Is Venezuela Heading Towards Prout?


Richard Moore

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Subject: [toeslist] Is Venezuela Heading Towards Prout?

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 Is Venezuela Heading Towards Prout?

3 December 2006

Is Venezuela Heading Towards Prout?

by Andy Malinalco

Today there are countless movements and struggles which are fighting for the 
creation of a more just, sustainable, and human society, guaranteeing safety and
individual freedom. Of all these, many progressive people around the world see 
the Bolivarian Revolution in Venezuela as the one with the greatest possibility 
to transform social reality.

Prout (Progressive Utilization Theory) is a socio-economic theory with a 
holistic purpose which seeks to replace capitalism with the three-tier model.  
The three-tier model is one in which cooperatives are the main economic 
enterprise in the society, with large-scale key resources being run by local 
government enterprises and small-scale business matters being privately owned.  
However, cooperatives would be with pre-dominant type of enterprise and the more
cooperatives the better.  There may also be scope for aspects of key industries,
as well as small business, to become cooperatized as well.

PROUT was conceived in 1959 by the Indian philosopher and spiritual leader 
Prabhat Ranjan Sarkar (1921-1990). Prout is not a rigid economic doctrine, like 
the neoliberal regime, but a collection of principles which can be applied 
according to the requirements of any given situation. It's a model which - 
instead of economic growth as an end in itself - through economic democracy, 
decentralization, participatory management, regional autonomy and 
self-sufficiency has the well-being of all living being as the guiding principle
of social and economic life.  That is, there is a neo-humanistic welfare 

While the Bolivarian Revolution proceeds mostly through trial and errors, Prout 
is a theoretically sound and worked out coherent vision, which until now has 
only been put into practice by a few small local communities in various 
countries. In this article compares how the main goals of the Bolivarian Process
point toward the vision of Prout.

The path originates through various conflicts

The Bolivarian Revolution which was started with the electoral victory of Hugo 
Chávez in 1998, is not working with a rigid doctrine, and like most of the 
current movements standing against the neoliberal world order (e.g. the 
Zapatistas, People's Global Action, Reclaim the Streets, etc.) is not really 
defined. Its shape is drawn by the constant clashes with its national and 
international opposition, and it is these very conflicts that in turn lead to 
formulation of cohesion in its outlooks (thesis - antithesis -> synthesis 
[thesis]), not some incohesive doctrine, which make it more and more radical. 
For example, during the first years Chávez - besides his determined 
anti-imperialism - spoke about some 'third way' and 'capitalism with a human 
face'. Now he has changed this for anti-capitalist rhetoric, and since the 
beginning of 2005 he is propagating 'Socialism of the 21st Century' as the 
direction for Venezuela - although he has not clearly defined what he means by 

According to Michael Lebowitz (1), the original blueprint of the Chávez 
government was a strong State rejecting neoliberalism and controlling the key 
industries; supporting the formation of cooperatives, with the informal sector 
becoming a part of the legal economy; while the backbone and driving force of 
the economy remains private capital and large capitalist corporations. This 
concept changed due to the impact of the coup, the illegal oil strike and the 
self-organization of the people in resistance to these two attempts to bring 
down the government. The focus shifted to an anti-capitalist direction, with the
alternative of solidarity economy.

Every attempt by the opposition to get rid of Chávez has instead strengthened 
his control and opened new gates for revolutionary change. The attempted coup in
2002 not only led to the cleanup of the military command, but it made it clear 
to the poor supporters of Chávez that if they want to keep their revolution, 
then their activity, participation and organized acts are very much needed. The 
coup attempt turned out to be the most efficient mobilization of the Chavistas. 
In the general strike it was realised that company owners were aligned with the 
opposition at the end of 2002, and at the beginning of 2003 what was made 
possible was examples of workers' management in practice, with more government 
control of the national oil company PDVSA (2).  Since then PDVSA's profits are 
funding the government's popular 'missions', which were started in 2003. The 
food crisis experienced during the days of the strike created the realization 
that safeguarding the nation's food security was vital. Due to the food crisis, 
the military opened shops on the main roads of Caracas, selling basic foods 
under its market price. These turned out to be so popular, that after the crisis
ended, a chain of such stores was broadened to the whole country, within the 
framework of Mission Mercal.

Prout principles in the Bolivarian Revolution

So while the Bolivarian Revolution doesn't have a coherent and detailed vision 
about the future society, its goals, which caused it to turn its back to 
capitalism, correspond to some of the goals of Prout: to minimize inequality, 
achieve national self-reliance, and create economic democracy, where everyone is
able to satisfy their basic necessities.

The Bolivarian Revolution has started to apply principles of Prout, for the most
part unconsciously, in the following four areas: securing the basic necessities 
of people, economic independence and self-sufficiency (endogenous development), 
building an alternative economic model based on cooperatives as the mainstay, 
and creating participatory management in economic affairs.  These are underlying
neo-humanistic and universal ideals inherent in the ethical development of 
society for the good and happiness of all, and so naturally any progressive and 
welfare oriented movement would imbibe them.

1. Providing the basic needs

According to Prout it should be guaranteed that everyone is able to afford their
basic necessities. The five basic necessities are: food and drinking water, 
clothing, housing, education and health care. These are needed for a quality of 
life that is necessary in order to start the development of the real human 
personality, which has the capacity to make decisions regarding their economic 
future and social participatory role. As Dada Maheshvarananda wrote, 
paraphrasing P R Sarkar: "Providing the basic necessities should be the primary 
function and duty of any economy. Human beings require these in order to realize
their individual potentialities, to develop culturally, to achieve inner 
fulfilment and self-realization, which many now consider as higher goals of 
life.. What a wonderful world it will be when no one on the planet will worry 
about getting enough money to buy the food, clothes, housing, education and 
medical care needed for his or her family!" (3)

Of these five necessities, the following appear in the Bolivarian Constitution 
of 1999 as basic rights:

* proper housing in Article 82: "Every person has the right to adequate, safe 
and comfortable, hygienic housing, with appropriate essential basic services, 
including a habitat such as to humanize family, neighbourhood and community 
relations. The progressive meeting of this requirement is the shared 
responsibility of citizens and the State in all areas."

* education free of charge in Article 102: "Education is a human right and a 
fundamental social duty; it is democratic, free of charge and obligatory."

* primary health care in Article 83: "Health is a fundamental social right and 
the responsibility of the State, which shall guarantee it as part of the right 
to life. The State shall promote and develop policies oriented toward improving 
the quality of life, common welfare and access to services."

* universal access to health care in Article 84: "In order to guarantee the 
right to health, the State creates, exercises guidance over and administers a 
national public health system that crosses sector boundaries, and is 
decentralized and participatory in nature, integrated with the social security 
system and governed by the principles of gratuity, universality, completeness, 
fairness, social integration and solidarity."

The State started the 'missions' with the goal of securing these constitutional 
basic rights and creating essential social security.

For example, within the framework of Mission Habitat the government builds new 
residential buildings - primarily for families with children and without a home,
and for communities that organized themselves into construction teams. Housing 
is a serious problem in Venezuela: a large part of the population lives in 
hardly lashed-together shanties or in badly constructed buildings without 

The Mission Barrio Adentro - which is maybe the most famous project in 
international terms - was started in the spring of 2003, and brings basic health
care into the slums, to that huge part of society that were previously excluded 
from health care. Both consultations and medicines are given free of charge. The
doctors and staff live in the slums to really serve the community. With this 
'mission', which costs up to 5 billion dollars a year, presently 14,000 doctors 
and 3,000 dentists from Cuba and an increasing number of Venezuelan doctors 
provide health care to some 17 million Venezuelans.

The educational 'missions' were started against exclusion and to foster 
participatory management in the education sector - illiteracy and the lack of 
learning possibilities were the main factors that sustained the enormous social 
differences. The goal of Mission Robinson was to end illiteracy. When it started
in July 2003, one and a half million people, which means 6% of the population, 
were illiterate. On 28 October 2005 Venezuela was declared an illiteracy-free 
country. After Mission Robinson the government launched Mission Robinson II for 
those who didn't finish primary school - the program includes more than one and 
a half million adults. Until September 2006 some 418,253 adults who previously 
dropped out finished their high school studies within Mission Ribas. The State 
pays approximately 100 dollars each month (which in Venezuela is quite useful) 
to every participant of the educational programs so that they can attend these 

Mission Mercal, the nutrition project of the government, sells basic foods in 
poor areas at 28-40% less than the market price. In the first wave in 2004, they
established 4,052 such shops, and this number increased to 15,721 by September 
2006. The Mercals sell nearly half of the total food sold in the country. In 
addition, free canteens appeared in the slums, named Comedores Bolivarianos, 
which provide hot meals to 600,000 people every day. This is people's economy in
action and helps redefine and shape the market to meet the basic necessities of 
the population.

People's economy is an aspect of Prout. P R Sarkar describes it as follows:

"People's economy deals with the essential needs of the people in general - the 
production, distribution, marketing, shipping, storage, pricing, sales, freight 
charges, pro forma costing, and all related activities of such essential needs. 
Most importantly, it is directly concerned with the guaranteed provision of 
minimum requirements such as food, clothing, housing, medical treatment, 
education, transportation, energy and irrigation water.  Continuous improvement 
in and ready availability of these requirements is the key factor in people's 
economy. The minimum requirements can be assured through guaranteed purchasing 
capacity which should be enshrined in the constitution as a fundamental or 
cardinal human right. This will give the citizens of the country legal power if 
their minimum requirements are not met, hence the necessity of purchasing 
capacity will be reinforced by constitutional law. As people's economy will deal
with minimum requirements and people's subsistence problems, it must take 
precedence over other parts of the economy.

People's economy should also be concerned with the development of both private 
and cooperative industries. Private industries would be limited in size and 
scope to prevent monopoly production and exploitation, and would be required to 
function as cooperatives once they grow too large. Cooperative industries are 
the best means of independently organizing people so that they take collective 
responsibility for their livelihood. People's economy also includes employment 
for all; the eradication of mass poverty; the development of rural economy; the 
phase-wise socialization of land into the hands of those who work physically or 
intellectually for proper production; practical training programmes to impart 
skills which enable people to find employment in their immediate urban or rural 
locality; work placement; and the transportation, transshipment, loading and 
unloading of any materials, even if they are not economically viable in the 
short-term. It is also concerned with the generation of cheap power and the 
supply of water, which are essential if people are to control their local 
economies. Finally, it includes economic decentralization, cooperative dynamo 
and block-level planning."

5 June 1986, Calcutta

2. Endogenous development

Prout proposes that the current centralized economy be decentralized into 
economically self-reliant regions. While forming socio-economic units, several 
factors should be considered.  These include: same economic problems; uniform 
economic potentialities; ethnic similarities; the sentimental legacy of the 
people; and similar geographical features. These regions would also place 
importance on the inhabitants' cultural legacy and nurturing of local language 
to help solve social and economic problems and development social and economic 
interests. These regions would decide their economic future from below, with 
planning emerging from the communities.

Such regions would be divided into blocks, which would provide the basic level 
of economic planning. As P R Sarkar wrote:

"There are many benefits to block-level planning. The area of planning is small 
enough for the planners to understand all the problems of the area; local 
leadership will be able to solve the problems according to local priorities; 
planning will be more practical and effective and will give quick, positive 
results." From: BLOCK-LEVEL PLANNING 1981, Calcutta

With the term "endogenous development", Chávez marks his endeavour to reject the
neoliberal economic rules and the developed countries economic models. Instead 
he is trying to develop an economic model which suits Venezuela, is for 
Venezuela, and satisfies the needs of Venezuela. This model is not well-defined,
as are so many other things in the Bolivarian Revolution - instead the 
revolution itself forms it with the process. The goal is to create the nation's 
economic sovereignty. According to Chávez, while in the time of Bolivar the 
fight was for political independence, this generation should achieve economic 
independence (4).

In concrete terms this means to break the dependence on oil, to diversify the 
income sources of the national economy, and to rejuvenate agriculture which 
withered after the discovery of oil, and to achieve food security. (Venezuela 
imports the majority of the food it consumes, although they have succeeded to 
reduce this rate from 72% in 1998 to 64% in 2006.) Five fronts have been defined
for endogenous development: agriculture, industry, infrastructure, tourism and 

Strengthening agriculture is a crucial factor in achieving economic 
independence. The goal of food security is in the constitution, as follows:

* food supply in Article 305: "A secure food supply must be achieved by 
developing and prioritizing internal agricultural and livestock production."

* support of rural development by the State in Article 306: "The State shall 
promote conditions for overall rural development, for the purpose of generating 
employment and ensuring the rural population an adequate level of well-being, as
well as their inclusion in national development."

Ultimately, the agricultural sector should be well industrialised and run on a 
cooperative basis.  This will meet the needs of the local people. P R Sarkar 
defines 'local people' as:

"Local people are defined as those who have merged individual socio-economic 
interests with the socio-economic interests of the socio-economic unit they live
in. The primary consideration is whether or not people have merged their 
individual interests with their socio-economic unit, regardless of their colour,
creed, race, mother tongue, birthplace, etc.

31 December 1984, Calcutta

3. Cooperatives

Prout proposes a dynamic economy of the people, by the people and for the 
people. Rejecting profit-making as the goal of the economy, Prout bases its 
economic policy on consumption; that is, on meeting the actual needs of people 
(5).  Prout proposes a three-tiered economic system to realize this. To preserve
the open, innovative spirit of entrepreneurial outlook, but to avoid the 
destructive and exploitative impact of capitalism (which overrides the local 
social and economic environment), Prout keeps the private enterprises on a 
small-scale size, and sets a ceiling for the maximum growth of a private 
business, which should then adopt cooperative principles.

The largest part of the economy is formed by the cooperatives. This guarantees 
economic democracy, the decrease of alienation, the more just distribution of 
wealth, and it makes possible changing the logic of profit to satisfying the 
real necessities and achieving everyone's well-being.

Those industries which have strategic importance and which are too big or too 
complex to be efficiently managed by a cooperative, for example primary energy 
sources are the key industries which are managed by local government 
enterprises.  However, there may be many secondary cooperatives that may also be
producers or suppliers in the processing area.

The Bolivarian Revolution from its beginning committed itself to keeping the key
industries state-owned - rejecting the neoliberal doctrine demanding 
privatization.  Accordingly, the new constitution provides:

* public interest element in Article 302: "The State reserves to itself, through
the pertinent organic law, and for reasons of national expediency, the petroleum
industry and other industries, operations and goods and services which are in 
the public interest and of a strategic nature."

Prout proposes that key industries be run on the principle of 
"no-profit-no-loss". As these enterprises are not privately owned, surplus 
income will not be paid out as dividends to stockholders or private investors 
(5).  Rather, everyone may benefit by way of a rebate in the cost of goods or 
services.  Or by spending the state-owned enterprises' profits in social 
'missions', the government realizes this principle of Prout by giving it to the 
most poor of the society.

When Chávez took power in 1998 there were only 762 cooperatives in the country. 
One of the most important aims of the Bolivarian Revolution has been to make 
this barely existing sector an important part of the economy. The Bolivarian 
Constitution asserts that the State should promote and protect cooperatives as a
popular economic alternative:

* cooperatives in Article 118: "The right of workers and the community to 
develop associations of social and participative nature such as cooperatives, 
saving funds, mutual funds and other forms of association is recognized. The 
State shall promote and protect these associations destined to improve the 
popular economic alternative".

* guarantee of training, technical assistance and financing in Article 308: "The
State shall protect and promote small and medium-sized manufacturers, 
cooperatives, saving funds, family owned business, small business and any other 
form of community association for purposes of work, savings and consumption, 
under an arrangement of collective ownership, to strengthen the country's 
economic development, based on the initiative of the people. Training, technical
assistance and appropriate financing shall be guaranteed."

However no significant change took place until 2001, when the number of 
cooperatives was about one thousand. But with the impact of the passage of the 
Special Law on Cooperative Associations in that year and the bank loans provided
by the Ministry of Popular Economy (MINEP) since 2003, their number has 
dramatically increased. More than 150,000 co-ops have been registered in 
Venezuela by 2006, the largest number in the world.

To encourage and strengthen cooperatives and to create a base for endogenous 
development, in January 2004 the government launched Mission Vuelvan Caras, a 
one-year-long training program. The participants, who usually come from other 
educational missions, receive practical job training, and after finishing the 
majority form cooperatives.

In regard to cooperatives P R Sarkar states:

"Besides agricultural or farmers cooperatives, PROUT advocates the formation of 
other types of cooperatives, including producers and consumers cooperatives. 
Producers cooperatives include agro-industries, agrico-industries and 
non-agricultural industries. The total profit of such cooperatives should be 
distributed among the workers and members of the cooperative according to their 
individual capital investment in the cooperative and the service they render to 
the production and management of the cooperative.

Similarly, consumers cooperatives should be formed by like-minded persons who 
will share the profits of the cooperative according to their individual labour 
and capital investment. Those who are engaged in the management of such 
cooperatives will also be entitled to draw salaries on the basis of the services
they render to the cooperative. Consumers cooperatives will distribute consumer 
goods to members of society at reasonable rates."

18 February 1988, Calcutta

4. Participatory democracy

One of the most important achievements of the Chávez regime has been the 
inclusion of people into the political decision-making process. It began with 
the writing of the new constitution based on broad consensus in 1999. A national
referendum was held whether there should be a new constitution, then there was 
an election for the constitutional assembly. The writing of the constitution 
included wide-ranging consultation, and then the final text went to another 
national referendum for acceptance.

Since then Chávez has constantly called on the people to take power - which 
sounds somehow funny when the Bolivarian Revolution is based on a charismatic 
leader. But heeding his call, local government and the people started closer 
collaboration. Citizens form committees, express their opinion about the budget,
which tasks must be done, etc. Another part of the process is the formulation of
new communal councils (based upon 200-400 families in cities and 20-50 in rural 
areas), which chip on the local affairs - and they flourish in both the slums of
Caracas as well as in the high-class district Altamira. This model requires much
grassroots activity from the citizens; although currently participation is 
surprisingly strong, sceptics warn that the same ardour could be seen in the 
first days of the Iranian, Cuban or Spanish Revolutions, only to have it later 

In contrast, Prout focuses more on making representational democracy more 
accountable, while the participation of the people in decision making, 
anticipating the ebbs and flows of enthusiasm, would happen primarily according 
to their economic interests through cooperatives and determining their 
community's economic future.

The seeds of this transformation have also appeared in Venezuela. Workers 
encouraged by Chávez occupied approximately 1,200 factories and other businesses
after the owners decided to close them. In the days of the general strike in 
2002, workers locked out by their bosses in many places broke into their very 
workplace and were able to run it without the management. In certain state-owned
enterprises, worker co-management also appeared, such as in the Alcasa aluminium
company, where the workers are able to freely elect their own managers and can 
participate in the decision making. However these cases are still exceptions 
even in the state-owned sector, and more like experiments that generate great 
expectations, rather than part of a broad realignment.


What's taking place in Venezuela, in spite of the term 'revolution' used by the 
Chavistas, is a slow rearrangement of resources and the opening of new spaces 
for economic and political participation.  At the beginning of the Bolivarian 
Revolution, 42.8% of the households lived under the poverty line. By the second 
half of 2005 this rate decreased to 37.9%. This numbers were calculated by 
Venezuela's National Statistics Institute on cash incomes, therefore don't show 
the effect of the 'missions' which increased the general quality of life of the 
poor. But of all this the achievements the Venezuelan society is still marked by
the presence of wide-spread poverty and shocking inequality.

In spite of the cooperative boom, only 6% of the Venezuelan labour force works 
in cooperatives. Moreover some of the new cooperatives are not active, and some 
were established just to get the government's bank loan - their economic 
viability is still to be proven. This, and the shortage of cooperative 
experience in the country, indicates that cooperatives are still far from taking
over the Venezuelan economy. Instead of watching the creation of a 'Socialism of
the 21st Century' or the economic democracy of Prout, what we are seeing so far 
is more like an experimental laboratory of an alternative economic system.

Furthermore the capitalist structures haven't been touched in Venezuela. Chávez,
contrary to his Cuban friend Fidel Castro, has not taken anything away from the 
bourgeois, and Venezuela is still a capitalist country - although not 
neoliberal. Walking on the streets of Caracas you see the continuous presence of
the same multinational corporations, the same US fast food restaurants, the same
shopping malls like elsewhere. The country's economy is still run by private 

While Prout thinks in terms of self-sufficient regions, Venezuela strives to 
reduce its economic dependency and make itself self-sufficient.  On the whole 
Venezuela started the transformation from a very bad situation from the 
viewpoint of Prout: enormous inequality, dependence on the oil prices and on 
food imports, the concentration of 88% of the population in cities, lack of 
education, etc. From this state Venezuela slowly advances to an undefined goal, 
but the steps which have already been taken are surprisingly in harmony with an 
Indian thinker's vision made half century ago, a vision called Prout.

Andy Malinalco is an activist with the Prout Research Institute of Venezuela



1 Michael A. Lebowitz: Venezuela: Going Beyond Survival, Making the Social 
Economy a Real Alternative. 
<> 19 August 2006.

2 Though the company had been nationalized in 1976, it had in reality been a 
state-within-a-state. After the coup failed, the directors and managers 
announced a strike until Chávez resigned, locking out the workers and 
effectively shutting down production to create panic and chaos as gasoline 
became unavailable throughout the country. Chávez then invited Ari Rodriguez, 
then head of OPEC, to take over the company. He talked to the workers and asked 
if they could run the company without the former bosses. When they assured him 
they could, he fired the striking directors, greatly reducing the hugely bloated
managerial salaries, and within three months production was back to normal.

3 Dada Maheshvarananda: After Capitalism. Washington, Copenhagen, New Delhi, 
Belo Horizonte, Proutist Universal Publications, 2003. pp.69-70.

4 Hugo Chávez Frías: El Golpe Fascista Contra Venezuela. Ediciones Plaza, La 
Habana, 2003, p.16.

5 Dada Maheshvarananda: After Capitalism, pp.88-89.

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