Parecon

Parecon = participatory economics.

An approach to economic governance proposed by Michael Albert

Description

Michael Albert:

Opening essay offered as part of an extended exploration of views conducted with Michel Bauwens. Digital Curator and co-founder Peer to Peer Foundation

"Participatory economics, or parecon, envisions a new economy to replace capitalism and also 20th century socialism. Parecon rejects not only private ownership of productive assets, but also remuneration for property, power, or output, corporate divisions of labor, authoritarian decision-making, and both central planning and markets. It takes as guiding values solidarity, diversity, equity, self management, ecological stewardship, and also efficiency at meeting needs and developing potentials and in accord with these guiding values, advocates self managing workers and consumers councils, remuneration for duration, intensity, and onerousness of work, balanced job complexes, and participatory planning.

Parecon's aim is that:

• People should have a say in decisions proportionate to the degree they are affected, including having relevant knowledge as well as circumstances that engender confidence and skills for participation.

• People should receive social output in accord with the duration, intensity, and onerousness of the socially valued work they contribute - unless they cannot work and/or have special medical needs, in which case remuneration is for needs as well.

• There should be no class division due to differences in ownership or in access to empowering work or any other systematically differentiating economic circumstance.

• Relative values guiding allocation should reflect full personal, social, and ecological costs and benefits, and acted upon in a self managing manner that promotes solidarity.

To be worthy and viable, Parecon's values need to capture human aspirations, and its institutional implications for people's actions and interests need to propel those values.

Parecon delivers economic self management

I became a leftist in the mid 1960s. People controlling their own lives was a key theme of our commitments. But what did self management mean? It couldn't be that I could do any old thing I wanted, and not just because I might want to employ someone as a wage slave, or even a personal slave, or I might want to steal or kill or whatever. More, I can't by virtue of my lone desire do any work I favor, or consume any item I desire. As a member of society, I must manage myself consistent with others being able to manage themselves to the same degree.

In accord, self management came to mean that I and everyone should have a say over decisions proportionate to their effect on us. Sometimes, majority vote was the best approximation to everyone having that level of influence. Other times, consensus was the best way to achieve it. Sometimes two thirds for a decision was best, or even one person deciding, as in me deciding how to arrange my desk. Likewise, when a lot is at stake, extensive discussion, debate, and refinement of proposals make sense as part of attaining self management. Other times, with less at stake, quicker procedures would be better.

With the goal enunciated, it didn't take long to realize that if we should all have a say in decisions proportionate as they affect us - not with an anal idiocy as if decision making were a math problem, of course, but broadly and up to the point where trying for further precision would cost us more in time and hassle than it would gain in desirable decision making - the implications for economics were major.

An economy is a general system in which each choice, sets the context for all other choices. If I consume a pencil, you can't consume that pencil. More, if we together in our society produce 100,000 pencils, we aren't producing whatever we could have with the labor and resources that went to the pencils. Economists call this "opportunity cost." Doing any one thing foregoes using the component energy, resources, and labor to do some other thing.

This means every decision affects every actor, albeit some actors far more than others. Workers producing pencils are greatly affected by pencil production. People consuming pencils are highly affected by it. Even those who don't want pencils are somewhat affected, because, among other implications, if no one got any pencils there might be more or cheaper pens, or more of something else for those who didn't want pencils.

Thus, for an economy to be self managing, workers must have a say in their workplaces about their activities as producers, but consumers must also have a say about what they get to eat or wear or ride, and also about what is available, and this needs to be true of all actors in proportion as they are affected, which of course varies from case to case and from item to item.

We must have workers' councils and consumers' councils where each council uses self managed decision-making methods. But we must also ensure that the interface between workers in one plant and another, and between consumers in one region and another, and between workers and consumers throughout the economy, include all actors having appropriate influence.

Suppose workers in a plant make their local operating decisions in the most self managing manner conceivable, but central planners or markets impose output levels on them which they have too little say over. Goodbye self management.

Likewise, suppose consumers choose what they want from among society's outputs, individually and collectively, using highly self-managing methods such as looking at lists of availabilities and freely choosing among them, but the selection options they have are determined with their having insufficient impact. Again: goodbye self management. And similarly what if those who breathe pollution insufficiently influence car sales unless they happen to be the buyer, or if those who produce bicycles insufficiently affect the availability of roads, or for that matter either affects these choices too much?.

So, for parecon to solve the self management problem is true only if (a) it solves the problem of defining what self management means while also understanding and highlighting its central importance, and (b) it solves the problem of accomplishing economic functions without imparting to some actors more than proportionate say and to others less than proportionate say, but, instead, within an acceptable margin of error and without systematic and snowballing errors, it allots proportionate self managing say to all.

The features of parecon most critical to its solution to the self management problem are understanding that each person's freedom needs to extend to the point of others having similar freedom but should not extend further than that; understanding that not only what we do immediately day to day has to be self managed, but also the broad context in which we make those day to day choices; realizing that familiar corporate divisions of labor and market allocation produce a separate and dominating elite with excessive say over outcomes; realizing that sharply hierarchical decision making likewise destroys self management; and finally institutionally committing to self managed councils, balanced job complexes and participatory planning in place of the offending options.

Parecon attains equity

Regarding equity, parecon argues that we should each receive for our socially useful contributions a share of outputs in proportion to how long and hard we work at useful production and the onerous of our work, and for no other reason.

Someone might think, instead, that it is equitable for Bill Gates to get income equal to that of whole populations of numerous countries combined by virtue of owning property. It is fair for him to receive the value of the property's product.

Or someone might think it is equitable for Tiger Woods to get less but still an incredibly gargantuan income by virtue of the value of his fantastic athletic talent to those who like to watch golf tournaments.

Or someone might even think - and this person probably had to go to business school to develop this highly trained and sophisticated viewpoint - that a thug with great bargaining power - I have in mind our corporate centers of power but it applies to many other agents having ample power as well, such as doctors, lawyers, and engineers - ought to be welcome to use it to extort income.

Parecon, in contrast to these more familiar preferences about remuneration, rejects remunerating property, or bargaining power, or even personal output. You don't get more income in a parecon because you are born with highly valued talents or capacities, or because you happen to produce something highly valued, or because you work with highly productive partners, or because you own property, or because you are personally or collectively strong enough to take it. You get more in a parecon simply for working longer, or harder, or at worse conditions, as long as you are producing socially valued output.

The norm emphasizes not only the ethical basis of equity but also that for work to earn income, its product has to be socially useful. You can't work hard digging holes in your back yard and filling them. Nor can you work hard at making something useful and desired, but do the work in a slipshod or incompetent fashion. In such cases, you are not creating socially desired outputs the whole time you are laboring, which is to say not all the time or effort you are expending is warranted by the desirability of its product and therefore not all of it deserves remuneration. Similarly, I can't be shortstop for the Yankees or quarterback for the Indianapolis Colts in a parecon, nor could I be a surgeon or opera singer. My efforts would not be appreciated, being little different than if I were digging holes and filling them.

The claim that parecon attains equity means that parecon's combination of methods and structures ensures that each actor who is able to work is afforded a share of the social product in proportion to the duration, intensity, and onerousness he or she (usefully) expends. Parecon is not manic to the tenth decimal place about this, of course. Rather, in different pareconish workplaces workers will adopt methods of assessment and more precise norms that they prefer, consistent, however, with the overarching guidelines. What parecon contributes regarding equity is, first, clarification as to its meaning and composition and, second, institutions that facilitate attaining it, which are, again, the participatory planning system, balanced job complexes, and the self managed councils.

Parecon solves the problem of classlessness

The usual approach to class is that economic classes are a product of ownership relations. The main focus is capitalists owning the means of production and workers owning only their ability to do work. Other classes such as peasants are deemed less important as are differences between little or big owners, skilled or unskilled workers. The issue is capital versus labor.

Parecon additionally wonders about managers, doctors, lawyers, engineers, ceos. Is it helpful to lump these highly empowered workers with either rote workers below or with more powerful owners above? Or is this in between group significantly different from both owners and workers?

Parecon says what makes a class is that a group's position in the economy gives it interests collectively different and contrary to other classes, and, especially, that its position not only gives it a different methodology for personal advance and a different associated self image and image of others, but also a potential to rule economic life.

Parecon labels a group between labor and capital the coordinator class and says it matters both to how capitalism works, and, even more so, to what has in the past replaced capitalism. Parecon realizes, that is, that what has in the past been called socialism has had core institutions that didn't elevate workers while eliminating owners, but that instead elevated coordinators while eliminating owners. In the 20th century socialist economies, in the pareconist view, workers didn't dominantly decide economic outcomes and equitably share society's output. Instead, coordinators monopolizing empowering conditions of work dominantly decided economic outcomes, and greedily aggrandized themselves from society's output.

So parecon's class insight is that beyond capitalism there is classlessness, yes, as one option, but there is also coordinatorism as another option, where coordinatorism is an economic system that retains the class division between those who monopolize empowering circumstances in their work - the coordinator class - and those who mainly follow orders and suffer tedious conditions - the working class - and in which the coordinators rule the workers.

Saying that parecon solves the class problem is therefore saying that (a) parecon solves the problem of identifying the key classes. And (b) parecon's institutions don't elevate coordinators above workers, but instead create conditions in which no group has interests systematically opposed to the interests of other groups and conveying to it means to dominate those other groups.

The features of parecon most central to its solving the class problem are seeing that economics produces people and social relations and not simply outputs; understanding that not only ownership relations but also the conditions under which people work and their daily roles impact both their collective motives and their operational means; realizing that corporate divisions of labor and market allocation produce the coordinators as a separate and dominating class; and finally committing to balanced job complexes and participatory planning in their place.

Parecon promotes economic solidarity

There is an important movement of activists largely centered in Latin America and parts of Europe, that says they favor "solidarity economics." In essence they are presumably rejecting economic structures that cause actors to see one another as opponents or as means to ends. They favor economic relations that align actors so that the interests of each are mostly in accord with the interests of others. I am certainly still competing with Peyton Manning or Derek Jeter if I want to be quarterback of the Colts or shortstop of the Yankees, since it is true that we can't all have the spot. But once we do have responsibilities and tasks in the economy, advocates of solidarity economics want an arrangement that causes each person's pursuit of gain to be consistent with and to even enhance everyone else's pursuit of gain, rather than my doing well meaning you do worse, or vice versa. More, it would be nice to have an economy that nurtures empathy by causing even those who are most greedy and egocentric to have no choice but to be cognizant of and even supportive of other's needs and aspirations if we are to pursue our own. That would be serious solidarity. And seeking such an end provides a positive aim as compared to just avoiding the manipulative, often violent, and nearly always egocentric personal and collective rat race typical of current economies.

So the claim that parecon promotes economic solidarity says that parecon creates a context in which for me to materially advance means either the whole social product grows - which benefits everyone - or requires that I work longer, harder, or at worse conditions, which doesn't impede others from earning similarly if they wish to. More, parecon's logic also imposes when we consider choices for new technologies or other investments, my interests and other people's interests never systematically and repetitively clash and, most often, they even fully accommodate.

For example, we all benefit from the most effective reduction in onerous labor via an improvement of everyone's balanced job complex, rather than benefiting simply from a change instituted in our own workplaces as against others. The idea is when the dust settles we all wind up with average work conditions, so attaining the best average is in everyone's interest. What creates this context, again, is parecon's institutions, in particular its self managing councils, equitable remuneration, balanced job complexes, and participatory planning.

Parecon's implications today

There are many strategic implications of favoring parecon for activities we undertake now. For example, since our choices should embody the seeds of the future in the present in order to inspire and educate and also meet needs now, our institutions should have equitable remuneration, balanced job complexes and self management. If our efforts to win change need to empower constituencies to seek ever more, and to move toward where we wish to wind up, then our demands for change should move toward pareconish structure and our arguments and actions taken to win change should disseminate and generate support for pareconish vision.

Whether building new institutions, making demands in existing institutions, or trying to improve relations in some part of economic life by redefinition and reorganization, parecon's ultimate values and institutions should inform immediate demands, organization building, institution building, and consciousness raising. More, this should also hold for visionary aims we settle on for other aspects of life, such as kinship relations, culture, and political relations - summing to a participatory society." (http://www.zcommunications.org/znet/viewArticle/21283)

Discussion

Parecon vs. Economic Democracy

There has recently been an extensive debate between proponents of Michael Albert's Participatory Economics (Parecon) and David Schweikart's Economic Democracy. LInks about the debate can be found here at http://www.ecodema.org/archives/000171.html

It has a summary of the 2 positions:

Parecon is a proposed economic system that uses participatory decision making as an economic mechanism to guide the allocation of resources and consumption in a given society. Proposed as an alternative to contemporary capitalist market economies and also an alternative to centrally planned "socialism" or coordinatorism. The underlying values that parecon seeks to implement are equity, solidarity, diversity, and participatory self-management.

It proposes to attain these ends mainly through the following principles and institutions:

workers' and consumers' councils utilizing self-managerial methods for decision making, balanced job complexes, remuneration according to effort and sacrifice, and participatory planning.

For a deeper understanding here is the whole online version of the book: Participatory Economics: Life After Capitalism.

Schweickart's EconDem is a proposed form of market socialism that embodies three key ideas:

Democratic management of each productive enterprise by the workers

Democratic management of capital investment by a form of public banking

A (mostrly free) market for goods, raw materials, instruments of production, etc. The firms and factories are owned by society and managed by the workers. These enterprises, so managed, compete in markets to sell their goods. Profit is shared by the workers. Each enterprise is taxed for the capital they employ, and that tax is distributed to public banks, who fund expansion of existing as well as new industries.

For a deeper understanding see the book: After Capitalism by David Schweickart .

This article by the latter, is a devastating critique of the democratically-planned economy as proposed by Parecon.

Markets vs. Egalitarianism

David Schweikart at http://www.zmag.org/content/showarticle.cfm?SectionID=26&ItemID=9795

"Where does this leave us? Must we give up on the dream of a humane future beyond capitalism? I think not--but we must think hard about the viability of the alternatives we propose. We must also pay attention to the ethical foundations of our proposals.

In particular, we should reject the obsessive egalitarianism that underlies the Parecon proposal. This strict egalitarianism is morally problematic. [16] It undercuts the generosity of spirit a socialist ethic should promote. Suppose, for example, that I am happy with my work and with my level of consumption. Then I learn that you got more than I did without working any harder. May I take vicarious pleasure in your good fortune? May I fantasize that I too might one day get lucky? If your greater income is a reward for your greater contribution, may I feel good that you are so honored. May I consider honing my own talents so that I too might be rewarded more? Not if I'm committed to the Parecon principle. If you got more than me without working any harder, I am a victim of injustice. Righteous indignation is the appropriate response, not pleasure or inspiration. I experience your success as my humiliation. This is not an ethic of solidarity.

Strict egalitarianism is the ethic of squabbling siblings. (Gary got a bigger piece of pie than me. That's not fair! Gary gets to stay up later than me. That's not fair! Dad likes Gary better than me. That's not fair!) It is not an ethical principle that should command our allegiance. [17]

If we want to construct an economically viable, ethically desirable, alternative to capitalism, we should distance ourselves not only from Albert's obsessive egalitarianism, but also from his implacable hostility to markets: "Markets aren't a little bad, or even just very bad in some contexts. Instead, in all contexts, markets instill anti-social motivations in buyers and sellers, misprice items that are exchanged, misdirect aims regarding what to produce in what quantities and by what means, mis-remunerates producers, introduces class divisions and class rule, and embody an imperial logic that spreads itself throughout economic life. [18] "

Markets indeed have defects, but they have virtues as well. We need to think dialectically about markets. Markets are democratic (in that they respond to consumer preferences), and they are undemocratic, (since they tend to exacerbate income inequality). Markets enhance the space of individual freedom, (since consumer choices are not subject the approval of others), and they contract the space of individual freedom, (since market choices often have third-party effects). Markets provide incentives for constructive behavior (efficient use of resources, innovation) and for destructive behavior (consumer manipulation, disregard of ecological consequences). Neither market fundamentalism nor market rejectionism is an appropriate response to the reality of economic complexity.

God knows, we do not want to live in a world dominated by rapacious, unaccountable economic institutions that pit worker against worker, drive levels of inequality to almost unimaginable levels, and are in the process of devastating the ecology of the planet. We need a better way. But a life preoccupied with negotiating work complexes, forecasting one's future consumption, revising lists, scrutinizing the consumption lists of one's neighbors, posting notes on the qualitative aspects of desired purchases, voting on national plans vastly more complicated than the Federal Budget is not the answer.

This is not the place to defend an alternative proposal, one that avoids obsessive egalitarianism and allows for a regulated market, but interested readers might want to check out my After Capitalism" (http://www.zmag.org/content/showarticle.cfm?SectionID=26&ItemID=9795)

Parecon vs. P2P Theory

An extensive debate with Parecon is featered here at http://www.zcommunications.org/znet/zdebatealbbauwens.htm

More Information

• Hahnel, R. (2008) ‘Robin Hahnel Answers Various Criticisms of

Participatory Economics’, ZNet, November 19: http://www.zcommunications.org/robin-hahnel-answers-variouscriticisms- of-participatory-economics-by-robin-hahnel