Decentralized Economic Planning

PROUT Institute of Australia This presentation on planning for a decentralised economy is in no way comprehensive. It does not cover planning methodologies, for example. Its purpose is to fill out some additional concepts in planning for a decentralised economy. Proutist economic development is from bottom up. Likewise Proutist planning starts from the lowest level and builds upward. The lowest level of economic planning is the "block". Thus the first step is to identify natural local communities of some 100,000 to 250,000 persons as a block. From block go to district and then to nation. Prout would have a provision in the constitution of a country or federation to formalise the process of block level planning. The neo-liberal agenda plans for economic development using the trickle down approach. In this way, President Bush in 2003 was able to seek tax cuts for the very rich and appeal to the theory of "trickle down" growth. But the statistics do not support the notion that tax cuts necessarily increase investment, the supposed first step in the trickle down theory. The graph of Investment/GDP Radio and Share of the Corporation Income Tax shows a steady decline in corporate taxation as a percent of total taxation from 1955 to 1985, yet there does not appear to be a corresponding increase in investment (as a percentage of GDP) except for the years from 1976 to 1980. Prout does not support centralised planning whether capitalist or socialist. Centralised planning provides too many opportunities for unscrupulous persons to profit financially and politically. Centralised planning has never benefited people away from the centre or at the periphery. Eg Soviet development under Stalin was built on slave labour in prison camps. According to Prout, communism is economic centralisation - as there is control of wealth in the hands of a few. Capitalism is also economic centralisation - it also has control of wealth in the hands of a few. Prout supports decentralised planning to achieve "trickle up" movement of wealth. That is, first guarantee to all the basic minimum necessities through adequate purchasing capacity. Incentives should be there for those skilled and meritorious so that they have resources, facilities, amenities, etc to better offer their services to society and be rewarded accordingly with the amenities required for this. Incentives are a vital feature of Prout economics. However, increased amenities, over time, should also be there for the common people, not just the meritorious. The degree only varies as per economic development. The idea is that the gap will always be lessened, not increased. However, everyone having identical amenities or incomes is not a sensible or feasible approach in the relative world. The planning goal of any economic enterprise should be to maximise production and to decentralise production to the extent that is compatible with economic efficiency and collective welfare. Block level

plans should however be coordinated with each other, with the district plans and with the national plan. The idea to build up the wealth in a block, not to allow for net outflows of wealth at random or as per the whim of those who hold centralised economic power (be it capitalist or communist). In decentralised planning, each block has its own developmental plan, adjusting with overall plan of the socio-economic unit at various levels. Planning should be of ascending order - starting at the block level to district to national - to include all the levels of a socio-economic unit. As the amount of natural and human resources varies from block to block, separate economic plans have to be made for each and every block by a block-level planning board. Such a board should prepare a plan for development of the block and implement or see to the implementation of local developmental programmes. Blocks must not be demarcated on the basis of political considerations. Blocks should be scientifically and systematically demarcated as the basis for efficient decentralized economic planning. This means block divisions are to be organized according to such factors as: - Physical features of the area (including topography, river valleys, nature of the soil, type of flora and fauna, varying climatic conditions, etc). - Socio-economic requirements and problems of the people. - People’s physico-psychic aspirations. Each block should be economically sound so that the entire socio-economic unit will be self-sufficient. This enables a country or federation to become economically strong and developed in the real sense. Planning prepared for the all-round growth of a single block exclusively is called "intra-block planning". It should be noted that cooperation among blocks is necessary. Accordingly, planning among blocks is called "inter-block planning". Inter-block planning is an economic venture into some selected fields to organize and harmonize socio-economic development in a few adjoining blocks through mutual coordination and cooperation. It deals with problems that traverse block boundaries and cannot be tackled or solved by one block alone. Examples include: Examples include: - Flood control, river valley projects, afforestation projects, soil erosion, environmental impact of development. - Establishment of key industries, water supply, power generation, communication systems. - Establishment of an organized market system. - Higher educational institutions. The advantages of block level planning are many. Generally they include: - It is easier to identify and understand problems of a local area. - There are fewer conflicts of interest. - The local leadership solves problems according to local priorities.

- Planning is more practical and effective - to give quick, positive results. - It is easier and faster to respond to new situations. - The base for a balanced economy can be established. - It can easily identify leakage of capital. In block level planning, everything local is enhanced within the world community. In this regard, local socio-cultural bodies play an active role in mobilizing human and material resources. It is the development of local industries that provides immediate economic benefits. The growth of local industries creates greater opportunities for people’s all-round advancement, because all their basic needs are met. Local industries are the only way to provide local social security. The purchasing capacity of local people will be enhanced through this block level, local planning, approach. Consequently, unemployment is solved more easily. Prout distinguishes short and long term planning. The two types of planning differ not only in time scale but in their objectives. The goals are: - Guarantee minimum requirements of the local people. - Eliminate unemployment. - Increase purchasing capacity. - Make socio-economic units self-sufficient. P R Sarkar offers these points as a guide to planning and placement of a new industry: - Collective necessity – i.e. is there a local demand? - Full costing of inputs – including externalities. - Productivity – efficiency and local availability (eg build processing factories where the raw materials are). - Purchasing power (increase and distribute sufficient purchasing capacity). As a negative example, Sarkar notes that in India, tobacco is grown in the north, is processed in the south and is then taken north again to population areas. Again leakages of capital are to be avoided. It is also important to distinguish between real income vs nominal income. Important points on practical experience in community development projects are: - Always start from community strength. - Alway offer continuous education in good governance. - Never allow outsiders on local boards.