liberation Organisation (PLO), Hamas, Palestinian Islamic Jihad and the Popular Resistance Committees. The aim of these organisations were to take back all land originally belonging to Palestinians, and, as Yasser Arafat put it, “the uprooting of the Zionist entity from our land and liberating it.”

As part of its struggle to regain Palestinian land, terrorist tactics were used by the Palestinians to attack the civilian population inside and outside Israel. The 1972 attack on the Israeli Olympic team in Munich, perpetrated by the PLO subgroup Black September, where 11 Israeli athletes were killed, was one of the most publicised attacks outside the Middle East. The violence has continued up to present time, with hijacking of aircraft, suicide bombings, stabbings, etc. Since the formation of Israel, it is estimated that close to 3,000 people have been killed by Palestinian terrorist attacks.

Israeli Response

The Israelis did not take these issues sitting down; they have used any possible means to fight back. The first hijacking of an airliner in the Middle East was orchestrated by Israel in 1954, in order to take hostages to negotiate the release of Israeli prisoners held in Syria captured on a spy mission. In 1973, Israel shot down a Libyan airliner on its way to Cairo, killing 110 people on board. The same year they attacked Tripoli in northern Lebanon, killing 31 people and destroying classrooms, medical clinics and other buildings. There was no pretext of self-defence, and the attack was justified as being pre-emptive.

Israeli rule in the occupied territories is also brutal. Based on the findings of the International Committee of the Red Cross in Geneva—which is mandated to oversee that the Geneva Convention is upheld in the Israeli Occupied Territories of the West Bank and Gaza—Israel has been violating almost every major provision of the Convention, such as deportations, destruction of civilian homes, assassinations, torture, kidnappings, etc.

Violence is obviously used to terrorize people on both sides of the conflict. But since Israel has more power at its disposal, its capacity for violence is greater than that of the Palestinians. According to the Israeli Information Center for Human Rights in the Occupied Territories, from 2009 to 2018, the number of Palestinians killed by Israelis outnumbered Israelis killed by Palestinians 27 to 1.

Where to Go From Here?

Some observers think that Israel will eventually annex the occupied territories and deny citizenship to the Palestinian population living there. This is obviously not a solution and would simply intensify the struggle. Conversely, the original Arab idea of ‘uprooting the Zionist entity’ and destroying Israel is also non-starter—it will never happen.

Apart from these two non-starters, there are three possible solutions for resolving the Israel-Palestinian conflict.

The Two State Solution

The original idea was to create two countries, Israel and Palestine, co-existing side by side and both having viable international borders. The PLO have in principle accepted this solution using post-1949 borders to demarcate two states. The United Nations approved this solution, but left the negotiations of the specific borders in the hands of the Israelis and the Palestinians. A two state solution is the outcome favoured by the majority of both Palestinians and Israelis.

The problem with this solution, even if it would be accepted, is that Palestine would in effect be split in two. The main portion would be land locked, and the Gaza strip would be too small to function as an effective economic unit. While the original borders set up for Palestine were viable, the existing ones are not. The Palestinians would in effect be totally dependent on Israel for its economic survival.

But it gets worse. While it is certain that Israel will never accept the original partitioning plan agreed to by the United Nations in 1947, they will clearly not accept the 1949 borders either. Israel have actively supported Jewish settlements in the West Bank, and they are now so widespread that they crisscross the entire occupied territory. Unless Israel is willing to abandon all these settlements, which is very unlikely, there is no unified piece of land left to form a Palestinian state. 

A Three State Solution

Since neither the Gaza strip nor the West Bank can become viable states, it has been suggested to let the Gaza strip return to Egypt and the West Bank to Jordan. But this ‘solution’ would probably create more problems than it will solve. The Palestinians would be deprived of a land they could call their own, and their fight for a homeland would continue. Even Jordan is unlikely to agree to this solution, as it has no interest in getting more deeply involved in the conflict.

The One State Solution

The one state solution advocates one single state comprising Israel, the West Bank and the Gaza strip, with equal citizenship and equal rights to all citizens regardless of ethnic or religious affiliation. While some rightist parties in Israel support a one state solution, others fear that Jews will become an ethnic minority in the only Jewish state in the world.

Still, this solution is attractive as it could create a modern, secular state not guided by religion, where all people living within its borders have full and equal rights. This is the solution proposed in the manifesto of Universal Israel, the Israeli samaj movement.

A Proutist Perspective

This is no doubt a very complex issue, and to come up with a simple solution is difficult. But looking at it from the perspective of Prout may help us to understand the problem better.

It seems obvious that both Jews and Palestinians can claim the land to be theirs, as they both have a long history in the region. Therefore, for a final solution to appear, the interest of both peoples have to be respected.

If we look at the area from the prospect of a Samaj, the respective socio-economic areas would need to be economically viable. The original division conceived by the United Nations made two viable nations. As the culture, language and sentimental legacy of Jews and Palestinians are different, two viable Samajas in the form of nation states would have been a good option.

However, with the current expansion of Israeli territories and Jewish settlements in the West Bank, no viable Palestinian Samaj could be created, regardless of the sentimental legacies involved. The current situation, where Palestinians live under Israeli occupation without any rights at all, is the worst possible solution. Unless Israel agrees to return to the 1947 borders, or at least cedes enough land to create an economically viable Palestinian state, a one state solution where all inhabitants, whether Jews or Palestinians, are equal citizens with the same rights seems the best compromised solution we can hope for in the region.

I will return to this topic in a later piece to expand on this idea.

While the relocation of the American Embassy from Tel Aviv to Jerusalem is, no doubt, a provocative move, it will probably have little practical effect on the final outcome of the conflict.


After the Jerusalem Embassy: What’s Next for the Palestinians and Israelis?
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Trade Wars

During his presidential campaign, Donald Trump promised to revive American industry by putting an end to ‘unfair trade.’ The way he wanted to achieve this was by tearing up free trade agreements and imposing selected tariffs on countries he felt were taking advantage of the United States. In February of 2018, he made good on those promises and announced a 25% import tariff on steel and 10% on aluminum.

Donald Trump in office

In retaliation, China has announced a 25% tariff on USD 3 billion worth of food imports from the United States. This is three times the trade volume of US steel imports from China, which is roughly USD 1 billion. In a tit for tat response, Donald Trump has now announced that he will impose a 25% tariff on 1,300 Chinese items imported to the United States at a value of USD 50 billion.

China rapidly retaliated, and announced a 25% tariff on 106 products including soya beans and chemicals. The value of these imports are also USD 50 billion. The EU is equally disturbed by this unilateral action, and has threatened to retaliate with tariffs on bourbon and blue jeans.

The latest news as of this writing is that Trump now threatens to impose tariffs on USD 100 billion of Chinese imports. If that happens, China is sure to retaliate.

The trade war has started, and nobody really knows where it will end.

If a full scale trade war actually breaks out, it will lead to a marked reduction of trade in the world. But what would this new economic situation look like, and would it actually be such a bad thing? To understand the importance of trade, we need to take a closer look into the history of trade, and also look at various forms of trade, including free trade, unequal trade, fair trade and what would happen if there was no trade, either between people or nations.


Cooperation versus Going It Alone

It is a well-established fact that productivity is related to specialization. In other words, if one person were to do everything needed to survive all by himself, like some modern day Robinson Crusoe, his standard of living would be extremely low, and his level of technology, health care, etc. would be almost non-existent.

If, on the other hand, a group of one hundred people cooperate together, their chances of survival are much higher, and people will then start to specialize and cooperate. Some will hunt, some will farm, and some will build houses or tend animals.

The reason we today have advanced technology and that many people can afford a decent place to stay, go to school and get medical attention when sick is the result of billions of people specializing and working together in complex ways.

This is not controversial, and everyone from Marxists to Neoclassical economists understand this issue. The specialty of human beings is that we actually cooperate with each other to a much greater extent than we compete. To prosper, we need increased specialization and cooperation. 

Neoclassical Economics and Trade

Trade can be seen as an indication of both cooperation and specialisation. The reason people trade is that instead of making everything themselves, they make a few things and trade it for other things they want.

Based on this fact, neoclassical economics considers any increase in trade an advantage, regardless of any other circumstance. Consequently, all neoclassical economists would consider tariffs that reduce the volume of trade undesirable, and hence it would be hard to find an economist that would support Trump’s protectionist policies.


PROUT and Trade

But what about Prout? Doesn’t Prout support self-sufficient socio-economic zones, a ban on export of raw materials before processing, and favor the assurance that all essential goods are produced locally?
Yes, that is true. For example, in the essay Decentralized Economy Part 1 (1982) P.R. Sarkar writes: [a] decentralized economy aims to develop local industries and create employment for the local population, those commodities which are not produced within the local area should be banished form the local market as far as possible.

But, paradoxically, Prout also favors free trade. In Economic Dynamics (1987), Sarkar writes that there should be a free trade system so that overproduction can be consumed by other countries or other economic units, and proceeds to give examples of this.

Further down in the same article, Sarkar says:

In the existing world structure, geo-sentiment is an obstacle to the implementation of free trade. Neither the capitalist countries nor the communist countries like the free trade system because it is detrimental to their respective self-interests. But there are some free trade zones in the world which are very bright examples of the success of this sort of system. Singapore is one such example. There was a good proposal to declare Calcutta a free trade zone, but it was not implemented for many reasons, including the failure of the concerned leaders. Bengal could have been greatly benefited by such a system. [Economic Dynamics, 13 September 1987, Calcutta]

So does Prout favor protectionism or free trade? How can this contradiction be resolved? To answer this, we need to understand why Prout wants economic self-sufficient economic zones, protection of local industries, etc. The simple reason is that free trade can only be fair between equal partners. If one country is highly developed and industrialized, and the other only has raw materials and agricultural products, free trade between the two will be unfair and unequal. The advanced country will become rich and the backward country will continue to be backward as it is made a supplier of cheap raw materials and labor, and an importer of expensive finished goods. If the economically poor country would try to develop local industry, foreign cheap goods would soon flood the local market and put its undeveloped industries out of business.

According to the classical economist Ricardo, this is a good thing as even the undeveloped country will be better off. He calls this the law of comparative advantage, and theoretically and mathematically he is correct, except, there is one important issue that is often overlooked by economists: this theory is based on everything being stagnant and that nobody learns by experience.

If a 5 year old boy would make more money polishing shoes in the street than going to school, the law of comparative advantage would say that he should polish shoes. This is true for the moment, but schooling is an investment in the boy’s future, making him able to earn more when he grows up. It is the same with countries. If they never develop their local industry and technology, they are condemned to eternal poverty. But in order to develop this technology, they would need protection while they are growing up.

We will not find a single example of an advanced economy that did not initially protect its budding industries until they were globally competitive. This is true of England, USA, Sweden, France, South Korea, Japan, and all other developed nations. Therefore, protecting and encouraging local industries is an absolute necessity for a country to become prosperous. Any country that prematurely opened itself up to free trade—with the notable exception of the Gulf states, which had huge oil reserves to pay for all their imports—suffered stagnation and poverty.

This issue can easily be exemplified by comparing Japan and the Philippines. At the end of the Second World War, Philippines had a GDP per capita equal to Japan. Now it has one of the lowest in Asia. While Japan, South Korea, Taiwan, and other successful ‘tigers’ talked about free trade, they did not practice it but were fiercely protectionist. The Philippines, on the other hand, which actually practiced free trade, and did very little to promote the development of its industries, is now one of the poorest countries in Asia.


While tariffs and protective measures are necessary and good for developing countries, once a country has become technically advanced with high productivity, it has to open up its borders.

The United States is not an underdeveloped economy, and will not gain by imposing new tariffs. To the contrary, starting a trade war can have catastrophic consequences for the very people the tariffs are supposed to help; for the nation as a whole; and for the world as a whole.

I agree with the Prout-oriented political economist James B. Quilligan who, on request for comments on Trump’s tariffs, wrote:

Yes, Trump’s tariffs will impact everyone — workers, manufacturing, Wall Street, banks, US allies and US foes. We can already see a credit collapse coming in the US, with corporations using their profits to buy up their own shares rather than investing this money back into production. Trump’s trade wars will just speed this up — it’s the most stupid thing he could do. This is, however, an opportune moment for Prout.

This trade war, therefore, has a silver lining. For the first time in many years, current free trade policies are being questioned, and has become a topic that can be discussed and debated. This is an ideal opportunity to introduce Prout’s balanced view on free trade, which would promote cooperation and the free exchange of goods, while still allowing developing nations to develop their full economic potentials.

Look Out for the Next Installments on Free Trade and Tariffs

In a short column like this, there is not enough space to deal with all the complex aspects of free trade, so I have decided to cover this important topic in three installments.

In the next column, A Dirty Secret: Why Capitalism Really Doesn’t Like Free Trade, I will look at the curious statement of Sarkar that capitalist countries do not really want free trade. What is the reason behind this comment? Furthermore, what is the difference between the concept of free trade in Prout and in the capitalist system?

In the third and final installment in this series, we will investigate what the impact of a trade war would be on global trade, and whether Trump really is the initiator of tearing up multilateral trade deals, or if he is simply following a trend that started years ago.

Stay tuned!

Trade Wars
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Why Capitalists Hate Free Trade

In my last opinion piece on current affairs, I discussed Donald Trump and his introduction of tariffs and how they might lead to a trade war with China and the rest of the world. In that article, I quoted P. R. Sarkar, who said that, “Neither the capitalist countries nor the communist countries like the free trade system because it is detrimental to their respective self-interests.”

I was aware that this statement might be confusing since free trade is supposedly one of the main pillars of the capitalist system. In this installment, I will clarify my views on this issue.

Protectionism to Protect Budding Industries

As has been clearly explained in Roar Bjonnes’ and Caroline Hargreaves’ book Growing a New Economy: Beyond Crisis Capitalism and Environmental Destruction, no capitalist country became advanced by opening up its borders to free trade. Whether it is Great Britain, the United States, Sweden, Japan or South Korea, they all protected their economies with tariffs, import quotas, and government subsidies until their economies became strong enough to compete successfully on the international market.

Friedrich List (1789-1846), a German economists living in the United States, wrote:
Any nation which by means of protective duties and restrictions on navigation has raised her manufacturing power and her navigation to such a degree of development that no other nation can sustain free competition with her, can do nothing wiser than to throw away these ladders of her greatness, to preach to other nations the benefits of free trade, and to declare in penitent tones that she has hitherto wandered in the paths of error, and has now for the first time succeeded in discovering the truth.

Protectionism in Advanced Economies

Not only developing countries, but also advanced nations, such as the United States and the advanced economies in the European Union, are very much dependent on trade restrictions to remain prosperous.

Protection of Agriculture
First of all, these countries have tariffs, subsidies and quotas to protect agriculture, one of the few areas where a poor, developing nation actually could have had a competitive advantage over advanced economies. The European Union uses 50% of its budget to support the Common Agricultural Policy, which subsidises all farming in the European Union. Without this support, no food in commercial quantities could be produced inside the European Union—all agricultural products would have to be imported from third world countries. The United States has similar policies in place.

Intellectual Property Rights and Patents
The restrictions on free trade in agriculture is basically there to provide food security in times of conflict and war, and preserve the rural way of life in Europe. From the capitalist’s point of view, Europe could do very well without these subsidies. But there is one trade restriction that advanced economies are absolutely dependent on to survive, and that is Intellectual Property Rights (IPR) and patents.

Due to the rhetoric we hear in the news media, IPR and patents are not commonly considered restrictions on free trade. In reality, these restrictions are as powerful as tariffs and quotas. Both interfere with the market as it would react if there were no regulations. While tariffs prevent foreign goods to compete in the local market on the same terms as local goods, patents create a monopoly for the inventor to sell products based on the patent without competition.

In practice, this prevents local goods in developing countries to compete against patented imported goods, even if they have the capacity to produce them much cheaper than the imported goods. This is clearly a restriction on free trade, and originally the introduction of patents was controversial. Throughout the 19th century, both Switzerland and the Netherlands refused to protect patents as they argued it created artificial monopolies and went against the principles of free trade.

Patents secure a monopoly for the entity that owns the patent, and enables it to charge much higher for the product than it would have been able to charge in a free market where anyone could have produced it. This system enables companies who own patents to generate spectacular profits.

Pharmaceutical companies make hundreds of billions of dollars in profits selling drugs that cost next to nothing to produce, as they can set any price they like when nobody is allowed to compete with them. Kymira, a gene blocking cancer drug produced by Novartis, costs $475,000 per treatment. The company argues that the cost is justified due to the fact that the cost of developing the drug was very high, but in this particular case much of the research that went into the drug was done by the University of Pennsylvania at the expense of tax payers to the tune of $200 million. This is a typical procedure in the pharmaceutical industry. While the costs are socialised and paid by the tax payers, the profits are privatised and pocketed by the private company.

This is not an isolated example. Many cancer drugs cost over $100,000 per year per patient, while the manufacturing may cost a few thousand dollars. The hepatitis C drug Sofusbuvir costs $1,000 per pill, and a complete treatment costs $84,000.

Patents are naturally not limited to the pharmaceutical industry, but are present in almost every industrial, medical, and technology sector in existence today, and the profits these sectors enjoy are to a large extent dependent on IPR and patents.

These inflated profits from patents and IPR are, in part, what keeps rich countries rich. They have absolutely no reason to encourage free trade of any of these products, as it would jeopardize their monopoly standing and open them up to global competition.

The ways patents are granted is also troubling. Invariably, patents build on existing knowledge that has been created over centuries, so no one individual or company can claim to be their sole owner. The fact that it is possible to patent such things as the active ingredients in traditional herbal medicine and other properties of nature, such as the human genome, makes a mockery of the argument that IPRs are needed to promote innovation.

As IPRs are so valuable, most advanced economies have shifted to producing ideas and left the dirty work of actually making things to poorer countries. In areas where other countries could compete, such as knowledge and knowhow, they create barriers to prevent competition, and in areas where they know nobody can compete, they promote free trade. To accomplish this, they insist on IPR protection in free trade agreements and, in Orwellian fashion, brand it as a being an indispensable part of free trade, when in reality it is quite the opposite.

As the Norwegian economist Erik Reinert comments, “Protecting imperfect competition in the rich countries is accepted, but not in poor.”

>From this it is clear that capitalists do not want free trade. Far from it. They want to impose free trade on others when it is to their advantage, and avoid free trade at all costs when it is not to their advantage. I believe that this is the logic behind Sarkar’s quote that neither “capitalist countries nor the communist countries like the free trade system”.

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Intellectual Property in a Proutist Economy

Free trade is a double edged sword, and under the right circumstances it can bring about maximum utilisation of global resources and benefits for all parties involved. Under the wrong conditions, it can impoverish poor nations and make them exporters of cheap raw materials and importers of expensive manufactured goods. Therefore, while Prout supports free trade, it does this conditionally, and only during the appropriate circumstances when it will bring about prosperity for all parties.

Hence, while Prout supports the free flow of ideas and intellectual wealth, which in a sense is the basis for free trade, some restrictions on ideas and invention, or psychic pabula as Sarkar calls it, would be needed even in a Proutist economy. Society may have a legitimate reason to limit certain information, such as creating poisons and bombs, to protect itself. Likewise, if an artist creates a song or a work of art, he or she should definitely be able to protect so it is not copied and sold by others.

However, there is a strong case to ensure that scientific knowledge that is beneficial to humanity should have as few restrictions as possible. The argument that patents are needed to promote innovation is simply not true. Most of the people who invent things do not personally benefit from the innovations; rather, the company they work for is the financial beneficiary. And if private companies would limit their investment in innovations, then the state could easily step up and provide a conducive environment for creativity to flow. Here are few suggestions for rational patent policies within the framework of a Proutist economy from the book Growing a New Economy:

  • Patent laws and treaties should benefit society as a whole.
  • Where there is a conflict between the interest of the patent holder and the interest of society, the interest of society should prevail.
  • Medical patents for common ailments should not be allowed, as that could prevent sick people the possibility to afford a cure.
  • No patents should be granted for existing traditional knowledge, such as herbal medicine, or for things that already exist in nature, such as the human genes. Allowing these kinds of patents is a mockery of common sense, and is only a backdoor to allow individuals to monopolise knowledge and wealth given freely to us by our ancestors and by nature herself.

For more ideas about a rational approach to intellectual property, see chapter eleven of the book Growing a New Economy.


Why Capitalists Hate Free Trade
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A PROUT perspective on Cooperatives

PROUT’s economic structure consists of three tiers: key industries, such as electric utilities, are owned and operated by the local or state government, medium and large scale enterprises which operate as cooperatives and are owned by the workers, and small-scale private enterprises owned by individuals. The main defect of capitalism today is that it has created a profit-driven and centralized economy which consolidates economic power in the hands of a few individuals and a few large corporations. These monopoly corporations, where most people are employed today, would be transformed into cooperatives in a PROUT economy.

The Mondragon coops in Spain have demonstrated that co-ops are the most effective way to reduce inequality and maintain full employment. Studies by Professor Jaroslav Vanek at Cornell University have also shown that a cooperative structure is the most efficient way to run large-scale businesses. Today, many progressive and even some conservative thinkers suggest that the corporate sector should be replaced by cooperatives.

A PROUT perspective on Cooperatives
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A PROUT perspective on Speculation

The financial system has an important facilitating role to play in the economy by stimulating the real economy. Once the financial sector grows too large, as it currently has, speculation begins to dominate the economy and the real economy becomes unstable. Speculation does not create new wealth, it only redistributes it. Today, an estimated 95% of investments are speculative—only five percent are invested in the real economy. The speculative economy must therefore be curtailed and redirected into an investment economy, so that real money is invested in producing goods and services which create wealth in the real economy.

A PROUT perspective on Speculation
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