Multilevel Democratic Iterative Coordination

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David Laibman:

"Having said that, here is my model!

a. Democratic coordination.

I start with the core mechanism defining the economic process. Here the adjective noun pair ªdemocratic coordination replaces the traditional central planning, and this requires explanation.

Coordination, rather than planning, because the former term is simply a more accurate description of the process that progressively replaces the spontaneous market in allocating labor activities, choosing production techniques, and distributing products to their users. (Planning remains a crucial element in socialism;) It is ªdemocratic,º rather than ªcentral,º because the central site is only one site among several at which the coordination function is carried out, and the qualifier ªdemocraticº must apply to all of them. The key notion of iteration can be explained using a model with only two sites, which may be called ªcentralº and ªdecentral.º The latter corresponds to on-the-ground production collectives, or enterprises; the former, of course, to the overall regulating body that coordinates the activities of the enterprises.

This matchbox-sized model should be understood to stand for a much more complex system of ªlevels,º possibly including work collectives within enterprises, enterprises, local or regional midlevel territorial bodies, midlevel industrial associations, and perhaps other steps in an organizational hierarchy up to the ultimate central coordinating body. General economic coordination requires a careful and evolving blend of general social control and decentral autonomy. Both are essential for the progressive emergence of actual democracy. The enterprise must create its own detailed production prospectus, on the basis of its unique situation and local knowledge. This prospectus, however, reflects the enterprise’s status as a publicly owned resource, with a general function in production designated by a democratic political process. It is not a self-owned, autonomous entity seeking its own destiny independently of other such entities. Thus, the enterprise has an overall mandate to produce goods of a certain type; it cannot decide unilaterally to sell off its automobile producing equipment, for example, and re-tool for the apparel industry. At the same time, democratic coordination does not mean that every detail of the enterprise’s activity the exact assortment of output, for example must be previsioned in time. The Soviet process of iterative negotiation leading to a detailed plan, which then acquires force of law and becomes binding upon the enterprise (Ellman, 1979), reflected a given stage in the development of information technology. At mid20th-century levels of data processing and transmission, temporal closure was required. Thus, an enterprise’s annual plan for a given year was completed, according to a stated calendar, by a particular date in the preceding year (in practice, delay often caused enterprises to enter a production period without the plan for that period having been finalized). With modern electronic informatics, the process can be much more continuous. Enterprises continually adjust their output assortments, techniques, etc. to changing conditions, and these adjustments are instantaneously reported to and compiled by the center. The center, in turn, computes and transmits the overall parameters of the economic aggregates to the enterprises (and the public). It also intervenes, when necessary, and according to its democratic mandate, when impacts of the evolving proportions of economic activity on the general balance of resources, the environment, residential patterns, transport, etc. require that intervention.

The key insight the socialist epiphany, if you will is that neither the central nor the decentral levels can function effectively, and democratically, without the other. Without the overall stability and sense of prevision afforded by the formation of a central set of coordinating parameters, the decentral units cannot act effectively. In a market or negotiating environment of spontaneous, elemental flux, in which the outcomes resulting from the actions of myriad interacting individual units can only be known after the fact, no one can effectively plan, or create. In conditions of modern productive forces, with significant forward and backward linkages of activities and large external effects, markets and democracy are increasingly incompatible. The stable framework afforded by the central function provides the space within which intelligent choice, and therefore democratic action, is possible at the decentral level. At the same time, the autonomy and initiative of the decentral collectives is the essential basis for meaningful coordination at the center: without it, no reliable information can be generated for use by the center and the center would be embroiled in the well-known situation characterized by the statistician’s acronym, GIGO (ªgarbage in, garbage outº).

Here we incorporate into our conception the important idea of local knowledge: it is not only that production conditions are particular and concrete, but also that the actual requirements and possibilities in production can only be first discovered by production collectives in a process of learning-by-doing, in which people are mobilized in participatory fashion. More will be said below about the sources of democratic input at the different levels, and the ways in which the criteria to be followed at each level are developed. Here, two points must be emphasized.

First, given the continuous flow of information in both directions between center and locale, the information technology exists to convergently hone in on a detailed and consistent set of enterprise activity guidelines (ªplansº), linked into an overall economy-wide guideline. In general, spontaneous enterprise search for contractual partners (suppliers and consumers) will not produce an optimal pattern of contacts and flows; this can be seen even in the simplest classical linear programming formulations. Horizontal search and contracting by enterprises can be incorporated, however, by means of the principle of complete visibility, according to which all actions are instantaneously transmitted to the center, which can intervene in cases where a significant deviation from an optimal regime results.

Second, democratic input is essential at both the central and decentral levels. We should avoid the category error of counterposing ªcentralº to ªdemocratic.º On the one hand, there is nothing inherently democratic about the decentral site; local tyrants abound in history. On the other, there are many ways in which the democratic will can and must be enforced at the central site, by organized input from lower-level bodies, participation by representatives of consumers, local communities and other interested constituencies, referenda, etc., but above all by the fact that the entire process will be operating in a political culture of openness and debate. (I need hardly mention that this crucial element was missing in the Soviet experience.)"


More information

* Article: Mature Socialism: Design, Prerequisites, Transitions. By David Laibman. Review of Radical Political Economics, Volume 45, Issue 4 doi


"Stadial (stage-based) theory clarifies the relation between the evolving conception of mature socialism, on the one hand, and historical experiences of central planning and “market socialism,” on the other. The core of mature socialism is a system of multilevel democratic iterative coordination (MDIC), involving mutually supportive and mutually defining roles for a central authority and enterprises. This conception clarifies the relations between the socialist core and various precursor forms in existing transitional societies."

Some important concepts:

  • Parametric Forms are formulas that enable people to calculate a course of action that is in their own best (pecuniary) interest, while meeting built-in social criteria and raising people’s consciousness about those criteria." [1]