Socialism is a conceptual umbrella under which a variety of economic, political, and social theories exists. Most of these ideas contrasts themselves with capitalism by opposing private ownership, competitive relationships, and free, unrestrained markets. Within the socialist camp, there are differences regarding who should control the economy (state vs self-managed), between market and non-market approaches, and how it should be implemented (reform vs revolution). PROUT, often characterized as “progressive socialism”, provides a unique and integrated system that aligns itself with socialist approaches but also differs in important ways. As regards ownership, PROUT creates a three-tiered economic structure which allows for private ownership of small enterprises in order to stimulate innovation. However, most of the medium and large scale economic activity is controlled by independent cooperatives, together with a few state-owned key industries. Through economic decentralization, PROUT replaces state-level planning with local control of markets in order to build local self-sufficiency and wealth.
While socialism has a materialistic value base, which sees nature as a subset of the economy, PROUT’s values are based on neo-humanism, which views the economy as a means of not only supporting human life but of protecting the entire natural world. This worldview supports human and animal rights, and has an ecological vision honoring nature with inalienable constitutional rights. The economic features of PROUT are thus an integration of the best of both small scale capitalism and socialism while, at the same time, moving beyond both.
Sustainability refers to the ability of systems to “sustain” or endure over time. Since the 1980s, public and private entities throughout the world have adopted the path of ‘sustainable development’, where human systems advance in a way that meets the current and future needs of humanity. These efforts includes a triple bottom line policy of balancing economic development with social development and environmental protection. Unfortunately, progress towards sustainability over the last 30 years has been limited due to capitalism’s unsustainable pursuit of profits, regardless of the social and environmental costs.
Sustainability can only be achieved by replacing capitalism with a more humane, holistic, environmentally sensitive, and dynamic socio-economic system. PROUT addresses sustainability in four ways:
Adopts a universal value system called neo-humanism, which is based on respect for all living beings, as well as the entire inanimate world.
Maximally utilizes material and human resources through knowledge and know-how in order to meet the needs of a growing population while respecting the carrying capacity of the earth.
Decentralizes the economy so that communities can plan their economies in a way that is more responsive to local needs, appropriate resource utilization, and environmental protection.
Encourages the elevation of human pursuits from material satisfaction to mental expansion and spiritual realization. As humans evolve to subtler needs and interests, there will be less demand for limited physical resources.
A market economy depends upon the interplay of supply and demand to determine how capital is invested, what is produced, and how goods are priced. Although theoretically there should be little or no government interference in the operation of such markets (hence the term “free markets”), most economies in the world regulate their markets to some extent through different policies and regulations. Whether due to the manipulation of powerful economic forces or defective government intervention, market failures are produced which result in detrimental economic disparities, social problems, and environmental degradation.
Through its policies of economic democracy, PROUT avoids market failures by decentralizing the economy and empowering localities and regions with the task of economic development. This approach neither overburdens the economy with price controls and centralized planning nor does it allow non-local economic players, such as large corporations, to skew the markets for their own profit. Rather, localities are able to meet local needs by using market mechanisms to fulfill local consumption. Through localized economic planning, the current and future demands of a community can be met by ensuring the necessary supply of goods and services while, at the same time, addressing social and environmental conditions.
Capitalism, especially in its current form of corporate capitalism, facilitates the concentration of wealth by powerful individuals and business entities. Due to inheritance, ineffective or regressive taxation on wealth, depressed wages, and different forms of economic and social exploitation, the rich have been gaining greater control over capital and wealth, resulting in increasing wealth disparities. According to analysts at Credit Suisse, a global financial institution, the richest 1% now owns more than half of all the world’s household wealth.
In order to create greater economic equity which will increase everyone’s access to decent incomes and rising living standards, PROUT proposes a limit on the over-accumulation of wealth. This would be a ceiling on wealth to be determined by society collectively (and probably enforced by government) and would vary over time according to the needs and possibilities of each society. This upper limit on wealth would be set high enough so that highly productive individuals could acquire adequate amenities but not so high as to inhibit the development of the economy through the hoarding of large amounts of wealth. It would also help wealthy people divert their energies from wealth accumulation towards the development of their intellectual, artistic, and spiritual potentialities.
Historically, taxes have been viewed as a “necessary evil” in order to fund government. They have been difficult to collect, have exacerbated inequalities in society, and encouraged a host of illegal activities. In modern times, personal income taxes are particularly egregious, as they directly reduce an individual’s income that was earned through direct labor. PROUT suggest the elimination of income taxes and replaces it with a production tax levied at the point of production. Producers of goods or services would pay a tax before their production is purchased by the consumer. Although PROUT’s decentralization policy would greatly reduce the need for importation, all imported goods would be subject to an import tax to be paid by the importer before it became available to consumers.
The production tax would be levied progressively, so that essential commodities are taxed less than non-essential goods. In this way, those who choose to spend more of their incomes on non-essential items would pay higher prices due to higher tax rates. PROUT’s system of taxation would be far simpler to maintain, make tax collection more efficient, reduce tax evasion, and place more tax burden on those willing to pay more for luxury goods and services.