Imagine… a town of 5000 people where there is: no unemployment no pollution 100% recycling free health care a seemingly endless supply of a wide variety of organically gown produce – all incredibly delicious grown locally on some of the most fertile soil on Earth…

in the heart of Africa!

Imagine Africa rising! you will never see Africa the same way again!

a project of Working Villages International

Africa Rising:
A MODEL FOR SELF-SUFFICIENT VILLAGE DEVELOPMENT IN AFRICA Alexander Petroff

Chapter 1 A New Economic Development Model

This book is a practical blueprint for the revitalization of Africa. It envisions nothing less than the complete transformation of Africa into an economic and social powerhouse – from being the basket case of the world to a guiding light - showing the people of the world an example of living in peace with each other and in harmony with Nature. Although great thought and years of research have gone into the formulation of this entirely new economic development model, this book is not simply a treatise on economic theory, but rather a practical outline that is at this very moment being gradually implemented.

Economies are confined by the laws that protect and govern their development. The policy changes put forth in this model are just that - individual economic policy changes put in place to allow the economy to develop in a way that is most beneficial to the citizenry of an African village. This model does not rely on a new type of man inhabiting the African village. Men in our model make decisions based on individual incentive founded in self-interest, as it exists within the confines of law. Thus the economic underpinnings of this model do not rely on a selfless citizenry acting for the betterment of the whole to remain logically consistent. With the goals of minimizing exploitation of people and degradation of the environment, this book puts forward a practical roadmap for a better life for the people of Africa that can be realized if well meaning people work together… Not that there has been any lack of good intentions! Over the last 60 years, there has been an outpouring of sympathy and wellintentioned help flowing from the industrialized West into Africa. There have been charity rock concerts, which raised not only awareness of the seemingly intractable problems, but also millions of dollars to help solve these problems. Doctors have set up free clinics, various governments have crafted aid programs, backed development projects, and so on. And yet, despite these years of sacrifice by thousands of well meaning people, Africa seems to have turned into a bottomless pit of atrocities, genocide, mass starvation, mass unemployment and rebel armies roaming the countryside. The first step in this process is to face the bitter realities of the situation – to objectively see things as they are Clearly, to turn the situation in Africa around will take much more than good intentions. Due to the failure of previous attempts at economic development over the past half century, Sub-Saharan Africa has become completely unable to compete in the global economy, save for a few sectors of primary production. To equalize the levels of worker productivity between Sub-Saharan Africa and the global North to a point at which trade would be mutually beneficial would require trillions of dollars of direct investment. As an alternative to such an unrealistic scenario, this book boldly chalks out a new approach, which we call the Village Self Reliance (VSR) development model. VSR favors restructuring local markets towards self-reliance, injecting start-up capital, expertise, and vocational training, in order to shift dependency away

from foreign imports, while at the same time strengthening the local economy. In this model, market incentives are changed in order to orient local production towards fulfilling local demand for food, clothing, housing materials, and manufactured commodities.

Chapter 2 Facing Bitter Realities

The future of Sub-Saharan Africa (SSA) does not lie in capitalism, in communism, nor in socialism. Its future will not be guided by powerful dictators, by newly established bureaucracies, nor by a democratically organized citizenry. All of these systems rely on factors that are quickly becoming alien to SSA. They rely on cheap oil, industrial production, and the influence of powerful foreign countries. As the effects of these influencing factors decline, the great concrete cities, which have already started to decay, will crumble and be reclaimed by the jungle from which they sprang. And with this collapse, most likely even preceding it, will be the fall of the large states which were the byproduct of the colonial era, and established mostly for the purpose of resource extraction. To some extent, this is not news, as many of the states of SSA are currently

nothing more than state in name alone, now unable to provide security or services in their capitals, let alone in their far-flung provinces. But even setting aside the larger states, it seems doubtful that even the smallest SSA nations will be able to maintain the most basic control of their territory – in the absence of cheap oil, imported industrial products, and capital from foreign nations. What will follow the collapse of the SSA states in terms of economic and political organization is very uncertain. In all likelihood there will be no one uniform system. However, it is probably safe to say that whatever systems develop, be they warlords, clans, or communes, they will be regional, and small scale. In general, it is also probably safe to assume that it will not be the best of times for those living in SSA. We can expect a chaotic future, filled with war and famine, pestilence and instability. One may ask: How could such a future be allowed by those in the West? The fact is that the majority of people in SSA today are already living out such a future of misery, and the world’s nations sit by and at the very most pay lip service to the relieving the suffering – if not outright exacerbating the suffering by their foreign policies and weapons sales. Scholars and planners from Africa and the West have spent the past several decades trying to explain the current chaos, placing blame on one party or another and rationalizing how by destroying more of its land, cutting more of its trees, selling more of its mineral wealth, eroding more of its soil, and causing more misery to its population, SSA might one day become wealthy like the countries that have grown rich by exploiting it. Some people will undoubtedly protest that the West is not responsible and that people of Africa have done all these bad things to themselves. Indeed, it appears that many people in the West have gradually come to accept the miserable conditions in Africa without blinking. Unfortunately this is not a blame game. In reality, however, the great charade of the past 60 years is coming to an end, and the great projects of the twentieth century designed to enrich a few people in SSA and the West at the expense of hundreds of millions of Africans have been revealed to be just that. The frameworks in which these schemes were set up are becoming

undone by their own failures. The SSA development schemes of the twentieth century have failed because they failed to take into account the people of the region they were trying to develop. Erroneous economic theories failed to grasp the fact that people are not just units of production moving from one sector to another. Rather humans have physical needs as well as emotional and social desires and passions which will motivate them to act in ways that are not in accordance with a two-variable chart. Actual meaningful development is not measured in GDP but rather the quality of life and the happiness and fulfillment of the citizenry. Development in SSA has failed, and the failure to realize this fact will lead to the continued impoverishment of the populace until, either due to excessive violence or expensive oil, it causes the total abandoning of most of SSA by the global North. The only questions that remain now are: Must it end like this? Must SSA’s future be one of chaos and misery? Can human agency and knowledge do nothing to build a better life for the people of SSA? Before we allow total chaos to envelope Africa, we should remember three things: 1. the cost to humanity of letting Africa sink into bloody anarchy will be extremely high 2. the benefits of helping build Africa into a stable peaceful socioeconomic powerhouse are potentially very great 3. the cost of initiating this progressive movement are relatively low

Chapter 3 Failure of Traditional Models of Economic Development

The ideology of development currently in vogue is supposed to work as follows: The citizens require food, clothing, housing and manufactured commodities. There are countries in the world whose worker productivity in these sectors vastly exceeds that of the African villagers. Therefore, the most logical path to meeting the needs of the African villagers is that the villagers produce commodities they are more efficient at producing and trade them for the more efficiently produced foreign necessities they require. This is the theory of comparative advantage laid forth by Ricardo at the beginning of the

nineteenth century, in which he extols the virtues and efficiencies of England trading its wool for Portuguese wine. Where this logic falls apart is that in modern day Africa, worker productivity levels are so vastly eclipsed by its trading partners in the global North, that practically speaking, such a philosophy is no longer applicable. Even if the few areas of primary production, where regions of Africa still hold a competitive advantage, such as rare materials and virgin timber, were to be completely dedicated and exploited to fulfill the basic necessities of survival for all African villagers (rather than being sucked away by corrupt officials and sequestered in foreign bank accounts) there would still remain a substantial gap between the wealth obtained and the needs of the villagers. At the end of the day, the fact remains the worker productivity of the African villagers is currently so low as compared to their foreign counterparts as to effectively leave them unable to compete beneficially in the global economy. This relationship on the whole is only likely to get worse as petroleum prices increase and existing national infrastructures continue to disintegrate, leading to further poverty, unemployment and domestic strife, still further exacerbating this inequity in worker productivity.
A New Approach for African Villages: Village Self-Reliance

In the face of Africa’s catastrophe of economic collapse, this book re-examines the goals of economic development:- to provide the overall population with necessities of everyday life in the present, while at the same time growing the economy so as to provide for a more materially prosperous future.

After sixty years, the current development model has failed to provide results for Africa, and in many cases has made the situation worse. Therefore, VSR advocates the abandoning of the current policy and sets forward a new standard. Our goal is to provide the overall populations with the necessity of everyday life in the present, while at the same time growing the economy so as to provide for a more materially prosperous future. These objectives will be better accomplished by abandoning international trade as the means to provide every day necessities. Instead WVI is focused on developing a program of village selfreliance in which the needs of a village, such as food, clothing, housing materials and manufactured commodities are produced by local firms. To meet the challenges presented by low worker productivity and the rising cost of oil, this model introduces a post-petroleum village economy that is energy self-sufficient. Using oxen instead of trucks, tractors and automobiles, and locally produced biogas instead of electricity and charcoal, this program allows village firms to drastically reduce capital outlay and foreign debt, while at the same time minimizing environmental impact and providing them with a competitive advantage against firms not operating within the new village economy. In order to achieve these goals, this program deliberately sets aside electric and petroleum-based production methods and replaces them with a vigorous application of appropriate technology. This will lead to a noticeable increase of worker productivity across all sectors of village production. In addition, the shift to appropriate technology will create numerous forward and backward linkages within the local economy, as well as opening up new opportunities for innovation and entrepreneurship. With this shift in the orientation of production in the economy, local firms will be able to trade freely within the village marketplace. However, due to the lack of control over long-distance commercial capital, the model addresses the reality of an unequal foreign trade by introducing a local cooperative trading structure for managing imports of village necessities and exports of village surpluses, so as

to best meet the needs of the villagers while protecting local workers from exploitation and simultaneously securing the maximum benefit for village firms. I say with complete conviction that the development model presented here is the most realistic and expedient way in which rural communities in Sub-Saharan Africa can become free of the need for unending charity from the West, and create for themselves a stable society and growing economy capable of competing in the global marketplace, while at the same time meeting the material needs of its citizens, and developing the basic economic stability and equity needed to set the stage for a peaceful and productive society. On the basis of this strong conviction, Working Villages International entered into negotiations with the government of the Democratic Republic of Congo, which gave them a large tract of land near Lake Tanganyika. On this site, WVI is constructing a town for 5000 people which will grow and thrive based on the principles laid down in this book. WVI has hired local people – all former refugees to build the town that will be their home

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Chapter 4 The Need for a New Economic Development Model

There is no better day than today for moving forward with this great plan to help the people of Africa build a wonderful and full future for themselves, their families and their communities! Why wait? Western society is at its zenith and SSA still has at least some stability. Although the prognosis right now is grim, do not imagine that the situation is hopeless or irreversible. Honest men and women can work to develop a plan so that the next generation of Africans need not grow up in a land bereft of hope. The technology is there, the land is there, the people are there, and the skill is there, to allow SSA to organize itself in a new, more efficient, more environmentally friendly, stable, and secure way – a way that will provide for the
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physical, emotional and social needs of the whole population. Is it idealistic or utopian to think that we can chalk out a course that will see cultures and economies grow and all peoples governed by the rule of law? We have no doubt that these goals are completely practical We envision an Africa where families can sleep at night after a hard day of honest labor - with out fear of man or beast, where a grandmother need not worry from where her grandchildren’s next meal will come, where a young man is not forced to turn to crime for employment, and a father and mother need not despair about work, food, housing, or the future their child has ahead. Since the ingredients for success are there, and the good intentions are there, why have the results been such a miserable failure? Is something missing? Absolutely! This shift in the quality of life cannot occur within the current economic framework. Houses do not get built by building factories or mining minerals, people are not employed by buying machines, a country does not grow prosperous through foreign aid, and people are not made happy by an abundance of manufactured goods. Houses are built by building houses, people are employed by jobs, nations become prosperous by the productivity of their own citizenry not the charity of others, and most importantly, people are made happy by feeling that they are productive and important members of their society, not just cogs in a lifeless wheel. The biggest shift in thinking must be this:

The people of SSA can no longer continue to live beyond their means.
This change in thinking cannot occur just on a person-by-person basis, it is not simply a matter of making a list of “what can I afford this week,” but rather must be made on a societal level. The long list of manufactured goods imported from the West, which cannot be produced locally must be greatly reduced, as dependence on these foreign manufactured goods leads only to mass poverty. One might question: Is it fair to deny people the advances of modern technology? But the response must be: Is it fair that one man might impoverish a hundred or a thousand of his fellow countrymen so he can have access to a lifestyle enhanced by western technology, to such a point that the majority of his countrymen can afford neither
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housing nor food? The person who can answer yes to this latter question is most certainly not a humanitarian. A country where the majority of wealth is hoarded by a few for the purpose of acquiring foreign luxury goods is destined not only for failure, but also misery and social unrest. The point is not whether a technology is in itself bad or good. Rather the point is that to afford a car or a cell phone or a radio, so many man hours must be appropriated. Furthermore, even more manhours must be appropriated to build the infrastructure to support these goods. The reality of this plays out in situations where a country might have a semi-modern road network but most of its citizenry is still living in small damp huts. The elite of a country may be able to talk to their family members in London, but the villagers are hard pressed to find adequate food. The problem is further exacerbated by the fact that few if any of the manufactured commodities are produced inside the country using them, thus creating a massive economic drain, a drain which is made larger still by the fact that the country probably had to borrow large amounts of money to build the foreign-purchased and foreign-installed infrastructures to support these luxury goods. There should be no surprise about this poor distribution of wealth and the poor allocation of resources, as this fact itself is merely a reflection of the values of the economic system which for the past 60 years SSA has been trying to adopt as its own, the system of free market capitalism. This system which was forced upon the nations of SSA has shown itself throughout the region, in country after country to be unsuited for the development of a free, independent and prosperous people. Furthermore, it’s important to note that not only has the system of free market capitalism failed but so have the state capitalist or communist experiments in SSA. This is the second great paradigm shift that must occur: the complete reworking of the failed economic systems that are being imposed upon SSA. There is no question that the economic system has failed. One need only look at SSA’s record of massive unemployment. In any society that has existed before, such a large portion of the population being unemployed would be inconceivable. It is not a lack of resources, land or desire to work which causes the
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massive unemployment that afflicts most SSA nations; it is the failure of the financial and economic system. Masses of people throughout SSA starve for want of money to buy food, while great tracts of fertile land lie un-worked for lack of money to employ the starving. A great mass of people go without proper clothing, while thousands of tons of cotton is shipped over seas. The people do not have adequate clothing because they do not have money to purchase it. The same is true with housing, food, and all other necessities of life. A system of economic organization which permits these discrepancies is a failed one, for economics in its most basic function should be a means of organizing a society productively for the fulfillment of its physical needs. Any economic system that fails to meet even the most basic of human needs is devoid of legitimacy. If this statement is accepted, then there is no alternative; Africa must find an alternative model for economic development. I would like to introduce you, at this juncture, to VSR.

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Chapter 5 Basic Principles of VSR

The inspiration for this book comes from the social theories of E. F. Schumacher, the scholars of the school of Gandhian economics, and A.C. Bhaktivedanta Swami Prabhupada. These men and women created a vision of a society in which people could live at peace with, and be conscious of, their environments, a society in which machines do not replace man but aid him, where human labor was properly valued, a society in which small is beautiful, and simple living and high thinking are the governing principals. Although these scholars envisioned such a simple village society, neither they nor their followers created the practical economic framework where a society

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governed by their principals could thrive. Most of the focus of these thinkers has been on the political framework, the human relationship to the environment, and the moral foundation of society. These are indeed great topics to address, and without them any society is lost as to its purpose. However, without a practically mapped economic framework, such a vision shall always remain just that, a vision – and it will never transform itself into a society. Although these scholars could see the problems inherent in the current economic structure, and often presented solutions, too often their solutions were not founded in a logically consistent and well-planned economic model, but were often reactionary policies. The economic model being put forward here, and which is, this very day, being made into a reality in Eastern Congo, aims to correct this shortcoming, by synthesizing a new economic model which is strikingly new, and yet tantalizingly familiar. For the past fifty years the West has tried to shape Sub Saharan Africa in its own image, much to the failure and distress of the people living there. Now a the dawn of the third millennium when the old political and economic framework which once governed Africa stands in ruins, there is an opportunity to build an economy with an ethical basis that will provide, for the people of Africa, a far better life than they previously have had. It is the purpose of this book to present an economic framework for village development which differs from the modern Neo classical approach, and follows instead the principals of Schumacher, Gandhi, and Prabhupada. Let’s take a brief look at VSR and see what differentiates it from every other economic development model: VSR is based on LTV (Labor Theory of Value) analysis Instead of the Neo classical approach to development, this book uses LTV economic analysis as the framework for the economy. LTV (Labor Theory of Value) is chosen as the foundation due to its superior explanatory power, logical consistency, and the mountain of empirical evidence which supports the theory as well as the lack of empirical evidence or logical argument contradicting it. Up to this point, the social goals of Schumacher, Gandhi, and Prabhupada, have never been linked to LTV analysis.

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The unique contribution of the Village Self-Reliance (VSR) economic model is that it can be used to fashion an economic structure in which the idealistic goals set forward by these philosophers may be best realized on a practical basis. All models of development begin with a set of presuppositions. The model presented in this book is similarly based on a set of presuppositions. Chief amongst them is acceptance of the Labor Theory of Value. The logic it follows, conclusions it draws and prescriptions it makes, follow from a belief that all value comes from human labor. This is no small point. Very few development models concede this point. If they did, many of the policy changes that they advocate would have to be rethought, for their effects of such policies would be understood to be far different than generally anticipated. VSR is “Village-centric” Development VSR can be implemented most easily in the context of a village, especially when the economic structure is built from scratch. The workers engaged in the building up of the fixed capital village infrastructure will all become the ultimate beneficiaries. Our experience in Congo has already demonstrated that when the workers understand that they are building up their own future, they work extremely hard. The system of social organization presented here can be applied across the continent, adapted to time, place and circumstance. Later on, we will discuss some of the unique aspects of the village model, including an indepth explanation of the economic structure of the village – from the beginning of its establishment to its transition into a fully sustainable model.

Unique Adaptation of the Company Town Development Model The model for the village’s initial social and economic structural development is the company town. The company town is one of the few successful models of rapid development. Some may find it unusual that we should choose an initial development process that historically has appeared to make it convenient for large scale capitalist exploitation and abuse. In this case, instead of producing commodities for sale in the international market, the “commodity” produced is a civic infrastructure for primary use and benefit of the very village that produces it, with its physical structure and buildings The “instant towns” of Canada evolved from the company towns, as a way for the mining and manufacturing companies operating in Canada to cut the high costs of maintaining their towns as their revenues fell. This model was also a response by the local citizens and their governments to keep their towns and communities intact and viable after the company left the area. That model privatizes housing and local commerce, and promotes local business development. In our case the “ instant town model is used as a means of transferring operational management to local control. The objective is to produce the end result of a completely independent, sustainable, and locally controlled village, which is powered by the incentive and energy of numerous local stakeholders. Trade Policy LTV economic logic helps reveal the natural inequities produced by trade between communities with significantly differing levels of worker productivity. Due to these inherent inequities as well as the social objections to using such a foundation for an economy, from the very beginning stages there is a deliberate policy of placing a very strong incentive on producing for the local market. Furthermore, an even more stringent policy is adopted with regard to bringing in imports from external sources. External trade is thus heavily regulated in our development model. A strong protective shield is put in place to allow local industries to develop and become robust (by “robust”, we mean “able to compete within the local economy”) and all external trade passes through the Government Trading Company. This model of trade is very different from the policies advocated by modern Neo-

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Classical development theories. The implementation of this principle is crucial, and will be discussed at length later on in this book. Grain-Based Currency In order to encourage localized economic development, grain is used as the common medium for exchange, or, to put it another way, the commodity basis for money. In a world that is almost entirely built upon a modern currency not backed up by any type commodity, this is a very different approach to the concept of money. However, this approach was used by virtually the entire world until the 20th century, and it is an approach supported by LTV logic. Animal Traction VSR places a strong focus on animal traction as a crucial component in the attempt increase local economic linkages, and affordably increase small farm productivity. Forty years ago, to many westerners, the concept of promoting farming with animals as a path for development would have seemed like a throwback to the past. However, today many countries across Sub-Saharan Africa look to the ox as their primary hope to feed a growing population. This model builds on that enthusiasm, as well as looking at the lessons learned, both positive and negative, by the thousands of attempts to introduce ox power into developing countries. Land Tenure and Property Rights Land ownership will be given to farmers living in the village who have gone through the requisite training. The farmer will be able to decide for himself what crops he would like to produce, and will be able to hand the land down to his son. However there will be limitations on the ownership. The farmer will not have the right to sell his land, and will be encouraged to not let his land lay fallow. This will prevent investors and speculators from artificially boosting land prices, and thus preventing larger and larger segments of the society from becoming active stakeholders in the economic life of the village. The goal is to reduce exploitation, while encouraging the incentive and initiative which results from stability and pride in ownership. At the same time, it promotes sustainable increases in productivity.
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Maximizing the potential of the land and business is not the only goal of Schumacher and Prabhupada. More important to them was the maximizing of human potential. Marx would also argue that the more people working, the more value is created. However, in the eyes of Prabhupada and Schumacher, what causes an increase in the quality of life and what constitutes commodity that contains value is not necessarily the same thing. All people should be meaningfully engaged, even if their labor is not considered productive labor in the strictest LTV sense. Thus the economic structure of the village model is set up so as to insure that all people are employed in a meaningful activity. Following the Vaishnava model presented by Prabhupada and Gandhi and the Buddhist model presented by Schumacher, conditions for the worker should be a major consideration, and as much as possible work should be a source of satisfaction, not drudgery. Vocational Education The proposed village model will never be successful without a heavy focus on vocational education. Education is not just the key to increasing labor’s productivity but also its satisfaction. Thus education cannot be based on the ability of an individual to afford it, because it is not so much that education is a cost but a right. The government of the village should ensure that all people are properly trained in their vocation and to create a smooth-functioning civic order which is in harmony with the natural environment.

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Chapter 6 Economic Relations in the Village Part 1: Minimizing Variable Capital Input
The next three chapters explain the shape of economic relations in the village we are building. Each chapter addresses one of three stages of development. Phase 1 describes the establishment of the village, roughly following the model of a company town, the product produced being the town itself. Phase 2 describes the transition stage, during which private enterprise begins to develop, but with the company still providing a major source of employment. Phase 3, the concluding section, explains how the village functions after initial phases of the development project have succeeded, when private enterprise has evolved into the major employer, and the town government has become the employer of last resort. This final section focuses heavily on the commodity-based system of exchange that will be powering the town’s economy. Phase One: The Company Town Model of Development The historic company towns of North America were deservedly regarded as centers of exploitation, misery and environmental destruction. Nevertheless by careful study of different aspects of their structure, we can gain insights useful for building a development model which starts from scratch. Employing the company-town model of development, companies were able to quickly erect towns, providing every necessary service, and creating working local economies. Furthermore they were able to accomplish this while at the same time allowing the town members to retain a high degree of their previous culture. (Shifflett 11) In short, they provided economic development but without sacrificing cultural integrity. In the development of rural areas of Africa, the question must be asked: Can the company town model be used to develop infrastructure and economies, but without the exploitation which accompanied the development of company towns in North America? Furthermore, can the company town model be used to foster development of an economy which is not dependent on extracting mineral wealth – or to put it in a proactive way: How can the company town model be adapted to develop self-sufficient agrarian communities?
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There is a misconception that the rapid development of infrastructure, i.e. houses, roads, stores, public buildings, in a company town was only possible because of the wealth of the company and that the company constructed these infrastructure improvements out of its own pocket. This, however, was not the case. For the early company towns, it is true that the original capital for the construction of the town was advanced by the company. However, this cost was recovered, plus a profit, and in the end it was the workers themselves who actually paid, in the form of rent payments, for the construction of the early company towns. Later on, in the post war era of company towns in Canada, with the construction of the “Instant towns,” the company did not even front the capital for the infrastructure of the town. Even that was financed by the workers themselves in the form of either debts to banks or taxes to government. Minimizing Variable Capital Input The key point here is that it was the labor power of the workers that not only built the town, it actually paid for the construction of the town, as well. Therefore, in order to quickly construct a fully functional town, it is not necessary to have a vast supply of capital. The primary need is simply workers willing to work. Thus, all that is needed for the construction of a town is enough constant capital, i.e. basic machinery, tools and materials, and enough variable capital to pay the workers for the commodity they sell, labor. The cost of the labor, in a capitalist society, Marx points out is the cost of the average bundle of commodities, determined by that society, necessary for the reproduction of labor. (Marx 324-326) That would include, for instance, the cost of food, clothing, shelter and whatever desires a given society may legitimize a worker to enjoy, e.g., movies, cars, computers, tobacco, and so on. This point is also made by Ricardo “The natural price of labor is that price which is necessary to enable the labourers, one with another to subsist and to perpetuate their race, without either increase or diminution.” (Ricardo 80) In African societies, due to their impoverished state, in comparison with much of the world, this bundle of commodities is particularly low. Therefore, comparatively, from a development standpoint, the necessary variable capital required for the employment and
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mobilization of large numbers of laborers in an African society need not be very high. Necessities in the West, such as cars, radios, computers, washing machines and so on, need not be taken into consideration when deciding the cost of labor in an impoverished African nation. In fact to do so creates an artificial economy, and the possibility of resentment amongst members of a village. Instead one needs to take into consideration only the cost of food, clothing, and to some extent housing and a greatly reduced luxury fund. Thus the lion’s share of the cost of labor in a given rural African society consists of the cost of food, clothing and whatever raw materials make up the style of house a given society has become accustomed too. In the construction of a town we will consider each one of these in turn. Raw materials for house construction are at present the largest per purchase cost, though over the long run these are no doubt eclipsed by food and possibly clothing. The expense factor for the materials necessary to construct a house is determined by the extent to which a society has adopted modern materials for house construction. If the area is using concrete, steel, tin roofing and the house has electricity, then the cost for housing materials will be high. On the other hand, if the house is a mud and thatch roof with wood supports, and has no electricity, the cost will be low. As for housing for workers in the initial stage of constructing a selfsufficient village, it could be temporary (not intended to last more than 2-4 years) and would need to be erected quickly. The nature of the housing should lean more towards the mud and thatch variety. The goal here is that, although compared with western standards the quality of housing may appear poor, this temporary housing should at least equal in quality the local standard of housing. Furthermore, the housing should be provided free of charge. In the short run this will reduce the amount of variable capital necessary. Thus, having reduced the cost of housing for the laborers to zero, one of the major costs of labor can be temporarily set aside. The economic focus on reducing variable capital can be made to support the goal of not artificially increasing the standard of living of the village past what eventually can be supported by the local economy. The next great component of the cost of labor in Africa is clothing. At present, clothing represents an economic drain for Africa, because,
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for the most part, it is produced in foreign countries, creating no engagement for productive labor in a country itself. Keeping this potential source of economic drain in mind, it should be the eventual goal of a village to produce its own clothing. Clothing is certainly a commodity that can be produced in any society across the globe. Production of clothing has been a major part of the economy of every society worldwide, up until recent industrial advances relegated its production to only a few regions of the world. Gandhian economist A.M. Huq quotes Gandhi in regards to clothing production: “It is sinful for me to wear the latest finery of Regent Street when I know that if I had but worn the things woven by the neighboring spinners and weavers, that would have clothed me, and fed and clothed them." (EGE 17) Nevertheless, in the initial stage of village development, imported clothing will still be a significant component of the cost of labor, and must to be taken into account when calculating the cost of labor. In many African societies clothing is a high priority. Clean, beautiful clothing is highly valued. In any case, in the initial stages, clothing must still be calculated as a factor in the cost of Labor. The company town had an institution by which it met the laborers' need for food, clothing and amenities, the company store. Admittedly, the term "company store" brings to mind bad connotations of price gouging, exploitation, and the insurmountable indebtedness of its patrons. (Shifflett 176-189) Shifflett states: “Miners could fall prey to the worst the company town had to offer— outrageous prices, a monopoly on essential food and supplies, and a crippling debt. (179-180) However it need not be this way. Indeed Shifflett argues that although instances of excessive exploitation were witnessed in some of the early company stores, this was far from the norm. Indeed in many cases the company store was used as a village center and as “a center for social discourse.” (Shifflet 189) In our context though the company store could be used, not only as a way to meet the needs of villagers, but just as importantly as a means of subsidizing daily necessities to reduce the cost of labor, thus reducing the amount of variable capital required.

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Chapter 7 Transition to Commodity-Based Economy

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Even more important than these considerations, however, is the fact that with careful and deliberate management, the company store could be used as a central mechanism for transforming the town's social structure from a cash-based economy to an economy which is essentially commodity-based, with its fluid value realized through grain rather than baseless cash currency. This point will be further elaborated later in this chapter. For now, let us look at the effect of subsidies on the cost of clothing and other commodities. The company store should subsidize clothing and other amenities, by selling them below the cost of purchase. It may do this as a direct cost to the company, or by accepting donations from other Non Government Organizations (NGO’s), or by making agreements directly with producers of goods. The results will be the following: First, the immediate effect will be to reduce the cost of labor, so the company each week will have to pay its workers less cash in order for them to maintain themselves. Second, it will give an incentive to the town workers to remain inside the town and spend their wages in the town itself. This will allow the company to reuse some of the same cash, to pay the workers the following week. Furthermore, such discounted prices will act to discourage outside merchants from establishing themselves within the town and thus causing a cash drain from the economy of the town. It is important to note that this is a very different use of the company store than its historic predecessors. To an outside observer the function of the store may appear to be the same, to keep variable capital inside of the company, yet the exploitative nature of many of the historic company stores is reversed. From the perspective of modern economics, discouraging the participation of external merchants might seem undesirable. However, in terms of developing a self-sufficient village economy, such an approach is essential. Allowing external merchants to set up shop in the early stages of development would undermine the transition to a grain-realized, commodity-based economy and cause it to fail. The eventual goal of the town is not to perpetuate using external currency as a system of exchange, but rather to create economic independence by paying for goods and services with grain, following the monetary philosophy of LTV explained later in the book Nevertheless, regardless of the ultimate benefits, it is neither desired,
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nor possible to force this type of fundamental economic change upon a population by mandate. Unless the transition is undertaken willingly, and even enthusiastically, it is probable that it would lead to discontent and that any changes made would be short-lived. Thus, it is essential that in the beginning stages of development, the company store remain the only source of externally produced commodities, and the company itself remains the only employer of labor. Allowing external merchants to set up shop in the early years will especially compromise this position, and exacerbate the financial strain of building the town. Cash-Based Company Store, Grain-Based Company Store On the other hand, by using the company store as a central means of making the transition from a cash-based to a grain-based economy, the change can be most easily accomplished, particularly if the population can be given the chance to be educated as to how transition to a grain-based economy will benefit them and their village. The role of the company store for the first year will be to sell subsidized goods which are paid for in cash, thus preventing outside competition from arising. Later on, however, the company will open another store, which sells its goods for payment in grain (we shall refer to that store as “the village store.) At that time, following the historic model of the North American company towns, which issued company credits as an alternative system of exchange used in the company store, workers will have an option of receiving their wages in either cash or grain. If they take their wages in grain they can purchase commodities from the village store. The village store will be even more heavily subsidized than the company store, in order to promote the transition to grain-based economy. For instance, if a woman’s blouse costs one dollar at the company store, a similar blouse will cost less than a dollar's worth of grain at the village store. During this time the company store will cease to sell the grain of circulation, be it rice, wheat, millet or corn. The end result of this transition being nearly all wages paid out by the company are in the form of grain. These subsidies are meant not to be permanent fixtures of the economy, but rather as only temporary measures which will be phased out with the rise of the second stage of development, that of
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the transition. In the final stage, there will be no subsidies, no company store either, and the roll of the village store will be reduced to that of external commodity exchange, as its previous function be taken over by individual producers within the village. Thus, the subsidies are merely a temporary tool to create a village and steer it towards a commodity-based currency. Let us return now to our analysis of the cost of labor, starting with an examination of the factor of the cost of clothing. The price of clothing has now been reduced to a minimum. In the first phase, the cost of clothing is reduced because of subsidized prices at the cash-based company story. In the second phase, the cost of clothing is completely minimized, because prices at the grain-based village store are even further subsidized. At this point, the cost of clothing for the laborer is now reducible to the cost of the quantity of grain necessary to pay the laborer for that clothing. Free Food and Housing at Outset Reduces Variable Capital Expense Now we shall examine the last, and perhaps greatest, cost of labor in an African society, that of food. Historically, in some African societies, food is in fact the only cost of labor, as it is the only absolutely necessary factor in maintaining human life in the warm climates of Africa. Indeed, in extreme cases, such as in Uganda, for example, it was not until the 1970’s that many of the Karamojong herdsmen had clothes or housing. For the western purse, food is extremely cheap in Africa, partly due to soil fertility but again mostly due to the low standard of living of the farmers. However, for the African laborer, it represents a large portion of the annual budget, and thus a large portion of his labor is dedicated to providing food. A large portion of the food crops grown in Sub Saharan Africa are farmed by hand. Land is tilled, and crops are planted and harvested by human muscle – a mode of production not witnessed in much of Eurasia and North Africa for thousands of years. The fact that this mode of production requires such a large amount of time and labor, has led to situation of a high cost of labor for an African wishing to employ another African. For the successful

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development of a self-sufficient village, agricultural productivity must be increased. This will be the focus of a later chapter. For a westerner the cost of food is still perhaps amongst the lowest in the world. However, as observed by Ricardo, a reduction in the cost of food leads to a substantial reduction in the cost of labor. Thus for the purpose of reducing the amount of variable capital necessary to build the village, and for the purpose of maintaining a healthy workforce, for the first stage of development, i.e. for the first few years, all meals and food should be provided free of charge to the laborers and whatever dependents they have. These meals should be rich in calories, nutrition and diversity, in order that workers not become disgruntled. Thus we have reduced yet again the cost of maintaining a laborer. Food having been provided and housing having been provided, the upfront cost of labor for the first stage of development has now been reduced to the cost of clothing and whatever other amenities are deemed necessary for the daily reproduction of labor for the construction of the village. Thus the amount of variable capital necessary for the construction of the village has been reduced to a bare minimum, all other financial resources can now be shifted to the purchase of constant capital, from abroad, i.e. machines, tools and raw materials, and for the moment, food. However one of the first goals of the company town should be to become food self-sufficient, and thus reduce the cost of labor still further. At this point the reader may wonder: What was the point of fanatically reducing wages to a bare minimum? The cost is still the same to the company, is it not? However, the point of reducing variable capital is threefold. First of all: it may well be the case that the cost is in fact not the same to the company. Many building materials may be donated by charities or found locally for the temporary housing. The cost of food may also be reduced, as it too may be donated in large quantities by other charities or acquired for a discount rate due to the size and nature of the project or even produced locally by the company. The same is true with clothing.

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Low Rates for Variable Capital Will Allow Private Entrepreneurs to Successfully Compete and Take Over Business from the Company Store The second reason for taking steps to reduce the wages in the initial phase is so that during the second phase of development, that of the transition to private economy, the low wages paid by the company will allow private employers from the village to easily compete and exceed the low wages paid by the company. In essence, the company will deliberately set itself up to be ultimately driven out of business in the final successful stage of development into a selfsufficient local economy. In other words, by offering low wages that can easily be beaten by independent local employers, the company discourages the development of initiative-destroying paternalism, which so often accompanies conventional development projects. In essence, the fundamental thinking behind this approach is that the goal of African development projects should not be to establish a livelihood for westerners but rather to establish a livelihood for Africans. The third reason for starting with a company that pays very low wages is so that it will not create a population accustomed to a standard of living that is only maintainable with frequent injections of foreign capital. The standard of living should not decrease when the company leaves the village but rather steadily increase. Company Towns – Different Goals: Profit vs. Village Development In the company towns of North America, the purpose was to produce commodities for the national and international market, but this is not the goal of the new company towns of WVI. The goal here would be to actually build town infrastructure and the framework of an economy for the benefit of the workers in that town. In fact in the first stage of the African company town, virtually all productive labor would be engaged in producing commodities that are not for sale: houses, roads, public buildings, gas and water infrastructures, public baths and bio gas digesters, flour mills and spinning and weaving mills, granaries, stables, schools, workshops and so on. These are all infrastructure improvements for the benefit of town’s folk, but they are
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not for sale. It is this purpose of function that provides the fundamental difference between the historical company towns of North America and the future African company towns. The goal of the historic company towns was profit; the goal of the African company town will be local infrastructure and training development. This heavy focus on infrastructure and education is a development policy that was outlined particularly by Schumacher in his book Small is Beautiful. (Schumacher 197-205)

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Chapter 8 Education as an Engine of Growth
Education, particularly vocational education, is an important part of economic development. It is a way in which worker productivity can be increased without a need for an increase in investment in constant capital. Among the first public buildings erected, after workers' living arrangements, should be school facilities. During the construction phase of development, members of the future town should be engaged in taking classes in vocational education, at the village vocational college. However, education is a two edged sword. From the point of view of the village community, sending away one of their sons or daughters to get a university education represents a huge investment. Producing one doctor can cost the village hundreds of thousands of man-hours of labor. If that successful son or daughter of Ruzizi comes back to the village, sets up a clinic and begins practicing medicine, then the investment prove to be worthwhile in the long term. However, if they accept a high paying position somewhere in the West, then there is of course no return on the investment Schumacher points to Chinese estimates on how many peasant years of labor are embodied in a 4-year education at a Chinese University (Schumacher 207), i.e., how many years a peasant would need to work to send a person from his village to college. The Chinese economists in the 1940’s stated that the equivalent of 150 years of peasant labor needed to be appropriated to send one villager to college. Schumacher argues that such a massive appropriation should not go without substantial return to the village. In Schumacher’s view, the very least that should be done is that the students use their newly learned skills to help the people who made their education possible. Schumacher asks: “Is education to be a ‘passport to privilege’ or is it something which people take upon themselves almost like a monastic vow, a sacred obligation to serve the people?” (Schumacher 207) In his article in the New York Times (NYT 12/15/05) entitled “The Rock Star’s Burden” author Paul Theroux, comments on the education of doctors and teachers in Mali. He argues that doctors and teachers educated at the state’s expense, who later take their

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talents to Europe and America in search of a higher wage are, in fact, stealing from the very people who provided them with their education. Although Mali may provide some of its citizens with a high quality education, if the recipients of that education then leave the country, the nation as a whole is worse off for it. The resources are, in a sense, given to the West, instead of enhancing the wellbeing of the people who paid for them. Significantly, Schumacher’s point does not exactly revolve around the cost of education; rather he is elucidating the importance of labor time when accounting for cost. Often it is the case that those who have appropriated take for granted the sacrifice of those they have taken from. In Schumacher’s example of the Chinese village, a combined total of 150 years of labor were required to send one villager to school. If the student leaves the village and never returns to the village, that represents 150 years of labor lost. Thus the question presents itself: What could that labor have accomplished, had it not been invested in the education of an individual? What infrastructure improvements could have been made, how much extra food could have been grown, how many more commodities could have been produced for the village? The loss of labor is no small thing in a village clinging to the edge. To send a student to a 4-year education at a U.S. college which charges $40,000 a year, thus totaling $160,000 is no small expense for our African village. A laborer producing 2 dollars a day in value would have to work for 220 years nonstop to afford such an education. Theroux in his article advocates a contract tied to an education obligating doctors to stay in their country after their education is completed, at least for a given period of time. Although Schumacher does not go that far, the world had not experienced the situation present in Africa today at the time of his writing. If a village invests in an education of one of its citizens, there is an expectation that the person will repay with service the investment of the village. To be sure, not all education is accompanied with such drastic fees. Yet without this expectation, there is little incentive to educate, in fact there may be a disincentive. If after education, there is a high probability that the graduate will leave, a village might find it in its best interests to not educate their best and brightest, as they risk losing all the benefits that they might bestow. Indeed after decades of focus on
35

education, some African leaders have cut the public funding to many educational programs, claiming that if the west wishes the people to be educated they will pay for it. Yoweri Museveni, when faced with the question of financing schools or roads for Uganda by the World Bank, chose roads because he could see an actual economic benefit from them. (OFB) Thus, although education must be a priority, it should be one that comes with an obligation. However an obligation by the student is not enough, there must again be an obligation on both sides. Not only should the educated be obliged to stay in their communities, but also the communities should see that they are productively employed. Prabhupada advocated a course of action that would act as such an incentive. When town members satisfactorily complete their vocational training, they should be presented with a house free of charge. They should also be presented with their occupation's means of production free of charge. If they are farmers, the land should be free, as should their first team of oxen, and their first plow. (CSP Vrndavana, April 9, 1976) Similarly, those who are engaged in other spheres of production and those in distribution should be also endowed with the means of production for their respective trades. After completing training, a smithy should be given a forge and a workshop, a tailor, the tools of his trade and a workshop, and so on, all provided at the expense of the company. The conclusion is that although education may represent a large investment for the village, it may represent an incredible engine of growth. The village will try to maximize its return on investment by: 1. minimizing costs by increasing capacity for on-site vocational education 2. strive towards self-reliance in education by bringing in outside experts to train local people 3. make it feasible for trained people to live comfortably in the village and practice their profession by offering free housing and the infrastructure required for these people to practice their profession

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Chapter 9 Proliferation of Small-Scale Private Ownership as an Engine of Development
Presenting the means of production free of charge represents the fastest most economical means of steering the economy towards the private sector. It represents the single most powerful engine for building up the local economy. Because Africa is capital poor, villagers would otherwise have to work a long time to afford the means of production. The goal of the WVI company administration is not to have people working for the company, but rather to have people working for themselves. Furthermore, to provide the means of production and distribution also serves an additional economic purpose. If the means of production is provided to a trained worker free of charge, this means that the price of a commodity that worker sells can be reduced, as the amount of constant capital has also been greatly reduced. Thus, when a blacksmith sells something he has forged on equipment that he now owns at no cost to him, his price can be reduced because the cost of his constant capital has been reduced – compared with what it would have been if he were still paying off the cost of his forge. The same is true for the farmer, and this is another benefit to the economy. Reducing the effect of constant capital on price leads to a reduction in the price of agricultural goods sold by the farmer. This reduction in the price of agricultural goods leads to a reduction in the price of labor, since a major factor in deciding workers' wages is the price of agricultural goods. This is a point strongly argued by Ricardo in his book Principles of Political Economy. (Ricardo 80-98) During the first phase of development, the company will provide meals for its laborers. However, the private economy is by no means obliged to provide meals for its workers, and as the town begins its transition to a private economy, wages will have to rise as the price for agricultural goods will have to be factored in when deciding a laborer's wage. Thus, reducing the cost of agricultural goods as well as manufacturing goods by reducing the effect of constant capital on
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price will in two ways act as an important buffer to ease the transition. First, without this buffer, it is quite plausible to assume that there would be no transition, as under the circumstances no meaningful private sector could develop, if it were required to provide the capital necessary to acquire the means of production. Second, the indirect effect of this policy, the reduction in the amount of variable capital necessary to employ labor, will help put labor within the reach of the private sector. As mentioned earlier, regardless of what occupation a person has, upon a successful completion of vocational training, a village member will be presented with a house free of charge, from the company. During the transition phase the price of the bundle of commodities necessary to reproduce labor has been reduced by subsidizing the means of production. The cost of labor will be further reduced when the cost of housing has been reduced to zero. Although any improvements made upon the home will be out of the pocket of the individual villager, the initial cost of construction will be covered by the company. Thus, the villager need never be concerned with that cost. Thus the amount of variable capital necessary to employ anyone moving from temporary worker housing to permanent villager housing need not be affected by the cost of housing, as that would be provided free in both instances. Therefore during the transition, in the private sector we see a slightly higher cost of living reflected by a slightly higher wage. This trend is not carried over to the same extent to workers employed by the company. Their wages will still be held at a low rate, and they are still provided with temporary worker housing and communal meals. Workers who finish vocational training and have moved into permanent villager housing and by their nature wish to remain laborers and not be bothered with the stresses of running their own farms or businesses will remain in the labor market. During the transition, if they choose, they can continue to work for the company. However due to the greater degree of dietary choice and higher wage provided by the private sector they will have an incentive to be employed by the new small firm owners. During the transition phase, the company store, which sells products for cash, will be phased out. Thus the only form of currency active in
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the town will be grain based. In contrast to a cash economy where the state holds a monopoly on the production of currency and counterfeiting is illegal, farmers in the company town will be allowed and indeed will have incentive to produce grain "currency" on their own. At some point the farm sector will end up producing enough grain to meet not only the village’s need for currency but also the village’s need for food. This will lead to the end of the need to import food grains, for currency or consumption. When imported grain becomes redundant in this way, it will eventually be abandoned. Village Store Superseded by Development of Numerous Private Village Firms When the economy is successfully transitioned into a grain-based economy, the second company store will begin to reduce its subsidies. As a sufficient number of private merchants come online, the village store will gradually increase its prices, simultaneously cutting back its operations. In the beginning phase of the transition, when private firms are first coming on line, the market for their goods may be slack. At that point the village store will buy their unsold goods for slightly below market price, i.e. cost of constant capital plus the new value of labor embodied in the commodity minus a small portion of the embodied labor. This reduction will be made in order to keep production geared toward providing for needs of the local village economy.

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Chapter 10 Control on External Trade as an Engine of Development
The excess production which is not able to be sold inside the village will be thus sold to the village store, which will in turn seek markets outside of the village. The village store will, during this transition phase, act as the intermediary, selling outside the village for cash, village commodities purchased for grain. The cash will be used to purchase only commodities which are necessary for village life but cannot be produced inside the village itself. These commodities will then be resold inside the village for payment in grain. If at any point production seems to be becoming focused more on external trade while village needs are not being met the village store would have to reduce the price paid for those village commodities. This will discourage surplus production in this sector and steer production back towards fulfilling the needs of the village. At the end of the transition stage, the purchase of excess commodities, their sale outside the village, and the sale of externally produced necessities within the village will be the sole purpose of the village store. All locally produced village commodities will be bought and sold by private producers. It is important to keep external trade monopolized. If individual producers are able to buy and sell goods from outside the village, there is a great danger that the growth of a healthy local village economy will be undermined. It is prudent at this point to discuss the philosophical basis for the village’s trade policy. Although this is only indirectly an economic argument for localized production, it is still important to mention here, as it is perhaps the central argument for Schumacher, Prabhupada and the Gandhian economists. Indeed as it is a humanitarian argument, it is a central motivating factor for the decision to produce locally. Divorcing the consumer from the producer has led to an attitude of indifference on the part of the consumer with regard to the conditions of commodity production. In the current society, the only consideration that a consumer need take into account is that of price. In a globalized economy, there is no compelling need to take into consideration the conditions under which commodity production occurs. Thus in the

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current global economy, to the consumer there appears to be no producer. Each commodity has no history of production. Rather, from his perspective, the commodity simply appears on the marketplace with a price and nothing more, save perhaps a difference in quality. This divorcing effect makes the consumer unaware and indifferent to whatever levels of theft, exploitation and poor working condition that occurred during the commodity production. On the other hand, when commodity production is local, the consumer is forced to consider the condition of the producer. The producer’s well being is more in the mind of the consumer, perhaps they are even friends. The levels of theft, exploitation and poor working conditions now become apparent, and the consumer is less likely to tolerate the more heinous of these sleights on his friend, the producer. Thus the condition of the productive workers is more likely to improve. Although a reduction of these negative aspects of production is likely to lead to a further reduction in the rate of profit, it is an outcome which is to be desired. For, what good is an expanding economy if the masses of the citizenry are left in poverty? If all men are created equal, why should many suffer greatly so that a few may enjoy marginally more? As well as this social consideration is the economic argument against external trade, for a developing village, which is discussed in detail below. Why does WVI stress strict control on external trade? Production should be geared as much as possible to the local market, so that those who work may see the greatest possible improvement in their village as a result of their labor. However instances will always arise in which producers have overproduced. When the market has become saturated with a certain kind of commodity, the value embodied in the excess of that kind of commodity may never be realized if producers are restricted to appealing to only the local market in order to gain valorization for their commodity. In such a case labor expended on producing that excess commodity would be lost. In such an instance it is necessary to find external markets for the commodity, in hopes of realizing its value and preventing a waste of labor.
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Without the prospect of offering locally un-saleable commodities to external markets, the producer is forced to take the loss himself. In some fields of production, overproduction could mean the complete destruction of his industry, the losses of capital could force bankruptcy. In a world of equal levels of worker productivity, a producer chooses to sell in a local market because he is sure to get a higher rate of profit. The reason for this is that he does not have to pay for the profits of commercial capital. Adam Smith in his book The Wealth of Nations notes that in his day farmers living closer to London had a higher rate of profit than those living farther away from the city, whose profits were reduced because they had to pay for transport and solicitation. “The corn which grows within a mile of the town, sells there for the same price with that which comes from twenty miles distance. But the price of the later must… pay the expense of raising and bringing it to market…” (Smith 479) Let us take for instance a hypothetical case of a firm operating inside our village. The producer buys raw material and means of production for $100, and with his labor (and possibly that of a worker in his employ) he adds an additional value of $100. Then he sells the product for $200 in the local market. Let us assume for the moment that the cost of the labor to produce the commodity in both local and external markets was $60. Assuming productivity levels are equal between local and external markets, the commodity would sell for $200 in external markets as well. However, commercial capital would not go to the trouble of selling the commodity in external markets, were it not to receive a profit for doing so. Let us assume this profit rate is 11% for commercial capital. Ernest Mandel the LTV Economist makes the point that although theoretically the rate of profit should be the same for commercial and industrial capital, it is never likely to actually be so, due to the natures of commercial and industrial capital, the entry of firms into commercial capital is easier. “Since commercial businesses need much smaller initial outlay (sic) than large-scale industrial concerns, there is much quicker fluctuation as regards entries into and and (sic) exits from the sphere of distribution than is the case with that of production.” (Mandel 189) Thus for the sake of honoring Mandel’s observation and keeping the math simple let us assume the rate of profit for external trade for industrial capital at 12.5%. It should also be noted here that the
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same argument applies for the differing rates of profit of wholesalers and retailers. Therefore when our village firm has exhausted its local market, it sells its excess commodities to commercial capital for $180 per commodity, thus earning a rate of profit of 12.5%. The commercial capital resells the commodities in external markets for their full value of $200 and thus maintains its profit rate of 11%. It is at this point that Smith observes that the producer is the better off for the deal, although his rate of profit has been cut in half, from 25% to 12.5%, he would have lost the whole $200 of value, were commercial capital not there to buy his excess production, now he only sacrifices $20 of value. (Smith 482) Smith is right in his assertion that the producer would have been at a loss were it not for the presence of commercial capital. However, Smith goes even further and states that “whether the (commercial) capital, which carries this surplus produce abroad, be it a foreign or a domestic one, is of little importance.” (Smith 483) In this interpretation, Smith could not be more wrong. In terms of development, the control of commercial capital is nearly as important – and in some instances more so – than control of industrial capital. It is to this claim that the argument shall be made for the importance of a village monopoly on external commercial capital, in the form of the Village Trading Company (VTC) for the WVI villages. Commercial capital will always exist, and trade will always exist. However the control and guidance of it, or lack thereof, can make or break economies and communities. However, before we shift our discussion to the role of the VTC, it is important to note that no society is free from the need of obtaining commodities from outside. Even in the supposed self-sufficient manors of the dark ages, a trade in – at very least – iron and salt existed. The French Metayors, the Latin Partiarii, and the English Yeoman also required the tools and leather necessary to make their industries successful, (Smith 489-490). As productivity has increased in societies, the need for external commodities has also increased. The VTC, with its monopoly on commercial capital, provides not only a market for goods leaving the local market but also the source of the externally produced necessities required to maintain the standard of
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living and production. Having explained this, let us return to our comparison between the VTC and foreign commercial capital. Many arguments have been made extolling the benefits of collective bargaining; however, no magic occurs in the process. In fact, all that takes place is that under the process of collective bargaining, the influence of commercial capital has been reduced. The producers earn a higher profit on their commodities by eliminating the profits and wages needed by commercial capital. There have been instances in history in which commercial capital was not necessary and producers could bring their commodities directly to the consumers. Yet in many cases for the producer to sell his commodity in the external market for $200 instead of selling to the intermediary trader for $180, he must take the time to travel with his commodities to the distant markets and find buyers. There have been instances in history where such a system took a form in which, for part of the year, a producer would be engaged in the production process and the other part of the year he would spend transporting and selling his product in distant markets. Much of the early United States was witness to such a system, due in part, to the climate conditions which caused agricultural production to halt for part of the year, and also due to the lack of commercial capital in colonial and frontier times. Yet as production shifted away from agriculture, commercial capital became more ready and organized. At such a stage of development, to halt production in industry in order for the producer to abandon production and go out and trade, meant fewer commodities produced. Industrial capital has since found it in its best interest to produce all of the time and sell to commercial capital, even if it is forced to take a smaller rate of profit. The reason for that is that a surer market and a faster turnover of capital results in greater profits in the long run. Mandel notes that, “It is very much to the interest of the industrial entrepreneur that the circulation period of commodities should be reduced as much as possible. This is why he hands over the greater part of all the operations in the distributive sphere (transport, storage, selling and buying at the source, advertisement, etc.) to a specialized branch of capital, commercial capital.” (Mandel 189)

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Thus collective bargaining is simply a large organization of producing firms taking time to enter into the field of commercial capital. For this to succeed on a village scale, the producers would either have to hire someone to work for them in this capacity or halt the production time, thus cheating themselves of greater profits in the long run. In a competitive market place they would chose the former. The person the producers hire sells their commodities for the market price without the need for the profits of commercial capital. In our village the producer would able to sell his product in external markets for $200 and maintain his original 25% rate of profit. Yet this form of trade is not without it flaws. First the system requires that the producers have access to the same advantages as commercial capital, i.e. contacts, markets, means of transportation and means of distribution. Second it does not apply for all producers. If our village only had one or two producers of a commodity, it would be unlikely that they could hire someone to bargain for them. Secondly, it is important to note that the producer is also a consumer, and he would still encounter external commercial capital when buying products. Finally, collective bargaining with individual firms is unlikely to produce the best result due to the small scale of such enterprises. Thus, for our village, the VTC morphs the role of the commercial capitalist with that of the collective bargainer. The Village Trading Company (VTC) buys the commodity for $180, just as an outside trader would, and sells it in external market for $200. Certainly, there is a profit of $20 in either instance. Yet this is where Smith was wrong in his appraisal. When an outside trader is in control of the commercial capital, the $20 is unlikely to return to be invested in the village, whereas with the VTC in that role, the $20 will be returned to be re-invested in the village. Thus, in the end, what would have been the loss of the village of $20 is now restored. In the ideal case, however, the producer having only realized $80 of his labor rather than the full $100, will shift his production to commodities needed by the local village, because this way he can realize the full $100 of additional value in the local market. The producer adjusts his production, and the village is benefited as a result. But, returning to the example where the producer continues to sell his original commodity to the VTC at a loss of $20, it should be remembered that although the immediate effect is that he appears to have lost a potential $20, he will in fact regain some of that benefit in the form of
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subsidized external commodities which are brought into the village by the VTC. The VTC thus encourages producers to produce locally in a way that collective bargaining would not, and it realizes the greatest amount of value for the benefit of the village which an external owner of commercial capital has little incentive to do. Furthermore the VTC is a large enough entity that it can have access to markets and means of distribution and transportation and advertising that many small producers could not.

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Chapter 11 Overcoming the Stumbling Blocks - Unequal Productivity
So far in our trade discussion of trade we have assumed trade in spheres of production where the level of productivity is equal between local and external producers. However, as mentioned above, the reality of the world is that this is seldom if ever the case, especially with regard to the trade between the global North and the global South. We can expect that our local producer, who is working in a non-industrialized village, will have a lower level of productivity than a producer in an industrialized country in nearly all manufactured commodities. Mandel notes that: “The gap between the average productivity of labour of an Indian peasant and that of an American or British worker exceeds by far the gap between the productivity of labour in the largest Roman slave enterprise and that of the poorest peasant on the borders of the Empire. This unevenness of development has become, under the capitalist mode of production, a special source of super-profits.” (Mandel 199-200) Our villager may produce a commodity that embodies, let us say, $100 of new value, whereas an external producer, from an industrialized country, has a higher productivity level of productivity, and the similar commodity which he produces may embody only $50 of new value. The same commodity, when traded between such unequals, does not favor each village to the same degree. Mandel notes that because of this discrepancy less developed nations sell products at less than their value and buy at above their value. (Mandel 200) When an external producer sells his product in our village, he sells it for the value it would have if it were created in our village or $200, (assuming he is not trying to steal market shares), but when our village producer sells in the external market, he must sell for only $150, because the external market will not pay any higher price than $150, despite the fact that the locally produced commodity $200 of labor embodied in it. The external producer not only gets the original benefits of selling for above the cost of constant and variable capital, he now gets the benefit of an additional $50. However the fact that he is bringing his
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commodity from the outside and selling in the village market signifies not just the $50 lost to the village but also an additional loss because it is unlikely that the capital will be reinvested in the village, but rather more likely will be repatriated back to the home country of the external producer. Even worse though, is the danger of the foreign producer selling below the local market price, effectively destroying local producers. True, these producers could shift to another sphere of production; however, so complete is the domination of the foreign levels of productivity, that in the end, anything that can be produced more efficiently abroad will eliminate local competition, until only highly labor intensive and region specific commodities can be produced, or commodities illegal to produce in the industrialized countries. At that point, the local economy is reduced to producing only primary commodities, and even these are traded at such a low price that the village product of several days of labor is traded for the product of minutes or hours of labor from the external market. (Mandel 200) Mandel notes that the economy of developed nations grows faster when they are engaged in international trade. This is not due to obtaining the new markets for their excess production, but rather this is due to a discrepancy in the levels of productivity. Assume that the producer of a commodity in the developed nation pays a constant capital of $100 and a variable capital of $20, for a total production cost to him of $120. He then sells that commodity for a price of $150, earning a profit of $30 or a rate of profit on his investment of $120 of 25%. This is the transaction in the local market of his (industrialized) country. If, on the other hand, he sells his commodity to a country that is half as productive as his, the commodity can sell for a local price of $200. Due to the differing rates of productivity of the production of that commodity, his costs remain the same his profit is now $80, giving him a rate of profit of 67%. That money is now free to be invested in his home economy. However, that profit had a source, our village. J. B. Condliffe, in his book The Commerce of Nations notes, “It has often been said that the European peoples became rich by the impoverishment of other parts of the world, and there is truth in this charge.” (Condliffe 204) It does not need to be explained why the developing country does not get the same benefit from trade with countries of higher productivity, for it is all too obvious and has been elucidated above.
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It is in this last instance which Smith’s indifference on commercial capital is most hotly refuted by analysts like Mandel. On one hand, the complete control of commercial capital by a developing village can allow that village the chance to safely develop its industries. On the other hand, if the more productive country controls commercial capital, then, as indicated above, the servitude and impoverishment of the less productive country is assured. The only hope of defense a developing nation has against such a fate is law and regulation, such as a protective tariff, a defense that is not currently in favor and is under constant assault from more productive, and thus more powerful, nations. Thus, it is clear that if the developing nation is in control of the commercial capital and furthermore, if it is a capital that is employed in the best interests of the populous, then the developing country has a chance to develop its domestic industries. However, even this control of commercial capital will not be enough if it is not backed by a new trade policy. Trade Policy To avoid the trap of producing only primary products which are sold below their labor value and having to buy manufactured goods at prices above their value, a new trade policy is needed. The trade policy advocated by Prabhupada and the Gandhian economists is to produce locally. Gandhi stressed that everything which can be produced locally should be, even if the local economy is less efficient at its production: “My definition of Swadeshi is well known. I must not serve my distant neighbour at the expense of the nearest…Swadeshi is that spirit in us which restricts us to the use and service of our immediate surroundings to the exclusion of the more remote…I should use only things that are produced by my immediate neighbours and serve those industries by making them efficient and complete where they might be found wanting… “If we follow the Swadeshi doctrine, it would be your duty and mine to find our neighbours who can supply our wants, and teach them to supply them where they do not know how to proceed, assuming that there are neighbours who are in want of healthy occupation. Then every village of India will almost be a self-supporting and self49

contained unit, exchanging only such necessary commodities with other villages which are not locally producible…A votary of Swadeshi will carefully study his environment, and try to help his neighbours wherever possible by giving preference to local manufactures, even if they are of an inferior grade or dearer in price than things manufactured elsewhere…” (Gandhi 1957) Following Gandhi’s thinking, commodities that cannot be produced locally should be divided into three categories: (1) those commodities whose use value could be replaced by a sufficient local alternative, (2) those commodities which are not actually needed by the village and (3) those commodities which are necessary and which can only be produced externally and must be traded for. With regard to the first two categories, although it may seem harsh to a Westerner, to do without importing them from outside would not so much require not so much a change in standard of living, as a change in vision, in reality the standard of living will if anything increase. The electrical and petroleum infrastructures and the commodities which are tied to them are today not everyday parts of the lives of millions of Africans. The difference between the present living standard of these Africans and the policy of non-importation proposed here, is simply that today there is an aspiration towards a life style filled with these commodities. Much of the use values of the petroleum and electrical infrastructures could be replaced by local alternatives. In fact, to this day, even in the West, groups such as the Amish have a vastly higher standard of living and vastly higher worker productivity rates than the average African, even though the Amish go without the aid of these commodities. More realistically it should be noted that with current levels of productivity, it is not realistic to assume that a village in SSA could economically support an electrical- and petroleum-based style of life, without continual outside aid. Let us examine this point more closely. For sake of argument, let us assume that on average one hour of socially necessary labor in the U.S. produces $20 of value. This figure is a personal, conservative, modern day, rough, approximation based on the study done by Foley in 1986 cited by Matoto Itoh in his article The New Interpretation and Value of Money. (Mosely 177-178) Thus in one 8-hour day the
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average US worker produces a value equal to $160. For our African village let us assume that an hour of labor for the average worker (due to drastically reduced productivity) produces a value of $.25. Therefore an 8-hour day of labor produces a value equal to $2.

Value of 1 hr labor US worker African worker $20 $0.25

8 hour day 8 8

Value 1 day labor $160 $2

1 Unit of labor relative value $80 $1

Thus, the average productivity of an American worker is 80 times that of the average African in our hypothetical village. Therefore, even assuming perfect competition and perfect supply, and commodities sold at their exact value, with no profit rate beyond the average (an assumption almost never true in such circumstances), a commodity that took an American 1 day to produce and which would be sold in America for $160 would also be sold in our African village for $160. Thus one day of American labor is worth 80 days of African labor, or one day of African labor is worth roughly 6 minutes of American labor, leaving the African laborer at a clear disadvantage in terms of trade with the US and creating what Mandel calls: “…the exchange of less labour for more labour, or, what comes to the same thing, a transfer of value from the backward country to the advanced country.” (Mandel 200) Our example above analyzes the difference between a day’s labor for the US worker compared with the value of a day’s labor for the African worker. Building on this example, imagine the years of African labor value embodied in a single car. Assuming that the African laborer must eat, house and cloth himself, it would be impossible that he could ever afford such a luxury, as long as 1 hour of his labor is worth only one eightieth the value of 1 hour of a worker in the US. Thus, the implication is that for one African to purchase an automobile he must first appropriate years and years of labor from his
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fellow countryman. Furthermore, if the primary use of the car is for recreation rather than commercial use, it would mean years of labor spent for the personal enjoyment of one man. Our example says nothing of the costs of the infrastructures needed to support such commodities as automobiles. Therefore many of the western commodities are simply out of reach for our African villagers. A television or may be an affordable commodity for some villagers, or perhaps they could buy one in common. However, the investment in an electrical infrastructure needed is far beyond their means. Prabhupada and Gandhi would argue that the village labor would be better spent training oxen, building carts and producing plays and concerts and festivals. Economically the debt would be less, the foreign dependence reduced, and the capital would remain inside the village. Let us move on now to the third category of commodities, for that is where the Village Trading Company (VTC) is concerned. The VTC would have a monopoly on external commercial capital, meaning that all commodities coming in and out of the village economy must pass through it. As mentioned above, the VTC buys the excess production from the village and after selling it externally, uses the profits to purchase externally produced necessities which it in turn sells to the village. However, here it should be mentioned that excess production is not the only source of commodities which the VTC has at its disposal. Taxes in the village are payable either in currency or inkind, as was supported by Prabhupada and also which will be addressed later. (CSP Montreal, July 16, 1968) The in-kind taxes are used directly to maintain the village government; however, the surplus in-kind taxes are given to the VTC as a second source of tradable commodities. In-kind taxes work as follows. A potter produces 10,000 clay pots during a year, and also during that year he manages to sell 8,000 of them. Rather than sell the remainder to the VTC and pay higher taxes in the form of currency, he decides to pay his taxes that year inkind. Assuming the tax rate is 20% he gives 2,000 pots to the government. The government, for whatever reason, uses 1000 pots for its personal use and gives the other 1000 pots to the VTC. At this point, assuming there is no cost for transportation, whatever the VTC
52

sells the pots for is pure profit. It will naturally attempt to get the highest price for them, however if the external levels of productivity are higher they will still be able to sell the pots for less than their total value, because from the point of view of the VTC the cost of purchase was zero. The foreign currency earned by the VTC for this taxinitiated trade will go into a separate account controlled by the village government. The fund will be used to over come shortfalls in the VTC’s accounts and for other expenses and projects the government may have. The VTC and increasing productivity The potential benefits of the Village Trading Company (VTC) have not yet been fully expostulated. So far we have seen the positive benefits of the VTC in terms of selling excess village produce. However as a buyer, the VTC has the ability to effect the terms of trade. We will now look at possibly the most extreme benefit of such a position. Although it is hoped that such an occurrence will not occur, a budget deficit could be offset by gearing production to external markets, giving the village an advantage due to the VTC’s role as purchaser of external inputs. For this example we will again look at our example of the village producer, and assume that he is as productive as his external counterpart. In this instance, let us assume that our villager acquired all of his inputs from abroad and the inputs came through two successive forms of commercial capital, a wholesaler earning a 12.5% rate of profit and a trader earning an 11% rates of profit, so that when he bought them at their value their price was equal to their value or in other words $100. Our potter buys his inputs for $100, his labor for $60 and sells his commodity to the VTC for $180. The VTC sells for $200: this is the first cycle of capital. In the second cycle of capital the VTC buys the inputs directly from the external producer for $80 thus bypassing the trader and the wholesaler, the VTC then uses the original profit of $20 to sells the inputs to the village potter at a subsidized price of $60. Thus in the second cycle of capital the village potter buys his inputs for $60 and his labor for $60 and sells to the VTC for $140, the VTC in turn sells at its actual value of $200 realizing a profit of $60.

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In the third cycle of capital the VTC buys its inputs for $80 and sells them for $20, and when it buys the commodities from the village potter it buys them for $100 and sells them for $200 realizing a profit of $100. Thus by the forth stage it could theoretically provide the potter with the inputs for nothing and still have $20 left over, it would thus buy commodities from the village potter for $80 and sell for $200 realizing a profit for the sale of $120, and after purchasing the inputs have a remainder of $40 that would not need to enter into the next production cycle. Thus the VTC’s capital stock has increased by 22% for each successive cycle of trading, an increase that could be used to subsidize further imports of necessaries or increase worker productivity within the village.
VTC purchas e cost of inputs minus VTC previous profit equals Produce r's cost for inputs Produce r's laborvalue Added Price to Village rs VTC purchas e discount (if surplus) Reduced Price to VTC VTC sells Externall y VTC profit

First Cycle Second Cycle GTC purchases inputs, sells at discount

$100.00

$100.00

$ $100.00 200.00 $ $100.00 160.00 $ $100.00 120.00 $ $100.00 100.00

$ 20.00

$ $180.00 200.00 $ $140.00 200.00 $ $100.00 200.00 $ $ 80.00 200.00

$ 20.00 $ 60.00 $100. 00 $120. 00

$ 80.00 $ 80.00

$ 60.00 $ 20.00

$ 20.00 $ 20.00

Third Cycle

Fourth Cycle In Fourth Cycle

$ 80.00

$

-

$ 20.00

potter gets $80 worth of materials for free, VTC retains $40 remainder of 3rd cycle profits yellow indicates figure derived by formula

Other Factors Related to External Trade In addition to the monopoly on external trade held by the company store, outside trade will also be discouraged by other factors as well. The currency used in the external economy will be cash, whereas the

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villagers will trade in grain. This fact alone will hamper external trade outside the company store. The next factor to inhibit the development of external trade is the mode of transportation. For the village, the chief mode of transporting goods will be ox cart. Motor vehicles will not be supportable within the village infrastructure. External merchants will also be discouraged by lack of venue to sell their wares, since all land within the town limits will still be maintained by the company. Social pressure from an educated populace will act as a further deterrent to the establishment of external trade with village firms. Laws cementing the GTC’s monopoly on external trade will be the foundation to its discouragement.

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Chapter 12 The Self Managed and Self Sufficient Village
At the conclusion of the Phase 2, all work that is still carried on by the company will be transferred to the newly trained government. At that point the transition stage would have come to an end, and the finished “product”, a self-sufficient village will be completely developed. We shall now explore how economic and labor relations are carried on inside the village. This section will focus on how commodities are bought and sold, with special emphasis on the commodity of labor, the role of the government in the economy, the now greatly reduced role of the company, the role of external trade, and the positive benefits of village life on the standard of living. Value of Goods and Labor Using Labor Theory of Value During the first and second stages of development, the actions of the company town seem very similar to those of the traditional capitalist company towns of North America, and in fact all capitalist enterprises. That is, the focus is to minimize the amount of variable capital needed for the production process. The fundamental difference is that, unlike the historic North American company towns, the African company town will not be selling a commodity. Any commodities that are sold by the company are secondary to its central purpose, and the commodities are sold to the villagers without regard for profit – in fact they are often sold at a loss. However in the third stage, as the company begins to phase out its operations and begins to empower a private sector by providing its means of production, the goals of production change. It is the natural goal of the private sector to seek profit. Unfortunately if one accepts the Labor Theory of Value as given, as this book does, the source of this profit is merely unpaid labor, i.e. exploitation. The company buys labor at its value, the means of its production, i.e. the bundle of commodities necessary for its reproduction, and then benefits from the products of the labor without paying outright for its value. However, since what is produced is never sold, and the value never realized in economic terms, but rather, the products of the labor are returned to the laborer in the form of physical infrastructure and

56

the means of production, the argument can logically be made that no actual exploitation takes place. The company is merely helping the villagers to build up “sweat equity.” On the other hand, the production undertaken by the private sector during the transition phase is of a capitalist nature and can in fact technically be termed according to LTV economics as “exploitation.“ Private producers purchase labor at its value, extract a surplus amount of labor from the laborer and then realize the value of that surplus labor in the sale of the commodity. This surplus value – which was of course the motivation for the purchase of labor, is logically classified as unpaid labor and is technically considered exploitation. It is unfortunate, but without this source of exploitation, the laborer could not be productively employed. It is not in the nature of every man, even if given an actual choice, to be an economically independent farmer, nor is it desirable that society should arrange itself in such a manner. It is also regrettable that the logistics of the real world are not such that each person may possess the means of production. In the world of theater, for example, a play must be set in action by many actors; each actor cannot possess his or her own theater. In every society but the most primitive, this form of exploitation is what has been – on one hand – the driving force behind technological advancement and an increase of the standard of living. Yet on the other hand, carried along its natural course of development, such exploitation has evolved to become the source of misery and the loss of the souls, minds, hearts and bodies of humankind. However, the fact that for society to progress this type of exploitation, the theft of labor, must exist does not mean that it should be allowed free reign as it is in much of the world today. For society to progress, surplus value must be produced and concentrated in one form or another. Economics is the science of how this surplus value is created; politics is the science of how it is distributed. Sub Saharan Africa needs a new model of political economy. It is the purpose of the African company towns, and the villages they become, to eventually reduce this exploitation to a bare minimum and arrange the economy in such a way as to see that the villagers of the town get the maximum benefit from the labor they exert.

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Marx describes labor as broken into two parts, necessary labor and surplus labor. (Marx 325) Necessary labor is the work that a laborer performs to reproduce the value of his means of subsistence or the value of the bundle of commodities he needs to live and reproduce his labor again the next day. (Marx 324-325) Surplus labor is whatever labor he performs beyond that necessary labor. (Marx 325) If the working day is eight hours and the first four hours constitutes necessary labor, then the next four hours of work is surplus labor. According to Marx, in a capitalist society the wage is equal to the value of the necessary labor, the capitalist thus pocketing the value of the surplus labor once the commodity is sold. This is the normal state of affairs in capitalist economy. However, in our village, this is not the case. Marx explains that it is the incentive of capitalists to constantly try to increase the portion of the workday occupied by surplus labor. “But capital has one sole driving force, the drive to valorize itself, to create surplus-value, to make its constant part, the means of production, absorb the greatest possible amount of surplus labor… If the worker consumers his disposable time for himself, he robs the capitalist. The capitalist therefore takes his stand on the law of commodity-exchange. Like all other buyers, he seeks to extract the maximum possible benefit from the use-value of his commodity.” (Marx 342) This they do either by lengthening the working day or by decreasing the proportion of necessary labor, and by doing so they gain their profit. (Marx 341426) Historically, capitalists have found many ways of reducing necessary labor. Along similar lines, as has been described earlier in this book, during the first two stages of development, several variations of these techniques are employed in the proposed model. Although detailed examples of techniques for reducing necessary labor time will not be presented here, it is sufficient to note that technological progress has been at the center of capital’s attempt to secure more of the working day for itself. Technological increase is important, but should only be pursued the extent that it falls within the philosophical guidelines of Prabhupada, Gandhi and Schumacher. Romesh Diwan in his chapter entitled, “Total Revolution and Appropriate Technology,” sets forth the Gandhian requirements for technological change:

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A non-exploitative technology must not... encourage centralism. [Thus], technology must satisfy four basic conditions: (i) the operators must have full control of the technology; (ii) the technology must not replace the worker; (iii) the technology must increase the productivity of the workers; and (iv) it must be productive of goods and services needed by the worker. ...Obviously, machines can, and do, perform the work of more people. ...If there are unemployed persons, the use of a machine that replaces people adds to unemployment. ...The requirement that the technologies should be productive of goods and services needed by people is important since production of these goods is the necessary condition for the achievement of total revolution. If the technologies produce, say, war goods such as guns, the society will become violent through consumption of these war goods. Similarly, if these technologies produce, say, luxury or export goods, the producers of goods will not be able to satisfy their needs and will have to seek other, maybe violent, methods to satisfy these needs. The capacity to produce goods needed by people makes these technologies people-oriented. (EGE 186187)

Similarly in contrast to the capitalist tendency, it will be a distinct policy of the village to arrange the economy in such a way to as to insure that workers get paid as close to the value of their labor as possible, while still maintaining enough of an incentive to attract employment opportunities from the private sector within the town. We shall now examine these mechanisms. The first point to be understood is that a higher wage does not necessarily mean a higher standard of living. As indicated earlier, the
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standard of living depends on the relationship of the wage to the bundle of wage goods. Thus there is no universal correlation between degree of exploitation and standard of living. Simply stated, the economic structure of the village should be designed so as to realize the highest possible standard of living at the lowest possible rate of exploitation. For example, as mentioned earlier, in the final stage of development villagers who have satisfactorily completed their vocational training will be given housing free of charge. However, the final purpose of providing such free housing is not so that the capitalist can increase his rate of exploitation but rather so that the villagers can have more disposable income. Small Scale Makes Wage Analysis Feasible Building our model in the setting of a small self-sufficient village, one of the factors which makes it easier to determine what the average wage for unskilled labor should be is the small size of the social body. Determining the cost of the average bundle of goods enjoyed by unskilled labor in such a small village should not be a difficult task. Analyzing data, such as price, cost of constant capital and variable capital will be simplified when dealing with a population from 5,000 to 7,000. The LTV economist I.I. Rubin noted how such analysis is possible on a large scale in a socialist society, using the LTV logic of the equalization of labor and things (products of labor). (Rubin 98-99) Yet Rubin was dealing with a large society, for our purposes, a more intricate analysis might be accomplished. The important concept is that a rough understanding of the physical and cultural needs of a society be realized and quantified in terms of costs of abstract labor time. (Rubin 99) During the transition stage of development, when local markets begin to take hold, this natural data can easily be collected along with the rates of profit for each industry. By taking the price of a commodity and subtracting the cost of constant capital and variable capital, surplus value can easily be determined. (Marx 321) By using the surplus value as the numerator and variable capital as the denominator, the rate of exploitation can also be calculated. (Marx 324) Thus a town government can easily manipulate the economy to adjust the rates of profit. One approach government could take would be to legislate the wage rate for unskilled labor. Indeed this is
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an approach mentioned by Keynes for more centrally controlled economies. (Keynes 267) However, such laws would doubtless be unpopular among businessmen, be they farmers or manufacturers. Therefore whatever rate is decided to be the optimal rate for minimum exploitation could be achieved in another, less confrontational way. Government as Employer of Last Resort In the final stage of development, when the company has transferred all the remaining company employees over to the authority of the town government, the town government also assumes the role of employer of last resort. In short anyone who is unemployed and cannot find a job in the private sector will be employed by the government. However in order to not undermine the private sector the government should offer a lower wage rate than the private sector does. Computing Value of Labor How much less? That should be determined by how the economy is performing, though the government wage rate should be less subject to variation than the wage rate in the private sector. Thus, the government will set its wage relatively low. That means that the private economy can attract workers to its employment by offering any wage it chooses, above the government wage. If the private economy attempts to pay workers less than the government rate, wage laborers can simply quit their job and move to take a government job. The fear of workers leaving to the government sector of employment will keep the rate of exploitation low. Let us use some arbitrary figures to give an example. Let's say that in a certain job the value of necessary labor per day equals 2kg of rice, and the value of surplus labor in a day equals 2kg of rice. Thus the total value of labor equals 4kg of rice. For such a job, if the government sets its wage rate at 3kg of rice per day, for example, then the daily wage rate offered in the private sector might range from 3kg – 4kg. The government's set wage rate (effectively a wage floor) will not be the only government pressure against a high rate of exploitation. The fact that the government insures that everyone is employed leads in
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and of itself to a high degree of bargaining power for labor, which in turn pushes the wage rate up. This, however, also acts as a counter balance, to maintain a small rate of profit for the private sector. If the rate of exploitation were abolished all together, then employers could no longer afford their employees. The laborers would lose their jobs in the private economy and be forced to take a government job at a lower wage rate. The government safety net also acts as a psychological crutch for workers engaged in wage negotiations with employers in the private sector. Another benefit to both employer and employee is the free housing built by the company and now under the control of the government. By reducing the amount of necessary labor required to sustain a worker, free housing as mentioned earlier, puts the worker's wages more easily within the reach of prospective employers. On the other hand it also provides a check against exploitation, for if a worker is thrown out of work, he need not be homeless for lack of funds to pay a mortgage. Thus without fear of homelessness or starvation, laborers are in a better position to bargain with employers. This increased bargaining power will act as the first big deterrent to the foundations of an exploitative society. The second great safeguard against exploitation is the scale and structure of production. Each employer is himself a laborer. Although capitalistic tendencies are present in the mode of production, they are by no means the only tendencies. Let us look at the examples of farmers and blacksmiths, examining first the former. Sample Laborers: Farmer and Blacksmith In addition to a house, each farmer, be they a man or a woman is provided with land, oxen, and some of the other means of production. However, the farmer is not granted thousands of acres of land. Instead, the farmer is given only a small parcel of land, perhaps no more than 5- 10 acres. Furthermore this land is not for resale. Thus, the farmer has no means to lose or gain more land. The number of workers he can employ is thus limited. In addition, because the land must support the farmer's family, it would be impossible with such a small amount of land for him to become an absentee landlord. In fact it may just be the case that the majority of the labor which goes into developing the land comes from the
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farmer's own person. He may hire ten or so employees during the planting or harvest seasons, but throughout most of the year the farmer may only be able to afford no more than two or three labors. Some farmers may never see the need to hire any laborers. The situation of the blacksmith is much the same. He does not control a factory, but rather only a small shop. The constant capital required to start a blacksmith shop is not inconceivably out of the reach of any laborer wishing to start up his own blacksmith shop and work for himself, especially if the degree of exploitation suffered by a laborer is low. A person might apprentice or work as a laborer for a blacksmith for a few years and then decide that he wants to work for himself, in which case the means of production are not out of his reach, especially depending on the policy of the government, and public funds might be allocated to assist him in his endeavors to start a small business. The small scale of production process works to keep the means of production within reach of a laborer who wishes to possess them. The comparative ease of becoming an independent entrepreneur who owns his own means of production thus provides a further safeguard against excessive exploitation. It might be prudent here to discus the debate and policy of land rights of ownership. Land Tenure and Rights of Ownership Land that is privately held is one of the pillars of capitalist exploitation. As Marx points out, unless there is private ownership of land, capitalism is unlikely to thrive (Marx 327). On the other hand, many socialists and communists, witnessing the exploitive effects of private land ownership, argue for the public ownership of all land. In fact, many go even further, advocating the public ownership of all means of production and distribution. This does indeed seem a logical response to problems resulting from the exploitative use of private property. Thus it is today that these two concepts for land ownership dominate our planet’s thinking. However, it would be a fallacy to argue that these are the only two models of land ownership that exist in our world today, or have existed in history. Systems of land ownership are as varied as cultures. In the context of designing a development model, our question is not what systems have existed but more specifically: Why they have existed, and what were their

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results? Although Marx holds the position that all value comes from labor, he admits that land is the basis of human existence. (Marx 638) Land productivity, apart from nature’s original endowment, is linked to improvements made upon that land. Smith believes, as does Ricardo, that a nation’s economic development is crippled if such improvements are not carried out. Smith even goes so far as to claim that the English yeomanry “contributed more to the present grandeur of England, than all their (the English governments) boasted regulations of commerce taken together.”(Smith 492) The yeomen were small holders of property, who owned their land either outright or more often, held a lifetime lease on it. Smith’s contention is that private ownership of property is the key to insuring that improvements were made on the land. The fact that the farmers owned their own land gave them the incentive make improvements to it, because they were not hired to farm the land, but rather reaped the benefits directly from their labor and investment. However, this was not necessarily the case with larger landowners who depended on the labor of others to work their land. Stepping in line with the socialists, Smith notes that “It seldom happens, however that a great proprietor is a great improver.”(Smith 487) However, parting from the socialists he also notes that “A person who can acquire no property can have no other interest but to eat as much, and to labor as little as possible.”(Smith 488-89) Smith notes that inspiration and personal gain can no longer be counted on to produce results, instead he cites the example of many estates of Imperial Russia and the slave plantations of the Indies, and the barbarous treatment of the farmers of those regions to entice them to work. (Smith 488) Smith therefore supports the idea of many small farmers, each owning their own land, and thus thrifty and able to make small precise changes that a large holder of land would not bother to make. Marx points out, however, that in a capitalist world capital has a tendency to accumulate. Small holders of capital become devoured by big holders of capital, and the same is witnessed with capital in the form of land. In a footnote to his chapter on the Impact of the Agricultural Revolution Marx states that: “The philanthropic English economists… and liberal manufactures…ask English landed proprietors, as God asked Cain about Able, ‘Where are our thousands of freeholders gone?’ But where do you come
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from, then? From the destruction of those freeholders. Why don’t you go further, and ask where the independent weavers, spinners and handicraftsmen have gone to?” (Marx 913) Mandel confirms this line of thought stating that, “…capital is subject to the fundamental tendency towards concentration.” (Mandel 192) Supporting this line of thinking, the modern day environmental economist Marty Strange in his book Family Farming: A New Economic Vision, comments on farming in the United States postulating the future of farming in the United States: “Most likely, it will result in the establishment of a wealthy landowning elite whose ancestors were farmers, but who no longer need to bother themselves with farming for a living.” (Strange 7) From a different perspective, Lenin also supports this concept in his debate with Chayanov as to the fate of the small farmer in a capitalist society. Lenin’s hypothesis, that small farms would be gobbled up by big farms due to the tendency of capital to accumulate, was tested by two sociologists from North Carolina State University, Michael D. Schulman and Barbara A. Newman using data from the North Carolina Piedmont. Schulman and Newman found that: “There were 926,000 black farm operators [representing small farm operators] in 1920 (approximately 14% of all farm operators.) The number dropped to 87,000 in 1969, to 33,250 in 1982, and to 22,954 in 1987.” Thus they conclude that the small farmers tended to be driven out of business by larger farm enterprises. In fact by the present day, 2006, the black farmer in the U.S. is practically extinct. (RS 264-283) Furthermore, while not making a prediction per say, Marx specifically notes the tendency for capitalist farmers to make decisions which lead to maximizing short term profits at the expense of long term sustainability. (Marx 638) If we accept Smith and Marx’s presuppositions about the effects of private land tenure (for in their writings there seems to be no apparent contradiction), then it follows that small land holders are most likely to make the best improvements (thus increasing production) because they have the most incentive to do so (this point is discussed further in the African setting of Rwanda and Uganda). Yet, small holders have a tendency to become large holders, and as their holdings expand, they focus less on improving their existing property and more on acquiring new

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property that will give them a better return to their capital. This, in turn, leads to the long-term degradation of the land. Also, as Mandel notes, due to this effect of competition between capitalist landholders, these capitalists have a high incentive to make a much profit as possible in each cycle, because in the future times might be harder. (Mandel 133-134) This idea is very much in keeping with LTV logic because it reinforces the idea that such capitalist landowners are likely to make decisions which sacrifice long term health of land in order to preserve the safety of capital. Marx states: “All progress in capitalist agriculture is a progress in the art, not only of robbing the worker, but of robbing the soil; all progress in increasing the fertility of the soil for a given time is a progress towards ruining the more long lasting sources of that fertility. The more a country proceeds from large-scale industry as the background of its development, as in the case of the United States, the more rapid is this process of destruction.” (Marx 638) Yet if a village has a given allowance of land, such destructive decisions will be damaging to the long term health of the village, because if the long term fertility of the land is destroyed so are the people and the culture which resides on it. Here, it’s worth noting that at least some environmentalists have come to the conclusion that neither capitalism nor communism is good for the long-term care of a society’s soil. For example, in his preface to the second edition of Soil and Civilization, Edward Hymas states, “Both state ownership and capitalist ownership of farming land are economically and socially disastrous. The soundest system of tenure is working-farmer ownership without the right of alienation for gain… If, in the capitalist and mixed economies, moneylenders' interest on loans made to farmers is paid for out of soil fertility (see Chapter X), equally in the state-capitalist or so-called communist economies, it is loss of soil fertility which pays for the primal idiocy of arrogant authority. (Hyams vii) Our dilemma is now is to determine: What is the best land policy to preserve the sustainability of the village while at the same time reducing exploitation and in addition, increasing the productivity of the land? The answer is of course: There is no perfect answer. In the long term, centrally managed land undermines people’s incentive to make improvements upon the land. To be simply a paid worker,
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without outright ownership of the land, does not seem to provide a strong enough incentive to develop the land for its maximum production at the level of its maximum benefit. The workers’ wages may be generous, and their living and working conditions may be good. Nevertheless, incentive to develop the land to its best potential is undermined if the land is owned by a government or a landlord, and not owned by the farmer directly. A comparison of the neighboring farmlands of Rwanda and Uganda serves to underline the importance of having workers own their own farms. In the hills of Rwanda, one sees an endless system of wellterraced small farms, growing a wide variety of crops on their small plots. In spite of the genocide which killed a sixth of the country’s population, Rwanda remains the most densely populated country in Africa. Such a density in population could not be maintained if each farm was not well terraced, as the soil would instantly wash away. In contrast, just across the border in Uganda, one sees the same hills, but these are owned by large landowners. The hills are bare and treeless, and their fertile soil steadily washing away, the population of these hills, sparse. In one hundred years from now if land ownership remains the same, where will these two countries be in terms of wealth and the health of their citizens? It’s clear that how land is owned and managed is no small matter to the health of a nation. Despite the genocide and the two wars which followed, the people of Rwanda have continued to maintain and farm their land productively. Smith would argue that this is due to the fact that those who work the farms own their own land. Rwanda is surrounded by countries that have followed the large-farm concentrated ownership style of agriculture. Yet, following political disturbances these farms are not reengaged in production. That is because their absentee landlords do not think it is worth their investment. Meanwhile those living on or nearby the land are out of work and hungry for food. Such a land ownership pattern is not morally defensible following the logic of Prabhupada, Schumacher and the Gandhians. For our village, the land ownership will be a cross between the French Metayors, the English yeoman, and the socialist state farm. As with the socialists, land will be ultimately owned by the state. But,
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once the village is set up, land will be distributed to the individual farmer, as was customary with the French Metayors and the Latin Coloni Partiarii, (Smith 498). Thus, the farmers will possess their means of production. The farmer is granted his land for life, and he can pass it on to his heirs as was the custom with yeoman. Yet, although the product of the land belongs to the yeoman, a portion of it is given to the state each season, as a means of in-kind taxes, as was the case with the Metayors. However the land is given for ownership and production, but only ownership as it applies to production, the land is not resalable. The farmer can neither sell his land nor expand his farm, as is the case with the socialist farmer. Historian John Hope Franklin describes a similar system in the late Middle Ages in Africa, in which a local government official called “the master of the ground” allocated land to farmers, and under which unused land could not be sold, but reverted to the government for redistribution. (Franklin 26) However, under this system, the farmer cannot loose his land either, as long as he is developing it productively. Furthermore, he has great incentive to improve the land, since the profits from the improvements go directly to him and he can be confident that those profits will not be siphoned off by a landlord or by the state. The inkind tax is a percentage of his produce. The fact that taxes are in-kind frees him from dependence on the market in order to raise currency to pay his tax. Thus, he can’t be wiped out by a fruitful growing season, which could devalue the price of his crops so much that he can’t pay the tax. Prabhupada mentions such a tax structure of the ancient Indian system of government: “Everything was based on land distribution, and tax was paid to the government. Not by assessment. . . Whatever your land production is, you give the government onefourth. That's all. If you have produced 1,000 mounds grain, you give the government 250 mounds. If you have produced 100, then you give 25. So there is no question of harassment." (CSP Montreal, July 16, 1968) At death, the farmer can pass the land on to an heir, or if there is none, it will return to the state, just as under the ancient African system described by Franklin. Thus the farmer’s incentive is to make long term improvements to his land, carefully balancing those
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improvements to stay within the limits of the long-term health of the land. He knows that if he is greedy in the short term and destroys his land, he will personally suffer for it in the long term, and so will his heirs. No Unemployment In free market capitalism there is, in effect, a reserve army of the unemployed. This is the body of men kept idle, in order to provide employees to any capitalist wishing employees. It serves the important function of providing pressure on laborers to accept a low wage, for fear of being replaced, by someone else, even more desperate. (Marx 781) It was the belief of Gandhi and Prabhupada that such a calculated acceptance of a high level of unemployment is immoral, because the psychological as well as physical effects of unemployment are so degrading to one's mind, body, and soul. The government in the village will see that no such army of desperate souls exists. Indeed, Prabhupada mentions that one of the most important duties of the government is to see that everyone is employed. (CSP London, September 2, 1973) However, this being said, there is still a need for seasonal labor in an agricultural village, particularly around the harvest and planting seasons. As mentioned earlier, the government of the village will pay its laborers at a lower rate than the private sector. Thus, during seasons of high agricultural need, some of these workers may easily be enticed to help the farm families with their work for better pay than they receive in the government sector. Government Uses Gains from External Trade to Subsidize Goods and Services for Villagers External trade can have a strong influence on how labor is allocated in a society. In capitalist societies, it can, in fact, be the chief determining factor. In the villages external trade will also doubtless play a role. It will be the duty of the government to see that that external trade does not take the leading role in the everyday production of the village. Due to the grain-based system of exchange, the ability of external merchants to compete inside the village market will be greatly hampered. However the ability of village producers to sell their commodities abroad would be greatly
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enhanced due to the nature of the form of production. In local African markets, the commodity produced from a village set up as a company town might cost far less than similar commodities produced by competitors from other locations where the cost of labor must include the cost of housing, and agricultural produce is farmed by hand. Furthermore, due to the efficient layout of the village, other necessities will be less costly. For example, it is likely that food will be cheaper due to more efficient production and distribution, thus further reducing the cost of wages needed to maintain a laborer. Thus there is a great danger that once this fact is realized, the village would orient its production for external trade rather than local consumption. If this shift occurs there is a danger of the usual problems of capitalism arising – increasing concentration of capital and increased exploitation of labor. A blacksmith may pay his laborer something approaching the actual value of his labor if the commodity is sold inside the town, but once the commodity is sold outside the village, a new value is set – one that is higher and enables the capitalist to employ at a higher rate of exploitation in order to make a higher profit. With that the wheels of capital are set in motion. This is the reverse problem than what was address earlier in the trade section of the book, yet the mechanism is the same. The difference is that the village’s primary roll has a danger of turning from the exploited to the exploiter. This is a situation not morally supported by any of our philosophers. Nevertheless as mentioned above, some level of external trade is necessary. Thus, the challenge arises: How can the benefits of trade and indeed this further realization of value of some of the products sold occur without the negative effects of capital manifesting themselves? This is again the role of the town government. Having been given control of the village store, the government holds a monopoly on all external trade. As excess production piles up without a market for it inside of the town, the government will purchase this excess production from the individual firms and then sell the purchased commodities in whatever market it sees fit, attempting to get the highest possible price for it. At this point the government has realized the extra surplus value that
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could not be realized within the local village market. The government now takes the role of a firm which is trading in a larger market with different standards of productivity. The relatively high prices gained outside are the result from the greater market for the more efficient production methods inside the village. However as mentioned earlier this gain is achieved at the expense of external markets. Yet as trade must exist, it is a gain that is excusable by Gandhi and Prabhupada, provided that this super-profit is not what the village’s industry is centered around. If the trade is a trade in incidental surplus production, then it is acceptable. The question now remains: What should the town government do with its newly realized surplus value? If it were to return the value directly to the producers of the commodities, then there is the danger that the producers will become greedy and focus their production towards external markets. Instead the government should return the newly realized surplus value indirectly in the form of subsidized necessities, not able to be locally produced. In short, the Village Trading Company can purchase commodities like metals, tools for manufacturing, medications, and so forth, and then sell them to the villagers for payment in grain, at a cost below the price of purchase, and within the means of villagers. Thus the quality of life for the villagers is raised, but without the ill effects of undermining the locally oriented mode of production and the social structure. Had the government not acted as intermediary, the focus of the economy would soon have been diverted, and many of the trade advantages of the mode of production inside the village would have disintegrated. Furthermore, the village would run the risk of being faced with imports from more productive societies. With the government acting as intermediary, the trade benefits will remain season after season. A further benefit of trade is that firms always find a ready market for commodities they are unable to sell in the local market. If there is a temporary glut of production there is no need to fire workers because a firm faces losses. Rather, workers are thus able to remain employed producing new value and increasing the village's total wealth. Firms will have a chance to shift production gradually so as to facilitate a smoother transition of production to commodities more desired by the local village.

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The domestic market, not the external market, sets the price of commodities produced. However, the price is likely to remain at the upper end of what the domestic market dictates, as all commodities produced will be able to find a buyer, either a private buyer or the state trading company. As mentioned earlier the currency used as a medium of trade will be a grain. Excess Production and the Speed of Capital The purchase of excess production by the government also provides other stimulus, which will lead to faster economic growth throughout the village. First, it allows a greater portion of labor power expended in the village to be realized in value, thus allowing firms to reinvest that portion of capital in the production of still further surplus value. The process is further facilitated by the reduction of the time of turnover of capital by the reduction of time which capital spends in the form of a commodity. If a potter produces a jar and the item is never sold, then the capital invested in the jar is lost forever. As soon as the jar is sold, the capital can be reinvested, and has a chance to create more value. The shorter the period of time between the production and sale of the jar, the faster the potter can reinvest that capital, the faster the capital can be reinvested, and the faster the capital can be used to create further value. By purchasing surplus production, the government speeds up this process. Since the economy is a closed one, one might assume that the village would be none the better for this process. However, because the government is not selling the commodity inside the village, but rather in another market where a further value can be realized, the village not only is able to grow faster but also able to realize a further value on its commodities sold abroad. One might hypothesize that since a firm could cut the commodity stage of capital down to zero by immediately selling to the government, that they would always do so. However, since the government is offering a lower price for the commodity than can be gained on the village market, it means that by selling in the local village market, they would be able to realize more of the value of the commodity than by selling to the government. Thus selling to the government would always be the last resort.

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Currency Analysis According to LTV theory, labor is the source of all value. When trade occurs within a society, all that is in fact occurring is the exchange of equivalent amounts of labor. In the theoretical sense, when cloth is traded for iron, for example, an amount of cloth containing a given amount of socially necessary abstract labor is traded for an amount of iron containing an equal amount of socially necessary abstract labor. Although in the real world other factors come into trade such as supply and demand, and differing rates of productivity within industries and dishonesty, for our analysis of currency, we shall focus on the purified essence of the exchange that of the trade of equivalent amounts of labor. Unfortunately, like gravity and many other forces in the universe, abstract labor is not itself observable. One can only infer its existence by its effects and through the process of logical analysis. Certainly Neo-classicists might argue that trade does not consist of the exchange of equivalent amounts of abstract labor but rather it is based on individual preferences with no common factor between the commodities traded. However, this view is not the perspective of this book and will not be entertained here, except to note that such trades do not take place in a vacuum but do in fact take place within a greater social context. Instead, our focus here is on the role of currency in the economy of our village development model. Although, strictly speaking, currency is not necessary for trade, it does make trade easier. In the world prior to the 20th century, currency had its foundation in some commodity; however, today currency has no such foundation. The fact that currency formerly had its foundation in a commodity is a testament to the existence of abstract labor, and the ease with which any commodity can become the medium from which all other commodities value can be judged and compared. Although money can exist without such a tangible foundation and not stand in contradiction to LTV theory, (Moseley 14-17) it does so at a cost. The cost is stability, because having currency based on a commodity has a dampening effect, to act as a brake against extreme speculation and fluctuations in the economy. When money is not tied to a commodity, its value can rise or fall dramatically due to speculation, causing capital flight and quickly ruining economies with its fluctuation, as it has done in much of the global South during the
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latter half of the 20th century. Thus, for our purposes, the currency of our village will follow the strict LTV model and will be founded in a commodity. One might object that a commodity-based currency can have its own instability. Yet Marx would note that this instability is of a very different nature, and does not affect the function of the commoditybased money at all. “No matter how the value of gold varies, different quantities of gold always remain in the same value-relation to each other. If the value of gold fell by 1,000 per cent 12 ounces of gold would continue to have twelve times the value of one ounce of gold, and when we are dealing with prices we are only concerned with the relation between different quantities of gold… Thus gold always renders the same service as a fixed measure of price, however much its value may vary. Moreover, a change in the value of gold does not prevent it from fulfilling its function as measure of value. The change affects all commodities simultaneously, and therefore, other things being equal, leaves the mutual relations between their values unaltered, although those values are now all expressed in higher or lower gold-prices than before.” (Marx 192-193) Even its most damaging effects are only short term and taken altogether cannot inflict the scale of economic damage that we have seen with noncommodity-based currency. For example if rice is the commodity from which the value of money is derived, and by the virtue of a poor or bountiful harvest, the labor embodied in it is either doubled or halved, its function is not altered. For instance, it may be that in a typical year it takes 1 unit of abstract labor to produce 1 kg of rice, and that 1 kg of rice can be traded for 1 meter of cloth, which also takes 1 unit of abstract labor to produce. However, if there happens to be a poor harvest this year, it may mean that 1 unit of abstract labor will produce only .5 kg of rice, and that .5 kg of rice can be traded for 1 meter of cloth, which still requires the same 1 unit of abstract labor to produce as it did last year. In both the good year and the year of poor harvest, 1 unit of abstract labor is traded for 1 unit of abstract labor. The same principal holds for a bountiful harvest. In a year with a bumper crop of rice perhaps 2 kg of rice is traded for 1 meter of cloth. Yet still the same principal is applied: 1 unit of abstract labor is traded for 1 unit of abstract labor.

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rice cloth

bumper bumper averag average drought drought crop crop e year year year year year year kg/mete kg/met kg/mete 1 unit rs 1 unit ers 1 unit rs abstract produce abstract produc abstrac produce labor d labor ed t labor d 1 0.5 2 1 1 1 1 1 1 1 1 1

The quantities of rice traded for one meter of cloth may change from year to year, but the labor exchange remains the same throughout: 1 unit of abstract labor is traded for 1 unit of abstract labor. The question might be raised: Can two or more commodities be used simultaneously as the base of currency? The difficulty here is that not all commodities fluctuate at the same rates, as we can see, even in our simple example above. In fact it might be safe to say that it is almost never the case that any two commodities fluctuate in quantities of abstract labor at the same rate for a prolonged period of time. Thus, for the smoothest functioning commodity-based currency, it is best that the currency should be based on only one commodity. In spite of the fact that systems have existed that incorporate a duel commodity based system of currency (for example a gold and silver standard), such systems are significantly hampered by problems arising from the different rates of fluctuation in value of the respective commodities as Marx himself notes. (Marx 190-191) Each commodity embodies different properties, which make it more or less suitable to be the basis of money in a village, based on the village’s specific needs and goals. For many of the pastoral peoples across the world, cows, goats or horses, were the basis for exchange, because of their mobility, as well as their cultural and nutritional importance. In many of the trading nations of Eurasia, metals were used as currency because of their permanence and because they are easily dividable into smaller quantities. Many other
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commodities were chosen for their specific qualities. Some scholars suggest that Sparta used iron as its currency because the wealth was less likely to leave the city-state than gold or silver was, owing to its weight. (Hodkinson ch.5) Yet of special interest to us are the societies that used grain as their money. In examining this category, we will not include the ancient Roman state, which used grain taxes as a source of military power, for Rome had a metal based currency, even though taxes in grain were paid as an in kind-tax. Rather, we look to many of the small villages of Eurasia. Gold did not suit these provincial regions as a currency. Indeed it is claimed that when Adam Smith was born, there were parts of Scotland that did not accept gold coinage as the medium of local exchange. In the United States today, the national currency has become so successful that it is difficult for some to imagine alternative systems of exchange existing within its borders. Yet there are countries today where only the regional currency is accepted and the national currency has no purchasing power. In fact in the United States such systems did exist, most notably in the form of the company towns. (Schifflett 179) For the purposes of our village the qualities of grain seem best to suit the needs of currency. It is easily dividable, it is a necessary commodity in terms of use value, and it contains a use and exchange value that arguably is not as subject to the whims of preference as many other commodities. Thus men will labor for it in the hardest of times for its use value. It is a locally producible commodity, and it is producible in a large enough quantity as to provide enough quantity to meet the needs of currency. Also, in a village where a sizable portion of the population is engaged in its production, the amount of socially necessary abstract labor embodied in its average quantity is easily discernable. Having laid out these favorable attributes, it appears that grain has three qualities that seem to be negative attributes. First, it is bulky. Second, it does not have the long storage life of metals but spoils in just a few years. And third, it does not have uniform quality. Although these negative qualities may present difficulties in using it as a basis of currency, they would not cause, and historically have not caused, grain to fail as a medium for exchange. However, to mitigate these
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effects to the best possible extent we will examine how a system might be created to deal with these seemingly negative attributes of grain. Granaries as Banks With regard to the lack of strictly uniform quality, since grain being neither an element nor a molecule, a unit of grain produced in one time and location is not of precisely the same atomic composition or quality when compared to another unit of grain produced in another year and another locality. Depending on the producer, the local, and the weather, the quality of grain between farmers will vary. Nevertheless, even admitting to some degree of variation, all rice grown inside a village system will be subject to roughly the same weather conditions, similar variation of soil qualities, and similar means of production. Thus, the difference between one batch of grain and another will not be as dramatic as say grain production across the Untied States. In our village model, when a farmer harvests his grain, he will take it to a government-run granary. The granary will analyze its quality and quantity and, after taking a portion for taxes, will present the farmer with notes equal to the quantity of good grain he has deposited. What is good grain will depend on how it is defined by the individual government depending on time, place and circumstance. In this way exchange notes, based on the amount of grain held in the state granaries, will be introduced into the private economy. When citizens of the village require whatever grain is the basis of the town economy, let us say for instance rice, for caloric consumption or seeding, all they need do is present the notes at the granary and the corresponding amount of grain will be presented. If rice is the currency of trade, then it will not be sold in the economy; for it would be pointless to trade one kilo of rice for one kilo of rice (unless of course the rice came from outside the village with the hope of cheating the economy). Thus, such private trading of rice would be forbidden. In case of famine, the government would use cash reserves from its foreign trade to purchase the necessary rice to make up for the village’s lack.

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In a way, the granaries will work as a bank. However, the actual operations will be quite different. The notes themselves are not meant to be the medium of exchange beyond the fact that they represent the medium of exchange. The granaries do not act like a firm. They do not seek to make profit. Rather, they simply act as the storage units for the medium of exchange. They have no ability to lend grain in hopes of gaining a return or interest. The grain inside the granaries does not belong to the government, since the government did not purchase the grain in exchange for a note (even though to some, it may appear that way). The grain is merely stored there with anticipation of being withdrawn at a later date. For example, when a citizen deposits cash in a bank in the United States, the bank clerk does not take that cash and issue a bank credit (even though to an outside observer it may appear that way). Apart from a specific contract on the deposit, the Bank has no claim on the cash put in its care. Similarly, in the village granary there is no claim on the grain deposited. However, unlike a bank, no interest is given and none is collected. The government has no ability to lend or sell the private grain inside the granary. Such a centralized government practice, of, as Marx would phrase it M-M’ (money thrown into circulation and returning as money plus a profit, or in short usury) would be inconsistent with the social philosophy of not Prabhupada Schumacher and Gandhi. If capital is to beget capital let it do so productively by creating more value. To create an idle class that lives by M-M’ has its roots in exploitation. Money does not magically create more money, it takes value from the labor of the disadvantaged and returns it to those who have the advantage. Such a policy is in moral conflict with the abovementioned philosophers. Furthermore to have such a practice of MM’ placed in the hands of the government is in further conflict with the flat tax structure advocated by Prabhupada. If the government is collecting a tax already based on production it is not defensible, that they should use this fund, given in trust by the citizenry, to further enrich themselves at the further expense of the public. Next as grain does not last forever, when a citizen makes a deposit of grain he is given a notes equal to the amount of grain he has deposited. Upon return of the notes he is given the same quantity of grain as the notes he has returned; however, not the same grain. Old
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grain will first be dispensed out, so that it does not rot and lose its value inside the granary. Currency Conclusion A system as described above could be used to address the problematic attributes of grain. The first problem, that of bulkiness, is instantly solved by issuing notes representing grain. For reasons relating to the village’s policy of limiting external foreign trade, it is important that the notes be native only to the village and redeemable only in the village. The second problem, the short life span of grain, can be remedied by the rotating grain system. Certainly, however such a system is not perfect and some grain may still spoil too soon or be eaten by vermin, regardless of the safeguards put in place by the grain bank. In such circumstances, it will be the duty of the government to replace the lost stocks by using some of the taxes that they levied in that and previous seasons. And with regard to the third question, that of quality, the grain banks can assure the seller of commodities that the notes he attains from the sale of his wares, when redeemed will provide him with grain of a roughly comparable quality. However, for the grain farmer, grain that does not meet the bank’s quality standard will not be convertible into currency. He may be able to use part of it for seed or for animal feed, but it is true that part of his labors may be lost. On the other hand this represents the realities of production. Yet if due to weather conditions, a portion of all farmers’ grain is not suitable for entry into the government grain banks then the farmer will feel no ill effects from the loss of grain. For the commodity that is the basis for trade is not simply grain but grain of a certain quality standard. If half of all of the farmers’ grain is lost then the result is a loss of grain not a loss of value, the abstract labor required to produce 100,000 kg of grain and 50,000 kg of grain remains the same, in our village the exchange value is the same, the loss therefore is confined to the use value. The result is in essence the same as if the grain hadn’t been produced at all. Finally we shall address the problem of the effects fluctuation of grain prices on the existing holders of money at the time of fluctuation. This increase or decrease in purchasing power is an unfortunate
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reality not only of commodity-based money but also of noncommodity based money. It is an inescapable fact that derives its origin from the constant increases and decreases in productivity in all spheres of commodity production. However, some solace can be found in the grain-based currency. As long as only local grain is used for currency, and the unit of currency and the redeemable unit of grain remain constant, the currency will never collapse in its purchasing power altogether -- as has been seen with the hyperinflations of many non-commodity-based moneys. As mentioned above, when farmers go to the government granary to deposit their grain, a portion is taken by the government for taxes. This tax is the major source of government revenue; however, it is not the only source. The role of government is to ensure that the mission of the village is carried out to its fullest extent, i.e., that the highest quality of life sustainably affordable by the villagers should be maintained. Government should not exist for its own sake, and thus taxes should not be crippling to the economy. Rather taxes should be for the purpose of strengthening the economy, society and the villagers’ standard of living. Taxes should be payable in-kind, so as to be within the means of all villagers to pay. In some instances, if it is in the desires of a firm or individual equivalent taxes could conceivably be paid in the form of grain; however, the tax in-kind should always be allowed. In-Kind Taxes In-kind taxes have a strong historical precedent and as mentioned above they are philosophically advocated by Prabhupada. They are not only affordable to villagers, but they also act to tie the government closely to the prosperity of village. In this way they motivate the government to devise means to promote the general welfare of the citizens, and act as a check to keep government power from getting out of control. The tax rate itself should be based on the strength of the private economy. The stronger the private economy, i.e. the more commodities sold within the village and the more villagers employed by the private economy, the lower the tax rate. The goal of taxes is not the enrichment of individuals working in the field of governance. Taxes will always need to be present to provide for

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those employed by the government, but beyond this taxes should be based on the strength of the economy. The Roll of the Company in the Finished Town Let us briefly return to the roll of the corporation which founded the town as it is now very limited. It merely oversees the economic performance of the town and works with the government provided logistical, and if needed financial support, to ensure that the goals of the town are being met and the economy working properly. The ability of the company to buy and sell commodities, including labor is no longer an option. The town is now running itself, and is a selfsufficient entity, no longer reliant upon foreign dollars or expertise. Eventually the connection between the town and the corporation will be completely phased out. The Challenge: Determining a Unit of Abstract Labor As witnessed by Marx, all commodities have a common characteristic, that they are all the products of human labor. (Marx 128) The exchange value of a commodity can be directly understood as the quantity of socially necessary abstract labor embodied in it. (Marx 128-129) Determining exactly what an actual unit of abstract labor is for a given society, is another question altogether. Due to the complex nature of nations and their economies, scholars faced with the task of defining, first, what an abstract unit of labor is in a country such as the United States of America, for example, and then, determining what quantity of abstract labor is embodied in each commodity on the market would find themselves faced with a task that is nearly impossible, if not actually impossible. The perplexing problem of translating the discoveries of Labor Theory of Value into everyday prices in a fair and just way has led some to the conclusion that it is a problem whose solution cannot be found, and, hence, that the Labor Theory of Value must remain nothing more than a theoretical framework for understanding value. One of the chief problems making this an overwhelming task has to do with deciphering the difference of value between the varying degrees of skilled labor, or, to give an example, defining the difference between an hour of labor by a doctor, a lawyer, a car
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mechanic, a plumber, a factory worker and so on. Each one changes minutely from the other, and the value of labor is not the same even for workers within the same industry. For example, a new factory hand is paid less than an old one. Thus, the task of saying in a fair and just manner he produces this much abstract labor per hour and the other one produces this amount, remains overwhelmingly impossible. Some might argue that the market perfectly determines such values. Such a claim, however, is of course erroneous, as it does so unjustly with varying degrees of exploitation, depending on time, place and circumstance. This is also coupled with the fact that the price of a commodity in a free market does not necessarily accurately represent the value contained in the commodity. Price and value are not the same thing. Of course, a system of defining price by the quantity of abstract labor embodied in a commodity, could be easily devised if all labor were equal as, Rubin is quick to point out. (Rubin 98-99) In such a system, an hour of abstract labor would be equal to an hour of real labor. An hour of labor by a man who puts soup in cans, would be equal to an hour of labor by an airplane technician. Yet again the problem remains that such a system may be unfair. Furthermore, if it could be implemented, it would lead to an allocation of a society's resources in a manner inconsistent with the actual desires of society. The great scale and complexity of the economic structure of capitalist society has thus led to no useable fair and just measure of prices of commodities, across industries. Thus a degree of exploitation would always exist in private economies. Inadequacies of the Communal Solution This realization has prompted many revolutionaries who accept the Labor Theory of Value to advocate communal ownership of all means of production and distribution, as well employment from a central fund. The logic presented is that under such a system there would be no real exploitation, since all wealth would be communal. But critics have argued that such a system of communal ownership would destroy incentive and so on. This book does not hold nor refute this view, as the author has never seen any real data supporting such a belief, but rejects communal ownership and communal employment on other grounds.
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First of all, exploitation could still occur under such a communal system. It would merely change its form from direct exploitation of the laborer by the capitalist, to an indirect form of exploitation consisting of stealing from the general fund for personal benefit by persons with access to that fund. Second, and more importantly, although such a system may theoretically prevent exploitation, the witnessable effects of exploitation are still visible, unless each member of society actually has access and control over this central fund, it is in reality still a degree of exploitation, surplus value has been concentrated and not given to the individual who produced it. Furthermore it is not the nature of modern people to live in such a society, with such remote distances between labor performed and the rewards for that labor. Hence, massive retraining and reconditioning of people would be necessary to convince them of the social benefits of such a system. Historically such systems of retraining have been accompanied by a high mortality rate of the reeducated. Small Village Model Simplifies Task of Determining Value of Abstract Labor So let us turn our attention from a communal solution and look once again at our village to examine the seemingly impossible problem of determining the value of labor. In fact the greatest obstacle to determination of such a value of labor for a country like the United States of America, for example, does not present itself in our village, that is: size. The economy of the village is indeed a small one, thus the number of different fields of labor limited. Furthermore the number of people in the role of laborer is further reduced. Already in many African villages, most villagers know how much unskilled labor is employed for by local firms and, the firms can tell you in that village how much profit they make. In our village a body of trained experts looking at tables of data of rates of surplus value during a test period of time could determine the amount of abstract labor embodied in the production of different commodities by few differing degrees of skilled labor. Having analyzed such data, these experts could use their findings to determine prices to be paid by the government for excess commodities, as well as keep track of existing prices in the private market as a safeguard against price gouging. Such findings would of course not be absolute, and certainly not static, as the values of
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society are constantly changing. Reassessment would need to take place regularly. Nevertheless, the limited size of the village economy would make such studies possible. It is important to note that such a system would not be perfect. The results of the findings would not be exact; however, they would not need to be. Even with approximate values, exploitation in the market place would occur at a much lower rate. The fact that the economy is not a socialized one, such as Rubin’s system of discovering abstract labor advocates, (Rubin 154-171) may lead one to question what the point in trying to determine the amount of abstract labor present in different commodities. However such studies would be useful in two ways. First producers would be able to compare market prices to actual values, and upon such assessments be able to make decisions about production. If price can be altered by supply and demand such studies would greatly benefit a self-sufficient village. For instance a producer would be able to note that x commodity has a price of 2kg of grain yet there is only 1.5kg of value in it whereas y commodity has a price of 1kg of grain and there is 1.5kg of value in it, therefore the market is under producing commodity x and the thus if possible producer might shift his production to the under produced commodity. The second application of this study would be in the fields of production which the market does not support very thoroughly, but which are valued by society. Abstract Value for Arts, Education and Public Administration If left to its own devices, the market would easily be able to sort out the value society places on some commodities, in particular those commodities produced in large quantities, by many producers, and sold often. Grains, legumes, pottery, common hand tools, clothing and cloth are all examples of such products. However, there are some commodities and services for which the market would have a harder time supporting. The arts are one such field of endeavor. Given up strictly to the whims of the market, many of the great artists of history would have never produced their valuable art. The market is woefully inadequate at producing many of the heroes of history: If left to market forces how many Olympians would a nation produce? If relying on the market, would Van Gogh have continued
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painting? The same is true with many of the great universities of our time: If forced to rely solely on market forces, what would the state of education be today? Furthermore how many potentially great artists never painted a painting, or great athletes never developed their bodies, or great scholars never developed their brains -- due to the poor support generated by the market? Can anyone argue that society would not have benefited by their potential? In many instances, benefits like these are inadequately supported by the free market, but they are still valued by and necessary to society. Yet the workers who produce these values are forced to rely upon philanthropy and luck to maintain themselves. Although these spheres of interest are inadequately supported by the free market, they are still the product of labor. A great musician may not study music in the free market, because he lacks the means to support himself until he is skilled enough to garner support for his craft. Yet what musical treasures has society lost in the mean time? Discovering the amount of abstract value embodied in commodities in the spheres of production not supported by the market, yet valued by society, is a further benefit of such an inquiry. To rely on the market in this instance Rubin notes would be relying on the process of exchange to determine the value, yet this is not accurate. (Rubin 154) Artistic products not purchased by the private market still have value and could be purchased by the government, thus supporting the arts and thereby increasing the standard of living of the villagers. Such a system of supporting the arts would of course not be perfect. Each artist is different and the actual amount of abstract labor embodied in each piece of art would be far more difficult to determine. Yet due to the limited size of society, rough estimates could be determined. The same is true for teachers and actors. Certainly, as education is a priority of any forward-thinking society, the rate of earnings of its workers should not be left to the whims of the market. Teachers must be supported thorough the common fund of the government. Assessing the amount of abstract labor embodied in a given period of teaching will provide a fairer, even though not perfect, payment for the value to society of the labor of a teacher. Let us now return to grain and examine how it works in determining price in relation to quantities of abstract labor. For the sake of this
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argument we shall examine only the effects of this relation on the varying degrees of skilled labor, as it is clear above that the government has already determined the value of unskilled labor and set its wage below that, thus creating a pool of workers which is slightly underpaid. The mechanism for determining the government purchase of skilled labor is much the same as for unskilled labor, with one major difference. The difference here is the rate of support for the specific skill relative to the rate of support it might receive from private economy. For example those arts enjoying a higher rate of support by the private economy would garner a lower stipend by the government for the value of abstract labor embodied in their commodities. For example, consider two laborers, an actor and a teacher. Both theater and education are necessities of society, but let us say that the private economy is willing to provide a higher rate of support for actors than for teachers. In such a case, the actor who cannot be employed by the private sector would receive a lower rate of government support that would the teacher. The highest rate of support would be for policemen and government officials, as private support is not only unlikely but also undesired and quite possibly immoral for such positions. Thus, assuming the production of rice to be the basis for valuing unskilled labor and having already determined from the start the quantity of abstract labor embodied in say a kilo of rice, our team of experts could compute values in relation to all forms of skilled labor. Computing the means of production and labor time in relation to the growing season, let us assume it takes unskilled labor 2 hrs to produce a kilo of rice. Let us further assume that one unit of abstract labor is equal to one hour of unskilled labor; thus, one hour of abstract labor is equal to 500g or .5kg of rice. If the experts had determined that society valued an hour of artist's labor at 1.2 units of abstract labor, a teacher's hour at 1.3 units and a policeman’s hour at 1.4 units, the corresponding value of the labor in rice would be 600g, 650g and 700g per hour of labor, respectively. However, assuming that the team of experts determined that the market would support a ten percent reduction in the value of an artist, a five percent reduction in a teacher, and the government would pay the full value of labor for a policeman, the figures would be adjusted accordingly, to 540g,
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617.5g and 700g of rice per hour respectively. This reduction could take the form of a yearly reduction or a reduction in the hourly rate, in other words, the government could either pay the artist a wage of 540g per hour of labor time, or the government could subsidies each piece of work the artist sells for 540g per hour, thus the artist would sell each work of art for 60g per hour invested plus the cost of the constant capital. For our examination we will assume the former example. To determine the wage paid to the individual producers not supported by the market, the government would tally up all hours spent in the production process and multiply it by the wage rate and award a wage accordingly. If an artist were commissioned to produce a commodity for a private individual, of course the government would not pay the artist for that labor time. The artist would be able to negotiate the price of commodity with the private purchaser of labor. His low wage would act as an incentive to accept private jobs which would offer a higher commission. In the realm of theater, a firm could hire actors to perform plays and have some basis for deciding their wages. Some actors would be more highly prized and thus their wage would be driven up. As society began to value a field of production more or less, the units of abstract labor embodied in an hour of labor would increase or decrease accordingly. Rate-of-Profit Considerations Due to the closed nature of the economy of the village and the differing goals, a peculiar situation may occur with regard to the rate of profit. If not a flat-out majority, then close to a majority of people will be self-employed. Work and profit will not be the goals of life. As Mandel notes with the case of shopkeepers often times the fact that they own their own businesses is more important to them than their rate of profit. (Mandel 196) A citizen working in a field of employment with a higher concentration of capital than others may choose to stay in that field, despite the fact that his earnings are less than those of a citizen engaged in a field of production with a lower concentration of capital. The philosophy is that put forth by Schumacher in Small is Beautiful: Machines should be used to make a man’s work easier, not to make men unemployed in order to increase productivity. (Schumacher 148) An equalizing of the rates of profit between
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industries assumes that capital will flow to industries with the highest rates of profit, thus causing competition, which will in turn lower those rates of profit through competition, thus equalizing the rates of profit across industries. However, if the individuals who employ capital do not have as the primary goal of their life the maximizing of profit, but rather personal or social fulfillment by their occupation, the anticipated result of the equalizing of the rates of profit across industries may not occur. Thus, industries with higher concentrations of constant capital in relation to variable capital would have a lower rate of profit. Two of the goals of the government are to see that people are productively and happily engaged in work, and that the needs of the town are being met. Thus, if the rate of profit decreased dramatically in one field of necessary production, say blacksmithing, due to the high percentage of constant capital, so much that production no longer becomes feasible, in such instances it might be prudent to assist the firm rather than to let them fail. Instead of letting a firm fail, it may be preferable to have the government subsidize production and restore the rate of profit, by paying off some of the constant capital, thus in a sense devaluing it and restoring a favorable balance in the ratio of constant capital to variable capital. This money would come from taxes and would be, in a sense a transfer of value from more profitable industries to less profitable ones. I would argue this transfer mechanism is a more favorable one than the one which occurs naturally, as it does not go through the painful process of firms failing and the social distress that results from that. This being said the process should not be applied without consideration for individual time place and circumstance, or to allow firms to operate beyond the means of the village as a whole to support naturally, rather it should be used as a safety net to assure a smooth running economy. A word should be said about actual pricing per commodity. Although in the interest of fairness a society may strive to see that each producer of a commodity would receive the actual value embodied in that commodity, the world does not actually operate in this manner. A society as a whole does create a certain quantity of value; however, it is in the market place that the decisions of how that value is to be distributed between industries and producers are made. In a freely competitive capitalist system the rates of profit would be
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equalized due to the forces of competition. A transfer of profits would be witnessed from industries with a low percentage of constant capital to industries with a higher level of constant capital, until all industries experience the same level of profit. In reality of course, no such system has ever existed, nor is it likely to. Despite this fact there is still a tendency in this direction. In the initial stages of development where the majority of constant capital is supplied to firms in every sphere of production, this effect will be minimal and the equal rates of profit witnessed will be due primarily to the fact that due to artificially created circumstances, the industries with a seemingly great deal of constant capital actually due to its devaluation have similar ratios of constant capital to variable capital. However, over time this relationship will begin to change, and variable capital intensive industries will create more actual value per industry than constant capital intensive industries. Despite this fact, the rates of profit may still be similar due to the effects of competition and the transfers that take place as a result. Although value is created by labor, competition can have a serious effect on price. Due to the closed nature of the village economy, this competition will be constrained in some of the industries. However it is still important to acknowledge this trend. The amount of abstract labor contained in a commodity is the sole determinant of its value; however, abstract labor combined with competition determines its price. Summary The purpose of this section has been to explain to the reader how using the model of the company town a society can be guided towards a more just economic life style. By the reworking of economic relations in the final stage of development, citizens can increase their standard of living and reduce the rate of exploitation.

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Chapter 13 Ox Power!
The purpose of this section is to present the pros and con’s surrounding a shift to ox power inside of the village. This section will focus primarily on identifying the difficulties that have surrounded previous attempts to introduce animal traction. The section will conclude by presenting possible solutions to address the main problems that have been experienced in other projects across SubSaharan Africa. Why Ox Power During the 20th century, across Sub-Saharan Africa (SSA) – in both Anglophone and Francophone countries – African nations (and before them their colonial lords) have attempted to introduce draft animal power (DAP) into agricultural production, to replace traditional hand-powered agriculture. Their reasons for doing so were based on economic and social considerations. The outcome of this continentwide attempt to raise worker productivity, while preserving existing land ownership rights and local cultures, has had very mixed results. It is not possible, at this point, to term the attempt either a success or a failure. The task envisioned was a huge one, to completely alter the production methods of the majority of SSA’s citizens, by changing the way farming was done. Although many countries did not adopt programs to introduce animal draft power until after their independence, in some nations the history of DAP is over 70 years old. Today there are some 20 million draft animals in SSA, the vast majority of them oxen. (Starkey 94) In 2003, the UN FAO estimated that these animals farm roughly 25% of the farmland in SSA. At this point, only 10% is farmed by tractors, and the remaining 65% is still farmed by hand. (Bishop-Sambrook *) This represents the ongoing move towards DAP, in the early 1980’s only 10% of the farm land of SSA was tilled by oxen. (Copland 26) The FAO further estimates that the percentage of land farmed by DAP is likely to increase over the next 30 years, while the percentage of land farmed by tractor is likely to suffer a substantial decrease. The land farmed with hand tools is also likely to decrease though only moderately so. (Bishop-Sambrook *)

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The principal reason for the increase in DAP – over both the traditional methods of hand agriculture, and the modern methods of tractor agriculture – is economic, though social and political factors also play a role. For one thing, the structural adjustment programs of the 1990’s eliminated subsidies to tractor-based production (BishopSambrook*). Also, land reform laws in countries such as Zimbabwe and South Africa have led to the breaking up of large estates into small farms. Both of these factors have contributed to making production by tractors uneconomical. Furthermore, over the coming years, it’s doubtless that sharply rising costs of petroleum will prove to be an increasingly important factor undermining the economic feasibility of tractor-powered agriculture in many regions. In a study done at Michigan State University comparing horse farming to tractor farming in the state of Michigan, Chet Kendall, a doctoral student, presents calculations demonstrating that if the price of diesel rises to $2 a gallon for a period of 40, years it would be more economical for a farmer owning a farm of 364 acres or less to farm with horses than with a tractor. Kendall’s computations also demonstrate that over the long term, even for the comparatively low cost of $1 per gallon, Michigan farms of 174 acres or less would maintain a higher rate of profit by farming with horses. (SFJ Fall, Vol. 29 No. 4, p 37) And, in fact, in Michigan, the calculations in this study seem to be backed by a movement towards commercial farming with horses. During a study published in 1998, conducted over a decade by Drs. John Shelle and Ken Gallagher, it appears that even though the overall number of horses in Michigan declined by 19%, at the same time the number of commercial small farmers farming with horses increased by 54%. (SFJ Fall, vol. 29 No. 4 p 35) The size of a farm, the cost of labor, and the cost of petroleum are all major factors that must be taken into account when deciding what form of power to use in farming, what to speak of the cost of capital. Kendall’s study accounted for a very wide variation in the cost of labor from $3 per hour to $12 per hour, and a variation in the cost of diesel from $.50 a gallon to $2 a gallon. As his study was a study of small and medium sized farms, he did not take into account farms of over 400 acres. For the initial investment in horses, he estimated a cost of $8000 as compared with the $15,000 he placed for a tractor.

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Kendall also included the annual upkeep for both. (SFJ Fall, vol. 29 No. 4 p 37) Kendall’s study occurred in Michigan, yet for our purposes the message is the same: As the price of petroleum increases and small farmers all over the world will find it more economical to shift to DAP. For reasons discussed in the previous chapter one of the design objectives for our village model will be to set up many small farmers who not only control their land, but also directly control their means of production. This could mean small plots of land between 5 and 10 acres. Across SSA very few farms that small are farmed with tractors. (Copland 20) Indeed the farms of that size which are farmed with tractors have been done so only with the aid of government- and NGO-subsidized tractor-for-hire companies. Even if such subsidies no longer became necessary, the case would still remain that the farmer is not in direct control of his means of production. Also due to its complete reliance on outside factors for equipment, replacement parts, fuel, and even to a large extent, maintenance expertise, tractor farming is not in line with the trade policy laid out earlier in this book. Thus, in terms of farming practices, the policy of our model village should be to follow the trend that much of SSA is adopting, and to adopt a DAP infrastructure. What kind of DAP is a matter of some debate, depending on location, however for the vast majority of SSA the best animal for economic, medical and infrastructure reasons is the ox. Indeed, today the vast majority of draft animals in SSA are oxen. (Starkey 94) This book will thus focus its study on ox power. Yet for all of the potential benefits of ox power, such as increased worker productivity, linkages, increased crop yield, positive balance of trade, ownership over the means of production, and so on, many of attempts to introduce ox power have failed, or have been less successful than promised. So it is important to examine the reasons behind these failures. Fortunately, many of these failures and shortcomings have been documented thoroughly and the analysis of them has been remarkably uniform. Unfortunately, many of the proposed solutions are difficult to enact in the current social, economic and political context of SSA. Reasons for Failure in the Introduction of Ox Powered Agriculture
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Although the introduction of ox power has been faced with challenges due to various biological and health considerations, research shows that these things have not been a critical problem in development projects that fail to work. One reason is that many African societies have spent centuries, if not millennia, adapting cattle to the specific regions which they are being used. Only when cattle are moved from one region to another do region-specific parasites affect cattle to the point that their death rates cause the failure of a DAP project. In that case the cause for failure is that the cattle have not been acclimated to local pests and parasites. In a related example, it is often the case that when the tribes of northern Uganda and Kenya raid each other’s cattle, the cattle must be slaughtered within a week of capture, or else they begin to die of regional parasites for which they have no natural immunity. Addressing a related point, Dr. Drew Conroy, author of Oxen a Teamsters Guide and professor of Dairy Science at the Thompson School of Applied Sciences, University of New Hampshire, notes that “Oxen must be readily available and affordable. If they must be trucked in from long distances without ample replacements, their use in the long term may be unsuccessful.” (Conroy 315) Apart from instances such as these, the death of cattle by disease has not proved a significant deterrent for farmers to invest in training their animals, to do work. This being said, the sudden death of a trained animal represents a substantial loss of an investment for a farmer. Thus, cultures with access to pesticides and animal vaccines will use them rather than let their cattle die, for a sick or dead team is the same as a broken tractor during the planting season. Although biological factors have not ruined ox power projects, three other factors have been identified as the leading causes of project failures. They are poor training, insufficient funding and the way in which the oxen are applied. Training of Oxen It is a marvel that even when very poorly trained, oxen are able to plow; however they do so inefficiently. The best trained oxen in the world are able to plow, weed and harvest with the aid of only one teamster, just as is the case with a horse. Yet these cases are rare,
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especially in some regions, and require special training from birth to teach the oxen to accept orders from the teamster standing or riding behind them. More common, and perhaps the way the vast majority of oxen are trained throughout the world, is with the teamster walking along side them. This means that in most farm applications, two teamsters are normally required, one to direct the oxen and one to operate the equipment. If properly trained and using the right equipment, two oxen can plow about an acre of land a day. Yet the type of ox and the type of soil can also have a big effect. For example Ethiopia farmers using a smaller plow and smaller oxen can plow only about a half an acre a day. (OOA 277) However, despite this loss of productivity due to the varying factors listed above, the productivity of the ox, and thus the farmer, falls substantially when the oxen are poorly trained. Poor training is a frustration to the ox and to the teamster. In an ideal setting, all that is needed to control oxen are voice commands. Yet it is not uncommon in some development projects to see a group grown men with sticks, clustered around a team of oxen, shouting and beating the oxen just to get them to plow. I frequently witnessed such conditions in northern Uganda. Situations like this are frustrating not only to the ox but also to the teamsters. They are due solely to the poor manner in which the ox is trained. However, in an attempt to introduce oxen into a region, this poor training can lead to frustration that will kill a project. Drew Conroy comments on such situations, noting: “If the animals are beaten so severely that they refuse to work, or they lie down in the furrow, will others be encouraged to try this new technology?” (Conroy 317) In most instances, poor training is just the result of the lack of the teamster’s knowledge on how to properly train and use an ox. Yet in other instances the problem is the result of institutions. For instance in some African cultures, Conroy notes, oxen cannot be trained at a young age, for cultural reasons. Instead they must be trained as adults. (Conroy 317) In a conversation with Dick Roosenberg, the project director of Tillers International, in the summer of 2004, Roosenberg discussed a project where he worked in West Africa, training full-grown oxen. The goal of the government was to train thousands of full-grown oxen to be sent later to farmers all over the region. It seems that full-grown oxen were selected because they
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would be ready to work as soon as they were trained, rather then having to wait two or three years until they grew large enough to work. Also, the farmers for whom the animals were destined for owned no cattle, and the animals had to be bought from the herdsmen of the northern, more arid, regions. (Roosenberg July 2004) On book the project seemed well planned and promising. The results, however, were far less successful than anticipated. The older cattle were more difficult to train: nearly 40% of them failed to be trained. Many of those who were trained forgot their training when given to a new farmer. (Roosenberg July 2004) Conroy notes this phenomenon as well: “Training mature oxen to plow in one day can be an amazing feat that allows an ‘expert’ to visit more villages in a given amount of time… But the next time they are put into a yoke their attitudes may be altogether different.” (Conroy 317) A further problem Roosenberg noted with the project was that once the cattle died, the farmer would have to buy new oxen, as he had never learned how to train an ox himself. (Roosenberg July 2004) The system that Roosenberg described seems unnecessarily complicated, yet it came from good intentions and the desire to solve many of the problems of ox training projects. Ox training is no easy task, as it is as much about people as it is oxen. It takes patience and time on the part of the teamster. The potential productivity increases in SSA are huge, yet the time commitment must also be huge. Animals have to be looked after and cared for as well as trained. Conroy notes that the oxen’s “comfort must be a top priority.” (Conroy 316) Yet all of this takes time and patience, two things not all people have at their disposal. Furthermore, there is the logistical problem of how to train the farmers, to train and use their oxen. Although this process does not take years, or even months, farmers are spread out over great distances. Conroy notes attempts to solve this problem of training through the traditional educational approaches of agricultural extension agencies, farmer-to-farmer training, vocational schools, agricultural shows, local competitions, research institutions, and the media. (Conroy 319-323) In reality, none of these options are ideal for large-scale application. The agricultural extension is most easily put in place by a centralized state, yet it requires a great deal of
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overhead. Farmer-to-farmer training is likely to yield the best results, though it requires time, money and experts, and the farmer is unlikely to be able to learn about many of the other applications of the ox, a problem discussed later in the book. Vocational schools provide the best training in the use of equipment. However, if the farmer is not located near the school, his chances of bringing the technology to his village is reduced because he does not have a local support network for equipment or oxen. (Conroy 319-323) Roosenberg’s project attempted to solve all of these problems by approaching ox power like automobile production, manufacturing them in a central location by trained professionals and then shipping them across the country. Yet, as the cost for such a project was huge and the success rate low, it was destined to failure in the long run. If oxen were properly trained and the teamsters trained in the correct use of them, the result is a potentially massive increase in productivity and prosperity, as has shown to be the case with the Maasai of northern Tanzania. Conroy notes in Maasai the area, “The animals respond to verbal and visual cues, and the teamsters know what to expect from their animals. The result is beautifully plowed fields, no fussing or fighting with the animals and farmers that are delighted with their work… Compared to the option of hiring tractors for plowing, oxen are more affordable and represent a better long term investment.” (Conroy 381) Yet, even when oxen are properly trained, ox power faces two other great challenges. Funding is the next great challenge. Funding for Oxen and Equipment Apart from the high cost of supporting experts to train farmers, a cost often not taken on by the farmer, after he is trained in the use of an ox the farmer is still confronted with many expenses. For a farm where ox power is already adopted the cost to replace a team is relatively high; however, it is possible, because the farmer already produces more and has the resources available for such a replacement. However, for a farm where the primary source of power is manual labor to suddenly switch to ox power is quite another matter. In Ethiopia, where ox cultivation is the norm and has been ever since the time when Christianity was introduced, there is still a huge economic difference between families who have oxen and those
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who don’t. (OOA 277) To plow by hand is economically impossible in such circumstances, just as ox farming is not possible in the current context of large agribusiness farms the United States. Thus, those families without oxen have to hire oxen. The cost ranges between 50% and 75% of the harvest, and in such a context it is not possible for families without oxen to acquire them. (OOA 277) The problem is the same in regions of SSA where oxen are being introduced. Some farmers are too poor to front the capital required for even a team of oxen. However, even if they could afford the oxen, they assuredly cannot afford the expensive modern DAP equipment required to fully utilize their potential. After independence, the government of Tanzania decided that they were going to promote ox power as a primary source of farm power. (Starkey3 254) Apart from animal training projects, the government focused on agricultural equipment as well. “In 1970 the Ubungo Farm Implements factory (UFI) went into commercial production of ox plows, hoes and plow parts. Other manufacturers were also encouraged to step up production and distribution of their produce. By late 1984, the Mbeya Farm Implements factory (Zana Za Kilimo or ZZK) started with an installed capacity of 10,000 mouldboard plows per year.” (Starkey3 254) The idea was to eventually create enough plows and equipment to meet most of the needs of Tanzania. Farm equipment is expensive and heavy, and shipping costs are accordingly high. Thus to buy imported farm equipment would have been a tremendous burden on the Tanzanian state, which was already under investment isolation from many western countries for its neutrality in the cold war. Furthermore, as Tanzanian farmers were extremely poor, the government would have to subsidize the cost of the equipment. Yet despite all of this planning and effort to manufacture Tanzania’s own DAP equipment, the program failed. In the end, Starkey cites the Structural Adjustment Programs (SAP) imposed on Tanzania in the mid 80’s as the action that dashed Tanzania’s chances of successfully adopting ox power. (Starkey3 254) When SAP was imposed, the number of plows sold dropped from 80,435 the previous year to 2,027. (Starkey3 119) Yet even before that, the factory was operating below profitability, due to the subsidies, and furthermore, a great deal of the farm equipment produced never reached the farmers it was intended for.
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Also partially due to the lack of profitability, the factories never produced the number of plows they had capacity for, often missing targets by 10,000, and in one instance 20,000 plows, to the point that by the year 1995 UFI only produced 1,899 plows. (Starkey3 254) The factories were not profitable, and thus their output was not what it could have been. Then under SAP, when government subsidies were removed, it caused the factories to become even less profitable because there were very few farmers who could afford the plows. For farmers trained with a mouldboard plow and modern equipment, not being able to afford the equipment, meant that animal traction would have to be abandoned and farmers would have revert back to hand cultivation. Starkey notes, “A recent survey (Bagachwa et al, 1995) indicates that one of the major constraints to animal traction is the expense required to purchase a plow (about Tsh 30,000). Many farmers cannot possibly afford this level of investment. Prices have gone up because, among other constraints, subsidies have been removed.” (Starkey3 255) The mouldboard plow is the product of the factory, and small African farmers with a lower level of worker productivity simply cannot afford such an investment. However, it should be noted that using modern equipment is not the only way to farm with oxen. When projects are introduced, it has been the natural tendency to attempt the most modern equipment, with the idea being that it must be the best. However, Conroy cautions against such a strategy of development, arguing that modern equipment is unnecessary. (Conroy 315) Indeed this seems to be the case in Ethiopia. To this day farmers still farm with the ancient maresha plow, which breaks the soil but does not turn it as the moldboard plow does. The result is that it takes more time to plow a field. Yet despite the many attempts to introduce the mouldboard plow into Ethiopia, farmers continue to use their ancient plow, because the mouldboard plow ... is heavier and more costly to buy and repair.” (OOA 276) Conroy notes that the Maasai also use only primitive equipment, (Conroy 318-319) yet their farms have been more successful at incorporating DAP than many of their modern non-Maasai neighbors. Once farmers are already established with trained oxen and equipment, it seems that the two great hurdles of introducing DAP have been overcome, yet
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historically a project is still in danger of failing if the animals are not applied properly. Task Application for Oxen The problem it seems is that farmers prepare the ground with their oxen, perhaps even plant with their oxen, and in some instances even harvest with their oxen; yet weeding, which is a traditional female job in many cultures, is still done by hand. The drop in productivity level for this phase of agricultural work has proven disastrous for the overall application of ox power in many communities. In some communities where polygamy is still widespread, the effect of this hand weeding is not felt as hard. However, in many communities a great financial burden arises. It is possible with oxen for a farmer to plant more land than by hand due to the increase in speed and power provided by the oxen. Yet this translates into the necessity of more land to weed. Furthermore, every farmer requires labor for weeding at the same time, driving up the price of labor during the weeding period. In some cases, this has led to the situation where the monetary gains experienced from increased yields from ox power are completely lost. E.B. Wella and A.C.W. Roeleveld conducted a study on the application of ox-powered weeders, in several communities in Tanzania. The study showed that ox powered weeders not only reduced labor costs but also increased yields by nearly 2-3 times what could be accomplished by hand weeding. (Starkey2 66) However, it comes as no surprise, based on the discussion above, that this weeder came at a cost, roughly $1000, far beyond the pocketbook of the average Tanzanian small farmer. Yet in addition to the monetary constraint, which it could be argued that the increased yields would eventually cover, come two other problems. First, the weeders were only effective on land that was planted using oxen, otherwise they would wipe out the crops. Second, the increased yields led to increased labor costs when the time came to harvest the crops. (Starkey2 67) Furthermore, a weeder is a piece of machinery. If it breaks, it must be repaired; there must therefore be someone nearby to fix it. The problems caused by hand weeding however have led to deal of frustration with ox power. Wella and Roeleveld also found that many farmers had never heard of a mechanical
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weeder and did not think that it was even possible to use such a machine. (Starkey2 66) Farmers who are already farming with oxen are unlikely to go back to hand farming simply because of the problems presented by a low level of productivity during the hand weeding stage of production. Yet, in communities that have not yet made the switch, Conroy notes that: “Many farmers prefer hand labor to risking their few resources on a technology they do not understand. If acreage is increased because animals are employed for plowing and planting, a severe labor bottleneck may occur during weeding. Increasing acreage is of little value if neither additional labor nor the employment of animals is added for weeding and harvesting.” (Conroy 315) Cow Culture The problems cited here are not just indicative of the necessity for the use of oxen in weeding; that is merely a symptom. The problem is in the approach to the introduction of oxen into the farming culture. Oxen represent not only a change in production but also a change in culture and thinking. Just as the automobile is accompanied with a change in the society that it is introduced into, the same it true with oxen. The culture must change to a cow culture. Just as drive-in’s, drive-thru’s, fast food and strip malls are the direct result of the cultural change brought about by the automobile, a society must similarly adjust its thinking and actions around draft animal power. The Amish, when deciding on housing, take into consideration where they will graze their horses. (SFJ Fall, vol. 29 No. 4, p 37) Similarly, for the successful introduction of ox power, oxen must be at the center of thought for a village. Their care, their food supply, their equipment, their comfort etc. all of this must be considered. The Maasai have been successful in adopting ox power because they already had such a cow culture; the result was an easier transition to DAP. Care and understanding of the comfort of the animals was already well known to them. Conroy notes: “The Maasai’s story highlights a group of farmers who had their animal traction priorities in order. They focused their efforts on the animals and crops they were growing. They learned how to use oxen by watching other tribes using them. They didn’t need outside assistance and never received
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training from Extension officers or other development organizations. They were not persuaded to purchase fancy implements...” (Conroy 318) In other regions the success of ox power may depend on a similar appreciation for bovines. Conroy concludes his study of the Maasai by saying, “If all farmers using draft animal power could be so motivated, draft animal power would easily spread to new tribes.” (Conroy 319) Other Suggested Solutions Of the challenges listed above, the change in culture may be most difficult to accomplish in some areas. Some cultures forbid women from owning animals, and require them to do all of the farming. In such situations it is difficult to see how animal traction will be able to be introduced without a change in culture. However, there is still hope, as the Maasai were once one such culture. In their case, when presented with the possible benefits of adopting the new technology of ox power, they willingly decided to change part of their culture in order to incorporate the new technology. However, a change in culture is just one aspect to a successful shift to DAP. The challenges that have faced every project attempting to introduce DAP into a region will also face our model village. The solutions to many challenges of introducing ox power can be formulated by studying the major problems of the introduction of DAP in other projects Training of Teamster and Oxen With regard to training, this book advocates the combination between many of the educational techniques used across SSA to establish DAP. The three most successful, though the most costly, strategies are those of the Vocational School, Farmer-to-Farmer Training and the Agricultural Extension. In spite of their initial expense, these should be combined in the initial stage to train farmers. After the training of the farmers the strategies of Agricultural Shows, Local Competitions, Research Institutions, and the Media should be used to maintain the cow culture, further farmers’ expertise in ox handling, and develop better appropriate technology to increase the farmer’s productivity and comfort with his oxen.
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This book advocates the creation of a vocational school to work only with village farmers on a personal training basis, to assist them in ox management skills and the training of their own ox teams. As mentioned in the land policy and education sections above, after the completion of vocational schooling, farmers will be presented with their own land and their first team of oxen. These are oxen they will have trained themselves with the aid of experts from the vocational school. Once the technology catches on, the Vocational School will be phased out and a local branch of the government will take charge of making sure that the cows are being properly cared for and will see to major problems that arise. Furthermore this government body will be in charge of organizing Agricultural Shows or Fairs and Local Ox Competitions between teamsters, rewarding those who best handle their oxen, as well as rewarding the owners of the best teams, giving farmers a monetary incentive to manage and breed their animals well. Taking an example from the Amish and their Horse Progress Day, a similar fair should be held for oxen, where researchers combine with local blacksmiths and present new improvements in equipment, to improve production and ease the workload of farmers. Since oxen are expected to provide the practical engine of the local economy, not only in agriculture, but also in local shipping, trade and construction, the development and subsidizing of a cow culture must be as high a priority for the government as the support for the auto industry is in the United States. Equipment Policy In the beginning stages of village development, it may be necessary to purchase from abroad much of the initial equipment for new farmers. However, very quickly local production should be geared towards producing farm equipment, even if it is initially of a lesser quality. Projects have failed because equipment is too expensive, not available, or not locally repairable. Producing locally in the economic setting of the village reduces greatly these problems, as seen in chapter 2. Furthermore producing locally allows production to be directed at the needs of the local farmers, rather than a factory mold. Starkey notes that this was a major problem in Tanzania where
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farmers were forced to send new plows to a local blacksmith to make them useable in the local setting. (Starkey3 119) Another positive benefit is, as elucidated in the Trade policy section in chapter 2, producing locally makes the equipment accessible to local farmers, producers are also more in tune with the specific needs of the farmers, often producing at the request of a farmer. Finally, the policy of localized production of ox power equipment, such as plows, planters, carts and wagons, will provide the added economic benefit of providing local jobs to fulfill these important linkages to sustain the application of ox power in the local village. Summary Although the policies laid out here do not completely solve all the problems of DAP, they can act to greatly reduce the problems of equipment, training, culture and exploitation. The vision is that each farmer has a farm and a team of local oxen, producing with local equipment for the local market. The farmer was trained locally and is supported by the local government and the local culture. Localization, not centralization, is thus this book’s answer to the problems of introducing DAP.

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Conclusion
To some degree the proposals for village economic development put forth in this book may appear to be of a utopian nature. Yet the model presented here is far different than that of the utopian communities of the 19th century. This model, I would argue, is no more utopian than the Mondragon cooperatives in Northern Spain. The model is rather an attempt to correct many of the failures and inadequacies of capitalist development in Sub-Saharan Africa. This book attempts to identify many of the sticking points in economic development in the modern context and present solutions, just as any economic development model does. Was it utopian thinking to attempt to address the problems of competition in developing communities by instituting tariffs? Only if we define a utopian model as any economic structure that parts from a laissez faire system of production and exchange. Yet such a laissez faire system is itself a utopian dream, and not a functioning economic reality today. Economies are confined by the laws that protect and govern their development. The policy changes put forth in this book are just that, individual economic policy changes put in place to allow the economy to develop in a way that is most beneficial to the citizenry of an African village. This model does not rely on a new type of man inhabiting the African village. Men in our model make decisions based on individual incentive founded in self-interest, as it exists within the confines of law. Labor moves to the private sector from the Company payroll seeking a higher wage. Production is geared toward the local market following a higher price. The transition to the grain based currency in accomplished because of its greater purchasing power. The economic underpinnings of this model do not rely on a selfless citizenry acting for the betterment of the whole to remain logically consistent. Men and women in our village, act as they are perceived to do in any other society, what has changed is a few key aspects of the economic structure they live and work in. In the end the key aspects of life that have changed are; the structure of land, housing and capital ownership, the external trade policy, the government employment policy, the grain based currency and the tax structure.

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The changes in economic structure proposed here may seem radical, and indeed, to a degree, they are, yet compared to the laws governing economic trade and production in most western nations they are few in number, what to speak of countries such as China. The logical progression of incentive based decisions within such a framework results in a producer who possesses his own home, his own means of production, producing for the local economy, and always able to find employment, thus the product of his labor his own to do with as he pleases within the confines of the law. This was the type of free producer envisioned of Schumacher, Gandhi and Prabhupada. This book has used LTV economic reasoning to discover the policy changes necessary to create such a situation of production and life. To this extent this model is utopian in that it seeks to create a better quality of life, with less exploitation. And to this extent any social and economic planner is a utopian, the desire with all such people is to make life better. The goal of this book has been to show that the vision of a better life proposed by Schumacher, Gandhi and Prabhupada, is not just a utopian dream, but in fact, if structured under the development model of the company town and founded in LTV economic reasoning, it could be a reality. This book has presented a logically consistent economic structure under which the social goals of Gandhi, Schumacher and Prabhupada might be realized.
Expllicit Deo Gratias

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