PROUT Institute of Australia

"In capitalist and communist countries the mode of production is

defective. In capitalist countries, labour does not work in the interest
of management and management does not allow the rolling of money due to
wealth concentration. In communist countries, labour does not feel one
with the job and that is why there is sluggish production. The
co-operative model of PROUT is free from both defects." P.R. Sarkar

Cooperatives have many advantages. They fit within the three industrial
/ commercial structure of Prout as follows:

Key industries
Cooperatives
Small businesses

There are seven internationally recognised principles of cooperatives:

1st Principle - Voluntary and Open Membership

Co-operatives are voluntary organisations, open to all people who are
willing to accept the responsibilities of membership without gender,
social, racial, political or religious discrimination.

2nd Principle - Democratic Member Control

Co-operatives are democratic organisations controlled by their members
who actively participate in setting policies and making decisions.
Elected representatives are accountable to the membership.

3rd Principle - Member Economic Participation

Members contribute equitably and democratically control the capital of
their co-operative. At least part of the capital is usually the common
property of the co-operative. Members usually receive limited
compensations on capital subscribed as a condition of membership.
Members allocate surpluses for any or all of the following purposes:
- developing their co-operative
- benefiting members in proportion to their transactions with the
co-operative
- supporting other activities approved by the membership

4th Principle - Autonomy and Independence

Co-operatives are autonomous, self help organisations controlled by
their members. If they enter into agreements with other organisations,
including government, or raise capital from external sources, they do so
on terms that ensure democratic control by their members and maintain
their operative autonomy.

5th Principle - Education, Training and Information

Co-operatives provide education and training for their members, elected
representatives, managers and employees for the effective development of
their co-operative.

6th Principle - Co-operation among Co-operatives

Co-operatives serve their members and strengthen the co-operative
movement by working together through local, national, regional and
international structures.
7th Principle - Concern for Community
Co-operatives work for the sustainable development of their communities
through policies approved by their members.

It is often stated that the discovery of the miners safety lamp (also
known as the Davey lamp) saved many miners lives. However the statistics
show that more miners died after the introduction of the safety lamp
than before. Reason? Because mine managers, now that the lamp existed,
forced the miners into more and more unsafe parts of mines causing more
serious explosions. This is use of technology without a benefit to the
workers. In a cooperative system, workers would actually enjoy the
fruits of modern technology.

The proper use of science under a collective economic system will only
bring about human welfare. It may well be possible that due to
mechanization no one will have to labour for more than 5 minutes a week!
Being not always engrossed in anxiety about food and clothes, humankind
will not misuse its mental and spiritual wealth. People will be able to
devote more time to sports, literary discourses and spiritual pursuits.
So, with the development of technology (even as simple as the Davey
lamp), the approach should be all-round welfare and practically a
reduction in working hours so that each person can pursue a holistic
life.

Modern corporations are forced to engage in takeover battles if they are

to survive. These are at the expense of workers. We commonly see
newspaper reports about jobs being slashed subsequently. For example,
we read that Cadburys has been buying up overseas companies and has to
find savings by slashing jobs. In a cooperative system, cooperatives
would exist for the benefit of their workers and local communities.

In addition, cooperatives develop nicely in a community that has:

1. An integrated economic environment
2. Common economic needs
3. A ready market for the coops output (goods and services produced).

For financial viability, P.R. Sarkar (the propounder of Prout) comments

that cooperatives may derive a "rational profit" of 15%. Of course the
exact rate will depend on competition and market factors, but the point
is an efficient market and an effective industrial and commercial
structure would properly allocate gains so that there is enough for all
(including through distribution of cooperative dividends and payment of
salaries or wages) to have an adequate purchasing capacity for minimum
necessities and appropriate amenities. A dynamic cooperative that makes
a profit will greatly assist it members to obtain not only the
additional common amenities (above minimum necessities), but also with
incentives to increase the standard of the amenities available for each
person. Of course, in a well organised accounting system, costs include
depreciation and sinking funds. Allocation for new investment is vital.
Profit will also be needed for employee incentives.

It is interesting to note that the Mondragon experience indicates that a

cooperative becomes unwieldy when it exceeds 500 workers. Studies in New
South Wales, Australia indicate that the maximum size for a primary
school is around the same number. Larger than this and the school starts
to lose its community feel.
As well as cooperatives, Prout's industrial and commercial structure
includes key industries and small businesses.

Some characteristics of a key industry in the Proutist model are:

- Capital is owned by local community.
- Legal status of key industries is akin to a statutory authority or
local government corporation.
- Board of directors is elected or appointed by local community or
government appointments on merit.
- Large scale and complex operations.
- Operate in the public interest, so as to serve the people.
- Operate on a 'no profit - no loss basis', eg if they happen to make a
surplus profit in a financial year, it can be allocated back to
consumers by way of a rebate against electricity payments or other
utility charges.
- Efficiency must be maintained through targets and comparison with
global best practice.

Private enterprise is also encouraged in the Proutist model. Their

characteristics are straightforward and include:
- Capital is owned privately.
- Legal status is of small business, according to local laws and/or
legislation, such as sole trader, partnership, family trading trust.
- Small scale operations.
- Prices are determined by a free market.

The division between small and medium scale businesses is a function of

factors such as capital, number of workers and turnover. Definition will
vary according to time, place and person (society). If a private
business grows too big, the better social policy is that it should be
split in two or turned into a cooperative.

In terms of strategic importance, key industries are the foundation of

an economy. But cooperatives are the norm of production and business and
commercial relationships. In terms of numbers of enterprises,
cooperatives are the preferred model, but small private enterprises
could be a large sector. In terms of numbers employed, cooperatives
would be the dominant sector. Hence, cooperatives are Prout's solution
to unemployment.

When planning, consideration should be given to the balanced integration

of key industries, cooperatives and private enterprises. For example,
the electricity grids would be well organised as public utilities as
this can be classed as a key industry. In this case cooperatives heavily
dependent on use of electricity should be encouraged to set up around,
or near enough to, the public utilities and their substations, etc.
Cooperatives less dependent need not be so close. And of course, small
businesses such as craftspersons might set up around their related
cooperatives.

So the industrial structure of an economy, with cooperatives tending to

cluster around key industries and private enterprises tending to cluster
around cooperatives, in their varying degrees, can lead a balanced
industrial sector in that society. In the agricultural sector, producer
cooperatives would supply consumer cooperatives that deal directly with
consumers.

The health system could also be modelled on the three tier principle and
the banking system can be modelled on the three tier principle. In the
financial sector model, private services can include financial brokerage
and insurance broking. Private enterprise do not run banks in the
Proutist model - these would be run as cooperatives.