“The first thing that must be done to increase the purchasing capacity of the common people is to maximize the production of essential commodities … “ (P.R. Sarkar, “Some Specialities of Prout’s Economic System”, June 1979, Calcutta).
Purchasing Capacity or Purchasing Power is Prout’s basic outcome measure. It is an indicator of the ability of individuals or families to acquire economic goods and services.
Question: What do we want, increase in per capita income, or increase in purchasing capacity?
Answer: According to PROUT, increases in per capita income are not a sufficiently reliable and scientific index to determine the standard and progress of a particular socio-economic unit. Rather, this approach is misleading and deceitful, because it refers to a simple mathematical calculation of total national income divided by the total population. This does not give the correct picture of the standard of living of the people of a particular socio-economic unit as the wealth disparity in society is concealed. Per capita income shows the mean and not the variation of income distribution. If inflation is also considered, the reliability of per capita income is further reduced.
Purchasing capacity, on the other hand, is the real index of how people’s economic needs can be met by their income. All PROUT’s plans and programmes in the socio-economic sphere should be aimed at increasing the purchasing capacity of the people. PROUT stresses increasing purchasing capacity and not per capita income.
It may be questioned whether it is wise for any government to guarantee the minimum requirements. If the state is to supply cereals, pulses, salt, gram, ghee, butter, etc. to all people then naturally the state has to institute some process of control which people may not like. Hence PROUT’s view is that people should be guaranteed the provision of sufficient purchasing power to meet these requirements. In that case, the state need not adopt control measures. The other disadvantage of guaranteeing the supply of minimum requirements is that if consumable goods are supplied to everyone, people will become lethargic. They should, therefore, be supplied with purchasing power in exchange for their work according to their physical, psychic, or spiritual capacity.
By EvolutionNews.co.nz – Read more
Purchasing Capacity: A Key Prout Economic Concept by John Gross – Click here
