Participatory Economics

- by Michael Albert

Participatory Economics (parecon for short) is a type of democratic economy including new institutions and guiding norms proposed as an alternative to contemporary capitalism and central planning. Parecon is a direct and natural outgrowth of hundreds of years of struggle for economic justice as well as contemporary efforts with their accumulated wisdom and lessons.

The underlying values parecon seeks to implement are:

Solidarity: people caring about one another and being social in their inclinations
Diversity: having varied options and outcomes
Equity: having fair distribution of wealth, income, and also circumstances
Self-management: people having a say over the decisions that affect them in proportion to the extent they are affected

Having these values at its core means that participatory economics proposes institutions that (it claims) propel these results rather than propelling anti-sociality and individualist competition, homogenization of outcomes and tastes, gross inequality, and top down hierarchical rule all familiar from both capitalism and the two post capitalist coordinator models that their advocates respectively call market socialism and centrally planned socialism. The main institutions to attain these ends are:

Workplace and consumer councils with self management decision making.
Balanced job complexes, which means a division of labor in which each actor has a mix of tasks and responsibilities that is balanced so as to convey average workplace quality of life and average empowerment to all.
Remuneration according to effort and sacrifice - not for output, power, or property.
Participatory planning which is a cooperative interactive approach to allocation that replaces both markets and central planning.

Workplace and consumers councils

Each workplace is owned in equal part by all citizens so that ownership conveys no special rights or income advantages. Bill Gates wouldn’t own a massive proportion of the means by which software is produced. We all would own it equally, so that ownership would have no bearing on the distribution of income, wealth, or power. In this way the ills of garnering wealth through profits would disappear.

Workers and consumers would develop and express their desires via democratic councils with the norm for decisions being that methods of dispersing information and for arriving at and tallying preferences into decisions should convey to each party involved, to the extent possible, influence over decisions in proportion to the degree he or she will be affected by them.

Councils would be the vehicle of decision-making power and would exist at many levels, including smaller work groups, teams, and individuals, and broader workplaces and whole industries, as well as individual consumers, neighborhoods, counties, and larger. Votes could be majority rule, three-quarters, two-thirds, consensus, etc. and would be taken at different levels and with fewer or more participants and voting rules depending on the particular implications of the decisions in question. Sometimes a team or individual would make a decision. Sometimes a whole workplace, an industry, a neighborhood, or a county would decide. Different decisions would employ different voting and tallying methods. There would be no a priori correct, detailed option, but there would be a right norm to implement: decision-making input in proportion as one is affected by decisions.

Above is an example of how the consumer council structure could look like in the U.K with 35 people in each council making 5 levels for the population of the U.K.

Balanced Job Complexes

Each actor does a job, and each job of course includes a variety of tasks. In rejecting current corporate divisions of labor, we decide to balance for their empowerment and quality of life implications the tasks each actor does. Every person participating in creating new products is a worker, and each worker has a balanced job complex, meaning the combination of tasks and responsibilities each worker has would accord them the same empowerment and quality of life benefits as the combination every other worker has.

Unlike the current system, we would not have a division between those who overwhelmingly monopolize empowering, fulfilling, and engaging tasks and those who are overwhelmingly saddled with rote, obedient, and dangerous tasks. For reasons of equity and especially to create the conditions of democratic participation and self- management, balanced job complexes would ensure that when we each participate in our workplace and industry decision-making, we have been comparably prepared by our work with confidence, skills, and knowledge to do so.

The contrary situation now is that some people have great confidence, decision-making skills, and relevant knowledge obtained through their daily work, while other people are only tired, de-skilled, and lacking relevant knowledge as a result of theirs. Balanced job complexes do away with this division. They complete the task of removing class divisions that is begun by eliminating private ownership of capital. They eliminate, that is, not only the role of capitalist with its disproportionate power and wealth, but also the role of decision monopolizing producer who is accorded status over and above all others. Balanced job complexes retain needed conceptual and coordinative tasks and expertise, but apportion these to produce true democracy and classlessness.

Remuneration according to effort and sacrifice

But what about remuneration? We work. This of course entitles us to a share of the product of work. But how much?

We ought to receive for our labours remuneration in tune with how hard we have worked, how long we have worked, and how great a sacrifice we have made in our work. We shouldn’t get more because we use more productive tools, have more skills, or have greater inborn talent, much less should we get more because we have more power or own more property. We should get more only by virtue of how much effort we have expended or how much sacrifice we have endured in our useful work. This is morally appropriate, and it also provides proper incentives by rewarding only what we can affect and not what is beyond our control.

With balanced job complexes, if Emma and Edward each work for eight hours at the same pace, they will receive the same income. This is so no matter what their particular job may be, no matter what workplaces they are in and how different their mix of tasks is, and no matter how talented they are, because if they work at a balanced job complex their total workload will be similar in its quality of life implications and empowerment effects. The only difference to reward people doing balanced jobs for will be length and intensity of work done. If these too are equal, the share of output earned will be equal. If length of time working or intensity of work differ somewhat, so will the share of output one earns.

And who makes decisions about the definition of job complexes and who evaluates the rates and intensities of people’s work? Workers do, of course, in their councils, using information culled by methods consistent with the philosophy of balanced job complexes and just remuneration, and in a context appropriately influenced by the wills and desires of consumers.

Participatory Planning

There is one very large step left to a proposal for an alternative to capitalism. How are the actions of workers and consumers connected? How do we get the total produced by workplaces to match the total consumed collectively by neighbourhoods and other groups as well as privately by individuals? For that matter, what determines the relative valuation of different products and choices? How do we decide how many workers will be in which industry producing how much? What influences whether some product should be made or not? What guides investments in new technologies in turn influencing what projects should be undertaken and which others delayed or rejected? These questions and others too numerous to mention in this introduction are all matters of allocation.

Existing options for allocation are central planning as used in the old Soviet Union and competitive markets as used in all capitalist economies. In central planning a bureaucracy culls information, formulates instructions, sends these instructions to workers and consumers, gets feedback, refines the instructions a bit, sends them again, and receives back obedience. In a market each actor competitively buys and sells products, resources, and the ability to perform labor at prices determined by competitive bidding. Each actor seeks to gain more than those they exchange with.

The problem with each of these modes of connecting actors is that they impose on the economy pressures that subvert solidarity, equity, diversity, and self-management.

For example, even without capital ownership, markets favour private over public benefits and channel personalities in anti-social directions that diminish and even destroy solidarity. They reward output and power, not effort and sacrifice. They produce a disempowered class saddled with rote, obedient labour and an empowered class that accrues most income and determines economic outcomes. They force decision-makers to competitively ignore the wider ecological implications of their choices. Central planning, in contrast, denies self-management and produces the same class division and hierarchy as markets but instead built around the distinction between planners and those who implement their plans, extending from that foundation outward to incorporate empowered and disempowered workers more generally.

In short, both these allocation systems subvert instead of propel the values we hold dear. So what is our alternative to markets and central planning?

Suppose in place of top-down central planning and competitive market exchange, we opt for cooperative, informed decision-making via structures that ensure actors a say in decisions in proportion as outcomes affect them and that provide access to accurate valuations as well as appropriate training and confidence to develop and communicate preferences—that is, we opt for allocation that fosters council-centered participatory self-management, remuneration for effort and sacrifice, balanced job complexes, proper valuations of collective and ecological impacts, and classlessness.

To these ends, therefore, we advocate participatory planning—a system in which worker and consumer councils propose their work activities and consumer preferences in light of true valuations of the full social benefits and costs of their choices.

The system utilizes cooperative communication of mutually informed preferences via a variety of simple communicative and organizing principles and means including, as we will see in coming chapters, indicative prices, facilitation boards, and rounds of accommodation to new information—all permitting actors to express their desires and to mediate and refine them in light of feedback to arrive at choices consistent with their values.

The summary is that workplace and consumer councils, diverse decision-making procedures that implement proportionate say for those affected, balanced job complexes, remuneration for effort and sacrifice, and participatory planning, together constitute core institutional scaffolding of a comprehensive alternative to capi- talism and also to centrally planned or market socialism.

So parecon combines these central institutions into an economic system that accomplishes economic activity to meet needs and fulfill potentials while also propelling solidarity, diversity, equity, and self-management. Parecon therefore gives us true classlessness and is therefore an alternative both to capitalism and to the horrible systems that previously existed in Eastern Europe and the Soviet Union.