Participatory economics
Encyclopedia
Participatory economics, often abbreviated parecon, is an economic system
proposed primarily by activist and political theorist Michael Albert
and radical economist Robin Hahnel
, among others. It uses participatory decision making
as an economic mechanism
to guide the production, consumption
and allocation of resources
in a given society. Proposed as an alternative to contemporary capitalist
market economies
and also an alternative to centrally planned
socialism
, it is described as "an anarchistic economic vision", and it could be considered a form of socialism as under parecon, the means of production are owned in common
.
The underlying values that parecon seeks to implement are equity
, solidarity, diversity, workers' self-management
and efficiency. (Efficiency here means accomplishing goals without wasting valued assets.) It proposes to attain these ends mainly through the following principles and institutions:
Albert and Hahnel stress that parecon is only meant to address an alternative economic theory and must be accompanied by equally important alternative visions in the fields of politics
, culture
and kinship
. The authors have also discussed elements of anarchism
in the field of politics, polyculturalism
in the field of culture, and feminism
in the field of family and gender relations as being possible foundations for future alternative visions in these other spheres of society. Stephen R. Shalom has begun work on a participatory political vision he calls "par polity
". Both systems together make up the political philosophy of Participism
.
, which Albert and Hahnel argue that by its very vagueness has allowed it to be abused by capitalist ideologues.
Personal decisions of any one worker, such as where to place pictures on their desk, do not require a vote at all, as they affect only one individual.
, it is proposed that each individual do different tasks, which, taken together, bring an average comfort and an average level of empowerment. The main goals are to dissolve economic hierarchy and achieve one class of workers, and to empower all to make contributions to the workplace. Hahnel and Albert argue that without balanced job complexes, those with empowering jobs, such as accounting or management, would be able to formulate plans and ideas, while others, such as janitors, would not develop the capacity to do so, neither would they have the training. Without balanced job complexes, people without empowering jobs would most likely end up just ratifying the proposals of empowered workers, and would have little reason to be at a meeting.
As an example of a balanced job complex, someone who works in a publishing house might have a mix of tasks including editing books (empowering), sweeping and cleaning (dis empowering) and even others like driving a truck to deliver books (somewhere in between). The time scale of when these tasks are performed is variable, one might do several different tasks in a week, or do a task like work on an oil rig for several months, then do more empowering work like astronomy for several months. A rough numeric rating system would be developed that would rate each task performed in the economy according to its estimated degree of empowerment.
, their property
, or their innate intelligence. Therefore, the primary principle of participatory economics is to reward for effort and sacrifice. For example, mining
work — which is dangerous
and uncomfortable — would be more highly paid than office
work for the same amount of time, thus allowing the miner to work fewer hours for the same pay, and the burden of highly dangerous and strenuous jobs to be shared among the populace.
Additionally, participatory economics could provide a certain leeway for exemptions from the compensation for effort principle. People with disabilities
who are unable to work, child
ren, the elderly, the infirm and workers who are legitimately in transitional circumstances, can be remunerated according to need. However, every able adult has the obligation to perform some socially useful work as a requirement for receiving reward, albeit in the context of a society providing free health care
, education
, skills training, and the freedom to choose between various democratically structured workplaces with jobs balanced for desirability and empowerment.
The starting point for the income of all workers in participatory economics is an equal share of the social product. From this point, incomes for personal expenditures and consumption rights for public goods can be expected to diverge by small degrees reflecting the choices that individual workers make in striking a balance between work and leisure
time, and reflecting the level of danger and strenuousness of a job as assigned by their immediate peers.
's and producer
s' councils to implement the decision making principle. Many individuals would participate in both types of councils. These would be similar to workers' council
s.
Consumers' councils act as decision-making bodies for consumption planning, and producers' councils - which are culminations of several workers' councils - act as decision-making bodies for production planning.
Geographically, consumers' councils would probably be nested within the same neighborhood
councils, ward councils, city
or regional councils and a country council used for political decision-making through parpolity - parecon's political counterpart. Decisions would be achieved either through consensus decision-making
, majority votes or through other means compatible with the principle. The most appropriate method would be decided on by each council.
Local decisions like the construction
of a playground
might be made in the ward or city consumers' council, probably interacting with both city and countrywide producers' councils through rotating delegates. Countrywide decisions, like the construction of a high-speed mass transportation system, would be discussed by the country consumers' council, possibly interacting with a city producers' council in the city where the materials are produced, or countrywide or international producers' councils.
The producers' councils would probably correspond to workplace councils in each workplace and similar workplaces would group into nested councils on successively larger geographical
and linguistic
scales.
(IFBs) act as management bodies for local consumers' and producers' councils and are the mechanism via which economic allocation is decided upon and ultimately implemented.
Facilitation boards
first announce a set of indicative prices which workers and consumers use, individually and through their councils at each level, when deciding on their production and consumption proposals. Proposals could be done either collectively through a local consumer council, or individually on a computer; or any combination of the two. When the proposals are all in, the IFBs aggregate all the production and consumption proposals for the different categories of goods and services – inputs into all the production processes as well as consumer goods – to see if proposed supply and demand are equal. If they are not equal for every good and service the IFB revises the set of indicative prices and the process is repeated through successive rounds until a consistent set of production and consumption proposals is arrived at.
The facilitation boards then implement these final proposals by setting new prices and organizing production plans. In the event of unforeseen circumstances occurring in between planning procedures, the IFBs would adjust prices or production quotas accordingly within established guidelines.
as unforeseen circumstances changed production quotas. After the participatory planning procedure is completed, prices will get new base values, likely to be changed again by the boards as unforeseen circumstances develop.
These prices would represent the estimated marginal social opportunity cost
for all goods and services. During the planning procedure, not only do the prices reflect proposed supply and demand, but also the social and ecological cost of producing the good. For instance a product that produces pollution in its manufacture, or is especially dangerous for workers to produce, would have its price automatically inflated to discourage excess consumption.
Using new prices estimated by the facilitation boards as a guide, citizens would respond with their personal consumption proposals, and participate in the formulation of collective consumption proposals at the neighborhood, ward, municipal, provincial and national levels. Personal consumption proposals would be a prediction by each citizen of what goods and services they plan to consume the next year. For instance a couple expecting a new baby would request the appropriate goods, and a citizen who enjoys exotic fruit would put in her demand to make sure it is received. Collective consumption proposals would be created by citizens making proposals for a wider geographical area (e.g. a new recreation center at the community level or a new power plant at the provincial level) that are received by a facilitation board.
The facilitation board
would work with the citizen(s) that originated the proposal to work it into a manageable proposition. Around the time of the planning procedure, interested parties within the region affected by the collective consumption proposal would be able to view the collective consumption proposals and vote them up or down. This could be done at large meetings or via computer. At the same time, worker's councils and producers councils would respond with production proposals outlining the outputs they propose to produce and the inputs they believe are required to produce them. Individual workers would indicate their proposed hours of work, and workers will be able to propose upgrades and innovations for their workplace, aided by a facilitation board.
Facilitation boards would then calculate excess proposed supply and demand based on the proposals, adjusting the indicative price for each final good or service according to its impact on society and the environment so that the social opportunity cost is reflected. Using the new indicative prices, consumer and workers' councils would revise and resubmit their proposals, as some goods would be more expensive, and others less expensive. Proposals deemed excessive by other parties would become very expensive, creating a disincentive to pursue them.
Iteration
s would continue according to some predefined method which is likely to converge within an acceptable time delay. For instance, proposals would only be changeable by a minimum percentage for the second round, and a lesser percentage for the third round, and so on, forcing convergence of a feasible plan.
The facilitation boards should function according to a maximum level of radical transparency
and only have very limited powers of mediation, subject to the discretion of the participating councils. The real decisions regarding the formulation and implementation of the plan are to be made in the consumers' and producers' councils.
system which would be non-transferable between consumers, and would be only usable at a store to purchase goods.
Electronic "credits" would be awarded to workers for their work, as a means of saying that this worker benefited society with their work. The more effort and sacrifice, the more credits are awarded. Credits would then be used to buy goods and services. Once used to purchase something, a credit would be deducted from the consumer's total; it "disappears" and does not go into a till or bank, it is simply deducted from the consumer's total. There would be no banks in the capitalist sense. Individuals would have to work more to get more credits. In this way, there would be no flow of money and no way to "make money off of money" as in a capitalist economy. People would be able to borrow credits if approved by an appropriate board, but no interest would be charged.
The non-transferability of parecon credits would make it impossible to bribe or even beg for money. and would thus make monetary theft impossible. People would still be free to barter their individual goods with each other, e.g. exchange a couch for a stereo, but any attempt to create an exchangeable currency would likely be discouraged, as this might lead to attempts to reinstate money and capitalism. Credits might be shareable amongst family members, depending on how the parecon is set up. A lost or stolen "credit" card would not be usable by another person, as presumably there would be means to verify the identity of a citizen at shopping centers.
Albert and Hahnel did not clarify how a currency of this form would be used in international trading with non-parecon countries. If a capitalist country refuses to be paid for their bought goods in this way, it is likely that a parecon nation would use money for international trading, but keep its unique credit currency for internal purposes.
members would do very important economic work running the economy, and thus one might think they would gradually take over a parecon. However, it is easy to block this from happening, as board members could be required never to handle proposals that pertain to their own region. It is impossible to bribe board members, due to parecon's unique currency. Board members also work in a balanced job complex where they do disempowering tasks, and any Facilitation Board
meeting would be transparent to the public.
would continually modify prices as time goes on, finding reasons for production shortfalls, production overruns, changes in demand, environmental disasters, etc. and the facilitation boards
would adjust prices accordingly. One way to do this would be to adjust prices within council guidelines on a monthly basis as events unfold. Hahnel and Albert note that markets themselves hardly adjust prices instantaneously and contend that a participatory economy should be able to do just as well, or better.
has argued that "participatory planning is not central planning". "The procedures are completely different and the incentives are completely different. And one of the important ways in which it is different from central planning is that it is incentive compatible, that is, actors have an incentive to report truthfully rather than an incentive to misrepresent their capabilities or preferences." Hahnel has also written a detailed discussion of parecon's desirability compared to capitalism with respect to incentives to innovate.
Notably, innovation is sometimes the outcome of cumulative creativity, which might not be legitimately attributed to individuals. In capitalism, patent laws, intellectual property rights, industry structures, and barriers to market entry are institutional features that reward individual innovators while limiting the use of new technologies. Hahnel notes that, in contrast, "in a participatory economy all innovations will immediately be made available to all enterprises, so there will never be any loss of static efficiency." This position concurs with the more empirically oriented work of Pat Devine
, with whom Hahnel has worked as a visiting scholar at Manchester University, and whose work has demythologised Austrian and mainstream theories of entrepreneurship while highlighting the potential for participatory approaches.
Albert and Hahnel have voiced detailed critiques of centrally-planned economies in theory and practice. Yet they would argue that central planning's dismal performance hardly lets capitalism off the hook. Hahnel further supposes, "the truth is capitalism aggravates prejudice, is the most inequitable economy ever devised, is grossly inefficient — even if highly energetic — and is incompatible with both economic and political democracy. In the present era of free-market triumphalism it is useful to organize a sober evaluation of capitalism responding to Friedman's claims one by one."
One reason why proponents of parecon would consider the non-specific criticisms outlined above misplaced is that, unlike historical examples of central planning, the parecon proposal advocates the use and adjustment of price information reflecting marginal social opportunity costs and benefits as integral elements of the planning process. Hahnel has argued emphatically against Milton Friedman's a priori
tendency to deny the possibility of alternatives:
and tobacco
, is in the interest of the seller and (at least in the short term) in the interest of the buyer, but others outside the transaction end up bearing costs in the form of social problems and medical treatment.When vehicles using fossil fuel
s, are manufactured, distributed and sold, others outside the transaction end up bearing costs in the form of pollution, and resource depletion. This may be considered under economics as a common pool good. The market price of such vehicles and drugs does not include these additional costs, which are referred to as externalities
. The implications of significant external effects invalidate market efficiency regardless of the economic calculations of market actors because in such cases prices will not accurately reflect opportunity costs.
In contrast to parecon, mainstream economics suggests that the problem of externalities can in large part be addressed by the use of Pigovian tax
es — extra taxes on goods that have externalities. If the taxes are set so that the after-tax cost of the good is equal to the social cost of the good, the direct cost of production plus cost of externalities, then quantities produced will tend toward a socially optimal level, according to economic theory. Hahnel observes, "more and more economists outside the mainstream are challenging this assumption, and a growing number of skeptics now dare to suggest that externalities are prevalent, and often substantial. Or, as E.K. Hunt put it externalities are the rule rather than the exception, and therefore markets often work as if they were guided by a "malevolent invisible foot" that keeps kicking us to produce more of some things, and less of others than is socially efficient."
Albert and Hahnel favour Pigovian taxes as long as a market economy is in place, which sometimes appear as green taxes, over other solutions to environmental problems such as command and control, or the issuance of marketable permits. However, Hahnel, who teaches ecological economics at American University, argues that in a market economy it would be predictable that businesses would try to avoid the "polluter pays principle" by shifting the burden of the costs for their polluting activities to consumers. In terms of incentives he argues this might be considered a positive development because it would penalize consumers for "dirty" consumption. However it also has regressive implications since tax incidence
studies show that ultimately it would be poor people who would bear a great deal of the burden of many pollution taxes. "In other words, many pollution taxes would be highly regressive and therefore aggravate economic injustice."
Therefore, he recommends that pollution taxes be linked to cuts in regressive taxes such as social security taxes. In the end Hahnel argues that Pigovian taxes, along with associated corrective measures advanced by market economists, fall far short of adequately or fairly addressing externalities. He argues such methods are incapable of attaining accurate assessments of social costs:
This concept extends to private property belonging to corporation
s. In the course of the late nineteenth and early twentieth century, a stepwise juridical revolution made corporations into "juridical persons" with the rights of citizens under the concept of corporate personhood.
At the same time, every corporation has its own set of owners who have the right to do as they please with it, because people outside a corporation do not have any right to interfere with its activities while it abides by the law. Although market economists note that all consumers can influence corporations through their own market interactions, or through buying and selling of their goods, services, or even shares
, advocates of parecon are unsatisfied with this as this influence has a limited extension, and organization of collective consumer action is difficult in a market economy. Pareconists believe that the state is unlikely to interfere in the market for the benefit of the public, and advocates interpret economic history as demonstrating that it is more often the other way around, through means of plutocracy
.
Being huge agglomerations of economic power, large corporations tend to interfere with the decision-making of states by lobbying
for legislation and policy that suits their interests or, in many cases, by bribery
, or by financing huge propaganda
campaigns for the success of some political candidate who would support the corporation's interests. An example included the corporate slogan "what is good for General Motors is good for America." In some cases, there have been plans for corporate-backed coups
, such as the Business Plot
. However, Milton Friedman believes that such corporate lobbying is only possible in states that allow for significant state interference within the economy.
Promoters of parecon hold that the pursuit of private profit and power by these kinds of corporations is not in the interest of the majority of citizens.
and a maximum of transparency in all discussions and decision making. This model is designed to eliminate secrecy in economic decision making, and instead encourage friendly cooperation and mutual support. This avoidance of power hierarchies puts parecon in the anarchist
political tradition. Stephen Shalom has produced a political system meant to complement parecon, called Parpolity
Although parecon falls under left-wing political tradition, it is designed to avoid the creation of powerful intellectual elites or the rule of a bureaucracy, which is perceived as the major problem of the economies of the communist state
s of the 20th century. Parecon advocates recognize that monopolization of empowering labor, in addition to private ownership, can be a source of class division. Thus, a three-class view of the economy (capitalists, coordinators, and workers) is stressed, in contrast to the traditional two-class view of Marxism. The coordinator class, emphasized in Parecon, refers to those who have a monopoly on empowering skills and knowledge, and corresponds to the doctors, lawyers, managers, engineers, and other professionals in present economies. Parecon advocates argue that, historically, Marxism ignored the ability of coordinators to become a new ruling class in a post-capitalist society.
The archetypal workplace democracy
model, the Wobbly Shop was pioneered by the Industrial Workers of the World
, in which the self-managing norms of grassroots democracy
were applied.
While many types of production and consumption may become more localised under participatory economics, the model does not exclude economies of scale
.
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Economic system
An economic system is the combination of the various agencies, entities that provide the economic structure that defines the social community. These agencies are joined by lines of trade and exchange along which goods, money etc. are continuously flowing. An example of such a system for a closed...
proposed primarily by activist and political theorist Michael Albert
Michael Albert
Michael Albert is an American activist, economist, speaker, and writer. He is co-editor of ZNet, and co-editor and co-founder of Z Magazine. He also co-founded South End Press and has written numerous books and articles...
and radical economist Robin Hahnel
Robin Hahnel
Robin Hahnel is a Professor of Economics at Portland State University. He is best known for his work on participatory economics with Z Magazine editor Michael Albert. He is currently a visiting professor at Lewis & Clark College....
, among others. It uses participatory decision making
Participation (decision making)
Participation in social science refers to different mechanisms for the public to express opinions - and ideally exert influence - regarding political, economic, management or other social decisions. Participatory decision making can take place along any realm of human social activity, including...
as an economic mechanism
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
to guide the production, consumption
Consumption (economics)
Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt. Generally, consumption is defined in part by comparison to production. But the precise definition can vary because different schools of economists define production quite differently...
and allocation of resources
Factors of production
In economics, factors of production means inputs and finished goods means output. Input determines the quantity of output i.e. output depends upon input. Input is the starting point and output is the end point of production process and such input-output relationship is called a production function...
in a given society. Proposed as an alternative to contemporary capitalist
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
market economies
Market economy
A market economy is an economy in which the prices of goods and services are determined in a free price system. This is often contrasted with a state-directed or planned economy. Market economies can range from hypothetically pure laissez-faire variants to an assortment of real-world mixed...
and also an alternative to centrally planned
Planned economy
A planned economy is an economic system in which decisions regarding production and investment are embodied in a plan formulated by a central authority, usually by a government agency...
socialism
Socialism
Socialism is an economic system characterized by social ownership of the means of production and cooperative management of the economy; or a political philosophy advocating such a system. "Social ownership" may refer to any one of, or a combination of, the following: cooperative enterprises,...
, it is described as "an anarchistic economic vision", and it could be considered a form of socialism as under parecon, the means of production are owned in common
Common ownership
Common ownership is a principle according to which the assets of an enterprise or other organization are held indivisibly rather than in the names of the individual members or by a public institution such as a governmental body. It is therefore in contrast to public ownership...
.
The underlying values that parecon seeks to implement are equity
Equity (economics)
Equity is the concept or idea of fairness in economics, particularly as to taxation or welfare economics. More specifically it may refer to equal life chances regardless of identity, to provide all citizens with a basic minimum of income/goods/services or to increase funds and commitment for...
, solidarity, diversity, workers' self-management
Workers' self-management
Worker self-management is a form of workplace decision-making in which the workers themselves agree on choices instead of an owner or traditional supervisor telling workers what to do, how to do it and where to do it...
and efficiency. (Efficiency here means accomplishing goals without wasting valued assets.) It proposes to attain these ends mainly through the following principles and institutions:
- workers'Workers' councilA workers' council, or revolutionary councils, is the phenomenon where a single place of work or enterprise, such as a factory, school, or farm, is controlled collectively by the workers of that workplace, through the core principle of temporary and instantly revocable delegates.In a system with...
and consumers' councils utilizing self-managerial methods for making decisions, - balanced job complexBalanced job complexA balanced job complex is a way of organizing a workplace or group that is both directly democratic and also creates relative equal empowerment among all people involved....
es, - remunerationRemunerationRemuneration is the total compensation that an employee receives in exchange for the service they perform for their employer. Typically, this consists of monetary rewards, also referred to as wage or salary...
according to effort and sacrifice, and - participatory planning.
Albert and Hahnel stress that parecon is only meant to address an alternative economic theory and must be accompanied by equally important alternative visions in the fields of politics
Politics
Politics is a process by which groups of people make collective decisions. The term is generally applied to the art or science of running governmental or state affairs, including behavior within civil governments, but also applies to institutions, fields, and special interest groups such as the...
, culture
Culture
Culture is a term that has many different inter-related meanings. For example, in 1952, Alfred Kroeber and Clyde Kluckhohn compiled a list of 164 definitions of "culture" in Culture: A Critical Review of Concepts and Definitions...
and kinship
Kinship
Kinship is a relationship between any entities that share a genealogical origin, through either biological, cultural, or historical descent. And descent groups, lineages, etc. are treated in their own subsections....
. The authors have also discussed elements of anarchism
Anarchism
Anarchism is generally defined as the political philosophy which holds the state to be undesirable, unnecessary, and harmful, or alternatively as opposing authority in the conduct of human relations...
in the field of politics, polyculturalism
Polyculturalism
"Polyculturalism" is a term for an assertion that all of the world's cultures are inter-related. It is thus opposed to the concept of multiculturalism, which its supporters argue is divisive. Polyculturalism was the subject of the 2001 book Everybody Was Kung Fu Fighting: Afro-Asian Connections and...
in the field of culture, and feminism
Feminism
Feminism is a collection of movements aimed at defining, establishing, and defending equal political, economic, and social rights and equal opportunities for women. Its concepts overlap with those of women's rights...
in the field of family and gender relations as being possible foundations for future alternative visions in these other spheres of society. Stephen R. Shalom has begun work on a participatory political vision he calls "par polity
Participatory politics
Participatory politics or parpolity is a theoretical political system proposed by Stephen R. Shalom, professor of political science at William Paterson University in New Jersey....
". Both systems together make up the political philosophy of Participism
Participism
Participism is a libertarian socialist political philosophy consisting of two independently created economic and political systems: participatory economics or "parecon" and participatory politics or "parpolity"...
.
Decision-making principle
One of the primary propositions of parecon is that all persons should have a say in each decision proportionate to the degree to which they are affected by it. This decision-making principle is often referred to as self-management. In parecon, it constitutes a replacement for the mainstream economic conception of economic freedomEconomic freedom
Economic freedom is a term used in economic and policy debates. As with freedom generally, there are various definitions, but no universally accepted concept of economic freedom...
, which Albert and Hahnel argue that by its very vagueness has allowed it to be abused by capitalist ideologues.
Democratic Work Life
Workers in a Participatory Economy would make decisions about what to do in the workplace according to the above decision making principle, where workers have say in proportion to how much they are affected by a decision. Workplace decisions might be through majority vote, requiring 50% majority. Sometimes a higher percentage, such as a 2/3 majority, or 80%, or even consensus might be needed. For instance, upgrades to a plant that would require a great deal of time and effort for all workers might need greater than 50% vote, as workers would be affected adversely by the decision. Another example is when a decision might have advantages but involves some risk, such as raising a heavy beam while building a bridge that might endanger some workers, but will make the bridge be built faster. Such a decision would seem to require consensus among the affected workers, giving any one worker veto power due to the danger.Personal decisions of any one worker, such as where to place pictures on their desk, do not require a vote at all, as they affect only one individual.
Balanced job complexes
Some tasks and jobs are more comfortable than others, and some tasks and jobs are perceived as more empowering than others. So, to achieve an equitable division of labourDivision of labour
Division of labour is the specialisation of cooperative labour in specific, circumscribed tasks and likeroles. Historically an increasingly complex division of labour is closely associated with the growth of total output and trade, the rise of capitalism, and of the complexity of industrialisation...
, it is proposed that each individual do different tasks, which, taken together, bring an average comfort and an average level of empowerment. The main goals are to dissolve economic hierarchy and achieve one class of workers, and to empower all to make contributions to the workplace. Hahnel and Albert argue that without balanced job complexes, those with empowering jobs, such as accounting or management, would be able to formulate plans and ideas, while others, such as janitors, would not develop the capacity to do so, neither would they have the training. Without balanced job complexes, people without empowering jobs would most likely end up just ratifying the proposals of empowered workers, and would have little reason to be at a meeting.
As an example of a balanced job complex, someone who works in a publishing house might have a mix of tasks including editing books (empowering), sweeping and cleaning (dis empowering) and even others like driving a truck to deliver books (somewhere in between). The time scale of when these tasks are performed is variable, one might do several different tasks in a week, or do a task like work on an oil rig for several months, then do more empowering work like astronomy for several months. A rough numeric rating system would be developed that would rate each task performed in the economy according to its estimated degree of empowerment.
Compensation for effort and sacrifice
Albert and Hahnel argue that it is inequitable and ineffective to compensate people on the basis of their birth or heredityHeredity
Heredity is the passing of traits to offspring . This is the process by which an offspring cell or organism acquires or becomes predisposed to the characteristics of its parent cell or organism. Through heredity, variations exhibited by individuals can accumulate and cause some species to evolve...
, their property
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...
, or their innate intelligence. Therefore, the primary principle of participatory economics is to reward for effort and sacrifice. For example, mining
Mining
Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...
work — which is dangerous
Safety
Safety is the state of being "safe" , the condition of being protected against physical, social, spiritual, financial, political, emotional, occupational, psychological, educational or other types or consequences of failure, damage, error, accidents, harm or any other event which could be...
and uncomfortable — would be more highly paid than office
Office
An office is generally a room or other area in which people work, but may also denote a position within an organization with specific duties attached to it ; the latter is in fact an earlier usage, office as place originally referring to the location of one's duty. When used as an adjective, the...
work for the same amount of time, thus allowing the miner to work fewer hours for the same pay, and the burden of highly dangerous and strenuous jobs to be shared among the populace.
Additionally, participatory economics could provide a certain leeway for exemptions from the compensation for effort principle. People with disabilities
Disability
A disability may be physical, cognitive, mental, sensory, emotional, developmental or some combination of these.Many people would rather be referred to as a person with a disability instead of handicapped...
who are unable to work, child
Child
Biologically, a child is generally a human between the stages of birth and puberty. Some vernacular definitions of a child include the fetus, as being an unborn child. The legal definition of "child" generally refers to a minor, otherwise known as a person younger than the age of majority...
ren, the elderly, the infirm and workers who are legitimately in transitional circumstances, can be remunerated according to need. However, every able adult has the obligation to perform some socially useful work as a requirement for receiving reward, albeit in the context of a society providing free health care
Health care
Health care is the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans. Health care is delivered by practitioners in medicine, chiropractic, dentistry, nursing, pharmacy, allied health, and other care providers...
, education
Education
Education in its broadest, general sense is the means through which the aims and habits of a group of people lives on from one generation to the next. Generally, it occurs through any experience that has a formative effect on the way one thinks, feels, or acts...
, skills training, and the freedom to choose between various democratically structured workplaces with jobs balanced for desirability and empowerment.
The starting point for the income of all workers in participatory economics is an equal share of the social product. From this point, incomes for personal expenditures and consumption rights for public goods can be expected to diverge by small degrees reflecting the choices that individual workers make in striking a balance between work and leisure
Leisure
Leisure, or free time, is time spent away from business, work, and domestic chores. It is also the periods of time before or after necessary activities such as eating, sleeping and, where it is compulsory, education....
time, and reflecting the level of danger and strenuousness of a job as assigned by their immediate peers.
Consumers' and producers' councils
Albert and Hahnel proposed the creation and organization of consumerConsumer
Consumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...
's and producer
Production, costs, and pricing
The following outline is provided as an overview of and topical guide to industrial organization:Industrial organization – describes the behavior of firms in the marketplace with regard to production, pricing, employment and other decisions...
s' councils to implement the decision making principle. Many individuals would participate in both types of councils. These would be similar to workers' council
Workers' council
A workers' council, or revolutionary councils, is the phenomenon where a single place of work or enterprise, such as a factory, school, or farm, is controlled collectively by the workers of that workplace, through the core principle of temporary and instantly revocable delegates.In a system with...
s.
Consumers' councils act as decision-making bodies for consumption planning, and producers' councils - which are culminations of several workers' councils - act as decision-making bodies for production planning.
Geographically, consumers' councils would probably be nested within the same neighborhood
Neighbourhood
A neighbourhood or neighborhood is a geographically localised community within a larger city, town or suburb. Neighbourhoods are often social communities with considerable face-to-face interaction among members. "Researchers have not agreed on an exact definition...
councils, ward councils, city
City council
A city council or town council is the legislative body that governs a city, town, municipality or local government area.-Australia & NZ:Because of the differences in legislation between the States, the exact definition of a City Council varies...
or regional councils and a country council used for political decision-making through parpolity - parecon's political counterpart. Decisions would be achieved either through consensus decision-making
Consensus decision-making
Consensus decision-making is a group decision making process that seeks the consent, not necessarily the agreement, of participants and the resolution of objections. Consensus is defined by Merriam-Webster as, first, general agreement, and second, group solidarity of belief or sentiment. It has its...
, majority votes or through other means compatible with the principle. The most appropriate method would be decided on by each council.
Local decisions like the construction
Construction
In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of human multitasking...
of a playground
Playground
A playground or play area is a place with a specific design for children be able to play there. It may be indoors but is typically outdoors...
might be made in the ward or city consumers' council, probably interacting with both city and countrywide producers' councils through rotating delegates. Countrywide decisions, like the construction of a high-speed mass transportation system, would be discussed by the country consumers' council, possibly interacting with a city producers' council in the city where the materials are produced, or countrywide or international producers' councils.
The producers' councils would probably correspond to workplace councils in each workplace and similar workplaces would group into nested councils on successively larger geographical
Geography
Geography is the science that studies the lands, features, inhabitants, and phenomena of Earth. A literal translation would be "to describe or write about the Earth". The first person to use the word "geography" was Eratosthenes...
and linguistic
Linguistics
Linguistics is the scientific study of human language. Linguistics can be broadly broken into three categories or subfields of study: language form, language meaning, and language in context....
scales.
Facilitation Boards
Iteration Facilitation BoardsFacilitation board (economics)
A facilitation board is a proposed economic institution proposed mainly by economists Michael Albert and Robin Hahnel which act in systems of economic democracy as agencies that facilitate information exchange and processing for collective consumption proposals and for large-scale investment...
(IFBs) act as management bodies for local consumers' and producers' councils and are the mechanism via which economic allocation is decided upon and ultimately implemented.
Facilitation boards
Facilitation board (economics)
A facilitation board is a proposed economic institution proposed mainly by economists Michael Albert and Robin Hahnel which act in systems of economic democracy as agencies that facilitate information exchange and processing for collective consumption proposals and for large-scale investment...
first announce a set of indicative prices which workers and consumers use, individually and through their councils at each level, when deciding on their production and consumption proposals. Proposals could be done either collectively through a local consumer council, or individually on a computer; or any combination of the two. When the proposals are all in, the IFBs aggregate all the production and consumption proposals for the different categories of goods and services – inputs into all the production processes as well as consumer goods – to see if proposed supply and demand are equal. If they are not equal for every good and service the IFB revises the set of indicative prices and the process is repeated through successive rounds until a consistent set of production and consumption proposals is arrived at.
The facilitation boards then implement these final proposals by setting new prices and organizing production plans. In the event of unforeseen circumstances occurring in between planning procedures, the IFBs would adjust prices or production quotas accordingly within established guidelines.
Participatory Planning
The participatory planning procedure would be a regular (probably either annual, bi-annual or quarterly) event where citizens participate to determine which and how many goods to produce. Prices for goods and services before the onset of the planning procedure would have been determined by the previous planning procedure, modified by facilitation boardsFacilitation board (economics)
A facilitation board is a proposed economic institution proposed mainly by economists Michael Albert and Robin Hahnel which act in systems of economic democracy as agencies that facilitate information exchange and processing for collective consumption proposals and for large-scale investment...
as unforeseen circumstances changed production quotas. After the participatory planning procedure is completed, prices will get new base values, likely to be changed again by the boards as unforeseen circumstances develop.
These prices would represent the estimated marginal social opportunity cost
Opportunity cost
Opportunity cost is the cost of any activity measured in terms of the value of the best alternative that is not chosen . It is the sacrifice related to the second best choice available to someone, or group, who has picked among several mutually exclusive choices. The opportunity cost is also the...
for all goods and services. During the planning procedure, not only do the prices reflect proposed supply and demand, but also the social and ecological cost of producing the good. For instance a product that produces pollution in its manufacture, or is especially dangerous for workers to produce, would have its price automatically inflated to discourage excess consumption.
Using new prices estimated by the facilitation boards as a guide, citizens would respond with their personal consumption proposals, and participate in the formulation of collective consumption proposals at the neighborhood, ward, municipal, provincial and national levels. Personal consumption proposals would be a prediction by each citizen of what goods and services they plan to consume the next year. For instance a couple expecting a new baby would request the appropriate goods, and a citizen who enjoys exotic fruit would put in her demand to make sure it is received. Collective consumption proposals would be created by citizens making proposals for a wider geographical area (e.g. a new recreation center at the community level or a new power plant at the provincial level) that are received by a facilitation board.
The facilitation board
Facilitation board (economics)
A facilitation board is a proposed economic institution proposed mainly by economists Michael Albert and Robin Hahnel which act in systems of economic democracy as agencies that facilitate information exchange and processing for collective consumption proposals and for large-scale investment...
would work with the citizen(s) that originated the proposal to work it into a manageable proposition. Around the time of the planning procedure, interested parties within the region affected by the collective consumption proposal would be able to view the collective consumption proposals and vote them up or down. This could be done at large meetings or via computer. At the same time, worker's councils and producers councils would respond with production proposals outlining the outputs they propose to produce and the inputs they believe are required to produce them. Individual workers would indicate their proposed hours of work, and workers will be able to propose upgrades and innovations for their workplace, aided by a facilitation board.
Facilitation boards would then calculate excess proposed supply and demand based on the proposals, adjusting the indicative price for each final good or service according to its impact on society and the environment so that the social opportunity cost is reflected. Using the new indicative prices, consumer and workers' councils would revise and resubmit their proposals, as some goods would be more expensive, and others less expensive. Proposals deemed excessive by other parties would become very expensive, creating a disincentive to pursue them.
Iteration
Iteration
Iteration means the act of repeating a process usually with the aim of approaching a desired goal or target or result. Each repetition of the process is also called an "iteration," and the results of one iteration are used as the starting point for the next iteration.-Mathematics:Iteration in...
s would continue according to some predefined method which is likely to converge within an acceptable time delay. For instance, proposals would only be changeable by a minimum percentage for the second round, and a lesser percentage for the third round, and so on, forcing convergence of a feasible plan.
The facilitation boards should function according to a maximum level of radical transparency
Radical transparency
Radical transparency is a management approach in which all decision making is carried out publicly. The term was used by Daniel Goleman in his book...
and only have very limited powers of mediation, subject to the discretion of the participating councils. The real decisions regarding the formulation and implementation of the plan are to be made in the consumers' and producers' councils.
Money in a participatory economy
"Money" in a parecon would be more akin to a bookkeeping system than traditional currency. Money as it now exists would be abolished and instead replaced with a personal voucherLabour voucher
Labour vouchers are a device proposed to govern demand for goods in some models of socialism, much as money does under capitalism.-Outline:...
system which would be non-transferable between consumers, and would be only usable at a store to purchase goods.
Electronic "credits" would be awarded to workers for their work, as a means of saying that this worker benefited society with their work. The more effort and sacrifice, the more credits are awarded. Credits would then be used to buy goods and services. Once used to purchase something, a credit would be deducted from the consumer's total; it "disappears" and does not go into a till or bank, it is simply deducted from the consumer's total. There would be no banks in the capitalist sense. Individuals would have to work more to get more credits. In this way, there would be no flow of money and no way to "make money off of money" as in a capitalist economy. People would be able to borrow credits if approved by an appropriate board, but no interest would be charged.
The non-transferability of parecon credits would make it impossible to bribe or even beg for money. and would thus make monetary theft impossible. People would still be free to barter their individual goods with each other, e.g. exchange a couch for a stereo, but any attempt to create an exchangeable currency would likely be discouraged, as this might lead to attempts to reinstate money and capitalism. Credits might be shareable amongst family members, depending on how the parecon is set up. A lost or stolen "credit" card would not be usable by another person, as presumably there would be means to verify the identity of a citizen at shopping centers.
Albert and Hahnel did not clarify how a currency of this form would be used in international trading with non-parecon countries. If a capitalist country refuses to be paid for their bought goods in this way, it is likely that a parecon nation would use money for international trading, but keep its unique credit currency for internal purposes.
Too much administration
A potential criticism of parecon is that it would increase bureaucracy and reduce timely decision-making. However proponents of parecon argue that capitalist economies are hardly bureaucracy free, with massive administration in corporations and government. In a parecon there would be no banks, advertising, stock market, credit cards etc. This would free up many workers to do tasks associated with facilitation boards. Albert and Hahnel argue that is probable that a similar number of workers will be involved in a parecon bureaucracy as in a capitalist bureaucracy.Too many meetings
Parecon appears to require all workers to attend too many meetings. In the workplace, workers that would not, or hardly ever, attend meetings in a capitalist society would be attending regular meetings. However, Hahnel and Albert argue that capitalist societies are hardly meeting free, with some workers doing little else but attend meetings. Thus, while it would be the case that more people will attend workplace meetings, the total time spent in meetings as a whole might be similar to a capitalist society, as those workers that spend a lot of time attending meetings in a capitalist society are now spending less. Further, concerning meetings for participatory planning, the planning process would last a few weeks, with time off work to participate. Decisions for collective consumption do not require meetings, as voting proposals up or down can be done by computer. Also those not interested in the collective consumption proposals do not have to attend.Loss of efficiency
There are several ways a parecon might lose efficiency in the workplace. For one, expert and exceptional workers (e.g. exceptional surgeons and scientists) would not be performing their tasks full time. This is most likely an efficiency loss, however, it should be offset by other efficiency gains, such as other workers being more motivated than in a capitalist economy to perform well, since everyone has empowering work. Another possible efficiency loss is a loss of innovation, as an inventor would not profit from patents of their invention. This assumes that the only motivation for innovation is monetary, which is of course debatable. In a parecon, an inventor of a useful technology would benefit from social acclaim and gratitude. Further, in a parecon there would be no work wasted on advertising or banking, freeing the labor of many; another efficiency gain.Facilitation board becoming an elite class
Facilitation boardFacilitation board (economics)
A facilitation board is a proposed economic institution proposed mainly by economists Michael Albert and Robin Hahnel which act in systems of economic democracy as agencies that facilitate information exchange and processing for collective consumption proposals and for large-scale investment...
members would do very important economic work running the economy, and thus one might think they would gradually take over a parecon. However, it is easy to block this from happening, as board members could be required never to handle proposals that pertain to their own region. It is impossible to bribe board members, due to parecon's unique currency. Board members also work in a balanced job complex where they do disempowering tasks, and any Facilitation Board
Facilitation board (economics)
A facilitation board is a proposed economic institution proposed mainly by economists Michael Albert and Robin Hahnel which act in systems of economic democracy as agencies that facilitate information exchange and processing for collective consumption proposals and for large-scale investment...
meeting would be transparent to the public.
Humanity is intrinsically selfish
Human nature is often seen as too backward and selfish to allow a parecon to work. An underlying philosophy behind parecon is that people are affected by their environment and do selfish things largely due to the institutions they live in. For example, in a capitalist society, a corporation that strives to protect the environment will most likely be out-competed by rival corporations; a corporation that rewards its workers too well will not profit as much as one who strives to cut wages. Simply removing these institutional factors should greatly reduce such antisocial behavior, argue Hahnel and Albert. It is further noted that despite the institutions of capitalism encouraging people to act selfishly, many still give to charity and do other positive ventures, something that should increase in a parecon. The only route to monetary gain in a parecon (if there are people that have only that interest in a parecon) is to work hard and benefit society as a whole.Eclipse of Public Market
The current ideas of Farmer's Market, Garage Sales, Flea Markets, or even the individual seated on the corner selling his belongings or art/craft creations would be untenable. Busking would vanish thus depriving the population of local culture. However, if people want buskers to liven up the city, then the service can be provided, they would be paid for their service, but not be able to accept coins or "credits" on the spot. If people want to get rid of excess belongings, they can record that their items were given to someone else and receive compensation for their lost good. The compensation would likely be less than or equal to what they originally paid for the item, thus making it impossible to make a profit. Direct barter for goods is also possible.Price Fluctuation
It has been debated whether parecon would be able to change prices as demand changes and other factors modify the results of the participatory planning procedure. Albert and Hahnel have argued that this would be done efficiently. Facilitation boardsFacilitation board (economics)
A facilitation board is a proposed economic institution proposed mainly by economists Michael Albert and Robin Hahnel which act in systems of economic democracy as agencies that facilitate information exchange and processing for collective consumption proposals and for large-scale investment...
would continually modify prices as time goes on, finding reasons for production shortfalls, production overruns, changes in demand, environmental disasters, etc. and the facilitation boards
Facilitation board (economics)
A facilitation board is a proposed economic institution proposed mainly by economists Michael Albert and Robin Hahnel which act in systems of economic democracy as agencies that facilitate information exchange and processing for collective consumption proposals and for large-scale investment...
would adjust prices accordingly. One way to do this would be to adjust prices within council guidelines on a monthly basis as events unfold. Hahnel and Albert note that markets themselves hardly adjust prices instantaneously and contend that a participatory economy should be able to do just as well, or better.
Opposition to Central Planning and Capitalism
On the notion of informational incentives, Robin HahnelRobin Hahnel
Robin Hahnel is a Professor of Economics at Portland State University. He is best known for his work on participatory economics with Z Magazine editor Michael Albert. He is currently a visiting professor at Lewis & Clark College....
has argued that "participatory planning is not central planning". "The procedures are completely different and the incentives are completely different. And one of the important ways in which it is different from central planning is that it is incentive compatible, that is, actors have an incentive to report truthfully rather than an incentive to misrepresent their capabilities or preferences." Hahnel has also written a detailed discussion of parecon's desirability compared to capitalism with respect to incentives to innovate.
Notably, innovation is sometimes the outcome of cumulative creativity, which might not be legitimately attributed to individuals. In capitalism, patent laws, intellectual property rights, industry structures, and barriers to market entry are institutional features that reward individual innovators while limiting the use of new technologies. Hahnel notes that, in contrast, "in a participatory economy all innovations will immediately be made available to all enterprises, so there will never be any loss of static efficiency." This position concurs with the more empirically oriented work of Pat Devine
Pat Devine
Pat Devine is a radical economist concerned mainly with industrial economics and comparative economic systems. He made one of the most thorough descriptions of a future economy where allocation is done by democratic planning and social ownership without any social division of labour...
, with whom Hahnel has worked as a visiting scholar at Manchester University, and whose work has demythologised Austrian and mainstream theories of entrepreneurship while highlighting the potential for participatory approaches.
Albert and Hahnel have voiced detailed critiques of centrally-planned economies in theory and practice. Yet they would argue that central planning's dismal performance hardly lets capitalism off the hook. Hahnel further supposes, "the truth is capitalism aggravates prejudice, is the most inequitable economy ever devised, is grossly inefficient — even if highly energetic — and is incompatible with both economic and political democracy. In the present era of free-market triumphalism it is useful to organize a sober evaluation of capitalism responding to Friedman's claims one by one."
One reason why proponents of parecon would consider the non-specific criticisms outlined above misplaced is that, unlike historical examples of central planning, the parecon proposal advocates the use and adjustment of price information reflecting marginal social opportunity costs and benefits as integral elements of the planning process. Hahnel has argued emphatically against Milton Friedman's a priori
A priori and a posteriori (philosophy)
The terms a priori and a posteriori are used in philosophy to distinguish two types of knowledge, justifications or arguments...
tendency to deny the possibility of alternatives:
Friedman assumes away the best solution for coordinating economic activities. He simply asserts "there are only two ways of coordinating the economic activities of millions — central direction involving the use of coercionCoercionCoercion is the practice of forcing another party to behave in an involuntary manner by use of threats or intimidation or some other form of pressure or force. In law, coercion is codified as the duress crime. Such actions are used as leverage, to force the victim to act in the desired way...
— and voluntary cooperation, the technique of the marketplace." [...] a participatory economy can permit all to partake in economic decision making in proportion to the degree they are affected by outcomes. Since a participatory system uses a system of participatory planning instead of markets to coordinate economic activities, Friedman would have us believe that participatory planning must fall into the category of "central direction involving the use of coercion."
Critique of markets
A primary reason why advocates of participatory economics perceive markets to be unjust and inefficient is that only the interests of buyer and seller are considered in a typical market transaction, while others who are affected by the transaction have no voice in it. For instance, the sale of highly addictive drugs, like alcoholAlcohol
In chemistry, an alcohol is an organic compound in which the hydroxy functional group is bound to a carbon atom. In particular, this carbon center should be saturated, having single bonds to three other atoms....
and tobacco
Tobacco
Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...
, is in the interest of the seller and (at least in the short term) in the interest of the buyer, but others outside the transaction end up bearing costs in the form of social problems and medical treatment.When vehicles using fossil fuel
Fossil fuel
Fossil fuels are fuels formed by natural processes such as anaerobic decomposition of buried dead organisms. The age of the organisms and their resulting fossil fuels is typically millions of years, and sometimes exceeds 650 million years...
s, are manufactured, distributed and sold, others outside the transaction end up bearing costs in the form of pollution, and resource depletion. This may be considered under economics as a common pool good. The market price of such vehicles and drugs does not include these additional costs, which are referred to as externalities
Externality
In economics, an externality is a cost or benefit, not transmitted through prices, incurred by a party who did not agree to the action causing the cost or benefit...
. The implications of significant external effects invalidate market efficiency regardless of the economic calculations of market actors because in such cases prices will not accurately reflect opportunity costs.
In contrast to parecon, mainstream economics suggests that the problem of externalities can in large part be addressed by the use of Pigovian tax
Pigovian tax
A Pigovian tax is a tax levied on a market activity that generates negative externalities. The tax is intended to correct the market outcome. In the presence of negative externalities, the social cost of a market activity is not covered by the private cost of the activity...
es — extra taxes on goods that have externalities. If the taxes are set so that the after-tax cost of the good is equal to the social cost of the good, the direct cost of production plus cost of externalities, then quantities produced will tend toward a socially optimal level, according to economic theory. Hahnel observes, "more and more economists outside the mainstream are challenging this assumption, and a growing number of skeptics now dare to suggest that externalities are prevalent, and often substantial. Or, as E.K. Hunt put it externalities are the rule rather than the exception, and therefore markets often work as if they were guided by a "malevolent invisible foot" that keeps kicking us to produce more of some things, and less of others than is socially efficient."
Albert and Hahnel favour Pigovian taxes as long as a market economy is in place, which sometimes appear as green taxes, over other solutions to environmental problems such as command and control, or the issuance of marketable permits. However, Hahnel, who teaches ecological economics at American University, argues that in a market economy it would be predictable that businesses would try to avoid the "polluter pays principle" by shifting the burden of the costs for their polluting activities to consumers. In terms of incentives he argues this might be considered a positive development because it would penalize consumers for "dirty" consumption. However it also has regressive implications since tax incidence
Tax incidence
In economics, tax incidence is the analysis of the effect of a particular tax on the distribution of economic welfare. Tax incidence is said to "fall" upon the group that, at the end of the day, bears the burden of the tax...
studies show that ultimately it would be poor people who would bear a great deal of the burden of many pollution taxes. "In other words, many pollution taxes would be highly regressive and therefore aggravate economic injustice."
Therefore, he recommends that pollution taxes be linked to cuts in regressive taxes such as social security taxes. In the end Hahnel argues that Pigovian taxes, along with associated corrective measures advanced by market economists, fall far short of adequately or fairly addressing externalities. He argues such methods are incapable of attaining accurate assessments of social costs:
"Markets corrected by pollution taxes only lead to the efficient amount of pollution and satisfy the polluter pays principle if the taxes are set equal to the magnitude of the damage victims suffer. But because markets are not incentive compatible for polluters and pollution victims, markets provide no reliable way to estimate the magnitudes of efficient taxes for pollutants. Ambiguity over who has the property right, polluters or pollution victims, free rider problemFree rider problemIn economics, collective bargaining, psychology, and political science, a free rider is someone who consumes a resource without paying for it, or pays less than the full cost. The free rider problem is the question of how to limit free riding...
s among multiple victims, and the transaction costs of forming and maintaining an effective coalition of pollution victims, each of whom is affected to a small but unequal degree, all combine to render market systems incapable of eliciting accurate information from pollution victims about the damages they suffer, or acting upon that information even if it were known.
Critique of private ownership and corporations
Advocates of parecon say the basis of capitalism is the concept of private ownership, which confers upon every owner the right to do with their property as they please, even though decisions relating to some property may have unwanted effects on other people.This concept extends to private property belonging to corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
s. In the course of the late nineteenth and early twentieth century, a stepwise juridical revolution made corporations into "juridical persons" with the rights of citizens under the concept of corporate personhood.
At the same time, every corporation has its own set of owners who have the right to do as they please with it, because people outside a corporation do not have any right to interfere with its activities while it abides by the law. Although market economists note that all consumers can influence corporations through their own market interactions, or through buying and selling of their goods, services, or even shares
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
, advocates of parecon are unsatisfied with this as this influence has a limited extension, and organization of collective consumer action is difficult in a market economy. Pareconists believe that the state is unlikely to interfere in the market for the benefit of the public, and advocates interpret economic history as demonstrating that it is more often the other way around, through means of plutocracy
Plutocracy
Plutocracy is rule by the wealthy, or power provided by wealth. The combination of both plutocracy and oligarchy is called plutarchy. The word plutocracy is derived from the Ancient Greek root ploutos, meaning wealth and kratos, meaning to rule or to govern.-Usage:The term plutocracy is generally...
.
Being huge agglomerations of economic power, large corporations tend to interfere with the decision-making of states by lobbying
Lobbying
Lobbying is the act of attempting to influence decisions made by officials in the government, most often legislators or members of regulatory agencies. Lobbying is done by various people or groups, from private-sector individuals or corporations, fellow legislators or government officials, or...
for legislation and policy that suits their interests or, in many cases, by bribery
Bribery
Bribery, a form of corruption, is an act implying money or gift giving that alters the behavior of the recipient. Bribery constitutes a crime and is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or...
, or by financing huge propaganda
Propaganda
Propaganda is a form of communication that is aimed at influencing the attitude of a community toward some cause or position so as to benefit oneself or one's group....
campaigns for the success of some political candidate who would support the corporation's interests. An example included the corporate slogan "what is good for General Motors is good for America." In some cases, there have been plans for corporate-backed coups
Coup d'état
A coup d'état state, literally: strike/blow of state)—also known as a coup, putsch, and overthrow—is the sudden, extrajudicial deposition of a government, usually by a small group of the existing state establishment—typically the military—to replace the deposed government with another body; either...
, such as the Business Plot
Business Plot
The Business Plot was an alleged political conspiracy in 1933. Retired Marine Corps Major General Smedley Butler claimed that wealthy businessmen were plotting to create a fascist veterans' organization and use it in a coup d’état to overthrow United States President Franklin D...
. However, Milton Friedman believes that such corporate lobbying is only possible in states that allow for significant state interference within the economy.
Promoters of parecon hold that the pursuit of private profit and power by these kinds of corporations is not in the interest of the majority of citizens.
Comparison with other socialist movements
Although participatory economics is not in itself intended to provide a general political system, clearly its practical implementation would depend on an accompanying political system. Advocates of parecon say the intention is that the four main ingredients of parecon be implemented with a minimum of hierarchyHierarchy
A hierarchy is an arrangement of items in which the items are represented as being "above," "below," or "at the same level as" one another...
and a maximum of transparency in all discussions and decision making. This model is designed to eliminate secrecy in economic decision making, and instead encourage friendly cooperation and mutual support. This avoidance of power hierarchies puts parecon in the anarchist
Anarchism
Anarchism is generally defined as the political philosophy which holds the state to be undesirable, unnecessary, and harmful, or alternatively as opposing authority in the conduct of human relations...
political tradition. Stephen Shalom has produced a political system meant to complement parecon, called Parpolity
Although parecon falls under left-wing political tradition, it is designed to avoid the creation of powerful intellectual elites or the rule of a bureaucracy, which is perceived as the major problem of the economies of the communist state
Communist state
A communist state is a state with a form of government characterized by single-party rule or dominant-party rule of a communist party and a professed allegiance to a Leninist or Marxist-Leninist communist ideology as the guiding principle of the state...
s of the 20th century. Parecon advocates recognize that monopolization of empowering labor, in addition to private ownership, can be a source of class division. Thus, a three-class view of the economy (capitalists, coordinators, and workers) is stressed, in contrast to the traditional two-class view of Marxism. The coordinator class, emphasized in Parecon, refers to those who have a monopoly on empowering skills and knowledge, and corresponds to the doctors, lawyers, managers, engineers, and other professionals in present economies. Parecon advocates argue that, historically, Marxism ignored the ability of coordinators to become a new ruling class in a post-capitalist society.
The archetypal workplace democracy
Workplace democracy
Workplace democracy is the application of democracy in all its forms to the workplace....
model, the Wobbly Shop was pioneered by the Industrial Workers of the World
Industrial Workers of the World
The Industrial Workers of the World is an international union. At its peak in 1923, the organization claimed some 100,000 members in good standing, and could marshal the support of perhaps 300,000 workers. Its membership declined dramatically after a 1924 split brought on by internal conflict...
, in which the self-managing norms of grassroots democracy
Grassroots democracy
Grassroots democracy is a tendency towards designing political processes where as much decision-making authority as practical is shifted to the organization's lowest geographic level of organization: principle of subsidiarity....
were applied.
While many types of production and consumption may become more localised under participatory economics, the model does not exclude economies of scale
Economies of scale
Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...
.
Example implementations
A few workplaces have been established based on principles akin to parecon, particularly in Canada and the USA:- South End PressSouth End PressSouth End Press is a non-profit book publisher run on a model of participatory economics. It was founded in 1977 by Michael Albert, Lydia Sargent, John Schall, Pat Walker, Juliet Schor, Mary Lea, Joe Bowring, and Dave Millikan, among others, in Boston's South End...
, a book publisher in BostonBostonBoston is the capital of and largest city in Massachusetts, and is one of the oldest cities in the United States. The largest city in New England, Boston is regarded as the unofficial "Capital of New England" for its economic and cultural impact on the entire New England region. The city proper had...
, MassachusettsMassachusettsThe Commonwealth of Massachusetts is a state in the New England region of the northeastern United States of America. It is bordered by Rhode Island and Connecticut to the south, New York to the west, and Vermont and New Hampshire to the north; at its east lies the Atlantic Ocean. As of the 2010...
. - G7 Welcoming Committee, an independent record label closely tied to the Winnipeg band PropagandhiPropagandhiPropagandhi is a Canadian punk band formed in Portage la Prairie, Manitoba in 1986 by Chris Hannah and Jord Samolesky. The band is currently located in Winnipeg, Manitoba....
. - Z Magazine, a progressive/radical magazine.
- The Old Market Autonomous ZoneThe Old Market Autonomous ZoneThe Old Market Autonomous Zone, or A-Zone, was founded in 1995, in Winnipeg, Canada by local activists Paul Burrows and Sandra Drosdowech, who also co-founded Winnipeg's Mondragon Bookstore. Its name is derived from "Old Market Square," the historic Exchange District in Winnipeg's downtown core...
, a three-story building in Winnipeg, Canada that houses organizations which have similar principles, including: Mondragon BookstoreMondragon BookstoreThe Mondragon Bookstore & Coffeehouse is a political bookstore and vegan cafe located in The Old Market Autonomous Zone at 91 Albert Street in Winnipeg, Manitoba, Canada...
(a vegan restaurant and anarchist bookstore), G7 Welcoming Committee Records (see entry above), the Rudolf Rocker Cultural Centre, Natural Cycle (a bike repair and courier company), Canadian Dimension (a radical magazine), DadaWorldData (a documentary film company), Junto Local 91 (a lending library), War on Music (a collectively run music retailer and vinyl-only record label), and the Canada-Palestine Support Network. Another parecon-inspired worker-run collective, Arbeiter Ring PublishingArbeiter Ring PublishingArbeiter Ring Publishing is a worker-owned and operated independent book publisher and distributor that specializes in progressive, radical and anarchist literature . Founded by Todd Scarth and John K...
, named after the radical Jewish labour organization, was also based out of the A-Zone until 2002, and continues to operate in the city. The Emma GoldmanEmma GoldmanEmma Goldman was an anarchist known for her political activism, writing and speeches. She played a pivotal role in the development of anarchist political philosophy in North America and Europe in the first half of the twentieth century....
Grassroots Centre is the A-Zone's second floor, where many activist groups share communal meeting and organizing space. - The NewStandardThe NewStandardThe NewStandard was an independent, nonprofit, ad-free news service. After nearly 3.5 years on line, The NewStandard discontinued publication on April 27, 2007...
, an online progressive hard news website published by the PeoplesNetWorks Collective, headquartered in Syracuse, New YorkSyracuse, New YorkSyracuse is a city in and the county seat of Onondaga County, New York, United States, the largest U.S. city with the name "Syracuse", and the fifth most populous city in the state. At the 2010 census, the city population was 145,170, and its metropolitan area had a population of 742,603...
. It ceased publication in April, 2007. - OAT, the Organization for Autonomous Communications (previously TAO Communications).
- Ram Wools Yarn Co-op, Ram Wools Yarn Co-op (in Winnipeg Manitoba) Started off April 1, 2009 as a succession to a privately held company of 37 years.
- ParIT Workers Cooperative, ParIT Workers Co-op (in Winnipeg Manitoba) Is an IT firm committed to Parecon and the use of free software.
See also
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Mutualism (economic theory) Mutualism is an anarchist school of thought that originates in the writings of Pierre-Joseph Proudhon, who envisioned a society where each person might possess a means of production, either individually or collectively, with trade representing equivalent amounts of labor in the free market... Post-autistic economics The movement for Post-Autistic Economics was born through the work of Sorbonne economist Bernard Guerrien. The movement is best seen as a forum of different groups critical of the current mainstream: from behavioral and heterodox to feminist, green economics and econo-physics... Post-capitalism Post-capitalism refers to any hypothetical future economic system that is to supersede capitalism as the dominant form of economic organization.-Post-capitalist systems:There have been a number of proposals for a new economic system to replace capitalism... Participatory budgeting Participatory budgeting is a process of democratic deliberation and decision-making, and a type of participatory democracy, in which ordinary people decide how to allocate part of a municipal or public budget... Participatory democracy Participatory Democracy, also known as Deliberative Democracy, Direct Democracy and Real Democracy , is a process where political decisions are made directly by regular people... Participatory justice Participatory justice is the use of alternative dispute resolution, such as mediation, conciliation, and arbitration, in criminal justice systems, instead of, or before, going to court... Participatory politics Participatory politics or parpolity is a theoretical political system proposed by Stephen R. Shalom, professor of political science at William Paterson University in New Jersey.... Socialism Socialism is an economic system characterized by social ownership of the means of production and cooperative management of the economy; or a political philosophy advocating such a system. "Social ownership" may refer to any one of, or a combination of, the following: cooperative enterprises,... Syndicalism Syndicalism is a type of economic system proposed as a replacement for capitalism and an alternative to state socialism, which uses federations of collectivised trade unions or industrial unions... Transformative economics Transformative economics is an alternative theory of socio-economics.Transformative economics was derived from Progressive Utilization Theory — a social philosophy developed by Indian philosopher Prabhat Ranjan Sarkar in 1959.... Workers' council A workers' council, or revolutionary councils, is the phenomenon where a single place of work or enterprise, such as a factory, school, or farm, is controlled collectively by the workers of that workplace, through the core principle of temporary and instantly revocable delegates.In a system with... Workers' self-management Worker self-management is a form of workplace decision-making in which the workers themselves agree on choices instead of an owner or traditional supervisor telling workers what to do, how to do it and where to do it... Workplace democracy Workplace democracy is the application of democracy in all its forms to the workplace.... |
Further reading
- A Quiet Revolution In Welfare Economics, Albert and Hahnel, Princeton University PressPrinceton University Press-Further reading:* "". Artforum International, 2005.-External links:* * * * *...
, 1990. - Looking Forward: Participatory Economics for the Twenty First Century, Albert and Hahnel, South End PressSouth End PressSouth End Press is a non-profit book publisher run on a model of participatory economics. It was founded in 1977 by Michael Albert, Lydia Sargent, John Schall, Pat Walker, Juliet Schor, Mary Lea, Joe Bowring, and Dave Millikan, among others, in Boston's South End...
, 1991. - The Political Economy of Participatory Economics, Albert and Hahnel, Princeton University Press, 1991.
- Moving Forward: Program for a Participatory Economy, Albert, AK Press, 1997.
- Parecon: Life After Capitalism, Albert, Verso Books, 2003.
- Economic Justice And Democracy: From Competition To Cooperation, Hahnel, Routledge, 2005.
- Realizing Hope: Life Beyond Capitalism, Albert, Zed Press, 2006.
- Real Utopia: Participatory Society for the 21st Century, Chris Spannos (Ed.), AK Press, 2008.
- Takis FotopoulosTakis FotopoulosTakis Fotopoulos , born , is a political philosopher and economist who founded the inclusive democracy movement. He is noted for his synthesis of the classical democracy with the libertarian socialism and the radical currents in the new social movements...
(2003), "Inclusive Democracy and Participatory Economics", Democracy & NatureDemocracy & NatureDemocracy & Nature was a theoretical journal founded in 1992 by Takis Fotopoulos. Initially launched as Society and Nature, it was renamed Democracy & Nature in 1995. Four volumes of three issues each were released by Aigis Publications in the period from 1992 to 1999. From 1999 to 2003, five...
, Volume 9, Issue 3 November 2003 , pages 401 - 425 - comparison with Inclusive DemocracyInclusive DemocracyInclusive Democracy is a political theory and political project that aims for direct democracy, economic democracy in a stateless, moneyless and marketless economy, self-management and ecological democracy... - Rameez Rahman, Michel Meulpolder, David Hales, Johan Pouwelse, Henk Sips (2009), "Revisiting Social Welfare in P2P", Delft University of Technology Report. - applying Participatory Economics principles to analysis of peer-to-peerPeer-to-peerPeer-to-peer computing or networking is a distributed application architecture that partitions tasks or workloads among peers. Peers are equally privileged, equipotent participants in the application...
computing systems
External links
- Participatory economics website
- Vancouver Participatory Economics Collective
- Old Market Autonomous Zone (Winnipeg)
- Participatory Economy and Inclusive Democracy - A critique
- Nonsense on Stilts: Michael Albert's Parecon - A critique
- Audio material regarding Participatory Economics
- CAPES – Chicago Area Participatory Economics Society
Video
- Cartoon introduction to participatory economics (You Tube video) 7:16 mns, by Jason Mitchell
- Michael Albert in Alternative Economy Cultures Helsinki, Finland, 3 April 2009