During the twentieth century the battle for political democracy dominated world events, perhaps the 21st century will be marked by a struggle to establish economic democracy. Ravi Logan gives an outline of what economic democracy would look like.

by Ravi Logan

Where economic power is centralized, democracy is subverted. Centralization of economic power cannot coexist with a government that is of, by and for the people; centralization of economic power twists political power into government by, for and of the special interests. Government becomes controlled by the power of money.

Some functions of the state may remain responsive to popular influence, but where there are decisions to be made that affect big moneyed interests, the voice of the people becomes pathetically weak and is trumped by corporate lobbyists and legislators beholden to corporate campaign contributions.

To end this tyranny, PROUT advocates economic democracy rather than political democracy. In political democracy there is universal voting rights and centralization of economic power. In liberal democracy, economic power is centralized in the hands of large corporations; under socialist democracy, economic power is centralized in the hands of the state. But both are systems of political democracy.

Political democracy is easily corrupted. And it is a governing system that is highly tolerant of economic exploitation. In many Asian and African nations, European colonial rule was replaced by political democracy. People fought for their independence, and for the right to be democratically self-governed. But how much have the lives of the common people improved? In almost all cases, political democracy became a disappointment for people who suffered under colonialism and, upon independence, had such high hopes for life under democracy.

With political democracy comes the false promises of politicians, vote rigging, rampant corruption, tyranny of state power, cronyism, and economic exploitation. The aspirations of the people remain frustrated, and political alienation and cynicism grows — as does extremism and political polarization.

Political democracy discourages honest, competent leaders and attracts ideologues, demagogues, power-seekers, and the self-serving.  It also impedes people’s aspirations for economic liberation and privileges the interests of big corporations, allowing their corrupting influence over government to stifle regulations that would protect workers, communities, health, and the environment. 

Requirements of Economic Democracy

To resolve the failures of political democracy, PROUT advocates economic democracy. The central intent of economic democracy is for the common people to enjoy maximum economic empowerment. Toward this end, four basic requirements must be assured:

First, the basic necessities and amenities of life should be guaranteed to all, according to standards appropriate to the region and the age.

Second, there should be ever-increasing purchasing power enjoyed by all, while maintaining sustainable development.

Third, the power to make economic decisions should be vested in the hands of local people and their decisions should be made on the basis of collective necessity.

 And fourth, people outside the local community should not interfere in the local economy, and locally generated capital should not be drained from the local community.

Independence from Corporate Rule

Wherever economic globalization has gotten established, economic power is concentrated in the hands of large corporations. Corporate executives — remote from the economic aspirations of local people and local communities — control the economic fate of the society. Under economic democracy, this would change. Economic power would be decentralized; local people would control the economic power, stewarding their local resources to promote local prosperity. Raw materials would not be shipped elsewhere to be processed, but used in local industries. And instead of allowing capital to be drained out of local areas, it would be kept local and put to use developing the potentialities of the community.

This decentralization of economic power will give people maximum control over issues of immediate concern to them: the management of their workplaces, the allocation of investments in their local communities, the setting of pay and incentive levels, the utilization of local resources, the collection and distribution of tax revenues, and so forth. People would be economically secure and empowered.

What would be the effect on government if economic enterprises were locally based, if local economies were community controlled, and if all people were guaranteed their basic necessities and amenities? For one, the huge metacorporations could not longer corrupt the political process with skilled lobbyists, huge campaign contributions, deceptive public relations, control over political appointees, and the other means that give them undue influence over government.

Instead there would be a highly empowered citizenry, electing and backing political administrations that think first to support human interests.

Corporations Will Revile It, People Will Embrace It

Where there is international corporate economic development, the influence of these economic giants on the democratic system becomes so burdensome that democracy may be lost altogether and become simply a rubber stamp for the economic giants who control so much of the interests and workings of the society.

 These multinational corporations, these economic giants, are demons in disguise. They gain such power through their economic stance that the democratic system will eventually crumble beneath their weight, if they are allowed to continue. Governments will become simply paper democracies, and these economic giants will rule worldwide. Will they rule for the welfare of people? Or will the people become the slaves of these economic giants — helpless, without any political power whatsoever? Because all political power will be controlled by these giants, if someone attempts to stand against them, they will be suppressed. No one will be able to stop them; such is their power — if they are allowed to have it.

They will make a world government, but that world government will be nothing but a rubber stamp for their interests. It is very important that these multinational corporations do not reach their goal. They are thrusting to take the power in every realm, and they must be fought like demons.

What is the alternative? Localized economic control. If there is local economic control, then democracy may continue as a healthy form of government. This is the optimum system, and it will avoid the undermining of the democratic system that has come with the development of multinational corporate interests.

People must be given an alternative lest they have no hope whatsoever against this development of the modern era. Economic democracy should be established as soon as possible. Every effort must be made to spread this concept. Those multinational corporations will revile it; they will find it poisonous. But the people will embrace it. Even the politicians will like it, because they see that they are being taken over by these large economic forces.

It is an idea whose time has come. People do not like the growing control of the multinationals. The concept of local control will appeal to them. They will rally around it, place their hopes on it, and struggle to attain it.

Ravi Logan is Executive Director of the Prout Institute ( and the author of PROUT: A Solutions Oriented Paradigm of Development. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..