2004 Proutist Universal 1 Proutist Economic Development Decentralised Economic Planning Dr. Michael...

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2004 Proutist Universal 1

Proutist Economic Development

Decentralised Economic Planning

Dr. Michael Towsey

Dr. Michael Towsey Proutist Universal 2

Decentralised planning

1. Decentralised economy requires decentralised planning.

2. Planning starts from bottom up.

3. The block is the smallest unit of Proutist economic planning.

4. First step: identify blocks, natural economic communities consisting of 100,000 to 250,000 people.

5. Block > District > NationGuarenas > Miranda > Venezuela

6. There should be provision in constitutions, such as the Venezuelan constitution, for the importance of block level planning.

7. Trickle up development vs trickle down.

Trickle down development

The theory goes:

• Increase the income of the rich who know how to create wealth.

• The wealthy will invest their extra accumulated income as capital to generate more wealth.

• This creates jobs and more demand.

• Prosperity trickles down to the poorer people.

Trickle down ?

Traditional socialist planning

• Intention was to distribute wealth more equitably.

• BUT emphasis was on large scale projects and centralised planning.

• 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.

• Communism is economic centralisation - in the hands of a few.

• Capitalism is also economic centralisation - in the hands of a few.

Trickle up development

• Block level planning.

• Maximise production by decentralising production.

• Decentralise to point consistent with economic efficiency and collective welfare.

• Adjust block level plans to coordinate with district and national plans.

• 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.

Block-level planning boards

• 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.

• Prepares a plan for development of the block and implements local developmental programmes.

Organizing blocks

• Blocks must not be demarcated on basis of political considerations.

• Blocks should be scientifically and systematically demarcated as the basis for efficient decentralized economic planning.

• Block divisions 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.

Intra- and inter- block planning

• Each block should be made 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 = "intra-block planning".

• Cooperation among blocks is necessary.

• Planning among blocks = "inter-block planning".

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.

• Deals with problems that traverse block boundaries and cannot be tackled or solved by one block alone.

Inter-block examples

• 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;– etc.

General advantages of block level planning

• Easier to identify and understand problems of a local area.

• Fewer conflicts of interest.

• Local leadership solves problems according to local priorities.

• Planning will be more practical and effective - to give quick, positive results.

• Easier and faster to respond to new situations.

• Base for a balanced economy can be established.

• Can easily identify leakage of capital.

Local advantages of block level planning

• Local socio-cultural bodies play an active role in mobilizing human and material resources.

• Development of local industries provides immediate economic benefits.

• 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.

• Purchasing capacity of local people will be enhanced.

• Unemployment solved more easily.

Short and long term planning

• Short term plan:– Focus: Labour intensive industry.

• Long term plan:– Focus: Establish capital intensive industry.

• Goals:– Guarantee minimum requirements of the local people;– Eliminate unemployment;– Increase purchasing capacity; and – Make socio-economic units self-sufficient.

Factors of planning

• When planning (eg an industry), consider four factors:

– Collective necessity – i.e. is there a local demand?

– Full costing of inputs – including externalities.

– Productivity – efficiency and local availability:

• build processing factories where raw materials are.

– Purchasing power:

• distribute sufficient purchasing capacity;

• real income vs nominal income;

• no leakage of capital.

Community development

• Identify community needs.

• Always start from strength ... ... ...

• A successful project requires good governance.

• Good governance requires continued training and education:– Need to understand concept of conflict of interests.– Accountability to fight corruption.

• No outsiders on local boards: – Especially no money donors, central government officials &

project contractors.

2004 Proutist Universal 1 Proutist Economic Development Decentralised Economic Planning Dr. Michael...

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