Understanding Prout

Essays on
&
Sustainability
Transformation
UNDERSTANDING PROUT
VOLUME 1
THE BIOPSYCHOLOGY
OF COOPERATION
EDUCATION FOR
LIBERATION
THE THREE-TIER
ENTERPRISE SYSTEM
WATER AND LAND

MANAGEMENT
E dited by J ake K arlyle and M ichael Towsey

UNDERSTANDING PROUT
Essays on Sustainability and Transformation

Volume 1
Edited by Jake Karlyle and Michael Towsey
Proutist Universal
Australia
II
Copyright 2009 Proutist Universal, Australia, electronic edition.

Copyright 2010 Proutist Universal, Australia, printed edition.
PROUTIST UNIVERSAL ® is a Registered Trade Mark of Proutist Universal in

Australia.
Published by Proutist Universal, Australia.

P. O. Box 665,
Maleny, Queensland 4552, Australia.
All rights reserved by the publisher. No part of this book may be reproduced or
transmitted in any form or by any means, electronic or mechanical, including
photocopying, recording or by any information storage and retrieval system, without
prior permission in writing from the publisher.
Copyright permissions and enquiries: [email protected].
National Library of Australia – Cataloguing-in-Publication Data:

Jake Karlyle, 1952- and Michael Towsey, 1948-.
Understanding Prout – Essays on Sustainability and Transformation, Volume 1.
First Printed Edition 2010

ISBN 978-0-9591792-3-1 (Volume One)
ISBN 978-0-9591792-4-8 (Set of Volumes)
1. Sarkar, Prabhat Ranjan, 1921-1990. 2. Social Sciences. 3. Social Change.

4. Economics. 5. Cooperatives.
Cover design by Kamala Alister.

Cover photo by Rob Blakers, www.robblakers.com
Printed chemically-free on carbon-neutral, FSC, TCF (totally chlorine free) paper.
Maleny Green Printery, www.malenyprint.com.
III
To Shrii Prabhat Ranjan Sarkar

V
Contents
Preface
The Biopsychology of Cooperation – Michael Towsey

Introduction
The Cooperative Movement in the 19th Century
Matter-centred Philosophy
Self-centred Philosophy
The Renaissance of Cooperation
Education for Liberation – Marcus Bussey

Prout and Neohumanism
From Humanism to Neohumanism
Neohumanism
Prout as Social Pedagogy
Prout’s Fundamental Principles and Education
Bridge Building
Unpacking Service
Education for Sadvipraship
Policy and Beyond
Conclusion
The Three-Tier Enterprise System – Michael Towsey

Introduction
The Three-Tier Enterprise System
Corporate Structure and Governance
Regulation
The Rural Sector
The Service Sector
Water and Land Management – Michael Towsey

Introduction
Supply – Water Production and Harvesting
Storage and Yield
Demand – Water Consumption
Land Use Planning
The Administration of Water and Land
Community and Culture
Policy Recommendations
VII
Preface
This first volume of Understanding Prout – Essays on Sustainability and
Transformation was published electronically in 2009 to mark the 50th
anniversary of the founding of the Progressive Utilization Theory by the
eminent Indian philosopher Shrii Prabhat Ranjan Sarkar (1921-1990). The
editors are happy to present this paperback edition in 2010.
Prout (an acronym for Progressive Utilization Theory) is arguably the only
socio-economic theory to emerge out of the Third World that has direct
applicability to the developed world. It offers a new vision of society based on
cooperation rather than competition and domination.
Why describe these essays as about sustainability and transformation?
Because, in society as in individual life, there is a constant struggle to maintain
equilibrium (sustainability) while at the same time to adapt to and to learn from
the new experiences that life throws at us (transformation). Transformation
also has a deeper, inner sense, as the contributors to this volume make clear.
Surely the greatest challenge facing humans at the start of the 21st century is to
learn the lessons embodied in climate change and globalization.
One of Prout’s contributions to this challenge is to propose a cooperative
economic system. Consequently all the essays in the first volume explore the
theme of cooperation from various viewpoints. A cooperative economic
system, however, is not possible without a commitment to a cooperative ethic
and culture. Thus in the first essay of this volume, “The Biopsychology of
Cooperation”, Michael Towsey explores cooperation from an ethical, social
and cultural perspective.
In the second essay, “Education for Liberation”, Marcus Bussey begins with
the paradox of a modern education. Why does it appear to impart so much and
yet fail to prepare us for a future that now asks different questions of humanity.
Bussey introduces Sarkar’s philosophy of Neohumanism as the essential
ingredient of an education for cooperation and liberation.
The third essay, “The Three-Tier Enterprise System”, by Michael Towsey,
introduces cooperatives from the traditional economic perspective and
compares them with the more usual private and public enterprises. However he
moves on to expand our understanding of the cooperative sector and to explore
the governance and regulatory issues that are likely to arise in a cooperative
economy.
Finally the fourth essay, “Water and Land Management”, brings the focus to
the local level. A cooperative global society cannot be achieved without due
attention to the local economy and the local economy depends first and
foremost on water and land management. Whereas 20th century water policy
VIII
focused on hydraulic engineering, so the 21st century approach will be about

ecosystem management and biotechnology. It will work with ecological and
biological processes rather than usurp them. We cannot live outside ecosystem
dynamics.
P. R. Sarkar developed Prout over a period of 35 years, from the beginning of
1955 until his death in October 1990. Apart from some notable exceptions, the
majority of his published works consist of extemporaneous discourses
delivered to groups of people who had typically gathered from many parts of
the world. The exceptions are books which the author dictated. All the author’s
discourses and books on Prout are contained in the series Prout in a Nutshell,
which was created by the author in 1987. The First Edition of the series
contains 21 parts, published between October 1987 and October 1991.
In 1959 Sarkar first described his socio-economic ideas as the Progressive
Utilization Theory for which he coined the acronym Prout. From 1955 to 1959,
he spoke on a broad range of topics, but it was on 5th June 1959 that he first
solidified his socio-economic ideas into a comprehensive theory, defining
Prout as the “progressive utilization of all factors”. He continued to develop
Prout throughout his life and consequently Prout in a Nutshell contains some
180 discourses and book chapters.
P. R. Sarkar once noted that the study of Prout can be done on three levels:
introductory, intermediate and advanced. These levels may be equated with
senior high school, undergraduate and post-graduate or research levels
respectively. The essays in this series of volumes are designed to be on the
intermediate level, making them accessible to a wide audience.
A number of contemporary thinkers have studied Prout and been impressed by
the scope of Sarkar’s vision. For example, Leonardo Boff, the co-founder of
Liberation Theology, says, “Prout is very important to all who yearn for a
liberation that starts from economics and opens to the totality of human
existence.” Hazel Henderson, economist and author of Beyond Globalization,
has described Prout as, “an important contribution to re-thinking the disastrous
course of the current economic globalization”. Noam Chomsky, Professor of
Linguistics (MIT), renowned academic and activist, says of Prout: “Alternative
visions are crucial at this moment in history. Prout’s cooperative model of
economic democracy, based on cardinal human values and sharing the
resources of the planet for the welfare of everyone, deserves our serious
consideration.”
The editors hope that the reader will enjoy the essays in this book – they are a
refreshing contribution to the challenges that lie ahead in the 21st century.
Jake Karlyle and Michael Towsey, Editors
The Biopsychology of Cooperation
Michael Towsey
Introduction
The cooperative system is fundamental to the organization, structure and
culture of a Proutist1 economy. It is an expression of economic democracy in
action – cooperative enterprises give workers the right of capital ownership,
collective management and all the associated benefits, such as profit sharing.2
Sarkar, the propounder of Prout, goes further and argues that an egalitarian
society is actually not possible without a commitment to the cooperative
system.3 The commitment is not just to an economic order but also to a
cooperative ethic and a cooperative culture. This essay explores cooperation
from the ethical, social and cultural perspective. The business enterprise
perspective is the subject of another essay in this volume.4
Background
Cooperation as a cultural, social and economic movement arose early in the
19th century, and with particular success in Britain. The term movement is used
here to indicate that what caught the popular imagination of the day was much
more than the consumer/worker cooperative, which at the time was a novel
form of business enterprise. The cooperative movement was primarily a social
and cultural movement because it advocated better conditions for the working
class and better education for their self-improvement. It was also an economic
movement in that it “sought to transform the balance of economic power from
capital ownership to democratic control by members of an economic
enterprise”.5 The cooperative business model enjoyed early success in the
capable hands of one of the movement’s founders, Robert Owen. The
philosophy of the movement was promoted by a group of thinkers who were
later characterized by Marx and Engels as utopian socialists.6 Indeed the word
socialist was first used in 1827 to describe Owen and his followers.7
During the second half of the 19th century, both the theory and the practice of
cooperation were ultimately rejected by all the other major strands of social
and economic thought of the day. In particular, Engels made a stinging critique
of utopian socialism in 1880 which caused those seeking radical social change
to turn their attention to Marx and the emerging socialist Left. It could be
argued that Marx and Engels effectively killed, for more than a century, any
capacity the cooperative movement had to effect radical social change. In
addition, the British government made no attempt to encourage cooperatives as
a business model. This left the way open for the other currents of 19th century
2 UNDERSTANDING PROUT – VOLUME 1
political thought to mature into the three great isms of the 20th century:
communism, fascism and liberal capitalism. However, out of the turmoil of the
20th century it has become clear that none of the three contenders was able to
produce a stable social order, that is, one which is environmentally, socially
and economically sustainable. These three characteristics are considered today,
quite reasonably, to be the minimum requirements for a successful social order.
After more than a century of neglect, the cooperative movement is beginning to
enjoy a renaissance. In fact, it comes as something of a surprise to learn that
today worldwide the cooperative movement has a membership of over 800
million people and provides over 100 million jobs. That is 20 percent more
than provided by all multinational corporations combined8 and has been
achieved despite vigorous efforts by privately owned corporations to
demutualize profitable cooperatives.9 But it has to be admitted that cooperation
as a social and economic ideal is not part of today’s popular consciousness. In
an era mesmerized by the sparkle of globalization and consumer goods,
cooperatives appear somehow old fashioned, like the friendly societies to
which one’s grandparents or great-grandparents once belonged.10
Four factors have helped to breathe new life into the cooperative movement.
First, the collapse of communism11 has discredited the Marxist brand of
‘scientific’ socialism and those looking for serious social change are once
again evaluating the cooperative movement. Second, the economic woes
besetting Western capitalist democracies have starkly exposed the defects of
the dominant social order to emerge out of the titanic struggles of the 20th
century. Third, the British Labour government from 1997 gave much support
to what they heralded as the third sector and social enterprise. In many
respects it was cooperation rebadged12 but it did help to broaden our
appreciation of cooperation by encompassing not-for-profits and self-help
organizations and it also made alternative economic models more visible in the
English speaking world.13 Fourth, much economic and scientific evidence is
emerging, some of it from surprising quarters, to suggest that cooperation is not
a utopian concept but entirely achievable given any reasonable effort to put it
into practice.
The rejection of the cooperative business model by 19th century British
capitalists was motivated by a desire to preserve class privilege. And of course
the British government was obliged to maintain an increasingly expensive and
restless empire – cooperatives are not a good business model for empire
builders. The essential criticism made by Marx and Engels, that utopian
socialists failed to understand the importance of class struggle and did not have
a theoretical analysis to underpin it, was correct. But the argument is no longer
compelling because the 20th century has taught us that accepting one (class
struggle) does not require rejecting the other (cooperative economics). Prout,
for example, embraces both the cooperative economy and a theory of class and
class struggle. New evidence is emerging to suggest that not only is
THE BIOPSYCHOLOGY OF COOPERATION 3
cooperation, as a social and economic ideal, possible in the 21st century, but
that it is necessary. One of the objectives of this essay is to present some of that
evidence.
The evidence is better appreciated by making comparisons with the other social
orders that dominated the 20th century, in particular communism and neoliberal
capitalism. The failings of both these systems highlight the importance of
cooperation, both as a social ideal and as a business model.
Structure of the Essay

This essay is in four parts. Part one, The Cooperative Movement in the 19th
Century, briefly reviews the early history of the cooperative movement up to
the point of Engels’ famous 1880 pamphlet and the emergence of the Fabian
socialists. The second part, Matter-centred Philosophy, reviews the communist
attempt to build a social order on the foundation of Marxist theory. The ideal,
classless, worker-ruled society was sought by the imposition of material
equality. Part three, Self-centred Philosophy, examines neoliberalism as the
most recent development of capitalism. Neoliberalism rejects cooperation in
favour of individualism, competition and survival of the fittest. Finally part
four, The Renaissance of Cooperation, as the title suggests, turns to the
renewed interest in cooperation evident in the first years of the 21st century. We
review the theory, the science and the ethics of cooperation. The scientific
evidence, most of it obtained in the last few years, suggests that cooperation is
an extremely important component of human social and economic behaviour.
On the way we find that a number of themes keep recurring. Five of them will
be flagged here to help the reader maintain continuity as our story weaves
through the 19th and 20th centuries into the 21st. The first concerns human
nature. To what extent do humans have a propensity for altruistic as opposed to
selfish behaviour? A cooperative economy would certainly draw on the human
capacity for altruism and empathy.
A second theme is the frequently controversial nature-nurture debate. What is
the relative importance of genetic inheritance versus environment in
determining the trajectory of a person’s life? Or are both of these subservient to
the expression of free will? These themes are intertwined. Selfish behaviour is
observed in all humans at various times and could thus be considered ‘natural’.
Is altruistic behaviour likewise natural or must it be learned, even imposed?
Some philosophers have claimed that humans are essentially brutish and rise to
cooperative behaviour only in response to reward and punishment.14 Others,
such as the utopian socialists, have leaned to the view that humans are
essentially good but spoiled by a brutish environment, and still others claim
that one’s life depends entirely on the choices one makes.
A third theme is egalitarianism. Many societies like to claim the virtue of

equality, but what does it mean in practice? In particular, must a society be
equal in some sense to be cooperative?
A fourth theme is ethics. What kind of ethical principles are required to sustain
a cooperative society? And a fifth theme is social progress. How do we know
whether our circumstances are getting better or worse as the years pass by?
These last two themes are also intertwined since progress is frequently defined
in terms of an increasing quantum of the good compared to the bad.
The Cooperative Movement in the 19th Century

The 19th century was the first in which, at least in Europe, the pace of scientific
discovery and technological change threatened the stability of society at large.
Today we accept rapid technological change as a fact of life, despite its often
disruptive social and cultural impacts, and we attempt to gain the initiative by
anticipating future possibilities. However, with respect to technological
change, we might say that the 19th century was caught by surprise. Social
dislocation created many new opportunities for exploitation and the
unscrupulous were not slow to take advantage of them. By contrast, the
intellectual world was full of optimistic expectation that science and
technology would lift humanity above its age-old struggle with nature.
The concept of progress formed an important backdrop to 19th century debates.
New discoveries in the physical and natural sciences and the ever increasing
productivity of machines suggested that material progress could continue
indefinitely. Furthermore the publication of Darwin’s theory of evolution in
1859 encouraged a view that progress was somehow a universal truth,
applicable to both the natural and the human worlds. The concept of progress is
not made explicit in our following review of the 19th century debates but it was
certainly part of the intellectual background to those debates.
This part reviews the initial successes of the cooperative movement in the 19th
century and its subsequent decline. We review only the key strands of
ideological and political thought to emerge in Europe and particularly in
Britain. A more detailed account can be found in the books of historian George
Cole.15 The various ideological splits that took place in the 19th century set the
stage for the major political struggles of the 20th century.
Early Success
The cooperative movement arose as a response to the appalling conditions of
the working class during the industrial revolution.16 Although the first
consumer cooperatives were formed in the 18th century,17 it was not until the
early 19th century that a school of thought emerged to promote cooperation as a
social and economic ideal. The movement was represented on the European
continent by the philosophers Henri de Saint-Simon (France, 1760-1825),

François Fourier (France, 1772-1837) and Wilhelm Weitling (Germany, 1808-
1871), but the greatest practical success was achieved in Britain due to the
efforts of Robert Owen (1771-1858).
Owen was born in a small market town in Wales. At the age of 17, he moved to
Manchester where he subsequently enjoyed much success managing a cotton
mill. In 1799, he moved to New Lanark, on the Clyde upriver of Glasgow, and
finally realized his ambition to manage a cotton mill that achieved commercial
success yet also satisfied his cooperative and ethical ideals. The New Lanark
project generated considerable interest both in Britain and in Europe. Inspired
by what they saw, others set up worker and consumer cooperatives, so that by
1830 there were several hundred cooperatives in Britain. Many of these
eventually failed but some continue even today.18 In 1844 the Rochdale Society
of Equitable Pioneers established the Rochdale cooperative principles which
became the basis for the development of the modern cooperative movement
and is considered by Cole19 to be its formal beginning. For more on the birth of
the cooperative movement, see also Bihari.20
For his philanthropy, Robert Owen enjoyed much fame and the support of a
wide circle of social reformers, including the influential Benthamites.21 New
Lanark itself became a much frequented place of pilgrimage for social
reformers, statesmen and royal personages, including Nicholas, later to become
emperor of Russia.
But Owen was not satisfied. He recognized that the well-being of his workers
in New Lanark was entirely dependent on his personal approach to business.
There was a need to embed new principles of worker and social welfare in
legislation. In 1817 he lobbied strongly for the Poor Laws and was a zealous
supporter of the Factory Act of 1819, although the final result greatly
disappointed him. Engels is lavish in his praise of Owen’s pioneering work for
the working class:
As long as he was simply a philanthropist, he was rewarded with nothing
but wealth, applause, honor and glory. He was the most popular man in
Europe. Not only men of his own class, but statesmen and princes
listened to him approvingly. But when he came out with his Communist22
theories that was quite another thing. Three great obstacles seemed to him
especially to block the path to social reform: private property, religion,
the present form of marriage.
He knew what confronted him if he attacked these – outlawry,
excommunication from official society, the loss of his whole social
position. But nothing of this prevented him from attacking them without
fear of consequences, and what he had foreseen happened. Banished from
official society, with a conspiracy of silence against him in the press,
ruined by his unsuccessful Communist experiments in America, in which
he sacrificed all his fortune, he turned directly to the working class and
continued working in their midst for 30 years. Every social movement,

every real advance in England on behalf of the workers, links itself on to
the name of Robert Owen. He forced through in 1819, after five years
fighting, the first law limiting the hours of labour of women and children
in factories. He was president of the first Congress at which all the Trade
Unions of England united in a single great trade association.23
As Engels acknowledges in this passage, the birth of the cooperative movement
was also the birth of socialism, the word itself being coined by Henri de Saint-
Simon24 in 1827. By the mid 19th century, many of the basic tenets of socialism
had been articulated, in particular those concerned with egalitarianism. We
may distinguish four egalitarian principles:25
1. All human beings regardless of birth or class have a right to self-
improvement. This right is granted either by God or by virtue of being
human.
2. There are no relevant differences between humans that justify one to
claim a greater inherent right to self-improvement.
3. All human beings regardless of birth or class have the ability to improve
themselves, if placed in beneficial circumstances.
4. Creating those beneficial circumstances is always within political
control, and so is always, by design or neglect, the result of political
activity.
Egalitarianism is the foundation of Owen’s philosophy. For example, in
Revolution in the Mind and Practice of the Human Race, he asserts that
character is formed by a combination of Nature or God and the circumstances
of one’s experience. But given Nature cannot easily be changed, social
circumstances become all important in shaping the human character. Cruel
living conditions and the lack of educational opportunities will inevitably warp
the development of moral sensibilities:
…any character from the best to the worst, from the most ignorant to the
most enlightened, may be given to any community, even to the world at
large, by applying certain means; which are to a great extent at the
command and under the control, or easily made so, of those who possess
the government of nations.26
In effect, Owen is asserting the third and fourth principles of egalitarianism,
today widely accepted but in his day dangerously radical ideas. Human beings
are malleable – by manipulating social conditions it is possible to create the
best or the worst of persons. Consequently the poor and impoverished are not
to be blamed for vice and defects of character. Rather the fault is with those
who govern and who permit the most treacherous of circumstances to
“inevitably form… such characters”.27
Opposition to the Cooperative Movement

The British cooperative movement in the early years of the 19th century drew
its inspiration from the Benthamites, a highly influential group whose primary
philosophical concern was to place free market capitalism on a rational and
ethical footing. Bentham himself was initially a supporter of Owen’s
endeavours to reform working-class conditions. However, whereas the
cooperative movement was primarily concerned with the ethical defects of
capitalism and promoted socialist solutions, the Benthamites became
increasingly preoccupied with its rational defects. When the consequences of
the socialist program became apparent, James Mill,28 a prominent Benthamite,
was horrified. He wrote:
Their notions of property look ugly… they seem to think that it should
not exist, and that the existence of it is an evil to them. Rascals, I have no
doubt, are at work among them.29
Bertrand Russell cites these words (written in 1831) as “the beginning of the
long war between Capitalism and Socialism”.30
The economic debates at this time are interesting, if for no other reason than
that they appear not to have changed much in a century and a half. Bentham
believed that free labour markets would enable workers to move from one
place of employment to another and so choose their employers, thereby curbing
the excess power of capitalists. Owen, on the other hand, recognized that in an
age of machines, those few who owned machines could control the labour
market and thereby bend the workers to their will. He understood what so few
understand even today, that in free markets the question of who has market
power is all important. Owen’s solution was the cooperative one, that machines
should be owned collectively so that the benefits of machine automation might
be shared by those who worked them. Note that a cooperative economy does
not imply the abolition of private property but rather introduces another mode
of ownership in addition to public and private.
In pursuit of his vision, Owen and many of his followers set up intentional
communities as experiments in cooperative living. The reasoning was simple –
if the human character is moulded by life experience, in particular early
childhood experience, then the way to a better world cannot be purely
concerned with the factory floor. The entire social order itself must be changed
to ensure that good life experience can shape people of good character. These
experiments in community living were a failure and it is important to
understand why. At least three factors suggest themselves.
First, many of the persons involved in the early cooperative communities
appeared to have had little aptitude for what they were attempting. New
Harmony, Owen’s own attempt to set up a model cooperative community in
Indiana, USA, 1826, collapsed when one of his business partners ran off with
the money.31 Another attempt in Glasgow also failed. In the words of Owen’s
son, the persons who joined these experimental communities were “a

heterogeneous collection of radicals... honest latitudinarians, and lazy theorists,
with a sprinkling of unprincipled sharpers thrown in”.32
Second, the community lifestyle required participants to accept a uniformity of
purpose and circumstances. It was too much to ask. Contemplating the failure
of New Harmony, Josiah Warren wrote:
We had a world in miniature – we had enacted the French revolution over
again with despairing hearts instead of corpses as a result... It appeared
that it was nature’s own inherent law of diversity that had conquered us...
our “united interests” were directly at war with the individualities of
persons and circumstances and the instinct of self-preservation...33
Warren went on to become an advocate for individualist anarchism – this in
itself says something about the diversity of minds with which Owen had to
contend. But there is no doubt that the requirement for a uniformity of mind
and purpose contributed to the failure of the early utopian communities.
Third, the British government of the day rejected the cooperative agenda, both
the business model to improve working conditions and the social model to
address deficiencies in public education, health and welfare. Instead they chose
the laissez-faire doctrine of minimum government intervention.34 The
Australian economist and academic Hugh Stretton believes that laissez-faire
cost Britain dearly. The French, Germans and Americans were subsequently to
become greater industrial powers because their governments became
economically involved by promoting public education, public science, public
investment and “abler public services”.35
Owen devoted much of his life to lobbying politicians. He fought the
commonly held view of his day that the poor were sub-human, the “savages at
home”,36 for whom education would add cunning to vice. Articles appeared in
The Economist magazine (which was then, as now, a proponent of laissez-
faire) providing the theoretical justification for such views.37 Owen’s failure to
overturn prejudice by moral argument disillusioned him with politics and he
sought, instead, to create the ideal society by establishing working examples of
it. But in a society which rejects cooperation, it is not easy to create a shining
example of it. Owen’s success at New Lanark is, therefore, all the more
remarkable.
In conclusion, we must be careful to assess the cooperative movement of the
first half of the 19th century with a view to its achievements as well as its
failures. On the positive side, the movement changed forever the conditions
considered acceptable for working-class people. It promoted child care, public
education, public health and equal rights for women, all of which today are
considered the norm in a democratic society. The other part of the cooperative
legacy was the elaboration of a new business model, the consumer and worker
cooperative. The Rochedale pioneers established the principles of cooperation
which survive to this day. On the negative side, the early experiments in
intentional communities appear naive in hindsight. The failure of some of the
early consumer and worker cooperatives are best judged as experiments in a
new business model.38
While the cooperative movement was struggling with its failures, Marx and
Engels appeared on the stage with a new ingredient to add to the socialist mix,
class struggle. Owen of course recognized class antagonisms, but he attempted
to establish his ideal within the established social order. In the Communist
Manifesto, Marx and Engels disparaged this approach and drew a distinction
between themselves as scientific socialists and the cooperative movement as
utopian socialists. The term utopian socialists has stuck. Utopian socialists,
declared Marx and Engels:
consider themselves far superior to all class antagonisms. They want to
improve the condition of every member of society, even that of the most
favoured. Hence, they habitually appeal to society at large, without
distinction of class; nay, by preference, to the ruling class. For how can
people, when once they understand their system, fail to see in it the best
possible plan of the best possible state of society? Hence, they reject all
political, and especially all revolutionary, action; they wish to attain their
ends by peaceful means, and endeavour, by small experiments,
necessarily doomed to failure, and by the force of example, to pave the
way for the new social Gospel.39
In 1880, Engels published a simpler and shorter account of the new scientific
socialism, under the title Socialism – Utopian and Scientific.40 Its grand visions
captured the imagination of a younger generation. Historical materialism could
explain the past and the future. The liberation of the working class was an
historical inevitability.
By comparison, the utopian socialists offered only an ethical ideal with no
apparent means to realize it. Socialism, said Engels, was not just a new idea
discovered by Owen and his followers, but rather the necessary outcome of a
historical struggle between two classes, the proletariat and the bourgeoisie. The
requirement of the day was not to build model communities but to strike at the
source of class enmity, the economic relations between the two classes.
Trade union membership increased rapidly from 1880 to the end of the century
and the cooperative movement also enjoyed a resurgence, partly due to rising
living standards of workers and partly because, as Cole puts it, every “trade
unionist was always a potential cooperator...”41 But over the same period the
two movements took different paths. Cole again: “In the eighties trade
unionism and consumers’ cooperation went on their several ways, each
shedding much of its earlier idealism, and each settling down to consolidate its
position within somewhat narrowly delimited fields.”42 The cooperative
movement expanded more easily into consumer cooperatives which engaged
labour “in the ordinary labour market…” and were not therefore seen as
offering the same benefits to workers as producer cooperatives. Towards the

end of the 19th century, the cooperative movement equipped itself with all the
formal apparatus of a large national organization, holding annual congresses
with delegates from regional and local levels. It also began publishing a
newspaper, The Cooperative News. And, despite the difficulties, there was also
a gradual expansion of producer cooperatives during this period.43
The Cooperative Movement into the 20th Century

Marxism split the socialist movement in two, those supporting the
revolutionary approach through the vehicle of Communist parties, and those
supporting a gradual approach through moderate Labor parties. In Britain,
1884, the gradualists formed the Fabian Society, which continues to this day to
be the social conscience of the British Labour Party. It promotes the welfare
state but does not challenge the power of the private enterprise sector on which
the welfare state depends.
By the late 19th century, the cooperative movement had lost its initial
momentum and fervour. Revolutionary socialists had rejected cooperatives in
favour of state-owned enterprises44 and liberal capitalism had made only those
grudging compromises with the welfare state it deemed politically necessary.
The cooperative ideal continued to get political support from Fabian
socialists,45 but the focus of the socialist struggle had moved elsewhere.
However, it should not be forgotten that the cooperative movement continued
to spread around the world in the late 19th century and first half of the 20th
century in the form of agricultural cooperatives and credit unions. They
especially found a role in the newly emerging frontiers of the USA and
Australia where government administration and infrastructure had not yet
penetrated. Farmers had to fend for themselves and found it advantageous to
form cooperatives through which they could process and market their produce.
Two impressive examples of cooperative economies in the 20th century deserve
special mention, that of Yugoslavia (on a national scale) and that of
Mondragon, Spain (on a regional scale). Yugoslavia during the 1960s and 70s
provides a unique example of a predominantly worker cooperative national
economy. In Yugoslav Socialism: Theory and Practice, Harold Lydall46 makes
some interesting comparisons between the Yugoslav and Mondragon
approaches to worker cooperatives. A critical difference between them
concerns income reinvested for capital formation – in Mondragon cooperatives
it is owned by the worker/members whilst in the Yugoslav case it was
collectively owned by the state. In Lydall’s view, worker management in
Yugoslav cooperatives was more a public relations exercise than real. As he
puts it, a “one-party Marxist regime… is fundamentally incompatible with self-
management, since it does not really trust the workers to make their own
decisions”.47 He prefers instead the Mondragon model to which we shall return

at various points in this essay.
To sum up the 20th century experience, we may say that although cooperative
economics was not highly visible compared to private enterprise capitalism and
state enterprise communism, it nevertheless survived in pockets in an otherwise
hostile world. This says much about the inherent resiliance of cooperation.
Fascism
Not much will be said of Fascism in this essay, because it is not a sustainable
social system. Like a pathogen, it only draws sustenance from societies that are
already sick. However it is of interest philosophically because it is the polar
opposite of cooperation. 20th century Fascism grew out of 19th century
European Romanticism.48 As represented by the German philosopher
Nietzsche (1844-1900), it celebrates the will of great men to do great deeds.49
Great deeds require great resources which are gathered through imperial
conquest. The suffering of the masses is of no account if it is in the service of
great men. Nietzsche alludes habitually to ordinary human beings as the
bungled and the botched and as having no independent right to happiness or
well-being. He regards any sign of empathy or compassion as a weakness:
The object is to attain that enormous energy of greatness which can
model the man of the future by means of discipline and also by means of
the annihilation of millions of the bungled and the botched, and which
can yet avoid going to ruin at the sight of the suffering created thereby,
the like of which has never been seen before.50
One glimpses in this passage a terrible premonition – Nazi Germany some 50
years later.
The question arises in Nietzsche’s philosophy – how to determine a great man
and how to determine a great deed? Great men are those who rise to the top
through struggle and war. And these men must be great by birth because if
such accomplishments could be achieved by learning, this would suggest an
equality that Nietzsche is nowhere prepared to acknowledge. Great deeds are
determined by great men for “no morality is possible without good birth” and
“every elevation of Man is due to aristocratic society”.51 It comes as no
surprise that Nietzsche despised women (“we should think of women as
property”) and Christianity (because it cultivates slave morality). It should be
noted that Robert Owen and many other 19th century socialists also argued
against religion. But whereas socialists objected to religion because it checked
the advancement of the common person, Nietzsche objected to it weakening
the resolve of a great man. The common person was of no account.
Writing in 1943, while Nazi Germany was still a formidable power, Bertrand
Russell remarks on a particular feature of Nietzsche’s philosophy – the
complete absence of empathy.52 Indeed, Nietzsche explicitly preached against
it. Only three years later, a psychologist, Dr. Gustav Gilbert, was assigned by
the U.S. Army to study the minds and motivations of the Nazi defendants at the
Nuremberg tribunals. The following year, he published a diary containing
transcripts of his conversations with the prisoners. The one characteristic he
found all the defendants to have in common was a lack of empathy. In a 2000
TV dramatization of the Nuremberg trials, the Gilbert character says:
I told you once that I was searching for the nature of evil. I think I’ve
come close to defining it: a lack of empathy. It’s the one characteristic
that connects all the defendants: a genuine incapacity to feel with their
fellow man. Evil, I think, is the absence of empathy.
In an essay motivated by the Nuremburg dramatization, journalist Ernest
Partridge says:
Empathy, the capacity to recognize and cherish in other persons, the
experience, emotions and aspirations that one is aware of in oneself, is
the moral cornerstone of progressive politics. It is a principle recognized
and taught in all the great world religions, reiterated by numerous moral
philosophers, and validated by the scientific study of human
personality.53
In conclusion, it seems relevant to note that Nietzsche, the champion of the
superman and the despiser of the bungled and botched, was for most of his life
incapacitated by bad health. He retired from a university position, incapable of
work, at the age of 35. He went insane aged 44 and remained so to his death
twelve years later.
Matter-centred Philosophy
In Socialism – Utopian and Scientific, Engels introduced Marxism as a
synthesis of French socialism, German philosophy and English economics. It is
not the intention of this section to offer a comprehensive account of Marxist
philosophy. Our interest is primarily with Marx’s treatment of ethics and the
human character. How did Marx hope to create a better society? How did he
contend with the question of human nature? What was the practical outcome of
his scientific socialism?
The Ethics of Scientific Socialism

Marx rejected a universal morality54 just as he rejected a fixed human nature
but it is inaccurate to claim, as many have, that there is no morality to be found
in his philosophy. Morality for Marx was rooted in class. Good and bad for
working-class people was a function of their class interest and quite different
from the good and bad of the bourgeoisie. Moral systems that claimed to be for
the universal good, yet ignored class conflict, must be a fraud because class
conflict necessarily undermined the possibility of a universal good. Yet some

Marxists do make the claim for an absolute socialist morality.
Marx does indeed possess an ‘absolute’ moral criterion: the
unquestionable virtue of the rich, all-round expansion of capacities for
each individual. It is from this standpoint that any social formation is to
be assessed.55
And how is one to achieve this rich, all-round expansion of capacities? By
participation in class struggle. Marx believed that a classless society was not
just possible but an inevitable consequence of historical dialectical forces. The
play of class dialectics would, stage by stage, propel capitalist society through
socialism towards that classless society. The moral imperative was to work
towards that end. Furthermore only by participation in class struggle was
personal improvement possible.
In the modern world this entails both engagement with, and fanning the
flames of, those collective struggles against the dehumanizing and
alienating effects of capitalism through which our need for solidarity both
emerges and is realized.56
Socialist morality is rooted therefore in the particular interests of the working
class, but the success of those interests is considered ultimately to be in the
universal interest.57 Socialist morality is not an individual code of conduct.
Human beings are social beings and therefore socialist morality has meaning
only in a social context and only within the discipline of a collective struggle.
By forming and being active within trade unions and working class
political parties, workers create institutions through which they change
themselves. Working together in such institutions becomes a day to day
practice that both presupposes the need for solidarity and engenders a
spirit of solidarity within the working class. The virtues or character traits
that are thus promoted stand in direct opposition to the competitive
individualism of the capitalist marketplace.58
Solidarity is an important component of revolutionary socialist morality. It
satisfies a personal need and contributes to the empathy in human relationships.
We might say that it is the ‘soul’ of the great socialist enterprise.
The Classless Society

The promise of a classless society provided class struggle with a moral
compass. Without the desirability and inevitability of a classless society, there
would be no reason to choose between working-class morality and bourgeois
morality. The classless society made moral choice possible. It also gave
meaning to the concept of progress because industrialization would ensure
enough material production to satisfy everyone’s needs, thereby making
equality within a classless society a practical possibility. Given the importance
of the classless society in the Marxist view of the world, we are obliged to
explore it further.
Technically speaking, a classless society would lack distinctions of wealth,
income, education, culture or social network.59 In the Marxist conception, the
abolition of such distinctions would occur quite naturally following the seizure
of political power by the proletariat. Furthermore the state would also wither
because its only function is to maintain the exploitation of one class by another.
The proletariat seizes political power and turns the means of production
into State property. But, in doing this, it abolishes itself as proletariat,
abolishes all class distinction and class antagonisms, abolishes also the
State as State. Society, thus far, based upon class antagonisms, had need
of the State. That is, of an organization of the particular class which was,
pro tempore, the exploiting class, an organization for the purpose of
preventing any interference from without with the existing conditions of
production, and, therefore, especially, for the purpose of forcibly keeping
the exploited classes in the condition of oppression… The proletariat
seizes the public power, and… By this act, the proletariat frees the means
of production from the character of capital they have thus far borne, and
gives their socialized character complete freedom to work itself out.60
Note that the withering of the state might not happen immediately. But it would
happen inevitably because socialized production would have, as Engels puts it,
“complete freedom to work itself out”. He goes on to say:
The development of [socialized] production makes the existence of
different classes of society thenceforth an anachronism. In proportion as
anarchy in social production vanishes, the political authority of the State
dies out. Man, at last the master of his own form of social organization,
becomes at the same time the lord over Nature, his own master – free.61
This last sentence is of much significance. As the state dies out, different forms
of social organization become possible and thereby ‘Man’ becomes “lord over
Nature, his own master”. The phrase “lord over Nature” is not to be interpreted
in the environmental sense, as mastery over the external world of plants and
animals. Rather it suggests that the unnatural, alienated condition imposed by
exploitation and state oppression will disappear because its only cause will
have disappeared. In such circumstances the free human will be master of
his/her own character and will have no inclination to maintain class
distinctions. Whatever vices or weaknesses of character persist will be of the
trifling kind.
Engel’s faith in free humans to be lords over their own nature can only be
understood in the context of dialectical materialism, according to which human
character and well-being are determined first and foremost by material
circumstances. By appropriately adjusting those material circumstances, human
beings can in some sense be made equal. This is the justification for the famous
slogan, “From each according to his ability, to each according to his needs”.62
By satisfying material needs, that is, by providing everyone with an

equivalence of the basic requirements of food, clothing, housing and so on, not
only is the egalitarian objective of socialism achieved, but something more –
the seeds of social conflict are eliminated. Is this a reasonable expectation?
The answer to this question depends on how one views the nature-nurture
problem. Marxists were firmly on the side of nurture. If material circumstances
determine everything, then differences endowed by nature can be ‘ironed out’
by appropriate material adjustments in the environment.63 If everyone has the
same material circumstances then there will be no differences to promote class
conflict, because all conflict having a material cause must also have a material
solution. Furthermore, diminishing class conflict would promote a more equal
distribution of material resources, leading inevitably by positive feedback to
the ideal classless society.
It may be reasonable to argue, as socialists do, that a more egalitarian
distribution of material benefits contributes to a better society. However during
the communist era faith in nurture became a dogma beyond all reason. The
consequences were particularly disastrous for Soviet agriculture under the
direction of the Russian agronomist, Lysenko.64 Lysenko promoted a form of
Lamarckism, the scientifically unsubstantiated belief that an organism’s
characteristics acquired as a result of a particular environment can be inherited
by their offspring. He did not claim that this was also true for human biology,
but there can be little doubt that Lysenko rose rapidly in the Soviet bureaucracy
because his Lamarckian beliefs were consistent with Marxist ideology as
embraced by Stalin.65 No one should enjoy material benefits in excess of those
appropriate to the service of the state.
Even in moderate hands, Marxist faith in nurture appears to have been naively
utopian – that is, to have depended on a belief that base human desires would
simply fall away in the absence of class exploitation. It was possibly an
understandable naivety in 19th century Britain when most social strife stemmed
from mass poverty. But even in the 1940s and despite recognizing the
corrupting influence of power, George Orwell continued to believe, according
to critic James Wood, in a “mystical revolution”,66 a revolution in which
English society would somehow keep all its good features and divest itself of
all bad features. For Orwell, social privilege was the source of all evil – get rid
of privilege and the exploitation of the working class would somehow take care
of itself. His reform agenda did not appear to have any means to deal with the
deeper origins of class exploitation in human psychology.
At this point, there are two criticisms that we can direct against the socialism of
Marx and Engels: first its claim to be scientific and second its naive trust in the
consequences of material egalitarianism. Concerning the first, the hallmark of
the scientific method is to ask questions, to conduct experiments in the pursuit
of answers and then to refine these answers through further questions and
experiments. The supposedly scientific part of scientific socialism was that part
which asserted the dialectical inevitability of class struggle leading through the
stage of socialism to a classless society. This element of Marxism borrowed
heavily from Hegel. Concerning this aspect of Marx, Bertrand Russell says,
“Broadly speaking, all the elements in Marx’s philosophy which are derived
from Hegel are unscientific, in the sense that there is no reason whatever to
suppose that they are true.”67 The neo-conservative Joshua Muravchik, in an
unsympathetic history of socialism, nevertheless makes a valid point – that the
utopian socialists, by establishing experimental communities, were in fact
attempting to apply the scientific method to human social organization. “Owen
and Fourier and their followers were the real ‘scientific socialists’. They hit
upon the idea of socialism, and they tested it by attempting to form socialist
communities.”68 Marx and Engels, on the other hand, made untestable
predictions about the future, especially when proclaiming the inevitability of a
classless society. They were certainly in no position to criticize utopian
socialism as unscientific.
The second criticism we can make of scientific socialism is its approach to
egalitarianism.
Egalitarianism
Socialists of all persuasions promote egalitarianism. Almost by definition, it is
supposed to make for a better society. Marxism promoted a strong form of
material egalitarianism. Engels was correct to chastise the utopian socialists for
being preoccupied with the vision of egalitarianism without being concerned
with the ‘how to get there’. It was certainly naive to ignore the significance of
class conflict and believe that those responsible for a system of cruel
exploitation would give way to moral appeal. But Marx and Engels then
replaced one piece of naivety with another – that the imposition of material
equality would somehow eradicate the seeds of vice and exploitation.
It is interesting that utopian visions often seem to depend on the imposition of
material equality. The tendency was already apparent in Sir Thomas More’s
Utopia published in 1518. In Utopia, everyone wears the same clothes (which
they make themselves preserving the natural colours) and everyone eschews
fashion. All houses are of the same construction and all streets and villages are
laid out according to the same design. No one desires to live in a bigger house
or in a better neighbourhood. Everyone works the same number of hours per
day. There is no privilege and therefore no resentment fuelled by inequality to
disturb the tranquil rhythm of Utopian life.
Bertrand Russell acknowledges that More’s Utopia was “in many ways
astonishingly liberal” for its day but is nevertheless dismayed with the vision:
It must be admitted, however, that life in More’s Utopia, as in most

others, would be intolerably dull. Diversity is essential to happiness, and
in Utopia there is hardly any.69
Russell might well have been talking about the USSR or Communist East
Germany. In fact the communist experience tells us that the dogmatic
imposition of equality, far from bringing utopia, spawns dystopia.
In an apparent reference to utopian socialism, Sarkar criticizes social theories
that sound “somewhat pleasing to the ear” and speak “glibly of human
equality” but which on application turn out to be ineffective because “the
fundamental principles of these philosophies were contrary to the basic realities
of the world”. “Diversity, not identity”, says Sarkar “is the law of nature”.
The world is full of diversities – a panorama of variegated forms and
rhythms. One must never forget it. Sometimes the superficial display of
these theories [that speak glibly of equality] has dazzled the eyes of the
onlooker, but actually they contained no dynamism. And yet, dynamism
is indeed the first and last word of human existence. That which has lost
its dynamism is just like a stagnant pool. In the absence of flow, a pond
invariably becomes overgrown with weeds, and becomes a hazard to
health. It is better to fill this sort of pond with earth. Many philosophies
in the past have rendered this kind of disservice to humanity.70
In conclusion, the fundamental problem with both the theory of Marxism and
its practice, as manifest in the USSR and Eastern Europe, was an inadequate
understanding of individual and collective psychology. It is true that later
Marxist intellectuals, such as Gramsci and Marcuse, attempted a fusion of
Western psychology with Marxist materialism, but for the practical
implementation of Marxism it was too little and too late.
Egalitarianism remains today the most contentious and polarizing political
issue in democratic nations. How far should governments go in promoting
equality? Should they target equality of opportunity or equality of outcomes?
What is an acceptable level of wealth inequality? So polarizing are these
questions in the body politic that all political identity is defined in terms of
them – in terms of the so-called left-right spectrum. Policies are somewhere on
the spectrum from extreme left to extreme right. The following passage from
Stretton is helpful in clarifying definitions:
Some people favour greater or less equality for its own sake. Others
favour greater or less equality as a means to other ends, such as
productive efficiency or the reduction of poverty. (There are hard choices
for the Left if it is ever true that greater equality may reduce productivity
and for the Right if greater equality may increase productivity.) Whatever
their reasons, this text generally uses Right for those who want greater
inequality than exists in their society, Left for those who want greater
equality, and Centre or middle of the road for those who don’t want much
change in either direction.71
In debates about equality, the theme of selfishness versus altruism obviously

plays an important role. But perhaps surprisingly, nature versus nurture is also
invoked. Those on the Left, in keeping with the socialist tradition, give much
more importance to nurture (the family and social environment) and they
frame policy debates in terms of adjusting family and social circumstances
using government intervention to create an equality of opportunity or
outcomes. Those on the Right, usually identifying themselves as conservatives,
are more inclined to favour policies that reward those already endowed with
talent and advantage. To the extent that talent is endowed by nature,
conservatives by implication give more importance to nature. (Fascists take
this dogma to the extreme.) Conservatives also reason that it is wasteful giving
resources to those without the talent to use them efficiently and note that
inefficiency is a moral issue. When it is pointed out that such people are
usually the poor, conservatives reply that rewarding the rich benefits the poor
by a trickle-down effect – which elicits from those on the Left the accusation of
hypocrisy and selfishness.72
Sarkar on Marx
Sarkar praised Marx as “a good man” with “strong feelings for suffering
humanity”. Marx’s writings, he added, “reflected his concern for the
downtrodden humanity”.73 He appreciated the dynamism of the communist
movement and in an obvious reference to the gradualism of the Fabian
socialists whose logo is a tortoise,74 he asks, “what is the use of tortoise-like
progress such as this?”75
Sarkar condoned Marx’s rejection of religion because how is it possible to
break the structure of the capitalist age without freeing people from “the
intoxicating effect of the opium of religion”.76 He recognized that Marx’s
rejection of religion was not a rejection of morality.
A group of exploiters loudly object to a remark that was made by the
great Karl Marx concerning religion. It should be remembered that Karl
Marx never opposed spirituality, morality and proper conduct. What he
said was directed against the religion of his time, because he perceived,
understood and realized that religion had psychologically paralysed the
people and reduced them to impotence by persuading them to surrender
to a group of sinners.77
However on the issue of materialistic philosophies, Sarkar is extremely critical
and Marx does not escape mention:
There are certain defective philosophies which think that the material
world is everything. When matter becomes everything, then matter
becomes the goal of life. And consequently, human existence, human
consciousness, the subjective portion of the human mind, everything will
become like earth and stone. That is why such a philosophy is detrimental
to human development. Karl Marx preached that defective philosophy.
You should keep your mind free from the bindings and fetters of such a
defective philosophy because it is anti-human, morally anti-human. It is
most detrimental to human existence and human development.78
The difficulty for those wishing to put Marxism into practice was that it had no
adequate theory of human psychology and spirituality. Even before all the
basic material requirements are satisfied, the human mind wants to express
subtler sensibilities. It might be drawn to the realms of music, sculpture,
architecture or indeed the entire universe of ideas. Or it might get the urge to
undertake some noble task or to explore the world of spirituality. This is not
comfortable territory for those caught in the dogma of materialism. Sarkar
notes the frustration experienced by those who attempted to implement the
Marxist doctrine.
Leaders like Lenin and Mao took up the task of materializing his
[Marx’s] ideas in the society. They were not bad people, but as they tried
to materialize the theory of Marx they encountered many practical
difficulties. Realizing that the theory was defective, they became
frustrated and started committing many atrocities. Stalin was a demon
who killed millions of people. This all occurred because of the inherent
defects of Marxism.79
For Sarkar, the apparently rapid demise of communism in the USSR and
Eastern Europe came as no surprise – the Marxist view of the human being was
fatally flawed and any attempt to establish a socio-economic system on that
view was bound to fail. Sarkar subscribes to a theory of history in which the
clash of civilizations plays an important role (although certainly not the only
role). The ideologies which underpin civilizations compete with one another
for the hearts and minds of people. The struggle for survival exposes the
weaknesses of an ideology and stronger ideologies will defeat the weaker. In
order to survive, an ideology must provide sustenance to subtler aspirations of
human mind and soul. And so it was that capitalism defeated communism,
because as Sarkar puts it:
whenever there is clash between self-centred and matter-centred theories,
the self-centred philosophy [capitalism] will win. The matter-centred
theory [communism] will never win. It comes as it goes after creating
enormous devastation, and it dies a black death.80
But the success of capitalism has brought its own defects into stark relief and it
is to these that we now turn.
Self-centred Philosophy
The theory and the practice of capitalism have come under attack by socialists,
feminists and environmentalists for well over a hundred years. Yet despite the
battery of arguments brought against it, the system rolls on81 – a society that
promotes self-interest is not easily checked by intellectual argument.
Capitalism offers choice and exciting consumer goods in great abundance. No

matter that few of us can afford this abundance without going into debt. It has
taken the combination of an impending environmental catastrophe and a global
financial crisis to force people to question the wisdom of capitalism. Even
Time magazine, citing eight reasons for the Global Financial Crisis, criticized
the “the myth of the rational market” and “under-regulated” financial
institutions.82
This part begins with a brief introduction to the theoretical foundations of
contemporary capitalism. We then focus on the assumptions that the theory
makes about human economic behaviour and we find them to be highly
unrealistic. We next consider the emphasis on finance in contemporary
capitalism and conclude with a discussion of ethics in capitalism. Here we
must make a distinction between theory and practice and note that an
unsatisfactory theory of ethics leads to an objectionable practice.
A note on terminology. The terms neoliberalism and economic rationalism are
used to describe the modern practice of capitalism. Neoliberalism refers to the
policy agenda of deregulation, privatization and free trade. It is the 20th century
manifestation of 19th century laissez-faire. Economic rationalism refers to the
policy agenda that places economic efficiency (narrowly measured) above
other policy outcomes, such as full employment or environmental protection.
Neoclassical economic theory is used as the justification for both policy
agendas. This essay preserves the distinction between neoclassical theory and
neoliberal practice.
Neoclassical Economics
In an analysis of capitalism from the perspective of a scientist, mathematician
and environmentalist, Geoff Davies targets three defects of contemporary
capitalism: 1) its theoretical foundation known as neoclassical economics; 2)
its accounting system, in which all value (economic, environmental, social,
cultural and ethical) is reduced to dollar figures; and 3) its monetary system, in
which privately owned banks create money (an essential public service) as an
interest bearing debt to the themselves. Only the first of these concerns us here.
Neoclassical economics is essentially a mathematical edifice. It begins with a
set of assumptions and builds on these a mathematical description of prices,
investment, wages, interest rates and national economies. The following
critique draws heavily on Geoff Davies and economist Susan Richardson. The
final conclusion is simple – the assumptions of neoclassical theory are
profoundly flawed and therefore the conclusions drawn from a mathematical
elaboration of them, no matter how elegant, are also flawed. For the purposes
of this essay we note four assumptions of neoclassical theory:
• That every agent is actuated only by self-interest.
• That numerous agents motivated by self-interest produce an outcome

which affords the greatest utility for the greatest number.
• That free markets are the most efficient means to allocate resources.
• That free markets come to a stable equilibrium.
The term agent refers, in neoclassical theory, to an abstract human being,
family or firm. An agent is devoid of any behaviour other than to make
economic decisions and is devoid of any motivation other than to maximize its
self-interest. We identify this agent as Homo economicus and his/her
characteristics are explored below. We should note a corollary to the first
assumption – that Homo economicus is a valid model of human behaviour for
the purposes of studying and managing a real economic system.
The second assumption, often referred to as the invisible hand, was made
famous by the 18th century father of economics, Adam Smith. We shall return
to the concept later, but suffice to note here that, if the concept has any validity
at all, then it has been badly abused.
The third assumption requires that prices in a free market adequately reflect
productive efficiency for the given level of demand. This assumption is
severely compromised, however, because many of the factors which impinge
on efficiency (for example, environmental pollution) escape accounting by the
free market mechanism. These are referred to as external costs because they
are external to the market.
Concerning the last assumption, neoclassical theory is not able to account for
real world events, such as the growth and collapse of speculative bubbles,
despite these being the apparent cause of the current Global Financial Crisis.
According to Davies, a neoclassical economy never strays too far from a stable
equilibrium, because its mathematical architecture constrains it from doing
so.83 Consequently government treasuries around the world found their
financial models quite unable to cope with the Global Financial Crisis of 2008-
2009. Their models described an unreal world.
As a result of constant repetition to generations of students, the four
assumptions of neoclassical economics have acquired the status of axioms –
they have become self-evidently true and therefore beyond question. Again, it
is not the purpose of this essay to offer a detailed critique of capitalism, which
has been done by many others. Our primary purpose is quite modest – to
illustrate the inadequateness of Homo economicus as a model of human
economic behaviour so as to shine the spot light on a more appropriate model.
Homo economicus
Neoclassical economic theory makes three assumptions concerning the
behaviour of Homo economicus:
• That economic agents are well informed about the markets in which
they participate.
• That economic agents are rational, that is, they are able to reason
accurately with the information available.
• That economic agents are self-optimizing – that is, their only goal is to
optimize their gain or pleasure.
We should be clear about what is, and what is not, being claimed. Neoclassical
theory does not claim that human beings are purely economic beings. Nor does
it claim that their environment is purely economic. But it does claim that, for
the purposes of simplification and in order to get a grasp on matters of
particular interest to economists, one is justified in separating human beings
and their world into two parts – that part which pertains to economics and that
which does not. About the non-economic part, economists are agnostic – it is
simply not relevant. Here we find that neoclassical economics is attempting to
emulate the physical sciences, such as physics and chemistry, where the
accepted methodology is to experiment with isolated systems and to simplify
the description of those systems using mathematical models. For the physical
sciences, this has been a successful methodology. Its adoption by economists
has proved otherwise.
Feminists were the first to draw attention to the problem of applying ‘hard
science’ methodology to economics. What started as a set of simplifying
axioms or assumptions eventually became a set of dogmatic assertions about
the way people actually are. Economist Susan Richardson puts it thus:
The deductive character of masculine economics means that a whole
elaborate edifice has been constructed on the foundation of a few
assumptions about the way people behave in their economic life. Initially
the assumptions and the deductions from them were adopted to see
whether self-interested behaviour could, under certain conditions, lead to
socially desirable results. It was, in effect, a formal logical test of [Adam]
Smith’s propositions about the efficacy of the invisible hand. But it
became more than that. Masculine economics slipped from the insight
that under certain tightly defined conditions, selfish, individual behaviour
and egocentric behaviour could produce economically efficient outcomes,
to the assumption that people, in their economic behaviour, are indeed,
individual and egocentric. These foundation assumptions of economics
have rarely been explicitly tested to see whether they have much
intersection with the way in which people actually feel and act in their
economic lives.84
Richardson finds the principle that every agent is actuated only by self-interest
to be depressing because we know it not to be true and yet its acceptance hides
other more noble possibilities.
This proposition can be (and has been) made to be tautological – any
action which is taken is preferred by the author to the alternatives which
are available to her, so it is self-interested. I find this depressing. It robs

humanity of the possibility of noble behaviour. It means that we cannot
distinguish morally or in other ways between private and greedy person,
the passionate believer in a cause, the person who devotes her life to the
well-being of others. All are equally said to be acting in their own self-
interest.
The proposition that all economic action is selfish diminishes humanity in
a second way. It has been applied by economists, to the effect that if the
slightest whiff of self-interest can be detected in an action then that self-
interest is assumed to be the whole of the motivation. In fact, motivations
are multiple and complex. Altruism, duty, love, compassion and fellow
feeling are among them.85
In the end, argues Richardson, the assumptions of neoclassical economics
become self-fulfilling prophesies.
The assumption that people are entirely selfish in their economic
behaviour also rules out systematic inquiry into the extent to which
selfish or other motivations are affected by context and the behaviour of
others. If a person behaves altruistically and gets selfishness in return,
then she will feel not moral but a mug. This issue is important to the
crucial question – does a system which runs on and assumes selfishness
increase the total quantum of selfish behaviour, because this is the norm
and is rewarded, or does it diminish it because it economises on altruism,
saving altruism for circumstances where selfishness is hostile to human
well-being? Man-made economics does not explore these questions.86
Let Tim Hazeldine, Professor of economics at Auckland University, have the
last word. “Homo economicus is a selfish shit. There is no place for honour,
decency, empathy and altruism.”87
Since Richardson wrote more than a decade ago, considerable scientific
research has gone into understanding the way in which people make economic
decisions and the factors which influence them. The research is important for
two reasons. First, its insights inform the work of advertisers and marketing
departments. Second, and more importantly for our purposes, the entire edifice
of neoclassical theory depends on the validity of its assumptions about human
behaviour. The results, described briefly in the following pages, turn out to be
fascinating and often humorous, but damning for neoclassical theory. Now let
us briefly review each of the assumptions concerning Homo economicus.
People are not always well informed

Advertisers do not always tell the truth. As just one example, in October 2008
Coca-Cola in Australia employed a well-known actress to feature in a series of
ads which claimed that accusations the drink was full of caffeine, rotted
people’s teeth and made them fat were a “pack of lies”. The Australian
regulatory body that deals with false advertising ordered Coca-Cola to run
another series of ads saying that the originals were misleading.88
The participants in a market may not be equally well informed. Insider trading
deals depend entirely on having information not available to the majority of
others. Indeed successful trading in many markets depends on the participants
gaining an information advantage. Equality of information does not exist in the
real world.
People do not reason by logic alone

We know that people do not purchase rationally because many still buy
cigarettes, even when the packet displays images of diseased lungs. But
scientifically controlled experiments illustrate the irrationality of human
economic behaviour even where addiction appears not to be involved. Here are
just a few of countless observations:
• It is well known that placebos are often as effective as a medicine,
illustrating the so-called power of the mind. But it is also observed in
controlled experiments where subjects are required to purchase their
medicines, that the more expensive the placebo, the more effective it
is.89
• In controlled experiments where men are asked to play a simulated
financial investment game on a computer, those shown pornographic
images before hand make high-risk investment decisions compared to
those shown neutral photos.
• A study of 443 women, aged 18 to 50, found that the participants were
more prone to impulse buying in the luteal phase of the menstrual cycle
(10 days prior to menstruation).90
• Much research has been devoted to the best supermarket layout to
maximize sales. The placement of every product is guided by research.
Take just one example. Supermarkets around the world will typically
guide you on a path that takes you first past the fruit and vegetable
stands, leaving the sweets and dairy products till last. This is because
market research has shown that people are more inclined to buy high
fat, high calorie foods if they have first been given the opportunity to
select healthy foods.91
The conclusion we may draw is that economic decision making is not guided
by logic alone. A range of factors plays a role and in particular every ‘rational’
calculation is made in a complex physiological environment. Numerous
hormones and neuro-active substances are playing a role, either consciously or
unconsciously.
People do not necessarily seek to optimize their gain

Numerous experiments have revealed that human economic decision making is
far more complex than accepted by the simple theory of maximizing gain. This
turns out to be true even for animals. For example, if two monkeys perform the
same task side by side, and one is rewarded a grape (big money) and the other
a cucumber (small money), the latter will become angry or work more slowly.
Yet if both receive a cucumber, both continue to work and eat happily.92
Conclusion: monkeys show an aversion to inequality. The reward does not
have to be physical – it can even be the affection of laboratory staff.
Humans also behave ‘irrationally’ in rejecting inequality, even if it means
walking away from a deal worse off or empty-handed. This is demonstrated in
experiments where two strangers (A and B) are asked to share a sum of money,
all of which is first given to A as if it belongs to A. The rules stipulate that if B
rejects what is offered by A, neither of them gets anything. Classical economic
theory says that gain will be jointly maximized if A gives just a small portion
of the money to B because B at least gets something rather than nothing and
A’s displeasure at giving up something is minimized. In practice, this seldom
happens. A usually offers close to half the money and B usually rejects any
offering much less than half.93
This behaviour cannot be explained by a theory which says that agents should
accept whatever reward they are given to maximize gain. And here lies a
problem because, as already observed, the entire theoretical edifice of modern
free market economics is built on supply and demand curves whose validity
requires humans to optimize personal gain. The theory breaks down because it
turns out that factors other than personal advantage also influence mental cost-
benefit calculations. We will return to these other factors below.
In conclusion, the assumptions made by neoclassical theory concerning human
economic decision making have been shown to be flawed. It is hard to avoid
the conclusion that the entire mathematical edifice built on those assumptions
is also flawed.
The Culture of Neoliberalism

The reduction of the world of economics and commerce to a mathematical
abstraction has far-reaching consequences. When the goods we make and sell –
our clothing, books and clean water – are all reduced to dollar units to facilitate
accounting, it is but a short step to believing that manipulating dollar figures is
the be-all and end-all of business and that the reality behind those figures is of
little consequence. Psychologically, the shift is from a preoccupation with
production to a preoccupation with finance.
This shift in preoccupation has even been accompanied, Sarkar notes, by a
change in the meaning of words. The original Sanskrit word for a business
person was vaeshya and it meant “one who earns a living through the
production of goods”. The word survives in modern Indic languages but it has
come to mean “one who profits by trading and broking without being directly
involved in production”.94
The sophistication of financial instruments and services has increased steadily
over the centuries. However, the 1980s witnessed a singular transition in the
history of capitalism because, during this decade of deregulation, financial
instruments became an end in themselves rather than a means to production.
The transition from finance as means to finance as end in itself paralleled the
transition from Keynesian welfare capitalism to neoliberalism. One of the first
countries to make this transition (with much haste and social dislocation) was
New Zealand.95,96 Writing from his own experience as a politician and
bureaucrat administering the transition, Bruce Jesson compares workplace
culture before and after:
The difference between a productive culture and a finance culture is that
the world of the producer is tangible whereas the world of the financier is
ethereal. The old-style manager dealt with workers, customers and actual
productive processes. The modern manager deals with spreadsheets and
figures on a screen. The difference is expressed quite graphically in the
changed attitudes of managers to workers. The old-style manager knew
the workers, dealt with many of them personally and had a feeling of
some responsibility for them. Laying them off was a last resort. The new
finance-oriented managers have no contact with the workers and assume
that there are too many of them. Laying workers off is their first option.
The contrast between the culture of a production-based and public
service-based economy and that of a finance-based one is crucial. Each
has an ethos of its own. Production-based industries develop ways of life
that are unique to them. They evolve standards of excellence and pride in
their craft... People learn to cooperate in their work and form bonds of
mateship...
Finance has an ethos of its own too, to do with financial efficiency and
competitiveness. From a financial point of view, there is nothing unique
about any particular industry. Finance is fluid, mobile, moving constantly
around the world. Finance recognizes no boundaries between industries –
or countries – and it treats each industry the same way...
At the same time, there is a fundamental contradiction in the ethos of
finance. On the one hand, there is all this obsession with efficiency; yet
the personal goals of the finance elite are apparently to make and spend
money as conspicuously as possible. There is none of the frugality of
earlier generations of capitalists, nor much apparent thought for the
future. The lavish lifestyle of the elite is matched, within their own
companies, by the emphasis that is placed on advertising and marketing.
Industry is increasingly dominated by the sales process, with its parasitic
caste of PR people and ad people promoting a culture of hedonism and

avarice.97
Of note in Jesson’s comparison is the deteriorating relationship between
managers and workers. When finance is everything, a business has no use for
ethics and the culture of cooperation. Margaret Thatcher, the person who
perhaps more than any other symbolizes the temporary triumph of
neoliberalism, once famously remarked: “There is no such thing as society –
there are only individual men and women.”98 It was a nonsense statement then,
as it is now. But its significance is clear. Society is the relationships between
people. If those relationships are made invisible, then the violence done to
them by neoliberalism is also made invisible.
The Ethics of Capitalism

Debates about the ethics of capitalism usually revolve around the ethics of
market outcomes because the market is supposedly the determinant of
everything that matters in a capitalist society. Markets are populated by
producers and consumers. In a free market, consumers are free to choose
whatever affords them the greatest utility. In this way, capitalism side-steps the
nature-nurture debate and instead asserts the supremacy of choice. Between
producers, however, neoclassical economics promotes the virtue of
competition, and here we find an echo of Darwin’s theory of natural selection
and survival of the fittest. Producers compete in order to satisfy consumer
choices and only those with the best business acumen survive or become rich.
However what commercial competition selects is not genes but behaviour –
and not moral behaviour but any behaviour that turns a profit. So we find that
as the culture of neoliberalism pervades a society, business, and social ethics
more generally, begin to decline. In this section, therefore, we are concerned
with the ethics of capitalism, both the theory and the reality.
The invisible hand

The ethics of liberal capitalism were articulated by Bentham and became
known as utilitarianism. According to this philosophy, the morally good is that
which makes people happy and that which gives them pain is bad. Bentham
made no distinction between pleasure and happiness. Of course, happiness and
pain are seldom unalloyed, so one state of affairs is better than another if it
involves a greater proportion of pleasure over pain.
Bentham went further however and claimed that each individual pursues that
which he/she believes will deliver them the greatest net happiness. We
recognize here the self-optimizing goal of economic agents – which is not
surprising because the utilitarians did the philosophical groundwork for
neoclassical economic theory. The concept of utility underlying supply and
demand curves arises from utilitarianism.
The utilitarian ethic says that individual desires and actions are good where the
outcome promotes the general happiness. But, and it is a significant ‘but’, the
outcome does not have to be the intention of the original action, only its
consequence.99 This takes us back to the previous century when Adam Smith
first articulated the metaphor of the invisible hand.100 His assertion was that, in
a free market, pursuit of self-interest (that is, profit) leads participants to
achieve the material advantage of society as a whole, as though “led by an
invisible hand to promote an end which was no part of his intention”.
Utilitarians take this argument two steps further: first, they equate a materially
optimal result (measured at the government level as per capita Gross Domestic
Product or GDP) with the greatest happiness of the greatest number; second,
they make an ethical jump and equate the greatest happiness of the greatest
number with the public good. Conclusion: self-interested action in free markets
leads to the public good. Also implicit in the above chain of reasoning is the
neoclassical definition of progress – an ever increasing per capita GDP. By
this definition, progress depends on free markets and the invisible hand.
Neoliberals ignore Adam Smith’s own doubts about the efficacy of the
invisible hand and his belief that “economics should be subordinate to and in
the service of society and morals”101 rather than define those morals. Noam
Chomsky argues that the invisible hand has been stretched to the point of
abuse. Adam Smith believed, he says, that the invisible hand would destroy the
possibility of a decent human existence “‘unless government takes pains to
prevent’ this outcome, as must be assured in ‘every improved and civilized
society’”.102
The 2001 Nobel Prize winning economist, Joseph E. Stiglitz, has a different
objection to the invisible hand – it is invisible because it is probably not there.
Adam Smith, the father of modern economics, is often cited as arguing
for the “invisible hand” and free markets: firms, in the pursuit of profits,
are led, as if by an invisible hand, to do what is best for the world. But
unlike his followers, Adam Smith was aware of some of the limitations of
free markets, and research since then has further clarified why free
markets, by themselves, often do not lead to what is best. As I put it in
my new book, Making Globalization Work, the reason that the invisible
hand often seems invisible is that it is often not there.
Whenever there are “externalities” – where the actions of an individual
have impacts on others for which they do not pay or for which they are
not compensated – markets will not work well. Some of the important
instances have been long understood – environmental externalities.
Markets, by themselves, will produce too much pollution. Markets, by
themselves, will also produce too little basic research. (Remember, the
government was responsible for financing most of the important scientific
breakthroughs, including the internet and the first telegraph line, and
most of the advances in bio-tech.)
But recent research has shown that these externalities are pervasive,
whenever there is imperfect information or imperfect risk markets – that
is, always.
Government plays an important role in banking and securities regulation,
and a host of other areas: some regulation is required to make markets
work. Government is needed, almost all would agree, at a minimum to
enforce contracts and property rights.
The real debate today is about finding the right balance between the
market and government (and the third “sector” – non-governmental non-
profit organizations.) Both are needed. They can each complement each
other. This balance will differ from time to time and place to place.103
Ethics in the era of MBAs

It is not unreasonable to trace the source of the current Global Financial Crisis
to a failure of ethics, which in turn can be traced to deregulation and the
inadequate schooling of business students in ethics.
In the early 1990’s the then Professor of Business at Monash University,
Murray Cree, became interested in the ethical attitudes of his students. He
conducted a survey of some 380 students from three Australian universities in
the departments of business, accounting and marketing.104 Their average age
was 21. Cree asked two questions:
Q1: Would you be open to being involved in an insider trading scam if the
payment to you was to be $500,000?
Q2: Would you still be open to the proposition if you knew it would wipe
out your parents’ life savings?
The percent of respondents answering ‘yes’ to these questions is shown in the
following table.
Accounting Marketing Business

students students students
Q1 72% 46% 63%
Q2 42% 30% 26%
Approximately two thirds of students surveyed were prepared to engage in

illegal and unethical practices for their own personal gain and one third would
have been prepared to destroy their parents’ life savings in the process. This is
a frightening result. As Cree points out, many of these same students would be
today’s executives in the banking and investment sectors and would be
managing large sums of money. If one is seeking the origins of the Global
Financial Crisis, Cree considers the results of his investigation to be “Enough
said!”
Other studies published in accounting journals have concluded that the threat
of prosecution significantly lowers the propensity for financial wrong doing,
suggesting that an effective regulatory regime helps to keep business people
honest. The obvious corollary is that deregulation would have the opposite
effect. It is also of interest that men appear to be less perturbed by the threat of
prosecution than women.
Much of the finger pointing during the current Global Financial Crisis has been
at the MBA courses offered by universities around the world. And the Harvard
Business School, as the world’s premiere business education institution, has
come in for particular attention. This is the institution where, as one
commentator points out, “currently 1,800 students are beavering away, trying
not to think too hard about the economic triumphs achieved by such notable
alumni as George W. Bush and Rick Wagoner, the chairman of General
Motors”.105 (General Motors went from being one of the largest car makers in
the world to declaring bankruptcy in 2009.) Another commentator, analyzing
the movements on Wall Street, discovered that the more Harvard graduates are
employed in any one year the worse U.S. markets perform.106
But the times are changing. Conscious of their reputation, Harvard business
students have taken matters into their own hands. Nearly 20% of the 2009
graduating class (one may ask why only 20%) have signed The MBA Oath, a
voluntary student-led pledge stating that the goal of a business manager is to
“serve the greater good”. It promises that Harvard MBAs will act responsibly,
ethically and refrain from advancing their “own narrow ambitions” at the
expense of others.107 All students at the Columbia Business School must pledge
to an honour code: “As a lifelong member of the Columbia Business School
community, I adhere to the principles of truth, integrity, and respect. I will not
lie, cheat, steal, or tolerate those who do.” The code has been in place for about
three years and came about after discussions between students and faculty.
Business school academics say that what we are seeing is “a generational shift
away from viewing an MBA as simply an on-ramp to the road to riches”.108
What is Economic Truth?

It is worth asking why a demonstrably flawed economic theory has become the
only economic truth taught in universities around the world. Why have
alternative economic perspectives, such as those provided by schools of
political economy, for example, almost disappeared from universities?
In answering this question, we are obliged to recognize the contested nature of
academic knowledge. That which is learned at universities is not universal truth
but rather the outcome of a struggle to which many forces are brought to bear.
The development of economics as an academic discipline has been subject to
diverse and powerful influences, of which it is worth identifying three: the
struggle for power, the struggle for rationality and the struggle for distributive
justice.
1. The struggle for power: The dominance of neoliberalism in universities
has been due to the ability of its proponents to render the issue of power
and class struggle invisible. As in politics, a basic question in
economics must be power – who has economic power and how is it
obtained? Who does not have economic power and how is it lost?
Power is rendered invisible to economics students around the world in
order to hide the reality that neoclassical economics serves the interests
of a powerful social class. When class and class struggle are made
invisible, it allows teachers of economics to advance their subject
matter with the aura of a rationality beyond question.109
2. The struggle for rationality: Rationality in neoclassical theory is defined
in terms of efficiency. Free markets are rational because they are
claimed to be the most efficient at allocating scarce resources. The term
economic rationalism has its origins in this claim. Efficiency is no
doubt a worthy goal and certainly an inefficient system is open to attack
on moral as well as rational grounds. However the extent to which free
markets deliver efficiency is debatable, because of the problem of
external costs noted above. It is also of interest that neoclassical
economists have attempted to enhance their aura of rationality by
claiming the methodology of the physical sciences. To question
neoclassical theory requires an audacity comparable to questioning
Newton’s theory of gravity.110 Davies explores this issue in some detail
and finds neoliberalism guilty of scientific fraud.111
3. The struggle for distributive justice: Ethical outcomes are certainly of
concern to many economists, notwithstanding the insistence of
conservatives who argue that “real economics is not a morality tale”.112
At least two difficulties arise with neoliberal measures of well-being.
First, measures of economic well-being, such as growth in per capita
GDP, are averages which ignore inequalities in income distribution.
Second, economic well-being tends to be conflated with efficiency –
the assumption being that efficiency is a prerequisite for justice, so
achieving the former somehow achieves the latter.
Unfortunately for those who cherish a belief that universities should be the
creators, preservers and disseminators of enlightenment, university economics
in recent decades has been motivated mostly by a desire to preserve class
privilege and concerned little with distributive injustice.
To claim that neoclassical economics is objective in the same sense as physics
and chemistry is both nonsense and dishonest. Physical and economic laws are
not the same kind of laws. Economic laws describe the aggregate of human
behaviour in markets. Markets are systems created and managed by humans
and behaviour in them is mediated by money, another human artefact. Since
markets are essentially human creations, they come within the purview of
human consciousness. Their performance can be modified if humans desire it.
Physical laws describe the aggregate behaviour of inert atoms or bodies in
space. These behaviours, as exemplified by the law of gravitation, for example,
are not amenable to persuasion by human consciousness – at least not in the
present age. Not to see the difference is nonsense.
The dishonest aspect of the assertion is that its true purpose is to undermine the
fourth principle of egalitarianism – that economic circumstances are, by design
or neglect, a product of political processes and not of immutable universal
laws. To surrender to the supposed law of the market is to surrender to any
market result, even those which produce poverty and pollution. And this brings
us to a more compelling reason to recognize a distinction between the physical
sciences and economics. A theory of physics which gets the number of
fundamental particles wrong is unlikely to spawn poverty or threaten the
survival of the human race. A theory of economics which ignores the reality of
external costs, such as climate change, is a serious threat to the planet.113
The Renaissance of Cooperation

We turn now to a discussion of the cooperative principle. The argument is that
a society based on the principle of cooperation is possible given some
reasonable effort to put it into practice. Furthermore, the future development of
human civilization depends on our ability to establish such a society.
In the simplest of terms, a society consists of a collection of individuals and the
relationships between them. It is the relationships that make a society
something more than the sum of its individuals. To be of any practical use, a
social theory must offer an adequate account of both social relationships and
the individuals expected to participate in them.
Experience tells us that multiple factors help to maintain the cohesion of a
social group (some formal, some informal, some coercive, some heartfelt) and
likewise multiple factors encourage its disintegration. Obviously social
integrity depends on the balance of cohesive and fissiparous tendencies. It is
generally recognized that a predominance of self-interest over collective
interest is detrimental to social cohesion. Societies which embrace
neoliberalism are faced with increasing problems due to this defect. It is also
generally recognized that rewards and inner convictions are better ways to
preserve social cohesion than punishment. Fascist societies are relatively short
lived because they have little other than propaganda and punishment to
preserve an otherwise highly unstable social stratification.114 Sarkar cites “too
much self-interest in the individual members, the formation of groups for
economic or social advantages, and the lack of understanding of others” as the
principle reasons for the downfall of a society. “Instances of so many groups
and empires disappearing altogether are not rare in the little-known history of
this world.”115
The essential problem to be solved by all societies, and the problem addressed
in the remainder of this essay, is how to achieve a social cohesion which is
sustainable because it is consistent with the spectrum of human needs and
aspirations. The discussion is divided into seven sections, each of which
approaches the challenge of building a cooperative society from a different
perspective. Here is an overview of what is to come.
Section 1, What is Scientific?, argues that Western materialistic science, which
now dominates world culture, is in its present form partly a help and partly a
hindrance in building a cooperative society. This section makes the case for a
broader definition of science based on a synthesis of Western materialistic
science and Eastern spirituality.
Section 2, The Concept of Progress, links social progress to the pursuit of
happiness, but links the pursuit of happiness to the development of human
potential. Any kind of social or economic development, therefore, can only be
considered progress if it enhances the more subtle and more expansive
potentialities of human consciousness.
Section 3, The Theory of Cooperation, introduces the concept of social capital,
a term used to describe the network of relationships between people and
especially the moral and empathic component of those relationships. We also
introduce Neohumanism, that part of Sarkar’s social philosophy which links
cooperation to social progress.
Section 4, The Science of Cooperation, introduces the (Western) science and
sociology of cooperation. Surprisingly we find that humans have a genetic
predisposition for cooperation, which can be elicited given appropriate social
encouragement.
Section 5, The Ethics of Cooperation, explores the ethical dimension of
cooperation and affirms that a cooperative society is possible given the right
kind of individual and collective effort. We must also address the problem of
power, which has undone all attempts so far to establish a cooperative society.
Section 6, Egalitarianism, begins with the dilemma that egalitarian societies
can be shown to be happier and yet the imposition of material equality has
proved to be a disastrous failure. What is the appropriate degree of
egalitarianism required to encourage cooperation?
Section 7, The Future of Cooperation, looks to the growing importance of an
economy for the mind.
What is Scientific?
The reader may be wondering why a discussion of cooperation should begin
with the philosophy of science. Recall that Marx and Engels stamped
dialectical materialism with the authority of science and likewise neoliberalism
attempted to claim the authority of science, although neither of these attempts
stood up to close scrutiny. The label ‘scientific’ endows validity because the
discipline of science is both powerful and rational. When the discipline is
followed wisely, the knowledge so obtained reduces the element of surprise in
our dealings with the world (that is its power) and it provides a view of the
world that is both internally consistent and, more importantly, consistent with
human well-being (that is its rationality).
Science is motivated by questions and the question that motivates us here is:
what kind of social relationships serve to strengthen society and at the same
time promote the general happiness without encouraging selfishness?
Obviously the answer we are inviting is cooperative relationships. But
cooperation, like finding peace and love in our lives, is much easier to talk
about than to achieve. We need something more than a wish and a prayer in
order to build a society based on cooperation. We need the confidence and the
rationality that science provides.
In the previous two parts of this essay, we considered the Marxist and the
neoclassical views of the human being and we found them both wanting. The
fundamental defect of both is that they are reductionist – but for different
reasons. In the case of Marxism, the human being is reduced to a material
entity for ideological reasons, but the theory flounders when the intellectual,
aesthetic and spiritual human being begins to assert itself. In the case of
neoclassical economics, the human being is reduced to a behavioural parody,
because it supposedly facilitates a mathematical description of the narrow
world that interests economists. Clearly we require a theory of the human being
which avoids these problems.
From the Proutist perspective, a healthy society (and therefore a healthy
economic system) can only be built on a holistic understanding of the human
being, one which accepts humans as multi-dimensional, that is, as physical,
instinctual, sentimental, intellectual, social, aesthetic, moral, spiritual and so
on. Human beings have needs and aspirations in all the above dimensions of
life and each of them impinges one way or another on social cohesion and on
economic activity, which is why they must all somehow be acknowledged in
theory and in practice. This idea is fundamental to everything that follows.
However, we are faced with a difficulty. Western materialistic science is
founded on the assumption that only matter exists and therefore only matter
can be known. Due to this presumption (actually it is a dogma), Western
science can only ever seek to understand the more subtle aspects of human
beings, their sentimental, intellectual, social, moral and spiritual lives, as
epiphenomena of matter. The quandary is that we wish to embrace Western

science for its ability to improve our quality of life and to defeat dogma with
rationality. Yet constrained by its own dogma of materialism, Western science
is inadequate to explore the inner mental and spiritual worlds. Even the neuro-
philosopher Patricia Churchland admits that, “We do our research as if
materialism is a proven fact, but of course it isn’t.”116 The philosopher Ken
Wilbur argues that the non-material worlds must be approached on their own
terms, that is, each of the dimensions of human existence is deserving of its
own science and methodology. In Eye to Eye, he gives an elegant account of
the three kinds of science required to deal with the physical, mental and
spiritual worlds, and he highlights the common features of the three
methodologies that justify their deserving to be acknowledged as scientific.117
Sarkar also embraces the Western scientific method but, not surprisingly,
rejects the dogma of materialism. As with much of his philosophy, Sarkar’s
approach is to find a synthesis of East and West.
The Asian countries, in spite of their long heritage of morality and
spirituality, have been subject to great humiliation during periods of
foreign invasion. While the higher knowledge of philosophy propagated
by the oriental sages and saints has been accepted as a unique
contribution to the store house of human culture and civilization, the
people of these lands could not resist the foreign invaders. The history of
all the Asian countries, a region of so many religions, has been dominated
by foreign powers for centuries together. This imbalance brought about
their material deprivation and political subjugation.
On the other hand, the West is completely obsessed with physical
development. It has made spectacular progress in the fields of politics,
economics, science, warfare, etc. In fact, it has made so much material
progress that it seems to be the sovereign master of the water, land and
air. But for all that, it is not socially content and miserably lacks spiritual
wealth. Unlike the East, in the West plenty of wealth has created a crisis.
Therefore, it is abundantly clear that no country can progress
harmoniously with only one-sided development.
Therefore, it behoves both the East and the West to accept a synthetic
ideology that stands for a happy synthesis between the two. Here, the
East can help the West spiritually, whereas the materialistic West can
extend its material help to the East. Both will be mutually benefited if
they accept this golden policy of give and take…
In the educational system of the East, there is the predominant element of
spirituality… So the people of the orient could not but be spiritual in their
thoughts and actions. Whereas there is, in the Western system of
education, a clear and unilateral emphasis on mundane knowledge. So to
build up an ideal human society in the future, the balanced emphasis on
the two is indispensable.118
There are many schools of Eastern philosophy of differing influence and

importance and it is as difficult to generalize about them as it is about the many
schools of Western philosophy. Some might be characterized as idealistic,
some materialistic, some dualistic, and so on. Sarkar places himself in the
highly influential tradition of Tantra,119 which might best be described as the
science of spirituality. Tantra earns the title of a science (as opposed to a
philosophy) because its methodology requires the practice of physical and
mental disciplines to gain access to the subtle experiences described by the
theory. Furthermore, like any good science, its body of theory and practice has
evolved over time. It is not bound by the semantics of ancient texts.
Our assertion is that, in order to build a society based on cooperation, we
desperately need science – but not a single science bound by the dogma of
materialism but multiple sciences each with a methodology appropriate to the
dimension of human experience it investigates. It must be admitted that not all
the sciences we require are equally developed. But this is not the point – we
cannot know everything in advance. We can, however, start with an immature
science and develop it into a mature science over time. It must also be re-
emphasized that advocating the need for new methodologies to investigate the
inner mental and spiritual worlds is not a rejection of Western materialistic
science. Western science has already begun to investigate how and why people
cooperate – a good starting point to which we shall return shortly.
The Concept of Progress

Happiness
The pursuit of happiness is a fundamental human motivation. All social
theories must provide some account of it. In the case of Marxist theory,
happiness is implicit. Individuals find it in the solidarity of social struggle and
ultimately in the harmony of a classless society. In neoclassical theory,
happiness is explicit. Individuals pursue their own desires and the mechanism
of free choice in a free market delivers the greatest happiness to the greatest
number. Happiness is also explicit in Sarkar’s social theory. All humans pursue
happiness because it is human nature to do so. Typically, this search involves
the pursuit of fame, power and wealth. But these avenues lead to frustration
because human desires appear to know no bound – when one is satisfied
another appears in its place and the seeker finds only emptiness. In truth,
human desires are limitless. Therefore, says Sarkar, they can only be satisfied
by something that is itself limitless and herein lies the value of spiritual science
because only spiritual experience has this particular quality.120
So with respect to the pursuit of happiness, the science of spirituality promotes
two principles. The first concerns balance, the second wisdom. Given that
humans are multidimensional beings, their well-being and therefore happiness
depends upon maintaining a proper balance within and between all the
dimensions of their lives. Just as the physical body requires balanced nutrition
(pabula), so too the mind requires the right kinds of intellectual, cultural and
spiritual pabula. Sarkar makes a distinction between carbonic pabula which are
required to sustain the physical body and non-carbonic pabula required to
sustain the mind. (We need this unusual terminology because Sarkar uses it
subsequently to define an ethical principle.121)
The second principle stems from the observation that the many kinds of pabula
which humans pursue are not equivalent in their ability to satisfy. Pabula can
be arrayed on a spectrum from crude to subtle, defined by how easily
accessible they are to consciousness – sensory stimuli are easily accessible,
intellectual ideas range in difficulty and certain kinds of spiritual experience
are very difficult to grasp with ordinary consciousness. According to the
second principle, the different kinds of pabula sustain happiness in inverse
degree to their ease of attainment. Tasty food is necessary for happiness but it
fails to be enough once readily obtained. Conversely, spiritual experience can
be elusive but is found to offer sustained contentment in the long term. We
may understand wisdom as the ability to discriminate between the different
kinds of pabula.
Development and progress

The above two principles have ramifications for both the individual and the
collective pursuit of happiness. From the individual perspective, the pursuit of
happiness is a developmental journey. Humans are at first frustrated in their
search for happiness, because they search where it is easiest to do so. By
stages, however, they turn their attention in more subtle directions.
Psychologists identify a definite sequence of developmental stages in the
unfolding of the various potentialities of the human mind. The natural sequence
(and thus also the healthy sequence) is from the crude to the subtle and from
narrow concerns to expansive concerns. From baby, through infant and child to
adult, the intellect becomes by steps more subtle and more powerful.
Eventually the mind can span great physical and even metaphysical distances.
Likewise from baby to adult, a person gradually acquires the faculty of
empathy – the selfish concerns of the child give way to concern for the welfare
of others. And again, moral perceptivity begins with fearful obedience to rules
and grows to the appreciation of virtue. A happy life depends entirely on
making each of the many steps of this developmental journey, a journey which
continues for as long as one lives.
However the developmental journey is not without its struggle, because there is
a palpable tension between the developmental transitions in life and the
requirement to maintain balance. At each developmental stage, a person
gradually learns to achieve equilibrium but each inner impetus for further
unfolding of mind threatens the equilibrium that has been painstakingly
achieved. Indeed Sarkar defines life as a never-ending struggle “to restore an
unstable equilibrium”.122 Wilbur offers a comprehensive description of the

equilibrium-development tension in Eye to Eye.123
With regard to the collective pursuit of happiness, the same dynamics apply,
but on a longer time scale. There is the same tension between development and
equilibrium requiring the same struggle to restore an unstable equilibrium.
Societies and civilizations, by gradual degrees, move from the crude to the
subtle and from the selfish to the collective welfare. This movement becomes
the basis for Prout’s definition of progress. Note that by this definition, all
scientific and intellectual discoveries, all kinds of social and economic
achievement can only be considered progress to the extent that they encourage
the flow of life from crude to subtle – that they encourage the unfolding of the
more subtle potentialities of individual and collective life.
We are now in a position to understand the particular challenge confronting the
human race in the opening decades of the 21st century. We are taking another
small but collective step away from a pre-occupation with self-interest towards
a pre-occupation with the welfare of the planet as a whole. We cannot expect to
take such a step without some disruption and some letting go of the past, but by
making this step we are surely embracing a more dignified and more optimistic
future.
The nature-nurture debate

Human development is from crude to subtle. Mind has an inner impulse to
unfold which is not dependent on, nor imposed by, the external environment.
In other words, mind has its own dynamic, its own nature. This understanding
has an immediate impact on our interpretation of the nature-nurture debate. In
essence we are saying that, in addition to their physical attributes, humans are
also intellectual, social, moral and spiritual, by nature. But nature in this view
is something more than the universe of atoms and molecules – it now includes
the universe of minds and consciousness. How a human being develops still
depends on choices made in the context of inborn and environmental factors
but now the inborn is not confined to genes and likewise environment includes
all the physical and metaphysical worlds into which human life penetrates. So
concerning the old debates of nature versus nurture and determinism versus
free will, Sarkar is clear that a useful social theory must accommodate both
sides of both arguments. It is not at all helpful to be dogmatic in these debates.
The assertion that the subtle aspirations of human beings are in part innate is
significant for a second reason. Socialists have traditionally preferred to argue
that all morality, all aesthetics, all spiritual yearning is imposed, for better or
for worse, by family and society. The utopian socialists relegated all
expressions of vice and virtue to the arena of nurture in order to reject the
conservative argument that working-class vice was innate. Marxists went
further and insisted that all human subtlety was derivative of socially imposed
material circumstances. Both views are inadequate because they try to squeeze
human reality into a very tiny mould. The reality is larger, more complex and
more subtle. A better approach surely is to expand one’s theory to embrace
reality, not to squeeze reality into the strictures of an outdated theory.
Economic progress
In the healthy developmental sequence, the human mind unfolds from a
predominance of crude to a predominance of subtle preoccupations. We have
already noted that this developmental sequence becomes the basis for Prout’s
definition of progress. Sarkar takes a highly significant step by linking the
trajectory of economic development to the unfolding of human mind. In the
first instance, humans are preoccupied with their physical existence, that is, to
provide themselves with the basic requirements of life, which Sarkar lists as
food, clothing, housing, health care and education. He describes an economy
which cannot meet the basic requirements as undeveloped. Once physical
requirements are satisfied, we find that more subtle intellectual, social and
artistic expressions quickly assert themselves. Serious social problems arise if
an economy is not reorganized to satisfy those aspirations. And finally, when a
widespread refinement of intellect and aesthetic expression awakens spiritual
interest, economic priorities change yet again. Of course these are not three
distinctly separate phases, but unless one recognizes human development as an
unfolding of more and more subtle aspirations, economic development will
stagnate and human aspirations will at some point become frustrated, with
potentially disastrous results. It also goes without saying that the economic
indicators used to measure collective welfare must periodically be adjusted to
accommodate changing aspirations.
Most communist countries were able to provide the basic material requirements
of life but stagnated because they were not able to take the next step. Capitalist
economies are able to satisfy some of the subtler aspirations of the middle class
by diverting relatively modest resources into education, the arts and the like.
However, their disregard for ecosystem relationships, social relationships and
ethics leads ultimately to the disintegration of the social fabric.
Ecosystem relationships in the context of a cooperative society are discussed in
another essay in this volume.124 In this essay, we are concerned only with
social relationships and ethics.
The Theory of Cooperation

Our concern in this section is to develop a theory of cooperation and social
cohesion. The key argument is that social cohesion depends on cooperation and
cooperation depends upon social relationships characterized by trust and
empathy. Social cohesion will therefore depend on the aggregate quality of
social relationships, which in Western social science has come to be described
as social capital. The term is used by way of analogy to other kinds of

economic capital, such as human capital and financial capital. Some resist the
term because it represents the further intrusion of economic thinking into the
social sciences, but it is widely accepted and therefore used here. Interest in
social capital arises because the concept is believed to be measureable (albeit
indirectly) and because research has shown that those measures correlate with
other important social and economic indicators.
Although Sarkar does not use the term as such, much of his Neohumanist
philosophy is concerned with the quality of social relationships.125 We begin
with the theory of social capital as understood by Western social science and
then introduce the contribution of Neohumanism.
Social capital
In Taking New Zealand Seriously – The Economics of Decency, Hazeldine
defines social capital as the “empathy and sympathy” in human relationships
and the “shared attitudes and goals” of a community.126 Putnam, a sociologist,
defines it as the “connections among individuals – social networks and the
norms of reciprocity and trustworthiness that arise from them”.127 Social
capital is embodied in human relationships and in the social, educational and
cultural institutions which mould those relationships. The evidence suggests
that it is hugely important in explaining the differences in wealth and
productivity between nations. Government investment in activities which build
good social relationships and community, says Hazeldine, can be as productive
as business investment in new machinery and factories. This understanding
makes Margaret Thatcher’s repudiation of society in favour of individualism
look all the more ridiculous.
Many studies have attempted to measure social capital and thereby make
inferences about its correlation with other apparently unrelated social and
economic indices. Following the lead of Putnam, the social capital of a
community is often measured as the levels of trust and civic involvement of its
members. Trust is assessed by gathering information using carefully worded
questionnaires and civic engagement by measuring the average number of
church groups, unions, sports groups, schools groups, clubs and societies to
which people belong. One study,128 for example, has shown that the correlation
of income inequality with higher mortality rates (observed among the States of
the USA) can probably be explained by declining social capital. In other words,
income inequality occurs at the expense of social capital and declining social
capital has a deleterious effect on public health.
Hazeldine129 argues that New Zealand’s program of economic rationalism
(synonymous with neoliberalism in this essay), which began in 1984, is
gradually destroying the social trust and empathy upon which economic life
depends. In other words, New Zealand is living off the social capital
accumulated by previous generations and, as any economist will tell you,

drawing on an account without making deposits cannot last forever.
There are different kinds of social capital just as there are different kinds of
physical and human capital. Putnam makes an important distinction between
inclusive social connections and exclusive social connections. Ethnic
organizations, sectarian church groups and fashionable country clubs tend to be
exclusive even while their internal bonds are strong. Civil rights groups, youth
service groups and charitable organizations tend to be inclusive. From this
perspective, social capital can be both positive and problematic. However, in
the end, Putnam sees social capital as an essential force in society. He draws on
a vast array of data that reveals how Americans have become increasingly
disconnected from one another and how participation in sports, religious,
political and hobby groups is declining. He links the disintegration of social
capital to declining indices of individual and public health. On the optimistic
side, however, he demonstrates how regenerating broken social bonds can
improve those same indices.
Neohumanism
Neohumanism is Sarkar’s reinterpretation of Humanism. It is well described as
a synthesis of the European humanist tradition with the Indian spiritual
tradition. It includes: an analysis of social sentiments as the basis for social
cohesion; the role of rationality in the struggle against dogmas; a commitment
to egalitarianism; and a commitment to spirituality as the basis for building a
healthy society.130 Various aspects of Neohumanism will appear in each of the
subsequent sections but we deal here with its analysis of social relationships.
Humanism was defined by the Greek philosopher Protagoras (5th Century
BCE) as the principle that humans are the measure of all things. Human
dignity takes precedence over the dictates of kings, queens, priests and tyrants.
It remains an excellent definition and European history can be interpreted as
the struggle to establish the humanist ideal in the face of determined opposition
from successive kings, queens, priests and would be tyrants. However, today
the humanist ideal appears to be inadequate in at least two respects. First, if
humans are the measure of all things, then what about animals and plants? Do
they only have value or meaning by reference to humans? Second, what can we
say about the future of humanity if we only have the past as a reference? A
vision of human potential is required if we are to approach the future with
confidence and optimism.
Neohumanism is Humanism infused with spirituality and extended to
encompass the plant and animal worlds. Elsewhere in this volume, Bussey
introduces Neohumansim as follows:
Neohumanism is a reinterpretation of Humanism proposed by P. R.
Sarkar. It takes the universal aspiration of Humanism, to reach beyond
the limitation of humanity and to strive for unity at the social level, and
suggests a universalism that includes all animate and inanimate existence.
Humanity is thus part of a great whole and our job is to increase the
radius of our heart’s love… Furthermore, the Cosmos, its matter and the
organic forms that populate it, are all taken to be conscious, thus human
isolation is broken down. We are never alone, as Sarkar insists. Rather we
are bound together in an infinite network of relationships that span
material, intellectual and spiritual realities.131
Lying at the core of Humanism is both an ethic and a sentiment. The ethic is
egalitarian – it asserts the essential equality of humans. The sentiment is an
experience of empathy or connectedness with those who come within the
humanist embrace. Put another way, Humanism is about cooperation. Both the
ethic and the sentiment of Humanism are required to sustain cooperation.
But a cursory examination of history obliges us to ask: who is included in the
humanist embrace? For the ancient Greeks, it did not extend to slaves or to
women. In 18th century England, it did not extend to slaves or to colonies. Put
another way, the cooperative ideal can be found on the inside of the humanist
embrace but it does not extend to the outside. The struggle of human history
has not been so much to establish some fixed Humanism but rather to extend
the radius of the circle of those included within the ideal. In Neohumanism,
Sarkar extends that circle to include animals and plants. Furthermore,
spirituality is required in order to ensure that the circle of Humanism is
extended to include more and more of the currently marginalized.
Sarkar’s analysis of social sentiments and their contribution to social cohesion
has some parallels to Putnam’s analysis of social capital. Like Putnam, he
makes a basic distinction between exclusive sentiments (for example,
nationalistic geo-sentiments or groupist socio-sentiments that bind a group but
then pit group against group) and all-inclusive sentiments. The Neohumanist
sentiment is the ideal because it excludes nothing – everything and everyone is
inside its cooperative embrace. Here then we have another perspective on
Sarkar’s definition of social progress – it is the ever-expanding circle of
Neohumanistic cooperation, made possible by the ever-increasing subtlety of
the human mind.
Much of Neohumanism is concerned with the use of rationality to defeat social
dogmas. Rationality is usually understood to mean the capacity for logical
reasoning undistorted by sentiment. Neohumanism however acknowledges
what neuro-biologists have learned from investigations of the brain – that
reason cannot be divorced from sentiment because the two are intertwined in
the brain. Rationality is not reason divorced from sentiment but reason
empowered by an all-inclusive Neohumanist sentiment.132 Logic alone can
never defeat the combination of dogmas and cheap sentiments offered by
communism and fascism. Even the great 20th century logician, Bertrand
Russell, came to the conclusion that the final argument against Nietzsche’s
fascist philosophy must be an appeal to human emotion.133
Grounding social capital in human sentiments and therefore in human neuro-
physiology is an extremely important step because it opens up the apparently
intangible world of social capital to the rigour of (Western) scientific
investigation. We now turn to that science.
The Science of Cooperation

In this section we examine some of the scientific evidence that humans have a
predisposition to cooperation and in particular to economic cooperation. Some
of the evidence comes from a new and exciting field of research known as
neuro-economics. We then turn to those insights provided by sociological
studies.
Neuro-economics
Neuro-economics is the study of the neuro-physiological underpinnings of
economic decision making. The field is new and is providing unexpected
insights into human economic behaviour. Recall that classical economic theory
requires individuals to make complex calculations to maximize their personal
advantage or utility. Utility, however, is a strangely ambiguous concept. On the
one hand it is given a numerical value which implies the counting of
something, but on the other it is entirely abstract and not anchored to anything
in the real world that can be counted. The advent of neuro-physiology led to
the idea that utility was really a surrogate for some chemical currency inside
the brain, with most interest focused on serotonin molecules because these are
known to be responsible for the experience of pleasure.
It turns out that a wide range of molecules of emotion134 impinge on the mental
cost-benefit calculations that are supposed to take place inside the brain and
they have unexpected effects. For example, let us return to the ‘sharing
experiment’ described earlier, in which person A was asked to share a sum of
money with person B. Remember that these experiments demonstrated
behaviour inconsistent with neoclassical theory. People appear to put a high
value on fairness. In a follow on experiment, persons A and B were placed in
the same experimental scenario as before, but they were (unknowingly) given
an intranasal administration of oxytocin. Oxytocin is a neuro-peptide that plays
a key role in social attachment and affiliation in animals and causes a
substantial increase in trust in humans. In these experiments the effect of
oxytocin was to increase the amount of money that A gives B. The
experimenters concluded that “oxytocin may be part of the human physiology
that motivates cooperation”.135 It is of interest that oxytocin also appears to
play an important role in mental health – some of the signs of autism can be
alleviated by a nasal spray containing oxytocin.136
Oxytocin is not the only neuro-chemical to promote cooperation. Recent

observations of bonobo monkeys in the jungles of the Congo reveal fascinating
contrasts with chimpanzees.137 Bonobos are matriarchal and show little
aggression compared to the patriarchal chimps. Chimps respond to strangers
with aggression, while bonobos demonstrate curiosity. When under stress
chimp tribes degenerate into fighting, while bonobos respond to stress by
engaging in collective sexual activity. Scientists have concluded that bonobos
demonstrate higher levels of trust both with each other and with strangers. Of
most interest, however, from a neuro-economics point of view, is the ability of
the monkeys to perform a simple task requiring cooperation in retrieving some
bananas that are out of reach. Although both species are intelligent enough to
work out a solution (for example, by one climbing on the shoulders of the other
or by one holding a ladder for the other), the chimps fail because they cannot
trust one another. On the other hand, bonobos have no trouble cooperating to
retrieve the bananas.138
It turns out that these differences can largely be correlated with a single gene –
a so-called ‘social gene’ that acts via a neuro-peptide called vasopressin.
Bonobo monkeys have the social gene, chimpanzees do not. And of particular
interest – humans have the same vasopressin gene as bonobos. Recall that
social capital was defined in terms of trust and empathy and that these
behavioural traits oil the wheels of social and economic interaction by
encouraging cooperation between strangers. We now know that oxytocin and
vasopressin are the physiological underpinnings of trust and that they influence
levels of cooperation.
Managing social capital

We must immediately dispel any notion that trust, empathy and cooperation are
predominantly determined by genes. In Sarkar’s terminology, genes represent
potentialities. How those potentialities are expressed depends entirely on the
choices people make in the context of their genetic endowment and their social
environment. It is therefore extremely interesting to learn that measures of trust
vary greatly from country to country. In one survey,139 an aggregate measure of
trustworthiness ranged from a low 3% in Brazil to 65% in Norway. In a
ranking of some 42 countries, Australia came in eighth position just ahead of
India, Switzerland and the USA (see Figure 1 in Zak140). It is possible to
measure other social and economic indicators in the same countries and
determine how these correlate with trust. The data suggest that low aggregate
trust is correlated with low levels of investment and with poverty. Zak also
claims that governments can increase aggregate trust by adopting policies
which promote education, civil liberties and communication and which
decrease income inequality.
This conclusion is supported by a just published, ground-breaking book which
reviews 30 years of research into the adverse effect of income inequality on
almost all social indicators. The title says it all – Spirit Level: Why More Equal
Societies Almost Always Do Better.141 It does not matter if the average per
capita GDP (the de facto measure of well-being in neoclassical economics) is
very low or very high. It is the gap between rich and poor that is important.142
The effect appears to cross cultures because countries as diverse as Indonesia,
Vietnam, Finland and Japan all have better indicators than the UK and USA.
The rich in more equal countries are happier than the more rich in less equal
countries.143 The evidence obliges us to turn the trickle-down-effect on its head
– the rich enjoy a better life by increasing the income of the poor.144
The differences revealed, even between rich market democracies, are striking.
Almost every modern social and environmental problem – poor physical
health, mental illness, lack of community life, violence, drug abuse, obesity,
long working hours, school dropout rates, imprisonment, violence and teenage
pregnancies – is worse in a less equal society.145 As with the Zak study, trust
and cooperation are found to decline with increasing inequality and the authors
suggest that low trust is a critical factor because low trust induces high stress
and high stress leads to many of the other poor outcomes. Ultimately the Spirit
Level is an optimistic book because there is good news – it is easily within the
ability of governments to manage levels of inequality and therefore levels of
trust. Many of the other social problems respond accordingly, without requiring
the expensive remedial programs that attempt to correct the negative effects of
high inequality. To this extent, the early socialists and George Orwell had an
accurate intuition – reducing inequality helps to solve many apparently difficult
social problems.
In the end much of this is common sense, but somehow it has been ignored by
governments around the world bent on promoting the neoliberal agenda. In
particular, it is worth noting the negative consequences of deregulating
markets. Neoliberals claim that regulation warps the efficiency advantages of a
truely free market. However the efficiency of a market is also dependent on
trust among its participants. Deregulation combined with a lack of trader ethics
eventually destroys a market because dishonest behaviour begins to dominate.
This is illustrated by an interesting experiment with a group of chimpanzees. 146
The object was to determine if chimpanzees could learn to trade using money.
Chimps in the wild trade services with one another but not, as in this
experiment, goods for goods with money as an intermediary. The results
demonstrated that the animals could learn to trade using simple tokens as a
currency convertible into snacks – but only as long as a human referee
remained to keep the trading honest. In the absence of human supervision,
trades started going sour because the chimps did not always return tokens
proffered by their peers. “Lack of trust”, trouble communicating and difficulty
with mental scorekeeping were three explanations suggested for the breakdown
in chimp trade. A human parallel that one might draw from this experiment is
that a market can be made to function adequately even if the participants have
poor ethics, as long as it is well regulated. It would be interesting to repeat the

same experiment with bonobos.
Contemporary economic theory places much stress on free market competition
to achieve efficiency. Justification for the role of competition comes from
biological theories of evolution which stress survival of the fittest under
competition. We now know much more about our closest primate cousins and
have discovered that competition is only half the story. Some primates have a
sense of fair play and an innate capacity for cooperative behaviour. The
evidence points to humans also having a genetic and physiological
predisposition to cooperation and, given the will, businesses and governments
can foster that predisposition to promote a cooperative economy. Far from
being weaknesses, trust and cooperation are economic strengths.
The more we understand human cooperation and how to
strengthen cooperation, honesty and trust, the more economically
successful our society becomes.147
The Ethics of Cooperation

The essence of the utopian argument (and of its naivety) is that a better society
can be created without sustained individual and collective effort. It contrasts
starkly with the pessimistic argument currently pervading crisis-ridden
capitalist societies which asserts that, no matter how humans struggle to create
a better society, they will always be brought down by greed and selfishness.
Both arguments are dangerous, the former because it does not accord with
reality, the latter because it engenders hopelessness. Any vision of a
cooperative society must avoid both these traps. Human beings have many
potentialities from crude to subtle, from selfish to altruistic. Social progress
depends on tipping the balance in favour of the subtle and the altruistic. It is
therefore of paramount importance to understand the science behind all these
potentialities and to encourage the subtle and restrain the crude.
We have seen that a cooperative society must be built on trust and empathy
because these are required to sustain cooperative relationships. It is extremely
difficult to establish trust and empathy in a culture which actively encourages
self-interest and large inequalities of wealth. On the other hand, a cooperative
society can be built where there is some rational effort both by individuals to
deal with personal selfishness and by society as a whole to promote social
equality. To the extent that traditional socialists turn their backs on individual
morality and conservatives refuse to acknowledge egalitarian struggle, the
more difficult it becomes to establish a cooperative society. In this section we
deal with ethical struggle and in the next with the egalitarian struggle.
Sarkar promotes two complementary ethical systems, cardinal human values
and Neo-ethics. They are discussed in turn.
Cardinal human principles

Sarkar places much importance on a high standard of morality in individual
and collective life. Cooperative businesses require not just honest directors and
managers but also a state administration that is run by honest public servants
and politicians.148 In other words, morality is the sine qua non of a cooperative
society. A commonly accepted set of moral principles is required but here we
come up against an obstacle. Conservatives are inclined to seek moral guidance
from religious scripture and, in the worst case, impose dogmas which repel the
rational mind. Traditional socialists, not wishing to submit to religious dogma,
tend to reject all moral principles as relative. So what kind of moral code is
required to sustain a cooperative society and how can one promote it? Sarkar
argues for the concept of cardinal human values, values that go beyond any
one culture or religion.
It is interesting to note the emergence of various international courts of law,
driven by a gradual recognition that cardinal human values must take priority
over local culture and custom. True, only the worst violations, such as crimes
against humanity, reach the international courts today and admittedly often for
political reasons, but nevertheless the gradual emergence of an internationally
accepted set of moral values is of tremendous importance. Acts of violence,
deception and theft perpetrated on innocent people cannot be justified in the
national interest. By logical extension to individuals, acts of violence,
deception and theft for personal gain are also morally reprehensible. Most
cultures around the world accept these as moral principles – indeed it is hard to
imagine a sustainable society without them.
Sarkar promotes a set of ten principles that encapsulate cardinal human
values.149 The first three are concerned with the avoidance of violence,
deceitfulness and theft as described above. To act according to cardinal
principles of morality, says Sarkar, is virtue and to act against them is sin. The
central idea in virtue is “to serve the collective interest, to accelerate the speed
of the collective body…” To retard the speed of the collective body is sin.150
Note that the ‘speed of the collective body’ to which Sarkar refers is the
collective movement from crude to subtle encapsulated in his definition of
progress. We must flag this as a critical concept in Sarkar’s philosophy – virtue
and sin, good and bad, are defined by reference to collective social progress
and not in terms of some prevailing religious idea.
The cardinal human principles have five important characteristics: 1) they are a
natural system of morality in the sense that, without them, the natural
developmental sequence of expansion and subtlification of mind cannot occur;
2) they are not ends in themselves but the means to individual and collective
progress; 3) in particular they provide the necessary foundation for a healthy
inner spiritual life; 4) their practice builds trust and therefore the quality of
cooperation in society; and 5) they are egalitarian because they are of benefit to
all – their practice, by definition, excludes group or class interest.
Of the ten principles, one is of particular importance because it encapsulates
the others: non-objectification.151 Objectification is the use of people (or indeed
anything animate and inanimate) as objects for one’s own purposes without
regard for their well-being. It is interesting to note that economic exploitation is
defined in a similar way.152 This principle appears in Neohumanism as the
distinction between utility value and existential value. To recognize the
existential value of a person is to recognize that their joys and sorrows are as
important to them as my joys and sorrows are to me. We may therefore
describe non-objectification as the empathic principle. It requires an ability to
put oneself into the mind of another – to expand one’s consciousness beyond
its limited ego boundary.153
Environmentalism infused with the empathic principle becomes deep
ecology,154 whose significant feature is to acknowledge the existential value of
the natural world in addition to its utility value for humans. Recall also that
social capital is defined in terms of the trust and empathy inherent in social
relationships. It is now clear that the building of social capital has a moral
dimension.155
The practical translation of ethical principles into good social outcomes is
performed by a society’s legal system.156 The law defines crime and the
corresponding punishments. The larger the gap between crime and sin (the
latter defined as that which impedes social progress), the more problems a
society will face. Put another way, social progress depends on reducing the gap
between morality and legality. Of course differences in climate and local
circumstances will require minor differences in the application of the law from
place to place, but the intention of the law should always be to give expression
to cardinal human principles.
If we try to expand the scope of the few fundamental cardinal human
principles and draft the constitution, legal code, administrative and
judicial systems in adjustment with the expanded scope of those cardinal
principles, that will pave the way for the greater unity of human society.
Humanity or Neohumanism will thereby acquire accelerated speed, which
is one of the essential factors for the path of proper movement… This
should not remain a utopian dream. It should be the first expression of the
practical wisdom of humanity.157
Contemporary society offers many examples of a harmful gap between
morality and legality. Consider CEO salaries, concerning which the word
‘obscene’ is used time and again. It was justifiably used to describe the £10.9m
payouts received by Scottish Power’s former chief executive and colleagues
just three months after they warned customers about severe increases in power
bills.158 And in Scotland again, Sir Goodwin, former boss of the Royal Bank of
Scotland, had to have police protection after public anger over the
announcement that he would receive a £650,000 annual pension entitlement on
leaving the bank which had collapsed under his stewardship. CEOs defend
their astronomical incomes as not breaking any law and as justified by ‘market
forces’.
A cardinal human principle relevant to CEO salaries would be contentment.159
To maintain contentment, one must struggle against greed. It requires, says
Sarkar, “being contented with the earnings of normal labour”. How might we
give this principle economic and legal expression? Sarkar’s proposal is to
provide a guaranteed minimum income (GMI) to all, sufficient to cover the
basic requirements of life, and then to set the maximum remuneration at some
fixed ratio to the GMI. This policy is already part of cooperative ethics and has
been practised by cooperative businesses in Mondragon and Maleny for many
years. However, due to the contributory role that excessive CEO salaries
played in precipitating the Global Financial Crisis, the proposal to set a
maximum salary at some ratio to the minimum is finding broader support.160
Another gap between morality and legality in contemporary capitalist society
concerns the waste of material resources. The relevant cardinal principle is
non-acquisitiveness,161 or the avoidance of superfluous material consumption.
Material goods should be acquired only to the extent required for a fruitful life.
Note that this definition implies a legitimacy to consume something beyond
basic needs, in contrast to Marx’s ‘needs slogan’ that limits individual
consumption to the basic requirements.
The justification for placing a moral constraint on material consumption is that
material resources are finite. One person’s inconsiderate use of finite resources
disturbs the welfare of others and upsets environmental balance. From a social
perspective, therefore, this principle offers the moral justification to pursue
economic efficiency. As we have mentioned earlier, those who argue for
productive efficiency do have a valid moral argument. But that same argument
must also extend to efficiency of consumption, the issue which so worries
environmentalists. Profligate consumption of fossil fuels (because capitalism
considers Nature to be free for the taking) has brought planet Earth to a dire
situation. The green slogan, reduce, reuse and recycle has a moral imperative.
Neo-ethics
The cardinal human principles define virtuous conduct for individuals. By
contrast, Neo-ethics162 is more concerned with the ethics of groups, that is,
social groupings whose identity is defined by race, language, gender, economic
class and so on. Neo-ethics is not an alternative to the cardinal human
principles – the two are complementary. As the name implies, Neo-ethics is the
ethics associated with Neohumanism.
Recall that the purpose of Neohumanism is to expand the circle of those who
are included in the cooperative embrace. The existence of a circle, however,
implies two groups, those on the inside and those on the outside. Within the
circle there is cooperation and outside the circle is the other, those with whom
there is not necessarily felt a need or even a willingness to cooperate. Groups
are inevitable in society and they cannot simply be wished away. The problem
to be addressed by Neo-ethics is the pathological tendency for some groups to
coalesce around the desire to exercise power over the ‘other’.
Sarkar labels this problem imperialism, a term he uses quite generally to refer
to the endeavour of any group to wield power over another. The imperialist
urge is a psychic ailment “rooted deep in the human psyche”.
Goaded by this psychic ailment, a superpower forces its own selfish
national interests on other weaker states to establish its suzerainty
politically, militarily, etc. An imperialist power wants to dominate and
exploit other socio-politico-economic units as an expansion, perpetration
and consolidation of its vested interests; a powerful linguistic group
suppresses other minority linguistic groups; the so-called upper castes
subjugate the so-called lower castes in society; and opportunistic males
curtail the rights of women in various ways. In all these cases, the same
inherent psychological malady of imperialism prevails.163
Whether expressed as capitalism, nationalism, caste-imperialism, male
chauvinism or lingualism, imperialism is anti-human. “It runs counter to the
spirit of Neohumanism and the ethics of human life… it thwarts human
progress and creates global wars and all sorts of divisive and destructive forces
in society.” Imperialists “cultivate a psychology based on slavery, inferiority
complex, pseudo-culture and psycho-economic exploitation”.164
Concerning the problem of imperialism, socialists in the 19th century, both
utopian and scientific, were quite naive. They appeared to believe that the
imposition of material and social equality would somehow obliterate groups
and therefore obliterate the group psychology giving rise to imperialism. But
the imperialist impulse runs deep. George Orwell, in Animal Farm, identified it
as the source of what went wrong with the socialist revolution but, as we have
previously noted, he apparently still believed in the healing power of an
imposed material and social egalitarianism.
An appropriate concentration of political power in society is required for stable
governance – nowhere does Sarkar give the anarchist agenda any credence.
Furthermore, individuals and groups will differ naturally in their social
influence, quite apart from any power granted to them by a democratic process.
We may view power as a neutral instrument which can be used for good
purposes or bad. The question is whether power necessarily corrupts those on
whom it is endowed and, if so, what can be done about it. Sarkar recognizes the
seriousness of the problem and approaches it from two sides. On the external or
objective side he advocates, among other things, the separation of powers and
the checks and balances that have gradually developed in Western

democracies.165 But external checks and balances are not enough – something
is required on the internal or subjective side.
We have already noted that the natural sequence of human development gives
rise to increasing intellectual subtlety, empathy and moral intuition. This
constitutes the starting point for Prout’s understanding of individual and
collective progress. Unfortunately, for many different reasons, the
developmental sequence is sometimes frustrated, in which case some
intervention is required to remove the impediment and to encourage healthy
development to resume. Sarkar views the imperialist tendency as a psychic
ailment, that is, as a failure to develop to maturity. It arises when a person or
group fails to maintain a healthy balance in life, that is, fails to maintain a
balance between their outer (material) and inner (spiritual) lives, or to use
Sarkar’s unusual terminology, to maintain a balance between the carbonic and
non-carbonic pabula required to sustain those lives.
When people get detached from non-carbonic pabula and become
increasingly engrossed in carbonic pabula, there are two ill-effects as a
consequence. First, the arena of one’s own carbonic pabula will increase
and the mind will gradually and steadily drift towards crude matter.
Secondly, one’s mind will think in terms of devouring other’s carbonic
pabula. This is the psychological explanation of imperialism. That is,
imperialism has its origin in the psyche and functions in the psychic
arena.166
This passage addresses the internal or subjective side of the problem of power.
To protect against the corrupting influence of power it is important to remain
‘attached’ to one’s inner spiritual life. The lust for power grows in intensity
when one fails to maintain a healthy spiritual life. This idea is pivotal in
Sarkar’s social philosophy but it is very difficult for Westerners to understand
because Western culture is predominantly materialistic – we have little
understanding of the tremendous social importance of a healthy spiritual life.
Social dynamism is the resultant of a myriad of social forces, some of them
noble, some ignoble, some magnanimous, some selfish and so on. Just as in
individual life, so too in society, there is a never ending struggle between
progressive and degenerating influences. Sometimes the former are
predominant, sometimes the latter. In the worst case, degenerating forces
dominate to such an extent that they ultimately lead to the complete destruction
of a society. The rise and fall of various fascist regimes in the 20th century are
obvious examples.
Fortunately, many steps can be taken to tip the balance of social dynamism in
favour of progress. One of them, says Sarkar, is to promote the conscious
acceptance of the two principles of Neo-ethics. The first states that spirituality,
being that which promotes all human virtue and subtle consciousness and
therefore ultimately drives all social progress, “must be accepted as the
supreme desideratum in human life”. The second principle concerns

maintaining balance in life. “There should be happy adjustment and balanced
blending between carbonic and non-carbonic pabula.”
It must be emphasized that in Sarkar’s view spirituality is not something
imposed or unnatural. It is certainly not religiosity. Rather it is an attribute
latent in all human beings and its expression is to be encouraged because it
promotes all that is noble, charming and impressive about the human species.
Hence the first principle – without the conscious acceptance of the importance
of spirituality in individual and collective life, social progress becomes
uncertain, hesitant and difficult to sustain. Leaders fall prey to their cruder
ambitions and a blind populous follows to their ultimate destruction. In order to
accommodate social progress, a second principle becomes necessary. Progress
requires that the structure of society, including its economic structure, be
continually adjusted. If we understand an economy as producing the many
kinds of pabula required for human health and fulfilment, progress requires a
gradual shift in emphasis from producing carbonic pabula to producing more
and more subtle non-carbonic pabula. Sarkar describes that part of an economy
producing non-carbonic pabula as the psycho-economy. Its role is to find new
and creative solutions to economic problems so as to encourage the maximum
utilization of psychic and spiritual potentialities.167
We live in an era where human intellect and aspirations have attained some
degree of subtlety, but the most powerful of our political and economic
institutions are still mired in the dysfunctional materialism of previous
centuries. The choice is rather stark – imperialism or cooperation – but there is
a choice nonetheless.
Given the human proclivity for abuse of power and the tremendous impact that
this disturbing facet of the human character has had in history generally and in
the history of the cooperative movement and of failed socialist endeavours, it
deserves investigation from as many perspectives as possible, the political, but
also including the psychological and the spiritual.168
The biopsychology of ethics

Since the acceptance of ethical principles is essential to sustain a cooperative
society, it is clear that training in ethical decision making cannot be left to
chance. It is encouraging to find that courses on business ethics are now
multiplying in universities around the world, but something more than reading
books on the subject is required. Soldiers cannot learn to fight from books
alone and the same applies to those wishing to acquire ethical muscle. The
learning of ethics requires exposure to real moral dilemmas because, as recent
research has revealed, much more than the logical brain is involved.
Brain scans have opened a huge field of research into what parts of the brain
are involved during different kinds of activity. In one recent study,169 neuro-
scientists wanted to discover those parts of the brain associated with different
states of mind such as empathy, compassion, altruism, emotional stability, self-
understanding and pro-social attitudes. They found that pondering a situation
calling for altruism or compassion activated a brain region known as the medial
prefrontal cortex. However, moral decision making involved the joint activity
of several distinct parts of the brain – the medial prefrontal cortex just
mentioned (sometimes described as the social-empathic cortex), the rational
cortex (dorso-lateral prefrontal) which plays a role in sustaining attention and
working memory, the conflict detection cortex (“sixth sense” anterior
cingulated) and the limbic system (a part of the brain usually associated with
primitive emotions, such as sex, fear and anger). The authors concluded that
the neuro-biology of wisdom may involve an optimal balance between the
more primitive brain regions and the newest ones. For those teaching ethics in
MBA courses, the conclusion is clear. If the goal is to help students acquire
ethical muscle, they will need to be exposed to situations which exercise all
these different parts of the brain at the same time.
It turns out that all decision making involves the emotional parts of our brain.
Even decisions which are not apparently emotionally or morally charged still
engage parts of the brain associated with emotion. Far from being opposites,
emotion and rationality are interdependent. Neuro-physiologist Antonio
Damasio170 has shown that people who lose the ability to perceive or
experience emotions as a result of a brain injury also find it hard, if not
impossible, to make decisions.
Another important finding, this time by cognitive psychologists,171 is that
intuitive judgements of right and wrong operate quite independently of
religious affiliation. Atheists are just as ethical and have just as strong a moral
compass as persons with religious beliefs. Harvard psychologist Marc Hauser
says that his investigations, designed to test the kinds of moral decisions made
by people from different cultures and backgrounds, lead him to believe that
there might be something like a universal moral grammar, a set of principles
that every human is born with regardless of culture. It is a tool kit in some
sense for building possible moral systems. The analogy here is to Noam
Chomsky’s idea of a universal grammar, a basic linguistic tool kit that
underlies all the languages of the world, but which nevertheless permits much
variation in lexicon and grammar. Likewise, Hauser says, there is a suite of
universal (innate) principles that strongly influence how all humans think about
the nature of harming and helping others, but each culture has some freedom,
within constraints, to determine how those principles are expressed. Although
in many cultures religious beliefs have become the standard way to
conceptualize or articulate moral intuitions, religious conviction is not the
origin of those intuitions.
Hauser takes an evolutionary point of view and views the selective advantage
of a universal moral grammar within our brains as a mechanism that facilitates
making rapid decisions when confronted with ethical dilemmas. Part of the
substrate for a universal grammar must surely be the proclivity for cooperation,
altruism and empathy that also appears to have evolved with the human species
and that is demonstrated even in infants as young as 15-24 months.172 From
this perspective cooperation and ethics cannot be disentangled; they are simply
two different views on the same facet of the human character. They are both
supported by the same biological mechanisms which, according to evolutionary
anthropologist Michael Tomasello, have:
…very likely supported humans’ earliest forms of complex collaboration
and, ultimately, our unique forms of cultural organization, from the
evolution of tolerance and trust to the creation of such group-level
structures as cultural norms and institutions.173
Egalitarianism
Recall the assertion (possibly the most important made in this essay) that a
cooperative society can be built where there is some reasonable effort to do so.
That effort involves two parts, the first of which was discussed in the previous
section, the personal struggle with ethics. We now turn to the collective
struggle to establish a cooperative society, where the focus is on egalitarianism.
We have noted the communist attempt to impose material equality and found it
to be a disastrous failure. However, we have also reviewed some of the
accumulating evidence that more equal societies perform better on virtually all
social indicators than less equal societies. Even the rich are happier. People
appear to be deeply sensitive, even subconsciously so, to differences in social
status and relationships. The greater the differences, the more tension people
experience. The increased trust, cooperation and well-being that accompany
greater equality are associated with a reduction in social stress.
The balance of equality

So the question arises – if 100% equality is both impossible and undesirable,
and yet equal societies are happier, what should be the balance of
equality/inequality? Those on the left and right of politics take different
positions on this question because they attach different values to the
achievement of equality over other goals, such as productive efficiency. We
have suggested that there is a legitimate policy debate here because both
equality and efficiency have a moral dimension. The moral requirement for
productive efficiency places a legitimate constraint on the virtue of income
equality. If talent and hard work are not rewarded, both productivity and
cooperation suffer.
The Proutist solution has two components: first, to divide the Gross Domestic
Product into two parts, one part to guarantee the minimum requirements of life
to all and the other to reward effort and talent; and second, to set the maximum
income as a fixed ratio to the minimum income. As a community accumulates

more wealth, the quantity and quality of the minimum requirements can be
increased.
The commitment to egalitarianism in this incomes policy is evident in three
respects. First is the commitment to provide the minimum requirements to all
(humans, animals and plants). This corresponds to Marx’s dictum – to each
according to need. Second is the commitment to increase purchasing capacity
by increasing the quality and availability of the minimum requirements:
…increasing the purchasing capacity of each individual is the controlling
factor in a Proutist economy. The purchasing capacity of common people
in many undeveloped, developing and developed countries has been
neglected; hence the economic systems of these countries are breaking
down and creating a worldwide crisis.
The first thing that must be done to increase the purchasing capacity of
the common people is to maximize the production of essential
commodities, not the production of luxury goods. This will restore parity
between production and consumption and ensure that the minimum
requirements are supplied to all.174
Third is the commitment to reduce income inequality by gradually reducing the
gap between the maximum and the minimum income.
After the needs of all have been met, Sarkar proposes to reward those who
have demonstrated talent and effort. Fairness and the desirability to maintain
productivity justify such an approach.
The concept of equal distribution is a utopian idea. It is merely a clever
slogan to deceive simple, unwary people. Prout rejects this concept and
advocates the maximum utilization and rational distribution of resources.
This will provide incentives to increase production.175
Rewarding talent and effort can be interpreted as the meritocratic component
of Prout because, quite obviously, those so rewarded will rise in social
position. Many socialists oppose the meritocratic concept because, as the word
implies, it can lead to the entrenchment of a class that monopolizes access to
merit, thereby perpetuating its own power and privilege. Sarkar is clear that the
necessity to reward talent should not be at the expense of needs (however they
are defined in any particular age) and he also advocates checks and balances on
public power. But the positive outcomes are too obvious to ignore: work
satisfaction, work place efficiency, the possibility for self-improvement and so
on. The productivity increase so achieved creates more wealth which can be
used to increase the standard of ‘needs’. However the egalitarian versus
meritocratic impulses are always likely to be in political conflict – to hope
otherwise is to hope for the discredited socialist utopia. Rather than ignore or
suppress the associated political tensions, it is sensible to recognize them and
provide a forum in which they can be expressed constructively.
Ultimately the degree of egalitarianism in a particular community and the rate

at which egalitarian indicators can be increased is a matter of culture and
collective social consciousness. These do not change easily, which is why the
sudden imposition of equality will always fail if culture cannot sustain it.
The egalitarian principle in Neohumanism is referred to as the Principle of
Social Equality. It is a social mentality as much as an economic state. And
significantly it is defined in terms of needs:
It is the realization that all the creatures which have come to live in this
world, do not want to leave it – they all want to survive. Thus we must
grant them their right to remain in this world, their right to survive. We
must continue to fulfil all their needs so that they will not have to leave
this world prematurely. We must make arrangements for the food,
clothes, education, shelter and medical treatment of each and every
individual, so that all can live in this world as long as possible, and
become assets to the earth.176
In the context of Neohumanism, creatures is a reference to humans, animals
and plants. Those who wish to create a better society, says Sarkar, will have to
“stage a fight against all crude forces, a pauseless struggle against inequality
and cowardliness”. He then adds curiously that “complete one hundred percent
equality is an impossibility”, so for those wishing to create a better society,
“Where is the opportunity for them to have rest?”177 This is the way of the
world – we must struggle for social equality while recognizing that complete
equality is impossible due to the relentless dynamism of nature.
Coordinated cooperation
Sarkar makes a distinction between ordinary cooperation, coordinated
cooperation and subordinated cooperation. He opposes subordinated
cooperation and wants to promote coordinated cooperation:
…for the maintenance of any organism, there must be a close cooperation
between each of its component parts. Humanity is not inert, and the
relationships between human beings depend on more than mere
cooperation. This cooperation instead of being based on a master-servant
relationship, must be constructed in a warmly cordial atmosphere of free
human beings. It should be a coordinated cooperation and not a
subordinated one.178
The features of coordinated cooperation that distinguish it from ordinary or
“mere” cooperation are: 1) coordinated cooperation “must be constructed”, that
is, it is intentional; 2) the affect is positive for all concerned because part of the
process is to create “a warmly cordial atmosphere”; and 3) coordinated
cooperation must be voluntary, which is one of the internationally accepted
principles of cooperation.
Although the distinction between coordinated and subordinated cooperation is

quite general, Sarkar uses it most often in relation to the position of women in
society:
In the annals of human history we do find women whose memory
glorifies not only womanhood, but the entire human world. In philosophy
and spirituality, social reform and educational pursuits, science and
technology, they stand second to none. Women are found discussing the
riddles of philosophy, solving problems of social and educational reform,
and are inspiring men in times of struggle. They have their potentiality no
less than men. The difference in natural and biological characteristics
between men and women speaks only of coordinated cooperation, not of
subordinated cooperation.179
The progress of society is impossible when women are in a subjugated or
subordinated position. Sarkar cites his own country as an example.
Take the case of India. We are not as developed as we should be. Why?
One of the reasons is that we have kept women confined within the walls
of their homes, resulting in the progress of only fifty percent of the
population – the males. And as only the men are progressing, they will
have to carry the load of fifty percent of the population. Thus the speed of
progress is reduced. Ideally, women should also move with their own
strength and with the same speed as their male counterparts. In the
process of movement, if they feel pain in their legs, if they fall on their
faces, they should be physically lifted up. But not only women may need
assistance: the males may also fall down, and then it will be the duty of
women to extend their helping hand to carry the load of their male
counterparts. We cannot expect that, in relation to men, the position of
women will remain one of subordinated cooperation: it may also be one
of coordinated cooperation. The position of males may even be one of
subordinated cooperation. Nothing can be said emphatically in this world.
The fact is that we must move together in unison with all.180
There are two points to note from this passage. First is the clear hint that, while
the preferred future is coordinated cooperation, men could well find themselves
in the subordinated position. There are surely enough clues in the changing
dynamics of contemporary society to suggest this possibility. According to the
UK trend forecaster Future Laboratory, “the future of business is feminine”. In
the wake of the Global Financial Crisis, even in the high powered world of
global finance, women are now more sought after because they are more
inclined to be team players and less inclined to take testosterone-fuelled
risks.181
A second observation is that Sarkar never advocates the obliteration of “natural
and biological” differences between groups as the solution to antagonisms
between them. In order to bring an end to patriarchy, one might propose three
possibilities: matriarchy, coordinated cooperation or androgyny. The first of
these is a distinct possibility; the second is to be preferred but what about the
third? Androgyny could be understood as the attempt to stop gender

exploitation by diminishing the physical and psychological differences between
men and women. Sarkar never appears to favour this strategy. His approach to
class antagonisms, for example, is not to impose material equality (communist
states tried this and failed) but to allow class dynamics to unfold progressively
while remaining vigilant against the tendency for one class to exploit the
others.182 More generally, the dynamics that arise from the interaction of the
many different groups in society should be allowed to play out naturally.
Differences naturally endowed can be used to help one another. Service
psychology underpins Sarkar’s approach to coordinated cooperation.
Political leanings
Those who believe that the left-right polarization of traditional politics will
find no place to draw energy in a cooperative society presumably believe that
policy debates with egalitarian implications, for example, concerning income
ratios and minimum requirements, will be resolved by rational argument.
However, the evidence suggests that the psychological factors which incline a
person to favour a more conservative versus a more egalitarian position on
such issues are not going to disappear even in a more cooperative society.
Recent research has shown that where a person is positioned on the political
spectrum has physiological and genetic correlates. According to a U.S. study
published in Science,183 political views are an integral part of ones physiology.
Forty-six volunteers were asked about their views on a range of political issues
before measuring their physiological responses (interpreted as levels of fear) to
a range of non-political stimuli, for example, sudden loud noises and
frightening images (including pictures of a man with a large spider on his face
and an open wound with maggots). “Those individuals with measurably lower
physical sensitivities to sudden noises and threatening visual images were more
likely to support foreign aid, liberal immigration policies, pacifism and gun
control, whereas individuals displaying measurably higher physiological
reactions to those same stimuli were more likely to favour defence spending,
capital punishment, patriotism and the Iraq War.” The researchers concluded
that “the degree to which individuals are physiologically responsive to threat
appears to indicate the degree to which they advocate policies that protect the
existing social structure from both external (outgroup) and internal (norm-
violator) threats”.
A number of studies184 suggest that political orientation has a genetic
component. A study of 30,000 twins from Virginia, USA, found that identical
twins are more likely than non-identical twins to give the same answers to
political questions. The explanation appears to lie in other independent studies
which show that some personality traits are highly heritable and that political
leaning depends on those traits. For example, conscientiousness, openness,
extroversion, agreeableness and neuroticism are all accepted as basic
components of personality and they are all known to be highly heritable. The
first three are correlated with political persuasion. Republican voters in the
USA score more highly on conscientiousness but Democrat voters score more
highly on openness and extroversion.
There is much irony here for socialists, for they strongly support policies that
stress the importance of nurture and yet their policy preferences (so the
evidence suggests) betray an influence of nature.
From a Darwinian perspective, the health of a species depends on the existence
of ‘hidden’ genetic variability within its populations. A genetically determined
trait may be advantageous in one environment but not in another. The success
of any species depends on maintaining diverse genetic resources. We may
assume that the diversity of human personalities (and the consequent diversity
of political views) serves an important purpose for human society as a whole
but it also means that debates about egalitarianism run deep and will be with us
for a long time to come.
The Future of Cooperation – Psycho-economics

Contemporary economics is divided into two disciplines: microeconomics and
macroeconomics. Sarkar proposes dividing economics into four disciplines:
people’s economics, general economics, commercial economics and psycho-
economics. Contemporary economics is primarily devoted to commercial
interests. People’s economics, by contrast, is concerned with the provision of
the minimum requirements of life using local resources, and psycho-economics
is concerned with satisfying subtler human aspirations.
People’s economy will be the main concern of undeveloped and
developing countries, but psycho-economy will gain increasing
importance in the future once the problems of subsistence are gradually
solved. Psycho-economy will be of major importance in a highly
developed and mechanized economy where people may only work a few
hours a week and have much spare time.185
Sarkar divides psycho-economy into two branches. The first investigates the
psychology, behaviours and institutional arrangements which make people
more susceptible to economic exploitation. “The first and foremost duty of
psycho-economics is to wage a tireless fight against all degenerating and
dehumanizing economic trends in society.” The second branch of psycho-
economy hints at the subsequent development of neuro-economics and beyond.
This branch is virtually unknown today, but it will become an extremely
important branch of economics in the future. It will ensure equilibrium
and equipoise in all levels of the economy. It will find new and creative
solutions to economic problems to nurture the maximum utilization of
psychic and spiritual potentialities. Psycho-economics will add to the
glaring glamour of economics.186
Psycho-economics will surely develop in directions that we cannot yet

imagine, but it nevertheless has practical relevance in today’s world. In
developed economies (by definition, those which can provide the minimum
requirements of life to all), its most obvious expression will be cultivation of
the fine arts187 – not just to provide entertainment but to engage the individual
and collective minds with more subtle feelings and thoughts. If building a
cooperative society requires a constant struggle against individual selfishness
and narrow social dogmas, the fine arts provide us with the inspiration to make
that struggle because they can take one beyond limited ego and personal
concerns. The fine arts have the potential to engender feelings of love, awe and
respect for all the different peoples and living things in this world. They
overcome barriers and build bridges of affection.
The entire aesthetics is the only charming entity in human life. Had there
been no aesthetics, human life would have been just like a desert. A slight
touch of aesthetics in this anxiety-ridden life of human beings is just like
an oasis in a desert. Art, architecture, literature, music – everything had
its origin, had its starting point – where? Just at the common point of
aesthetics and mystics.188
Earlier it was noted that the struggle to create an egalitarian society can
succeed only as fast as culture and collective social consciousness are prepared
to accommodate it. We now go a step further and argue that education and the
fine arts provide the keys to changing culture and in combination they are the
most powerful force for social improvement. As an example we can turn to the
success of El Sistema, Venezuela’s 32-year-old program of social action
through music. This program has been so successful that it is now being
emulated around the world. It is estimated that a million Venezuelan children
have participated in El Sistema and currently a quarter of a million Venezuelan
teenagers and children, most from impoverished backgrounds, are being filled
with an “affluence of the spirit”189 through the intensive study of music and
participation in orchestras, choirs and ensembles. The goal of the program is to
help disadvantaged children become fully participating members of society.
The rationale is that the many skills required to play in an orchestra or sing in a
choir can be translated to the wider social setting.
When you work in the kind of ensemble musical activity that El Sistema
fosters, you are essentially developing into a social being, a cooperative
being, a non-violent being, someone who has the empathy to want to
reach out and help others…190
Jose Antonio Abreu, founder of El Sistema, was asked why he made the
unlikely choice of music for disadvantaged children rather than the more
obvious choice of sports, especially soccer. Abreu acknowledged that sport has
the virtue of being invigorating, motivating and promoting physical health. But
disadvantaged youths have had the message drummed into them throughout
their lives, “You are a loser.” The problem with competitive sports is that 50
percent or more of them will continue to get the message reinforced, “You are
a loser.”
This is one problem that we do not encounter with playing in a symphony
orchestra because a symphony orchestra is a rare and unique
organization, whose only purpose and only reason for being is to be in
agreement with itself. We are a community and we all win simply by
participating in it.191
A note of caution is probably in order here. The fine arts are essential for
human well-being but they do not promise utopia. Hitler and Stalin attempted
to co-opt artists and musicians in the service of their tyranny. Those who did
not succumb were killed or sent to prison camps. The American music critic
Alex Ross has described “the awful warping effect that happened, in classical
music in particular” as a result of the engagement of Nazi Germany with the
fine arts. “You can see the danger of artists becoming too involved with
politics and being too impressed with politicians who take an interest in art.”192
The message is clear. Politicians must not be allowed to use the arts for their
own ends and yet it is their duty to create a social and economic environment
in which the arts can flourish. The vindication of this approach can be seen in
the El Sistema project.
I would love to be able to say that the problems of gang violence and
poverty [in Venezuela] have gone away completely but what I can say
[about Abreu’s system] is that over the years, with a million children
having gone through this system, those who have experienced it are
among the most brilliant, poised, self-assured, curious, engaged young
leaders of the future that I have ever met. I think that is about as good a
sign of a system that works and frees people from the shackles that they
were… born into and might have been fettered with for the rest of their
lives, as any could possibly be.193
Conclusion
A healthy human society can only be founded on a social theory that
recognizes humans as multidimensional beings, that is, as having metaphysical
and spiritual aspirations in addition to their physical aspirations. Given the
history of utopian visions gone wrong, it is important to guard against naivety –
a cooperative society will not be established without struggle and without a
commitment to cardinal human values and Neo-ethics. Human beings are both
selfish and cooperative – our struggle is to encourage the latter in as many
ways as possible and to control the former in as many ways as possible.
Cooperation must not be allowed to become another dogma. Coordinated
cooperation will require a good scientific understanding of the physiological,
psychological and environmental factors which encourage cooperation and
those which do not. The research to date offers good grounds for optimism.
Human beings have a strong genetic and physiological foundation on which to
build a better society and there is every reason to suppose that a cooperative
society can be built given any reasonable effort in that direction.
We conclude with Sarkar’s definition of society because it encapsulates many
of the ideas developed in this article.
The concerted effort to bridge the gap between the first expression of
morality and establishment in universal humanism is called “social
progress”. And the collective body of those who are engaged in the
concerted effort to conquer this gap, I call “society”.194
The phrase “first expression of morality” clearly implies the emergence of a
natural system of morality, certainly not one that was imposed from the
outside. We might speculate that this occurred sometime in the late Palaeolithic
(Old Stone Age) or early Neolithic (New Stone Age) when there is clear
evidence for aesthetic expression and burial of the dead with artefacts.
Aesthetics and ethics are closely linked in the Eastern understanding of
developmental psychology.195
The term universal humanism is clearly an anticipation of Neohumanism (the
above definition dates back to 1957). A society established in Neohumanism
would accept Neo-ethics as its moral compass and would enjoy a degree of
egalitarianism such that remaining class and group differences would not
provoke disruptive social antagonisms. We cannot reasonably expect such a
society to be achieved anytime in the near future, but without the vision, it is
not possible to take steps in that direction.
Acknowledgements
The author wishes to acknowledge Jake Karlyle, Ivana Milojevic, Sohail
Inayatullah, Marcus Bussey and Firdaus Ghista for helpful feedback during the
various drafts of this article.
About the Author

Michael Towsey studied biology at Auckland University (New Zealand) in the
late 1960s and later obtained his PhD in computer science from Queensland
University. For most of his career Michael has been a research scientist. He
started in the field of plant physiology, moved to crop physiology and after
obtaining his PhD turned to biological applications of machine learning.
Michael is a founding member and associate of Prout College. In relaxed
mode, he plays in two recorder ensembles and potters around in a community
garden.
References
Davies, Geoff. Economia: New economic systems to empower people and support the living
world. (EC) ABC Books, First Edition, 2004. ISBN 0 7333 1298 5.
Russell, Bertrand. History of Western Philosophy, (HWP) Unwin University Books, New
Edition, 1961.
Sarkar, P. R., Prout in a Nutshell, Parts 1-21 (PN1, PN2, etc.) AM Publications; Parts 1-12,
First Edition, 1987; Parts 13-15, First Edition, 1988; Parts 14-21, First Edition, 1991.
(Note: Prout in a Nutshell contains all of P. R. Sarkar’s discourses on Prout.)
Sarkar, P. R., Proutist Economics – Discourses on Economic Liberation (PE). AM
Publications, First Edition, 1992. ISBN 81-7252-002-6. (Note: Proutist Economics contains
all the author’s discourses on economics, which are also contained in Prout in a Nutshell.)
Sarkar, P. R., Human Society, Part 1 (HS1). AM Publications, Fourth English Edition, 1998.
Part 1 was dictated in Bengali in 1957. First Bengali Edition, 1959. First English Edition,
1962. (Note: All the chapters in this book are also published in Prout in a Nutshell.)
Sarkar, P. R., Human Society, Part 2 (HS2) AM Publications. Fourth English Edition, 1998.
Dictated 1967, First Bengali Edition, 1967. First English Edition, 1967. (Note: All the
chapters in this book are also published in Prout in a Nutshell.)
Sarkar, P. R., Human Society (HS). AM Publications, Second English Edition, 1999. First
English Edition, 1987. (Note: Human Society is the one volume book containing both
Human Society, Part 1, and Human Society, Part 2.)
Sarkar, P. R., Problems of the Day (POD). AM Publications, Fourth English Edition, 1993.
The discourse was originally given in Bengali, 26 January 1958, Bhagalpur. First published
in both Bengali and English, 1959. (Note: This discourse is also published in Prout in a
Nutshell.)
Sarkar, P. R., Idea and Ideology (I&I). AM Publications, Seventh English Edition, 1993. First
English Edition, 1959. Originally dictated in English, 1959. (Note: The last two chapters of
this book, which deal with Prout, are also published in Prout in a Nutshell.)
Sarkar, P. R., Discourses on Prout (DOP). AM Publications, First English Edition, 1993. This
book is a series of six discourses given in English at the First Conference of Proutists, 17-
22 October, 1959. (Note: These discourses are also contained in Prout in a Nutshell.)
Sarkar, P. R., The Electronic Edition of the Works of P. R. Sarkar (ElEdit). AM Publications,
Version 7.0, 2006. (Note: All the discourses and books by P. R. Sarkar included in the
above reference list are also available in this electronic edition. ElEdit Version 7.0 contains
the most recent translations available of all Sarkar’s discourses and books.
Stretton, Hugh. Economics – A New Introduction. (ENI) Pluto Press: London, 1999.
Note: In the following endnotes, a space may have been inserted into some URLs in order to
facilitate formatting. If a URL does not work, check for the insertion of a gap.
Endnotes
1
Prout (the Progressive Utilization Theory) is the socio-economic theory developed by the
Indian philosopher, Prabhat Ranjan Sarkar (1921-1990).
2
Sarkar, P. R. “Cooperatives” (PE), p 128. For a more general introduction to Prout read, After
Capitalism – Prout’s Vision for a New World by Ac. Maheshvarananda Avt., Proutist
Universal Publications, ISBN: 1-877762-06-7, First Edition 2003.
3
Sarkar, P. R. “Shudra Revolution and Sadvipra Society”, (HS2).
4
Towsey, Michael. “The Three-Tier Enterprise System”, in Understanding Prout – Essays on
Sustainability and Transformation, Volume 1, Proutist Universal Australia, 2009.
5
Bihari, Pranav. What factors led to the emergence and early growth of the British co-
operative movement in the 19th century? Unpublished master’s thesis, 2009, London
School of Economics and Political Science, UK. http://pranavbihari.wordpress.com/
6
Engels, Fredrick. Socialism: Utopian and Scientific, Marx/Engels Selected Works, Volume 3,
pp 95-151, Progress Publishers, 1970. First published 1880. Download Version:
Marx/Engels Internet Archive, http://www.marxists.org/archive/marx/works/index.htm.
7
Russell (HWP) p 747.
8
The International Cooperative Alliance. ICA Membership Statistics. 2007, retrieved 5 August
2008 from http://www.ica.coop/members/member-stats.html. The ICA defines cooperatives
as “collectively owned and democratically controlled economic enterprises”.
9
Many of Australia’s most successful cooperatives in the agricultural sector have fallen prey to
large corporations seeking to privatize capital that was accumulated cooperatively. The
push to demutualize cooperatives has succeeded for at least two reasons: 1) large
cooperatives were finding it difficult to obtain finance from private financial institutions to
expand their operations, and 2) the shareholders/owners of cooperatives, many of them
farmers, had forgotten why their cooperatives had been formed in the first place and the
advantages of them.
10
A friendly or mutual society is a mutual association for insurance, pensions, savings and
loan-like purposes. Many still exist today. http://en.wikipedia.org/wiki/Friendly_societies
11
The word communism can be used in two senses. As used by Marxist socialists, it refers to
the ideal classless society expected to be formed after the overthrow of capitalism and an
intermediate period of socialism. Its second more common use refers to those states, such
as the USSR and China, which attempted to implement the Marxist social agenda. This
essay uses the term in the second sense. We use the phrase classless society to refer to the
more formal notion of a communist society.
12
The difference between a social enterprise and a cooperative is partly one of definition. Yet
the difference may be important. A cooperative has a distinct legal structure that defines the
shared ownership of assets and a more democratic management structure. Social
enterprises, on the other hand, according to the Wikipedia entry under that heading, are
“social mission driven organizations which trade in goods or services for a social
purpose… It could be that the profit (or surplus) from the business is used to support social
aims (whether or not related to the activity of the business, as in a charity shop), or that the
business itself accomplishes the social aim through its operation, for instance by employing
disadvantaged people (social firms) or lending to businesses that have difficulty in securing
investment from mainstream lenders.” Missing from this definition are explicit statements
concerning the ownership of capital, amount of surplus returned to workers and
management style.
13
Pearce, John. Social Enterprise in Anytown. Calouste Gulbenkian Foundation, 2003.
14
The English philosopher Thomas Hobbes (1588-1679) argued in a famous treatise,
Leviathan, that all ‘men’ are equal in nature, but by nature they desire their own liberty and
to acquire dominion over others. From these impulses arises a war of all against all, which
makes life “nasty, brutish and short”. Unlike bees and ants, human beings cannot cooperate
because their nature is to compete. Strong centralized government alone can prevent the
brutishness of life from overwhelming society.
15
Cole, George D. H. A Century of Cooperation, George Allen and Unwin Ltd. for The
Cooperative Union Ltd. First Edition, 1944. Downloadable from: http://www.archive.org/
stream/centuryofcoopera035522mbp/centuryofcoopera035522mbp_djvu.txt. Cole is a noted
historian of the cooperative and socialist movements in Britain from the 18th century
through to the early 20th century. See also Cole, A History of Socialist Thought, 7 Volumes.
The Wikipedia entry http://en.wikipedia.org/wiki/G._D._H._Cole offers a complete list of
Cole’s works.
16
The opening paragraph of A Century of Cooperation (Cole, ibid) offers a deeply-felt
introduction to the times: “The decade in which the Pioneers of Rochdale founded their
Cooperative Store is known to historians as ‘The Hungry Forties’. It deserves the name, not
only on account of the devastating famines which swept Ireland when the potato harvests
failed, but hardly less for the sufferings experienced by the working classes in Great
Britain. The great enlargement of the powers of production which followed upon the new
inventions in the textile industries and on the application of steam-power to manufacture
and transport ought, had it been rightly used, to have added largely to the wealth and
prosperity of the entire people: in fact, it inflicted upon them monstrous hardships which
still arouse bitter indignation when one looks back upon them from the vantage point of
today. One sees a hard generation of employers grinding the faces of the poor, and even
making a merit of so doing, with the support of the orthodox economics of the day and of
an other-worldly religion which taught that the ‘deserving poor’ would be richly
compensated for their sufferings in this world by their blessings in the next.”
17
The first consumer cooperative may have been founded on 14 March 1761, in a cottage in
Fenwick, East Ayrshire, when local weavers manhandled a sack of oatmeal into John
Walker’s front room and began selling the contents at a discount, forming the Fenwick
Weavers’ Society. George Cole (ibid) claims that the originators of the cooperative
business were “workmen employed by the government in the dockyards of Woolwich and
Chatham, who, as early as 1760, had founded corn mills on a Cooperative basis as a move
against the high prices charged by the corn-millers who held the local monopoly. These
early Societies speedily found themselves in conflict with the private bakers as well as with
the millers; and when, in 1760, the Woolwich Mill was burnt down, the local bakers were
accused of arson, a charge which they rebutted in a statement sworn before the Mayor. To
this burning we owe our knowledge of this early Cooperative mill, and also of the mill at
Chatham…”
18
For example, Lockhurst Lane Industrial Cooperative Society (founded in 1832 and now
Heart of England Cooperative Society), and Galashiels and Hawick Cooperative Societies
(1839 or earlier, now Lothian, Borders and Angus Cooperative Society).
19
Cole, George. The British Cooperative Movement in a Socialist Society, Allen and Unwin,
London, 1951.
20
Bihari, Op. Cit.
21
The Benthamites were an extremely influential group of British philosophers, jurists and
social reformers in the first half of the 19th century. They were named after Jeremy
Bentham (1748-1832) and also included James Mill, John Stuart Mill and (for a time)
Robert Owen. The Benthamites are best remembered for their advocacy of utilitarianism as
a social ethic because they believed it to promote individual and economic freedom. To this
end they also advocated free trade. Their social agenda included animal rights, the
separation of church and state, equal rights for women, the abolition of slavery and the
death penalty, the right to divorce and the decriminalization of homosexual acts.
22
Owen never embraced Marxist communism. Rather it seems Engels is attempting to co-opt
those parts of Owen’s program that he finds amenable to his own.
23
Engels, Fredrick. Socialism: Utopian and Scientific, Marx/Engels Selected Works, Volume
3, pp 95-151, Progress Publishers, 1970. Download Version: Marx/Engels Internet Archive,
http://www.marxists.org/archive/marx/works/index.htm
24
Henri de Saint-Simon (1760-1825): a French utopian philosopher and founder of French
socialism. Like all the utopian socialists, he was opposed to class revolt and instead
attempted to implement his ideals by moral appeal to those in power.
25
The four principles presented here are modified from Roger Scruton, A Dictionary of
Political Thought, Pan, 1982.
26
Owen, Robert. A New View of Society, First Edition, 1813, p 9.
27
Owen, ibid, p 12, emphasis in original.
28
James was father of the more famous John Stuart Mill, who helped to develop the ethical and
theoretical foundations of neoclassical economics.
29
As quoted by Russell (HWP) p 747.
30
Ibid.
31
New Harmony survives today as a town in Indiana. See
http://en.wikipedia.org/wiki/New_Harmony%2C_Indiana, link valid 12 December 2009.
32
See the Wikipedia entry on Robert Owen under the heading Community Experiment in
America (1825) http://en.wikipedia.org/wiki/Robert_Owen
33
Warren, Josiah. Periodical Letter II, 1856, as quoted in the Wikipedia entry, ibid.
34
Contemporary neoliberalism can be understood as the 20th century manifestation of laissez-
faire capitalism.
35
Stretton (ENI) p 101.
36
Gunnell, Barbara. “A bend in the river”, Griffith Review 25, September 2009. Also an
interview with B. Gunnell by Geraldine Doogue on ABC Radio National, Saturday Extra,
22 August 2009, http://www.abc.net.au/rn/saturdayextra/stories/2009/2662879.htm
37
Just as today, most 19th century academic economists were out of touch with the realities of
poverty. They published essays on the six kinds of poverty, four of which were culpable
because they were the outcome of a failure of will. To help the poor was morally wrong. To
give shoes to a poor person, for example, would weaken their will to purchase their own
pair of shoes. See Gunnell, ibid.
38
It is worth remembering that bankruptcies do not diminish the ardour of capitalists for
private enterprise.
39
Marx, Karl and Engels, Communist Manifesto, Source: Marx/Engels Selected Works,
Volume One, Progress Publishers, Moscow, USSR, 1969, pp 98-137; first published 1848.
Translated: Samuel Moore in cooperation with Frederick Engels, 1888. Download Version:
Marx/Engels Internet Archive, http://www.marxists.org/archive/marx/works/index.htm
40
Engels, Op. Cit.
41
Cole, A Century of Cooperation, chapter 10, Op. Cit.
42
Ibid.
43
Cole, A Century of Cooperation, chapter 11, Op. Cit.
44
In Critique of the Gotha Program, (Section 3) Marx makes it clear that the cooperative mode
of production had no worth in itself and was of interest only to the extent that it represented
the struggle of workers “to revolutionize the present conditions of production”. Here is the
entire passage: “That the workers desire to establish the conditions for cooperative
production on a social scale, and first of all on a national scale, in their own country, only
means that they are working to revolutionize the present conditions of production, and it
has nothing in common with the foundation of cooperative societies with state aid. But as
far as the present cooperative societies are concerned, they are of value only insofar as they
are the independent creations of the workers and not protégés either of the governments or
of the bourgeois.”
45
George Cole, Op. Cit., possibly the best historian of 19th century cooperation and socialism,
was himself a member of the Fabian society for a short period.
46
Harold Lydall. Yugoslav Socialism: Theory and Practice, Oxford: Clarendon Press, 1984.
See also a review of this book by André Sapir in The Economic Journal, September 1985,
pp 820, http://www.jstor.org/stable/2233060?seq=2, link valid 23 December 2009.
47
As quoted by Sapir, ibid.
48
49
The following exposition on Nietzsche is due entirely to Bertrand Russell, (HWP), Chapter
XXV.
50
Nietzsche, Beyond Good and Evil, as quoted by Russell, (HWP) p 731. The italics are in
Nietzsche’s original text.
51
52
Actually Russell refers to the “absence of sympathy” which he defines as “being made
unhappy by the suffering of others”. Empathy is a broader concept than sympathy (see for
example, the distinction at http://www.toddlertime.com/mh/terms/empathy.htm). I have
chosen to use the word empathy (the word Russell might have used if writing today) in
order to be consistent with what is to come.
53
Partridge, Ernest. Evil as the Absence of Empathy, Atlantic Free Press, 14 August 2008,
http://www.atlanticfreepress.com/news/1/4519-evil-as-the-absence-of-empathy.html
54
At this point it is helpful to clarify the differences in nuance between morality and ethics.
Here are the Oxford American Dictionary definitions. Morality: “principles concerning the
distinction between right and wrong or good and bad behaviour” and “a particular system
of values and principles of conduct, esp. one held by a specified person or society” e.g.,
bourgeois morality. Ethics: “moral principles that govern a person’s or group’s behavior”
and “the branch of knowledge that deals with moral principles”. Clearly these definitions
overlap. Over the 200 years which this essay spans, usage of these words has changed
somewhat. Today, use depends on context. Morality is used in a normative context and
ethics in a professional or philosophical context. In this essay, the words tend to be used
interchangeably, depending on context and the word used by the author under
consideration.
55
Blackledge, Paul. “Marxism and ethics”, International Socialism – A Quarterly Journal of
Socialist Theory, Issue: 120, International Socialism, London, 2008. Web: www.isj.org.uk.
Blackledge is citing Terry Eagleton.
56
Blackledge, ibid.
57
Blackledge, ibid.
58
Blackledge, ibid.
59
For a brief description of the classless society, see the Wikipedia entry:
http://en.wikipedia.org/wiki/Classless_society
60
Engels, Op. Cit.
61
Ibid.
62
This famous slogan appears in Part I of Critique of the Gotha Program by Karl Marx (1875).
However Marx did not invent it. It was common to the socialists of the 19th century and can
be traced to the utopian socialist Henri de Saint Simon. See http://en.wikipedia.org/ under
the heading “From_each_according_to_his_ability,_to_each_according_to_his_need”.
63
It should be remembered that the principles of genetic inheritance were only gradually
elucidated in the second half of 19th century and first half of 20th century, and of course
their basis in DNA was not understood until the 1950s.
64
Lysenko came to prominence in the 1930’s during the crisis brought about by forced
collectivization of Soviet agriculture. He denounced the geneticists of his day as “fly-lovers
and people haters” – fly-lovers because, at the time, the principles of genetics were being
elucidated by breeding experiments with fruit flies, a research preoccupation which
appeared to have little relevance to the plight of Soviet agriculture. In 1948, genetics was
denounced as a bourgeois pseudoscience and prominent geneticists were executed or sent to
labour camps. A ban on genetics research was not lifted until the mid 1960’s by which time
immense damage had been done. Lysenkoism also spread to other communist countries and
was not eradicated from China until long after it was denounced in the Soviet Union.
65
See, for example, the Wikipedia entry on Lysenko. But note also the caution expressed
concerning the extent to which Lysenko’s rise can be attributed to ideological as opposed to
political reasons. http://en.wikipedia.org/wiki/Lysenkoism
66
James Wood in an interview on the ABC, Radio National, The Book Show, 11 May 2009,
10am, http://www.abc.net.au/rn/bookshow/stories/2009/2566126.htm concerning his essay
“A Fine Rage”, The New Yorker, 13 April 2009, p 54,
http://www.abc.net.au/rn/bookshow/stories/2009/2566126.htm
67
Russell (HWP).
68
Muravchik, Joshua. Heaven on Earth: The Rise and Fall of Socialism, Encounter Books,
ISBN 1-893554-45-7, 2002.
69
70
Sarkar, P.R. The Liberation of Intellect. AM Publications, 1982.
71
72
The author believes it was John Kenneth Galbraith who observed that conservatism
represents the age old endeavour to find the moral high ground for selfishness!
73
Sarkar, P. R. “Suppression, Repression and Oppression”, in (PN17) and (ElEdit), 1989.
74
See the Wikipedia entry on the Fabian Society, http://en.wikipedia.org/wiki/Fabian_Society,
for a picture of its logo. The emblem is inspired by Aesop’s fable, The Tortoise and the
Hare.
75
Sarkar, “Shúdra Revolution and Sadvipra Society”, Last chapter in (HS2). In his socio-
economic writings Sarkar often writes from the perspective of an historian. Indeed, in To
the Patriots he notes, “Politics is neither my hobby nor my profession. I am a student of
history.” Sarkar often makes direct and indirect references to historical debates and
understanding these references helps to understand Prout.
76
Ibid.
77
Ibid.
78
Sarkar, P. R. “Art and Science”. Published in Ánanda Vacanámrtam, Part 14, First Edition,
originally published in A Few Problems Solved, Part 4, 1979.
79
Sarkar, P. R. “Suppression, Repression and Oppression”, in (PN17) and (ElEdit), 1989.
80
Sarkar, P. R. “The Excellence of God-Centred Philosophy”, in (PN18).
81
At the time of writing this paragraph in July 2009, the Global Financial Crisis is still
unfolding and its impact on the future of capitalism is not yet fully understood.
82
Fox, Justin. “Blame Them: Who got the U.S. into this financial mess?” Time magazine, 12
January 2009, p 31.
83
Ibid, pp 39.
84
Richardson, Susan. “Why do Women make Hopeless Economists? (Or fail to succeed
playing man-made economics by men’s rules.” Economic Papers, vol 17, 1 March, 1998.
As quoted in Stretton, H. (1999) p 236.
85
Richardson, 1998, ibid.
86
Richardson, 1998, ibid.
87
Hazeldine, Tim. Taking New Zealand Seriously – the economics of decency. Auckland:
Harper Collins Publishers, 1998. Chapter 8.
88
As reported in the Brisbane evening paper, mX, 3 April 2009, under the heading “Coke must
correct false health claims”.
89
See the Wikipedia entry on Placebo for further information
(http://en.wikipedia.org/wiki/Placebo). According to another study, the response to a
placebo increased from 44% to 62% when the doctor gave them with “warmth, attention,
and confidence”.
90
Pine, Karen. http://www.timesoftheinternet.com/60522.html. A study done at Hertfordshire
University, England, 2009.
91
http://www.beerprofits.com/progressivegrocer/content_display/supermarket-industry-
news/e3i41aefa9b7ae8b6123a75022f77788844
92
Khamsi, Roxanne. “Envious monkeys can spot a fair deal.” New Scientist, 13 November
2007. Original report in Proceedings of the National Academy of Sciences (DOI:
10.1073/pnas.0707182104). http://www.newscientist.com/article/dn12913-envious-
monkeys-can-spot-a-fair-deal.html, valid link 27 January 2010. See also Frans B. M. de
Waal, “How Animals Do Business – Humans and other animals share a heritage of
economic tendencies – including cooperation, repayment of favours and resentment at
being short-changed”, Scientific American, April 2005.
http://www.rijnlandmodel.nl/achtergrond/sociologie/samenwerking_dieren_waal.htm
93
Powell, Kendall. Economy of the Mind, PLoS Biology, v1(3) p 312, 2003.
94
Sarkar (I&I) p 133.
95
Hazeldine, 1998, Op. Cit.
96
Jesson, Bruce. Only Their Purpose is Mad – The money men take over New Zealand, The
Dunmore Press, 1999. ISBN 0 86469 343 5.
97
Jesson, 1999, ibid.
98
The author has read various versions of this famous remark. Davies (EC) cites B. Toohey,
Tumbling Dice, William Heinemann Australia, Melbourne, 1994, p52.
99
Russell, (HWP) p 745. Ethical systems that determine the virtue of an action by its
consequences are known as consequentialist. Utilitarianism is just one example of
consequentialism. Consequentialism is to be contrasted with systems of ethics that find
virtue in duty, or intention or the law of God.
100
Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. First
Edition, 1776. Accessible through chapter headings at
http://www.adamsmith.org/smith/won-index.htm
101
Davies (EC) p 47.
102
Chomsky, Noam. “The Masters of Man” in Notes of NAFTA, 1993.
http://www.chomsky.info/articles/199303--.htm
103
Altman, Daniel, “Managing Globalization”. In: Q & A with Joseph E. Stiglitz, Columbia
University and The International Herald Tribune, 11 October 2006.
http://blogs.iht.com/tribtalk/business/globalization/?p=177. The quoted passage is part of an
answer to the following question: Q. What I find difficult to imagine is why a “superior
authority,” such as the government or an international organization, would be able to
regulate/decide what is the best trading strategy for any given country/region/community.
Why shouldn’t we let the free market forces determine what is the best for the world? What
is your opinion on the issue of free worldwide market forces versus regulation?
104
The author became aware of this research as a result of a letter from Murray Cree to
Geraldine Doogue, the presenter of Saturday Extra, Australian Broadcasting Corporation,
Saturday 4 April 2009, http://www.abc.net.au/rn/saturdayextra/default.htm. The figures
cited are those supplied in Cree’s letter. Cree states that the research was published in the
Certified Practicing Accountants Journal 1993. It is also cited in Murray Cree and Geoffrey
Baring, “Desperately Seeking Ethics”, Australian Accountant (July):25-26, 1991.
105
Billen, Andrew. “Goodbye to glib gurus and their gobbledygook”, The Times Online, 9
March 2009
106
Daniel Gross. Why Harvard Is Bad for Wall Street – Obscure Economic Indicators:
Harvard Business School graduates on Wall Street. SLATE: Posted 19 November 2004
107
Leslie Wayne. “A Promise to Be Ethical in an Era of Immorality”, The New York Times,
Times Reader 2.0, 2009, http://www.nytimes.com/2009/05/30/business/30oath.html
108
Ibid.
109
The invisibility of power in the contemporary teaching of university economics would
appear to be an example of what the Portuguese philosopher and co-founder of the World
Social Forum, Boaventura de Sousa Santos, calls abyssal thinking. Abyssal thinking creates
systems of visible distinctions in order to render other more fundamental distinctions
invisible. In the case of mainstream Western economics, the visible distinction is the
tension between distributive rationality and distributive justice and the invisible distinction
is between the economically powerful and those colonized. According to de Sousa Santos,
“the struggle for global social justice must be a struggle for global cognitive justice as well.
In order to succeed, this struggle requires a new kind of thinking, a post-abyssal thinking.”
See Boaventura de Sousa Santos (2007) Beyond abyssal thinking: From global lines to
ecologies of knowledges. http://www.eurozine.com/articles/2007-06-29-santos-en.html
110
This is a reference to a statement of Margaret Thatcher (cited by Davies, 2004, p 38) that
monetarism (the monetary policy of neoliberalism) is not just a theory but is as “essential as
the law of gravity”.
111
Davies (EC) Is neoclassical theory scientific? Part 6, p 62
112
This is the title of an editorial in The Australian, 2 April 2009, p. 13. For the benefit of non-
Australian readers, The Australian is an extremely conservative, yet very influential daily
newspaper. The editorial was prompted by a well-publicized speech given by the Prime
Minister, Kevin Rudd, in St. Paul’s Cathedral, London, in which he castigated the “false
god” of “unfettered free markets”. According to the editorial, Mr Rudd overlooked the fact
that world markets are “in the process of self-correcting”. The editorial conveniently did
not mention that the self-correction required many billions of tax-payers money, leaving a
public debt that will require a decade or more to repay.
113
Geoff Davies sums up capitalism thus: “The theory is bunk and the practice is ruining the
world.” Davies (EC) p 15.
114
The characteristics of fascism are similar across cultural boundaries. Japanese society just
prior to World War Two was not dissimilar to that of Italy and Germany – characterized by
imperialism, militarism, racism and social stratification. Torture and propaganda were
important instruments of the state, used to maintain order and ideological purity.
115
Sarkar, P. R. “Social Psychology”, in Tattvika Praveshika, First Edition, 1957, in (ElEdit).
116
As quoted by Roger Lewin, Complexity: Life at the Edge of Chaos, ISBN:0020147953 /
9780020147954 / 0-02-014795-3. Simon and Schuster. Churchland goes on to acknowledge
that although she does not believe in Cartesian dualism, “we cannot claim to have ruled it
out”.
117
Wilbur, Ken. Eye to Eye: The Quest for the New Paradigm. First Edition, 1984. Third
Revised Edition, 2001: ISBN 1-57062-741-X.
118
Sarkar, P. R. “Talks on Education: Basic Differences in Attitude between the East and the
West”, in (ElEdit).
119
Shrii Shrii Anandamurti. “Tantra and its Effect on Society”, in Discourses on Tantra,
Volume 2, AM Publications, 1994. Original discourse, 1959.
120
Sarkar, P.R. Ananda Marga: Elementary Philosophy. 1963. First Bengali Edition, 1955.
First English Edition, 1961. In (ElEdit).
121
This terminology was introduced by Sarkar in the context of his theory of Microvita. The
theory lies outside the scope of this essay but may be the subject of a future essay in this
series.
122
Sarkar, P. R. The Supreme Question – 1, 1957, in (ElEdit).
123
Wilbur, Ken. Eye to Eye, Op. Cit.
124
Towsey, Michael. “Water and Land Management – A Foundation for Economic Planning in
Australia”, Understanding Prout, Volume 1, 2010.
125
The concept of social capital finds its place in Proutist economics as a metaphysical
potentiality of the collective body. The third fundamental principle of Prout states: “There
should be maximum utilization of the physical, metaphysical and spiritual potentialities of
unit and collective bodies of human society”, Sarkar (PE) p 7.
126
Hazeldine, Op. Cit.
127
Putnam, Robert D. Bowling Alone: The Collapse and Revival of American Community. New
York: Simon and Schuster, 2000.
128
I Kawachi, B. P. Kennedy, K. Lochner and D. Prothrow-Stith. “Social capital, income
inequality, and mortality”. American Journal of Public Health, Vol. 87, Issue 9 pp 1491-
1498, 1997. American Public Health Association.
129
Hazeldine, Op. Cit.
130
Sarkar, P. R. The Liberation of Intellect – Neohumanism. AM Publications, 1982.
131
Bussey, Marcus. “Education for Liberation” in Understanding Prout, Volume 1, 2010.
132
Implicit in Sarkar’s synthesis of sentiment and rationality is a new approach to science –
that science can only be of benefit to society if it is motivated by a Neohumanistic
sentiment.
133
Russell (HWP) pp 737. Russell asks, “Suppose we wish – as I certainly do – to find
arguments against Nietzsche’s ethics and politics, what arguments can we find?” After two
pages of argument to and fro, he finally concludes, “But I think the ultimate argument
against his philosophy… lies not in an appeal to facts, but in an appeal to the emotions.
Nietzsche despises universal love; I feel it the motive power to all that I desire as regards
the world.”
134
This is the catchy title of a book by Candace Pert, Molecules of Emotion: The science
behind mind-body medicine, Scribner, 1997. ISBN 0-684-84634-9.
135
Zak, Paul, R. Kurzban and W. Matzner. “The Neurobiology of Trust”. Annals of the New
York Acadamy of Sciences, 1032: pp 224-227, 2004. See also URL2
http://abc.net.au/catalyst/stories/s1481749.htm.
136
“Nasal spray gives hope on autism”. The Sunday Times, February 14, 2010.
http://www.timesonline.co.uk/tol/life_and_style/health/article7026369.ece, link valid 16
February 2010.
137
Newby, Jonica. Making love not war. Catalyst, ABC TV, 20 September 2007.
http://abc.net.au/catalyst/stories/s2038245.htm
138
The reader may ask if experiments with monkeys have any relevance to human social
behaviour because our social conditioning can sublimate or repress physiological
tendencies. But this is exactly the point. It is difficult in humans to know the extent to
which subtle and altruistic behaviour is ‘natural’ because our social conditioning is so
pervasive. Monkey experiments point to the natural physiological foundations of human

behaviour presumably without the same degree of social conditioning. But there is an
extremely important caveat. The information so obtained must be extrapolated to humans
with much caution. A large body of experimental work on the ‘economic’ behaviour of
chimpanzees turns out not to be so relevant to humans because chimps lack the all
important ‘trust’ gene (producing vasopressin). On the other hand, comparisons between
chimps and bonobos appear to tell us a lot about the influence of the vasopressin gene.
139
Zak, Paul. “Trust”. Capco Institute Journal of Financial Transformation. v7: pp 13-21,
2003.
140
Ibid.
141
Wilkinson, Richard and Kate Pickett. The Spirit Level: Why More Equal Societies Almost
Always Do Better, Allen Lane, 5 March 2009. ISBN: 9781846140396.
142
Inequality was measured as the ratio of the average income of the richest 20% to that of the
poorest 20%. Japan was the most equal nation in the study with a ratio of 3.5. Australia was
well down the list along with Britain at 7.0. The USA had even higher inequality.
143
See a review of The Spirit Level at the Penguin web site,
http://www.penguin.co.uk/nf/Book/BookDisplay/0,,9781846140396,00.html.
144
Experiments with brain scans throw further interesting light on this claim. In a study of 20
pairs of men who were asked to share money, it was discovered that the sharing promoted
activity in those parts of the brain that process pleasureable rewards. Even when the richer
of the two men said he wanted more of the money, in fact his brain scan indicated the
opposite was true. Acording to the leader of the research team this apparent incongruity
“highlights the idea that even the basic reward structures in the human brain are not purely
self-oriented”. The study was originally published in Nature, February 2010. For further
information see a report by Marlowe Hood, “Subconsciously, humans want to share the
wealth”, http://uk.news.yahoo.com/18/20100224/tsc-subconsciously-humans-want-to-
share-c2ff8aa.html. Link valid 26 February 2010.
145
There is a curious exception to this statement – rates of suicide tend to be higher in
countries with more equality. In an interview on ABC Radio, the authors Wilkinson and
Pickett offered an interesting explanation – that in unequal societies people tend to blame
others if their lives go wrong, whereas in more equal societies people are more likely to
blame themselves. In unequal societies, violence is directed outwards; in equal societies it
is directed inwards. ABC, Radio National, Saturday Extra, 6 June 2009, 7:30am.
http://www.abc.net.au/rn/saturdayextra/stories/2009/2589596.htm
146
Brosnan, Sarah F. & Beran, Michael J. “Bartering behaviour between conspecifics in
chimpanzees, Pan troglodytes”. Journal of Comparative Psychology. May, 2009. See also a
report at http://www.world-science.net/exclusives/090522-trade.htm.
147
Gunnthorsdottir, Anna. “Notes and Ideas – a behavioural economist nominates the five
books that can explain the games people play”. The Australian Literary Review. Issue 1,
Volume 1, p 29, 5 September 2006.
148
Sarkar, P.R. “Shúdra Revolution and Sadvipra Society” (HS2).
149
The ten principles are known as Yama and Niyama. The terminology is Sanskrit because
they have their origins in the ancient practice of yoga. See Sarkar, A Guide to Human
Conduct, 1957 (ElEdit). See also Bussey, “Education for Liberation” in Understanding
Prout, Volume 1 for a further account of the Yama and Niyama and their importance in
Neohumanist education. Sarkar appears to use the terms cardinal human values and
cardinal human principles interchangeably.
150
Sarkar, P. R. “Talks on Prout”, Section: Papa and Punya [Sin and Virtue], in (PN15). It
should be noted that the English word sin is a translation of the Sanskrit papa. It does not
have a religious connotation.
151
In the original Sanskrit, this principle is known as Brahmacarya.
152
See the Wikipedia entry on exploitation, http://en.wikipedia.org/wiki/Exploitation
153
A moral person refrains from hurting another, not for fear of punishment but because he/she
experiences disquiet about the pain inflicted on the victim. Empathy stops what anger,
greed or passion might like to pursue. In other words, empathy, not punishment, guides the
moral person in good conduct.
154
Deep ecology was developed by Aerne Naess and shows the influence of Mahatma
Ghandi’s brand of Hindu philosophy.
155
The role of empathy in traditional socialist philosophy is filled by solidarity, but it only
appears to manifest when one follows the correct political line.
156
Fitzgerald, Jennifer. “Rekindling the Wisdom Tradition” in Transcending Boundaries,
Gurukula Press, Australia, 1999.
157
Sarkar, P. R. “Sin, Crime and Law” in (PN12).
158
The word obscene was used by Scottish National Party energy spokesman Richard
Lochhead. http://www.spinprofiles.org/index.php/Scottish_Power
159
In the original Sanskrit, this principle is known as santosa. Human desires know no limit
and if some effort is not made to control them, much social harm results. Sarkar would
consider the excessive salaries pursued by CEOs in contemporary times to be a moral
malady. “Millionaires want to become multimillionaires, because they are not satisfied with
their million. Ask the millionaires if they are happy with their money. They will say,
‘Where is the money? I am somehow pulling on.’ This answer indicates their ignorance of
aparigraha [non-acquisitiveness]. But such feelings have another adverse effect on body
and mind. Out of excessive fondness for physical or mental pleasures, people become mad
to earn money and amass wealth. As money becomes the be-all and end-all of life, the mind
gets crudified.” To maintain contentment, says Sarkar, “one has to make a special type of
mental effort to keep aloof from external allurements” and to avoid coming “under the
sway of excessive greed”.
160
Simms, Andrew. “A salary cap for everyone”, The New Economics Foundation, 7 August,
2009. http://neftriplecrunch.wordpress.com/2009/08/07/a-salary-cap-for-everyone/, link
valid 27 January 2010. See also Simms, “Now for a maximum wage – A pay ceiling would
be good for both business and social cohesion”, The Guardian, Wednesday 6 August 2003,
http://www.guardian.co.uk/politics/2003/aug/06/executivesalaries.economy, link valid 27
January 2010.
161
In the original Sanskrit, this cardinal human principle is known as aparigraha. It concerns
the avoidance of superfluous material consumption.
162
Sarkar introduced Neo-ethics late in his life, in 1987.
163
Sarkar, P. R. The Neo-ethics of Multilateral Salvation, First Edition, 1987. In (ElEdit).
164
Ibid.
165
Sarkar’s principles of ethical governance will be the subject of a future essay in this series.
166
Sarkar, P. R. The Neo-ethics of Multilateral Salvation, First Edition, 1987. In (ElEdit).
167
Sarkar, P. R. “Quadri-dimensional Economy”, in (PE), pp 40.
168
We may conclude that any attempt to establish a socialist society with a materialistic
philosophy such as Marxism is doomed to fail. The union of mind and matter that is
supposed to usher in a classless society can, on the contrary, only lead to imperialism. The
history of the USSR confirms such an outcome.
169
Jeste, Dilip and Thomas W. Meeks. “A seat of wisdom in the brain?” Archives of General
Psychiatry, 6 April 2009.
170
Damasio, Antonio. Descartes’ Error: Emotion, Reason, and the Human Brain, First
Edition, 1994; Penguin paperback reprint 2005: ISBN 0-14-303622-X.
171
“Is Morality Innate and Universal?” An interview with Harvard psychologist, Marx
Hauser”, Discover magazine 2007, http://discovermagazine.com/ 2007/may/the-discover-
interview-marc-hauser, link valid 12th February 2010.
172
Tomasello, Michael. Why We Cooperate, A Boston Review Book, 2009. ISBN-10:0-262-
01359-2, ISBN-13:978-0-262-01359-8. For a review see http://mitpress.mit.edu/
catalog/item/default.asp?ttype=2&tid=11864 See also Joan Silk, “Who are More Helpful,
Humans or Chimpanzees?” Science, v311, 3 March 2006.
173
Tomasello, ibid.
With Carol Dweck, Joan Silk, Brian Skyrms and Elizabeth Spelke
174
Sarkar, P. R. “Some Specialities of Prout’s Economic System”, in (ElEdit).
175
Ibid.
176
Sarkar, P. R. Liberation of Intellect. Op. Cit. p 35.
177
Sarkar, P. R. “Tantra and Its Effect on Society”, Op Cit.
178
Sarkar (HS1).
179
Sarkar, P. R. “Women’s Rights”, (PN13), 20 April 1981.
180
Sarkar, P. R. “The Importance of Society”, (PN13), 8 December 1978.
181
Women’s touch revives business, http://www.news.com.au/business/story/
0,27753,25908382-5012426,00.html
182
Sarkar (HS2).
183
Douglas R. Oxley, Kevin B. Smith, John Alford, Matthew Hibbing, Jennifer Miller, Mario
Scalora, Peter Hatemi, John Hibbing. Political Attitudes Vary with Physiological Traits.
Science v321 (5896), pp 1667-1670, 2008. DOI: 10.1126/science.1157627.
184
Giles, Jim. “Born that way: Your political leanings are imprinted in your genes”. New
Scientist, 2 February 2008, p 29.
185
Sarkar, P. R. “Quadri-dimensional Economy”, (PE) pp 40.
186
Ibid.
187
The author is indebted to Firdaus Ghista for the following train of thought.
188
Sarkar, P. R. “Aesthetics and Mysticism”, published in Ánanda Vacanámrtam, Part 34, AM
Publications, 1980.
189
http://forum.wgbh.org/lecture/el-sistema-venezuelan-music-education-miracle. Simon
Rattle, conductor of the Berlin Philharmonic, has called El Sistema “the most important
thing happening in classical music in the world today”.
190
Critendon, Stefen. Who stopped the music?, Background Briefing, ABC, Sunday 19 July
2009. The quote is from Brian Levine, managing director of the Toronto based Glen Gould
foundation, which has just issued its prestigious award to Jose Antonio Abreu, founder of
the El Sistema program. http://www.abc.net.au/rn/backgroundbriefing/> and
http://mpegmedia.abc.net.au/rn/podcast/2009/07/bbg_20090719.mp3
191
Ibid.
192
These comments were made by Alex Ross when he was interviewed on the ABC, Radio
National, The Book Show, 25 May 2009, 8-9pm. The reader is referred to Ross’s highly
acclaimed book, The Rest is Noise: Listening to the 20th Century. Fourth Estate, 2007.
ISBN 9780374249397.
193
Brian Levine in interview with Stefen Critendon, Who stopped the music?, Background
Briefing, ABC, Op. Cit.
194
Sarkar (HS1).
195
Neolithic culture, characterized by the earliest use of wild crops and domesticated animals,
appears to have arisen independently in several locations around the world, including
Africa, South Asia, Southeast Asia and the Middle East. Its beginning in the Middle East is
dated to around 9500 BCE, that is, around the end of the last ice age. However recent
discoveries of so-called Bradshaw rock art in Northwest Australia indicate a widespread
aesthetic expression going back into the previous ice age, around 30,000 years ago (Ian
Wilson, Lost World of the Kimberley – Extraordinary Glimpses of Australia’s Ice Age
Ancestors, Allen and Unwin, December 2006). The Neanderthals (who survived in Europe
until about 28,000 years ago) wore jewelry and probably buried their dead (Kate Wong,
“Twilight of the Neanderthals” in Scientific American, August 2009, p 35). The earliest
known human literature (which survived as an oral tradition) is the Rg Veda dating from
West Asia and the Indian subcontinent about 15,000 years ago. Thus one might speculate
that the dawn of human ethical and aesthetic sensibilities was between 30,000 to 15,000
years ago.
Education for Liberation
A Cornerstone of Prout
Marcus Bussey
Prout is a socio-economic philosophy to help take humanity from

imperfection to perfection… Prout is the path of socio-economic
emancipation for humanity. Prout should go side by side with the psychic
approach of Neohumanism. Neohumanistic ideas give human beings the
impetus to move. They create a longing for subtler pabula, and that
pabula is supplied by Prout. The spirit is to maintain a balance between
the physical and psychic worlds and take human beings to the threshold
of spirituality.
P. R. Sarkar1
It is common in Neohumanist circles to talk about Neohumanist education
without mentioning Prout. In fact the 1,000 plus Neohumanist preschools,
schools and high schools around the world can be seen as a cornerstone in the
Proutist goal of taking “humanity from imperfection to perfection”. These
schools represent a direct engagement with local peoples and local cultures
with the clear intention of providing an education that is free from local
dogmas and overtly universalist in intent. The activity of building schools is
Proutist; the philosophical inspiration for them is Neohumanist.
Background
Education is a function of all cultures and societies. At all times it reflects the
ideals and the world experiences of the culture it serves and maintains. In pre-
modern contexts it was an informal and open-ended process involving much
doing, emulating and story. At all times scholar-elders were recognized by
their peers for a higher-than-ordinary capacity to manage complexity, link past,
present and futures in meaningful ways and to communicate their wisdom with
others. With the advent of institutional modernity (c1800) education shifted
from these informal settings and became an instrument of the state.2
This modernist education is essentially Western in nature. It has been
propagated worldwide as an important conduit for globalizing modernity.3 The
result has been increases in both literacy and numeracy and the attendant
knowledge bases of the sciences and humanities. Statistically these increases
have been accompanied by higher levels in health, well-being and living
standards.4 The current educational paradigm however also has resulted in a
growing imbalance in the global economy, is replicating the thinking that has
depleted much of the world of its resources, has undermined local cultures and
economies, and has failed to address the poverty in both imagination and moral
vision that lies behind the current global financial and environmental crises.5
This paradox lies at the heart of modern education. It has achieved great things
yet has also failed to prepare people for a future that now asks different
questions of humanity. Essentially this is the result of an outdated image of the
‘educated individual’ still dominating the educational enterprise. When it was
conceived in the first half of the 19th century, compulsory schooling was
understood to be a form of social engineering that would bring a range of skills
and literacies to the citizenry of industrializing states. The ‘educated
individual’ was taken to be literate, disciplined, hard working and patriotic. In
this endeavour education has been largely successful. However it adopted a
one-size-fits-all approach and devalued creativity while seeing moral virtue in
the discipline and patriotism it instilled in the educated.
Today a broader range of literacies needs to be fostered in order to meet the
complex challenges that face humanity. Such literacies would include ethics,
morality, creativity, spirituality, empathy, imagination, inner vision, courage,
discrimination, universalism and so on.6
This essay will examine what Prout brings to our understanding of education.
As a socio-economic theory it has clear educational priorities and these will be
examined below. Prout also has a vision of the ideal ‘educated individual’ that
vastly increases the range and focus of education. Prabhat Ranjan Sarkar calls
such an individual a sadvipra.7 To educate for the sadvipra greatly changes the
goals and purpose of learning. For one thing, education lays the foundation to
prepare a context from which the sadvipra might emerge – as in pre-modern
societies, it is recognized that though we educate many, only a few will have
the extra depth to become elders (sadvipras) and take on special responsibility
for the shaping and guidance of the collective. Yet education must lead all to
fulfil their maximum potential for in doing so they can best be utilized by the
collective. It is in this validating experience that individual existence becomes
meaningful and joyous.

Much of this essay focuses on the relationship between Prout and
Neohumanism. As noted in the opening, Neohumanist education has
traditionally been associated with Neohumanism but Prout in fact can be said
to have a prior claim both historically and also strategically to this
philosophical position. The next section therefore offers a brief genealogical
gloss to situate both Prout and Neohumanism historically. Neohumanism is
then historically situated vis-à-vis Humanism and the possibility of a new
Renaissance is posited.
EDUCATION FOR LIBERATION 79
Neohumanism is then introduced as a layered philosophy that can be seen as a

form of pragmatism8 with a distinctive epistemology9 and an evolutionary
ontology.10 The attention then shifts to Prout and education. First, the social
pedagogic dimension of Prout is outlined and then the educational implications
of what Sarkar described as the Five Fundamental Principles of Prout is
explored. Second, we return to the concept of sadvipra, the ideal for a
Proutistic education. An educational system is only as strong as its vision of the
ideal citizen. As Prout posits a universal citizen with revolutionary vision the
context for this vision, drawn from Sarkar’s model of the social cycle (samaja
cakra), is turned to as a way forward in developing a truly Proutistic
educational experience.
Prout and Neohumanism

Twenty three years lie between Sarkar’s initial statements on Prout11 and his
definitive statement on Neohumanism12 yet he indicated early on that education
was a major instrument in transforming society and that universal humanism13
was to be the underlying philosophy to direct and shape this task. This is why
in 1963 he founded the Education, Relief and Welfare Section (ERAWS).14 At
this time education was taken to be simply providing a basis in literacy,
numeracy, the humanities and sciences within an ill-defined ‘spiritual’ or
‘yogic’ context. Yogic and dietary insights were introduced in schools and,
once Ananda Marga globalized after leaving India in 1967, the ideas of
alternative educational approaches from Montessori and Steiner through to the
free flowing learning approaches characteristic of the open schooling and
holistic educational movements were trialled in Ananda Marga schools in
economically developed countries. This resulted in a lack of coherence and
Sarkar formally introduced Neohumanism in 1982 to focus attention on the
philosophical essentials necessary to fulfil the Proutistic intention of shifting
human attention from the narrow and limited geo and socio educations of both
the capitalist and socialist nation state towards expansive yet deliberately
enabling universalist education. For him this moved attention from human self-
interest to a new sense of purpose for the human story. Such a move was
flagged in his initial statements on Prout where he discussed the need for a
“common philosophy of life”15 that fostered the physical, mental and spiritual
development of individuals. In this way he foresaw the development of a
integrated personality and a sense of not just belonging to one Cosmic family16
but of being stewards by virtue of our position within the universal collective
and thus responsible for the collective welfare of the universe. This vision he
clarified over two decades later in his extended statement on Neohumanism in
a series of discourses called Liberation of Intellect: Neohumanism:
Neohumanism will give new inspiration and provide a new interpretation
for the very concept of human existence. It will help people understand
that human beings, as the most thoughtful and intelligent beings in this
created universe, will have to accept the great responsibility of taking

care of the entire universe – will have to accept that the responsibility for
the entire universe rests on them.17
It would help at this point to explain the background to the term Neohumanism.
The following section offers a short overview of it looking at its relationship
with Humanism and the European Renaissance and the educational structure,
based on the seven liberal arts, established to promote the Humanist agenda.
An alternative Neohumanist approach, the seven liberating rationalities, is
offered at the end of the section as an aesthetic counterpoint to the Renaissance
model of learning.
From Humanism to Neohumanism

Humanism was a European intellectual movement that emerged in Italy in the
middle of the 14th century. A number of cities became centres of great
intellectual activity – these included Florence, Bologna, Milan, Rome,
Ravenna, Pisa and Sienna. The thrust of this movement was a growing
confidence in the human ability to understand the world. Many thought that
this was achieved by going back to the ancient achievements of Rome and
Greece but in fact it rested more on the ability to account for what we
observed, that is, a scientific mind was emerging. This mind was bent on
improving the lot of humanity. It did not differentiate between improvements
in science, mechanics and engineering and improvements in art, music and
poetry. What was key was a new aesthetic capacity and also a rationality that
was bent on reason and logic. The Humanism of Italy rapidly spread
throughout Europe and is now associated with the Renaissance. It made it hard
to maintain church related dogmas and ultimately directly contributed to the
Reformation.
The movement was initially Christian in tone, even though the Catholic Church
viewed it with suspicion. At times the church even threatened Humanists with
burning at the stake. Ultimately it was a force that soundly counteracted the
dogmas of faith-without-reason. It did keep at its heart a desire to overcome
socio- and geo-sentiment and saw humanity as one and as ‘the measure of all
things’ – best captured in Leonardo da Vinci’s Vitruvian Man (see Figure 1
below).
There are a number of ideal examples of Humanism from this time. Erasmus of
Rotterdam (1466/9-1536) is one example as is Thomas More (1478-1535) who
invented the idea of utopia. Miguel Cervantes (1547-1616) who wrote Don
Quixote is another. One of my favourites is Sebastien Castellio (1515-1563)
who took humanist thinking to a new level by arguing that though the human
mind can reason well enough it does not have the capacity to determine
absolute truth. For him truth was relative and there was always room for doubt;
similarly he argued if we had a just and loving God it seemed illogical to
suppose that people who had never heard his message should be sent to hell by
default – this is an astonishing insight for the 16th century!
The Reformation was in many ways the child of Humanism. It led to some
terrible wars, lasting over the next 150 years. By the time this was over
intellectuals saw the woes of humanity as premised on Christian intolerance.
The way forward was a secular humanism framed in the universalistic
aspirations of the Enlightenment which paved the way to both the French
Revolution and the Industrial Revolution. The former was atheistic in tendency
while the latter, though Christian, internalized the religious spirit in the private
domain. Both in their own way led to a materialist understanding of reality.
Humanism and the Renaissance are intimately entwined in European history
and laid the foundation for the kind of intellectual work that lead to the
amazing energy of the last two centuries.18
Neohumanism is a reinterpretation of Humanism proposed by P. R. Sarkar. It
takes the universal aspiration of Humanism, to reach beyond the limitation of
humanity and strive for unity at the social level, and suggests a universalism
that includes all animate and inanimate existence. Humanity is thus part of a
great whole and our job is to increase the radius of our heart’s love, to move
from a single future, such as a utopia as in Thomas More’s platonic ideal,19 to
multiple futures based on the good life or eupsychia in which many local
variations of fulfilment and value are affirmed. Furthermore, the Cosmos, its
matter and the organic forms that populate it, are all taken to be conscious, thus
human isolation is broken down. We are never alone, as Sarkar insists. Rather
we are bound together in an infinite network of relationships that span material,
intellectual and spiritual realities. This is a much more creative but less stable
reality. It stands in marked contrast to the order of the Humanist vision of the
world.
Thus da Vinci’s Vitruvian Man appears at ease and stable, what motion there is
being centred on a solid axis. He lacks the dynamism of the Hindu god Nataraj
who dances creation and embodies the Tantric worldview that underpins
Neohumanism and understands existence as a tension between ignorance and
understanding.20 The worldviews of the West’s Judeo-Graeco-Roman-
Christianity and Asia’s Tantric Hindu-Buddhism stand in clear contrast and
evoke significantly different social and cultural futures and therefore
educational responses (Figure 1).21 As Gilles Deleuze and Felix Guattari argue
the West has a totalizing and hegemonic approach to learning and knowledge
production. This they call geophilosophy. It has a one-size-fits-all approach to
reality and this size is distinctly Western.22 Neohumanism, and consequently
Prout, can be better understood via the dancing Nataraj. This figure is fluid and
mobile and evokes cultural understandings that are fractal in nature and honour
the local while affirming the universal: one foot is always near the ground
while the other is free.
Similarly the Vitruvian Man represents order, stability and balance while the
Nataraj points towards tension, paradox and dynamic transformation. The
educational priorities of both, as a result, are qualitatively different. The
Vitruvian Man stands for taxonomy and harmony in an ordered universe while
the Nataraj represents a world of multiple meanings, contexts and forms. Thus
order is always contingent and bounded by chaos. Each meaning, context and
form is driven by its own logic and thus evokes a range of rationalities. This
represents a significant shift in consciousness from the definitive mindset of
Humanism to the process orientation of Neohumanism. Sarkar has argued that
as a result of this emergent consciousness we will have/are having a new
Renaissance which heralds a new dawn in the evolution in consciousness.23
This new Renaissance is found in the works of those pushing the boundaries of
the knowable, trying to out-think thinking, and challenge the ability of any
system to be comprehensive, save in its omission of comprehension.24 As
indigenous American pedagogue Sandy Grande argues, “no theory can, or
should be, everything to all peoples – difference in the material domain
necessitates difference in discursive fields”.25
Both Renaissances evoke new modes of educating. The European Renaissance
had the seven ‘liberal arts’ of grammar, rhetoric, logic, geometry, arithmetic,
music and astronomy; Neohumanism has seven ‘liberating rationalities’ of
service, empiricism, character development, ethics, aesthetic science,
universalism and spiritual practice. The seven liberal arts are idealist in nature
whereas the seven liberating rationalities are pragmatist in nature. This means
that Humanism remained an intellectual movement that approached human
social process theoretically and sought to rearrange the social order politically.
Neohumanism on the other hand is a pragmatic movement that constructs
reality through physical, intellectual and spiritual activity.
This constructive approach Sarkar called “cult” – the root of words such as
culture and cultivated. Sarkar was clear that spirituality is not otherworldly but
deeply grounded in daily practice: “Spirituality is not a utopian ideal but a
practical philosophy which can be practised and realized in day-to-day life,
however mundane it be”.26 Neohumanist education consequently turns away
from idealist constructions of knowledge and grounds learning in local and
practical contexts while holding aloft a sense of greater purpose which prevents
it from being narrowed by local sentiment for place or group.
This rethinking of education pushes us away from a unified worldview, where
there could only be one (European) Enlightenment, to a mode of thinking about
existence and enlightenment as multiple, and layered (that is, dealing with the
physical, the mental and the spiritual).27 In this recognition of the layered
nature of reality in which ‘diverse movements of the infinite’ generate hybrid
formulations, new educational possibilities appear.28 This new Renaissance
thus reinvigorates the Humanism of the European Renaissance which
challenged humanity to see itself as one family rather than as tribal units.
Sarkar developed Neohumanism to extend this task of Humanism to the entire
universe.29
Humanism and Neohumanism and

Modernity Prout
Image
Vitruvian Man Nataraj
Cultural Christianity of Europe and Tantra of Hindu-Buddhist

Referent pagan Classicism of Rome India-Asia
and Greece
Core Totalizing and Hegemonic Fractal, Local and Universalist

Mission
Expression Order, Stability and Balance Tension, Paradox and

Dynamic Transformation
Educational Taxonomy and Harmony; Layered reason; Multiple

Priorities European Enlightenment enlightenments
Educational Grammar, Rhetoric, Logic Service, Empiricism, Character

Focus development, Ethics, Aesthetic
Geometry, Arithmetic
science, Universalism,
Music, Astronomy Spiritual practice
Figure 1: The Vitruvian Man and Nataraj

Neohumanism is one of the voices of the emergent Renaissance of critical
consciousness in which human identity expands from tribal allegiance to
species, that is, the humanist project, to a universalist recognition of self as

participant and co-creator in the universe of forms.30 The ideas in this section
are summarized in Figure 1.
Neohumanism
Neohumanism offers an evolutionary map that contextualizes the
concerns of Prout within a broadly philosophical engagement with three
broad human concerns: pragmatism, epistemology and ontology. Sarkar
divides Neohumanism into three stages which he calls “spirituality as a
cult”, “spirituality in essence” and “spirituality as a mission”.31
Spirituality as a cult is the pragmatic work of constructing human existence
through our engagement with the world. Cult, an often abused word, simply
refers to the practice of anything in order to internalize its deeper lessons as
core features of identity and meaning. It is the root of the word “culture” and
the connection here is clear – culture is the set of those practices which
generate meaning and identity in the human sphere of action. So, spirituality as
a cult for Sarkar refers to the physico-psycho-spiritual processes used to
“remove the defects of the psychic world and also the external world, and
enable you to move towards the spiritual world without any delay”.32 This
process takes on the physical world of need and the psychic world of sentiment
in order to establish an effective base from which humanity can fulfil its
spiritual potential. Spirituality as a cult engages with the physical and social
contexts that people inhabit and works to relieve poverty and inequity in the
commercial and political spheres and also ideological and paradigmatic
limitations, which cast a narrow and disabling shadow across humanity. Here
service and the re-imagining of human possibility link with a vigorous
intellectual engagement with dogma and sentiment. This Neohumanist
rationality is driven by universalism and a deep benevolence – it underwrites
Prout and also the Neohumanist educational movement.
Spirituality in essence focuses on the psycho-spiritual as the epistemological
context for Prout. It builds on the re-imagining of humanity as part of a
universal story. This is an epistemological task as it works on how we know
and understand the world around us. It engages with worldview and paradigm
as the contexts which shape human understanding of self, other and the world
around us. As this understanding is a collective story, there is nothing outside
it.33 There are many examples of this story in action today beyond the label of
Neohumanism because many minds globally are responding to the need for
such a renewal.34 What makes Neohumanism significant is the fact that it
integrates spiritual practice with Western empiricism and links it to a Tantric
desire for liberation. Tantra tackles defects not by rejecting the world, as in
traditional mysticism, but by embracing it and linking individual with
collective in the struggle for liberation, social justice and environmental
renewal.35
Spirituality as a mission is the ontological component of Neohumanism and

Prout. This is the inner work of aligning existential self with what Sarkar
termed “Cosmic Existential Nucleus”.36 His choice of such an abstract term is
significant as he is seeking to define this Cosmic orientation beyond the
cultural codes that have dominated metaphysical and religious discourse to
date. In this alignment lies the fulfilment of human potential, yet Sarkar argues
that individuals cannot make this journey on their own. This is a collective
journey in which micro and macro both work ultimately towards the same goal.
It is the mission that drives Prout, liberation of self and service to humanity,
elevating its focus from the micro-conditions that frame direct experience,
always reframing them with the macro-evolutionary journey of consciousness
from ‘imperfection to perfection’.
It is now time to consider how this plays out in Prout.
Prout as Social Pedagogy

Prout has a commitment to the progressive utilization of human potentiality.37
This potentiality is moulded by context which always enhances some features
while down playing others. Culture is the root of this context and is essentially
the learning milieu that shapes human experience. Sarkar’s contention is that
human culture to date has been defective in one way or another.38 At the
broadest level this can be seen in the simple dichotomy between East and West.
The East has tended to emphasize metaphysical sensibility and conformity in
the form of stable hierarchic social structures; the West has, on the other hand,
tended to emphasize material reality and individualistic, and thus less stable but
highly creative, social structures. It is acknowledged that both are part of the
human experience and both drive aspects of any educational agenda.
Consequently Sarkar argued that no country (or hemisphere) could progress
effectively when offering only a limited approach to human experience. In this
case both East and West have things to learn from one another. Thus Sarkar
noted that: “We should remember that morality, spirituality and humanity and a
happy blending of occidental extroversial science and oriental introversial
philosophy is the very foundation of our education”.39
Accordingly, Prout is linked to processes that free those in context from the
limitations of their local culture. It is argued that there is one human culture, a
mixture of values, physical, psychic and spiritual potentialities, aesthetic
sensibilities, and responses to the fundamental human needs for food, shelter,
medical care, education and security.40 These needs are found in all local
contexts but have been shaped by history, geography and localized sentiments.
The pedagogic mission of Prout is to develop educational contexts that liberate
people from the restrictive aspects of their culture without in anyway altering
its core nature41 or what Sarkar calls its prana dharma.42 This is why Sarkar in
discussing the Indian educational experience affirmed what was important in
the Western model brought to India by the British while arguing for a
culturally appropriate Ashramic schooling system.
Prout does not want to turn the hands of the clock back. Prout does not
reject the Western educational system. But at the same time, the Western
education system utterly failed to inculcate a sense of morality, reverence
and a high standard of behaviour among the students of India during the
time of the British Raj. That is why in Prout’s system of education, we
43
stress the need to start Ashramic schools in every village of India.
Ashramic schooling is education aligned with Indian culture. It is local and
built around a local scale that does not replicate the large factory schools of
Western modernity. Yet it is not parochial either, as Sarkar insists that the best
of Western education be included in the school curriculum and that also the
school does not inculcate narrow sentiments that promote caste, gender
inequity and either geo- or socio-sentiment. For education to liberate students
and communities from the disabling restrictions of ignorance and narrowness,
it must offer a holistic vision of human capacity. For Sarkar this needs to
address human physical, intellectual and spiritual needs.
The real meaning of education is trilateral development – simultaneous
development in the physical, mental and spiritual realms of human
existence. This development should enhance the integration of the human
personality. By this, dormant human potentialities will be awakened and
put to proper use. Educated are those who have learned much,
remembered much and made use of their learning in practical life.44
Prout’s Fundamental Principles and Education

There are Five Fundamental Principles that shape Prout’s socio-economic
goals.45 The first puts a cap on wealth while the others focus in one way or
another on the effective utilization of human potentials. This focus has clear
educational implications. Take principle number two:
There should be maximum utilization and rational distribution of all
mundane, supramundane and spiritual potentialities of the universe.
This principle concerns both human and non-human potentiality. There is a
relationship of course between the two. If humanity enlarges its capacity for
fulfilment and love then the entire environment will benefit from benevolent
and eco-centric human activity. Education is central to any such change. In
both traditional and Western educational contexts education has acted as a
useful tool in the maintenance of social relationships. This maintenance has not
been committed to the fulfilment of individual or collective potentiality but
rather to the ordering of society into hierarchic relationships that underwrite
economic disparities and social/class structures.46 For Sarkar education should
challenge functional agenda and lead to the maximum utilization and
distribution of human potential – as noted above this is physical, intellectual
and spiritual in nature. Thus he argues that education should be free and based
on universalism.
Principle number three states:
There should be maximum utilization of the physical, metaphysical and
spiritual potentialities of the unit and collective bodies of the human
society.
Sarkar elaborates this principle by noting that different people are endowed
with physical, intellectual and spiritual potentialities. They should be
encouraged to serve the society with their respective capacities. In the same
way the collective body should also be encouraged to serve society.
Again the focus is on maximum utilization but in this case Sarkar directs
attention to service. Both individual and collective abilities are not simply for
the aggrandizement of the individual or the collective. These potentialities, the
physical, intellectual and spiritual, are to be put to use for all, in the spirit of
universalism. Neohumanist thought builds this insight into a form a benevolent
rationality47 and argues that reason needs to be understood in terms of our
ability to understand physical, intellectual and spiritual contexts. In other words
reason increases our ability to engage with the physical world, with the world
of ideas and also with spiritual processes that have previously been considered
to lie beyond the scope of rational discourse. In short education needs to
inculcate the predisposition to serve and put one’s abilities at the disposal of
universal goals.
The fourth principle48 unpacks the third principle by arguing that how
propensities are used is determined by need. This is a form of discernment that
must grow out of educational encounters with need in which again the
benevolent intellect is developed that can best assess where need lies. Service
spirit is fundamental here as the tendency is for individuals to put their own
needs first when in fact collective need is greater. This relational quality the
social scientist Ananta Kumar Giri has called shudra bhakti.49 It is an
expression of devotion to the whole via the sacrifice, tapah, of the individual.
What is interesting, in the Neohumanist context, is that there needs to be an
alignment between individual needs and the fulfilment of the whole – that is,
liberation of self and service to humanity. The maximum utilization of the
individual must affirm individual gifts and direct these towards collective
needs. Thus Prout avoids the nihilistic dimension of authoritarian one-size-fits-
all education.
The fifth principle further clarifies this process by pointing to the ‘progressive
nature’ of such utilization. This means that where physical skill is needed then
those with physical ability should be involved, but intellectual ability needs to
be considered before the physical and if there is any scope for this to be
utilized it should be. Similarly, spiritual ability needs to be cultivated in all but
given priority as when this is activated many intellectual and physical issues
become less contentious. Thus a hierarchy is implicit in the principles but all
are seen as mutually reinforcing. In this Sarkar shares the insight of
Vivekananda who declared:
The watchword of all well-being, of all moral good, is not ‘I’ but ‘thou’.
Who cares whether there is a heaven or a hell, who cares if there is an
unchangeable or not? Here is the world and it is full of misery. Go out
into it as Buddha did, and struggle to lessen it or die in the attempt.50
Both the spiritual and the intellectual are embodied processes and just as the
hierarchy places spiritual work above the physical so the physical demands of
the spiritual purposeful attention to the moment.51 If the moment demands
physical intervention then no amount of theory or meditation will avail. This is
the magic of Prout – despite being spiritual in orientation it is utterly pragmatic
and committed to addressing the physical suffering and inequity of the world.
Thus education becomes a direct tool in dealing with this inequity and in lifting
up those deprived of dignity and all-round development – physical, intellectual
and spiritual. It is about fostering full capacity in each human being. It is
therefore libratory in intent and opens each person, in context, to a better
understanding of themselves, their world and their capacity to fully engage
with it. As Sarkar noted:
Education does not mean literacy alone. To my mind, education means
proper and adequate knowledge and power of understanding. In other
words, education is perfect knowledge of what I am and what I should
do.52
Bridge Building
One way to think about this work is to see it as bridge building. Prout is
Neohumanism in action and the core mission of Neohumanist educators is to
build bridges. Bridges lead us from where we are to more expansive and
inclusive futures. These futures hinge on the coordination of the social capital
available to communities and schools.53 As Proutistic service projects these
schools often act as the locus for a great deal of other social infrastructure
consolidation. The school is an important hub of community renewal. The
present sets the context for this work and this is universal, as all human’s share
one reality, yet this universal is, paradoxically, intimately local. Neohumanism
provides an aspirational agenda but does not concern itself with the detail that
must always be worked out according to the context. Prout is the interface that
does get involved with this local context. The common thread in terms of
practical expression is service in all spheres of educational endeavour, that is,
physical, intellectual and spiritual. Service also moves beyond the present and,
via history, engages in what Mary Grey called “dangerous memory”.54 It also
orients us towards future generations and leads us to serve the future via care
for the present in the form of environmental, social justice, peace and futures
education.55 Beyond this there is also service to the inanimate world.
The range of our service should include the animate world, but it should
not be restricted there. It should also extend to the outer fringes of the
inanimate world. This is the demand of the day. From the point of view
of Neohumanism the arena of our service should be ever-increasing, ever-
56
expanding, and should include both the animate and inanimate worlds.
Service grounds all learning in purposeful action and all teaching in context.
Service to self and to the expressed world links the wonders of learning that
expands the mind with the sweat of labour for the sick and needy, with the
fields and forests, along with the subtlety of aesthetic and spiritual pursuits.
Figure 2: The Rings of Sentiment57

The rings of sentiment (Figure 2) outline how service can be employed to
convert narrow sentiment to universal sentiment. This conversion is a central
feature of all Neohumanist activity as Neohumanism always challenges us to
transcend context; to overcome the limitations inherent to our personal, social
and historical confines. Thus Figure 2 is generally employed to map the
limitations inherent to context, yet it also flags those contextual realms that
Proutists must engage with positively (that is, not reactively) in order to fulfil
the core aspirational goal of Neohumanism which is to liberate self and society
from contextual limitations. Service to context, while holding on to this
aspirational goal, aligns us all with context without making us its prisoner.
Thus, as noted above, ‘education is that which liberates’ – sa vidya ya

vimuktaeye – which expresses this service as both a personal and social
capacity with both an inner and outer orientation.
Unpacking Service
Service is the bridge between one person and another, one expression of the
Cosmos and another. Proutists as Neohumanist educators need to embrace all
their work as service, even if it seems to be otherwise, that is, how can service
to the ego or a social group be expansive? Well it becomes so through one’s
intent. To become literate, to learn to excel in math or writing develops the ego
but also develops a communal resource that can ultimately liberate both the
individual and the group from narrow bonds of identity.58 Intent frames the
learning with greater import. When students understand that their skills have
value beyond the market place of competitive capitalism and actually feed into
the social capital of their communities, then they have learned the real lesson,
and enlarged their frame of reference.
Prout expresses the Neohumanist drive to expand human potential, and lead
humanity from crude to subtle, as service. This becomes a bridge between
people, communities and cultures. It transforms one heart at a time by reaching
out to the yearning within each of us and allowing dreams and hopes to become
valid sources of inspiration for learning. It strengthens identity in peoples and
communities by embracing the local as the forum for learning yet it maintains a
universalist vision that empowers all to live beyond the narrow confines that
context and habit so easily impose on learning.
Service takes many forms that can be seen to move along a continuum of
contexts that move from the physical, the interpersonal, the visionary and into
the spiritual. Thus we have:
• Service to the Present.
• Service to the Collective.
• Service to the Past.
• Service to the Future.
• Service to the Whole.
• Service to the Cosmic Principle.
Throughout this act of serving runs the individual’s growing sense of self. It is
cultivated through activity, built daily through engagement with the world. The
individual grows and learns through this service. Giri emphasizes this point
when he states, “It is a poetry and politics of [the] human heart which
transgresses the familiar dichotomy between self-development and social
commitment”.59 It is in this transgressing that all activities become means to
serving better. As people become empowered through this service they

increase in the deeper resources this world so dearly needs: joy, devotion,
patience, tenacity, centredness, discrimination and love.
Education for Sadvipraship

A Proutistic education is committed to leading humanity from the crude and
partial cultures of the present, towards more unified visions of human
possibility and more unified cultural forms. It is also committed to social and
economic justice and in developing the values and skills needed to establish
these in the world. Education plays a central role in this process. As noted, the
journey is along a continuum of contextual moments. This continuum has been
presented above when considering service as a central element in such an
educational agenda. It was also suggested by the liberating rationalities of
Neohumanism and the new Renaissance. It moves from the physicality of the
present, to collective needs, to the hard memory work of the past, to the
imaginative and hopeful work of exploring and activating alternative futures, to
holistic and integrated processes that link all to levels of the universal and
finally to the spiritual and inner work that brings us to the threshold of an
entirely different level of consciousness and relationship to being.
Western education is founded on a static vision of humanity, as captured in the
aesthetically perfect image of the Vitruvian Man. Prout’s educational agenda,
inspired by Neohumanism, suggests a more dynamic and transformative
approach. The dancing Nataraj is suggestive of the energy inherent to
transformative action. To bring this into clearer focus it is worth examining
how society might educate for Sadvipraship. As noted, the sadvipra is an
individual who brings, through their moral and intellectual courage, a
transformative shift to society (see also Appendix 1).
According to Sarkar, sadvipras come forward at a time when society is
dominated by a particular exploitative social group. He describes four social
groups that are defined by their orientation to life and their chief mode of
expression.60 These are collective psychologies or varnas and drive social
evolution. His reconfiguring of the Indic caste notion of varna is highly
original, allowing for history to be rethought as eras dominated by a particular
varna, either workers, warriors, intellectuals or accumulators of capital.61 This
dynamic interpretation breaks caste from its structural moorings and rereads it
as discourse or psychology. Sarkar was clear in his rejection of caste as a form
of social closure that maintains the oppression of the majority of Indians. For
him the varnas offered a cyclic view of history, but this is not repetitive as in
true cyclic history because he theorizes the sadvipra. Inayatullah explains:
Through the intervention of the sadvipra, Sarkar’s social cycle becomes a
spiral: the cycle of the stages remains, but one era is transformed into its
antithesis when exploitation increases. This leads to the new synthesis
and the possibility of social progress within the structural confines of the
four basic classes.62
Thus, for Sarkar, history is cyclic in that it follows a clear pattern but spirula in
that it accounts for social progress. His vision of progress therefore also allows
for history to be understood as linear in that social evolution is linked to the
mythic dimension of consciousness evolution that supplies the ontological
trajectory to his spiritual reading of existence. Education in this vision must
cater for the needs of any era while sowing the seeds for potential ruptures that
see new eras initiated.
To educate for Sadvipraship requires that elements of all the four varnas are
developed within the educational system. Two reasons can be given for this.
First, as asserted in four of the Five Fundamental Principles of Prout, the
education system of Prout is designed to foster the all-round development of
individuals. Therefore it must cater for the entire range of abilities and varnas
in order to allow all to achieve their potential. Second, the sadvipra is a person
who has internalized and transcended the qualities of all the varnas while being
established in morality and spiritual practice. Consequently the education
system must supply the necessary range of experiences to allow for this.
Continuum Seven Libratory Service

Rationalities
Physical Service & Empiricism Present
Interpersonal Collective Character development Collective
Just Relationships Ethics Past
Build NH Futures Aesthetic science Future
Holistic systems Universalism Whole
Spiritual Spiritual practice Cosmic Principle
Figure 3: Correlating Context, Rationality and Service

These two points mutually reinforce one another. Again we can see bridges in
action with each varna being offered the opportunity to best fulfil its potential
within an educational context that is sensitive to the contextual nature of
learning and the continuum of human experience that determines the libratory
rationality at play. There are clear correlations here between the contextual
continuum, the seven libratory rationalities of Neohumanism and the nature of
service to be fostered in education. These correlations are mapped in Figure 3.
This figure provides a map for beginning to think about the nature of a
curriculum for fostering Sadvipraship. Curriculum is a social and historical
map of knowing – it tells us what is important and unimportant about knowing
in any particular context.63 Proutistic curriculum is potentially a map of
something completely new. Yet it can also be a cosmetic touch up of what we
already have. The world needs new ideas in order to imagine beyond business
as usual and thus open social invention up to multiple lines of flight and break
the trance of a single future – and thus make way for alternative futures.
Curriculum aimed at the creation of sadvipras via the fostering of healthy
collective psychology, that is, taking into account the needs of the four varnas,
begins this transformative work. This exciting venture is sketched in Figure 4.
An attempt is made in Figure 4 to link the entire range of possible curricula
interventions with the social psychologies of the varnas. Furthermore, they are
presented along the contextual continuum that determines the forms of reason
that best account for this mode of engaging with the world. Meditation and the
ethical system of Yama and Niyama64 are the backdrop for this work for all the
varnas. Current educational practice can be seen to focus on a subset of these
areas. The sadvipra is not introduced as a category simply because they
function as a meta-category that incorporates all the varnas. As noted above,
Sadvipraship rests on the synthesis of all qualities and is not a concrete goal.
The sadvipra is recognized via their actions not via what they know. In this,
Sadvipraship is similar to indigenous categories such as ‘elder’ and ‘guru’, and
is a title bestowed by the collective not claimed by an individual. To educate
for Sadvipraship is to educate all varnas in such a way that they reach their
maximum potential. Only when this is done is the ground readied for the
sadvipra to emerge when needed. Only when this is done are individuals in a
position for their potentialities to be utilized to the fullest by the collective.
Only when this is done is personal and collective aligned in such a way that the
betterment of both is within reach.
Policy and Beyond

Now the pragmatic aspect of Prout links personal fulfilment with collective
expression. It is not enough to facilitate individuality in a vacuum. Thus there
is a strongly structural functional dimension to the social thinking of Prout. Yet
this transcends the limited understanding that structural functionalism generally
suggests.65 Proutistic education, as stressed repeatedly above, acknowledges
the role context plays in expression. The policy implications that emerge need
to be responsive to this sensitivity yet there are also generic elements that can
be developed globally. For instance the position of the teacher needs to be
rethought. Teachers are not simply knowledge administrators in a Proutistic or
Neohumanistic context – they carry a deep responsibility for their charges and
should be socially recognized for this work in the form of higher status as
reflected in increased salaries and also better working conditions. The
relational nature of teaching would also suggest the importance of lower

teacher-student ratios than the one to twenty-five or so that is currently
accepted in most countries.
Similarly, the role of the government in supporting public educational
institutions would be reassessed and funding and staffing would be based on
need and also linked to the wider set of goals suggested by the Five
Fundamental Principles discussed above. To ensure consistent delivery also
education should be quarantined from politics with recognized educators at the
helm of educational practice and administration. In this setting many of the
qualities of the sadvipra would be found in such educators and they would be
chosen for leadership roles by their peers and the communities they serve and
not by politicians or as the result of cronyism. Thus advancement would no
longer hinge on length of service and the bureaucratic construction of seniority.
Essentially education would move from the periphery of governmental
concerns to the centre. It has been common in the modern era for the human
services of education, health and social welfare to be considered as less
important than the economic, commercial and industrial portfolios of
government. From the perspective of Prout this is the wrong way round.
Investment should be in people first, and in this education should lead the way
rather than being called upon to fix social problems and maintain the social
sentiments and aporias of the vested interests that dominate an era.
Conclusion
An attempt has been made in this essay to outline the educational implications
of Prout. Much time has been spent in elucidating the relationship between
Prout and Neohumanism. It has been the latter that in recent decades has been
the source of inspiration and identity in thinking about educational renewal and
process. A good case can be made that this unilateral approach is in need of
rethinking as Prout theory and practice are both essentially pedagogic in nature,
though admittedly this often takes a social rather than an institutional focus. To
demonstrate this proposition the Five Fundamental Principles of Prout have
been examined and the utility of the central concept of the sadvipra in thinking
about curriculum presented.
Physical Interpersonal Just Build NH Holistic Spiritual *
Futures
Collective Relationships systems
Service Present Collective Past Future Whole Cosmic Principle
Worker Build, Assist those in Stand in solidarity Work at Identify with Asanas, diet,
make, need, team against injustice establishing universe, awe, stillness – ‘loving
create work projects singing together stamina’
Warrior Defend Protect the Fight injustice, Challenge Forge alliances, unity Fight limitations,
nature weak bear witness entrenched breath control
habits
Physical
Intellectual Measure, Create new Define a new Tell new Find connections Mantra, listening,
assess, knowledge and ethics, dangerous stories; re- between stories, sense withdrawal
describe, values memory imagine the trans-disciplinarity,
Meditation, Yama and Niyama
define future paradox
Merchant Value Share, establish Cooperative Negotiating Networking, pattern Concentration

nature cooperatives entrepreneurship
Psychic
Figure 4: Mapping the varnas and service to begin rethinking curriculum and educational practice
* Words in this column in italics are taken from the Eightfold Limbs of Yoga from the Yogasutra attributed to the second century BCE commentator
Patanjali. Meditation and the ethical system of Yama and Niyama can be understood within the curriculum as synthetic or integrative and working across all
varnas. The final limb of yoga is Samadhi, or union with Divinity-Cosmic Principle. This is theoretically available to all varnas yet in the Proutist system
most likely realized by the sadvipra.
The pedagogic mission of Prout is timely and engages with the roots of
concern that are fermenting broadly among an increasingly anxious globalizing
intelligentsia. This group is less concerned with classrooms than with social
justice and the immense inequity at the heart of the global social,
environmental and economic system. A new story is called for. David Korten
explains:
It is impossible to exaggerate the creative challenge before us. Six and a
half billion humans must make a choice to change course, to turn to life
as our defining value and to partnership as the model for our relations
with one another and the planet. Then we must reinvent our cultures, our
institutions, and ourselves accordingly. It seems a hopelessly ambitious
agenda, yet the key to success is elegantly simple: free ourselves from
Empire’s cultural trance by changing the stories by which we define our
possibilities and responsibilities.66
Prout and Neohumanism together provide a cogent and coherent platform from
which to engage a new story. This is not a single alternative to the monolithic
story of Empire that Korten critiques. It is a multiple and nuanced retelling of
human dreams and aspirations, grounded firmly in lived realities that are
always paradoxically unique and universal.
Dedication
This essay is dedicated to the life and work of Neohumanist educator John
Gurucharan Crowe (1 August 1952 to 14 July 2009). He was a good friend and
mentor for over two decades, and an ideal teacher.
Acknowledgments
The author wishes to acknowledge the input and feedback he has received in
writing this essay from Sohail Inayatullah, Jake Karlyle, Ac.
Shambhushivananda Avt. and Michael Towsey, and to thank Jeannette Oliver
for redrawing Figure 2.
About the author

Dr. Marcus Bussey is a research fellow in regional futures at the Sustainability
Research Centre and a lecturer in both world history and sustainable futures at
the University of the Sunshine Coast, Queensland, Australia. He is also a
Suzuki music teacher (guitar) and an associate at Prout College.
Appendix
1. Sarkar’s Extended Definition of a Sadvipra

“The world is a transitory phase or changing phenomenon within the scope of
the Cosmic Mind. It is going in eternal motion, and such a motion is the law of
nature and the law of life. Stagnancy means death. Hence no power can check
the social cycle of evolution. Any force, external or internal, can only retard or
accelerate the speed of transition, but cannot prevent it from moving. Therefore
progressive humanity should cast off all skeletons of the past. Human beings
should go on accelerating the speed of progress for the good of humanity in
general.
“Those spiritual revolutionaries who work to achieve such progressive changes
for human elevation on a well-thought, pre-planned basis, whether in the
physical, metaphysical or spiritual sphere, by adhering to the principles of
Yama and Niyama, are sadvipras.
“The principles of Yama are ahimsa, satya, asteya, aparigraha and
Brahmacarya. Ahimsa means not causing suffering to any harmless creature
through thought, word or deed. Satya denotes action of mind or use of words
with the object of helping others in the real sense. It has no relative application.
Asteya means non-stealing, and this should not be confined to physical action
but [extended] to the action of the mind as well. All actions have their origin in
the mind, hence the correct sense of asteya is “to give up the desire of
acquiring what is not rightly one’s own”. Aparigraha involves the non-
acceptance of such amenities and comforts of life as are superfluous for the
preservation of the physical existence. And the spirit of Brahmacarya is to
experience [the] presence and authority [of Cosmic Consciousness] in each and
every physical and psychic objectivity. This occurs when the unit mind
resonates with Cosmic will.
“The five rules of Niyama are shaoca, santośa, tapah, svádhyáya and Iishvara
prańidhána. Shaoca means purity of both physical and mental bodies. Mental
purity is attained by benevolent deeds, charity, or other dutiful acts. Santośa
means “contentment”. It implies accepting ungrudgingly and without a
complaint the out-turn of the services rendered by one’s own physical or
mental labour. Tapah means efforts to reach the goal despite such efforts being
associated with physical discomforts. Svádhyáya means study of the scriptures
or other books of learning and assimilating their spirit. The whole universe is
guided by the Supreme Entity [that is, Cosmic Consciousness], and nothing
that one does or can do is without [the Supreme Entity’s] specific command.
Iishvara prańidhána is an auto-suggestion of the idea that each and every unit
is an instrument in the hands of the Almighty and is a mere spark of that
supreme fire. Iishvara prańidhána also implies implicit faith in [the Supreme
Entity] irrespective of whether one lives in momentary happiness or sorrow,
prosperity or adversity.
“Only those who by their nature adhere to the above ten commands in their
normal and spiritual conduct are sadvipras.”67
References
(Note: Prout in a Nutshell contains all the author’s discourses on Prout.)
Sarkar, P. R., Human Society, Part 2 (HS2) AM Publications. Fourth English Edition, 1998.
Sarkar, P. R. The Liberation of Intellect: Neohumanism. (LIN) AM Publications, First English
Edition, 1982.
Sarkar, P. R. Discourses on Neohumanist Education (DNE), Kolkata, AM Publications, 1998.
above reference list are also available in the ElEdit. ElEdit Version 7.0 contains the most
recent translations available of all Sarkar’s discourses and books.
Endnotes
1
Sarkar, P. R. “Prout and Neohumanism”, (PN17), p 43.
2
Scott, J. C. Seeing Like a State: How Certain Schemes to Improve the Human Condition
Have Failed. New Haven, CT, Yale University Press, 1998.
3
Bussey, M. “Global Education: a Musical Exposition”, in Bussey, M., Inayatullah, S. and
Milojevic, I. (eds.) (2008). Alternative Educational Futures: Pedagogies for Emergent
Worlds, pp 41-57. Rotterdam, Sense Publishers.
4
It is worth consulting the OECD’s Programme for International Student Assessment (PISA)
to get an idea of how educational achievement is both assessed and also to see what is
valued. Visit:
http://www.pisa.oecd.org/document/2/0,3343,en_32252351_32236191_39718850_1_1_1_1,00
.html
5
Bussey, M., Inayatullah, S. and Milojevic, I. (eds.) Alternative Educational Futures:
Pedagogies for Emergent Worlds. Rotterdam, Sense Publishers, 2008; Nandy, A. Time
Treks: The Uncertain Future of Old and New Despotisms. Ranikhet, Permanent Black,
2007; Gatto, J. T. Dumbing Us Down: The Hidden Curriculum of Compulsory Schooling.
Gabriola Island, Canada, New Society Publishers, 2002; O’Sullivan, E. Transformative
Learning: Educational Vision for the 21st Century. London and New York, Zed Books,
2001; Slaughter, R. A. Futures Beyond Dystopia: Creating Social Foresight. London and
New York, Routledge/Falmer, 2004.
6
Bussey, M. “Sustainable Education: Imperatives for a Viable Future”, Encyclopaedia of Life
Support Systems. Oxford, UNESCO, 2002.
7
“The meaning of the word sadvipra is ‘a person who is a moralist and a spiritualist and who
fights against immorality’.” Sarkar, P. R. “Shudra Revolution and Sadvipra Society”,
(PN6), p 3. For a fuller explanation, see Appendix 1 and also Hayward, P. and Voros,
Joseph. “Playing the Neohumanist Game”, in S. Inayatullah, Bussey, M. and Milojevic, I.
(eds.) Neohumanist Educational Futures: Liberating the Pedagogical Intellect, pp 283-296.
Taipei, Tamkang University Press, 2006; Inayatullah, S. (2002); Inayatullah, S.
Understanding Sarkar: The Indian Episteme, Macrohistory and Transformative
Knowledge, Leiden, Brill, 2002.
8
Pragmatism is the field of philosophy concerned with how reality is constructed through
personal and collective experience. Practical consequence and the experience of the effects
of human action shape how we understand truth and meaning. Charles Pierce, John Dewey
and William James are early proponents of this form of philosophy, which contrasts
markedly with a distinctly idealist form of philosophizing that occurred before them.
Richard Rorty has promoted it recently and it can be found at the heart of the work of
French poststructural philosopher Gilles Deleuze.
9
Epistemology is the field of philosophy concerned with the nature and scope of knowledge.
Central concerns are how we know and how is what we know shaped by context. At issue
here also, from a critical point of view, is who does knowledge privilege? Thus thinkers
such as Michel Foucault, Jacques Derrida and Gilles Deleuze have paid considerable
attention to issues of how we know and how our knowledge limits or enhances possibilities
for collective movement.
10
Ontology is the field of philosophy concerned with our understanding of being, existence
and reality. This ultimately boils down to issues of purpose and function. Martin Heidegger
famously dealt with such issues in his work Being and Time. For Sarkar human ontology is
linked with a Tantric understanding of being as consciousness, and human purpose as being
linked to an ever-deepening relationship with this consciousness – the ultimate Cosmic
Consciousness.
11
Sarkar, P. R. “The Cosmic Brotherhood”, (PN3). Also in (I&I).
12
Sarkar (LIN).
13
It could be argued that Sarkar first introduced the concept of Neohumanism in 1957.
“Moralism”, the first chapter of Human Society, Part 1, which was dictated in 1957 and
first published in 1959, concludes with:
“The concerted effort to bridge the gap between the first expression of morality and
establishment in universal humanism is called ‘social progress’. And the collective body of
those who are engaged in the concerted effort to conquer this gap, I call ‘society’.” (Thanks
to Jake Karlyle for this insight; pers com, 5 May 2009.)
14
See: http://www.eraws.crimsondawn.info/
15
Sarkar, P. R. “The Cosmic Brotherhood”, (PN3), p 60.
16
Ibid. p 64.
17
Sarkar, (LIN), pp 93-94.
18
Eiseley, L. The Unexpected Universe. New York, Harcourt Brace and Co., 1969/1994;
Tarnas, R. The Passion of the Western Mind: Understanding the Ideas that Have Shaped
Our World View. New York, Ballantine Books, 1991.
19
One is reminded here of Ashis Nandy’s pithy summation that one man’s utopia is another’s
dystopia. Nandy, A. Traditions, Tyranny and Utopias: Essays in the Politics of Awareness.
New Delhi, Oxford University Press, 1987, p 1.
20
Bussey, M. “Neohumanism: Critical Spirituality, Tantra and Education”, in S. Inayatullah,
Bussey, M. and Milojevic, I. (eds.) Neohumanist Educational Futures: Liberating the
Pedagogical Intellect, pp 80-95. Taipei, Taiwan, Tamkang University Press, (2006b).
21
Bussey et al. (2008).
22
Bussey, M. “Six Shamanic Concepts: Exploring the Between in Futures Work”, Foresight,
11(2), pp 29-42, 2009; Deleuze, G. and Guattari, Felix. What is Philosophy? New York,
Columbia University Press, 1994.
23
Sarkar, P. R. “Renaissance in All the Strata of Life”, (PN9), pp 42-48.
24
Deleuze, G. The Fold: Leibniz and the Baroque (T. Conley, Trans.). Minneapolis,
University of Minnesota Press, 1993; Derrida, J. (1978/2002). Writing and Difference (A.
Bass, Trans.). London, Routledge; Foucault, M. (1970/2005). The Order of Things: an
Archaeology of the Human Sciences. London and New York, Routledge; Laszlo, E. (2001).
Macroshift: Navigating the Transformation to a Sustainable World. San Francisco: Berrett-
Koehler Publishers; Loye, D. (ed.) (2004). The Great Adventure: Toward a Fully Human
Theory of Evolution. Albany, NY, State University of New York Press; Macy, J. (2007).
World as Lover, World as Self. Berkeley, CA, Parallax Press.
25
Grande, S. Red Pedagogy: Native American Social and Political Thought, Lanham,
Rowman and Littlefield Publishers, 2004, p 166.
26
Sarkar, “The Cosmic Brotherhood”, (PN3), Op. Cit.
27
Bussey (2009) Op. Cit.; Inayatullah S. “Mapping Educational Futures: Six Foundational
Concepts and the Six Pillars Approach”, in M. Bussey, Inayatullah, S. and Milojevic, Ivana
(eds.), Alternative Educational Futures: Pedagogies for Emerging Worlds, pp 13-40.
Rotterdam, Sense Publishers, 2008.
28
Deleuze and Guattari, (1994) Op. Cit.
29
Bussey, M. “Neohumanism: Critical Spirituality, Tantra and Education”. In S. Inayatullah,
Bussey, M., and Milojevic, I (eds.), Neohumanist Educational Futures: Liberating the
Pedagogical Intellect, pp 80-95. Taipei, Taiwan: Tamkang University Press, 2006b.
30
The range of engagements in the process is large and growing exponentially, resembling a
large choir singing a new anthem of freedom; it is worth checking out the following. See
Gallegos Nava, R. (2001). Holistic Education: Pedagogy of Universal Love (Vol. 5).
Brandon, VT, Foundation for Educational Renewal; Gidley, J. M., and Hampson, Gary P
(2008). “Integral Approaches to School Educational Futures”, in M. Bussey, Inayatullah, S.
and Milojevic, Ivana (eds.), Alternative Futures Education: Pedagogies for Emergent
Worlds. Rotterdam, Sense Publishers; Gur-Ze’ev, I. (ed.) (2005). Critical Theory and
Critical Pedagogy Today: Toward a New Critical Language in Education. Haifa, The
University of Haifa; Hicks, D. (2004). “Teaching for Tomorrow: How Can Futures Studies
Contribute to Peace Education?” Journal of Peace Education, 1(2), pp 165-178; Loy, D. R.
(2002). A Buddhist History of the West: Studies in Lack. Albany, NY, State University of
New York Press; Miller, R. (2000). Caring for New Life: Essays on Holistic Education
(Vol. 1). Brandon, VT, Foundation for Educational Renewal; Nakagawa, Y. (2000).
Education for Awakening: An Eastern Approach to Holistic Education. Brandon, Vermony,
Foundation for Educational Renewal; O’Sullivan, E. (2001). Transformative Learning:

Educational Vision for the 21st Century. London and New York, Zed Books.
31
Sarkar (LIN), pp 99.
32
Ibid. p 99.
33
Ibid. p 100.
34
The list would be huge, already gestured towards in the reference above listing a few of the
educationalists seeking to develop the educational field – Paul Hawken maps some of this
in Blessed Unrest and he estimates community-based, private, institutional and commercial
movements with a sense of global community to be in excess of three million. Think also of
growing grass-root movements such as permaculture and deep ecology; Hawken, P.
Blessed Unrest: How the Largest Movement in the World Came into Being and Why No
One Saw It Coming. New York, Viking, 2007.
35
Bussey, (2006b) Op. Cit.
36
Sarkar, (LIN), p 101.
37
Prout is an acronym for PROgressive Utilization Theory.
38
Sarkar (LIN) p 53; also Sarkar, P. R. Ananda Vacanamrtam, Part 2, Kolkata, AM
Publications, 1986. Sarkar also points out the implications of ‘defective’ culture: “…when
one lacks proper culture one distorts the very spirit of his or her psychic object”. (1992)
Subhasita Samgraha, Part 24, Kolkata, AM Publications, p 94.
39
Sarkar, (DNE), p 147.
40
Sarkar, P. R. “Talks on Prout”, (PN15), p 11.
41
According to Prout, “The aim of education is: Sa vidyá yá vimuktaye; ‘Education is that
which liberates’.” Sarkar, (DNE) Op. Cit. p 111.
42
“The words práńa dharma mean the cardinal characteristic of a person which differentiates
one person from another. Just as each human being has his or her own traits, similarly an
entire race living within a particular geographical, historical and cultural environment will
also inhere some traits which distinguish that particular race from other. These traits or
specialities are inseparably embedded in the internal behaviour of the entire population, and
they help to form a particular bent of mind, expression of external behaviour, attitude
towards life and society, and on the whole a different outlook” (ibid. p 148).
43
Ibid. p 150.
44
Sarkar (DNE) Op. Cit. p 111.
45
Sarkar, “Talks on Prout”, (PN15), pp 22; “The Cosmic Brotherhood” (PN3), p 64.
46
Apple, M. W. (ed.) Cultural and Economic Reproduction in Education: Essays on Class,
Ideology and the State. London and Boston, Routledge and Kegan Paul, 1982; Gatto, J. T.
Dumbing Us Down: The Hidden Curriculum of Compulsory Schooling Gabriola Island,
Canada, New Society Publishers, 2002; Giroux, H. A. Teachers as Intellectuals: Toward a
Critical Pedagogy of Learning. New York, Bergin and Garvey, 1988; McLaren. Red
Seminars: Radical Excursions into Educational Theory, Cultural Politics and Pedagogy.
Cresskill, New Jersey, Hampton Press, 2005.
47
Bussey, M. “Mapping Neohumanist Futures in Education”, in S. Inayatullah, Bussey, M.
and Milojevic, I. (eds.), Neohumanist Educational Futures: Liberating the Pedagogical
Intellect, pp 7-24. Taipei, Taiwan, Tamkang University Press, 2006.
48
There should be a proper adjustment amongst these physical, metaphysical, mundane,
supramundane and spiritual utilizations.
49
Giri, A. K. New Horizons of Social Theory: Conversations, Transformations and Beyond.
Jaipur, Rawat Publications, 2006, pp 5.
50
Vivekananda.
51
Senge, P., Scharmer, C. O., Jaworski, J. and Flowers, B. S. Presence: Exploring Profound
Change in People, Organizations and Society. New York, A Currency Book, 2004; Tolle,
E. A New Earth: Awakening to Your Life’s True Purpose. London, A Plume Book, 2005.
52
Sarkar, P. R. “Dialectical Materialism and Democracy”, (PN6), p 20.
53
Hooghe, M. and Stolle, Dietlind. Generating Social Capital: Civil Society and Institutions
in Comparative Perspective. Palgrave Macmillan, New York, 2003; Krishna, A. Active
Social Capital: Tracing the Roots of Development and Democracy. New York, Columbia
Press, 2002.
54
Grey, M. C. The Outrageous Pursuit of Hope: Prophetic Dreams for the Twenty-first
Century. New York, Crossroad Publishing Co, 2000. The critical pedagogue Michael Apple
also nicely profiles this memory work, as part of his critical pedagogic tasks, and describes
this as part of bearing witness to past and present injustice. (2006: pp 681-682).
55
Eisler, R. The Real Wealth of Nations: Creating a Caring Economics. San Francisco,
Berrett-Koehler, 2007; Macy, J. World as Lover, World as Self. Berkeley, CA, Parallax
Press, 2007; Noddings, N. Caring: A Feminist Approach to Ethics and Moral Education.
Berkeley, University of California Press, 2003.
56
Sarkar, P. R. “Prout and Neohumanism”, (PN17), p 44.
57
Developed by Sohail Inayatullah, Inayatullah, S. Understanding Sarkar: The Indian
Episteme, Macrohistory and Transformative Knowledge. Leiden, Brill, 2002.
58
An interesting example of this is the findings of social psychologists who have found that
literacy when linked to the reading of quality novels and poetry raises the capacity for
empathy in the readers. The historian Lynn Hunt has demonstrated that this increase in
literacy and the emergence of the novel as a literary genre in the second half of the 18th
century directly contributed to the development of popular (i.e., middle class) concern for
human rights; Hunt, L. Inventing Human Rights: a History. New York, W. W. Norton and
Co., 2007.
59
Giri, A. K. Reflections and Mobilizations: Dialogues with Movements and Voluntary
Organizations. London, Sage, 2005, p 14.
60
Sarkar (HS2). See also “The Place of Sadvipras in the Samaja Cakra” (PN3); also of real
value is Sohail Inayatullah’s analysis of varnas: Inayatullah, S. Situating Sarkar: Tantra,
Macrohistory and Alternative Futures. Maleny, Australia, Gurukula Press, 1999;
Inayatullah, S. (2002). Op. Cit.
61
The four varnas are shudra, ksatriya, vipra and vaeshya. Rough English equivalents are
used here to reduce the amount of Sanskrit and thus make this section more accessible.
62
Inayatullah, S. “Prabhat Ranjan Sarkar: Agency, Structure and Transcendence”, in J.
Galtung and Inayatullah, Sohail (eds.), Macrohistory and Macrohistorians: Perspectives on
Individual, Social and Civilizational Change (pp 132-140). Westport, CT: Praeger, 1997, p
135.
63
Jardine, D. W., Friesen, Sharon and Clifford, Patricia. Curriculum in Abundance. Mahwah,
New Jersey, Lawrence Erlbaum Associates, 2006; Pinar, W. F., Reynolds, W. M., Slattery,
P. and Taubman, P. M. Understanding Curriculum: An Introduction to the Study of
Historical and Contemporary Curriculum Discourses. New York: Peter Lang, 2000.
64
Yama and Niyama are outlined in Appendix 1.
65
Structural functionalism suggests the work of Talcott Parsons who saw education
performing a social (i.e., structural) function of maintaining the social cohesion of a society
by replicating the processes necessary for continued social functioning. In Prout the
structural functioning of any system needs to be dynamic and to problematize conditions
that favour the dominance of one group over others.
66
Korten, D., C. The Great Turning: From Empire to Earth Community. Bloomfield, CT,
Kumarian Press, 2006, pp 354-355.
67
Sarkar, P. R. “The Place of Sadvipras in the Samaja Cakra”, (PN3), pp 55-56. Also in (I&I).
Michael Towsey
Introduction
This essay is an introduction to the three-tier economy of Prout, or to be more
precise, to its three-tier system of enterprise management. Prabhat Ranjan
Sarkar, the propounder of Prout, considered the three-tier system to be one of
Prout’s special features and we can better understand it by making comparisons
to enterprise management in two economic systems that are well known to us,
capitalism and communism.
There are generally considered to be three ways to own and manage a business:
government ownership, private ownership and cooperative ownership.
Ownership is an important consideration because whoever owns and controls
the means of production usually gets the lion’s share of what is produced.
According to communist dogma, all businesses have to be government owned,
and in theory ‘the people’ get equal shares of the product. According to
capitalist dogma, all businesses ought to be in private hands, and in theory
output is shared in proportion to the contributions made by the persons
involved.
Despite their obvious differences, capitalism and communism have three
characteristics in common: 1) they are both wedded to their dogma; 2) in both
there is a huge gulf between theory and actual outcomes; and 3) both produce
highly centralized economies. Communism is (or was) centralized by design
(Sarkar called it state capitalism) whereas capitalism inevitably becomes
highly centralized driven by the relentless pursuit of profit. Companies must
merge in order to survive, leading to fewer but ever larger companies.
During the 20th century capitalism and communism battled for ideological
supremacy and of course it is now a matter of history that capitalism defeated
communism. It is generally agreed that a contributory factor to the demise of
communism was a grossly inefficient system of production. According to one
argument, the government controlled industrial complex of the USSR was
unable to respond to President Reagan’s Star Wars Program and the country
collapsed in the endeavour to do so.1
Of particular interest is that in the ideological struggles of the 20th century the
cooperative system did not play a visible role. In order to understand this
invisibility and in order to understand Sarkar’s three-tier proposal, it is helpful
to review some of the history of the cooperative system.2
The Cooperative System

The basic principles of the cooperative system were laid out in the early 19th
century by the Welshman Robert Owen (1771-1858) at a time when the British
working class was reeling from the impact of the industrial revolution. Owen
was a successful businessman who nevertheless believed that a company could
maintain good labour relations and promote the welfare of workers while still
remaining profitable. In 1800, when Owen became manager of the New Lanark
mills and its 2,000 workers, he introduced a system of labour negotiations
which relied on reason rather than violence to achieve workplace agreements.
In 1829 he was instrumental in establishing the formal cooperative movement
which held its first conference in Manchester, 1831.3
Owen’s early views on management would be considered paternalistic by
today’s standards, but he quickly came to promote cooperative equality and
self-management. It is not often appreciated that Owen’s cooperative vision
was more than just factory cooperatives. He saw cooperatives as part of a
broader program of urban renewal and educational reform. However, such
reforms would have required government participation and thus endorsement
of the cooperative principle. Despite the fact that New Lanark enjoyed great
success and became widely famous in Owen’s lifetime, the British government
of the day refused to embrace the cooperative model and refused to involve
itself in social welfare more generally. The economist and academic Hugh
Stretton believes that this laissez-faire doctrine cost Britain its early industrial
leadership and allowed the French, Germans and subsequently the Americans
to become greater industrial powers.4
By contrast, 100 years later, when Japan embarked on its own industrial
revolution, and spawned its own Robert Owen in the form of Muto Sanji, also a
successful director of a cotton spinning business, the Japanese government was
prepared to embrace Sanji’s cooperative doctrine. Sanji’s initial intention was
just to improve his own firm but success spurred him to develop a management
philosophy which linked the welfare of factory workers to the success of
Japanese industry and therefore to the success of the nation as a whole. With
government backing, a system developed whereby Japanese workers enjoyed
security, skills training and high levels of respect in return for cooperative
service. This system, although not cooperative by the contemporary definition,
nevertheless served Japanese workers and the nation well until the late 20th
century.5
The cooperative system did not become an ideological force in the 20th century
(despite a shadow of it persisting in Japan) because cooperatives do not lend
themselves easily to centralized control. Hence capitalists and communists both
oppose the cooperative system. Furthermore, cooperative production cannot
compete with multinational companies which have the power to impose low
wages and externalize social and environmental costs. Nor do they prosper in
THE THREE-TIER ENTERPRISE SYSTEM 107
the modern world of economic rationalism where profit and efficiency are very
narrowly defined. Today, however, the defects of economic rationalism are all
too apparent and the cooperative model is once again attracting attention. For
example, cities such as Cleveland in the USA, hit hard by the Global Financial
Crisis, are forming worker cooperatives to save their dying economies.6

This essay is divided into five parts as follows:
• The three-tier enterprise system: We begin with a description of Sarkar’s
three-tier proposal and make comparisons with the enterprise system in
contemporary capitalist society. We explore the possibility of intermediate
or transitional enterprise models (that is, models which lie between private
and cooperative and between cooperative and public). This part ends by
promoting an expanded view of the traditional cooperative sector.
• Corporate structure and governance: This part compares the different
governance requirements for public, cooperative and private enterprises and
it discusses the problems associated with measuring and achieving
productive efficiency.
• Regulation: This part looks at the regulatory challenges involved with the
three-tier enterprise system and suggests, among other things, an enlarged
role for the audit branch of government in a cooperative system.
• The rural sector: The essay so far has assumed that the enterprises under
consideration typically belong to the manufacturing sector. This part
describes how the three-tier enterprise system might apply to the rural or
agricultural sector.
• The service sector: Finally we turn to the application of the three-tier system
to the service sector with particular emphasis on health services and
banking.

Prout’s economic model is first and foremost based on the cooperative system
and in this respect it stands in marked contrast to both capitalism and
communism. However, Sarkar has not succumbed to a ‘dogma of
cooperatives’. Rather he recognizes (and experience has clearly demonstrated)
that all three systems of business ownership are appropriate in different
circumstances. Advocating a balanced and practical approach, he proposes “a
three-tiered economic structure, that is, small-scale privately owned businesses,
medium-scale cooperatives and large-scale key industries managed by the
immediate government”.7
This at least is a brief summary to convey the general idea. There remains
some confusion partly because the early translations of Sarkar’s works were
ambiguous in crucial places and partly because he described the system over a
period of years. In later years he summarized the idea in a single sentence such
as the one quoted above and it is easy to forget that the discourses of 30 years
earlier provided considerable detail. One motivation behind this article is to
return to the early discourses with the most recent translations that have since
become available.
Important Concepts
Sarkar formally introduced Prout in 1959, but in the two preceding years he
had already described many of the important concepts, first in Human Society,
Part 1,8 and later in Problems of the Day.9 (A more recent compilation,
Proutist Economics,10 contains most of the author’s economic ideas.)
For our purposes the relevant part of Human Society is the section headed
Business People. The context is India not long after achieving independence
from Britain. The Cold War is underway and India is caught between the
residual imperial might of Britain and the communist might of its northern
neighbour, the USSR. There is much discussion within India about its
economic direction – capitalism, socialism or a mixed model such as welfare
capitalism? The ideas of Mahatma Gandhi (1869-1948) are also influential – in
particular his opposition to modern technology and promotion of small cottage
industries symbolized by the spinning wheel.
Sarkar approaches the topic by stating that there are three possibilities to
owning and running a business: state control, cooperative and private. He
quickly rejects the wisdom of widespread nationalization of industry. He
argues that the technological complexity of the modern state makes it
impossible for central bureaucrats to run and supervise all large-, medium- and
small-scale enterprises. Nationalization of all business is simply inefficient.
Note that with this argument Sarkar accepts the reality of the modern state,
with all its technological complexity, and thus implicitly rejects Gandhi’s anti-
technology position.
Next Sarkar rejects as “unrealistic” the proposal that every business should be
run as a cooperative. He observes that certain prerequisites must be satisfied
before a business can be both successful and genuinely cooperative. A
cooperative enterprise, he says, can only be built with the collective labour and
intelligence of a group of people who “share a common economic structure,
have the same requirements, and have markets available nearby for the goods
they produce (or purchase)”. Obviously not all businesses will have these
characteristics. (More will be said on the necessary characteristics of
cooperatives in a subsequent part, Corporate Structure and Governance.)
Finally Sarkar dismisses the (neoliberal) notion that every business must be a
private enterprise but he also rejects an economic system based on state
regulation of privately run businesses and the various mixed economic models
that were popular at the time. His main argument is that private owners will
always be fighting against the constraints imposed by government which will
lead to black market activities, tax evasion, etc. He believes that welfare
capitalism is an inherently flawed concept which is more concerned to preserve
the power of capitalists than it is to promote the general welfare.11
So what does Sarkar propose? He presents his vision in the context of the
Indian agrarian economy and the production of essential commodities. The
dominant economic role is to be played by three kinds of cooperative: farmer
cooperatives, producer cooperatives and consumer cooperatives. Farmer
cooperatives, says Sarkar, offer economies of scale, sorely needed in India
where agriculture is dominated by peasants working small plots of land.
Aggregating small fields will allow farmers to arrange seed more efficiently
and to increase crop production by taking advantage of “proper scientific
methods”.
Sarkar promotes a system where the production and distribution of each
individual commodity is assigned either to the public, cooperative or private
sector. The best option is for farmer and producer cooperatives to produce all
essential foods, fibres, clothing and fuel, while consumer cooperatives should
be responsible for the distribution and marketing of the same. Housing
materials should be manufactured and distributed by the state government
(through the mechanism of autonomous bodies) or by large cooperatives
supported by the state government. The right to manufacture medicines should
be entrusted to autonomous bodies which can distribute the medicines
themselves or through consumer cooperatives. Autonomous bodies are not
directly defined but appear to be statutory entities similar to public utilities.
Sarkar is explicit about the dangers of business people having a dominant role
in the rural economy. He defines business people as “those who profit by
trading and broking without being directly involved in production”. It is
important to be clear about this definition. Sarkar is not opposed to businesses
that produce real wealth, that is, real goods or services – quite the opposite. He
is however opposed to those people (‘middlemen’) who would insert
themselves into a chain of production for the purpose of creaming off the
surplus. Such people should not own arable land, nor should they act as
intermediary merchants. He is also opposed to the feudal-like system where
peasants work hard but must deliver their harvest to a wealthy landowner.
Almost everyone in the world today has in principle acknowledged that
only genuine farmers should own arable land, and that no third party
should come between them and the revenue department of the
government. So it must be accepted that in the production of food, the
question of ownership by non-producing business people does not arise at

all.12
Business people should not control the distribution of food grains because
when in private hands “it is absolutely impossible to stop hoarding,
speculation, black marketing and adulteration in food markets”.13 Nor should
business people be given scope to gain control of key commodities. It is no
accident that the greatest fortunes are made by those who control key
commodities, such as oil, steel and communications. The production and
distribution of non-essential foods, non-essential housing materials and the like
is the appropriate domain for private businesses.
Sarkar sums up his general attitude in the following passage:
The less private enterprise is provided with business opportunities and the
more production and distribution are carried out through cooperatives and
autonomous bodies, the better. The less the government is involved with
the public in the areas of production and distribution the better its
relationship with them will be, and the less power the central government
has in these areas the better.14
In Human Society, Part 1, we begin to see Sarkar’s vision of a cooperative
economy. Other ideas appear which are to be elaborated over subsequent years,
for example, the distinction between essential and non-essential goods and the
importance of a decentralized economy. However there is no specific mention
of the three-tier economy. That concept appears for the first time in the
following year (1958) in Problems of the Day:
Industry, agriculture, trade and commerce – almost everything – needs to
be managed, as far as possible, through cooperative organizations. For
this, special facilities will have to be provided to cooperative
organizations whenever necessary. Adequate safeguards will have to be
arranged, and slowly private ownership, or the system of individual
management, will have to be eradicated from specific areas of
agriculture, industry, trade and commerce. Only those enterprises which
are difficult to manage on a cooperative basis because they are either too
small, or simultaneously small and complex, can be left to individual
management. Similarly, the responsibility for those enterprises which
cannot be conveniently managed on a cooperative basis because they are
either too large, or simultaneously large and complex, can be undertaken
by the immediate state government (in the case of a federation), or by the
local body (in the absence of a federation).15
It is clear once again that Sarkar considers the cooperative system to be the
standard means of owning and managing a business. We depart from it only
when there is good reason – when efficiency and common sense tell us to.
Notice that the definitions of size and complexity are with reference to some
standard of cooperative practice – more on this later. The term immediate
government will also be explained later, but for the moment think of these
businesses as public utilities owned by and operated on behalf of the general

public. Public utilities were a common way of producing key commodities
prior to the ascendancy of economic rationalism.
The language of the above passage allows us to construct a table (Table 1)
showing the operating domains of the three types of business. It should be
mentioned in passing that Table 1 could not have been constructed from earlier
translations of the same passage. Therefore it is important when studying
Sarkar to obtain the most recent translation available.
Table 1
The mode of business ownership and management according to the three-tier system
of Prout is determined by business size and complexity.
Complexity of the Enterprise

Size of Enterprise Not complex Complex
Too large for a coop public utility public utility
Large cooperative public utility
Medium cooperative cooperative
Small cooperative private
Too small for a coop private private
On 19th October 1959, Sarkar added another component to the three-tier

enterprise system by introducing the concept of key industries.16 The term is
not defined directly but from context and examples key industries are those that
have a central or strategic role in the economy. Obvious contemporary
examples are the oil and coal industries. While Sarkar is generally in favour of
economic decentralization, key industries are the exception. These are of such
importance that they require centralized planning.
If a particular country or district is highly industrialized, that will not help
in uplifting or changing the economic standard of other parts of the world
or country. Hence industry should be decentralized but key industries
should be centralized. For example, the spinning industry should be
centralized, and around it there should be a weaving industry run on [the
basis of] decentralization principles. Even in areas where the climate is
extreme, industries such as spinning can be established through artificial
vaporization. This will help to create a self-supporting economic unit,
which is badly needed.17
Most key industries will also be very large, so it often appears that the term is
synonymous with very large-scale industry. However Sarkar later made a
distinction:
There are some special types of key industries which can conveniently
function as either small-scale industries or medium-scale cooperative
industries. If some key industries are structured in this way, they must be
under state control. Care should be taken to ensure that they are properly
organized and widespread. Such key industries should never be
controlled by capitalists, otherwise the interests of the people will be
partially, if not fully, ignored. Moreover if they are left in the hands of
capitalists, many kinds of problems will arise.18
Key industries are a modification to the basic template of Table 1. When an
industry is declared to be a key industry by an appropriate government
authority, it comes under state control and central planning. Large-scale key
industry is centralized while small-scale key industry is geographically
distributed. This is a strategic consideration. Examples of small-scale key
industries might be town water supplies, treatment of sewage and the
manufacture of ball bearings. None of these is necessarily large scale but
without them modern civilization would collapse. Factories that produced ball
bearings were specially targeted in World War Two bombing raids.
We now have two refinements to the template in Table 1. One involves the
distinction between a key industry and non-key industry and the other involves
a distinction between essential and non-essential goods and services. Note that
these two distinctions are independent of one another. The former distinction is
made with respect to the strategic role of an industry while the latter distinction
is with respect to what consumers normally buy. It is unlikely that ball bearings
will appear in a weekly shopping list and a bakery does not rate as a strategic
industry. But of course both distinctions will vary according to the
circumstances of the age.
Sarkar formally introduced Prout in 1959 in the last two chapters of Idea and
Ideology.19 He traces the rise of capitalism as well as the individualism and
selfish tendency which contain the seeds of its eventual demise. He then lays
out the philosophical, constitutional, legal and socio-economic justification for
Prout. He introduces ideas such as the guaranteed minimum requirements,
incentives, guaranteed purchasing capacity and the need for a merit based
economy. He concludes with Five Fundamental Principles (Appendix 1) which
are a succinct statement of the economic principles of Prout. These are later
included in a set of 16 aphorisms that summarize Prout.20
Sarkar’s fourth exposition of Prout, Discourses on Prout,21 includes a summary
of the three-tier system:
Large-scale and small-scale industries should remain side by side. Key
industries should be managed by the immediate government, because it is
not possible to run them efficiently on a cooperative basis due to their

complexities and hugeness. Small-scale industries should run on a
cooperative basis, and the small industries which cannot be managed by
cooperatives should be left to private enterprise. Thus: 1) small
businesses should be left to individuals; 2) big industries should be
owned by the immediate government; and 3) the industries in between the
big and small industries should be run on a cooperative basis.22
The three tiers of enterprise are described again in different ways over
subsequent years. The wording varies on each occasion but all the important
ideas were introduced by 1959. One should interpret the later summaries by
returning to the original expositions.
Three Categories of Goods and Services

Something more must be said about the distinction between essential and non-
essential goods and services because it is profoundly important in a Prout
economy. Essentials and non-essentials are treated differently because if
essential goods are in short supply people may suffer greatly, but an absence of
luxuries can be tolerated, at least for a while! For example, excise taxes might
be applied to luxuries but not to essential goods. Free trade in non-essentials is
certainly to be encouraged but free trade in the essentials of life is quite another
matter. Everyone must be guaranteed their essentials before trading the surplus.
It is morally unacceptable that malnutrition is widespread in India and yet some
80% of its wheat crop is exported to developed countries to fatten beef cattle.
In 1988, Sarkar formalized the classification of commodities by introducing a
third category.
Commodities can be divided into three categories: essential commodities,
such as rice, pulse, salt and clothing; demi-essential commodities, such as
oil and antiseptic soap; and non-essential commodities, such as luxury
goods. If hoarders create artificial shortages of non-essential commodities
common people will not be affected, but if they accumulate essential
commodities then common people will suffer tremendously. This
situation can be avoided if consumers cooperatives purchase essential
commodities directly from producers cooperatives or agricultural
cooperatives.23
In subsequent paragraphs, Sarkar specifies the relation between commodity
type and enterprise type.
If the distribution of essential commodities is done through consumers
cooperatives, middlemen and profiteers will be eliminated… Demi-
essential commodities, which may be affected by artificial shortages
causing suffering to common people, should be produced by producer
cooperatives. The production of luxury goods can be left in the hands of
the private sector. Essential commodities or services of a non-farming
nature coming within the scope of producer cooperatives, and which

require huge capital investments, should be managed by the government.
The railway system is an example. So, for the establishment of a healthy
society, agricultural cooperatives, essential commodity producer
cooperatives and essential commodity consumer cooperatives are a
must.24
A reading of the various texts suggests Table 2.
Table 2
The mode of production used to produce a commodity will in part be determined by
its category, essential, demi-essential or non-essential.
Category of Public Utility Cooperative Private

commodity or service
Essential X
Demi-essential X X
Non-essential X
The Enterprise Pyramid

To place the three-tier classification of enterprises in a more concrete context,
it is useful to examine the distribution of business sizes in a well-developed
economy, such as Australia. Businesses in Australia are typically divided into
four categories. By far the largest category, embracing some 82% of
Australia’s 1.11 million businesses (in 2002), are the micro-businesses owned
by one or two people and employing few or no staff. Micro-businesses have
limited resources and each produces a limited range of goods and services.
They are price takers and have no market power (Table 3). At the other end of
the scale are huge businesses, employing more than 200 people. They dominate
the market over a wide geographical range and are price setters.
Of particular interest is that there are very few large businesses and many small
ones. In fact, research has established that the distribution of business sizes is
so consistent between countries and over time that it appears to be governed by
three laws.25 The first law, known as the 95% rule, says that large businesses
rarely exceed 5% of the total number of businesses in a country. In Australia it
is less. The second law is the pyramid law which says that the number of
businesses of a particular size is in inverse proportion to their size. The third
law says that these patterns vary little over countries and over time.
The formal division into four categories is used in Australia to make
distinctions concerning workplace regulations. It is tempting to propose that
the same categories could be applied to Prout’s three-tiers of enterprise (right-

most column in Table 3). Micro-businesses fall into the private enterprise
category, small and medium businesses fall into the cooperative category,
while large businesses fall into the public utility category. Assuming that the
pyramid law persists in a Proutist economy (a quite reasonable assumption),
then privately owned micro-enterprises would constitute the largest category of
business.
Table 3
Like many other countries, business sizes in Australia follow the pyramid rule, that is,
there are very many small businesses and few large ones. The term frequency in
column 2 refers to the number of businesses in Australia. The numbers in columns 2
and 4 are obtained from the Australian Bureau of Statistics, Year Book 2002.26 Note
that these ABS figures exclude public trading and general government entities and
businesses in the agriculture, fishing and forestry industries.
Frequency Number Total persons

(number of of staff employed in
Business Prout
businesses) per business
Category category
business category
Large 2,700 (0.24%) >200 1.75 million Public Utility

Medium 36,900 (3.3%) 20-199 1.80 million Large Coop
Small 167,100 (15%) 5-19 1.44 million Small Coop
Micro 907,800 (82%) 0-4 1.74 million Private
TOTAL 1,110,000 (100%) - 6.73 million -
However, as shown in Table 3, the total numbers employed in the cooperative

sector would far exceed those in the other sectors. And when turnover is taken
as the criterion for size, then the large-scale public utility sector is most likely
to be dominant (Figure 1). The most meaningful of these criteria is the human
one – number of persons employed. In a Prout economy, Sarkar’s intention is
that the majority of people would work in cooperatives. From a social and
cultural perspective, it is desirable that cooperatives dominate the collective
psychology.
The Enterprise Network

Another way to consider the relationship between public utilities, cooperatives
and private enterprises is to view economic production as a network of
enterprises (Figure 2). In Sarkar’s vision of economic development,
cooperatives will tend to cluster geographically around sources of raw

materials, which will often be extracted and processed by public utilities. In
turn, private enterprises will tend to cluster around cooperatives exploiting
non-essential niche markets wherever they can. For example, a factory
producing yarn might be classified as a key industry in a particular area. It
would be placed near sources of cotton, wool or artificial fibres as the case may
be. Cooperatives producing a variety of fabrics and clothes would be located in
the vicinity of the yarn factory. Finally a fabrics industry would attract a
variety of individually working artists and fashion designers, whose services
would be purchased by cooperatives interested in enhancing their products and
gaining a competitive edge.
Private Private Private
Cooperative Cooperative Cooperative
Public Public Public

Three tiers ranked Three tiers ranked by
Three tiers ranked
by number of number of individual
by turnover
persons employed enterprises
Figure 1: The relative sizes of the three industrial sectors in a Prout economy
depend upon which feature is measured.
The notion of a production network can be used to formalize the concept of a

key industry. As noted above, studies in many countries have revealed that
there is a surprising consistency in the pattern of business sizes. When the ABS
data in Table 3 are plotted using what is called a log-log plot (Figure 3), the
result is close to a straight line. Such a result is highly significant and of
immediate interest to scientists, because similar distributions are found in many
parts of the natural world. For example, neurons in the brain are connected
such that a few neurons have many connections and many neurons have few
connections. One can draw a log-log plot of the distribution and obtain a
straight line just like the one shown in Figure 3. Genes within living cells
regulate other genes. Most genes will regulate only a few other genes but there
are a few genes with many regulatory links. The same distribution occurs on
the internet. Most internet web pages have only a few links to other pages but
there are a few major pages, known as hubs, that have many links.
Figure 2: Economic production is the result of a network of enterprises. A

more sophisticated diagram might show the arrow widths weighted according
to the volume of trade between enterprises. The arrows between public utilities
and cooperatives would be thick, while arrows to and from private enterprises
would be thinner.
In general, networks of this type are called scale-free networks.27 They are
found widely in the natural world and they have interesting properties. If we
assume that large businesses also supply (that is, have links to) many other
businesses, then the enterprise network also appears to be scale free. Hub
businesses, which are of particular importance to the integrity of the network,
can be identified mathematically by the pattern of their connections. Key
industries can be defined and identified in this manner as network hubs.
The Enterprise Life-cycle

Research is beginning to reveal many interesting parallels between national
economies and biological systems. The existence of scale-free networks in both
domains is just one example. Another is the pattern of business bankruptcies or
dissolutions over centuries, which has similarity to the pattern of species
extinctions over evolutionary time.28 It is also helpful to think of the founding

and growth of a business as being a life cycle. Most commonly, businesses are
born small, perhaps in a garage. Some succeed and grow to become
multinational corporations (Apple Computing is the archetypal example) –
others never get out of the garage.
Distribution of business sizes Figure 3: The ABS

business size and
6
employment data
(summarized in Table 3
Log of frequency
columns 2 and 3), when

plotted logarithmically,
5 yields a straight line
graph. Business size is
measured as the number
4 of staff or employees
(but excludes the owners
and therefore a business
can have size zero – no
3 employees).
0 1 2 3
Log of business size (staff)
To get from garage to corporation requires an enterprise to catch a

technological wave and to stay on that wave as today’s convenience becomes
tomorrow’s necessity. Sarkar is explicit, even enthusiastic, in his support of
science and technology to promote eocnomic development and to expand the
domain of necessities as technology progresses.29
The number of items considered essential commodities should be
continually and progressively revised and expanded with the changes in
time, space and person. Such revisions should be made by the
government and not by the board of directors of a particular cooperative.
What is considered a demi-essential commodity today may be treated as
an essential commodity tomorrow.30
In a cooperative economy, the same dynamics will tend to push businesses
through a life-cycle. Some thought needs to be given to the important transition
stages in that life cycle; the transition from private business to cooperative,
from cooperative to public utility, and even the transition from public utility
back to cooperative when a technological wave has swept through and had its
day. One way to ease a passage through these life-cycle stages would be to
consider the possibility of transitional enterprises and partnerships between the

different enterprise types.
Transitional Enterprise Models

Businesses have a life-cycle. A successful business will grow and, in the three-
tier framework, may need to negotiate its way through all three tiers during its
life time. But are there only three business management models? Why could
there not be a spectrum of management models from the single owner-operator
of a micro-business to the complex hierarchical management of a large-scale
government corporation? It would certainly be useful to have intermediate
business models between the private concern and a cooperative because they
are so different, not just in size but also in the psychology of their management.
One way to approach the issue of transitions is to think in terms of mixed
models and partnerships. For example, Sarkar’s discussion of service
cooperatives (see later) includes doctors who pursue private practices within a
cooperative framework. This is a model that already has successful parallels in
Australia. The Independent Groceries Association (IGA) enables individual
owners to manage grocery stores under the umbrella of a larger organization
which achieves economies of scale by sourcing and distributing supermarket
items nationally. This is particularly useful in sparsely populated parts of
Australia where there may not be the population to support independent
consumer cooperatives. Another example, closer to the author’s home, is the
Praxis Cooperative in Brisbane. Its six members and associates work both as
individuals and cooperatively, offering a range of professional services.31
Many franchises in a capitalist economy could operate as cooperative-private
partnerships. One might even imagine a multinational franchise, such as
MacDonald’s, operating as a group of dispersed national cooperatives, sharing
the same recipes. The critical issue is that those resources which can be
purchased locally are purchased locally and that profits (whether of the
cooperative or the franchises) be retained locally.
In a mixed cooperative-private model, a business registered as a cooperative
would retain within it individuals who are operating their own private business.
This model would work particularly well for individuals providing professional
services, that is, doctors, lawyers, accountants and artists. The arrangement
would preserve the spirit of cooperation but allow for individual diversity.
In the same manner, a large public utility might act as the umbrella
organization for a group of cooperatives. They might do this to undertake
large-scale public works or, as in the case of the Mondragon cooperatives in
the Basque region of Spain, to survive in a capitalist world dominated by large
corporations. Mondragon’s 100 worker-owned enterprises and affiliated
organizations are today integrated into the Mondragón Cooperative
Corporation (MCC). MCC firms are the leading producers of domestic

appliances and machine tools in Spain, the largest domestically-based
supermarket chain in the country, and the third largest supplier of automotive
components in Europe.32
The dubious PPPs (public-private partnerships) so popular in Australia over the
past two decades could become public-cooperative partnerships (PCPs). The
PCP model could assume considerable importance as a means to decentralize
an otherwise centralized key industry. We have already noted Sarkar’s
opposition to highly centralized industry and his support of science to achieve
economies of decentralization. PCPs might be the appropriate managerial
structure to move in this direction.
So we now have a five-tier system instead of the basic three-tier system: the
basic three tiers plus PCPs and cooperative-private partnerships. This is a
richer way of viewing the possibilities and deals with transitional issues. Other
intermediary managerial models will undoubtedly be adopted as required but
we should not lose sight of the primary objectives – to ensure that everyone has
their minimum requirements of life, to achieve efficient production and to
decentralize production by building strong local economies.
An Expanded View of the Cooperative Sector

So far we have considered three kinds of cooperative: farmer, producer and
consumer cooperatives. Sarkar also refers in various places to service, banking,
housing and family annuity cooperatives.33 Quite clearly cooperative
enterprises can provide much of the range of goods and services required by a
modern, technologically advanced society.
Over the past decade or so, traditional worker and consumer cooperatives (such
as discussed above) have come to be regarded as just one component of a third
economic sector sometimes referred to as the social purpose or mutual sector
(see Figure 4). Social purpose can be defined more or less narrowly and any
given enterprise, depending on its mix of social and commercial objectives,
will lie somewhere on a continum between a purely social purpose enterprise
and a purely commercial purpose enterprise. According to the Wikipedia entry
on Social Economy (December 2009),34 a purely social purpose enterprise
must satisfy the following three critieria:
• The ideal of the enterprise must be a clearly defined ethical concept.
• The primary objective of the enterprise must be the improvement of
disadvantaged peoples, to which we might add disadvantaged animals
and plants.
• The profits and the resources must be verifiably reinvested for the
benefit of the disadvantaged.
Pearce35 divides the social purpose sector into three sub-sectors: first, the
formal cooperative sector consisting of cooperative enterprises as described
above; second, the voluntary sector which in Australia is called the not-for-
profit sector; and third, the informal household economy. Two further terms
are commonly used in reference to the social purpose sector, the social
economy and social enterprises. The social economy, as can be seen from
Figure 4, is the formal trading part of the social purpose sector. Social
enterprises may be defined quite generally as those trading businesses whose
principle objectives are something other than making a profit. This includes
cooperative enterprises and not-for-profits and collectively they constitute the
social economy.36 Note that social enterprises will typically have a mixture of
social and commercial purposes – it is their principle objective, however,
which determines their classification. In the case of a worker cooperative,
which clearly must have some commercial objectives, its principle objectives
will nevertheless probably be concerned with: 1) provision of goods and
services required by the local community, 2) provision of employment
opportunities in the local community, and 3) safe and enjoyable working
conditions.
In this essay, we will sometimes use the term cooperative sector synonymously
with the social purpose sector. Using the word cooperative in this more general
sense draws attention to the manner in which the various components of the
sector operate – that is, cooperatively. They do not rely upon the command
structure which is typical of private and state owned enterprises.
The voluntary sector in Pearce’s enterprise typology consists of cooperatively
managed NGOs, charities, clubs and societies. Examples are church groups, the
RSPCA, AMURT, Amnesty International, the World Wildlife Fund and
Greenpeace. Such groups exist for the welfare of marginalized people and care
of the environment. They survive from donations and small business activities.
They are increasingly important in the modern world and have a significant
presence in the United Nations. Such organizations do not exist primarily for
production or profit but they are economically important because they
represent self-help, filling the gaps where governments and big business have
failed. At the local level, they attend directly to problems of unemployment,
disaster relief, injustice and pollution. It is estimated that the not-for-profit
sector in Australia contributes over 4% to the GDP.37 Given their essential
contribution to providing people with the essentials of life, these organizations
will continue to have a prominent role in a Proutist economy.
Figure 4: This diagram illustrates the different sub-sectors of the cooperative sector
of a modern capitalist economy. The cooperative sector is more sophisticated and
important in a capitalist economy than is indicated simply by the number of workers
cooperatives. (Reproduced with the kind permission of John Pearce.38)
One measure of the health of a community is the degree of participation in

voluntary organizations, clubs and societies. Sociologists, such as Putnam,39
have expressed concern about the decline in club memberships since the 1970s.
It is interesting to note a parallel decline over the same period in the Calvert-
Henderson real economic indicators.40
Recognition of the importance of the social economy has been a long time
coming to Australia and the country is probably a decade behind Europe and
the UK in this regard. However, this is about to change, judging by various
institutes that have opened in the last few years, including the Centre for Social
Impact at the University of New South Wales,41 the Australian Centre for
Philanthropy and Nonprofit Studies at the Queensland University of
Technology,42 and Social Traders.43 A particularly important research interest
for these centres is social accounting, that is, how to measure the success of the
social purpose activities of social enterprises. More will be said on this
subsequently.
The Informal Economy

The third component of the social purpose sector in Pearce’s typology (Figure
4) is the almost invisible but tremendously important household economy. Best
estimates suggest that informal household production accounts for as much as a
third of productive economic activity in Australia44 and yet it is totally ignored
by the formal national accounts. Such activities include care of aged parents,
construction of household furniture and the myriad acts of kindness that people
do for one another in daily life. It would be futile to absorb the informal
household economy into the formal economy (although tax collectors might
dearly like to do so) but the health of the formal economy ultimately depends
on the smooth running of the informal household economy. Hence the
importance of public parks and other public amenities that help to make family
life easier.
In passing we should mention the wider informal economy. In countries such
as India and Brazil, less than 25% of the working age population is employed
formally in the private or public sectors. The remainder make themselves a
living invisible to the collectors of statistics and taxes. The informal economy
is not planned or measured and therefore not incorporated within the national
accounts. It includes undeclared small businesses, black market activities and
criminal activity, in addition to the legitimate informal household production
that we have already described.
Unfortunately we cannot ignore the contribution of black markets and criminal
activity to the modern capitalist society (see the black sector in Figure 4).
According to a United Nations report,45 drug money worth billions of dollars
kept the financial system afloat at the height of the Global Financial Crisis in
2008. Antonio Maria Costa, head of the UN Office on Drugs and Crime, says
he has evidence that the proceeds of organized crime were “the only liquid
investment capital” available to some banks on the brink of collapse in 2008.
As a result, profits from global drug trafficking to the tune of about $350
billion were laundered through the banking system in order to keep the global
economy afloat.
Corporate Structure and Governance

There is a wealth of literature on corporate structure and governance that would
also pertain to enterprises in a three-tier economy. In this section we
summarize some of the basic ideas, pointing out areas where the three-tier
system might require differences from conventional practice.
Cooperative Enterprises
There are seven internationally recognized principles of cooperation:
1. Voluntary and open membership.
2. Democratic – controlled by their members.
3. All members contribute fairly to their cooperatives, which they own in
common. Cooperatives pay a limited return on the money a person
invests to become a 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 the local community.
Besides these, Sarkar insists that successful cooperatives also depend on
common motivation, strong supervision, ethical management,46 wholehearted
acceptance by the local community and the availability of local markets.47 In
the Prout system cooperatives are still subject to the discipline of the market
place, and if a cooperative cannot get a viable market share in its own locality
it is unlikely to get it elsewhere. Finally Sarkar notes that the cooperative
system in general needs to be accepted at the government level with
appropriate legislation to encourage a positive climate for cooperatives. (Recall
Robert Owen’s vision of government support for cooperative villages.) This
includes everything from an education system which espouses the virtues of
economic cooperation to legislation that offers protection from the predatory
activities of large corporations (a situation that might occur if a government
were trying to introduce cooperatives into a capitalist, free market economy).
The generally recognized advantages of the cooperative system include:
• There is no conflict between owners and employees because the employees

are the owners. The adversarial basis of labour relations is removed. Sarkar
puts it thus: “In capitalist and communist countries, the mode of production
is defective. In capitalist countries, labour does not work in the interest of
management and management does not allow the rolling of money due to
wealth concentration. In communist countries, labour does not feel one with
the job and that is why there is sluggish production. The cooperative model
of Prout is free from both defects.”48
• Workers have more incentive to work efficiently because they enjoy the
benefits of their hard work.
• Cooperatives allow workers to reap the benefits of labour saving technology
because automation reduces working hours but not income.
• A well-managed cooperative offers security of employment. Workers need
not live in fear of losing their jobs because they are also the owners.
• Cooperatives do not exist purely to make a profit. They have multiple goals,
multiple bottom lines – for example, to provide worthwhile work and to
produce products that improve the quality of life of the local community.
• Cooperatives are closely linked to their communities ensuring that
cooperative boards of management will make decisions that take community
interests into account. For example, cooperatives are less likely to pollute
the environment because their owner-workers must live with the pollution
they create. A frequent criticism of private corporations is that they are not
accountable to the communities affected by their decisions.
Sarkar admits that cooperatives have failed in many countries, giving rise to
doubts regarding their viability as an alternative business model:
On the basis of the examples to date, it is not appropriate to criticize the
cooperative system. This is because most countries could not evolve the
indispensable conditions necessary for the success of the cooperative
system. Cooperatives depend upon three main factors for their success –
morality, strong supervision and the wholehearted acceptance of the
masses. Wherever these three factors have been evident in whatever
measure, cooperatives have achieved proportionate success.
Take the case of Israel. Because the country is surrounded by enemies on
all sides, the people are extremely aware of the need to be self-reliant.
People want wholeheartedly to consolidate the national economy. Thus,
they have converted arid deserts into productive agricultural land through
the cooperative system.
As this kind of mentality was never created in India, India is a classic
example of the failure of the cooperative system. Indian cooperatives
were not created for economic development but for the fulfilment of
political interests. Under such circumstances it was impossible for the

cooperative system to succeed.49 50
Fortunately, today we can say that there are many cooperative success stories
around the world. The best examples of large-scale cooperatives are to be
found in Mondragon.51 Good examples of medium- and small-scale
cooperatives can be found in Maleny, Australia. This small town boasts over
20 cooperatives, including a cooperative bank, a food co-op, an artists co-op
and several housing co-ops. Housing co-ops are common in many parts of the
world, especially Turkey and Scandinavia.
Government Business Enterprises

Recall that in the three-tier economy, all key industries and all enterprises
which are too big to be run conveniently as cooperatives are operated as
government enterprises. Their capital is ‘owned’ by the public and they operate
in the public interest. Public ownership is established by a statute which also
defines the goals and governance of the enterprise. The enabling legislation is
the responsibility of the nearest appropriate level of government, or to use
Sarkar’s term, the immediate government. For example, in Australia, which has
a federal system, the national airline operates under Federal legislation, the
electricity boards operate under State legislation, and many of the water and
sewage authorities operate under local government. In the 1940’s, 50’s and
60’s, prior to the era of privatization, government enterprises had an important
role in managing natural monopolies, for example, harbours, hospitals and
airports. A Prout economy would certainly reverse the privatization trend, but
Sarkar is cautious of politicians having a direct business role. It is important
that the legislation which defines a government enterprise preserves a distance
between politicians and management.
Business corporations, including those which are state owned, typically have a
board of directors who represent the owners and who make policy. Policy
execution, on the other hand, is in the hands of one or more executive officers
headed by a CEO. A major issue in the case of state owned enterprises is the
degree of government influence over policy making versus the degree of
independent public control. This is determined by the enabling legislation
which describes the composition of the board. The possibilities include
government appointment, election by an appropriately constituted electoral
college, election by the employees, election by the public, or some combination
of these. Given Sarkar’s preference for government to have minimal direct
involvement in business, it is not surprising that he describes government
enterprises as autonomous bodies. An autonomous body has the legal authority
provided by statute but after that it operates independently of government
control. Independence is ensured by having the board constituted
independently of government and giving the board (and not the government)
power to appoint the executive. In New Zealand before privatization, the

District Hospital Boards, the Port Authorities and the Electricity Boards, etc.,
were elected by the general public at the same time as other local body
elections. Sarkar suggests that worker’s representatives, elected by the workers
themselves, should also have position(s) on the board.
Once a board is established, it (or the chair person) appoints the executive
officers. The officers are answerable to the board and the board is answerable
to the immediate government representing the people. Executive officers may
be selected from among the board members or from elsewhere, but these days
it is considered best practice to ensure a majority of non-executive directors.52
In the various organizations which Sarkar founded, their constitutions allow
executive officers to be selected from suitably qualified persons outside the
board.
Consistent with their role as public utilities, government enterprises in the
Proutist model operate on the principle of no profit and no loss. That is, they
set their prices so as to equate income with expenditure. However, this raises
three questions, concerning optimum pricing, efficiency and tax revenue.
Pricing
The public management of large-scale industries is justified where there are
unavoidable economies of scale that lead to a natural monopoly. In these
circumstances, market forces would push a cooperative or private enterprise to
increase profits by restricting supply. According to standard economics text
books, government regulation can correct such market ‘distortion’ in two ways.
One is to require the firm to produce to its marginal cost (marginal cost
pricing) and the other is to produce to its break even point (average cost
pricing).53 The former policy increases supply but the firm makes a loss over
the long term. The latter policy ensures that the firm breaks even in the long
term but there is a so-called ‘deadweight loss’ or inefficiency associated with
lower production. Sarkar would appear to be an advocate for average cost
pricing, since elsewhere his notion of a rational profit requires accounting for
all long-term fixed costs, investment, sinking funds, etc.
However, there is strong argument that public utilities should produce up to
their marginal costs because they are typically producing goods that are
essential for public welfare. In other words, they should maximize production
and fixed costs should be met out of government expenditure. A further
argument is that the products of public utilities have positive externalities
which are not captured in normal cost accounting. Proutists have yet to give
adequate thought to these issues. The economics literature offers other
proposals, such as a compromise between average cost pricing and marginal
cost pricing, for example.54
Efficiency
The second issue to arise from the no profit and no loss principle concerns
efficiency. In the capitalist system, profit is used as a surrogate measure of
efficiency and therefore as a guide to long-term investment. Some might argue
that removing the profit orientation of a large enterprise removes the possibility
of monitoring its efficiency, but this is not necessarily the case. First, it must be
remembered that efficiency is not to be measured purely in financial terms –
public utilities also have community service goals; and second, there are other
ways of striving for efficiency. The first point is well illustrated by a long-
running debate in Australia concerning the privatization of Australia’s
telecommunications giant, Telstra. Opponents of privatization argued that a
privatized Telstra would cut back on rural services because these yield lower
profit margins. They argued that Telstra should be considered a public utility
with social purpose objectives and that it should be compelled to accept lower
profit margins in providing rural services. This proved to be such a potent
political argument that the government delayed privatization for many years.
(Up until the privatization era, it was accepted practice for public utilities to
subsidize their rural services from more profitable urban services.)
Concerning the second point above, in the absence of profit motive, public
enterprises can benchmark their performance according to the ‘best practice’ of
the day. Relevant indices might be labour productivity, capital productivity and
service standards. Companies can compare themselves with other companies
and with international best practice.
Taxation
The third issue arising from the no profit and no loss principle is taxation. Tax
is normally levied on profit and a well-run public utility can be an excellent
source of public revenue. Venezuela is funding its ambitious social programs to
reduce poverty from the profits of its state owned oil company, PDVSA. In
Australia, some public utilities operate in the manner of private companies but
with the government as sole or principle shareholder, which therefore reaps the
dividend. At the time of writing this paragraph, Southeast Queensland’s
electricity company, Energex, runs on this model and it delivers substantial
revenue to the Queensland State government. However it leaves Energex open
to government interference and the State government (at the time of writing)
stands accused of putting pressure on management to maximize the dividend
paid to the government at the expense of maintenance and investment in
infrastructure. Clearly there are conflicts of interest in this approach to revenue
raising that threaten both business viability and the public interest.
Prout’s taxation policy is discussed in Towsey55 but suffice to note here that
the tax mix depends more on resource taxes than on income and profit taxes.
Public utilities consume a high proportion of natural resources, such as water,
air, minerals, fossil fuels, etc. In other words, the tax stream would come from
the inputs to public utilities and not from their output. Resource taxes would
not only yield revenue but also offer governments the opportunity to regulate
the mix of resource consumption and thereby ameliorate environmental
problems.
As a topical example, what might be an effective approach to reducing
greenhouse gas emissions? Much argument rages over the merits of a carbon
tax versus carbon trading. But it does not have to be either-or. We can learn
much from two previously successful campaigns that changed public opinion
and industry behaviour: the introduction of compulsory seat belts and the
controls over cigarette smoking. In the face of initial strong opposition, both
these campaigns were successful because both relied on a spectrum of tools,
such as discriminatory taxation, incentives, regulation and education. Likewise
reducing greenhouse gas emissions will require a combination of carbon taxes,
carbon trading, incentives, regulation and education. In a three-tier economy a
carbon tax might be applied to polluting key industries but the cooperative
sector might respond better to a carbon trading scheme. The three-tier system
encourages more flexible policy options.
Global Enterprises
As the world becomes increasingly globalized, industries may emerge that
invite management on a global scale, presumably by an autonomous body
legislated for by the United Nations or equivalent. The production of fibre
optic cables is a possible contemporary example, where just seven companies
produce 98% of the world’s requirements. However Sarkar objects to
centralizing industry on a global scale and always prefers to decentralize as far
as is efficiently possible. Given the strategic importance of fibre optic
technology, research should be directed towards efficient production on a
national or even smaller scale.
Private Enterprises
Recall that private enterprises in the three-tier model are small scale and
provide non-essential goods and services. In the Indian context, Sarkar gives
betel shops, tea stalls and restaurants as examples.56 Consequently there is no
need for the more complex managerial apparatus of larger enterprises. Most
private businesses would be family businesses or partnerships of a few people.
They would operate pretty much as small businesses do today, chasing niche
markets where these arise and setting prices as high as the market permits.
They might also be crucibles of entrepreneurial activity that pave the way for
larger cooperative enterprises. According to capitalist theory, private
businesses need only be motivated by profit but in practice most small business
operators care about what they do and often continue in businesses that do not
yield much profit.
Shareholding
A fundamental feature of the cooperative system is that the workers in a
business are also its owners. Ownership is established by the workers
purchasing shares, thereby having a personal stake in its financial success. This
is the entrepreneurial or risk-taking element of being involved with a
cooperative. It is also standard practice to place a limit on the proportion of the
total shares that may be held by any one person or group.
If non-worker shareholders exist at all, they may receive a dividend but have
no say in management. “In cooperatives, voting rights should be on an
individual basis and not on the basis of the number of shares a person holds.”57
Furthermore, shares should return a dividend based on the “net profit earned by
the enterprise”, and there should be no system of preferential shares, that is,
shares which earn a fixed amount of interest regardless of whether the
enterprise makes a loss or profit. In other words, individuals who invest in a
cooperative must share the risk of its success or failure. The fundamental
principle is this – cooperatives must never be allowed to become purely
investment or money-making ventures. If this happens, the spirit of cooperation
will be destroyed and cooperatives will fall into the hands of commercially-
minded business people who will forget the social and environmental
objectives of cooperation.
With one exception, shares should not be transferable or tradeable.
Members who purchase shares in the cooperative should have no power
or right to transfer their shares without the permission of the cooperative,
but their shares may be inherited. If some cooperative members have no
descendants, then their shares should pass on to their legally authorized
successors who will become members of the cooperative if they are not
already members.58
The reason for this policy is once again to prevent a concentration of share
ownership in the hands of business minded people who place commercial
interests above community. The following passage demonstrates how Sarkar
envisages cooperatives having strong community links.
In different countries there are different systems of inheritance, so the
right of inheritance [of a deceased person’s shares in a cooperative]
should be decided according to the system in vogue in a particular
country. For example, in Bengal the Dáyabhága system is followed, in
other places in India the Hindu Code is the established system, while in
other countries other systems are practised. If this arrangement is
followed, cooperative members will not need to go to court or get
involved in litigation. As all members of the cooperative will be from the
same vicinity or members of the same village, they will all know each
other, and thus there will be little difficulty in deciding who should be the
legally appointed recipient of the shares. The members of the cooperative
themselves will be able to decide who can claim the right of inheritance
to the shares owned by the deceased members.59
In order to raise capital, a cooperative would, in the first instance, turn to the
cooperative banking system. Indeed, the role of cooperative banks is to build
the cooperative sector. Large-scale investments in infrastructure, perhaps
involving government-cooperative partnerships, could be allocated funds in the
government budget. Some of the financial instruments in a modern capitalist
economy may be appropriate in a cooperative economy, some not. Once again
the guiding principle is to protect the practice of cooperation and to avoid the
domination of profit motive. Public utilities might issue bonds if large capital
investment programs were not to be entirely funded out of the government
budget. But this would draw savings from the cooperative sector. Finance in a
developed cooperative economy is clearly a topic for future research.
Profit in a Cooperative Economy

Profit motive lies at the heart of capitalism. To quote James Killen, a former
Australian cabinet minister (1975-1982), also renowned for his wit: “Anyone
who does anything for anything other than profit is either a bankrupt or a
madman!” Indeed the pursuit of profit is so ingrained in the culture of modern
capitalist society that we have forgotten how life might be different.60 Sarkar
argues strongly that the profit motive cannot be the dominant guiding principle
of a healthy socio-economic system. Instead he promotes the principle of
production for consumption, that is, the production of what people need.
We have already noted the disturbing contradiction between the fecundity of
capitalism and the poverty which accompanies it. A combination of
competition and the blind pursuit of profit concentrates business ownership to
the point where most production is captured by a relatively few people who
produce only that which yields them maximum profit. Basic necessities are
therefore neglected even as luxuries become cheaper. Replacing the profit
motive by a consumption motive will remove this defect. Indeed the production
for consumption motive lies at the heart of a cooperative economy just as the
profit motive lies at the heart of capitalism.
Obviously profit and loss accounting are essential in a cooperative economy
because profits are an incentive to work and accounting is required, among
other reasons, to determine a just distribution of profit. Sarkar promotes the
idea of a rational profit. A well-run business, he says, should be able to add a
mark-up of 15% after all costs, sinking funds, etc., have been taken into
account.
A rational profit is about 15%. This amount or part of it will be

distributed among those who manufactured the machines. This will be
their incentive. As they get more incentive, workers will try to
manufacture more machines. This is not the case in state capitalism
[Sarkar’s terminology for communism as practised in the USSR] because
workers get fixed incentives which become part of their salary. Incentives
should encourage greater work and better quality work, so they should be
directly linked to production. When this system is adopted, the per capita
income and the standard of living of the workers will automatically
increase.61
A 15% mark-up will not enable people to get rich fast, but it will promote
productivity and a steady accumulation of wealth in the community. Note that
from a macroeconomic point of view, a 15% mark-up for each individual firm
will lead to an approximately 70%-30% split (between wages and profit) of
total output from the entire business sector. This comes about because firms
within a chain of production are adding a mark-up to the mark-ups of prior
firms in the chain.62 A 30% profit share of gross business output is fairly
typical for a modern economy. A 15% mark-up is rational because it leads to a
balanced income distribution between secure income (wages) and incentive
income (bonuses and dividends). The crucial issue, of course, is that in a
capitalist economy the major portion of profit goes to a few majority
shareholders who constitute a very small proportion of the population. In an
economy dominated by cooperatives, the 30% profit share is distributed to the
owners of cooperatives who are the workers themselves. In other words, the
cooperative system leads to a more equitable distribution of wealth. In the case
of workers in public utilities, Sarkar advocates bonus systems and non-
financial rewards.
Efficiency and Multilateral Accounting

We have already noted that profit in the capitalist system is frequently a
surrogate for efficiency. Obviously, therefore, the systems of accounting used
to determine profit are worthy of attention. Efficiency (the ratio of outputs
divided by inputs or benefits divided by costs) is an important criterion by
which we measure the success of many human endeavours. In theory, more
efficient businesses should yield larger profits. Capitalism prides itself on
being an extremely efficient system to allocate resources and to build wealth,
yet in truth it is a very inefficient system if we take into account the poverty
and pollution that always accompany it.
From a theoretical point of view, the inefficiencies of capitalism can be traced
to a market mechanism that is unable to signal the true short- and long-term
costs of the traded goods and services. This problem is compounded by
accounting systems that are concerned only with financial costs and ignore so-
called external costs which typically emerge over the longer term. In fact the
competitive pursuit of profit encourages businesses to externalize as many

costs as possible and to think only in the short term. For example, it is
estimated that US corporate profits in 2000 amounted to $500 billion, but the
unaccounted external costs associated with producing that profit amounted to
$2,500 billion. These costs, which included diseases associated with air
pollution, cancers induced by workplace conditions, environmental clean-ups
and so on, did not appear as costs in corporate balance sheets but rather were
paid by taxpayers or victims. See the Endgame website63 for more detail about
this analysis.
Capitalist accounting also ignores positive externalities, that is, benefits that
arise from work such as care of children and the elderly, and hence these jobs
are relatively poorly paid. A just released report from the New Economics
Foundation64 has compared the remuneration of bankers with child care
workers and found the discrepancy to be at odds with a proper accounting of
cost-benefit to society.
High-earning investment bankers in the City of London are among the
best remunerated people in the economy. But the earnings they command
and the profits they make come at a huge cost because of the damaging
social effects of the City of London’s financial activities. We found that
rather than being ‘wealth creators’, these City bankers are being
handsomely rewarded for bringing the global financial system to the
brink of collapse. While collecting salaries of between £500,000 and £10
million, leading City bankers destroy £7 of social value for every pound
in value they generate.
Both for families and for society as a whole, looking after children could
not be more important. As well as providing a valuable service for
families, childcare workers release earnings potential by allowing parents
to continue working. They also unlock social benefits in the shape of the
learning opportunities that children gain outside the home. For every £1
they are paid, childcare workers generate between £7 and £9.50 worth of
benefits to society.65
From the foregoing it is apparent that measures of profit and efficiency very
much depend upon what one decides to count as costs and benefits. And this, in
turn, depends on the state of scientific knowledge and the relative political
power of the stakeholders involved. In other words, measures of economic
efficiency are highly political and intensely contested. Given what is at stake,
this will probably always be the case, even in a cooperative economy.
However, the principles of Prout clearly indicate a commitment to
incorporating a broad range of factors in the balance sheet, including
intellectual, social, affective and spiritual. Is it possible to account for such a
diverse range of resources in a meaningful way, thinking for the future as well
as the present? Yes, it is. In fact several exciting initiatives have already been
adopted by businesses and local governments around the world.
Triple bottom line accounting

A widely adopted initiative is triple bottom line accounting. It attempts to
make hidden costs explicit by having three parallel balance sheets that account
for the economic, social and environmental performance of a business. The
balance sheets identify all known benefits and costs to all stakeholders,
including workers, local community, nation and the environment.66
It is worth mentioning recent interest in a fourth bottom line concerned with the
ethical dimension of economic activity.67 68 Very few companies have an
ethical audit of their activities. As noted already, the success of the cooperative
system is dependent on high ethical standards of management.69 The ethical
bottom line has come under the spot-light following the bankruptcies of high
flying companies, such as Enron and WorldCom. According to Wong,70 Enron
was brought down by its paucity of social-spiritual capital:
Enron’s senior management failed to maintain a relationship of openness
and trust with employees… Senior management cared more about self-
enrichment than the needs of employees. They showed little regard for
meaning and ethics beyond the bottom line… Enron’s deficiency in
social-spiritual capital proved to be fatal.
We can expect the number of accounting dimensions to increase over coming
decades as we become ever more aware of the multiple social, environmental
and ethical consequences of our economic activity – hence the open-ended
term, multilateral accounting. But this is for the future. In 2009, social and
environmental accounting must still be regarded as very much in their infancy.
Protocols are still being developed and contested.
Social accounting
Two social accounting models that we shall note here are those promoted by
the Social Audit Network71 (SAN) and Social Ventures Australia (SVA).72
They serve to illustrate two sides of an important debate about whether the
three bottom lines should be accounted in real physical quantities or whether
they can meaningfully be merged into a single bottom line accounted in
dollars. SAN is a grassroots network that grew out of an initiative of the New
Economics Foundation. Over the past decade it has developed widely used
tools for social accounting and auditing. SVA is a more recent entry into the
field and commands the support of some big businesses. In particular it
promotes the social accounting tool known as SROI (Social Return on
Investment). The SAN tools and SROI are very similar in all but one crucial
respect – whereas the SAN approach is to account in quantities and qualities,
the SROI approach finally converts all quantities to dollar values. This is a step
some would question on the grounds that the social quality of life cannot (or
should not) be quantified in dollars. The motivation for converting the triple
bottom line to a single dollar bottom line is precisely the difficulty of making
comparisons between the three differently accounted lines. SROI attempts to

estimate the financial benefits generated by an organization’s commercial and
social acitivites and then compares those financial benefits to the investment
required to generate them. “This return ratio tells us the extent to which the
funds are being effectively leveraged.”73
Environmental accounting
Exactly the same debate arises in environmental accounting. The Wentworth
Group of Concerned Scientists (an Australian group) has recently put forward a
proposal for a set of National Environmental accounts.74 Data for the accounts
would be collected on a regional basis and would monitor the health of five
classes of environmental assets: land, water, atmosphere, marine and urban.
The accounts would be published each year and would become the basis for
determining the effectivness of all environmental restoration programs. One
consequence of a set of water accounts would be, for example, a sustainable
allocation of irrigation water in the Murray-Darling Basin.75
The Habitat Hectares program76 in the State of Victoria offers another example
of environmental accounting, in this case land quality and in particular its
biodiversity. However the Habitat Hectares program goes a step further and
sets up a market that allows land developers to trade in biodiversity. The idea is
that the environment provides ecosystem services, that is, it performs important
functions that improve human life. For example, trees purify water, prevent
erosion and so on. If a dollar value can be put on those services, then market
mechanisms can be put in place to retain or even increase that value.77 As an
example of this approach, which is the environmental equaivalent of SROI,
New York’s water supply comes from a large natural watershed and it is
estimated that it would cost $9 billion to purify the city’s water supply if nature
were not doing it for free.78 If water is priced with this cost in mind, the
revenue can be used to further improve environmental quality.
Politicians like putting a dollar value on ecosystem services because it makes it
easier to weigh up conservation costs against competing budget items. But the
approach is fraught with difficulty. Most obviously it assumes that all the
services provided by a particular ecosystem can be known. But ecosystems are
incredibly complex and all its services cannot possibly be known. Furthermore
how does one put a price tag on the aesthetic, cultural or spiritual value of a
particular lake or forest. There is, however, a more fundamental objection – the
notion of ecosystem services is entirely focused on benefit to humans. But an
ecosystem is a living entity in itself, not an abstract concept, and therefore has
its own moral right to be healthy, quite independent of its value to humans.79
To reiterate, social and environmental accounting are still very much in their
infancy but they point the way to the future.
Philanthropy
The distinction between philanthropy and social enterprise is to be noted.
Philanthropy is the practice of a person or business investing their savings in a
community without expectation of a financial return. Typically philanthropy is
practised by individuals who have made much money running a privately
owned and highly profitable business. A social enterprise on the other hand is a
business whose dominant concerns are with community benefit rather than
with profit. The distinction can become confused because the object of many
philanthropic organizations is to help social enterprises in various ways.80
Philanthropy has long been a strong tradition in the United States but it has not
been so strong in welfare economies such as that of Australia. But over the past
decade, the Australian government has been attempting to increase the role of
big business philanthropy, while at the same time constraining its own budget
commitments to social welfare, tertiary education and scientific research. One
response of big business has been the adoption of formal accounting systems to
monitor the performance of what they call their community investment
programs. One such is the London Benchmarking Group (LBG).81 A question
arises as to the appropriate roles for government social programs versus
philanthropy and the balance between the two. While business philanthropy is
obviously to be encouraged it should not be a substitute for well-planned
government social action. In particular, it does not absolve governments of the
responsibility to seek out and fill gaps of disadvantage.
Regulation
In a modern economy, the different enterprise types require legislative support,
that is, acts of parliament which lay out basic principles of governance and
broad parameters of what can and cannot be done using that enterprise
structure. In the case of public utilities, each typically has a dedicated act of
parliament, or statute, which lays out the social purpose of the enterprise, its
governance and the nature of its link to the executive branch of government.
The legislative support for cooperatives in Australia is weak and varies from
State to State, reflecting the weakness of the sector in general. For example, it
used to be that a cooperative could not be formed in Queensland without the
active involvement of 25 persons. That number has since been reduced because
it was an unnecessary impediment. An interesting new development in
Australia is the emergence of national cooperatives that operate in several
States and therefore do not come under the umbrella of any one State’s
legislation.82 To respond to this need, the Federal, State and Territory
governments have agreed to adopt a national scheme for cooperative
legislation. Of interest is that a cooperative can be formed with a minimum of
five people, which is the boundary (in the Australian system of business
classification – see Table 3) between a micro-enterprise and a small enterprise.
As noted earlier, there is a spectrum of enterprise possibilities and those which
are selected as relevant for a particular country will require acts of parliament
to support them.
Regulatory Authorities
The success of the three-tier enterprise system will depend on the formal
acceptance of some regulatory decisions that are today made informally. Two
decisions will be of particular importance: first, the classification of goods and
services into essential, demi-essential and non-essential, and second, how to
determine which enterprise type is most appropriate for a given business. These
are qualitatively different kinds of decision. The former deals directly with
people’s quality of life and therefore properly belongs to the legislative branch
of government, that is, to the elected representatives of the people.
Decisions about enterprise demarcation will require expert legal and economic
knowledge. How large can a private business become before cooperative
management is appropriate? And, in the case of an essential commodity, how
to choose between a cooperative or key industry as the best mode of
management? Such decisions should be the province of a dedicated regulatory
authority, not dissimilar to Australia’s existing competition authority known as
the ACCC (Australian Competition and Consumer Commission). It would also
resolve disputes, for example, between the participants in private-cooperative
partnerships and public-cooperative partnerships.
It is worth reiterating why we even care about such considerations. We care
because the way in which goods and services are produced is as important as
what is produced. The way goods and services are produced affects the
efficiency with which we use scarce resources; it also affects our economic
security and ultimately our quality of life.
According to Sarkar, decisions about enterprise demarcation “should be based
on the principles of self-reliance, maximum utilization, rational distribution,
decentralization, rationalization and progressive increases in the standard of
living of all peoples”.83 These principles interact in complex ways but
nevertheless we attempt a brief introduction to each of them.
Principle of self-reliance
The principle of self-reliance or self-sufficiency is concerned primarily with
social, political and economic security. Countries which import many of their
essential foods and medicines are vulnerable to foreign pressure. Brazil in the
early 2000’s contemplated abandoning its free trade agreement with the USA
until it discovered that it was dependent on the latter for supplies of some
essential drugs such as insulin.
As usually defined in the Proutist literature, the principle of self-reliance refers
to the ability of a country or local community to produce its own minimum
requirements of life, namely basic foods, clothing, housing, education and
health care. However, in “Economic Self-sufficiency for Bengal”,84 Sarkar
clearly extends the concept to include the production of cash crops and
manufactured goods to be traded for semi- and non-essential commodities. In
other words, self-sufficiency includes the ability to maintain a balance of trade
as well as the ability to produce one’s minimum essential requirements.
Such is the importance of self-reliance that Sarkar advocates the establishment
of key industries even if it is not immediately efficient to do so. We have
already had the example of establishing a spinning industry using artificial
vaporization in regions where climate is unsuitable for crops. Why? Because
textiles and clothing are an essential requirement but a secure weaving industry
can only be established if local yarn is available. In these cases, the spinning
industry would be considered a key industry and given appropriate support
even though purely economic considerations might support importation of
cotton.
Principles of maximum utilization and rational distribution

Businesses must manage the coming together of the factors of production –
labour, space, raw materials, tools, machinery, capital, etc. The managerial
process itself must satisfy some measure of efficiency. The principle of
maximum utilization implies that the number of managers and their degree of
involvement should be sufficient but not excessive. The principle of rational
distribution implies that the managerial style will depend upon the technology
and degree of automation. In short, the pursuit of efficient management will
frequently suggest the business category.
Principle of rationalization
In its broadest sense, rationalization is any reorganization of operations to
increase efficiency – but by what definition of efficiency? In recent times the
term has become associated with the ideology of economic rationalism, where
efficiency is very narrowly defined. We interpret the principle here to mean the
adoption of new technology to achieve not just increased output but also other
goals such as shorter working hours and safer and more interesting work. We
note, in passing, that in a cooperative economy automation gives scope for
decreasing work hours without decreasing income, because the rewards of
increased labour productivity are distributed to the owner-workers.
Most usually, rationalization is intended to take advantage of economies of
scale, leading to larger enterprises and increased managerial requirement.
Assuming that economies of scale motivate a cooperative to expand, at what

point is it advantageous to convert to a public utility? At least three factors
come to mind.
1. Cooperatives are community based enterprises and ideally they adopt
appropriate technology, that is, technology which, for a given level of output,
maximizes the use of locally available resources. In a decentralized economy, a
cooperative’s community would be its local shire or geographical area known
(in Prout parlance) as a block. A block has a population of around 100,000
persons, about the same size as the average local government area in Australia.
For a typical cooperative, the block would be its major source of labour, raw
materials, finance and of course the market for its product. The linking of
cooperatives to blocks having a particular population immediately sets some
constraints on the maximum size of a cooperative. If a cooperative outgrows its
community and its technology can no longer remain appropriate by the above
definition, then converting to a public utility may be the best solution.
2. Within a block, cooperatives compete for market share. They extend their
market indirectly by trading with coops in other blocks. If economies of scale
cause cooperatives to merge with one another, the point will come where a
large coop can exert undue influence on the local price by restricting supply.
Placing upper limits on the size of a cooperative is the equivalent to anti-
monopoly legislation. If splitting a large coop cannot be justified then forming
a public utility may be the only option.
3. The persons working in a cooperative are also a community. Larger
cooperatives in Mondragon, Spain, have reported difficulty in maintaining
cooperative integrity when the number of workers exceeds about 500. One of
the defining characteristics of a cooperative is that all workers have a sense of
personal responsibility for the final product and for the quality of the
workplace. When a company becomes very large, a major shift in management
style becomes necessary, not just to handle complexity, but also to maintain a
sense of personal responsibility. This is achieved by shifting to hierarchical
systems of management, where personal responsibility revolves around one’s
team or department within the company.
Principle of decentralization
In today’s world, we take it for granted that companies must search for
economies of scale if they are to survive under competition. In our discussion
of the principle of rationalization, we noted that an expanding cooperative in a
decentralized economy would eventually come up against the boundaries of its
community, more formally the block in which it resides. For the capitalist, such
a restriction is an intolerable frustration. Nothing should be allowed to stand in
the way of the search for profit. In a cooperative economy, however, value is
given to the economic security of a community. An appropriately decentralized

economy offers local people control over their resources, and over how their
community develops. They are not subject to blackmail by large companies
who threaten to move elsewhere if workers do not accept lower wages.
Capitalist society is so driven by the need to chase economies of scale that
most scientific and technological research is devoted to meeting that objective.
But the research impulse could just as well be steered towards economies of
decentralization. Economic decentralization is probably the most significant
strategic feature of a Proutist economy. It motivates economic planning,
scientific research and collective psychology.85
Key industries are usually large scale, capital intensive and difficult to
decentralize. However, Sarkar recognizes many “adverse effects of industrial
centralization” and encourages attempts to decentralize key industry as far as is
consistent with principles of efficiency.
Normally only very large-scale key industries should be centralized
instead of decentralized. But industries which cannot be readily
decentralized today may be decentralized in the future due to changing
circumstances. At that time the decentralization of key industries must be
implemented.86
Advocates of free markets, deregulation and globalization dismiss the
importance of a decentralized, community oriented economy. They might
derisively refer to the failure of Mao Tse-Tung’s development program
symbolized by the slogan “an iron foundry in every backyard”. Sarkar is not
advocating this kind of irrational decentralization. Rather he advocates
decentralization driven by the desire for economic security and made possible
by scientific research.
As far as possible, the establishment, operation and distribution of all
industries should be done at block level. Only when this cannot be done
should industries be organized at a higher level. Obviously, industries
such as iron and steel factories cannot function in every village, block and
district, so they should function in a larger area.87
Principle of progressive increase in the minimum standard of

living
It is obvious from the foregoing discussion that there will be tensions between
the various principles when deciding how an industry is best managed.
Efficiency may suggest public utility management, but economic security may
favour cooperative management. Both calculations will depend on what criteria
are taken into account. The ultimate arbiter in these cases is another principle,
the endeavor to progressively increase the standard of living for everyone. This
endeavor is the driving force of a Prout economy and finds its justification in
human psychology – years of work with no apparent improvement in one’s
circumstances have a depressing effect on the individual and society.

Stagnancy of this kind was a causal factor in the collapse of communism.
There are three parts to this principle: 1) an index with which to measure the
standard of living, 2) an increase in the index over time, and 3) that the index
should increase for everyone. This principle has many ramifications but here
we are only interested in its bearing on enterprise management. There are two
levels of concern, the microeconomic and the macroeconomic.
At the microeconomic level, work should be safe, healthy and interesting. But
just as important, it should be socially useful and personally meaningful.
Decisions about the mode of management for an industry must consider such
factors. The bigger the enterprise, the more likely it is that workers become
cogs in a machine. The great advantage of cooperative management is that it
enables workers to feel at one with their job.
At the macroeconomic level, a variety of indices are becoming available to
measure the different components of quality of life. According to economic
rationalists, increasing per capita GDP is said to be evidence of an increasing
quality of life. This assertion is wrong on two counts. First, per capita GDP is
an average figure that hides great inequality of incomes and especially
inequality of access to the minimum requirements of life.88 Second, GDP
measures any kind of economic activity whether it contributes to quality of life
or not. Military spending, policing, surveillance and the like contribute
magnificently to GDP, but the circumstances which make them necessary
suggest something is wrong with our quality of life.
An exciting range of new economic indicators has been developed by the
Calvert-Henderson group.89 These include literacy rates, school dropout rates,
infant mortality, nutritional indices, cholesterol levels, average calorie intake,
water quality, sanitation standards, access to telecommunications, access to
affordable housing, tests for various types of intelligence, the status of women
and minorities, pollution levels and natural resource depletion. Friends of the
Earth have an interactive website90 which demonstrates how different
combinations of socio-economic indicators can be combined into a single
index. The Kingdom of Bhutan is the first nation to have formally adopted a
new economic indicator known as the happiness indicator, an innovation
which has reportedly attracted the attention of the UK Treasury.91
The way in which large-scale businesses are managed impacts directly on
standard of living indices. For example, consider a privately owned
telecommunications enterprise. As the business grows, its sphere of operations
will eventually encompass both rural and urban areas. Rural areas are the least
profitable, so the easiest way to increase profits is to cut rural services. GDP
might increase but the standard of living for some will decline. The same
company operating as a public utility would subsidize rural services with its
more efficient urban services because its enabling legislation (an expression of
public will) requires it to do so. GDP increases (perhaps not as much) but the
standard of living in rural communities also increases.
The Audit Branch of Government

The separation of powers is a fundamental principle of democratic societies. It
emerged out of a 2,000 year struggle in Europe to establish the Humanist ideal,
that is, to put human dignity and worth above the dictates of kings, queens and
tyrants. Sarkar expresses grave concerns about the gradual erosion of the
separation of powers in the 20th century. He goes further and suggests that, in
addition to the legislature, the executive and the judiciary, there should a fourth
branch of government, the audit branch.92 In simplest terms, the role of the
legislature is to decide what to do, the role of the executive is to do it and, in
Sarkar’s proposal, the role of the audit branch would be to ensure they have
done it. (And of course the role of the judiciary is to resolve disputes between
the other three branches.) The audit branch would not have any role in
preparing the budget because this is a policy matter that remains the preserve
of the legislature.
In keeping with the notion of triple bottom line accounting, the audit branch of
government might also be responsible for a country’s social and environmental
auditing. It might subsume the bureau of statistics and calculate economic
indices, measures of welfare, etc. It would monitor the degree of self-
sufficiency of local government areas (blocks) and report to the legislature
when there is an unhealthy draining of wealth from one block to another. In the
environmental arena, it would monitor the hydrological cycle, soil erosion and
greenhouse gas emissions. Apart from reducing the scope for corruption in the
public sector, a separate audit branch of government would have other
advantages, including, for example, preventing politicians from redefining
quality of life indices to suit their own agendas.93
Competition and Cooperation

One of the seven international principles of cooperatives is cooperation among
cooperatives. And yet, at the same time, cooperatives are subject to the
discipline of the market place. If a cooperative does not produce good quality
products, consumers will seek other suppliers. This raises the interesting
synergy of cooperation and competition. Australia has a competition watch dog
whose job, in theory at least, is to ensure fair and efficient competition. There
are many instances, especially with very large corporations, where competition
does not make sense. A classic example is competition which leads to a
proliferation of competing protocols and standards in telecommunications and
computing. To avoid such non-productive competition (the fierce war between
Betamax and VHS for video format dominance is a classic example), large
businesses cooperate. Finding the right balance of competition and

cooperation, that is both rational and serves the interests of consumers, is
probably a never ending struggle. It may turn out to be helpful to study the
synergy of cooperation and competition in the natural world. (See, for example,
the section Patterns of Competition and Cooperation in Nature and Society in
David Holmgren’s treatise on permaculture.94)
Worker’s Organizations and Unions

Traditional trade unions sometimes have difficulty coming to terms with the
cooperative model. A case in point is a long running dispute in Italy, where
cooperatives form an important sector of the Italian economy. There are
estimated to be some 40,000 cooperatives in Italy, which of course give work
to many times more people. Many of these workers are not employees in the
traditional sense but rather working partners. As they combine features of a
partner in a commercial company (some sort of entrepreneurship) with those of
an employee (the fact of earning a wage), working partners are at the centre of
an important fight between trade unions and cooperative associations. To
simplify greatly, the question is whether the working partner should be
considered more of a ‘partner’ and therefore bear the risks of economic
activity, or more of a ‘worker’ and hence be fully protected by industry-wide
collective agreements.
Unfortunately this debate takes place against the backdrop of the historical
struggle between workers and bosses who see their interests as antagonistic.
And indeed they usually are in a capitalist society. Cooperatives do not fit
conveniently into the polarized world of labour versus capital. Yet, as the
Italian author of a report on this debate comments,95 trade unions around the
world promote many cooperative initiatives, mainly in the field of social
welfare. The working partner dispute exposes an ideological tension between
unions and cooperatives – two worlds that actually have many cultural and
practical connections, despite their differences.
Sarkar accepts the view that workers should organize unions where they see the
necessity. He does not, however, address the issue of the relationship between
unions and cooperatives. The easiest interpretation is that trade unions are
primarily relevant to the large government run enterprises. And in these, Sarkar
also advocates worker representatives elected to the boards of directors.
In the case of cooperatives, many of them will employ workers from the
spectrum of social classes. It is quite easy to imagine a scenario where better
educated upper middle class workers become entrenched in better paid
management positions and the differential wage between managers and non-
managers increases excessively. Sarkar accepts that intellectual and managerial
skills should be adequately rewarded but he also insists that there should be
some maximum ratio between the lowest paid and the highest paid.96 Indeed
most existing cooperatives have such a maximum ratio, but it is interesting to
note that the managers of the Mondragon cooperatives have increased that ratio
from 1:3 to 1:6 as they were obliged to compete in the capitalist world.97
The lesson appears to be that there will always be a need for regulatory
authorities to monitor working conditions in all enterprises, whether private,
cooperative or public. Furthermore, workers organizations will be helpful to
guard against class exploitation within cooperatives, and they could also take
the role of guilds and trade associations to assist in the dissemination of new
technology and to ensure a uniformity of quality standards through an industry.
However, care should also be taken that trade unions do not undermine the
cooperative spirit. It will probably take some time for the appropriate balance
to emerge.
The Rural Sector
The Corporate Conquest of Farming

Agriculture in under-developed countries has long been problematic, but as we
enter the 21st century even agriculture in developed countries has reached a
critical juncture. The combination of climate change, rising energy costs and
exposure to unfair competition in the name of ‘free trade’ has rendered the
traditional family farm unviable. The family- or owner-operated farm is rapidly
giving way to corporate agriculture, that is, large-scale farming dominated by
a few corporations able to command large-scale investment funds. The
Australian government is promoting corporate agriculture as the way of the
future, arguing that family farms no longer have the economies of scale to
survive in a globalized world. Large multinational corporations have long
dominated the production of inputs to farming and also the distribution of farm
output, but until recently the actual farming itself had mostly remained in the
hands of small family businesses.
The corporate conquest of farming will have hugely important consequences.
A particularly worrying feature is that the agri-corporates see themselves first
as financial investment managers and only second as farmers. Yet they are now
the largest holders of prime agricultural land in Australia and by contracting
out the actual farming they still determine what is planted and where. One of
Australia’s largest agri-corporates, Primary Yield,98 describes itself as follows:
Primary Yield is an investment manager specializing in the agricultural
sector. For investors and advisors looking to build a well-diversified
portfolio, Primary Yield offers simple access to a range of quality agri-
business investments managed by industry leading specialists in sectors
participating in strong global markets.
The yield in Primary Yield is not bushels per acre but cents in the dollar – with
the disturbing consequence that farming will inevitably become embroiled in
speculative take-over battles, as one agri-corporate attempts to swallow up
another.
Needless to say many Australian farmers are disturbed by the shift to corporate
agriculture. They use terms such as corporate feudalism to describe emerging
trends in the rural economy,99 where arable land is farmed by a class of
essentially powerless ‘serfs’ but owned by a class of aristocrats (powerful
corporations) who also reap the product. The term is ironic, since it also
describes the reality of farming in Third World countries, despite the great
difference in technology and scale. Sarkar is adamant in his rejection of the
feudal nature of agriculture in India.
The previous four paragraphs were researched in 2006-2007. At that time there
were three major agri-corporates in Australia: Primary Yield, Great Southern
and Timbercorp. The government of the day had great faith that such
companies would be the salvation of Australian agriculture.100 It is worth
noting the status of these three giants as of 2009. Primary Yield collapsed in
November 2008 with a debt of $100 million AUD. Timbercorp collapsed in
April 2009 with a debt of $300 million AUD.101 Great Southern declared
bankruptcy in May 2009 owing investors up to $4 billion AUD. The managing
director of Great Southern gave himself a $2 million retirement benefit just
before the company collapsed.102 Billions of dollars of prime agricultural land
are now tied up in legal battles.
A Cooperative Rural Sector

Sarkar accepts that farming must be viewed as an industry and subject to the
same criteria of efficiency as required for manufacturing industries. However
he insists that farms must be owned and managed by the farmers themselves
and that in order to achieve the required economies of scale farming is best
organized cooperatively. Sarkar envisions the rural economy as dominated by a
variety of cooperatives, primarily farmer cooperatives, producer cooperatives
and consumer cooperatives. The first is engaged in primary production. The
second are of two kinds: agro-industries, which produce tractors, hoes and
other commodities required to grow food and fibre, and agrico-industries,
which value-add by processing and refining farm output. Consumer
cooperatives are responsible for the distribution, marketing and sale of
agricultural produce. Sarkar also refers to farmer-cum-producer cooperatives
which both grow and value-add. Public utilities would supply key raw
materials requiring large-scale infrastructure for their production and
distribution, for example, fertilizer, irrigation water and fuel. Privately owned
small businesses would provide specialized agronomic and veterinary services
and of course specialty foods and gourmet items (Figure 5).
Cooperatives are nothing new in the world’s rural economies. Indeed in the
19th century and well into the 20th century, farmer owned cooperatives
dominated the processing and distribution of agricultural produce. It is only in
the last 20 years with the emergence of economic rationalism that private
corporations made concerted efforts to take over rural cooperatives in a process
known as demutualization. Farmers allowed this to happen partly because they
were not able to stand against the power of large corporations and partly
because they had forgotten the advantages that lead their predecessors to form
cooperatives in the first place.
AUTONOMOUS
Agro-industrial
BODIES producer
cooperatives
Key Industries
for production of
fertilizers, fuels, etc. C
o
n
Farmers Consumer
Regulatory cooperatives cooperatives s
Authorities
for land and water
u
management, etc. m
e
Research Institutes Agrico-industrial r
for agricultural and producer s
scientific research cooperatives
indicates private concerns.
Figure 5: The agricultural sector from a three-tier enterprise perspective.
Sarkar’s proposal might be described as the remutualization of the rural

economy, with the difference that the actual farming is also mutualized.
Farming cooperatively, says Sarkar, offers many advantages, three of which
are mentioned here. First, it offers economies of scale and therefore financial
stability. Farmers will be able to invest in the latest machinery and take
advantage of the latest scientific and technological developments. Second,
farming planned over larger areas of land will achieve environmental benefits
through more effective management of water, soil erosion, drainage, etc. Third,
and as important as the first two, financial and ecological stability will allow
farmers to enjoy an enviable lifestyle. Automation will reduce hard physical
labour and allow time for intellectual, artistic and spiritual activities. This last
advantage has also been emphasized by Colin Tudge, author of The Secret Life
of Trees:
…once we start to think seriously about the fate of cities, and
environmental stress in general, and human employment and dignity – we
see that for the foreseeable future, and probably forever, the economies
and physical structure of the world must be primarily agrarian. In the
current crude, unexamined dogma, ‘development’ and ‘progress’ mean
urbanization. The primary requirement, in absolute contrast, is to make
agrarian living agreeable. It can be. It’s just that at present, all the world’s
most powerful forces are against it.103
The increased significance of agriculture does not mean a majority of people
‘toiling in the fields’. Rather it means that the economy and culture of a region
would be securely grounded in the ecological dynamics of its landscape. In
Sarkar’s view, a healthy, well-developed society would have about 25% to
30% of its active work force engaged directly in agriculture. This compares
with 80% in underdeveloped countries and 5% in what Sarkar calls over-
developed countries, such as Australia and the USA. A strong cooperative
sector is required to make agrarian living agreeable. However, Sarkar warns
against the hasty formation of farmers cooperatives.
…it is not wise to suddenly hand over all land to cooperative
management because cooperatives evolve out of the collective labour and
wisdom of a community. The community must develop an integrated
economic environment, common economic needs and a ready market for
its cooperatively produced goods. Unless these three factors work
together, an enterprise cannot be called a cooperative.104
Even worse would be any attempt to impose the cooperative system on an
unwilling rural population. This would inevitably lead to failure, as was the
case when the Soviet Union attempted to imposed collective farming.
The leaders of the Soviet Union were ignorant of the collective
psychology of the people, so they tried to impose collective farming by
force. This produced severe famines and massive civil unrest. While
trying to cope with these problems, the administration resorted to brute
force instead of adopting psychological measures, and as a result they
annihilated many people.105
Those attempting to establish a Proutistic economy, says Sarkar, “will never go
against the spirit of a country and cause its ruin”.
Four Phase Program for a Cooperative Rural Economy

Sarkar proposes a four phase program for the introduction of farming
cooperatives.
Phase one
In the first phase, uneconomic farms, that is, those where the market price of
the produce is less than the cost of production, including all capital, labour and
machinery costs, would be encouraged to join a farmers cooperative. The
contributing farmers would still retain title to their land. 50% of the net profit
would go to the landowners (in proportion to the productivity of their
contributed land) and 50% to the labourers (in proportion to their net wage).
The advantage of cooperative management at this stage is an increase in
production because uneconomic land holdings become economic. Economies
of scale are achieved in the more efficient provision of irrigation, use of
machinery and land management practice. In this phase, there is no point in
attempting to include economic holdings. Parallel to the formation of farming
cooperatives would be the formation of agro- and agrico-cooperatives to
generate local demand for farm produce and to provide employment within the
local community.
Phase two
In the second phase, farmers owning economic holdings would be invited to
join the cooperative system but this phase begins only after all non-economic
holdings have been consolidated. Profit in farmer cooperatives is now divided
25% to landowners and 75% to labour. Landowners would still enjoy two
income sources, one from their labour, the other from their land contribution.
Phase three
In this phase, there would be rational redistribution of land. Rational means
that farm boundaries would be adjusted to landscape management requirements
and that farm sizes would be sufficient to support a family. This policy implies,
although Sarkar does not explicitly state it, that family farms would be the
norm, just as they are today, but that families would work cooperatively with
their neighbours in order that the landscape might be managed as a whole.106 In
addition, the family would have the financial and social security of working
under the umbrella of a larger cooperative. However there would now be no
distinction between farm labour and landowner. All farming members would
own the land through their cooperative and consequently 100% of the profit is
shared in proportion to the contribution of a member’s labour.
While one of the advantages of a farmer cooperative is economies of scale, the
farms should not be too large:
In this phase, it will be easy to establish big cooperatives with the
extensive application of science, but these cooperatives will not be
anything like the huge collective farms of the Soviet Union or China. If
cooperatives are allowed to become extremely large, it will be difficult to
utilize natural resources efficiently and this will lead to complications in
the sphere of production. One of the main defects of the collective farms
in socialist countries is their unmanageable size.107
The ultimate size and composition of the cooperatives, says Sarkar, should be
determined by the farmers themselves.
Phase four
Sarkar notes that the establishment of a cooperative rural sector will not happen
overnight. Indeed he implies that it may take many years for a culture of
thinking cooperatively to gradually permeate society. This process is what
sociologists would refer to as the accumulation of social capital. The final
phase will be characterized by no conflict over the ownership of land, by full
employment and by an agreeable rural lifestyle.
The most important feature of Sarkar’s rural development program is that it
works from bottom up. It proceeds at a pace determined by the willingness of
farmers and rural communities to embrace the cooperative system. When
cooperatives are pushed from the top with little psychological preparation, the
outcome must be uncertain. Venezuela and Bolivia make an interesting
comparison. President Chavez in Venezuela is creating cooperatives and
communal councils from top-down. In Bolivia, by contrast, cooperatives are
arising out of a people’s movement, bottom-up. If Chavez loses power the
entire Venezuelan cooperative program could possibly fall apart. In Bolivia,
political leaders are almost irrelevant because their cooperative movements
have been built by local communities who offer ultimatums to politicians. One
reason for the difference is that Bolivia’s movement has indigenous roots, with
a culture quite different from traditional Latin-American culture.108
The Service Sector

In this section we describe the application of the three-tier enterprise system to
the structure of two service industries, health and finance. Sarkar defines a
service cooperative as “a subtle type of cooperative coming within the arena of
cultural cooperatives”. Into this category he includes the work of intellectuals
and artists. But he gives as an example the formation of physicians service
cooperatives. The reader may like to extend the application of the three-tier
enterprise concept to other sectors, such as education, media and
communications.
The Health Sector

Health services constitute a significant part of a modern economy and consume
a large portion of its resources. Consequently delivery of health services must
be subject to principles of efficiency, decentralization, etc., as described in the

previous section.
Doctors should start service cooperatives. These cooperatives may also
be called “physicians service cooperatives”. Suppose a doctor is not able
to open his or her own practice, he or she may form a service cooperative
with five or ten other doctors. Such a cooperative is an intellectual service
cooperative. Doctors who have little capital and cannot afford to establish
their own practices can also work in this type of cooperative. Such a
system will solve the unemployment problem of doctors. In addition,
doctors can start research through these cooperatives, although a doctor’s
job is ninety-nine percent practical and hardly one percent theoretical.109
It seems natural to adopt the three-tier system to structure the provision of
health services through hospitals, clinics and private practitioners. A public
hospital would be a large institution typically with several hundred staff and
managed as they usually are today by an autonomous or government body of
some kind. Cooperative clinics and hospitals would offer a wide range of
standard and specialty services under the same roof but would not offer the
high-tech diagnostic services of a major hospital (such as MRIs). Finally,
private practitioners would offer a variety of health services and premium
services, such as home visits.
With regard to the provision of medicines, Sarkar argues that the right to
manufacture medicines should be entrusted to autonomous bodies, while their
distribution can be through the same autonomous bodies or through consumer
cooperatives.110
It is interesting to note that with the advent of economic rationalism, public
hospitals in the State of Queensland are employing more bureaucrats and fewer
nurses, with administrative staff constituting almost 75% of new staff
employed in the five years up to 2005.111 Despite this, Queensland hospitals
continue to be plagued by crisis. Doctors are scarce, nursing is more stressful
than ever and hospitals are overcrowded. When business people run hospitals,
efficiency apparently comes at considerable cost.
In most developed countries, health care is funded partly by government and
partly by personal health insurance. Sarkar does not discuss this contentious
issue, other than to insist that everyone must be guaranteed their minimum
health requirements. The issue has been discussed briefly in Towsey (2003)
who observes that “there is a common perception that government involvement
in public insurance promotes equity while non-government insurance schemes
are economically more efficient”. He then proposes a mixed health funding
scheme:
There is an important distinction in Prout between the minimum required
allocation of a commodity or service and the additional amenity
component which makes life easier but is not essential. In the case of
health care, the Australian government makes the same distinction. The
government provides essential health services, while private insurers
cover optional extras, such as doctor of choice, massage and optometry.
This arrangement, or something like it, seems elegant. In a Proutist
system, government would have a constitutional obligation to ensure that
everyone gets the minimum health care services so it should be given the
necessary powers to achieve this goal, thereby taking care of the equity
objective. Health insurance cooperatives could provide cover for the
additional health amenities that become desirable as a community
becomes more wealthy.112
Given the expensive medical technology currently available to save lives, this
apparantly elegant solution hides extremely difficult policy decisions – what is
a minimum health requirement and what is an amenity? A workable health
policy is yet another area requiring attention from Proutists.
The Financial Sector

It is patent that in our days not alone is wealth accumulated, but immense
power and despotic economic domination is concentrated in the hands of
a few... This power becomes particularly irresistible when exercised by
those who, because they hold and control money, are able also to govern
credit and determine its allotment, for that reason supplying so to speak,
the lifeblood to the entire economic body, and grasping, as it were, in
their hands the very soul of production, so that no one dare breath against
their will.
Pope Pius XI113
Sarkar would probably have appreciated the intensity of language used by Pius
XI. His response would have been to insist that the banking system should not
be in the hands of private individuals “because past experience has shown that
managers who are dishonest business people have seldom protected the hard
earned savings of ordinary depositors. Many have profited by illegally or
recklessly investing the bank’s money; their activities have also ruined many
middle-class families.”114 As if to prove his point, in recent years the United
States has witnessed the Savings and Loans scandals, Enron, WorldCom and
the sub-prime mortgage meltdown, to mention just the big ones. In Australia
we have had the collapse of HIH. Each of these calamities wiped out the life
savings of many families. They were caused in each case by a few dishonest
and reckless managers.
Ideally the central bank should be an autonomous body at arms length from
political interference. In fact the current practice of an independent central
bank, whose operations are defined by statute, appears to be entirely
appropriate. The problem is that the banking system to be regulated is in
private hands and managed to serve the selfish interests of a comparatively few
very wealthy shareholders. Furthermore, those appointed to the Reserve Bank
Board come from the private sector and support its ethos and culture. In a
cooperative economy, the banking system would be a combination of
comparatively few large-scale banks, operating as key industries on a no profit
and no loss basis, and many smaller community-scale cooperative banks or
credit unions.
A widespread system of cooperative banks and credit unions would
decentralize money allocation decisions. Cooperative banks build local
prosperity because they keep money circulating within the local community
rather than letting it bleed to outside investors. To reap this advantage, it is
necessary to ensure that the majority of a credit union’s funds are borrowed
from and lent within their block or community. Prout’s three-tier system would
place an upper limit on the expansion of individual credit unions, thereby
preventing any one institution gaining disproportionate power. The profits of
cooperative banks would be distributed to shareholders, the majority of whom
would be employees and customers living within the same block.
There are many innovations in the field of community banking and currencies,
for example, micro-credit,115 the interest free loans of Starr-Bowkett
Societies,116 the JAK banks in Sweden117 and LETS trading schemes.118 They
deserve the opportunity to achieve success, but within the constraints of
cooperative management, strict supervision and social purpose objectives.
Broking and advisory services are appropriate roles for the private and
cooperative sectors, depending on the scale of the service provided. Sarkar
refers to family annuity cooperatives which, although undefined, would
presumably provide superannuation and life insurance services. They could
operate in conjunction with other cooperatives to provide workers with
pension-saving schemes. Conceivably payments to annuity trusts could become
compulsory, just like superannuation payments are today, in which case
retirement savings would become an important source of capital for new
cooperative enterprises.
The financial sector, even in an established cooperative economy, will always
require careful regulation to guard against unscrupulous activity. A cardinal
rule for policy makers is that a regulatory authority should always be
independent from the actual providers of the regulated products and services
and there should be no conflicts of interest between the regulator and the
regulated. It is an obvious rule born out of centuries of experience. Yet it is a
rule often broken. Consider, for example, the case of the Australian Securities
Exchange (ASX) that supervises trading in Australian shares and securities.119
The ASX is also a for-profit company (having a duty to maximize returns to its
shareholders) that stands to profit from an increased volume of the trading it
supervises – a conflict of interest that inevitably led to accusations that the
ASX compromised its regulatory role by promoting dubious investment
products so as to increase turnover. This in turn placed superannuation savings
at risk.120 One is reminded again of Sarkar’s warning about financiers

recklessly investing the savings of middle-class families, thereby bringing
about their ruin.
To conclude, financial management will always be about walking a tightrope –
it should enable entrepreneurs to respond to perceived opportunities but
without giving the selfish minded of them a chance to rort the system. The
larger goal is to ensure financial security into the future.
Acknowledgements
The author wishes to thank Jake Karlyle, Marcelle Holdaway, Alanna Hartzog,
Firdaus Ghista, Ac. Maheshvarananda Avt., Howard Nemon and Trond
Øverland for helpful criticisms of earlier drafts. Also thanks to John Pearce for
his permission to use Figure 4.
About the Author

garden.
Appendix
The Five Fundamental Principles of Prout

1. No individual should be allowed to accumulate any physical wealth without
the clear permission or approval of the collective body.
2. There should be maximum utilization and rational distribution of all
mundane, supramundane and spiritual potentialities of the universe.
3. There should be maximum utilization of physical, metaphysical and spiritual
potentialities of unit and collective bodies of human society.
4. There should be a proper adjustment amongst these physical, metaphysical,
mundane, supramundane and spiritual utilizations.
5. The method of utilization should vary in accordance with changes in time,
space and person, and the utilization should be of progressive nature.
References
(Note: Prout in a Nutshell contains all the author’s discourses on Prout.)
nearly all the author’s discourses on economics, which are also contained in Prout in a
Nutshell.)
Human Society, Part 1 and Human Society, Part 2.)
Nutshell.)
22 October, 1959. (Note: This book is also contained in Prout in a Nutshell.)
above reference list are also available in the ElEdit. ElEdit Version 7.0 contains the most
recent translations available of all Sarkar’s discourses and books.
Stretton, Hugh. Economics – A New Introduction (ENI). Pluto Press: London, 1999.
Endnotes
1
In the later phases of the Cold War, the US adopted what became known as the Strategy of
Technology. The idea was to overwhelm the Soviet Union’s economic ability to maintain
military parity. See http://en.wikipedia.org/wiki/Strategy_of_Technology, link valid 12
December 2009. Of course this economic or technological argument is only part of a more
complex story. Suppression of intellectual freedom and human rights must surely have
contributed to the relatively sudden collapse of the USSR.
2
For a more detailed account of the early cooperative movement, see Michael Towsey, “The
Biopsychology of Cooperation”, in Understanding Prout, Volume 1, 2010.
3
For more on Owen’s life, see George Cole, A Century of Cooperation, George Allen and
Unwin Ltd., for The Cooperative Union Ltd. First Edition, 1944. Download from:
http://www.archive.org/stream/centuryofcoopera035522mbp/centuryofcoopera035522mbp_djv
u .txt. There is also a Wikipedia entry on Owen.
4
5
For more on Japan’s industrial revolution, read chapter 11 of Stretton (ENI).
6
See http://www.thenation.com/doc/20100301/alperowitz_et_al for the story of Cleveland.
7
Sarkar, P. R. “Socio-economic Movements”, (PN13).
8
Sarkar (HS1).
9
Sarkar (POD).
10
Sarkar (PE).
11
Elsewhere, Sarkar acknowledges Bertrand Russell’s description of Nehru and colleagues as
‘socialist show-boys’.
12
Sarkar (HS1).
13
Sarkar (HS1) p 139.
14
Sarkar (HS1) p 142.
15
Sarkar (POD). Section 11.
16
Sarkar (DOP). Also in (PN4).
17
Ibid.
18
Sarkar, P. R. “Socio-economic Decentralization”, (PE) pp 226.
19
Sarkar (I&I).
20
Sarkar, P. R. Ananda Sutram. AM Publications. First Edition, 1962. Second English Edition
(second printing), 2001.
21
Sarkar (DOP). Note: Discourses on Prout is chronologically the fourth book in which Sarkar
outlines his comprehensive socio-economic theory but it is only the second in which he
explicitly uses the term Prout.
22
Sarkar (DOP) Section 3.
23
Sarkar (PE) Ch 15.
24
Ibid.
25
Gittens, Ross. “Few are Great, Many are Small.” The Age, Melbourne, 23 August 2006.
26
http://www.abs.gov.au/
27
This is a technical term to describe the connectivity structure of a certain kind of network. It
is of interest because such networks occur widely in the “real-world”, for example, social
networks, computer networks, neural networks, gene regulatory networks and even disease
transmission. In scale-free networks, a few nodes are highly connected hubs despite most
nodes having few connections. This pattern of connectivity remains the same no matter
how large the network. For more information, see the Wikipedia entry
http://en.wikipedia.org/wiki/Scale-free_network
28
Ormerod, Paul. Why Most Things Fail: Evolution, Extinction and Economics. Faber and
Faber, 2005. ISBN 0-571-22012-6.
29
See Michael Towsey, “The Biopsychology of Cooperation” in Understanding Prout, Volume
1, 2010, for a further discussion of the controversial issue of economic growth.
30
Sarkar (PE) p 140.
31
http://www.communitypraxis.org/, link valid 12 December 2009.
32
http://www.ownershipassociates.com/mcc-intro.shtm, link valid 12 December 2009.
33
Sarkar (PE) p 271.
34
http://en.wikipedia.org/wiki/Social_economy, link valid 21 Decmber 2009.
35
Pearce, John. Social Enterprise in Anytown. Calouste Gulbenkian Foundation, 2003.
36
Another useful typology of enterprises describes four types based on two dichotomies –
private versus public ownership and social versus commercial purpose. See
http://en.wikipedia.org/wiki/Social_economy, link valid 21 December 2009.
37
See 2010 report, http://www.pc.gov.au/projects/study/not-for-profit/report and press release
http://ministers.treasury.gov.au/DisplayDocs.aspx?doc=pressreleases/2010/024.htm&pageID=
003&min=njsa&Year=&DocType=
38
Pearce, John. 2003 Op. Cit.
39
Putnam, Robert D. Bowling Alone: The Collapse and Revival of American Community. New
York: Simon & Schuster, 2000.
40
Henderson et al. Calvert-Henderson Quality of Life Indicators: A new tool for assessing
national trends. Editors: Hazel Henderson, Jon Lickerman, and Patrice Flynn; 2000. See
also http://www.flynnresearch.com/calvert.htm, link valid 12 December 2009.
41
http://philanthropywiki.org.au/index.php/Centre_for_Social_Impact, link valid 21 December
2009.
42
http://www.bus.qut.edu.au/research/cpns/, link valid 21 December 2009.
43
http://www.socialtraders.com.au/, link valid 21 December 2009.
44
Stretton (ENI).
45
See report in The Guardian, http://www.guardian.co.uk/global/2009/dec/13/drug-money-
banks-saved-un-cfief-claims, link valid 16 December 2009.
46
Sarkar (HS2) p 277.
47
Sarkar (HS1) p 136.
48
Sarkar, P. R. “Economic Dynamics”, (PN13), 1987.
49
Sarkar (PE).
50
Firdaus Ghista (pers com) has also alerted the author to the uncooperative behaviour of some
cooperatives in India. “In Bihar today, some coops grow their own crops, use the proceeds
to buy up other crops very cheaply from poor farmers and then sell that produce for a hefty
profit to the government. The government is unable to control this type of cooperative
capitalism even if it wanted to do so. How do you stop coops from becoming predatory
corporations? If the government does so, then it gives the state a loophole to interfere in the
cooperative economy whenever it wants. So moral struggle in coops is something people
must be psychologically prepared for.”
51
http://www.mondragon.mcc.es, link valid 12 December 2009.
52
Carver, John. A Theory of Corporate Governance – finding a new balance for boards and
their CEOs, 2000. http://www.carvergovernance.com/pg-corp.htm, link valid 12 December
2009.
53
The main difference between these two is that with marginal cost pricing one does not
attempt to recover fixed costs from revenue. With average cost pricing both fixed and
variable costs are recovered from revenue.
54
Futagami, Koichi. “The Range of the Public Sector and Efficiency”. Financial Review, 52,
pp 1-13, 1999. http://www.mof.go.jp/english/f_review/fr52e.htm#futagami, link valid 12
December 2009.
55
Towsey, Michael. Tax in a Proutist Economy, Prout Institute of Australia, 2003.
56
Sarkar (DOP) Section 3.
57
Sarkar (PE).
58
Sarkar, P. R. “Cooperatives”, (PE) p 128.
59
Ibid.
60
Adam Smith, in Wealth of Nations, acknowledged the importance of cooperation within an
economy. It was the subsequent neoclassical approach (later to become neoliberalism)
which narrowed and distorted economic thought. (Alanna Hartzog, pers com.)
61
Sarkar (PN18) p 69.
62
63
http://www.endgame.org/endgame.html, link valid 17 December 2009.
64
Eilis Lawlor, Helen Kersley and Susan Steed. A Bit Rich: Calculating the real value to
society of different professions. New Economics Foundation, © NEF December 2009,
ISBN 978 1 904882 69 5. Down from http://www.neweconomics.org, link valid 18
December 2009.
65
Ibid, p 3.
66
Pearce, 2003, Op. Cit. Chapter 11.
67
Garratt, Bob. Thin on Top. Nicholas-Brealey Publishers, 2003.
68
Cruver, Brian. Enron – anatomy of greed. Arrow Book, 2003.
69
Sarkar (HS2) p 277.
70
Wong, Paul. Lessons from the Enron Debacle: Corporate Culture Matters! 2002.
http://www.meaning.ca/articles/print/lessons_from_enron.htm
71
http://www.socialauditnetwork.org.uk/, link valid 21 December 2009.
72
http://www.socialventures.com.au/, link valid 21 December 2009.
73
http://www.socialventures.com.au/content/Social_Return_on_Investment_SROI_Tool/, link
valid 22 December 2009.
74
Wentworth Group of Concerned Scientists. Accounting for Nature: A Model for Building the
National Environmental Accounts of Australia. April 2008. Download from
http://www.wentworthgroup.org, For an introduction see also, Peter Cosier, Accounting for
Nature, Fenner Conference on the Environment, 10-12 March 2009, Canberra.
75
For the issues surrounding the Murray-Darling Basin water allocations, see Michael Towsey
“Water and Land Management – A Foundation for Economic Planning in Australia”, in
Understanding Prout – Essays on Sustainability and Transformation, Volume 1, 2010.
76
http://www.environment.gov.au/archive/biodiversity/toolbox/templates/pubs/habitat-
hectares.pdf, link valid 23 December 2009.
77
http://www.abc.net.au/rn/backgroundbriefing/stories/2008/2392756.htm, link valid 23
December 2009.
78
Ibid.
79
This is the distinction between the deep ecology and the utilitarian approaches to
environmental management. See http://en.wikipedia.org/wiki/Deep_ecology, link valid 23
December 2009.
80
For example, the Westpac Foundation is a charitable trust providing grants to help not-for-
profit organizations in Australia. It seeks to create and sustain social enterprises in
disadvantaged communities. http://www.westpac.com.au/about-westpac/sustainability-and-
community/westpac-foundation/, link valid 20 December 2009.
81
http://www.lbg-online.net/, link valid 12 December 2009. See also the “LBG Review”, a
special six page report in The Australian, Thursday 12 November 2009.
82
http://www.coopdevelopment.org.au/natlinks.html, link valid 12 December 2009.
83
Sarkar P. R. “Socio-economic Movements”, Section: 100% Employment for Local People,
(PN13).
84
Sarkar (PE) Part 6, p 295.
85
Firdaus Ghista (pers com) has offered the author an interesting historical perspective on the
origins of the centralized national economy. He cites Braudel’s Civilization and Capitalism,
15th-18th Centuries (The Wheels of Commerce, Volume 2) for the argument that economic
centralization and imperialism go hand in hand. “In medieval France, there were a number
of kingdoms/dukedoms, such as Bordeaux, Provence, etc. Each of these kingdoms had their
own economies, market networks. These economies were not very developed and not very
centralized. They were largely based on geography and were in a sense bioregional. As a
result of the struggle between the monarchs and nobles, some of these economies, like
Bordeaux, became regionally centralized. During the age of absolutism, the economy of
France became more and more centralized to feed the growing imperialism of Louis XIV.
After the Revolution this centralization accelerated as the new government broke up the
provincial structure and created smaller geometrical divisions that had no relationship to
geography or market networks. This was essentially the destruction of the provincial
economies by the national economy (that is, the economy of elite Parisian merchants). The
entire infrastructure was then developed to enable all these provinces to feed the Parisian
hub. In our time these national hubs now feed global hubs like London, Tokyo, Amsterdam
and New York.” Economic decentralization would transform the highly centralized
structure of modern global trade into a global network of trade between bioregional entities.
86
Sarkar (PE) p 227.
87
Sarkar (PE) p 226.
88
Summary statistics commonly reported in the media can grossly distort the true state of an
economy. For example, the overall U.S. unemployment rate of about 10% (in January
2010) hides gross disparities between income groups. According to a New York Times
article, 8 February 2010, the unemployment rate of the top decile income group is 3.2%
while that of the bottom decile income group is a staggering 30.8% - almost one in three.
That is more than five points higher than the overall jobless rate at the height of the Great
Depression. The second lowest income group had an unemployment rate of almost 20%.
http://www.nytimes.com/2010/02/09/opinion/09herbert.html
89
Henderson, 2000. Op. Cit.
90
http://www.foe.co.uk/campaigns/sustainable_development/progress/, link valid 12 December
2009.
91
Desty, Amos, “The New Wealth of Nations – Does Bhutan have a better way to measure
national progress?” American Scientist, Nov-Dec, 2004, p 513.
92
Sarkar, P. R. “Compartmentalized Democracy”, 1961, (PN14). In the U.S.A. the
Government Accountability Office (GAO), an investigative arm of Congress, fulfils some
of the proposed audit functions. http://www.gao.gov/, link valid 12 December 2009.
93
Definitions of unemployment and under-employment have been altered over the years to
make the figures look better.
94
Holmgren, David, Permaculture: Principles and Pathways: Beyond Sustainability.
Holmgren Design Services, 2002, p 167.
95
http://www.eurofound.europa.eu/eiro/1997/08/feature/it9708210f.html, link valid 12
December 2009.
96
See Michael Towsey, “The Biopsychology of Cooperation”, in Understanding Prout –
Essays on Sustainability and Transformation, Volume 1, 2010.
97
Pay differences between the lowest and the highest paid workers has been one of the most
contentious issues in the Mondragon cooperatives. Originally, the ratio was set at 3:1, but
was later raised to 6:1 to attract quality managers. Nevertheless this ratio pales into
insignificance compared to the income ratios prevailing in U.S. and U.K. companies. For
more background on the Mondragon cooperatives phenomenon see the Australian
Employee Ownership Association’s discussion forum. http://www.aeoa.org.au/0024/
_forum/topic.asp?TOPIC_ID=178, link valid 12 January 2010.
98
http://www.primaryyield.com.au, link valid in 2007, broken in 2009.
99
Masters, Chris, Treechange, Four Corners, ABC Television, Australia, 2007. Transcript
online at http://www.abc.net.au/4corners/content/2007/s1892893.htm, link valid 12
December 2009.
100
Ibid. See for example the promotion of Managed Investment Schemes by Australian
politicians, especially the zeal of Wilson Tuckey.
101
Australian Associated Press, “Timbercorp rent default jeopardises ownership of crops”, The
Australian, 8 August 2009.
102
Klan, Anthony, “Big payout as forestry group Great Southern teetered”, The Australian, 19
May 2009.
103
Tudge, Colin. The Secret Life of Trees, Penguin Books, 2005. ISBN-13: 978-0-141-01293-
3, p 368.
104
Sarkar (PE) p 113.
105
Sarkar (PE) p 115.
106
See Michael Towsey, “Water and Land Management – A Foundation for Economic
Planning in Australia”, in Understanding Prout – Essays on Sustainability and
Transformation, Volume 1, 2010.
107
Sarkar, P. R. “Farmers Cooperatives”, (PE) p 125.
108
This perspective on the cooperative movement in South America was suggested by Firdaus
Ghista (pers com).
109
Sarkar (PE) p 271.
110
Sarkar (HS1) p 141.
111
“Administration replacing nurses in Qld.” (Brief Article) Australian Nursing Journal, 1
April 2005. © 2005 Australian Nursing Federation. http://www.highbeam.com/doc/1G1-
131762954.html, link valid 28 December 2009.
112
Towsey, 2003. Op. Cit., p 6.
113
Pope Pius XI., QUADRAGESIMO ANNO: Encyclical on the reconstruction of the social
order. Saint Peter’s, Rome. 15 May 1931. Paragraphs 105 and 106. A slightly different
translation is to be found at http://www.vatican.va/holy_father/pius_xi/encyclicals/
documents/hf_p-xi_enc_19310515_quadragesimo-anno_en.html, link valid 20 January
2010.
114
Sarkar (HS1) p 142.
115
http://www.planetfinancegroup.org/EN/, link valid 17 December 2009.
116
A Starr-Bowkett Society is a co-operative, non-profit financial institution that provides
interest-free loans to its members and operates on the principle of mutual self-help. They
were first promoted in 1843 by Dr T.E. Bowkett and became popular in Australia from the
late 19th century through the early and mid 20th century. They are all but non-existent
today partly due in Australia to legislation banning them. For further information see,
http://en.wikipedia.org/wiki/Starr-Bowkett_Society and M. Darnell, “Freehold Property for
Mechanics: A brief insight into Starr-Bowkett societies” in G. Patmore, J. Shields and N.
Balnave (eds) The Past is before us; Proceedings of the Ninth National Labour History
Conference, University of Sydney 2005, pp 97-106.
117
The Swedish JAK bank appears to be a variant of a Starr-Bowkett Society. See,
http://www.jak.se/, link valid 12 December 2009.
118
More information on LETS see, http://en.wikipedia.org/wiki/LETS
119
The ASX was formed from the merger of the Australian Stock Exchange and the Sydney
Futures Exchange in December 2006.
120
Ferguson, Adele. “Traders Plunder Super”, The Australian, 16-17 February 2008, p 1. In
2009, the Australian Labor Government changed the legislation to remove the conflict of
interest in ASX’s operations.
Water and Land Management
A foundation for economic planning in Australia
Michael Towsey
Introduction
In most parts of the world, supplies of fresh drinking water are diminishing.
The reasons are not hard to understand – population increase, pollution of
ground and surface waters, over-exploitation of existing resources,
deforestation of catchments and increasing demand for agricultural purposes.
Finding new sources of water and managing demand are problems exercising
water authorities everywhere. At the time of writing, even economically
developed regions such as Australia and California are facing severe water
shortages.
I started writing this essay in 2007 when the worst drought in 100 years
dominated headlines around Australia. My initial motivation to broach the
topic was the intense and often perplexing debate about the best water policy
for Australia. It quickly became apparent that water policy cannot be discussed
in isolation, even though this is how politicians attempt to frame the debate. A
holistic approach is required, which at the very least includes land use policy. It
then became clear that water and land use policy are implemented within a
social and economic framework, and from a Proutist1 perspective water and
land use planning must be the starting point for local or block-level planning.
Block-level planning is one of the key features of Prout’s economic agenda.
The block, in Prout parlance, is equivalent to a local government area (LGA).2
Prout broadly supports economic decentralization and therefore promotes
cooperatives (locally owned and managed businesses) and economic planning
at the local (LGA) level as well as at the federal or country level.
Those wishing to promote an economic plan for their local area will have to
turn their minds to water and land use policy. But developing policy is not
easy. The Australian Greens summarize their water policy in just seven points
(see Appendix 3) and the Wentworth Group of Concerned Scientists3 in just
five points (see Appendix 4), but behind these summaries lies the deliberation
of some of the best informed minds in the country. It may be politically
expedient to present water policy in succinct statements, but such statements
must be supported by a depth of research – sufficient to handle the
controversies that will undoubtedly arise. This essay offers some general
background information to help formulate a water and land use policy
informed by a Proutist perspective (that is, a perspective which promotes

economic decentralization and cooperative enterprises). While the focus is on
Australia, the ideas should be applicable to most parts of the world.
The politics of water is intense. Supposing a community or country could come
up with a water policy that represented the best possible compromise between
the desires of urban consumers, farmers, environmentalists, miners and
business, the reality when it came to implementation would be something
different. Water scarcity threatens livelihoods which fuels fear and greed. If
you want to get some taste for the intensity and complexity of water politics in
Australia, an arid country suddenly confronted with water scarcity, read Ticky
Fullerton’s highly readable account, Watershed4.
Developing policy is also difficult because one has simultaneously to deal with
big picture thinking (ethics, culture, long-term future) and technological detail.
Furthermore, water policy must vary from place to place, so it is difficult to
make definitive statements that suit every situation. Nevertheless it seems
worthwhile to make the effort because water policy is not just about water, but
about land management, resource management, agriculture and industry, all of
which are located at the heart of block-level planning.

The obvious water policy issues revolve around supply, demand and storage.
But a long-term water policy requires a holistic approach and this document is
based on the premise that water policy cannot be separated from land
management, agricultural practice and of course economic policy.
We begin with a brief historical review which is necessary in order to
appreciate contemporary water policy issues, both general and Australian. Next
we deal with the supply, demand, storage triangle because these present the
obvious policy challenges. Finally we review the all important issues of land
management and water administration.
To give you a feeling for what is to come, here are some key features of the
approach to water policy advocated in this essay:
1. A decentralized approach to water harvesting and storage, that is, local
planning and management.
2. Water harvesting integrated with land management and planned on a
catchment by catchment basis.
3. Water harvesting preferentially (but not exclusively) by the capture and
storage of rainwater where it falls.
4. Water is a public resource, a minimum requirement of life and
necessary for collective security. The proposition that water should be
WATER AND LAND MANAGEMENT 163
privately owned and traded, like any other economic commodity,

cannot be supported.
5. Maximum utilization of water will require demand management and
scientific research directed to water efficiencies.
6. Rational distribution of water to be achieved through water trading by
publicly owned utilities and farmers’ irrigation cooperatives, with
independent statutory bodies having a regulatory role.
Some History
Water policy in the 20th century is best understood in the light of European
experience in the preceding century. The story begins early in the 19th century
with the introduction of the water closet, first into fashionable homes, followed
by more general adoption. Today we might assume this to represent a step
forward in public hygiene, but quite the contrary – it inaugurated a disaster that
killed hundreds of thousands of people over the coming century. The water
closets discharged into sewers which, in turn, discharged into rivers. Private
water companies drew water from those same rivers and returned it to the taps
and pumps of the general populace. European rivers were sewers and not
enjoyed by those of delicate disposition. “I counted two and seventy stenches –
all well defined – and several stinks”, wrote Samuel Coleridge of a boating trip
on the Rhine where it passes through the romantic city of Cologne. A sitting of
the Houses of Parliament in London, 1848, had to be adjourned because of the
appalling stench bubbling up from the Thames.5
As early as 1828, a distinguished physician, William Lambe, warned the public
that drinking water known to contain “the decayed and decaying remains of
myriads of animals and vegetables, in every stage of decomposition and
putrefaction”, might be harmful to health. Yet despite repeated epidemics of
cholera and typhoid (a cholera epidemic in London, 1848, claimed 3,000 lives
in one week alone), it took 100 years of heated controversy before common
sense prevailed and drinking water was kept separate from sewage. Why did it
take so long?
The first difficulty confronting water and sanitation experts of the period was
lack of an appropriate theory of disease. Bacteria had not yet been discovered –
cholera and typhoid were believed to be caused by a miasma, ‘something in the
air’. Without an adequate germ theory to stimulate investigation, progress was
difficult. An important discovery was made in 1854 when all the cases of
cholera in a Soho epidemic could be traced to a particular water pump. This
discovery forever linked public health to water quality and was an important
turning point in the history of public sanitation. But controversy persisted
because there was still no agreement on the causative agent linking the two.
Indeed the controversy increased because of a second difficulty. The first water
analysts, whose job it was to determine water quality, were inorganic chemists.
(The science of organic chemistry was not yet recognized.) And their primary
interest was the degree of enrichment of water by health giving salts believed
to cure dyspepsia, rheumatism and other disorders. Money could be made from
the right kind of mineral water and hence Bath and Harrogate became
fashionable spas frequented by the rich.
As towns competed with one another to promote the therapeutic value of their
springs, water quality experts felt the pressure to provide favourable analyses.
From which it was but a short step for private water companies in London and
other cities to promote the quality of their water over that of their competitors.
It was a battle of the experts, with water quality chemists opposed to sanitary
engineers. Here is a sample of the 19th century debate:6
Sanitary engineer: “…a stream which receives daily the evacuations of a
million human beings… with all the filth and refuse of various offensive
manufacturers… cannot require to be analyzed, except by a lunatic, to
determine whether it ought to be pumped up as a beverage for the
inhabitants of the Metropolis of the British Empire.”
Response of water chemist: To drink tap water containing microscopic
animalculae is “no more harmful than eating fish”.
It was a case of reformers invoking science to sanction change and
conservatives invoking science to prevent it, a situation which is disturbingly
reminiscent of contemporary debates about environmental pollution and water
quality. This situation deserves additional comment precisely because it is so
relevant.
Scientists like to claim that they arrive at theories through observation and
experimentation. Experience precedes theory. In practice the process is more
cyclical, with experimentation stimulated by pre-existing theory to build new
theory. If the cycle is broken for want of a satisfactory theory, investigation
stagnates. Furthermore, scientific knowledge is not absolute – it is always
subject to review. Scientists are happy with this state of affairs. Indeed they see
it as a strength and as a necessary protection against dogma. But when science
is required to inform public policy, its open-endedness becomes a weakness
which powerful people exploit to serve their own interests. Thus we observe,
even today, that scientific uncertainties about, for example, pesticide toxicity
levels or climate change, are deliberately exploited to frustrate the political
decision making process.7 8 While a solution in these cases would be an appeal
to common sense or adherence to the pre-cautionary principle, in practice
politics today is no better at framing public policy based on science than it was
in the 19th century. The policy debacle surrounding climate change is a case in
point. And future generations will look back in disbelief!
Something to think about

How long can we live?
Life expectancy in developed countries has risen steadily since 1840, and
for women at the rate of about three months every year!9 Despite the
recent epidemic of lifestyle diseases in developed countries, such as
obesity, diabetes and hypertension, some scientists believe that there is no
reason why longevity should not continue to increase. We may well ask
why longevity is increasing. Is it due to modern antibiotics and drugs? In
fact the greatest increases have come from low-tech public health
measures such as the following (in order of importance):10
1. Clean drinking water.
2. Sewage treatment and separation of sewage from drinking water.
3. Use of soap for personal hygiene.
4. Mass vaccination.
5. Public housing – ensuring dry, disease free shelter for the great
majority of the population.
Contemporary Issues
The realization that drinking water quality was an important determinant of
public health had a profound effect on European social consciousness, one that
is difficult to appreciate in the 21st century. But with regard to water policy that
impact persisted pretty much throughout the 20th century. The provision of
plentiful, safe and palatable water for all became a primary duty of the state.
Water and sewage companies were nationalized because private companies
were resistant to implementing changes that served the public interest but did
not advantage themselves. For the liberal conscience, clean water became a
matter of human rights. For the conservative, it was a matter of state security
because epidemics sweeping through squalid city slums incited public unrest.
And if further justification was required, archaeologists were uncovering
evidence that great civilizations of the past, such as Mesopotamia and Acadia,
had fallen for wont of good water management.11
Another hallmark of 20th century water policy was water as an engineered
product. To obtain water in abundance required the building of large dams far
from cities. The water then had to be piped to treatment plants where complex
quality control ensured that the water delivered to houses was of a satisfactory
standard. Indeed the greater the engineering prowess of a nation’s water
infrastructure, the greater its industrial might. The Hoover Dam (USA) and the
Snowy River Scheme (Australia) were very much products of that mind set. It
has been described as the epoch of the hydraulic society, the apex of
modernism.12 Of particular note is that the provision of water in the hydraulic
society had almost nothing to do with land management, ecology and the
dynamics of biological systems.
From an economic point of view, 20th century water policy was dominated by
the so-called supply side paradigm. Water resources planning, at least in
developed countries, attempted to ensure that consumers did not suffer a
restriction of supply. Attempts to restrain water use played a role only in times
of drought and could be accomplished only if the public perceived a crisis.13
In retrospect it was inevitable that such a system would break. Population
increase and growing per capita consumption increased the demand for water,
while pollution of surface and ground waters made it more difficult to maintain
supply. The privileging of water supply within the hydraulic society
encouraged both excess quantity and excess quality for routine uses such as
toilet flushing and garden watering. In short, the supply side paradigm proved
unsustainable.
And so we come to the 21st century, where the emphasis has shifted from
supply to demand management. While governments continue with efforts to
increase water supply, they are confronted by the political costs of building
large dams and recycling sewage and the energy costs of desalination. Thus the
new approach is to reduce demand and to make much more efficient use of
what water is available.
The emergence of economic rationalism in the late 20th century has also had an
impact on water policy. Why, the rationalists ask, should water be different
from any other commodity? The excess demand for water can simply be
corrected by increasing its price. Besides, the price of water in the hydraulic
society does not reflect its true economic cost. If water were privatized as it
was in Britain in 1986, the increased price would provide incentives for
entrepreneurs to find new methods to produce more water. Water freely traded
in an open market would solve the mismatch of supply and demand. Perhaps
not surprisingly the Business Council of Australia issued a report in September
2006 titled Water Under Pressure: Australia’s Man-made Water Scarcity and
How to Fix It. Its main argument, well publicized in the media14 was that water
shortages are due to economic mismanagement and could be solved by private
investment to build water infrastructure. The then Federal Environment
Minister, Malcolm Turnbull, welcomed the report by saying:
The big urban water utilities are very profitable businesses. If those
businesses are allowed to invest and do what they should do, which is to
deliver the water the cities need, then we will not have – on a long-term
basis at any rate – water restrictions in our major cities.15
Democrat Senator Bartlett was more circumspect. While admitting that the
primary water issue is not about scarcity but about management, he cautioned
against private ownership of water utilities because of the likelihood of
profiteering.
Water pricing and water markets desperately need to be reviewed;
however, we should be wary about private ownership of water. Water
availability is in the national interest and we should be concerned about
profiteering to the detriment of water users or the environment. We need
to separate ownership from pricing.16
Water is one of the last essential commodities in Australia not yet privatized. It
has therefore become a focal point for competing visions about the future. For
example:
• Water privately owned and traded in free markets to achieve efficient
distribution versus water as a public commodity managed in the interests of
the community.
• Water as a highly engineered product for a modern hydraulic society versus
water cycled through ecosystems, passed from one community to another,
with purity maintained by wetlands and managed aquifers.
• Public health as a product of mass inoculations and antibiotics versus public
health as a product of a clean environment from which healthy food and
pure water are harvested.
• Farms as agri-business, financed by managed investment schemes offering
high rates of return to wealthy, city-based corporate investors versus farmers
as custodians of the land and water and as producers of high quality food.
It turns out that visions about water management impinge on visions about the
future of our society.
Australian Water Issues

Australia is a large continent. It is geologically old, it is mostly flat and it lies
in the sub-tropics where temperatures are high but rainfall uncertain. These
features conspire to produce a continent with a unique relationship to water.
Except for the northern and eastern fringes, much of the continent is arid and
afflicted with salt. Perhaps because of this, 80% of the Australian population is
urban and almost all of it is coastal. And yet, surprisingly given the obvious
aridity of the continent, Australians have a higher per capita water use than any
other country in the world.
Commenting on Australia’s profligate use of water, Dr. Rick Evans told the
ABC science programme Catalyst:
In a broad sense we have been spoilt. We have been used to using far
more water than we need to use. We have been used to seeing it as an
infinite resource for which we can just turn on a tap, or pump water out of
a bore and it’s just there. In reality that is not the way the rest of the
world operates. We need to have a culture change.17
One is also reminded that Australians are among the highest per capita emitters
of greenhouse gases and second only to the USA in per capita production of
landfill waste. It is clear that Australia urgently requires policy initiatives to
encourage maximum utilization of scarce resources.
The classical European water cycle, which usually informs hydrology text
books, does not apply to most of Australia. Instead of mountain fed rivers that
flow to the sea, Australia has shallow catchments most of which flow in-land
across vast flood plains. Compared to other continents, Australia’s big rivers
hardly rate. The combined flow of all Australia’s major rivers is about one-
hundredth that of the Mississippi alone. The annual flow of Australia’s greatest
river, the Murray, equates to just one day in the life of the Amazon.
In her seminal publications, Mary White (described by Fullerton18 as
Australia’s own Rachel Carson) argues that the early Europeans failed to
understand the Australian landscape and the movement of water through it.
Despite its dried and rugged appearance, the continent is ecologically fragile
and it was perhaps inevitable that the imposition of European-style agriculture
would wreak havoc.19 For White, salt pans in agricultural land are a harbinger
of impending disaster, just as the decimation of insects by DDT was for Rachel
Carson. Of great concern is the long lag time between cause and effect in large-
scale ecological systems, and the continent is only just starting to show the
effects of 200 years of abuse.
Today about 70% of water consumption in Australia is used for agriculture.
Furthermore farmers holding free-hold title are responsible for some 70% of
the land. Consequently most of the difficult water policy decisions in Australia
are directly concerned with land use and farming practice. The following is a
list of just a few of the issues we face. There are no simple answers – these are
deep moral and social questions:
• Much of Australia’s agricultural land is in fact marginal for farming.
Difficult decisions must be made about what farming is sustainable in a
given catchment. These decisions require balancing long-term costs against
short-term gain.
• Unwise irrigation practices have caused environmental devastation in
Australia. Difficult decisions must be made about allocations to irrigation.
This will involve trade-offs between economic and environmental costs.
• Water has multiple uses – irrigation, electricity, drinking supply and
environmental flows. How to apportion scarce water will involve difficult
decisions. The power company Snowy Hydro was recently attacked for
buying electricity from coal-fired power stations.20 Its own hydro-
electricity would of course come without a carbon cost. The company
argued that it was preserving dwindling water supplies for town
consumption and irrigation.
• Farmers care for 70% of Australia’s land. If we are to reverse the
destruction of wetlands, recover biodiversity, improve water quality and
plant more trees for bio-sequestration, who is going to bear the costs? On-
going civil disobedience campaigns by farmers (for example, see reports of
deliberate illegal land clearing21) highlight this question.
• Australia’s iconic tree, the eucalyptus, does not mix well with traditional
agriculture. It has deep tap roots which lower the water table. Indeed it
might be argued that the eucalyptus contributes to the aridity of the
Australian continent. Elsewhere in the world, notably India and the Middle
East, the eucalyptus has been ruthlessly removed from cultivated areas.
Difficult decisions will need to be made as to how much we alter
Australia’s natural landscapes to satisfy human food and fibre
requirements.
• Indigenous land management involves burning, partly to aid hunting and
partly to encourage growth of edible herbaceous and tuberous plants. This
practice, which is common to savannah communities around the world, is
sustainable but maintains the landscape ecosystem in a state of arrested
development. In particular it reduces tree cover almost 100 fold – trees
which are needed for building soil, biosequestration, agroforestry, to name
just a few. Choices will have to be made between legitimate land
management practices.

If only Australia were in the northern hemisphere!
Australia is a major producer of wheat, wool, mutton, beef and cotton.
The country has made a lot of money growing food and fibre. But for
how much longer? Australia’s past agricultural practices, in particular its
profligate use of water and reckless land clearing, are simply not
sustainable. European farming practices have provided a short-term
bounty, but the creeping cancer of dryland salinity and soil erosion are a
warning that the bounty will indeed be short term.
Why is so much of the Australian landscape so fragile for agriculture?
Cotton has been grown in the USA for two hundred years, in some places
for three hundred, without insurmountable problems. Cotton has been
grown in Australia for around 50 years and already some would argue the
crop should not be grown in the country. Why the difference?
It is partly about rainfall reliability. The cotton belt in the USA enjoys a
sub-tropical climate with abundant rain, well distributed through the year.
This is ideal for cotton and the crop can be grown in Georgia and
Mississippi without irrigation. Rainfall in Australia is less reliable,
making irrigation essential. But irrigation in an arid climate with mobile
salt requires more care and self-restraint than has been exercised to date.
However, it is not only about water. More importantly, according to
Fullerton22 US soils “are much deeper and richer, and able to buffer the
abuse”. Northern hemisphere soils were formed comparatively recently.
The repeated advance and retreat of glaciers during the last ice ages
pulverized rock, creating deep fertile soils. By contrast Australian soils
are ancient and depleted. The last time glaciers performed their
rejuvenating function was 300 million years ago. Dry, desiccating winds
and water have long since eroded the surface, leaving a flat landscape
with shallow soils and flood prone.
Australian ecosystems have adapted well to unpredictable rain. After a
downpour, the deserts burst into life, a cacophony of plants and animals,
all anxious to complete their life cycles before the return of arid
conditions. But agriculture requires certainty, and the attempt to create
certainty with dams, weirs and irrigation has destroyed a surprisingly
fragile landscape.
Key Concepts
1. Just as 20th century water policy focused on hydraulic engineering, so
the 21st century approach will be about ecosystem management and
biotechnology. It will be about working with the water cycle and
ecological and biological processes rather than usurping them. We
cannot live outside ecosystem dynamics.
2. Water policy requires a holistic or integral approach. That is, it must
simultaneously address global warming, drought, deforestation, land
management, biodiversity, environmental flows for rivers, agriculture
and so on. In Australia, it must also accommodate our unusual
geography.
3. Except for the peripheral fringes of the far north, water is the limiting
factor for human settlement and agriculture in Australia. Consequently
water deserves to occupy a central place in community and economic
planning. Water harvesting must be integrated with land management
and planned on a catchment by catchment basis.
4. Harvesting and storing rainwater where it falls is the preferred method

to obtain water. This approach lends itself to decentralized planning and
management.
5. Deforestation contributes to climate change. Apart from producing
food, Australian farmers should also have the responsibility for
reafforestation and biosequestration. Agro-forestry is an ideal way to
combine these two with food production.
6. Water is an essential requirement of life. Consequently, it should be
managed as a public resource for the welfare of all. This will require
appropriate cooperation of all levels of government and a regulatory
role performed by independent statutory bodies.
7. Maximum utilization of water can be achieved through demand
management and scientific research.
8. Rational distribution of water can be achieved through a mix of both
planned allocation and water markets. Water traders would be licensed
public utilities and irrigation cooperatives, with strong regulation to
ensure that the community interest is served.
9. Water management has a cultural component. Encouraging respect for
the Earth and its resources should be a central feature of an education
for a sustainable future.
Supply – Water Production and Harvesting
The Water Cycle

Every schoolchild learns about the water cycle. Ocean water evaporates, falls
as rain on the land and then flows back to the ocean either over the surface or
underground (Figure 1). The cycle is driven by the heat of the sun, by wind and
by gravity. So why reiterate this here? Because what is not necessarily clear
from school is that the cycle is a unitary system on a global scale – its various
parts all around the globe are interconnected. Rain in Europe is affected by
currents far away in the Indian Ocean. Disrupt one part of the cycle and the
entire global cycle is disrupted.23 The importance of this fundamental truth
cannot be over-emphasized. Some disruptions are obvious – if we take too
much water from the rivers for irrigation ground water dynamics are disrupted.
If we take too much ground water, surface waters suffer. Ground water flows
and surface water flows are not separate systems.
Some human interventions, however, are not so obvious. Human induced
climate change is already having an impact on currents in the Indian Ocean
which can affect rainfall in far away Greece.24 Clear felling large tracts of land
reduces rainfall because rain clouds do not form so readily over cleared land.
India and Western Australia offer good examples.25
We ought not to discount the consequences of disrupting the global water
cycle. A WHO report26 estimates that “almost two billion people were affected
by natural disasters in the last decade of the 20th century, 86% of them by flood
and droughts”. That’s well over a quarter of the world’s current population
affected by severe water imbalance. Floods are the second most frequent kind
of natural disaster, after windstorms. The largest cause of deaths through
natural disaster is famine brought on by drought.27 Many of these catastrophes
can be attributed in part to human interference in the landscape and the water
cycle. In what follows, we compare the merits and demerits of individual
sources of water. But it is to be remembered that whatever the diversity of
sources, humans are tapping into one and the same water cycle and that such
interventions on a large scale can have unexpected consequences.
Figure 1: The water cycle on a global scale. Volumes attached to arrows represent
annual flows. Numbers at the bottom of the diagram represent areas and static volume.
In one year, the sun evaporates the equivalent of 125 cm depth of water off the
world’s oceans. However two thirds of this falls back onto the ocean and only one
third makes it over land. But small fluctuations in this ratio can have major
consequences for life on land. Australia has a higher rate of evapo-transpiration than
other continents. In fact, because much of its river water is used for irrigation, some
90% of rain falling on the continent is returned to the atmosphere by evapo-
transpiration. Note that one km3 of water equals one million megalitres and a
megalitre is the approximate equivalent of an Olympic swimming pool. Diagram from
Black28, reworked by Sahitya Graphics.
Surface Water
The harvesting and management of surface waters to provide potable water has
been the primary focus of water policy in Australian cities until recent times.
There is a strong logic to this. Rainwater is (assuming the absence of air
pollution) fit for immediate drinking. The further water disperses through the
environment, the more likely it is to become contaminated with pollutants, salts
and other minerals. Furthermore once it reaches the ocean or deep aquifers it
becomes more difficult to recover and process. In theory, the earlier we catch
rainwater, the cheaper it should be to process and the better the public health
outcomes.
The difficulty of course is that captured rainwater needs to be stored. Nature
provides lakes and ponds but these are not necessarily located where humans
can make best use of them. Hence the necessity to construct tanks, weirs,
reservoirs and dams. The issues of storage will be discussed subsequently.
The harvesting of rainwater is most efficiently achieved where the rain falls on
hard surfaces. Placing a dam at the bottom of a river catchment is rather like
placing it below a sponge. As an example, despite heavy rain on 6th June 2007
on the Brisbane River catchment, very little of it entered the dam because the
catchment soils were so dry. By contrast, rain which falls on a hard surface can
immediately be diverted to a collection point. Consequently the possibilities for
harvesting water in cities are extremely good given the large expanse of roofs
and roads. Stormwater run-off from most Australian cities goes directly to the
ocean where it is lost. The obvious problem with harvesting water in cities is
pollution. Sydney and Adelaide are now addressing this problem by purifying
water in aquifers – more on this below. Brisbane already harvests stormwater
for its parks.29
If a policy of harvesting rainwater where it falls were actually followed, it
would result in a highly dispersed system of collection and storage, since one
cannot predict where rain will fall. In practice, the 20th century hydraulic
society has opted for large dams sited at the end of large catchments. The
principle argument in favour of this strategy is economic efficiency. We return
to this issue in a subsequent section.
To summarize the advantages and disadvantages of using surface waters:
Advantages
• Easy to access.
• Rainwater should have high purity.
• Trapping water high in a catchment prevents fast moving water
concentrating too quickly and causing erosion.
Disadvantages
• Surface waters require surface storage. Rainfall is unreliable – the more
unreliable the rain, the bigger the storage required.
• Rain does not necessarily fall where it is most needed. Transporting
water can be expensive.
• Many parts of the world cannot use surface waters because they are
polluted. In developing countries 90% of domestic sewage and 75% of
industrial wastes are released directly into lakes and streams.
• There are significant evaporation losses when water is stored in farm
ponds, shallow dams or transported through canals. This is a particularly
serious problem in Australia. Irrigators in the Murray Basin, for example,
get just 80% of the water pumped to them. The rest evaporates in transit
through canals, with concomitant concentration of salts.
• It is difficult to construct deep dams in much of Australia’s flat
landscape. The average depth of the proposed Traveston Dam north of
Brisbane will be five metres. This is sufficiently shallow to allow the
waters to heat up, leading to rapid evaporation and eutrophication.30
Ground Water
Ground water constitutes some 98% of the available liquid freshwater on the
planet but the intemperate use of it is creating many problems. Ground water
accumulates from the downward percolation of rain, river and lake waters and
is stored in the pore space of soils, sand and rock. Sometimes it is useful to
make a distinction between sub-surface water and deeper aquifers. Sub-surface
water is closely associated with surface water and is immediately available to
plants. By contrast, aquifers contain older water which is not necessarily
accessible to plants.
Aquifers consist of thick layers of sand or stone permeated with water and
trapped underneath (and sometimes on top) by impermeable rock. Thus,
depending on the placement of the impermeable rock layers, an aquifer may or
may not be isolated from the water table upon which farmers depend for
growing crops. The water in deep aquifers is sometimes called palaeo-water or
fossil water because it will have been underground a very long time, perhaps
millions of years.
Many parts of the world rely heavily on ground water for town supply.
Denmark, for example, obtains some 98% of its water supply from ground
sources, Saudi Arabia 75%, London 70-75% and U.S. cities average 30-40%.
By comparison, Australian cities acquire about 10% of their water from
underground. There have been demands that this percentage increase.
Management of aquifers is necessarily an important component of water policy

in Australia because, although the surface is arid, massive amounts of water lie
beneath the surface. How that water should be used is not a simple issue. For
some 60% of the continent, there is little or no surface water, so it inhabitants
are entirely dependent on ground water. For ground water use to be sustainable,
the rate of extraction must be less than the rate of recharge. In arid regions,
recharge of local aquifers is likely to be minimal – the water is fossil water
accumulated in the distant past when rainfall was much higher than today. For
decades, hundreds of bores into the Great Artesian Basin (currently there are
892 of them31) have been allowed to spill water senselessly onto a sunburnt
landscape 24 hours a day, every day of the year. Obviously such practices are
unsustainable. For many aquifers it is difficult to measure the rate of recharge
and therefore to determine whether current use is sustainable or not.
The advantages of ground water use
• Aquifers tend to be spread over a large area so it is possible to extract water
where it is required, obviating the need for expensive pipelines and
transport.
• Water stored underground does not evaporate.
• Ground water is typically filtered and purified as it moves through an
aquifer and hence tends to be less polluted than surface water, especially in
heavily populated areas. It is precisely for this reason that European cities
have come to depend on ground water for town supplies.
The disadvantages of ground water use
• Ground water abstraction, in excess of replenishment, lowers the water table
thereby affecting local wells and agriculture. The famous Ogallala aquifer in
the USA (containing 20% more water than Lake Huron in the Great Lakes)
is being depleted at a rate 14 times faster than nature can replenish it.
Likewise irrigation in India is using water so fast that local water tables are
dropping year by year. A well of 10 metres a few years ago now needs to be
80 metres deep and in some locations wells must be refilled by tanker.
China, with a population of 1.2 billion people, has only half the water it
needs, and relatively insufficient areas of arable land. It relies heavily on
ground water but its water table is falling at about 1-2 metres per year. The
country’s development policy requires diverting most of its useable water to
industry at the expense of agriculture. According to Mary White,32 China is
an ecological catastrophe waiting to happen. What happens when China
cannot feed her people?
• While not subject to evaporation, ground waters can become saline due to
leaching or seepage from irrigated farmland. Even when not polluted by
human activity, water in aquifers can be contaminated with heavy metals
and other minerals, such as arsenates, leached from the rock matrix. In just
three districts of Bangladesh alone, arsenicosis kills over a million people a
year, with many more suffering side effects. This problem could be entirely
prevented by collecting rainwater, which is abundant in Bangladesh.
• Irrigation with ground water containing even low levels of salt can
exacerbate salinity due to evaporation.
• Abstraction of ground water is a form of mining which can lower the land.
For example, abstraction of water for industry is causing Venice to sink into
the sea.
• Professor Lance Endersbee33 claims that much of the world’s ground water
is a non-renewable resource, that is, it is not replenished by percolation from
the surface. He claims that rapid consumption of ground water has put the
world on the edge of a catastrophe, far more serious that global warming.
This is a controversial and disputed claim but it has received some media
coverage.34
Despite the call for Australian cities to use more ground water, this strategy
should be approached with extreme caution. Unlike other Australian cities,
Perth in Western Australia gets some 80% of its water from ground aquifers.
The consequences for local eco-systems have been devastating. Lakes and
wetlands are drying up with spread on effects to animal and bird populations.
Furthermore, excessive freshwater abstraction has sucked in salty ocean water
from the coast.
Desalination
Desalination involves the removal of salts from ocean or brackish water to
generate freshwater. The most common methods are distillation and filtration
(which includes reverse osmosis). Both of these are energy intensive and
therefore expensive. Consequently the oil-rich, rain-poor Middle East has been
the only part of the world to rely primarily upon desalination – at least until
now. In response to the worst drought in 100 years, Australia is contemplating
a desalination plant in all of its major coastal cities. Indeed the Queensland
government recently flirted with plans to build a desalination plant on Bribie
Island to supply Brisbane city. With a $3 billion price tag, it would have been
the world’s largest.
Distillation consists of applying heat to salty water to create water vapour,
which is then condensed to produce pure water. Distillation is more cost-
effective in conjunction with steam-turbine power generation because the
steam released from the power plant can be sent directly for distillation.
Distillation technologies account for approximately one-half of the world’s
installed desalination capacity.
Reverse osmosis is a low temperature, high-pressure membrane filtration

process that forces water through the molecular structure of several sheets of
thin plastic membranes to filter out minerals and other impurities, including
salts, viruses, pesticides and organic molecules. The membranes are like
microscopic strainers. A difficulty with current technology is that the plastic
membranes become clogged with bacterial bio-films and offer unnecessarily
high resistance, adding to costs. However, scientific research directed to these
problems is bearing fruit.
For more information on desalination see the accompanying endnote.35 Like all
other water sources, desalination has it advantages and disadvantages.
The advantages of desalination
• An obvious advantage is that desalination is climate independent. Rainfall is
irrelevant. When placed by the coast, desalination plants have virtually
unlimited supplies of ocean water.
• Desalination, particularly using filtration technologies, provides superior
quality water, regardless of the quality of the source water.
• Water desalination is commonly described as a hardware technology,
meaning that it is accomplished by means of pumps, filters and other pieces
of equipment that can be scaled to meet the expected demand. Additional
capacity can be added with relative ease by increasing the numbers of
filtration elements. This flexibility is important when trying to optimize
capital investments to match demand projected over time.
• The hardware nature of desalination allows for new cost-saving innovations,
such as foul-resistant membranes and improved energy recovery devices, to
be incorporated into existing plants with relative ease.
• Desalination plants have more flexibility of siting compared to conventional
surface-water alternatives, thus minimizing treated water transmission costs.
• Desalination is gaining cost competitiveness as surface and ground waters
become more difficult to manage.
The disadvantages of desalination
• Desalination is energy hungry. Power costs can account for 30-60% of the
operational costs. Thus, slight variations in power rates (remember peak oil)
directly impact the cost of treated water. Note, however, that Sydney and
Perth, unlike the Gold Coast, have opted for desalination plants powered by
renewable energy.
• A by-product of the desalination process is a highly concentrated saline
stream that requires careful management and disposal. Anticipation of
strong objections from the fisheries industry operating around Bribie Island
possibly persuaded the Queensland government to delay plans for a plant on

the island. Some of the most common methods for disposal of the
concentrate are: solar evaporation ponds, injection into depleted oil and gas
fields and open-ocean discharge. Safe disposal of the concentrate is a
significant cost factor.
• Desalination requires both pre- and post-treatment of the water. The
objective of pre-treatment is to remove suspended matter in the source water
and to condition the water by adding anti-scalants and lowering the pH to
improve membrane performance and prolong operational life. Desalination
by reverse osmosis is so effective that a post-treatment phase is required to
re-mineralize the product water and readjust the pH. As in all public water
supplies, treatment concludes with chlorination. As a matter of interest,
drinking highly demineralized water is extremely bad for health, since, on
its passage through the body, water is re-mineralized by drawing on the
body’s reserves.
We are entitled to view desalination as the apotheosis of the hydraulic society,
the ultimate in the engineering of water. It is yesterday’s thinking fulfilled with
the latest in modern technology. It does not require that we carefully manage
catchments. It does not require that we use water more efficiently. It does not
require that we stop polluting surface and ground waters, or that we stop using
the oceans as the ultimate sewer. It is a business as usual solution. It is however
a rational solution in a country where surface and ground waters are polluted,
where energy is cheap and where greenhouse carbon is not costed. In 2010,
Australia is just such a place, but what about 2020?
Other Water Sources

Cloud seeding
Cloud seeding has a controversial history. The first documented case of
human-made rain occurred in 1947 near Bathurst. Ongoing research led to the
commencement of cloud seeding experiments by Hydro Tasmania and
CSIRO36 in 1964. Typically silver iodide, dry ice or hygroscopic salts are
sprayed onto already existing rain clouds. It takes about 30 minutes for the ice
crystals formed to grow to sufficient size and fall out of the cloud under their
own weight. As the ice falls, it melts to become rain.
While Hydro Tasmania claims three successful experiments, CSIRO remains
sceptical. Trying to prove that a particular rainfall event is caused by seeding is
a difficult statistical exercise because of the great variability of normal rainfall.
The CSIRO says its trials conducted in Victoria in the 1970s and 1990s were
unable to prove that cloud seeding worked. Scientists at the National Academy
of Sciences (USA) in 2003 came to the same conclusion. The official position
of the American Meteorological Society (AMS) is that there has been some
statistical evidence showing a 10% increase in precipitation after cloud-

seeding, but no conclusive cause and effect. Another observation to emerge
from cloud seeding experiments concerns the effect of air pollution. The AMS
claims that clouds in the USA are full of aerosols, dust and industrial
pollutants, which impair a cloud’s capability to produce rain.
Despite the uncertainties, some forty countries, including South Africa, the
United States and China spend big money to practise weather modification and
the emerging consensus appears to be that cloud seeding works but one has to
get the conditions exactly right – and there are many variables. Snowy Hydro
has announced it will undertake a six-year $5 million trial in the Snowy
Mountains, spraying clouds with silver iodide. The company predicts that
snowfall could increase by 10% and deliver improved environmental flows to
the Murray River. The Queensland government also plans to trial cloud seeding
in the drought stricken southeast of the State.37
The budget for cloud seeding experiments runs into millions. Would the money
be better spent achieving water efficiencies in other ways? A desalination plant
costs in the hundreds of millions, an order of magnitude greater, but of course
the yield is certain. If a cloud seeding experiment works, the increased crop
yields for farmers in one season alone can be worth hundreds of millions.
These are the kinds of calculation that exercise water engineers.
Figure 2: A ‘hole’ remains

in a deck of stratus clouds
after seeding with dry ice.
Caption in the lower right
reads: “Effects of seeding
Altostratus Clouds over
Green Bay, Labrador: 45
minutes after seeding with
dry ice.” USAF photo from
Sewell 1973.38
Perhaps cloud seeding becomes a more viable proposition if we do not think in

terms of increasing rainfall but rather targeting rainfall. Much rain has fallen in
parts of Southeast Queensland over the past few years, but not in the
catchments which supply Brisbane city. The cloud seeding experiments
proposed for the region are intended to target rain towards dam catchments
rather than have it fall over the ocean or in places where it cannot be stored.

It’s not just about drinking water!
Clouds are not only seeded for rain. Other motivations for weather
modification include attempting to reduce the severity of hurricanes and
dispersing fogs that threaten to drift over airports. Here are some more
unusual experiments in cloud seeding:
• From 1967 to 1972, the US military seeded clouds with silver iodide to
extend the monsoon season over North Vietnam, specifically the Ho
Chi Minh Trail. The targeted areas experienced monsoon seasons
extended by an average of 30 to 45 days. The motto of operation
Popeye was make mud, not war.
• Russian military pilots seeded clouds over Belarus after the Chernobyl
disaster to remove radioactive particles from clouds heading toward
Moscow.
• During the July 2006 G8 Summit, Russian President Putin deployed air
force jets to seed incoming clouds, intending that the rain should drop
over Finland rather than the summit location. The attempt failed and
rain drenched the summit anyway!
• In Southeast Asia, large-scale forest burning produces a haze that
pollutes the regional environment. Cloud seeding has been used to
improve the air quality by encouraging rainfall.
• For other interesting information, see the Wikipedia entry on cloud
seeding.39
Air dehumidification
One of the side effects of the drought in Australia has been a downward
pressure on metropolitan property values as gardens die for lack of water. An
enterprising Brisbane company is selling modified refrigeration units which
cool air and extract the moisture. One unit generates 500 litres a day.
Compared with other sources of water, the process is extremely expensive (the
units sell for $20,000 AUD) but apparently justified in some city blocks by the
retention of property values.40
An Australian inventor claims to have invented a wind turbine which can
extract an average of 7,500 litres of water per day from the air.41 This is
enough for a small village but the device is yet to be independently tested.
Afforestation
It is well known that deforestation or land clearing has a major impact on local
hydrology. In Australia, the effect is to raise the water table and bring salts to
the surface where they are concentrated through evaporation. However it is
now becoming clear that deforestation has another effect – it directly impacts
on rainfall. Studies in the Western Australian wheat belt suggest that drought is
as much a product of land clearing as it is of global warming. How this works
has only recently been understood.
The wheat belt in Western Australia is the largest artificial feature on the
Australian continent visible from space. One sees it as an orange strip of
cleared land, surrounded east and west by darker native vegetation. The natural
vegetation to the east is separated from the wheat belt by a rabbit proof fence
that extends north from Esperance to Geraldton. It was originally designed to
keep rabbits from invading the wheat belt, but today it provides an ideal
opportunity to study the effect of land clearing. The soil type and geological
features are identical on both sides of the fence. The only difference is that to
the west of the fence, the land has been totally cleared for cropping.
Since the clearing of the land, rainfall on the wheat belt has declined by 20%
with devastating effect on yields and soil fertility – a consequence of global
warming, one might presume. But the problem with this explanation is that
over the same period of time rainfall to the east of the fence has increased by
10%. According to Professor Tom Lyons42 at Murdoch University, who has
studied the weather on both sides of the fence, even the clouds over the native
vegetation are quite different from those over the wheat belt. Wheat requires a
lot of water to grow and transpires a lot of moisture into the atmosphere. By
contrast the native vegetation is frugal with water and yet rain clouds form
overhead. So what is going on?
It seems that the dark native vegetation absorbs much more heat than the cereal
crops and the warm humid bush air therefore ascends high into the atmosphere
to the level where clouds are formed. Furthermore, the warm rising air passes
through cooler air and generates turbulence which is also helpful for cloud
formation. By contrast, the cold humid air above a wheat crop is stable and
does not rise into the atmosphere. It can be blown away by winds.
The conclusion from the Western Australian study is that it is possible to
increase rainfall over land by maintaining tree cover and that failure to do so
allows clouds to pass overhead and drop their water elsewhere. In India, it
appears that de-forestation makes the difference between clouds dropping their
rain over land versus over the ocean. According to Professor Lyons, tree cover
has its effect on a scale of about 20 km. The take-home message – trees bring
rain.
Inter-catchment Transfer
Water grids
The strategy behind water grids, and even their terminology, is derived from
the electricity grid. The idea is to link multiple suppliers and consumers into a
large network. This allows for more flexibility in providing power where it is
needed and it increases security in the event that one generator should break
down. The Queensland Water Commission is preparing plans for a Southeast
Queensland Water Grid that will link dams hundreds of kilometres apart.43
Their website claims the following advantages for a water grid:
• It provides a network of two-way pipelines to connect major bulk water
sources in the region.
• It allows water to be moved from areas of surplus to areas of shortfall.
• It allows risk to be managed at a regional level rather than on a storage
basis.
The proposed water grid will link three existing dams, two proposed dams, a
desalination plant on the Gold Coast (currently under construction) and a
recycled water plant.
The Queensland government has even more ambitious plans. It has authorized
a $2 million feasibility study into the construction of a $7.5 billion, 1200 km
water pipeline from North Queensland to Brisbane over the next 50 to 100
years. The justification is that the north of the State has plentiful water44 but it
is needed in the southeast to cope with population increase and climate change.
The pipeline would draw water from the Burdekin and feed into the southeast
water grid. Apart from the huge capital cost, the running costs are likely to be
more than $250 million a year.
The northern parts of Australia have always tempted the south with the allure
of limitless water, and schemes to take that water south are at least 100 years
old. More recently (in 1998) Western Australian MP Ernie Bridge claimed that
Australia could be drought proof within 10 years using only a minute
percentage of the major northern rivers to achieve the result. And in the 2006
State election, the Western Australian Liberals ran (and lost) on a pledge to
build a canal from the Kimberleys to Perth. That would have been a canal of
some 3,700km and costing $2 billion.
Grandiose hydraulic engineering projects are usually rejected by
environmentalists. Multi-billion dollar desalination plants, canals and pipelines
have one element in common – “faith in large-scale engineering solutions to
solve environmental problems”.45 But all too often such grand ideas turn out to
be grand follies. The Snowy River Hydro-electric scheme, it is beginning to
appear, may be no exception.
The Snowy River Hydro-Electric Scheme

Australia’s greatest of all public works is the iconic Snowy Mountains Hydro-
Electric scheme, an unquestioned marvel of hydraulic engineering. But at 30
years old it is beginning to look a bit sick. Grand idea or grand folly? As might
be expected, the answer is hotly contested.
The Snowy Scheme brought new sources of electric power on line to feed
industrial growth and it opened up vast tracts of land for irrigated agriculture.
Economic statistics tell a story of unparalleled success. The gross value of
Australian agriculture in 1997 was about $28 billion. Much of it came from the
Murray-Darling Basin – Australia’s bountiful food bowl, as big as France, and
producing food and fibre worth $10 billion a year, about a third of it
attributable to irrigation waters diverted from the Snowy.
In fact, 99% of the headwaters of the legendary Snowy River were diverted
through mountain tunnels into the Murray-Darling Basin. Put another way, one
catchment was killed in order to give life to another. But the profligate use of
water in the Murray-Darling Basin has created a litany of serious
environmental problems – salinity caused by a rising water table, destruction of
wetlands that purify ground water, loss of wildlife habitats and loss of native
fish due to polluting algae. It is also becoming apparent that not even the
economic advantages are unambiguous. Lost agricultural production in the
Murray-Darling Basin due to land degradation, salinity and soil erosion was
estimated in 1998 to be around $220 million per year. In a 1998 ABC Lateline
program Dr Judy Messer of the Nature Conservation Council, NSW, stated:
Clearly the Snowy Mountains Scheme is ecologically flawed. Whether it
is economically flawed or not is yet to be proven. But it may turn out that
way in the future, if the lands go out of production because of salt.46
Transporting water by ship
A business called “Solar Sailor Holdings Ltd.” is planning to ship 50 super-
tankers per year of water (500,000 tonnes per ship) from the west coast of
Tasmania to Sydney. The ships will be powered by wind and solar-power.
According to CEO Robert Dane, the business expects to make a profit of $300
million AUD per year per city supplied. The economic feasibility of the plan
has however been questioned.47
Towing icebergs and towing freshwater in large plastic bags
Towing icebergs to nearby ports was once considered a serious option for cities
at high latitudes. However the melting of ice sheets due to global warming
makes this a doubtful long-term option. Freshwater floats on salt water and it is
therefore theoretically possible to tow water over the oceans in large plastic
bags. But once again the economic viability of this approach is doubtful.48
Advantages of inter-catchment transfer

• Allows water to be moved from areas of surplus to areas of deficit.
• Allows risk to be managed at a regional level rather on an individual
storage basis.
Disadvantages of inter-catchment transfer
• Water is expensive to move up-hill and even horizontally through pipes.
• There is a real and demonstrated danger of a disconnect between the
ability to supply and willingness to consume. This is because the
environmental and social costs of wasteful consumption are not entirely
met by those who are profligate.
Figure 3: A cheaper way to transport freshwater over the ocean. The

world’s first commercial merchant ship pulled by a giant high-tech kite
aiding its engines to slash fuel consumption and cut greenhouse gas
emissions was launched in Hamburg, 14th December 2007. The SkySails
system purports to be able to lower a ship’s annual average fuel costs by
between 10% and 35%.49
Indirect Potable Reuse

Indirect Potable Reuse is the technical term for water recycling. The traditional
urban water cycle works something like this. Water is taken from an elevated
river or dam, gravity fed to town, treated and then made available to the
consumer. Typically the water is used once, for anything from drinking, toilet
flushing to dust suppression at a building site. The waste water is then pumped
to a sewage plant (but not necessarily), from which the effluent is pumped to a
downstream location or to the ocean. This one-use urban water cycle is
wasteful.
Recycling water, especially sewage water, is a contentious issue and it has
taken a severe drought for it to become electorally possible in Australia. The
genuine concern of consumers is that, given the great diversity of drugs,
hormones and chemical pollutants ingested by people today, can we be sure
that those also will not be recycled.50 The chairman of National Water
Commission (as reported in The Age, 1st May 2007) argues that this problem
can be solved by technological innovation. He claims that recycling will make
“unlimited supplies of urban water” available.
The truth is that people in most parts of the world are already, albeit
unknowingly, drinking recycled water, because downstream towns are drawing
on waters that have previously been used by upstream towns. The fraction of
wastewater effluent in a European river can be as much as 50%.51
In planned indirect potable reuse, treated wastewater is intentionally returned
upstream to be mixed with native water and then treated again for potable use.
Critical to the acceptability of water recycling is the intervention of multiple
barriers to remove contaminants. These barriers may include all or some of:
settling ponds, filtering, reverse osmosis, dilution, sterilizing and use of
wetlands and aquifers for natural cleansing.52 However the entire process is
extremely expensive – better surely, to minimize water consumption in the first
place.
Water Storage
Homeostasis
The primary objective of water management is to supply water of appropriate
quality, when and where there is a demand for it. The policy challenges are
quantity, quality, location and timing. Behind this simple statement lies a
deeper and more fundamental concept, homeostasis. Homeostasis is the ability
of a living system to maintain a stable internal environment despite a
fluctuating external environment. It is the sine qua non of life – indeed one
might say that the struggle to achieve or maintain homeostasis is life. Simple
cells maintain a constant internal concentration of critical nutrients, such as
sodium and potassium, and they expend considerable energy to do this.
Animals and plants maintain a metabolic equilibrium between all parts of the
organism. The development of warm-blooded animals capable of maintaining
metabolic activity even in sub-zero temperatures was a momentous milestone
in the evolution of life on planet Earth. From an evolutionary point of view, it

seems as if the more a species can guarantee the constancy of its internal
environment, the greater are the opportunities for it to develop sophisticated
behaviours and to push the boundaries of life.
A common means of maintaining homeostasis is the reservoir. For example, a
reservoir of fat or starch enables plants and animals to have instantly accessible
energy to meet unexpected demands in an unpredictable world. The reservoir is
drawn down in times of hardship and replenished in times of plenty. This
mechanism is fundamental to life and is referred to in Sarkarian philosophy as
prama trikona,53 that is, equilibrium established through the triangulation of
forces. The intuition is that a triangulation of vectors (three forces interacting
with one another) forms a stable structure, whereas larger polygonal sums of
vectors are not stable.
Interestingly enough, despite the critical importance of water for life, very few
animals have developed the ability to store water internally. Even the camel
only stores water in virtual form as fat. Animals typically adopt the just in time
strategy, drinking from a water hole when thirsty. This inadequacy at the
individual level is dealt with in human communities by collective approaches
to water storage and management. Indeed, we may trace the story of human
civilization by its ability to manipulate and store water. The core idea is that
the more a society is able to maintain stable supplies of water, the greater the
possibility to develop the social, political, military and cultural institutions that
define human civilization. Nomadic life was constrained by the need for
proximity to clean flowing water. Subsequent to the development of
agriculture, the ability to construct canals and irrigate fields was of momentous
importance, because it ensured a stable supply of water despite the fickleness
of rain. This is as true in the modern capitalist era as it was 3,000 years ago.
In Sarkarian philosophy, a modern economy is a living system. Just as cells,
animals and plants maintain homeostasis, so also an economy. A healthy
economy is one which can maintain a stable supply of the necessities of life at
stable prices despite the exigencies of weather, etc. Hence communities
maintain stores of rice, businesses maintain inventories and capitalists maintain
hedge funds. Homeostasis of the total economy is the result of all its
individuals and businesses maintaining their own equilibria. Even the home
refrigerator is a manifestation of homeostasis – it obviates a trip to the shops
after every meal.
Yield
Water management strives to maintain an equilibrium between the supply,
demand and storage of water and to influence the biological and psychological
impulses that impinge on achieving that equilibrium. From a purely
engineering perspective, it is convenient to think of water resources in terms of
reservoirs, inputs and outputs. Reservoirs may be lakes, dams, weirs, aquifers
or even, as we shall see, soil and tree roots. Input to surface reservoirs depends
on springs, precipitation and snow melt in the upstream catchment. Input to
aquifers depends on the amount of water entering recharge zones. The output
from a reservoir is the natural outflow plus that which is abstracted for human
use, the yield. Determining a sustainable yield for any particular catchment or
reservoir is surely the most contentious issue in water policy.
Consider the Snowy River whose water has three uses: 1) diversion to the
Murray Basin to grow some 30% of the nation’s food, 2) to meet the needs of
the 6,000 or so inhabitants of the Snowy Basin and 3) to provide environmental
flows, that is, to allow the Snowy River to be a river. From an engineering
perspective the third use was at one time not considered important, so the yield
of the Snowy was the 99% of flow diverted to the Murray. But once in the
Murray, the water was over-allocated for irrigation. Indeed approved
abstractions from the Murray-Darling system amount to some 80% of its
average annual flow. No wonder the river is in trouble! In both river basins,
yield is at the expense of environmental flows.
Speaking on the ABC Lateline program,54 Dr. Judy Messer of the Nature
Conservation Council of NSW argued:
The water belongs to the public. It’s a public resource which the irrigators
are allowed to purchase under license conditions. If you are going to have
healthy rivers, you have to allow the environment, the receiving
environment, to get enough water to keep the rivers healthy. That is
absolutely critical.
Responds Laurie Arthur, a rice farmer in the Murray Basin:
It sounds very easy – take water off the irrigators, let it run down the river
and everything will be fixed. Well that’s not the case! White man is on
this continent now and we have made radical changes to the landscape
and we have to address those changes and the only way we can do it is
with profitable farmers.
Our profitability comes from our water use. We need that profitability to
put back into our farms for all the environmental projects – we are putting
in recycling dams, we are lasering our country. We are using less water.
We need profitability to continue with that work.
Responds Dr. Judy Messer:
Well, the irrigators are the ones that are making the profits so there’s no
reason why they shouldn’t bear the cost. If there is a cost to the
environment then everybody has to wear it – it’s as simple as that.55
Ideally, the yield of a river or reservoir should be determined by its ability to
supply over the long term while also maintaining a healthy environment. In
practice, yield is determined by a balance of political pressures, and once a
population and its economy become dependent on a water supply it is almost

impossible to turn off the tap. But the painful truth is that water for irrigation in
the Murray Basin is greatly over allocated. Past yields are not sustainable
because nature is turning off the tap.
Surface Reservoirs
Conserve water on multiple scales
We have noted earlier the advantages of collecting rain where it falls – the
water is of high purity, it is easy to access and trapping water high in a
catchment minimizes soil erosion. However, storing water where it falls
requires dispersed, decentralized storage facilities on multiple scales, that is,
small house tanks, ponds, weirs, reservoirs and dams of various sizes. As
appropriate they can be interlinked by pipelines, canals, culverts and tunnels so
that water can be moved from regions of surplus to regions of deficit.
Debates about water storage in Australia are highly polarized. For a concrete
example consider the Queensland government’s intention, announced in 2006,
to build a large dam on the Mary River at Traveston Crossing some 200 km
north of Brisbane. This dam will have a surface area larger than Sydney
Harbour, it will inundate 600 to 900 farms (numbers have varied between
announcements), wipe out a small community and threaten a species of lung
fish having great scientific importance. The government is making its case with
dramatic photos of dry dams and the threat of no water. The residents of the
Mary Basin are adamantly opposed.56
What has been the environment movement’s response to the dam? The only
alternatives mentioned in a recent edition of ECO (a newspaper published by
the Sunshine Coast Environment Council57) were house tanks and recycling.
Of course house tanks and recycling must be essential ingredients in Australian
water policy but it seems that, in the Queensland debate, there is nothing
between a house tank and a huge dam. Such polarization is limiting our
options.
The power scaling law
An important principle of systems that operate on multiple scales is the power
scaling law. A cryptic version of this law might be: the smaller it is, the more
of them there are. In the case of water harvesting, this translates into the
installation of very many house tanks but the building of very few large dams.
But it also means the construction of intermediate size storages, town weirs,
ponds and public water tanks of many sizes.58
Why is this idea so important? Because the power scaling distribution is
observed everywhere.59 In fact, it is observed so widely in the natural world
that it is thought to have survival value, that it offers resilience in the face of
external stresses and change. In the case of water, reservoirs on multiple scales
(many small reservoirs, few large ones) enables local communities to have
control over local catchments but to enjoy the advantages of global
connectivity. It offers local security within global security.
Opposition to large dams
The power scaling principle begs the question – what is the maximum sensible
size for a water reservoir? Political opposition to large dams has grown rapidly
in recent years due to the social and environmental damage that they cause.
Large dams are usually defined as those having walls over 15m in height and
holding 3 million cubic meters of water.60 Mega-dams can be over 100 metres
tall and hold billions of cubic metres of water – for example, the Aswan Dam
contains 168,000 million m3, or 168 cubic kilometres.
China, the USA and India are the top three dam builders in the world. Most are
built for irrigation and proponents point to increased agricultural productivity
and the ensuing economic benefits. But the benefits are not evenly distributed.
Those downstream benefit but those upstream tend to be losers, especially
displaced families. Since 1947, the 4,300 large dams built in India have
displaced over 42 million people, predominantly indigenous minorities. When
the Mekong River in Thailand was dammed, the numbers of fish, staple food of
the locals, dropped by two thirds. But because dam management is centralized,
local populations did not derive equivalent compensating benefits. Proponents
of large dams simply ignore the negative social and environmental
consequences. Opponents argue that a larger number of small reservoirs would
have the same benefits for agriculture without the severe environmental and
social consequences.61 62 63
Opposition to big dams is growing everywhere in the world and their
construction proceeds only where highly centralized power can squash local
opposition.64 People who promote centralized economic power are invariably
not interested in distributing its benefits. Hence in the harvesting of water, as
with the other essential requirements of life, it is better for communities to
pursue a decentralized approach.
Managed Aquifer Recharge

Water enters aquifers in recharge areas and emerges from aquifers in discharge
areas. We may analyze sub-surface water resources in the same way as surface
resources. They are stores of water having both inputs and outputs, and we
wish to determine their sustainable yield. However there is a critical difference:
the input to storage ratio is much reduced and monitoring aquifer flows and
therefore calculating a sustainable yield is difficult. Consequently it is easy to
draw on sub-surface waters for a long time before the consequences of
excessive abstraction are realized. As noted earlier, Perth derives some 80% of
its town water from ground aquifers but the devastating effect on local eco-
systems is only belatedly apparent.
Some cities around the world have introduced managed aquifer recharge to
help replenish aquifers. For example, Perth has plans to return 20% of its
treated sewage to aquifers.65 Adelaide already has such a system and Sydney
has an experimental system where stormwater runoff from roads is captured
and returned to an aquifer which runs under the city from Centennial Park to
Botany Bay. Just ten metres of aquifer are sufficient to remove phosphate
pollutants and twenty meters to remove coliform bacteria. But water moves
slowly through the aquifer, taking ten years to traverse its eight kilometre
length.

Fossilized water
Water moves through the Great Artesian Basin at about one metre per
year. The time taken to travel from recharge areas on the western slopes
of the Great Dividing Range in Queensland to discharge mound springs
in arid South Australia is around two million years.
Soils and Wetlands

Soils
A handful of average soil consists of about 45% by volume of minerals, silt
and sand, 25% air, 25% water and the remaining 1-5% is organic matter. Of
course these proportions vary greatly from soil to soil but the point to note is
that soils can store an extraordinary quantity of water over an entire catchment.
The figure of 25% is typical for a loam soil that has been saturated with water
and then allowed to drain. Of that 25%, about half is water available to plants
and the remainder is tightly bound to soil particles. The water holding capacity
of a soil is, however, greatly influenced by its organic matter content, enabling
a healthy soil to soak up water like a sponge.
We have already noted that harvesting water in a soil covered catchment is
rather like catching water on the surface of a sponge. However sub-surface
water is not necessarily lost to the water engineer. Rather the soil, microbial
life and plant roots constitute a biological reservoir of water. The bio-reservoir
is yet another manifestation of ecosystem homeostasis – water is stored in
times of plenty and slowly released in dry periods, thereby helping to maintain
an even flow of water in rivers despite seasonal fluctuations of precipitation.
Trees are an excellent form of flood control, and planted in appropriate places
within a catchment they mitigate the need for costly engineering of
embankments, drains, etc. And of course water is purified as it passes through a
tree plantation. The planting of native water-frugal species along river banks is
an important water conservation measure. The most appropriate choice of tree
species will depend on the individual catchment and its function in the larger
water management plan. The bigger objective is to restore the biological
diversity and ecological integrity of waterways.
Wetlands
The term wetland is the more general and more modern name for swamps,
billabongs, ponds, salt-marshes, mudflats and mangroves. Wetlands are simply
areas of land that have acquired special characteristics from being wet on a
regular or semi-regular basis. The term also applies to depressions in the
landscape of our more arid regions that only occasionally hold water, but
which, when they do, teem with life and become environmental focal points.66
Wetlands are a crucial component of the normal water cycle because they link
surface and sub-surface waters. Indeed in a country as flat as Australia, surface
and sub-surface waters cannot be considered separate systems. During the wet
season, water flows as a sheet over the landscape. During the dry season, the
water shrinks to a chain of ponds. Water still flows but more slowly,
sometimes on the surface, sometimes below ground. Wetlands are not
wastelands. Destroying a wetland breaks a link in a chain and the entire water
cycle breaks down. Some additional benefits of wetlands include:
• Wetlands improve water quality by removing, using or retaining nutrients,
organic waste and sediment which is carried to the wetland with runoff from
the watershed.
• Wetlands reduce severity of floods downstream by retaining water and
releasing it during dryer periods.
• Wetlands protect stream banks and shore lines from erosion.
• Wetlands recharge groundwater, potentially reducing water shortages during
dry spells.
• Wetlands provide food and other products, such as commercial fish and
shellfish, for human consumption.
• Wetlands provide fish and wildlife, including numerous rare and endangered
species, food habitat, breeding grounds and resting areas.
• Wetlands offer opportunities for recreation, bird watching, photography and
outdoor education.
The Commonwealth Government of Australia is signatory to an international
convention on wetlands known as the Ramsar Convention. This commits
countries to maintain an audit of wetlands and to preserve and improve their

quality. Approximately 4,700 regionally important wetlands have been
identified in Australia. Those in the north tend to be in better condition than
those in the south, where grazing pressure, exotic weeds, feral animals and
urban development continue to threaten wetland integrity.
Demand – Water Consumption
Demand Management
Water consumption is frequently divided into four categories:
• Domestic consumption serviced by water companies.
• Power generation – steam is used to drive generators.
• Industrial – everything from beverage manufacturing to pulp mills.
• Irrigation waters for agriculture.
More recently environmental uses of water have leapt into prominence – water
to maintain biodiversity and flows in streams. And of course there are lesser
uses of water for recreation (fishing, parks, sports) and art (e.g., fountains).
Worldwide, it is estimated that irrigation accounts for about 70% of water use.
15% is used by industry and 15% for household purposes. The figures for
individual countries vary greatly depending upon economic development. As
might be expected, undeveloped countries use more in agriculture, developed
countries more in industry.
Water use in Australia is also dominated by agriculture. The breakdown is:
agriculture 70%, households 8%, water service 8%, electricity and gas
production 6%, manufacturing 3%, mining 3%, other 2%.67 The 8% household
consumption is divided between: gardening 106 kL (average annual volume
per household), bathroom 50 kL, laundry 39 kL, toilet 32 kL, drinking and
cooking 23 kL and miscellaneous 10 kL.68 Statistics such as these are useful
because they inform efficient water saving programs. No wonder that garden
watering is the first activity to be banned in a drought.
As noted earlier, the modern trend in water policy is to place more emphasis on
limiting demand and to make more efficient use of limited supplies. Supply-
driven policies are not sustainable in a world where water is becoming
relatively scarce. Factors that have forced communities to adopt demand
management are:
• Climate change: Catchments which once received rainfall to fill dams no
longer do. Rain appears to fall more frequently over the ocean or in places
where it is not easily captured. People in hot climates use more water than
those in cooler climates. The average daily per capita water consumption in
Darwin is 522 L, in Brisbane 300 L, in Sydney 230 L, in Melbourne 220 L

and in the UK 150 L. Thus within Australia the current mass migration of
people from the colder southern States to warmer Queensland is placing
increased demand on the nation’s water.
• Population increase and changing demographics: Even if population
remains stable, changing demographics have a remarkable influence on per
capita consumption. For example, a single person household consumes
about 220 litres per person per day (Lpd) compared to about 100 Lpd in a
five person household. The trend to single person households in Australia
will increase water consumption even if population declines slightly.
• Higher expectations: Affluence has increased per capita consumption in
recent decades. Up market houses, often with a swimming pool, use 225
Lpd versus 96 Lpd for poorer suburban houses.69
• Pollution of surface waters by chemical and organic pollutants originating
from both our agricultural and industrial practice.
• Increasing rates of ground water abstraction which have depleted aquifers.
• Increasing public opposition to large dams.
• The need for environmental flows.
Two obvious targets for reduced consumption are the one use urban water
cycle and agricultural practices. We consider these separately.
Reducing Urban Water Consumption

Demand management to reduce the consumption of potable water is the most
easily achieved water policy initiative required in Australia. It makes both
economic and environmental sense. Indeed a report70 commissioned by the
Mary Valley local governments (those affected by the aforementioned
Traveston Dam), calculates that realistic demand management plus water
recycling would obviate the need for a new dam over the next 50 years. The
report calculates that demand management options are cheaper than attempting
to increase water supply – $1.15 per kL of water saved versus $3.00 per kL to
supply water from the proposed Traveston Dam. The main savings come from
reduced pumping of water which is energy expensive. If one also factors in
greenhouse costs, then demand management is even more cost effective.
Demand management buys time for governments, delays the need for
expensive infrastructure and reduces operational costs. Demand management
options typically include:
• Retrofitting more efficient infrastructure – by far the most costly option.
• Rebates for water efficient equipment and water tanks.
• Restrictions on use of water for non-essential purposes, such as car washing.
• Advertising campaigns to change consumer behaviour.

• Repairing leakages from the public reticulation system – reported to account
for up to 20% (even 50%) of public consumption.
• Incentives to change industry practice.
An essential component of demand management is to fund research into small-
scale water technologies so as to promote economies of decentralization. Three
quite simple measures are:
• Quality management: Water of drinking quality is required for very few
uses – for drinking, cooking, bathing and washing dishes. Lesser quality
water is required for gardening, washing the car and flushing toilets. An
efficient water system would supply water of a quality appropriate for its
intended use. This could be achieved, for example, by supplying each urban
house with dual reticulation, one for drinking quality water, the other for
lesser quality water. Clearly the costs of dual reticulation would have to be
justified by savings elsewhere.
• Dual water supply: One step in this direction is the increasingly popular
dual water supply, where houses install rainwater tanks. By appropriate
plumbing, rainwater becomes the preferred source for selected uses. In order
to guarantee drinking quality water from urban house tanks, kitchen bench
water treatment plants are now available that remove impurities by reverse
osmosis – an impressive example of scientific research promoting
economies of decentralization.
• Household recycling: Wastewater from showers and hand basins could be
given basic treatment and then used for gardening purposes.
Reducing Agricultural Water Consumption

There are three major policy initiatives: 1) the introduction of water efficient,
drought tolerant crops and animals, 2) the introduction of efficient irrigation
technology, and 3) efficient farming practice.
Water efficient plants and animals

Farm products vary greatly in the water consumed. The figures in Table 1
suggest that Australia should not use irrigation water for livestock. Not only is
meat production profligate in its consumption of water, but the economic return
per litre of water consumed is the lowest of all farm commodities (see Table 2).
However it is dairy, cotton and rice that are the biggest actual users of
irrigation water in Australia. 25% of the Murray-Darling irrigation water is
used to grow just one crop – cotton. In times of drought questions are rightly
asked about the justification of growing such crops in an arid continent. Other
crops, especially fruit and vegetables, offer higher returns for less water.
Table 1: Water use by crops

Among the cereals, rice uses twice the water of wheat and maize. Millet
is the least thirsty. For the same amount of water as rice, sorghum
produces 4 to 5 times more protein and yields three times more food than
rice.71 Figures in table are from Leaman.72
Product Litres of water required per

1kg or 1 litre of produce kilo of product
Fine wool for suit 685,000
Wool 171,000
Steak 50,000
Butter 18,070
Cotton 5,300
Rice (white) 2,385
Rice (paddy) 1,550
Wheat 1,010
Citrus juice 780
Milk 600
Maize 576
Wine 360
Table 2: Economic returns of water used

The figures in this table are derived from a table in Leaman.73
Commodity Return ML/hectare % of all

$/Megalitre irrigated lands
Vegetables 1,295 3 2.6
Fruit 1,276 7 4.4
Grapes 600 8 5.2
Cotton 452 7 15.5
Coarse grains 116 3 3.5
Dairy 94 7 39.5
Rice 31 11 11.3
Sugar cane 21 7 8.0
Beef 14 4 7.2
Rice growers are understandably defensive about their huge infrastructure

investments. They point to scientific research which promises to grow rice with
30% less water using a combination of no-till technology and drought tolerant
rice varieties.74 Inefficient water practices persist because water is not properly
costed. A combination of triple bottom line accounting and government
regulation to prevent old world approaches (rice/flood irrigation) would
accelerate the introduction of efficient farming practices.
Irrigation technology
In many parts of the world irrigation is essential for agriculture but unwise
irrigation has incurred great costs. Somewhat belatedly the Australian
government has initiated a $10 billion National Plan for Water Security, much
of which will fund the following programs to increase irrigation efficiency.
Losses: In the Goulburn-Murray irrigation system alone, evaporation, leaky
irrigation pipes and seepage from channels are estimated to lose 900 GL each
year.75 That is enough water to supply the entire city of Melbourne for four
years. A major component of the Commonwealth government’s water spending
is to repair leaks, move water through pipes rather than open channels and to
build enclosed reservoirs.
Trickle irrigation: Irrigation water sprayed into the air results in about 70%
loss due to evaporation. By contrast flood irrigation (for rice) raises water
tables and mobilizes salt. The expensive alternative is to deliver water directly
where it is needed, by trickle underground.
Dry root irrigation technology: Developed by Australian scientists, dry root
irrigation is used in grape crops around the world as a precise tool for root
watering. It reduces evapo-transpiration and water needs by up to 50%.76 The
technology also appears to work for citrus and pear. The trick is to supply
trickle irrigation underground on two sides of a plant. The water is delivered
alternately through one side and then the other. The roots not receiving water
send a signal to the leaves to use water more frugally, while water supplied on
the other side maintains yield. The downside is that the technique requires
highly skilled management and is not easily transported to Third World
agriculture.
Precise long-range weather forecasts: The Australian Government is funding
satellite receiving stations, a radar rainfall network and upgrades to computer
infrastructure. The goal is to improve long-range forecasting which will enable
farmers to plant crops appropriate for the season’s expected rainfall, so
reducing demand for irrigation water.

Should we use water like this?
• Cubbie Station is an 80,000 hectare property in Southeast Queensland
on the headwaters of the Darling River. It produces cotton. To irrigate a
very thirsty crop, the property has the largest private dam in Australia. It
is only five metres deep but more than 30 kilometres on a side, so that it
stores more water than Sydney Harbour.77 Located in a hot climate, the
dam loses an equivalent of two metres of water each year to evaporation.
As drought hits harder, there are demands for the government to buy the
station and shut it down.78
• BHP Billiton extracts 34 Mega litres per day of water from the Great
Artesian Basin to feed its copper and uranium mine at Olympic Dam in
South Australia. The State government allows the company to take the
water for nothing. In fact, the government has approved tripling the size
of the mine and the company is seeking approval to increase its take of
water to 150 Mega litres per day every day for the next 70 years. That’s
60 Olympic swimming pools of water a day, for the lifetime of the mine,
for free. It amounts to about one third of the artesian water flowing into
South Australia.79
Efficient farming practice

There are three major issues concerning water use in modern agriculture: 1)
reduced water retention on farms caused by land clearing and the
mismanagement of wetlands, 2) pollution of waterways due to excessive use of
fertilizers, and 3) soil erosion. Here we focus on fertilizers and pollution.
Worldwide, agriculture is the biggest polluter of water, more so than domestic
sewage and industry. Nitrogen fertilizers are the chief culprit because they are
readily soluble in water and rapidly find their way into the relatively still
waters of lakes and ponds where they cause eutrophication.
Much of the nitrogen applied using conventional farming methods is not
absorbed by the plants it is intended to feed – hence the water pollution
problems. Less could be used if it were judiciously applied. Organic farming
practice makes much more efficient use of applied nutrients. For example,
experimental work by the little known Brazilian agronomist Ana Primavesi80
(brought to the attention of the English speaking world by Bunch81) indicates
that common agricultural crops can be grown with much lower applications of
nutrient with little reduction of yield. The science behind this is interesting.
Orthodox plant nutrition adopts the Nutrient Quantity Concept (NQC) – that is,
apply all nutrients in sufficient quantity so that no one nutrient is limiting yield.
As an alternative to NQC, Bunch uses the results of Ana Primavesi to advocate
the Nutrient Access Concept. NAC is a more appropriate soil fertility model
for ecologically managed soils.
That is, crop growth above a certain extremely low concentration, does
not depend on the concentration of nutrients. It depends, rather, on the
constant access of plant roots to the nutrients, even when these nutrients
exist in very low concentrations. The Nutrient Quantity Concept’s
remedy of increasing the concentration of nutrients by applying large
amounts of chemical fertilizer misses the point almost entirely. What is
needed is a constant supply of even a very small but well-balanced
amount of nutrients over time, and the unobstructed access of plant roots
to these nutrients.82
Plants compensate for the low nutrient levels by a flourish of root growth. As
long as water and low level nutrients stay available, plant yield does not suffer.
Fertilizer, applied in high doses at one or two points during a plant’s life cycle,
has the effect of suppressing root growth. Furthermore, rain washes away idle
nutrients leaving the plant late in life with both a deficient root system and
diminished availability. Interestingly, the examples that Bunch provides in
support of NAC include practices that are familiar to sustainable farmers; that
is, maximize organic matter production, keep the soil covered with green
manures and cover crop mulches, reduce tillage, maximize soil biodiversity,
and feed crops largely through mulches.83
The NAC approach to farming recognizes that the soil is a complex ecosystem,
not just an inert matrix to anchor plants in the ground. A well-managed soil
displays tightly coupled cycling of nutrients between soil organisms and plants.
Nutrient levels in the soil may not be overtly high but the rhizosphere
metabolism ensures that plants have access to a constant supply. Furthermore,
organic matter in the soil retains the moisture necessary to support ecosystem
cycling of nutrients.

How the Israelis do it
Australian irrigators visiting Israel are in awe. Israel has an arid climate
like Australia but the average annual per capita water consumption of
Israelis is about one-quarter that of Australians. (See Appendix 1.) Two
thirds of Israel’s water originates in the River Jordan in the Golan
Heights – hence the strategic importance of the area. The Sea of Galilee
is the main storage. According to Fullerton, “Dams on the farm are the
norm, using artificial liners to prevent seepage. And whereas almost all
water in Australia is used just once, in Israel… the average bucket of
water is used between five and seven times! For example, water which
may have been pumped from 800 metres underground is used first for
tourist spas… then to warm hothouses, and then on to different species of
fish (eels, then catfish). This now enriched water is then taken for
hydroponic tomatoes and herbs, with the rest going to drip irrigate field
crops of olives, melons and alfalfa. Since 1984, the use of freshwater on
farms has halved while the value of production is still rising.”84
Land Use
Sustainability
Defining sustainability
Acknowledging the requirement for sustainability sets fundamental constraints
on human activity, whether in the economic, social or ecological arenas. The
context, of course, is the addiction of modern capitalism to growth in a world
where the limitations to growth are increasingly apparent. Little surprise then,
that there are over 100 definitions of sustainability! The definitions may be
scientific but the battleground is ideological. In the realm of intellectual and
political discourse, sustainability ranks as one of the ‘big ideas’. It has a global
reach that transcends national and cultural boundaries. It is, for example, one of
four Core Concepts discussed at the 2007 Universal Forum of Cultures
sponsored by UNESCO, the others being cultural diversity, knowledge and
peace. These four themes were chosen because they encompass the vast
majority of issues and problems confronting humanity today.
One of the most cited definitions of sustainability is that proposed by the
Brundtland Commission85 – sustainable development is that which “meets the
needs of the present without compromising the ability of future generations to
meet their own needs”. A process is sustainable when it can be carried out over
and over without negative environmental effects or unacceptable costs to any
of the stakeholders involved.
While sustainability sets constraints on human activity, we can also approach it
as a liberating concept – as about design.
It is a concept that recognizes that human civilization is an integral part of
the natural world and that nature must be preserved and perpetuated if the
human community is to sustain itself indefinitely. Sustainable design is
the philosophy that human development should exemplify the principles
of conservation and encourage the application of those principles in our
daily lives.
“In order to integrate ecology and design, we must mirror nature’s deep
interconnections with our own way of thinking about design. The concept
of sustainable design holds that future technologies must function with
the way nature works.86
Dimensions of sustainability
Sustainability has economic, social and ecological dimensions. Probably all
human activities have consequences in each of these three dimensions, so we
are confronted with competing assessments of sustainability. We have already
come across this in the debate about environmental flows for the Murray-
Darling Basin. While environmentalists argue for the importance of river
health, farmers argue for the necessity of farm profitability. This debate
exposes a fundamental divide between views of the world which place
ecological sustainability as the absolute long-term constraint versus those
which place economic sustainability as the absolute constraint. According to
the economist’s worldview, healthy businesses are necessary to motivate
entrepreneurial adoption of resource efficient technologies. Consider this
excerpt from an editorial of The Australian newspaper (9th February 2007),
commenting on Dr. Tim Flannery’s award as 2007 Australian of the Year:
Professor Flannery is a well-documented global warming extremist…
[He] predicts sea-level changes of many metres. Such hyperbole is in line
with his deep-green anti-development, anti-immigration credentials…
[He] should be asked to justify the immediate social costs of stopping
coal exports, both here and in the countries that rely on Australian coal
for their electricity and jobs… The Australian supports the position … to
seek a technological solution that can be exported to assist the world in
meeting the climate change challenge.87
But the reality is that environmental degradation is proceeding at a pace much
faster than the adoption of ameliorating technology. As the president of the
Australian Conservation Foundation warns:
The economy is, of course, crucially important, as is the social well-being
of our citizens. Both now depend on urgent action to deal with our
environmental problems. Unless these problems are recognized, the well-
intentioned attempts to improve economic and social indicators are
doomed to fail.88
A matter of scale
Definitions of sustainability vary according to the scale of one’s immediate
concern – and this is a serious problem when it comes to adopting sustainable
practice. Farming offers a good example. Typically at the paddock level, the
dominant constraints to sustainability are agronomic and the goal is to
maximize yield over several seasons. At the farm level, the dominant
constraints to sustainability are economic – to keep the farm going as a viable
business over the farmer’s lifetime.
At the landscape or catchment level, the dominant constraints to sustainability
are ecological – for example, it is necessary to maintain adequate water and
nutrient cycling to sustain life in the catchment. At the regional or national
level, the main sustainability constraints are macroeconomic – that is, to export
sufficient produce in order to maintain employment, to import machinery, to
sustain rural community life. At the global level, the constraints are once again
environmental, with the current focus on climate change (Figure 3).
This, at least, is how the economically developed world currently constructs
sustainability. But in reality, ecosystem dynamics recognize neither political
boundaries nor abstract human constructs. Rather they operate on all scales,
from the paddock to the planet. Which brings us to a fundamental principle: In

order to achieve ecological sustainability on multiple scales, it is essential to
adopt land use planning. Land use planning begins initially at the landscape or
catchment level but the results of it filter down to the farm and paddock level
and they filter up to the regional and global levels. The Western world has
evolved social and economic systems where no one person or group takes
direct responsibility for what happens in a catchment. Individual farmers
answer to their farm and politicians answer to macroeconomic indices.
Landscape or catchment management falls through the cracks, as it were,
inadequately cared for.
Figure 3: The sustainability of agriculture is defined differently at different

temporal and spatial scales.
Measuring sustainability
How do we know in practice whether a particular human activity is
sustainable? Can we measure it? Economic sustainability, as narrowly defined
in modern economics, is easy to measure – it depends on continued
profitability under competition. Social sustainability revolves around the

concept of social capital and sociologists have even developed measures of it.
But how do we determine ecological sustainability? It is now generally
accepted that ecological sustainability has four components reflecting the status
of four fundamental ecosystem processes:
• The cycling of water.
• The cycling of nutrients.
• Flow of energy.
• Biodiversity and the relationships between species.
These processes operate only within certain limits and they are intimately
interconnected with one another. Since human society can exist only within
nature, all human economic, social and political activities must ultimately
operate within the limitations of these four fundamental processes. In
modernity (that view of the world, espoused in the The Australian editorial
above, which expects technological ingenuity to overcome all obstacles),
progress is about conquering the limitations posed by nature. In the ecological
worldview, progress is about working with them, leveraging them.

Sustainability is finely tuned
Ecosystem dynamics depend on four fundamental processes: the cycling
of water, cycling of nutrients, flow of energy and species interactions.
These four processes are intimately intertwined. As an example, consider
the following relationship between ocean bacteria and climate change.
Algae living in the oceans produce large amounts of the substance
dimethyl-sulpfonio-propionate (DMSP). DMSP is broken down by
marine bacteria to a volatile compound known as dimethyl-sulphide
(DMS). DMS enters the atmosphere and contributes to the condensation
of water and the seeding of clouds. On a global scale, cloud cover
regulates surface temperatures. Note the conjunction of nutrient cycling
(marine bacteria contributing to global cycling of sulphur), water cycling
(sulphur compounds affect cloud formation), energy (cloud cover affects
the proportion of the sun’s energy retained in the atmosphere) and species
diversity (the cooperation of diverse species to process sulphur-
containing compounds and cycle it around the planet).
It is well within today’s technology to genetically modify bacteria to
produce DMS at a faster rate. One can imagine seeding the oceans with
the modified bacteria in an attempt to modify the balance of cloud
formation – the use of DNA technology to manage climate change.
Agro-forestry
This section proposes that agro-forestry must become the dominant form of
agriculture in Australia and indeed in all parts of the word where trees can
grow. According to Colin Tudge, author of the widely appreciated The Secret
Life of Trees,89 agro-forestry “offers one of the principle hopes for a
sustainable world” – it is “one of the great hopes for the future”. The logic is
simple – we have to maintain a large portion of our continent covered in trees
but we must also farm the land. The two activities in Australia have for the past
200 years been considered antagonistic concerns – land-clearing still tends to
be viewed as a necessary pre-condition for profitable farming. In Queensland,
land clearing is a potent political issue with farmers resolutely opposed to
attempts by the Queensland government to restrict clearing. A land
management revolution would integrate forestry and farming into a single
enterprise. The psychology which places farming in opposition to forestry
appears strongly associated with the Anglo-Saxon tradition. Britain long ago
felled its forests while Germany and other central European countries retained
them as an integral part of their culture and economies. Even today, the
German landscape is a patchwork quilt of crops, forest and villages.
There are many advantages to maintaining land under trees:
• Tree cover encourages rain to fall as already described.
• Trees and plant cover in general allow organic matter and micro-organisms
to build up the soil encouraging the bio-storage of water.
• Trees plus healthy soil purify passing water.
• Trees bind the soil and prevent erosion.
• Trees are a carbon sink and now considered an essential part of the strategy
to combat global warming – biosequestration. Indeed, after burning of fossil
fuels, tree clearing is the second largest contributor to greenhouse gases. It
is not just the burning of trees, or the loss of a carbon sink. Sub-soil
processes particularly in peat forests release huge amounts of carbon when
the trees are cut.
• Forest trees provide food for honey bees in the off-season when human
annual crops are dormant. In Australia, honey bees are responsible for
pollinating one third of the food we eat and they pollinate $2 billion worth
of agricultural product. The pollinating service provided by bees is far more
important than their honey. The rapidly growing almond industry is just one
example of a crop totally dependent on pollination by bees.
• Forests provide homes for birds – birds that eat insect pests that might
otherwise be sprayed with insecticide – birds that eat seeds which get
transferred around the landscape.
In short, trees are at the heart of terrestrial ecology and play a vital role in both
the local and global circulation of water. How can trees also become a vital
component of feeding the world?
Colin Tudge considers the overwhelming predominance of cereals in the
world’s food basket to be partly an accident of pre-history. It might have been
different. Tree crops, such as olive, coconut, macadamia, avocado, pistachio,
walnut, cashew and almond to mention just a few, offer highly concentrated
calories and nutrients. If cereals had not existed, says Tudge, human
civilization would have flourished nonetheless on tree crops. And imagine the
possibilities if as much effort had been applied to maximizing tree yields as has
been devoted to cereal yields. In addition to the above advantages, tree
prunings have multiple uses. And once trees stop producing, their wood can be
used for construction and furniture. The trunks of old rubber trees provide an
excellent cabinet timber and earn Malaysia and Thailand billions of dollars in
export earnings.

Can planting trees halt the spread of dry land salinity?
Dry land salinity threatens to become Australia’s worst environmental
disaster. Clearing trees over large swathes of land has upset the finely
tuned balance between water, trees, soil and salt. In May 2000, Peter
Garrett (then president of the Australian Conservation Foundation and
now Minister for the Environment) announced that it would take the
planting of 40 billion trees over the coming decade at a cost of $65 billion
to remedy the problem. Seven years later, nothing like that target has
been reached. One of the problems is the traditional antagonism of broad
acre farmers to trees. And not all scientists agree that replanting trees can
solve the problems caused by clearing them. Fullerton90 quotes a top
CSIRO scientist as saying, “Trees [as a remedy for dry land salinity] are a
waste of time for most of Australia.”
So what are the problems? First, some 50% of a salt affected catchment
would have to be treed, which, Australia wide, would be a huge cost.
Second, trees transpire a lot of water, thus reducing available water for
irrigation. Planting trees may be good for the environment but it is bad
for irrigators – at least that is the claim.
The response of environmentalists is that much of the water lost by
transpiration is returned to the land as rain. Furthermore, the shade
provided by trees reduces pond evaporation and their roots hold a lot of
water which is released in times of drought.
Clearly more research has to be done. But one difficult truth remains.
There may be large areas of Australia that should never have been put
under agriculture. This dilemma brings us to a contention of Sarkar in
Ideal Farming91 that it is better to attempt to increase the productivity of

existing fertile land rather than to bring marginal land into production. On
the other hand, Sarkar clearly supports irrigation farming and he points to
the Israelis as a model.
The challenge is to find ways to integrate trees with farming. Trees provide
many services to farm animals. Well spaced, they act as wind breaks. They
ameliorate diurnal fluctuations in temperature and of course provide shade and
shelter. Leaves, twigs and other prunings in many parts of the world are used
for animal feed. Pigs and poultry scavenge the forest floor removing weeds,
seeds and insect pests.
Tropical forests offer many opportunities for agro-forestry because of the
diversity of animals and plants that they support. Coffee and tea do best under
the shade of taller trees. But the buttresses and shallow roots of tropical trees
are easily damaged by hard hoofs and indeed it is now well established that
trampling cattle and sheep have done irreparable damage to Australian
wetlands. In this regard, the soft padded alpaca from South America holds
great promise. The number of alpacas in Australia is now well over 20,000 and
although the industry is small in comparison to the sheep industry, the fine
fibre produced by Alpacas earns a premium. In an agro-forestry combination,
the Alpaca could do well in Australia.92
Australia is home to many plants having nitrogen-fixing nodules – most
famously the Acacia (Wattle). Nitrogen-fixing nodules not only enable trees to
grow in the most infertile of soils, they also leak nitrogen, thereby enriching
the soil and benefiting companion crops. Consequently leguminous trees are of
special importance in agro-forestry.
Tree crops often take 20 to 30 years before they deliver maximum yield.
Therefore mixed farming, using the spaces between trees for other crops and
animals, ensures that farms become productive earlier.
Australian governments are promoting tree plantations for both good and bad
reasons. A South Australian government scheme is in the good category. It
aims to plant 2.5 million trees on private and public land along the Murray
River corridor to promote bio-diversity and carbon sequestration.93 In the bad
category are plantation forests financed by Commonwealth government
sponsored Managed Investment Schemes (MIS). These attract cashed-up city
investors because they offer tax breaks but it is not at all clear whether these
get-rich-quick plantations can survive in the absence of generous tax
concessions.94 The disastrous effects of MIS plantations are felt in Tasmania
where water hungry eucalypt forests are drying up neighbouring farms.95 As
Tudge warns:
Eucalypts are famously desiccating, with long tap roots reaching down to
the ground water, transpiring long after other trees have given up. They
may create drought around them and kill surrounding trees if planted in
the wrong places.96
Planting the wrong tree in the wrong place for the wrong reasons cannot be
justified on environmental grounds and ultimately it will also fail
economically.
There are a multitude of possibilities for agro-forestry in Australia because the
country has a diversity of climates. The challenge is to get it right in each
location. Here are two possibilities, but there are many others:
Guayule rubber
Over 2,000 rubber producing species are known worldwide, but only two,
Hevea brasiliensis and guayule (Parthenium argentatum), have been
commercially exploited for natural rubber. Today, Hevea is essentially the sole
source of natural rubber grown in tropical parts of the world. Guayule on the
other hand tolerates arid and semi-arid conditions and would do well in
Australia and many other parts of the world. Rubber plantation work is tedious
but could be made more interesting if trees were grown in a mixed agro-
forestry plantation with other crops and animals. Guayule rubber has the
potential for commercialization as a non-allergenic natural rubber. The marked
increase in use of protective coverings following the HIV epidemic has
resulted in an explosion in the number of people sensitive to rubber. Once
sensitized, a person is unable to undergo surgery unless non-allergenic surgical
equipment is available. Guayule is the only plant which can produce this
product.97
Diesel trees
This incredible tree from Brazil (botanical name Copaifera langsdorfii)
produces a biofuel that can be tapped directly to power tractors and other
machinery. A one hectare plantation could feasibly produce 12,000 litres of
fuel a year, enough to make a small farm completely self-sufficient. A Mackay
nursery (in Queensland) is growing trial seedlings which thrive in tropical
conditions. Many other species of tree can produce oil but the advantage of the
diesel tree is that its sap can be placed directly in a diesel tank without
expensive processing. When the trees reach a 30cm diameter, a hole is drilled
into the centre and a tight-fitting pipe installed and plugged. The first fuel can
be tapped after seven to nine years, but it takes 15 to 20 years for trees to reach
maturity.98
To Burn or Not to Burn

Knowledge of fire – how to make it, preserve it and use it – was part of the
toolkit that the first Aborigines brought to Australia. As they moved inland into
increasingly unfamiliar landscape, they learned how to put fire to it and make a
good living from both plants and animals. In considering the purpose of
Aboriginal burning, most have assumed that it was to drive animals into traps
where they could be slaughtered, but Gott99 argues that it was more likely to
have been an agricultural practice. Periodic firing every three years or so
prevented tree cover from becoming dense and encouraged the growth of
herbaceous and tuberous species, which were a major staple food. Clearly, the
use of fire in this way was a skilful practice perfected over centuries and
entirely sustainable.
There has been much debate among ecologists over the status of the savannah
ecosystem. Is it a natural climax vegetation or is it an artefact of human
occupation and, in particular, of the use of fire? The question is difficult
because the landscape type has been so stable for many thousands of years.
According to Flood,100 the current consensus is that both in Africa and in
Australia savannah is a human creation. Indeed Tim Flannery101 has described
the Australian landscape as an Aboriginal artefact. Left to its own devices
savannah eventually returns to a dense cover of trees. For example, in southern
Victoria land which in the 1800s had a cover of 20 trees per hectare today has
3,000 trees per hectare. Fire has been used for so long by Aborigines as a
resource management tool that Australian ecosystems, its plants and even
animals have adapted to it.
In a review of Aboriginal land management, Bowman102 concludes that “fire
was a powerful tool that Aborigines used systematically and purposefully over
the landscape”.103 The use of fire was skilful and central to the maintenance of
the landscapes subsequently colonized by Europeans in the 19th century.104
Bowman also recognizes that the impact of Aboriginal burning is “one of the
most complex and contentious issues in Australian ecology”, adding:
This issue is not only important for the development of a comprehensive
understanding of the dynamics and evolution of the Australian biota, but
is central to the formulation of appropriate strategies for the conservation
of the nation’s biota.
Catastrophic bushfires in Victoria in March 2009, in which more than 200
people were burned to death, have greatly added to the political intensity of the
debate about using fire to manage the Australian landscape. Ecologists had
been winning the argument that regular burning is destroying Australia’s
biodiversity and local councils had placed limits on the amount of burning and
land clearing. But after the bushfires of March 2009 which were all the more
intense due to a build up of combustible biomass, political sentiment has
inevitably swung the other way.
Landscape Design for Farming

Natural sequence farming
If much of Australia’s arable land is to be covered with trees, how do we grow
our broad acre wheat, barley, oats and other annual crops? According to Peter
Andrews,105 we have to make more efficient use of the land under annual
crops. Andrews has developed a land management system called natural
sequence farming based on more than 30 years investigation of the Australian
landscape. Natural sequence farming is based on a theory of how nutrients and
water move through the Australian landscape. Andrews believes that by careful
management of water and nutrients it is possible to recreate the swampy
meadows and chains of ponds that were a feature of a healthy Australian
landscape before it was destroyed by European farming methods. Natural
sequence farming reconnects streams and rivers to subsurface waters. This is
important because Australian ecosystems function by allowing water to stay
underground for longer rather than remain on the surface where it evaporates or
runs to the sea. Natural sequence farming attempts to slow the passage of water
through the landscape and to retain nutrients within a catchment.
According to natural sequence farming, the ideal farm layout divides the land
into thirds (Figure 4):
• One third forest on the high ground and ridges accumulating fertility
under trees.
• One-third cropping on the mid-slopes exploiting fertility carried down by
water from the high ground.
• One-third recovery area where trees, grasses, etc., capture passing
nutrients before they wash into water ways and are lost from the local
landscape.
Tree prunings and hay harvested from the valley can be returned to the high
ground for mulching so completing the cycle. These figures are not hard and
fast, rather they attempt to exploit the way that nutrients are cycled in the
Australian landscape. According to Andrews, natural sequence farming
methods allow farmers to achieve five times more productivity on the cropped
third of their land, so compensating for the two-thirds under trees.106
Essentially, trees create the fertility used by crops, and that fertility is
transported naturally through the landscape by water.
Andrews claims that natural sequence farming methods can rectify a range of
environmental problems, such as salinity, erosion, eutrophication and rising
water tables. Proponents of natural sequence farming point to Andrews’ own
property in NSW, which retained a covering of green feed during a recent
drought that browned off neighbouring properties.
Figure 4: In natural sequence farming, individual paddocks, slopes or

landscapes, as appropriate, are divided into thirds. Fertility is generated on the
high ground. Water carries nutrients downhill which feed mid-ground crops and
are then recaptured in the low ground. Hay and shrubs etc are harvested from the
low ground and transported back up hill. This figure has been adapted from
Diagram 4 in (Andrews 2006) and reworked by Sahitya Graphics.
Natural sequence farming links to the work of Ana Primavesi described

above,107 because the system retains moisture and nutrients in the soil, and
ecological soil management ensures that plants yield well. Note that Andrews
and other proponents of organic agriculture are not necessarily opposed to the
use of slow release fertilizers to offset real losses from the land. However, they
argue that nutrient losses should be minimized and soil fertility can be
generated locally.
Permaculture
Permaculture was developed in the mid 1970s by two Australians, Dr. Bill
Mollison108 and David Holmgren,109 as a set of design principles that could be
used to create stable agricultural systems. The term is a synthesis of permanent
agriculture and the design principles are a response to modern methods of
industrial agriculture which pollute land and water, reduce biodiversity and
encourage soil erosion. At the heart of permaculture is the attempt to design

landscapes which produce food by mimicking the structure and processes of
natural ecosystems.
Although principally an agro-ecological design theory, permaculture has
developed a large international following of individuals who have subsequently
incorporated a range of alternative cultural ideas. One of the core values is self-
sufficiency or self-reliance – to reduce reliance on industrial systems of
production and distribution, which permaculture advocates believe are
destroying the Earth’s ecosystems. To quote Mollison himself, “I teach self-
reliance, the world’s most subversive practice! I teach people how to grow
their own food, which is shockingly subversive. So, yes, it [permaculture] is
seditious. But it’s peaceful sedition.”110
Permaculture design principles draw heavily on the practical application of
ecological theory. Each component of a farm design is analyzed in terms of its
needs, outputs and properties. For example, a chicken needs water, moderated
microclimate, food and other chickens, and produces meat, eggs, feathers and
manure while doing a lot of scratching. Design elements are then assembled in
relation to one another so that the products of one element feed the needs of
adjacent elements. Chickens will eat waste from other parts of the farm and
remove weeds. A successful design minimizes waste, fossil fuel consumption
and human labour.
Permaculture focuses on maximizing the use of trees (agro-forestry) and
perennial food crops because these make more efficient use of energy than
traditional annual crops. Permaculture borrows freely from organic agriculture,
sustainable forestry, horticulture, agro-forestry and indigenous systems of land
management, but its fundamental contribution to the field of ecological design
is the development of a concise set of organizing principles that can be
transferred through a brief course of intensive training. This helped to spread
the ideas more rapidly than would have occurred through a system of
university based education.
Perhaps because permaculture became associated with the alternative lifestyle
movement, it has not received the attention it deserves from mainstream
agricultural scientists. Agri-business will not promote research into farming
methods that avoid their products. There have been criticisms, on theoretical
grounds, that permanent and therefore mature wooded landscapes cannot be as
productive as traditional farmland because, according to the theory of
ecological succession, net productivity declines as ecosystems mature. Critics
also claim that existing permaculture projects are insufficiently documented to
determine how successful they really are. One country where permaculture is
claimed to have had much success is Cuba.

Can organic agriculture feed the world?
Much of the debate about the sustainability of orthodox farming practices
and the ability of organic methods to replace them hinges on nitrogen
(N). The main limiting nutrient for plant production in most parts of the
world is nitrogen. So for some the key question is said to be – can organic
methods supply N in the same amounts as supplied by artificial
fertilizers? It is not just an academic question. At stake is the ability to
feed our planet’s six billion people. Also at stake are the profits agri-
business derives from the production of artificial fertilizers.
The numbers read something like this. Agriculture consumes some 175 to
200 million tonnes of nitrogen fertilizer globally per year. 40% of it is
manufactured artificially by the Haber process, while the remainder
comes from nitrogen fixation of cover crops and recycled organic matter.
Consequently about one third of the world’s population, two billion
people, depend upon food produced with artificial nitrogen.
Modern agriculture has a “nitrogen addiction”, says Mary White. She
argues111 that organic methods (green manures and cover crops typical of
the European Middle Ages) could not sustain six billion people. At best,
she says, organic methods can produce about 200 kg of nitrogen per
hectare which will make 200-250 kg of plant protein, sufficient to support
about 15 people. In reality, farming in the Middles Ages, whether in
Europe or China, supported only about 5 persons per hectare. On the
other hand, White recognizes the environmental damage caused by
artificial nitrogen fertilizers and admits that ultimately our current
farming methods are not sustainable. All of which leads to a rather
pessimistic conclusion (which is not actually stated in her piece on the
subject).
Proponents of organic agriculture draw a more optimistic conclusion.
First, organic agriculture has come a long way since the Middle Ages.
We have already referred to the work of Primavesi and Bunch which
demonstrates how plants can be grown with smaller applications of
organic N. Second, organic N currently provides about 60% of the
world’s agricultural N, more than provided by artificial means. This
could and would certainly increase if the artificial N addiction were not
officially condoned by governments and departments of agriculture.
However the best evidence for the ability of organic methods to feed the
world comes from actual comparisons of production by the two systems.
A recent meta-study done by scientists at the University of Michigan,
Ann Arbor, USA, analyzed the data of 293 independent comparisons of
organic and non-organic plant and animal production around the world
and showed that organic methods perform as well as, and sometimes
better than, non-organic.112
The report makes two significant assertions. The first is that organic
methods can provide enough calories to support the whole human
population eating as it does today. The second assertion is that nitrogen-
fixing legumes used as green manures can provide enough biologically
fixed nitrogen to replace the entire amount of synthetic nitrogen fertilizer
currently in use. The authors also note that theirs is not the first report to
draw such conclusions, and that the scientific case for organics
agriculture is now proven.
Integrated farming
Sarkar’s contribution to farming and landscape design is known as integrated
farming. It is, in many ways, similar to permaculture, but the motivation is
subtly different. His primary concern is to address poverty and malnutrition, a
reality of life for most people in most parts of the world. However the
principles of integrated farming are also applicable to agriculture in the
developed world.
Integrated farming is better understood within the context of Sarkar’s socio-
economic program known as Prout (the Progressive Utilization Theory). An
important sector of a Proutist economy is what Sarkar calls people’s economy,
the purpose of which is to ensure the production and distribution of the
minimum requirements of life, that is, basic foods, health care, housing,
clothing and education. The Proutist approach is to produce these minimum
requirements at the local level, that is, to decentralize economic activity so that
local people are empowered to produce their own basic needs and not to
depend on outside companies. In the case of food, Sarkar’s strategy is to create
an edible landscape using the principles of integrated farming.
The main objective of integrated farming is self-sufficiency and in this respect
it is similar to permaculture. Communities should not be dependent on outside
resources for their basic requirements. “An integrated approach to farming
should include cottage industries, energy production, research centres, water
conservation, etc. This approach will help make the farming projects self-
sufficient.”113
Sarkar’s farming system promotes massive reafforestation programs which he
says are required both to manage the water cycle and to deal with climate
change. It should be noted that he was concerned with these issues long before
they rose to prominence in public consciousness. In Sarkar’s vision, tree
plantations are very much part of the village and city landscapes where people
live. He prescribes a systematic approach to the planting of trees and associated
herbaceous plants (that is, ‘filler’ plants or intercrops) in the boundary areas of
all schools, farms, orchards, homes and roadsides. He details combinations of

trees that can be planted for food, for timber, for shade, for fuel and so on.114
Like agro-forestry and permaculture, integrated farming is based on a mixture
of perennial and annual crops arranged spatially and sequentially to gain
multiple ecological and economic benefits.115
One notable aspect of Sarkar’s farming system is the importance given to
companion planting. Indeed, most of his writing on agriculture is devoted to
different systems of crop blending and the complementary interactions between
plants. In addition to increased productivity, there are ecological benefits that
arise from maintaining biodiversity and vegetation cover.116 Sarkar
distinguishes three cropping regimes: mixed cropping, supplementary cropping
and crop rotation. Under each category, he lists crop combinations and the
months in which they should be sown and transplanted. The detail applies to
India, but the principles can be adopted anywhere. “Our system of integrated
farming is designed to utilize every inch of land. Not only should the surface
land be fully utilized, but the space under the surface and even the space above
the surface should be used to the maximum.117 Here Sarkar is alluding to the
layered production systems that are also a part of permaculture design.
On the issue of chemical versus organic fertilizers, Sarkar is pragmatic. He
observes that the current system of intensive chemical agriculture kills the soil:
“…it is noticeable that whenever chemical fertilizers are used intensively, the
land becomes infertile and useless after some time. This is because chemical
fertilizers destroy the vital energy of the land so that it becomes lifeless, just
like cement.”118 However he also accepts that to achieve maximum
productivity, soils may require supplements of chemical fertilizers and research
will be necessary to do this without destroying the living components of a
fertile soil.
Finally, returning to the economic domain, Sarkar recognizes that modern
farming requires economies of scale that cannot be achieved by individual
farmers alone. He argues that many agricultural problems, such as conserving
water and maintaining soil fertility, require a cooperative approach.119
In the cooperative system there is great scope for agricultural research
and development to discover new ways to better utilize and prolong the
vitality of land. The benefit of cooperatives is that they combine the
wealth and resources of many individuals and harness them in a united
way.120
Only cooperatives can support the expanding economic requirements of
agriculture, like creating ponds, purchasing machinery, uniting local
people to pressurize the government for irrigation facilities, etc.121

The declining importance of agriculture in Australia
In 1836 Charles Darwin concluded that Australia would never be a great
agricultural nation like the USA because of poor soils and unpredictable
climate. Whether he was right or wrong depends on whether the bounty
of wheat, wool and meat over the past 170 years proves to be sustainable
or not.
In Australia, as in most other developed countries, the manufacturing and
service sectors are growing so fast that agriculture contributes a
diminishing share to wealth. Furthermore, only about 5% of the
population is directly engaged in agriculture. Historically, the agricultural
lobby in Australia has been powerful and exerted an influence in excess
of its economic contribution. The demise of rural communities in
Australia today is a reflection of their diminishing economic and political
power.
But there are tremendous dangers for Australia in allowing agriculture
and, just as importantly, agricultural communities, to decline. First is the
loss of food security, that is, our independence and self-sufficiency in
producing staple foods. Second is the real danger of losing agricultural
skills and even the willingness of people to engage in agriculture. Very
few Australians have a realistic understanding of the landscapes on which
their food depends and consequently governments are unable to muster
the political will to repair the existing damage and to introduce
sustainable practices.
Sarkar argues that a healthy developed economy must have a healthy
agricultural sector and this requires about 25% of the workforce to be
connected in some way with food production.122 He considers
undeveloped countries to have too many people engaged in agriculture
and developed countries to have too few. Both are unhealthy, both
economically and socially.
A second agrarian revolution

The first agrarian revolution took place in the Neolithic (New Stone Age),
about 10,000 years ago, when the world was warming with the passing of the
last ice age. The development of agriculture brought about entirely new ways
of living because it enabled large groups of people to remain together in one
place and to accumulate more tools and implements than could be carried in a
nomadic lifestyle. This paved the way for new technologies, new forms of
social interaction and trading. While the Neolithic agrarian revolution triggered
the flowering of human civilization, some argue that it also brought us
inexorably to our modern predicament – ecological and social breakdown. For
example, Richard Leakey123 argues that the transition from hunter-gathering to

farming “involved a dramatic alteration in the relationship people had both
with the world around them and among themselves. The hunter-gatherer is part
of the natural order – a farmer necessarily distorts that order.”
The claim here is that a second agrarian revolution is upon us. The challenge it
presents is to re-integrate productive farming within “the natural order”. The
existing system is breaking down. Farmer suicides and farm debt are running
high in Australia. The latest indication of breakdown is a civil disobedience
campaign by hundreds of Australian farmers felling protected trees on their
properties to protest against strict land-clearing laws.124 Some way must be
found to make farming both an economically viable occupation and an
ecologically sustainable one. Colin Tudge argues that agro-forestry is that way:
…societies can build their entire economies around trees: economies that
are much better for people at large, and infinitely more sustainable, than
anything we have at present. Trees could indeed stand at the heart of all
the world’s economics and politics, just as they are at the centre of all
terrestrial ecology.
The future endeavours of humanity must be geared to biological realities.
The world’s economies (and the endeavours of scientists and
technologists) must serve those realities. Most obviously – once we start
to think seriously about the fate of cities, and environmental stress in
general, and human employment and dignity – we see that for the
foreseeable future, and probably for ever, the economies and physical
structure of the world must be primarily agrarian. In the current, crude,
unexamined dogma, ‘development’ and ‘progress’ mean urbanization.
The prime requirement, in absolute contrast, is to make agrarian living
agreeable. It can be. It’s just that at present, all the world’s most powerful
forces are against it. Trees are right at the heart of all the necessary
debates: ecological, social, economic, political, moral, religious.
The Administration of Water and Land
The Administration of Land

Land use planning has little prominence in Western societies because private
property rights make it difficult to place limits on what land owners can or
cannot do with their land. One of the positive outcomes of global warming,
drought and environmental degradation is the attention they have focused on
land use and environmental management. In this section we explore the
administrative systems required to ensure that humans can survive without
destroying the integrity of the ecosystems on which they depend. There are two
dimensions to the management system we require, described somewhat
abstractly as the horizontal and vertical dimensions. The horizontal dimension
refers to the way we divide the landscape into administrative units and the
vertical dimension refers to the multiple layers of governance required to
manage the complexity of human systems interacting with ecosystems.
Dividing the land into administrative units
Ecosystem dynamics operate on multiple scales from local to global. Therefore
in order to administer human activities and to ensure their sustainability on all
scales, it is necessary to implement a hierarchical subdivision of land. With
such a framework in place, it becomes possible to plan resource use and to
integrate human activity with the four fundamental ecosystem processes.
There are many ways to approach a hierarchical subdivision of land: using
physical criteria, such as topography; biological criteria, such as vegetation
type; or human criteria such as political and cultural boundaries. The approach
advocated in this essay is to give primary importance to a system based on
surface water drainage and furthermore, to make political boundaries consistent
with catchment boundaries. Why? Because surface water is the primary
determinant of economic and social development.125 Australia provides ample
proof. Too much water (as in the far north), too little water (as in the arid
centre) and too unreliable water (as west of the Great Dividing Range) have
constrained the spread of human settlement across the continent. Only in the
southeast, where the prevailing water cycle was familiar to European settlers,
did population and commerce grow rapidly.
Here we state a fundamental principle of economic development: economic
planning begins with land use planning and land use planning begins with
water planning. To give expression to this principle, we propose, for the
purposes of political and economic administration, the hierarchical division of
land into local catchments, regional catchments, river basins and drainage
divisions.
Bioregions
The administration of land based on surface water drainage does not satisfy all
the requirements of environmental management. Some ecosystems, for
example, alpine regions, span the headwaters of several catchments, and
therefore cannot be well managed from a catchment perspective. Recall the
four key components of ecosystem dynamics: water cycling, nutrient cycling,
energy flows and species interactions. These four cannot be managed in the
same way, even though their management must obviously be coordinated. It is
now the accepted practice in Australia that conservation of biodiversity be
managed on the scale of whole bioregions.
Bioregions are relatively large areas of land having a characteristic set of
climatic, geological and biological features. To the trained eye of an ecologist,
bioregions are characterized by a particular assemblage of fauna and flora
whose patterns of interconnectivity depend on local climate, soil, landform,
vegetation and land use. Consequently bioregions provide a useful level of

generality for managing some aspects of landscapes, especially biodiversity.126
There are currently 85 bioregions recognized across Australia and their
boundaries do not follow the constraints of land drainage. So the question
arises – why should we adopt a water catchment approach to political and
economic administration rather than the bioregional approach? Of course both
catchments and bioregions must be managed in parallel, but for the purposes of
administering human settlement and economic activity, water is the critical
factor. Furthermore, nutrient cycling tends to be associated with water cycling,
so catchment by catchment management is appropriate for two of the four eco-
system processes. Separate administrative bodies will be required to manage
bioregions. Incidentally, energy flows in ecosystems interact with the dynamics
of climate change, requiring yet another kind of administrative apparatus.
Levels of governance
The vertical dimension of managing social and environmental systems refers to
the several layers of governance required to manage their complexity. Different
forms of management are required depending on the process to be managed, its
scale and its strategic importance. Here we consider five levels of management
that are distinguished by both scale (local to regional) and function:
• Farmers and land care groups (consisting of actual farmers and primary
producers).
• Water, sewage and irrigation companies, etc. (constituted as public utilities
or cooperatives as appropriate).
• Regulatory authorities (established by both local and federal levels of
government).
• Local and regional governments (to coordinate the management of regional
catchments).
• Higher levels of government (to manage large aquifers, river basins and
water trading).
The next section introduces a system of land division based on water drainage
and formalizes the concept of a local government area. Subsequent sections
discuss the various levels of governance.
Local Government Areas

The smallest unit of formal governance and economic planning in Australia, as
in most countries, is the shire, town or city council, collectively known as local
government. In Australia, the boundaries of local government areas (LGAs)
are, for the most part, accidents of history. They are typically focused on rivers,
because these were the main means of communication during the era of early
settlement.
Principle: As far as possible, LGA boundaries should be aligned to the
ridgelines of major river catchments.
In those cases where a river basin is too large to accommodate a single LGA,
the determination of boundaries would start at the catchment source and work
its way to the river mouth. For management purposes, it is useful to distinguish
between the upper, mid and lower river basin, the upper basin typically being
high, hilly country, the mid-basin being flat plains and the lower basin being
coastal delta. So for a river basin that embraces several LGAs, it is preferable
that the LGA boundaries delineate the upper, mid and coastal regions. LGAs
sharing a common basin can be regionally associated. Actual LGA boundaries
will be additionally determined by a combination of other factors, most
obviously population distribution (discussed below).
The advantages of this local government structuring scheme are:
• It facilitates the monitoring and management of water resources at the local
level.
• Local councils can assume full responsibility for a catchment because it lies
completely within their jurisdiction.
• It facilitates the management of whole river basins and the work of national
water authorities.
As Alexandra127 cleverly puts it, local government will no longer be about the
3R’s (roads, rates and rubbish) but about the 7R’s: “roads, rates, recycling,
revegetation, riparian restoration, regional reinvestment and resilient regional
communities”.
What is the optimum population for an LGA?
At the time of writing this paragraph, the Queensland State government intends
to amalgamate many LGAs into larger regional entities. The motivation is
purely economic – small councils are said to be inefficient. In contrast to the
focus on economics, electoral boundaries for State and Federal governments
are established with an eye to population distribution and the requirement to
have similar numbers of voters in each electorate. Catchment boundaries have
nothing to do with it. State and Federal electoral boundaries change frequently,
so that voters find themselves in different communities with different
demographics from election to election. As a consequence of such fluidity, the
sense of community at local level is not carried to the State and Federal levels
and there is little correspondence between local communities and the larger
political jurisdictions.
There is clearly a tension between the need to build local community and the
need for economic and administrative efficiency. When city councils become
too big there is loss of community identity but conversely small councils lose
economies of scale. This begs the question: what is the optimum population for
an LGA? We propose an average of 100,000 people as an appropriate
compromise. We note that, at the time of writing this paragraph, prior to
council amalgamations, each of the three councils on the Sunshine Coast north
of Brisbane has a population of about 100,000. Each includes a mix of both
rural and urban development and each could be considered a ‘good average
shire’. However some flexibility is required. It is clear that the largely empty
parts of rural Australia, with huge areas of land to administer, should be
allowed smaller population, while metropolitan councils will have a larger
population. Subject to catchment constraints, boundaries would need to be
revised periodically to accommodate movements in population.

Have the States of Australia passed their use by date?
Although environmental management in Australia is supposedly under
the jurisdiction of the State governments, local governments are in a
better position to oversee enactment of natural resource policies. They are
also in a position to respond more rapidly to environmental problems as
they arise, assuming of course that they are adequately resourced.
The State level of government in Australia should be abolished because it
no longer serves any important strategic function. The States could be
substituted by regional groupings of local governments. These regional
groupings would, of course, correspond to regional catchments or river
basins. Here are two reasons why the States have passed their use-by
date:
1) Failure to manage the Murray-Darling Basin
In July 2007, the Commonwealth government introduced legislation to

bring the Murray-Darling Basin under its control. (Note in the figure how
the basin straddles four States.) Despite objections from Victoria and
concerns about concentration of power, whole basin management is the
only solution to the inability of the four concerned States, Queensland,
NSW, Victoria and South Australia, to do the job.
2) Failure to manage bioregions that cross several State boundaries.
Managing biodiversity requires a whole bioregion approach. It became

apparent in the early 1990s that conservation goals could not be achieved
if administrative regions were constrained by State borders.
Consequently, the States asked the Federal government to coordinate the
determination of bioregion boundaries. Today there are 85 recognized
bioregions. 17 are found in NSW, but of these only two lie wholly within
the borders of the State. In the system proposed in this essay, where
LGAs and regional boundaries would be determined by catchments,
many bioregions would also cross administrative boundaries. Hence there
is a need for a separate administrative apparatus for bioregions.
Land-care and Farmers Organizations

The best persons to care for an area of land are those who actually live or work
on it. Their everyday presence ensures that they will recognize small deviations
from the natural order of the previous decades. In the case of rural land, the
growers, cultivators and graziers themselves are the best caretakers.
Unfortunately there are two all too common obstacles to the realization of this
truth. First, in most parts of the world, both developed and undeveloped,
farming is a marginal or uneconomic enterprise. In such circumstances, land
care is low down the list of priorities. Second, much land, both rural and urban,
is owned by absentee landlords. The people actual working or living on the
land have no incentive to care for it because they could be gone tomorrow.
Rural communities in Australia are in decline. The average age of an
Australian farmer is now 61 – young people are turning away from the land.128
Farmer suicides and farm debt are running high. We have already noted the
farmer civil disobedience campaign to fell protected trees on their properties.
The government introduced land-clearing restrictions in order that the tree
growth can be used to offset carbon pollution from the country’s vast coal
mining industry. Farmers argue that they are the scapegoats for climate change
and that the ban on tree clearing is yet another impost making it difficult for
farmers to earn a living.
Farmers have a legitimate grievance. Two decades of rural policy dominated
by economic rationalism and free trade have ripped the heart out of Australia’s
rural communities. Some way must be found to make farming an economically
viable occupation, if it is also to become ecologically sustainable.
Part of the solution is the gradual development of a cooperative rural
economy.129 But another ingredient will be agreements between representative
organizations, which in developed countries means both farmer and
environmental organizations. An historic agreement has just been signed in
Queensland and may be a positive sign of things to come. After many years of
fighting between farmers and environmentalists over the rapid rate of tree
clearing, the Queensland Premier has brokered an agreement between the
Queensland government, Agforce (Queensland’s powerful farmers
organization) and the Australian Rainforest Conservation Society. Under the
agreement, farmers who adopt green land care practices will be rewarded with
longer leases. (In Queensland, much rural land is government owned and
leased to pastoralists. In fact, the Queensland State government is the largest
landholder in the world after China and Russia.) AgForce cites the main issues
facing growers in Australia as resource management, land tenure,
environmental issues, international competitiveness and withdrawal of rural
community services. The above agreement attempts to address the first three of
these. Unfortunately, unless the economic viability of farming is addressed,
such agreements are unlikely to be effective.

A letter to The Mercury newspaper, Hobart.
“While the State government’s recent announcement of $420,000
to help 45 vegetable farmers develop business skills and $4 million
for marketing initiatives for Tasmanian produce is laudable (see
The Mercury, 21st September) it is not addressing the crux of the
problem.
“Unfortunately for a number of reasons we are not competitive
with the rest of the world because our costs of production are too
high. Forget about all the level playing field talk. It will never
happen.
“Many of these costs are outside the farmer’s control, such as
government charges at all levels and excessive red tape.
“However, many are within our control. Most of our Tasmanian
vegetable farms are over-capitalized and too small to be viable in
the long term.
“What the government should be doing through the Department of
Primary Industries, Water and Environment is examine new
business models by which groups of willing farmers could farm
cooperatively together as districts, ensuring greater economies of
scale.
“The natural resources of the regions, such as water, drainage and
topography, could be used more effectively.
“Build infrastructure, such as roads, fences and buildings, that
would eventually be located more strategically.
“The savings on machinery costs and the ability to purchase in bulk
would also be considerable. The opportunities to build a viable
future are exciting, challenging and numerous.
“I know lots of sacred cows will have to be buried but let’s have
the debate before it’s too late.
“This is not about destroying rural communities. It is about saving
them while we still have a say in our future.”
Rick Rockliff,
Sassafras
24th September 2005
Regulatory Bodies
Principles
Leaman130 promotes the following principles of water management and water
legislation:
• The water cycle is essential for a healthy ecosystem. Water is essential for
economic development. Clean water is essential for human health. All three
are interconnected. It is not possible to have one without the others.
• Water in all parts of the world in whatever form is linked via the water
cycle. It is not possible to divide water into isolated categories, for example,
surface water and ground water, and to have different legislation for each.
The water cycle must be managed in its totality.
• There should be no waste – water must be maximally utilized.
• Water should not be unnecessarily degraded because water is recycled to
others through the water cycle.
• Water is part of the commons, not given to any one person to squander.
Water should be shared equitably and there must be a transparent allocation
system subject to appeal.
• Codes of water practice should adopt the precautionary principle – when in
doubt protect the resource. Water is too valuable to risk.
Water management requires an understanding of all parts of the water cycle
within all catchments from local level to drainage division. It requires
measurements of precipitation, water flow, ground water levels, evapo-
transpiration, water quality and human abstractions and discharges. Water
resources are managed for many uses other than abstraction. Consider the
following list of competing management demands:
• Flood defence and land drainage.
• Development of water resources, especially storage facilities.
• Control of abstractions by individuals, irrigators, private companies and
public utilities.
• Control of water pollution and salinity.
• Control of effluent discharge.
• Control of catchment erosion.
• Maintenance of freshwater fisheries.
• Conservation of the water environment, biodiversity and environmental
flows.
• Provision of water based recreation, including fishing.
• Navigation.
• Environmental flows (last in the list because that is where it has traditionally
been placed).
Some history – water administration in the UK
The formation of multi-purpose river basin authorities was debated in the UK
for more than 100 years before it actually happened. As far back as 1870, Lord
Robert Montague, a commissioner in the Royal Sanitary Commission, argued
that “the various interests of land and river, navigation and mills, drainage and
water supply, fishing and manufacturers, can be adjusted and developed only
by the one management over the whole river”.131 His advice was rejected.
Disastrous flooding events over subsequent decades, primarily due to extensive
deforestation of the English landscape, led to the formation of numerous land
drainage boards and ultimately to the Land Drainage Act of 1930 which
established the notion of catchment management. The next advance was the
formation of River Boards under the River Boards Act of 1948. But this Act
failed to provide the Boards with the power to conserve water. They were
purely a data collecting service.
The introduction of spray irrigation after World War Two, with consequent
tension between town and country over rights to water, set the scene for the
next milestone in Britain’s water legislation – licensing. For hundreds of years,
water allocation had been determined by a system of water rights based on
common law. This system was changed overnight by the Water Act of 1963
which introduced a system of government licensing. No one had individual
ownership of the water, rather access was obtained by government license.
Further functions were integrated into the River Boards over the next decade
until finally the 1973 Water Act established 29 truly multi-function Regional
Water Authorities. However it can be argued that the 1973 Act went too far,
because it also merged the regulatory role with the service utility role.
Conflicts of interest arose as increasing economic pressures compromised
water quality and conservation goals. The defects of this arrangement were
used to push through the privatization of water utilities in the Water Act of
1989. A UK National Rivers Authority was established to coordinate the
activities of 10 regional units, but of particular importance, the Act separated
the regulatory function of the Authority from the private companies providing
water services. Today there are 22 water companies whose jurisdiction is
mostly catchment based. They are regulated by the Office of Water Services
(the economic regulator), the Environment Agency (the environmental
regulator) and the Drinking Water Inspectorate (the regulator for drinking
water quality). A committee of Secretaries of State has a wider role in
developing policy and the legislative framework.
Australian regulatory bodies
Effective water management depends on sound institutional arrangements
supported by Acts of Parliament. Australia has three levels of government,
local, State and Federal, and at present it is the States that have primary
responsibility for water management. In Queensland, for example, the Water
Act 2000 vests all rights to the use, flow and control of Queensland’s water
with the State government. The legislation is implemented by the Department
of Natural Resources, Mines and Water (NRWM) and requires that the NRWM
prepare a Water Resources Plan (WRP) for every river basin followed by a
Resource Operations Plan which determines how the objectives of the WRP
are to be achieved.132 The plan must have a number of features which would
satisfy some of Leaman’s principles and which, according to the NRMW, are
Australian best practice:
• The plan must specify the long-term consequences of the proposed water
allocations so that all users have certainty and security.
• Water resources must be managed to maintain river basin health and to
provide for the long-term sustainability of its ecosystems.
• The plan must specify a range of environmental flow objectives to achieve
river health and these must be supported by good science.
• Future increases in water allocations must be compatible with the security
and environmental flow objectives.
• The planning process should include community consultation.
• Planning must adopt the precautionary principle.
• More controversially, the Water Act 2000 also introduced a system whereby
water entitlements can be traded independently of the land to which they
were previously attached. Trading is seen as a means of increasing
productivity and efficiency because water moves to the highest value uses.
However the Water Operations Plan must contain trading rules to ensure
that the movement of water does not compromise security and
environmental flow objectives.
• The plan must also include demand management, ground water
management, etc.
The end result should be a plan that allocates water for domestic, agricultural,
irrigation, industrial and recreational users subject to the constraints of
environmental health and allocation security.
The whole process looks good on paper and is probably the best that can be
achieved in today’s social and economic climate, but given the fact that so
many of Australia’s rivers are in crisis, the regulatory regime is clearly
inadequate. Here we address just a few of the problems. They are not unique to
Australia and they provide valuable lessons for the future.
Divided responsibility: Many of the important river basins in Australia, most
notably the Murray-Darling, do not correspond to State boundaries. The effect
is that each State attempts to maximize its take of water and blame the others
for mismanagement. A second problem is that there are multiple regulatory
bodies even at the same level of government, with overlapping areas of
responsibility but with different goals and time-lines. For example, there are
currently five overlapping Australian Commonwealth bodies responsible for

water.133 The net result is that even though everyone accepts the principle of
whole river basin management in theory, the reality is nothing like it.
Nepotism: In 2008, the Queensland Labor government announced that it
intends to issue a tradable water allocation to Cubbie Station, a huge cotton
grower high in the headwaters of the Murray-Darling Basin.134 Due to water
shortages in the basin, the licence is effectively a gift worth about $100 million
AUD. Cubbie Station is already the biggest irrigator in Australia and much
controversy surrounds its profligate use of water. Of particular concern is that
the head of the company was a previous treasurer in the same Queensland
Labor Party. It is also of interest that at the time of the announcement, Cubbie
Station was deeply in debt due to the Global Financial Crisis. It is easy to agree
with a downstream grazier that the issuing of this license is “morally
outrageous”.
Transparency: Catchment water accounting should be transparent, that is, the
accounts should be public documents. However this is not always the case. In
places like Tasmania, where water is highly politicized due to large amounts of
water consumed by the woodchip forestry, catchment water accounts are kept
secret.
Politicization: The author has spoken to person’s who participated in the
community consultation process that was an integral part of the preparation of
the Mary River Basin Water Resource Plan in Queensland. It was quite clear
that those pushing for more environmental flows were up against powerful
established lobby groups. In the Condamine-Balonne Basin, established users
mounted a legal challenge against the science used to determine environmental
flows.
Enough of the problems – what are the solutions? There has been much
discussion in the Australian media over the past few years concerning an
effective regulatory apparatus for water. A key issue is how to deal with the
extreme politicization of water which makes it impossible to take timely and
effective action. The politicization of water is perhaps inevitable, but some
steps could be taken to minimize the problem. One suggestion has been to
constitute water boards in a manner not dissimilar to the board of the Reserve
Bank. The Reserve Bank has an economic regulatory function, established by
statute, with which politicians can not directly interfere. Catchment and River
Basin boards would be appointed as appropriate by local and national
governments consisting of properly qualified people. To prevent nepotism,
selection to such boards should be limited to members of an Australian College
of Water Scientists and Engineers. In Sarkar’s view, water boards must be
given all the power they need to manage catchments according to the best
science.
The goal of such a mechanism is to allow politicians to have some control over
the general direction of water policy but to prevent them from having any
influence over its administration. Decisions concerning water should be made
on the basis of the best science available, not the strongest lobby group. Just as
the statutory duty of the Reserve Bank is to maintain stable prices within
certain limits, so too the statutory duty of a River Basin board might be to
allocate water subject to keeping the total catchment’s water balance within
certain limits.
Catchment accounts and budgeting
Australia’s National Water Initiative (a Federal program) is designed to
implement total accounting for Australia’s water use. One of its objectives is to
return over-allocated catchments to balance by 2020. But the presumption is
that we know what that balance might be. Much research is needed.
Every catchment and river basin requires a set of water accounts and an annual
budget. In theory this is little different from a set of financial accounts – one set
of books to keep track of income and expenditure (inflows and outflows) and
another set of books to keep track of assets and liabilities (changes in the
volume of reservoirs). For any catchment the difference between inflow and
outflow should equal net change in the volume of stored water.
Quite apart from the fact that much research is needed in order to establish a
set of water accounts, even knowing the figures it is debatable whether it is
politically possible to return catchments to balance by 2020. State governments
have over-allocated water rights and because these are tradable much of
Australia’s water is now owned by foreign companies.
Water accounting constitutes just one component of environmental accounting.
Environmental accounting is in its infancy and many issues are yet to be
resolved. The Wentworth Group of Concerned Scientists has recently put
forward a proposal for a set of National Environmental accounts.135 Data for
the accounts would be collected on a regional basis and would monitor the
health of five classes of environmental assets: land, water, atmosphere, marine
and urban. The accounts would be published each year and would become the
basis for determining the effectivness of all environmental restoration
programs. The hoped for benefit from a set of water accounts would be, for
example, a sustainable allocation of irrigation water in the Murray-Darling
Basin.
The Habitat Hectares program136 in the State of Victoria offers another
example of environmental accounting, in this case accounting for land quality
and its biodiversity. However the Habitat Hectares program goes a step further
and sets up a market that allows land developers to trade in biodiversity. The
idea is that the environment provides ecosystem services, that is, it performs
important functions that improve human life. Trees, for example, purify water,
prevent erosion and so on. If a dollar value can be put on those services then
market mechanisms can be put in place to retain or even increase that value.137
As an example of this approach, New York’s water supply comes from a large
natural watershed and it is estimated that it would cost $9 billion to purify the
city’s water supply to the same extent if nature were not doing it for free.138 If
water is priced with this cost in mind, the revenue can be used to further
improve environmental quality.
Politicians like putting a dollar value on ecosystem services because it makes it
easier to weigh up conservation costs against competing budget items. But the
approach is fraught with difficulty. Most obviously it assumes that all the
services provided by a particular ecosystem can be known. But most
ecosystems are incredibly complex and all their services cannot possibly be
known. Furthermore, how does one put a price tag on the aesthetic, cultural or
spiritual value of a particular lake or forest? There is, however, a more
fundamental objection – the notion of ecosystem services is entirely focused on
benefit to humans. But an ecosystem is really a living entity in itself, not an
abstract concept, and therefore has its own moral right to be healthy, quite
independent of its value to humans.139
Water Companies and Water Trading

Private versus public?
We now turn from the higher levels of water administration to the lower levels,
the individuals and companies that get the licences and the rights those licences
endow. It is here that the ideological struggles concerning water are the most
intense, for it is here that water exposes an ideological faultline between two
opposing views of the world. The one view says that resources are most
efficiently managed when all of nature, including water, is owned by
individuals who chase profit by trading in free markets. In the case of water,
this means establishing a water market in which government allocations
become a private asset that may be traded like any other asset. The other view
says that natural resources, including water, are a gift of nature, part of the
common wealth and not, in the first instance, the property of any individual.
The common good is best achieved, not by chasing profit, but by public
management in the public interest. It is fair to say that progressive thinkers
around the world support water remaining in the public arena and certainly this
is the Proutist perspective. Only where powerful corporations have captured
the political process has water been privatized.
Nevertheless privatization of water remains a keenly fought battle and it is
worthwhile to summarize the arguments for and against. There are primarily
three modes of management for large water companies in various parts of the
world: the private corporation, the traditional public utility and a hybrid, the
government corporation. The hybrid is essentially a business corporation

trading for profit with the (majority) shareholding in government hands. It is a
half way house, often used by governments as an intermediary step from public
utility to full privatization.140
Although this essay supports the role of public utilities in a modern economy,
their potential disadvantages must be recognized.
Public ownership has traditionally suffered from a ‘cost-plus’ mentality,
where frequently decisions are not properly costed. Bureaucracies can
often be sleepy and over-staffed, with little incentives for innovation
among employees. Public ownership can be expensive and inefficient in
economic terms. Public authorities are also treasury-dominated, and
suffer from the myopic nature of this department, which is always
reticent to commit long-term investment capital (an attitude otherwise
known as NIMTOO – not in my term of office).141
The main arguments in favour of public utilities are precisely those where
private enterprise is weak.
[Public utilities] tend to be safety conscious, consumer conscious and
environmentally conscious. They do, after all, represent the public
interest, and the public generally likes the idea and feels safe. Corners are
less likely to be cut and the public authority is accountable to the Minister
and Parliament and to the Treasury… Private ownership is supposed to
offer efficiency and a cost consciousness, but with more focus on profit
comes less focus on safety and the environment.142
The inefficiency of public enterprises is part of the dogma of modern
capitalism. But the dogma should be challenged. It assumes that chasing profit
for shareholders must necessarily generate efficiency. But we have seen in the
past two decades that water and power utilities, once privatized, engage in
mergers and speculative activities that have nothing to do with their intended
community service. The Enron debacle is just one of many examples.143 More
recently we note the exorbitant salaries that the executives of large companies
are awarding themselves. None of this is efficient in any sense of the term. By
contrast, protocols are emerging whereby publically owned utilities can pursue
real efficiency – benchmarking, comparisons with other utilities and
comparison with world best practice, etc.144
In truth, the major motivation to privatize is ideological rather than to
implement good policy. In an era of economic rationalism, governments are
reluctant to engage in large infrastructure projects that make a significant
impact on their budgets. Private companies, on the other hand, have access to
large investment funds and claim to be better at managing the risk involved in
large infrastructure projects. Such arguments are self-fulfilling prophesies.
Reluctance to spend means that governments have run down existing
infrastructure to the point where major investment is now required. Second,
governments have lost the skills which they once had to undertake large
infrastructure projects. This is evidenced by the ability of private corporations
to outmanoeuvre government bureaucracy (to the disadvantage of the
consumer) in negotiations for privatizing the Sydney water system.145
Australian governments once had the ability to undertake huge infrastructure
projects, such as the Snowy Hydro Scheme, and there is no inherent reason
why they cannot do so again, given the ideological will.
Not all water projects need be large scale. Indeed, another argument in favour
of the decentralization of water harvesting is the consequent downscaling of
the investment risk associated with smaller projects. Small- and medium-scale
irrigation companies, organized either cooperatively or as trusts, are becoming
more frequent in Australia. The motivation for farmers is to secure their water
supply and remain independent of large corporations.
Water trading
According to free marketeers, water is just another commodity and its
distribution is best achieved through trading in a water market. The implicit
assumption is that water must therefore be in private hands. However water
ownership and water trading are two separate issues. Likewise there is no
inherent reason why water managed in the public sphere requires that all
allocation decisions must be made by government authorities.
The wisest approach appears to be water markets where the dominant traders
are public utilities and farmers cooperatives operating within of regime of strict
regulatory oversight. Utilities and cooperatives have social and environmental
objectives as well as economic, so they are not purely driven by profit. Such an
approach allows water to move to higher value uses while ensuring that
essential community and environmental needs are met. In other words, when
the issue of ownership is separated from the issue of trading, the price of water
can be allowed to reflect not just its true economic cost but also its true
environmental and social cost.
Leaman argues that water trading can only take place against a background of a
well-managed catchment for which all water inputs and outputs are accounted.
His scheme has two principle features: 1) water trading should not be
denominated in dollars but rather in litres, and 2) allocations to individuals
should have transparent equity. He argues against a system that declares or
implies that all the water falling in a catchment is owned by the State which
then allocates that water as it sees fit. Such a system is against natural justice
and will lead to theft and disputes between neighbours.
Once the total allocation in a catchment has been calculated, Leaman argues
that every property owner in a catchment has a right to some of the water
according to some formula that depends on the area of one’s property and the
rainfall.
If you need more, or can make do with less, then a part of your share can
be traded by agreement. This is a way of ensuring that everyone values
the water they have and wastes none of it. It does not need a price. Any
infrastructure installed to supply water can be subject to fees and
management charges. The water must not be for sale, but managed.146
Note that in Leaman’s scheme growers and irrigators might be doing their
calculations in dollars but the regulator keeping track of trades would calculate
only in litres. The regulator’s statutory task is to ensure a balanced water
budget for the catchment. Another feature of Leaman’s scheme is the abolition
of the government sale of water licenses, which has been abused for raising
revenue, even when the available water is already over-allocated. In 2006, the
average Australian water allocation was just 21% of the entitlement and in
some cases the allocations have dropped to zero.147
Leaman leaves undiscussed the geographical limits to trading. Should water be
traded outside the catchment and what are the limits to a catchment? The
difficulty is that selling water from one property has consequences for
neighbouring properties. As an example, water licenses in Sunraysia (an
irrigation dependent fruit growing district in South Australia) can be sold for
$2,500 per ML. Some 18% of Sunraysia’s allocations have been sold outside
the region, usually by growers attempting to stave off bankruptcy. The
subsequent deterioration of the land affects even those who have retained their
allocations.148
Barber149 goes beyond the more obvious water trading scenario and proposes
that we should also consider the water embodied in traded foods, woodchip,
etc. He advocates a 0.02% tax collected on the freshwater embodied in all
international trades. The motivation is to encourage countries with high levels
of freshwater to retain forests and glaciers. Barber also advocates the adoption
of an international protocol for water similar to the Forest Stewardship
protocol. Signatories to the protocol would, for example, ban trade with groups
that do not practise high water management standards. Of course, levying a tax
on embodied water requires one to calculate such quantities in the first place.
One approach is water footprinting. The water footprint of an individual or
community is defined as the total volume of freshwater consumed by that
individual or community per unit of time or, in the case of a business, it is the
water consumed to produce a unit of output.150
Community and Culture
Rhetoric versus Reality

The first Earth Summit of June 1992 came to an agreement on best practice
water management. The catch phrase was Integrated Water Resources
Management and, in theory, the resolutions to emerge out of the summit were
all laudable: a commitment to equity and sustainability as the basis for service
delivery; water administration on a whole river basin or catchment basis;
commitment to consultation with stakeholders; decision making at the lowest
possible appropriate level; need for community and women’s participation;
social mobilization, accountability and transparency. All were explicitly
emphasized. So where is the problem?
As spelled out by Black,151 integrated water resources management and sound
water governance do not exist in the ether – they exist only on the ground
within specific economic, cultural and political circumstances.
The context in which policy principles have to be applied – in every case
a unique mix of economic, social, cultural, hydro-geological, political,
administrative and other environmental factors – determines which
policies are suitable and whether they can be made to work. ‘Good
governance’ cannot be invented as if it were a module or imported from
outside; it needs its own roots and organic growth to flourish. Very little
governance in poor societies is good or effective; it is usually under-
resourced, inefficient, undemocratic and corrupt. There is no mystery
about this, although the degree to which it is ignored implies that there is.
It is simply a corollary of a country or areas within it being seriously
‘underdeveloped’.
The water policy principles so painstakingly thrashed out in Agendas and
Guidelines may be excellent on paper. But practice on the ground falls
desperately short.152
Black is particularly critical of big water and irrigation projects funded by
international agencies, such as the World Bank, that inevitably centralize the
control of water. Such projects establish the very opposite of what is apparently
supported on paper. Governments, corporations and banks are reluctant to fund
low-tech projects that harvest rainwater locally, that install non-energized
irrigation or ‘dry’ sanitation. Instead they fund large projects that encourage
centralized control, national growth against sustainable livelihoods and
privatization over public ownership. The ideological commitment to large
centralized projects is all the more damaging in societies which are already
decentralized and have fragile national administrative systems.
According to Black, the international consensus of the world’s leading water
warriors (she cites people such as Vandana Shiva and Riccardo Petrella) is
clear:
• Water is a vital natural resource and should remain in common ownership.
• Both the water and the pipes which carry it about must be controlled by
local democratic power.
• Water must not be controlled by distant corporations having government

bureaucracies in their pockets.
• The democratization of water begins by capturing rain locally.
The lesson: One cannot import first world technology into a Third World
culture. But even in economically developed Western countries, Sarkar would
promote a decentralized approach to the harvesting and management of water
(See Appendix 3).
Community Supported Agriculture

Community-supported agriculture (CSA) is an approach to food growing and
distribution, where a community of individuals pledges support to one or more
farms and the growers and consumers share the risks and benefits of food
production. A CSA usually arranges for weekly collections of fruit and
vegetables from growers, packages them into boxes sufficient for one family
over a week and distributes to member families.
CSA began in the early 1960s in Germany and Switzerland and independently
in Japan. Responding to concerns about food safety and the urbanization of
agricultural land, groups of consumers and farmers formed cooperative
partnerships to fund farming and pay the full costs of ecologically sound and
socially equitable agriculture. In Europe many of the CSA style farms were
inspired by the economic ideas of Rudolf Steiner. The idea spread to the USA
in the 1980s and today North America has at least 13,000 CSA farms.153
There are many variants of CSA but the basic design is to form a committed
group of consumers who are willing to fund a whole season’s budget in order
to get quality foods. A family does not pay per kilogram of produce, but rather
supports the budget of the whole farm and receives weekly what is seasonally
ripe. A significant advantage of this approach is that it spreads the financial
risk while allowing the grower to focus on what he/she does best – care of
soils, crops, animals and co-workers.
Some CSAs have evolved into social enterprises employing local staff,
improving the lot of local farmers and educating the local community about
organic/ecologically responsible farming. The Food Connect Foundation is a
highly successful model of this approach in Southeast Queensland.154
Recombinant Ecology
Human beings have settled virtually everywhere on planet Earth and, for better
or worse, made their mark on its landscape. It is no longer useful to think of
nature as some pristine state, independent of human activity. Rather individual
landscapes have co-evolved with local human culture and they continue to do
so. Just as fusion music is an innovative mix of international styles, so in most
parts of the world agriculture is a hybrid of indigenous and introduced species

and practices. Landscapes everywhere are in rapid state of flux, demanding
new theoretical concepts, such as recombinant ecology.155
This is particularly true in Australia, where migrants or the descendants of
migrants make up an overwhelming majority of the population and own or
manage most of the country. Each wave of newcomers has brought not only
diverse cultural resources to enrich civil and economic life but also diverse
genetic resources to create hybrid agricultural systems.
In northern Australia, for example, tamarind trees were introduced by
Macassans who arrived each year in large fleets of fishing boats. The
trees seeded prolifically and now the seasonal fishing camps can be
identified from their tamarind trees. In central Australia, a ‘hybrid
agriculture’ has evolved from the introduction of date palms and camels
from Southwest Asia; rabbits and beef cattle from Europe; citrus from
China; grapes, mulberries and figs from the Mediterranean; store food
that is trucked in from the coastal cities; and bush tucker which has co-
evolved on this continent for millions of years. Given this diverse
agricultural heritage, Australian ‘farming’ systems of the future will be
mixes of indigenous, exotic and colonial components, just as current
systems are ‘hybrids’ of indigenous and exotic species brought together
by the ‘historical accident’ of British colonization.156
Learning to Care
“Getting people to give a damn is the issue.”157 Caring for a landscape requires
land literacy. There are two parts to it, a subjective cultural component and an
objective or scientific component. Fortunately, both of these can be learned,
but the cultural component has been left to chance. It has taken a long time for
we Australians to be deeply moved by the landscape which we inhabit, mostly
because the majority of us are recent arrivals. The landscape looks and works
differently from other parts of the world. It takes time to understand it – time to
love it.
Education can help, but not just an education of knowledge. Something more is
required – to encourage an ethic that goes beyond purely human concerns, an
ethic of respect and love for the natural world. Neohumanist education does
just this.
To walk the earth lightly, internalizing the principle of non-harm, to live
gratitude and to work always in the knowledge of our relationship to the
physical, organic and human worlds is the heart of Neohumanist ethics
and underpins all futures work. Such an ethic is based on the recognition
that the human condition is no longer simply the province of human
beings. It is, in the strict sense, a Neohumanist condition that incorporates
the past, present and future, and also the planetary context. It opens up
educational contexts in which speciesism can be addressed along with
other cultural habits arising from the tendency to view the world as a
resource. In sum, the human condition is a spiritual Gaian
phenomenon.158
Ultimately, caring for water, for landscape, for the world around us, is about
love.
Neohumanism includes within its scope not only human beings and
animate creatures, such as plants and animals, but also all inanimate
entities as well, for the scope of Neohumanism extends down to the
smallest particles of sub-atomic matter… Why should the love and
affection of developed human minds be restricted to human beings
only?159
In Wisdom of the Elders, Knudtson and Suzuki argue that both culturally and
scientifically there is much to learn from indigenous societies. The defining
feature of indigenous societies is a distinctive culture “in which, at least
traditionally, they have a profound and deeply rooted sense of place and
relationship with the entirety of the natural world”.160
Here is the question – what might the landscape management practices of a
modern technologically developed society look like if it displayed a profound
and deeply rooted sense of place? Clearly we would value our landscape, not
just for its agricultural and mineral wealth, but for something more subtle, in
the same way that Europeans value their great cathedrals, museums and art-
galleries.
The tremendous success of the Landcare programme in Australia is a
demonstration that collective consciousness is changing. The revitalization of
degraded landscapes is becoming a major collective endeavour, a community
art-form equivalent to the building of a sublime gothic cathedral. “Just as
thought, observations and skill are used to create culturally significant symbols,
environmental repair brings landscape back to life, in a symbolic and material
healing of degraded ecosystems.”161
Environmental journalist Robyn Smith is optimistic. She believes that Australia
is finally starting to grow up:
…we have left our frontier stage behind us and are moving into the next
one, one of consolidation and responsibility. It seems that white
Australians are now ready to take on the role of stewardship of the land, a
role previously taken by Aboriginal Australians.
Survival in this country has always meant cooperation and co-adaptation.
Maybe we have learned the lesson that this is what we need to do in order
to prosper as a country and as a people.162
Policy Recommendations
The policy recommendations that follow are offered with caution. So much
depends on the political and cultural context, quite apart from the ecological
context. However, since drought in Australia was what motivated me to begin
this writing project in 2007, it seems fitting to conclude with the broad outlines
of a policy on water and land management. Notwithstanding my insistence in
this essay that water policy cannot be separated from issues of land
management, land management policy has not been included below for two
reasons. First, the policy list would be extended by many pages. Second, land
management is even more dependent on local conditions than water
management.
• The purest water is obtained by catching rain where it falls or trapping
surface water as close to the rain source as possible. This policy requires
many distributed storage facilities. It is consistent with the preferred policy
of decentralizing the production and distribution of the essential
requirements of life.
• In many parts of Australia, ground water is the only available source of
potable water. The iconic Australian outback could not have been settled
without it. However, ground water must also be conserved – not abstracted
in excess of recharge. Centres of urban population should not rely on ground
water, except in emergency.
• Desalination is a poor option, given its cost and the brine disposal problem.
However for urban populations, desalination powered by renewable energy
sources may be appropriate.
• Capture of rainwater from clean surfaces in the urban environment should
be a priority. Treatment of stormwater to potable standard is expensive, as is
recycling. Therefore water should be used multiple times before recycling.
• Water storage and treatment in aquifers should be implemented wherever
appropriate. The inertness of the geological matrix is an important
consideration.
• It may sometimes be useful to link distributed water storage facilities into a
water grid, especially in regions with unreliable rainfall. However water
grids are expensive to maintain and the policy of transferring water to
develop one catchment at the expense of another cannot be supported.
• All artesian wells, that are spilling water freely, must be capped.
• Irrigation channels should be sealed to minimize evaporation and ground
leakage. Storage and irrigation practices, which result in the evaporation of
50% or more of the harvested water, should be abolished. This figure can be
progressively diminished.
• Promote reafforestation programs of high ground and water ways. Promote

agro-forestry.
• The maintenance of a small-scale cloud seeding project appears justified in
Australia on the available evidence.
• Water is a common heritage and a necessity of life. Unlike oil, which is also
a necessity of modern life, freshwater has no viable substitute. Its depletion
in quantity and quality has profound social, economic and ecological
consequences. Therefore water should remain in public ownership. It also
follows that the distribution of water should not be privatized and nor
should water be reduced to an economic asset traded for profit.
• The harvesting, storage and management of water should be decentralized to
maximize local water security. LGAs should be organized along catchment
boundaries. LGs should be responsible for water accounting, catchment by
catchment.
• National water authorities are required to coordinate management of river
basins and to supervise inter-basin transfers and aquifers that underlie
several river basins.
• Regulatory authorities should be administratively isolated from companies
providing the actual water services.
• A system of regulated water trading could ensure efficient distribution.
• Acceptance of the precautionary principle which was agreed to at the Rio
Earth Summit (1992): “Where there are threats of serious or irreversible
damage, lack of full scientific certainty shall not be used as a reason for
postponing cost-effective measures to prevent environmental degradation.”

A vision of the future
Policy is not enough. Vision is required. Australian academics are turning
their minds not just to modern technology but to the Australian landscape
as a vibrant living entity. They see a marriage of bio-technology and
managed healthy eco-systems. Here is just one example of a growing
literature of futures thinking applied to the Australian landscape. In this
example, Alexandra and Riddington imagine a flight over the Murray-
Darling Basin (MDB) in 2105.
“In 2105, an international delegation of sustainability experts interested
in catchment restoration toured the MDB. Flying low over the catchment
this is what they saw. Blue haze hovers over ancient mountain forests in
the south. From the foothills, north to the plains, large areas of plantations
and woodland regrowth dominate. Streams snake over the riverine plains,
buffered by riparian forests, among mosaics of plantations, short rotation
bio-energy forests, and a diversity of crops…
“The rivers sustain significant irrigated crops, despite the reallocation of
water to environmental flows, native title claims and climate change. The
fertile, arable plains support sophisticated industrial ecosystems
producing a variety of industrial feedstock, biofuels, bio-pesticides, novel
pharmaceuticals and intensive horticulture and viticulture. Precision
farming systems use sophisticated monitoring technology to control
inputs and focus cropping on areas that maximize profit and minimize
risk, including environmental risks. Pest management is bio-intensive and
relies on beneficial insects, natural pathogens and plant-based extracts.
Bio-digesters produce energy and fertilizers from ‘waste products’.
“Traditional crops are still grown, but many new crops feed the 21st
century revolution in biological and chemical engineering producing
nutritional supplements, fuels, oils, medicinal herbs, resins, tannins,
natural rubber, gums, waxes, dyes, flavours and fragrances.
“Former grazing properties support plantations and regenerated forests,
earning income from carbon credits, biodiversity bonds, biomass energy
and utility timber production. Small residential villages – clusters of eco-
housing – are surrounded by productive gardens, small farms, orchards
and vineyards. Detailed catchment plans, revegetation and threatened
species management plans are being successfully implemented, with few
remaining signs of land degradation.
“Agriculture, manufacturing and food processing remain important to
local economies with sizeable dairy, cropping, horticulture and timber
industries. Agricultural production is concentrated where it is profitable
and sustainable, due to ongoing international pressure to minimize
agricultural subsidies. Damaging environmental practices are unviable as
markets dictate strict environmental performance and proof of eco-
efficiency using comprehensively audited, internationally recognized
environmental management systems.”163
Acknowledgements
The author wishes to thank Jason Wimmer and Jake Karlyle for helpful
criticisms of earlier drafts and Steve Demasson of Sahitya Graphics for
preparing Figures 1 and 4.
About the Author

garden.
Appendices
1 Water Statistics
Measures of water volume

Volume (litres) Weight (metric) Length cubed Appropriate scale
3
1 litre (L) 1 kg (0.1m) Bucket
1 kilolitre (kL) 1 tonne (1m)3 House tank
1 Megalitre (ML) 1000 tonnes (10m)3 Weir/farm pond
1 Gigalitre (GL) 1 Megatonne (100m)3 Large dam
1 Terralitre (TL) 1 Gigatonne (1km)3 Large lake
Distribution of water on Earth (from Figure 1.1 of Goodman164)

Oceans (97%),
Freshwater as both ice and liquid (3%) which is divided as:
Polar ice caps + glaciers (75%)
Rivers, lakes, groundwater (25%) which is divided as:
Surface water – rivers and lakes (1.2%)
Ground water (98.8%)
Average annual water balance of world (Table1.1 from Goodman 1984)
Volume (thousands of cubic kilometres)
Region Precipitation Evaporation Runoff
Australia 7.1 4.7 2.4
Europe 6.6 3.8 2.8
North America 15.6 9.7 5.9
Total Land Areas 111.0 71.0 40.0
Oceans 385.0 425.0 -40.0
Volumes and flows

Volume of typical Olympic swimming pool (50m x 25m x 2m) = 2.5 ML.
Volume of water in Sydney Harbour = 500 GL.
Total water consumed by 20 million Australians per year: >24,000 GL (1200

kL per person).
Total water consumed by 6 million Israelis in one year: >2,000 GL (333 kL per
person).
Total water consumed by Melbourne in 2006: 273 GL.
Amount of water transpired from corn field: 25 – 35 kL per hectare per day.
A single large tree can transpire 500 L of water per day.
Reported flow through Murray River, May 2007 after autumn rains – 103 GL.
Burdekin Falls Dam (North Queensland) in full flood – 13 GL per day.
(Williams, 2007)
Variability of annual flow of the Balonne River through the Queensland town
of St George:
In a wet year, 8500 GL, with 250 GL a day during a rain event.
In a dry year, 85 GL.
Rice crops require 12-13 ML per hectare.
The Great Artesian Basin

The basin is the largest and deepest artesian basin in the world, covering a total
of 1.7 million square kilometres and underlying about one-fifth of the
continent, including most of Queensland. The basin is 3,000 metres deep in
places and is estimated to contain 8,700 million ML (cubic kilometres) of
groundwater.165 The present rate of extraction from the basin is about 500 GL
per year. That is an annual discharge equal to the volume of Sydney Harbour.
The GAB discharges through mound springs, many in arid South Australia.
The discovery of the Great Artesian Basin opened up thousands of square miles
of country in inland New South Wales, Queensland and South Australia,
previously unavailable for pastoral activities. European discovery of the basin
dates from 1878 when a shallow bore near Bourke, New South Wales,
produced flowing water. There were similar discoveries in 1886 at Back Creek
east of Barcaldine, Queensland, and in 1887 near Cunnamulla, Queensland.166
Dams and storage

Volume of Cubbie Station Reservoir, Queensland = 500 GL. (1 Sydney
harbour)
Variability of Lake Argyle, created by the Ord River Dam, Western Australia:
Average: area = 980 square kilometres, volume = 10,700 GL.
In flood: area = 2,072 square kilometres, volume = 34,000 GL.
Traveston Dam: stage 1 yield = 70 GL/year. Average depth = 5m.
Australia has 450 large dams with a combined capacity of 81,000 GL.
In the Murray-Darling Basin there are 200 major storages (above 1 GL) and
79% of the annual flow is extracted for irrigation.
Victoria has about 300,000 farm dams.
Daily per capita consumption of water for different cities

(see www.acfonline.org.au)
Brisbane 2004 – 339L (Australian Bureau Statistics)
Brisbane 2006 – 312L (GHD)
Official Queensland Government target – 300 L
Sydney – 230 L
Melbourne – 221 L
Melbourne – 206 L (2005-2006). Figure quoted from The Age, 1st May 2007
UK – 150 L
2. Interesting (or Disturbing) Factoids

• 34,000 tonnes of dog poo is washed into Melbourne’s Port Phillip Bay by
stormwater each year.167 This is relevant if we intend to recycle stormwater.
• Australia has 180,000 kilometres of pipes to supply and dispose of water.
• Australia’s largest private irrigation company is the Murray Irrigation Area.
It takes 1500 GL from the Murray each year, more than three-quarters of
NSW’s share of the Murray water.
• The list of pesticides recommended by the National Registration Authority
for growing cotton include endosulphan, pyrethroids, ovasyn, kelthane,
larvin, methomyl, profenofos, comite.168
• “Sandra Postel, one of the top experts on the impact of irrigation practices
around the world, says it is a sad fact that no irrigation era in history has
survived beyond a century or so.” (As quoted in Fullerton.169)
• To keep the Murray Basin suitable for agriculture, 600,000 tonnes of salt are
pumped out of the ground each year and transported out of the basin, a
hugely expensive operation. Dry land salinity is Australia’s biggest national
disaster.
• Until recently, Brisbane was losing 10-20% of its drinking water because of
leaky pipes and infrastructure.
3 The Australian Greens Water Policy

The following is quoted from Policy Snapshots, distributed by The Australian
Greens170 just prior to the 2007 Federal elections.
Preamble
Australia is the driest inhabited continent, yet Australians are among the
world’s heaviest water users. We need to use our water wisely and plan for a
sustainable future in a drying and increasingly uncertain climate.
Climate change means that we cannot rely on runoff-dependent energy-hungry
solutions such as new dams, mega-pipelines and desalination plants to secure
our future water supplies. We should embrace water sensitive design
principles, meet water efficiency targets, and capture and reuse stormwater.
The Greens will:
• Ensure that all future land-use planning addresses climate change.
• Keep all major water resources and infrastructure in public ownership.
• Set water efficiency standards for new developments and appliances.
• Provide incentives to retrofit existing buildings with rainwater tanks and
grey water systems.
• Support the recovery of 3500 GL of water to restore the Murray Darling
ecosystems and commit $3 billion to buy back permanent water allocations
in the Murray-Darling.
• Ensure that development in northern Australia protects our wild rivers and
does not repeat the mistakes of the south.
• Support water recycling and demand reduction initiatives.
4 Proposals of the Wentworth Group

The Wentworth Group has five proposals that State and Federal governments
of Australia could implement immediately:
• Clarify water property rights and the obligations associated with those rights
to give farmers some certainty and to enable water to be recovered for the
environment.
• Restore environmental flows to stressed rivers, such as the River Murray
and its tributaries.
• Immediately end broad scale landclearing of remnant native vegetation and
assist rural communities with adjustment.
• Pay farmers for environmental services (clean water, fresh air, healthy
soils). Where we expect farmers to maintain land in a certain way that is
above their duty of care, we should pay them to provide those services on
behalf of the rest of Australia.
• Incorporate into the cost of food, fibre and water the hidden subsidies
currently borne by the environment.
5 Sarkar’s Proposals
Sarkar’s proposals for water management are scattered through a number of
talks. The key features of his approach are:
• Most emphasis to be placed on the harvesting of rainwater and its storage.
• Maximum reafforestation to encourage rainfall over land.
• Minimal use of ground water by irrigators and industry.
• The decentralization of water storage and promotion of catchment self-
sufficiency.
The following are some passages quoted in full, each starting with the name of
the discourse and the date it was given. The discourses can be found in Ideal
Farming Part 2,171 Prout in a Nutshell, Part 17,172 and Proutist Economics.173
“Water Conservation” (25th March 1989, Kolkata)
“The inner spirit of our water conservation programme is that the amount of
existing surface water should be immediately doubled. But it is preferable if it
is increased tenfold. This can best be done by a decentralized approach to water
management which increases the depth, the area, or both, of water storage
systems. The first step is to increase the depth of those ponds, tanks, dams,
lakes, rivers and reservoirs which are already being used for storing water. The
second step is to increase the area of these storage facilities, while the third
step is to increase the plantations around them… In addition to this, many new
small-scale ponds, tanks, dams, lakes and reservoirs should also be constructed.
As a general rule, surface water should always be utilized in preference to
subterranean water.”
“Water Conservation” (25th March 1989, Kolkata)
“The banks of all water systems should be covered by dense forests. The
science behind this is that the roots of the trees retain water. When the water-
table subsides, the roots of the trees slowly release water. Hence, a pond
surrounded by trees will never run dry. The foliage of the trees also minimizes
evaporation.”
“Lakeside and Riverside Plantations” (16th March 1988, Kolkata)
“For afforestation programmes to be successful, surface water must be
conserved. This can best be accomplished by increasing the water capacity of
existing storage systems and building new systems. The cheapest and easiest
method of creating new water storage systems is to construct small-scale ponds
and lakes.”
“Integrated Farming” (20th February 1988)
“Irrigation is also an important aspect of farming. As a principle, subterranean

water should not be used for irrigation purposes. Subterranean water should not
be disturbed, otherwise the level of the water-table will drop, leading to an
acute shortage of water. The best system is to collect surface water. The
rainwater, even from light showers, should be collected where it falls. If the
huge reserves of water under some deserts are harnessed, it may do more harm
than good. It is always better to conserve surface water.
“Water conservation, irrigation and afforestation are essential for desert
reclamation. In the Thar Desert of India, a canal has been constructed to bring
water from the Ganges to irrigate the land. The Ganga Nagar area has been
reclaimed and is now producing large quantities of wheat. The canal can be
extended even further into the desert. Conserving surface water is the best
method of irrigation and is preferable to exploiting underground water
reserves.”
References
(Note: Prout in a Nutshell contains all P. R. Sarkar’s discourses on Prout.)
all the author’s discourses on economics, which are also contained in Prout in a Nutshell.)
Sarkar, P. R., Human Society, Part 2 (HS2). AM Publications. Fourth English Edition, 1998.
Human Society, Part 1, and Human Society, Part 2.)
Nutshell.)
22 October, 1959. (Note: These discourses are also contained in Prout in a Nutshell.)
Sarkar, P.R. Ideal Farming, (IF). AM Publications, 1990. This book is a compilation of
discourses on farming.
above reference list are also available in this electronic edition. ElEdit Version 7.0 contains
the most recent translations available of all Sarkar’s discourses and books.
Endnotes
1
Prout (the Progressive Utilization Theory) is the socio-economic theory developed by the
Indian philosopher, Prabhat Ranjan Sarkar (1921-1990). For an introduction to the social
philosophy of Sarkar see in this volume, “The Biopsychology of Cooperation” by Michael
Towsey. For an introduction to Sarkar’s economic proposals see also in this volume, “The
Three-Tier Enterprise System”.
2
Here Sarkar has adopted the terminology of the Indian system of administrative subdivision.
Rural Districts are divided into Blocks and the Blocks into Villages (the smallest
administrative unit). In urban areas, the District is divided into Municipalities (or City
Councils) and the Municipality into Wards. This system was inherited from the years of
British administration and consequently has similarities to administration in Australia and
New Zealand where a Local Government Area is the equivalent of an Indian block. See
http://en.wikipedia.org/wiki/Administrative_divisions_of_India for more detail on India’s
current system of administrative units which, it should be noted, is not entirely similar to
that proposed by Sarkar.
3
The Wentworth Group is a group of high profile and authoritative scientists concerned for the
environment. They make reports and issue statements, particularly concerning water
management, which carry considerable weight in Australian policy making debates.
http://www.wentworthgroup.org/, link valid 20 December 2009.
4
Fullerton, T. Watershed. Pub. Australian Broadcasting Corporation, 2001.
5
Black, Maggie. The No-nonsense Guide to Water. Published by New Internationalist in
association with Verso, London, 2004. ISBN: 1-84467-509-2
6
As quoted in Hamlin, Christopher. A Science of Impurity. Hilger, 1990.
7
Gore, Al. The Assault on Reason. Bloomsbury Publishing, 2007. ISBN 9780747591597.
8
Hamilton, Clive. Scorcher: the dirty politics of climate change. Black Inc. 2007.
9
Oeppen, J. and Vaupel, J.W. “Broken Limits to Life Expectancy”. Science 10 May 2002: Vol.
296. no. 5570, pp. 1029 - 1031. DOI: 10.1126/science.1069675
10
This list was suggested, on the author’s request, by a doctor whose specialty is public health.
11
Fagan, Brian. The Long Summer: How climate changed civilization. Granta Books, London,
2004. ISBN: 1-86207-644-8.
12
Allan et al (2001) as cited on p 307 in Water Demand Management. Edited by David Butler
and Fayyaz Ali Memon. IWA Publishing, London, UK, 2006. ISBN: 1843390787.
13
Lawson (2002) as cited in Water Demand Management (2006) Ibid.
14
Adams, Shar. “Water shortage man-made”, The Epoch Times, 20-26 September 2006, p 1.
15
Ibid.
16
Ibid.
17
Demasi, Maryanne. Ground Water: When it comes to water these days every drop counts.
Catalyst, ABC Television, 2007. Transcript at
http://www.abc.net.au/catalyst/stories/s1872399.htm, link valid 20 December 2009.
18
Fullerton, 2001 Op. Cit.
19
White, Mary. Running Down: water in a changing land. Kangaroo Press, 2000. ISBN 0-
7318-0904-1.
20
Australian Broadcasting Corporation. Snowy Hydro Defends Water Management, 30 March
2007, http://rage.net.au/news/stories/2007/03/30/1885540.htm, link valid 20 December
2009.
21
“Farmers launch tree-felling protest”, The Australian, 3 July 2007.
http://www.theaustralian.news.com.au/story/0,20867,22011333-1702,00.html, link valid
December 2007.
22
Fullerton, 2001 Op Cit. p 86
23
Leaman, David. Water – facts, issues and problems, Leaman Geophysics, Second Edition,
2005.
24
Fagan, 2004 Op. Cit.
25
de Blas, Alexandra. Land Clearing and Rainfall in W.A. Earthbeat, Australian Broadcasting
Corporation, Radio National, Saturday 17 July 2004,
http://www.abc.net.au/rn/science/earth/stories/s1152730.htm, link valid 20 December 2009.
26
World Health Organization. Health, Dignity and Development – what will it take? 2004.
http://www.unmillenniumproject.org/documents/WaterComplete-lowres.pdf, link valid 20
December 2009.
27
World Health Organization. World Water Day 2001 – floods and droughts. 2001.
http://www.who.int/water_sanitation_health/emergencies/floodrought/en/, link valid 20
December 2009.
28
From Black, Op. Cit., p 12, who cites H2O, Guardian Special Supplement, 23 August 2003.
29
Chalmers, Emma. “Labor floats plan to harvest stormwater”. The Courier Mail, Monday 2
July 2007, p 2.
30
Eutrophication is the process by which pond and lake waters become enriched (polluted)
with mineral and organic nutrients, thereby promoting a proliferation of plant life,
especially algae. This reduces dissolved oxygen content, lowers water quality and kills
other plants and fish.
31
Farmhand Foundation. Talking Water: An Australian Guidebook for the 21st Century.
Farmhand Foundation, 2004. ISBN 0-9751235-0-5.
32
White, 2000 Op. Cit.
33
Endersbee, Lance. A Voyage of Discovery: An earthshaking revelation of what is happening
to our planet. Self published via Monash University Bookshop, Australia, 2005.
http://www.monash.edu.au
34
Adams, Philip. A dissident view of water and warming. Late Night Live, ABC National
Radio, 11 December 2006,
http://www.abc.net.au/rn/latenightlive/stories/2006/1808528.htm, link valid 18 December
2009. The Australian scientist Vale Lance Endersbee (1925-2009) was no stranger to
controversy. He was a climate change sceptic and a supporter of the Citizens Electoral
Council of Australia whose approach to climate change is the adoption of nuclear energy.
35
http://rio.twdb.state.tx.us/publications/reports/GroundWaterReports/GWReports/
R360AEPC/Ch15.pdf
36
CSIRO, the Commonwealth Scientific and Industrial Research Organization, is Australia’s
top research institution.
37
Moore, Tony. Cloud seeding to boost SEQ rain. Brisbane Times, 12 July 2007.
http://www.brisbanetimes.com.au/articles/2007/07/12/1183833672713.html, link valid 20
December 2009.
38
Sewell, W.R.D., et. al. Modifying the Weather. Western Geographical Series, Vol. 9, 1973.
University of Victoria, Victoria, British Columbia, Canada.
http://www.nawcinc.com/photopages/SeedingEffects.htm, link valid 20 December 2009.
39
http://en.wikipedia.org/wiki/Cloud_seeding.
40
Brisbane News. 6 June 2007, p 7.
41
Salleh, Anna. Making Water Out of Thin Air. ABC Science Online, 2007.
http://www.abc.net.au/science/news/stories/2007/1860729.htm, link valid 20 December
2009.
42
There are several references for this research. A good introduction is an interview with
Professor Tom Lyons from the School of Environment Science at Murdoch University.
Earthbeat, ABC Radio National. http://www.abc.net.au/rn/science/earth/stories/
s1152730.htm, link valid 20 December 2009.
43
http://www.qwc.qld.gov.au/Projects+-+South+East+Queensland+Water+Grid
44
Williams, Brian. “A Northern Oasis”, The Courier Mail, Monday 2 July 2007, p 2.
45
Miller, Claire. Snowy River Story: The grassroots campaign to save a national icon, ABC
Books, 2005.
46
Ransom, David. Water Pressure, Lateline, ABC Television, Australia, 1998. Transcript
online at http://www.abc.net.au/lateline/stories/s12205.htm, link valid 20 December 2009.
47
http://www.solarsailor.com/media_water_061012.htm, link valid 20 December 2009.
48
Farmhand Foundation. Talking Water: An Australian Guidebook for the 21st Century.
Farmhand Foundation, 2004. ISBN 0-9751235-0-5.
49
http://www.skysails.info, link valid 20 December 2009.
50
Colborn, T., Dumanoski, D. and Meyers, J. Our Stolen Future: How We Are Threatening
Our Fertility, Intelligence and Survival. Plume (Penguin), USA, 1997.
51
http://www.qwc.qld.gov.au/Projects+-+South+East+Queensland+Water+Grid and
http://www.cottonwoodwater.org/indirect_potable_reuse.htm
52
Responding to public concern, the Queensland Water Commission has published a brochure
listing the seven barriers in its intended plan to recycle water for domestic consumption:
• Barrier 1: Source control – to prevent harmful chemicals from entering the water cycle in
the first place.
• Barrier 2: Wastewater treatment plant – a settling pond and biological reactor that removes
most solids, organic matter, etc. After this point, the water could be used for outdoor
irrigation.
• Barrier 3: Microfiltration – low-pressure membrane filtration to remove bacteria. This
technology is already used in the manufacture of beverages.
• Barrier 4: Reverse Osmosis – a high pressure filtration process that removes salts, viruses
and organic pesticides. The same technology is used in desalination plants.
• Barrier 5: Disinfection and Advanced Oxidation – uses ultraviolet light and peroxides to
remove any remaining organics compounds.
• Barrier 6: Natural Environment – water is returned to storage dams or aquifers in readiness
for final treatment.
• Barrier 7: Water treatment plant – the existing standard water treatment and sterilization.
According to the same Queensland Water Commission brochure, “Purified recycled water has
been used to safely replenish drinking water supplies in North America and Africa for
decades and more recently in Europe and Asia. Long-term studies have shown no adverse
effects.”
53
Sarkar, P. R. Prama. AM Publications, 1987.
54
Ransom, 1998 Op. Cit.
55
Ransom, 1998 Op. Cit.
56
The ruling Queensland Labor Party’s promotion of the Traveston Dam against widespread
opposition caused the sitting Labor member for the area, Andrew McNamara, to lose his
seat in the subsequent State election on 21 March 2009. See “Traveston issue blamed for
ousting McNamara”, The Sunday Mail, 22 March 2009, p 9. At the time of publication the
dam was finally stopped by the Federal Minister for the Environment on environmental
grounds.
57
ECO, Issue #04, Nov-Dec 2006, Sunshine Coast Environment Council,
http://www.econews.org.au, link valid 20 December 2009.
58
The power scaling law expresses this idea in precise language. For the mathematically
minded a function obeys the power scaling law when the logarithm (log) of the count of X
(where X in this case is reservoirs of a particular volume) plotted against the log of X (the
reservoir volume) is a falling straight line over three or more orders of magnitude.
59
For example, neurons in the brain are inter-connected according to a power law. Genes
inside cells regulate each other according to a power law. It is also a property of social
systems – the distribution of business sizes and the connectivity of the internet follow a
power law.
60
Black, 2004 Op. Cit.
61
Large Dams In India – Temples Or Burial Grounds? (2004).
http://www.zmag.org/content/showarticle.cfm?ItemID=6272
62
Large Dams in India, (2006).
http://ksghome.harvard.edu/~rpande/papers/dams_OUP_Nov30.pdf
63
http://news.bbc.co.uk/2/hi/wouth_asia/6732967.stm
64
Roy, Arundhati. The Algebra of Infinite Justice. Penguin India, 2002. ISBN-10:
014302907X, ISBN-13: 978-0143029076.
65
Demasi, 2007 Op. Cit.
66
Commonwealth Government of Australia (CGA) The Wetlands Policy of the Commonwealth
Government of Australia, January 1997.
67
Leaman, 2005 Op. Cit.
68
Leaman, 2005 Op. Cit., p 50.
69
Stephenson, D. Water Resources Management. A.A. Balkema Publishers, 2003.
70
At the Institute of Sustainable Futures, http://www.isf.uts.edu.au
71
72
Leaman, 2005 Op. Cit. p 48.
73
74
Australian Broadcasting Corporation, (2007) New rice sowing technology may help save
water. http://www.abc.net.au/news/newsitems/200704/s1894530.htm
75
“Desal plant to double water bills”, The Australian, 20 June 2007, p 1.
76
Adams, Prue. Scientists invent water saving trick. Lateline, ABC Television, Australia. 27
February 2000. Transcript online at http://www.abc.net.au/landline/stories/s102945.htm
77
Fullerton, 2001 Op Cit.
78
http://abc.net.au/news/stories/2006/11/09/1784443.htm
79
http://www.acfonline.org.au/articles/news.asp?news_id=631
80
Primavesi, Ana. Manejo Ecológico del Suelo, La Agricultura en Regiones Tropicales, The
Ecological Management of Soils. Quinta Edición, Buenos Aires, Librería “El Ateneo”
Editorial, 1982. Only available in Spanish and Portuguese but cited by many other English
publications – see http://lists.ibiblio.org/pipermail/permaculture/2004-July/019978.html
and Bunch 2001.
81
Bunch, Roland. Nutrient Quantity or Nutrient Access: A New Understanding of How to
Maintain Soil Fertility in the Tropics, 2001.
http://ppathw3.cals.cornell.edu/mba_project/moist/RolandB.html, link valid at 20
December 2009.
82
Bunch, 2001 Op. Cit.
83
Zimmer, Gary F. The Biological Farmer, Acres USA, 2000. This is just one of innumerable
books on the modern science of organic agriculture.
84
Fullerton, 2001 Op. Cit. p 312.
85
UN, United Nations. Report of the World Commission on Environment and Development.
General Assembly Resolution 42/187, 11 December 1987.
86
Bailey, Robert. Ecoregion-Based Design for Sustainability. Springer-Verlag, New York,
2002. ISBN 0-387-95430-9.
87
Editorial: “Keeping the message cool on climate”. The Australian, 9 February 2007, Opinion
p 13.
88
Lowe, Ian. A Big Fix – radical solutions for Australia’s environmental crisis, Black Inc.,
2005.
89
Tudge, Colin. The Secret Life of Trees, Penguin Books, 2005. ISBN-13: 978-0-141-01293-3.
90
Fullerton, 2001, Op. Cit., p 105.
91
Sarkar (IF).
92
CSIRO. Alpaca Industry Benefits From Wool Experiences, Media Release, Ref 98/261, 6
November 1998, Marketing and Public Relations, CSIRO Livestock Industries, Australia.
93
Press release, 16 August 2007, from Mike Rann, Premier of South Australia,
http://www.ministers.sa.gov.au/news.php?id=2028. See also Australian Broadcasting
Corporation (2003) http://www.abc.net.au/local/stories/2003/12/08/1005475.htm
94
In 2008-2009, three MIS companies collapsed owing billions of dollars. For more
information Michael Towsey, “The Three-Tier Enterprise System” in Understanding Prout,
Volume 1, 2009, Section: The Corporate Conquest of Farming.
95
“Plantations are sucking us dry”. The Sunday Examiner, 19 February 2006, p 4.
96
Tudge, 2005, Op. Cit., p 213.
97
http://www.hort.purdue.edu/newcrop/proceedings1993/v2-338.html
98
http://www.abc.net.au/news/newsitems/200704/s1906000.htm
99
Gott, Beth. Fire as an Aboriginal Management Tool in South-Eastern Australia, Australian
Bushfire Conf., Albury, July 1999. http://www.csu.edu.au/special/bushfire99/papers/gott/
100
Flood, Josephine. The Original Australians: Story of the Aboriginal People. Allen and
Unwin Academic, 2007. ISBN-10: 1741148723. ISBN-13: 978-1741148725.
101
Doyle, John and Flannery, Tim. Two men and a Tinnie. ABC, Australia, 2006. DVD
Catalogue Number: R-106025-9.
102
Bowman, D.M.J.S. Tansley Review No. 101, The impact of Aboriginal landscape burning
on the Australian biota. New Phytologist 140(3): pp 385-410, 1998.
103
Ibid p 390.
104
Ibid p 404.
105
Andrews, Peter. Back from the Brink – How Australia’s landscape can be saved, ABC
Books, Sydney Australia, 2006. ISBN 978-0-7333-1962-4.
106
http://www.nsfarming.com and http://www.naturalsequencefarming.com.au
107
Primavesi, 1982 Op. Cit.
108
Mollison, Bill. Permaculture Two. Tagari Press, Australia, 1979. ISBN 0-908228-00-7.
109
Holmgren, Davi. Permaculture – Principles and Pathways Beyond Sustainability.
Holmgren Design Services, 2002. http://www.holmgren.com.au.
110
From an interview with Scott London, Santa Barbara.
http://www.scottlondon.com/interviews/mollison.html
111
White, 2000 Op. Cit. p 209.
112
Badgleya, Catherine et. al. “Organic agriculture and the global food supply”. Renewable
Agriculture and Food Systems 22:pp 86-108 Cambridge University Press, 2007.
doi:10.1017/S1742170507001640, Published online by CUP.
http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=1091304.
Reports and commentaries on this research can be found at
http://www.twnside.org.sg/title2/susagri/susagri011.htm and at the Institute of Science in
Society (ISIS) at http://www.i-sis.org.uk/organicagriculturefeedtheworld.php
113
Sarkar (IF) p 1.
114
Sarkar (IF) p 115.
115
Diver, Steve. Farming the Future: Sarkar’s unique contribution to agriculture. In
Transcending Boundaries. Edited by Sohail Inayatullah and Jennifer Fitzgerald. Gurukula
Press, Maleny, Australia, 1999. ISBN 0 9585866 0 8. p 217.
116
Diver, 1999 Ibid p 217.
117
Sarkar (IF), p 94.
118
Sarkar (IF).
119
For a more detailed discussion of Sarkar’s approach to a cooperative rural sector, see
Michael Towsey, “The Three-Tier Enterprise System” in Understanding Prout, Volume 1,
2010.
120
Sarkar (IF), p 9-10.
121
Sarkar (IF), p 94.
122
Sarkar (PE).
123
Leakey, Richard and Lewin, Roger. Origins – What New Discoveries Reveal about the
Emergence of our Species and its Possible Future, pp 9-10, E. P. Dutton & Co., 1978.
ASIN: B000IV25Q8.
124
“Farmers launch tree-felling protest”, The Australian, 3 July 2007.
125
UN, United Nations. Millennium Development Goals. United Nations, NY, USA, 2003.
http://www.developmentgoals.org/Education.htm
126
National Parks and Wildlife (NPWS 2007), New South Wales, Australia.
http://www.nationalparks.nsw.gov.au/npws.nsf/Content/Home
127
Alexandra, J and Riddington, C. “Redreaming the rural landscape”. Futures 39 pp 324-339,
2007.
128
80% of Australian farmers are 64 or older. See http://www.foodconnect.com.au/
129
Towsey, Michael. “The Three-Tier Enterprise System”, in Understanding Prout, Volume 1,
Proutist Universal, 2009.
130
Leaman, 2005, Op. Cit.
131
As quoted in Bailey, Richard. An Introduction to River Management. The Institution of
Water and Environmental Management, 1991.
132
Water Resource Plans result in many glossy brochures! See, for example, a variety of
reports associated with the WRP for the Mary River Basin published by the Southeast
Regional Water Planning Group, Department of Natural Resources and Mines
(Queensland), April 2003.
133
The five are:
• National Water Commission, a statutory authority within the Department of Prime
Minister and Cabinet (PM&C).
• Office of Water Resources, an agency within PM&C.
• Department of Agriculture, Forestry and Fisheries (DAFF).
• Land and Water Australia, a statutory authority within DAFF.
• Department of Environment and Heritage.
Each of these separate bodies administers a range of different programs including the
National Water Initiative, the National Action Plan for Salinity and Water Quality, and the
Murray-Darling Basin Initiative. Although these programs address similar problems, they
have different structures, different departments, different Ministers, different accountability
mechanisms and different timelines. The Australian Labor party has said it will create a
single Federal Government Agency to administer all Commonwealth water programs using
the argument that Australia’s water crisis is a national problem that demands a coordinated
national response.
134
Roberts, Greg. “Farmers fume over Cubbie station ‘gift’ of water license”. The Australian,
10 July 2008.
http://www.theaustralian.news.com.au/story/0,25197,23996542-5013404,00.html, link valid 20
December 2009.
135
Wentworth Group of Concerned Scientists. Accounting for Nature: A Model for building the
National Environmental Accounts of Australia. April 2008. Downloadable from
http://www.wentworthgroup.org, For a good introduction to the model, see also Peter
Cosier, Accounting for Nature, Fenner Conference on the Environment, 10-12 March 2009,
Canberra.
136
http://www.environment.gov.au/archive/biodiversity/toolbox/templates/pubs/habitat-
hectares.pdf, link valid 23 December 2009.
137
http://www.abc.net.au/rn/backgroundbriefing/stories/2008/2392756.htm, link valid 23
December 2009.
138
Ibid.
139
This is the distinction between the deep ecology and the utilitarian approaches to
environmental management. See http://en.wikipedia.org/wiki/Deep_ecology, link valid 23
December 2009.
140
Jesson, Bruce. Only Their Purpose is Mad – The money men take over New Zealand. The
Dunmore Press, 1999. ISBN 0 86469 343 5.
141
142
143
Cruver, Brian. Enron – anatomy of greed. Arrow Books, 2003.
144
Towsey, Michael. “The Three-Tier Enterprise System”, in Understanding Prout, Volume 1,
Proutist Universal, 2009.
145
Fullerton, 2001 Op. Cit. Chapter 2.
146
147
Warren, M. Article in The Australian, 21-22 October 2006, p 6.
148
Lane, Sabra. Fear of no water forces councils to draw up tough contingency plans.
Australian Broadcasting Report, 2007.
http://www.abc.net.au/am/content/2007/s1907815.htm, link valid 20 December 2009.
149
Barber, Marcus. “A Drop in the Ocean for Foresight Practitioners: What the Future May
Hold for Fresh Water Usage and Availability throughout the Globe”. Journal of Futures
Studies, 11(3) pp 61-78, 2007.
150
http://www.waterfootprint.org/, link valid 20 December 2009.
151
152
Black, 2004 Op. Cit. p 136.
153
See, http://en.wikipedia.org/wiki/Community-supported_agriculture. An inspiring film The
Real Dirt on Farmer John documents the resurrection of a family farm through its
conversion to a CSA model.
154
http://www.foodconnect.com.au/
155
Alexandra, J and Riddington, C., 2007 Op. Cit.
156
Alexandra, J and Riddington, C., 2007 Op. Cit.
157
Fullerton, 2001 Op. Cit. p 133, emphasis added.
158
Bussey, Marcus. “Mapping Neohumanist Futures in Education”, Chapter 1 in Neohumanist
Educational Futures, editors Sohail Inayatullah, Marcus Bussey and Ivana Milojevic,
Tamkang University Press, 2006. ISBN: 986-7385-63-2.
159
Sarkar, P. R. The Liberation of Intellect: Neohumanism. AM Publications, 1982.
160
Knudtson, Peter and Suzuki, David. Wisdom of the Elders, Bantam, 1999. ISBN-10:
0553372637. Emphasis added by this author.
161
Alexandra and Riddington, 2007 Op. Cit.
162
Smith, Robyn. The Story: Caring for Country, Australian Broadcasting Corporation., 1998.
http://www.abc.net.au/science/slab/country/story.htm.
163
Alexandra and Riddington, 2007 Op. Cit.
164
Goodman, A.S. Principles of Water Resources Planning. Prentice Hall, NJ. 1984. ISBN: 0-
13-710616-5.
165
166
http://en.wikipedia.org/wiki/Great_Artesian_Basin.
167
168
169
Fullerton, 2001 Op. Cit. p 87. See http://www.globalwaterpolicy.org/books.html for reviews
of Sandra Postel’s books, Rivers for Life, Island Press, 2003, and Pillar of Sand: Can the
Irrigation Miracle Last?, W.W. Norton, 1999.
170
www.greens.org.au, link valid 20 December 2009.
171
Sarkar (IF).
172
Sarkar (PN18).
173
Sarkar (PE).

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Essays on

WATER AND LAND

E dited by J ake K arlyle and M ichael Towsey

Essays on Sustainability and Transformation

Edited by Jake Karlyle and Michael Towsey

Copyright 2009 Proutist Universal, Australia, electronic edition.

PROUTIST UNIVERSAL ® is a Registered Trade Mark of Proutist Universal in

Published by Proutist Universal, Australia.

National Library of Australia – Cataloguing-in-Publication Data:

First Printed Edition 2010

1. Sarkar, Prabhat Ranjan, 1921-1990. 2. Social Sciences. 3. Social Change.

Cover design by Kamala Alister.

To Shrii Prabhat Ranjan Sarkar

The Biopsychology of Cooperation – Michael Towsey

Education for Liberation – Marcus Bussey

The Three-Tier Enterprise System – Michael Towsey

Water and Land Management – Michael Towsey

focused on hydraulic engineering, so the 21st century approach will be about

Structure of the Essay

A third theme is egalitarianism. Many societies like to claim the virtue of

The Cooperative Movement in the 19th Century

continent by the philosophers Henri de Saint-Simon (France, 1760-1825),

continued working in their midst for 30 years. Every social movement,

Opposition to the Cooperative Movement

son, the persons who joined these experimental communities were “a

offering the same benefits to workers as producer cooperatives. Towards the

The Cooperative Movement into the 20th Century

decisions”.47 He prefers instead the Mondragon model to which we shall return

The Ethics of Scientific Socialism

conflict necessarily undermined the possibility of a universal good. Yet some

The Classless Society

By satisfying material needs, that is, by providing everyone with an

It must be admitted, however, that life in More’s Utopia, as in most

In debates about equality, the theme of selfishness versus altruism obviously

Capitalism offers choice and exciting consumer goods in great abundance. No

• That numerous agents motivated by self-interest produce an outcome

are available to her, so it is self-interested. I find this depressing. It robs

People are not always well informed

People do not reason by logic alone

People do not necessarily seek to optimize their gain

The Culture of Neoliberalism

caste of PR people and ad people promoting a culture of hedonism and

The Ethics of Capitalism

The invisible hand

Ethics in the era of MBAs

Accounting Marketing Business

Q1 72% 46% 63%

Q2 42% 30% 26%

Approximately two thirds of students surveyed were prepared to engage in

What is Economic Truth?

The Renaissance of Cooperation

epiphenomena of matter. The quandary is that we wish to embrace Western

There are many schools of Eastern philosophy of differing influence and

The Concept of Progress

Development and progress

unstable equilibrium”.122 Wilbur offers a comprehensive description of the

The nature-nurture debate

The Theory of Cooperation

as social capital. The term is used by way of analogy to other kinds of

accumulated by previous generations and, as any economist will tell you,