Modes of production

Proutist Economic Development

1. Who owns the means of production – the capital and land?

Three Tier 2. Determines who gets what income.

Industrial System 3.
4.
Capitalist system – private (in reality, a few).
Communist system – the State (in reality, not really public).
5. Mixed economy (private and State).
6. Cooperative system – members of the coop.
Dr. Michael Towsey
7. Prout prefers the cooperative system, but supports public and
private ownership where appropriate.

 2004 Proutist Universal 1 Dr. Michael Towsey Proutist Universal 2

Modes of production in PROUT The cooperative model

Mode of Size Strategic Complexity Board of Examples
Production Importance Directors
• "In capitalist and communist countries the mode of production is
Public Large High High Elected, or Water defective. In capitalist countries, labour does not work in the
scale
(key
appointed by
Core power
interest of management and management does not allow the
immediate rolling of money due to wealth concentration. In communist
industry) utilities
government
Oil, Minerals
countries, labour does not feel one with the job and that is why
there is sluggish production. The co-operative model of PROUT
Defence industry
is free from both defects."
Cooperative Large, From high to High, Elected by Agriculture
medium medium, and medium, workers or - P.R. Sarkar
Auto manufacture
scale even low low members

Private Small Low Low, Not

scale although applicable
Motor mechanics
can be
specialised

Dr. Michael Towsey Proutist Universal 3 Dr. Michael Towsey Proutist Universal 4

1
 Cooperatives Seven principles of coops
There are seven internationally recognised
principles of cooperatives ...

• "Cooperatives are the businesses of the future."

- Felipe Perez-Marti 1. Voluntary and open membership.

• Workers or members own the cooperative. 2. Democratic - controlled by their members.

• More incentives for workers to be efficient.
• No conflict between owners and employees.
• Workers benefit from the effort they put in.
• Workers and members can derive income by:
– wages/salary (including bonuses); &
– dividends (allocation of rational profits); or
– both.
3. All members contribute fairly to their co-ops, which they own in
common. Co-ops pay a limited return on the money a person
invests to become member.
4. Autonomy and independence - cooperatives are autonomous,
self-help organizations controlled by their members.
5. Education, training and information.
6. Cooperation among cooperatives.
7. Concern for community.

Dr. Michael Towsey Proutist Universal 5 Dr. Michael Towsey Proutist Universal 6

Cooperatives & technology Cooperatives & management

• Cooperatives are
• Cooperatives to use latest managed by the workers.
scientific developments.

• Security of employment.
• Cooperatives will allow workers to
reap the benefits of technology.
• Anti-monopoly legislation
- when a cooperative
• Automation will reduce working becomes too big, can
hours but not incomes. split into two.

Dr. Michael Towsey Proutist Universal 7 Dr. Michael Towsey Proutist Universal 8

2
 Cooperatives – success Cooperatives - examples
depends on ...
• World‘s best example of large scale cooperatives
– Mondragon, Spain.
• Ethical management.
• Strong supervision.
• Best example of medium scale cooperatives:
• Whole hearted acceptance by local community. – Maleny, Australia, has over 20 cooperatives in the town
• Financial sustainability. including a cooperative bank, food coop, waste recycling
• In early stages, cooperatives require protection from coop, and several housing coops.
multinationals or trans-national corporations.
– eg import tariffs, tax concessions
– but eventually should be phased out.

Dr. Michael Towsey Proutist Universal 9 Dr. Michael Towsey Proutist Universal 10

Mondragón Corporación Key industries

Cooperativa
• Capital is owned by local community.
• Legal status - statutory authority, local government corporation.
• MCC’s mission combines the basic objectives of a
• Board of directors:
business organisation competing in international markets
with the use of democratic methods in its organisation, job – elected or appointed by local community;
creation, promotion of its workers in human and – government appointments on merit.
professional terms and commitment to the development of • Large scale, complex.
its social environment.
– Jesús Catania • Operate in the public interest – to serve the people.
Chairman of the General Council • Operate on no profit – no loss basis.
• Efficiency maintained through targets and comparison with
global best practice:
www.mondragon.mcc.es – Eg PDVSA can be compared with Pemex, Petroecuador and
Petrobras on criteria such as output efficiency, OP/L or
OP/K.
Dr. Michael Towsey Proutist Universal 11 Dr. Michael Towsey Proutist Universal 12

3
 Private enterprises Industrial sectors -
strategic importance

• Capital is owned privately.

Small businesses
• Legal status – small business, according to local legislation. Cooperatives
• Small scale. Key industries
• Prices determined by free market.
• Division between small and medium scale is a function of • Key industries are strategic • Cooperatives are strategic
factors such as capital, number of workers and turnover. because of: because of:
Definition will vary according to time, place and person (society). • important resources; • people’s livelihood;
• If a private business grows too big, split in two or turn into a • backbone infrastructure; • providing minimum
cooperative. • regulatory implications. necessities;
• networking of industry.

Dr. Michael Towsey Proutist Universal 13 Dr. Michael Towsey Proutist Universal 14

Industrial sectors - Industrial sectors -

number of enterprises numbers employed
Key industries
Small businesses
Key industries
Cooperatives
Small businesses
• Cooperatives are the most
predominant business / Cooperatives
enterprise structural model.
• It is expected that small
business will vary over time
and the preferred model is
cooperatives.
• Key industries are public
sector employers.
Dr. Michael Towsey Proutist Universal 15 Dr. Michael Towsey Proutist Universal 16

4
 Integration of three tier industries Proutist production network -
example

Demand
Supply of for goods
Key industries natural and
(public utilities) resources services

Cooperatives
(all types of
industry)

Key industries Cooperatives Small businesses

Small businesses

Dr. Michael Towsey Proutist Universal 17 Dr. Michael Towsey Proutist Universal 18

Health system Banking system

Central Bank
Major
Hospital
Credit Unions
– cooperative
Clinics banks

Private Private
doctors financial
services
Dr. Michael Towsey Proutist Universal 19 Dr. Michael Towsey Proutist Universal 20