Alternatives to capitalism – participatory economics?

Many of us today might agree with these words of John Maynard Keynes:

“The decadent international but individualistic capitalism in the hands of which we found ourselves after the war is not a success. It is not intelligent. It is not beautiful. It is not just. It is not virtuous. And it doesn’t deliver the goods. In short we dislike it, and we are beginning to despise it. But when we wonder what to put in its place, we are extremely perplexed.”

I think resolving this perplexity is a task which 20th century activism didn’t handle as well as it might have. In some ways this is understandable – activists had plenty on their plates dealing with capitalism’s various wars and crises. On the other hand, I think failing to develop and present to the public worked-out, credible alternatives has cost them a lot of potential recruits. The activist literature today is full of (valid IMO) criticisms of the existing economic systems, but somewhat light on what to replace these with.

Paradoxically, activist literature intending to empower its readers, by providing knowledge of how current systems work, often acts to dis-empower them, by presenting the picture of a “global nightmare” of giant corporations protected by powerful governments. In light of this, many people understandably assume there is little they can do and that even if we could somehow overthrow this system, we wouldn’t have anything credible to replace it with. I think that this and some other failings of “the left” are very well articulated here.

Instead, perhaps there should be a new brand of activist willing and able to take Buckminster Fuller’s challenge seriously:

“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”

The rest of this post is about one such model that attempts to resolve Keynes’ perplexity – Robin Hahnel and Michael Albert’s “participatory economics” or parecon for short. It’s difficult to describe parecon in a blog post – one needs at least a book! What I’ll try to do is give a sense of how parecon differs from previously tried attempts at alternatives to capitalism i.e. from 20th century socialist systems. If you want more details, elaborations, FAQs, criticisms etc go here. This post is only intended to pique someone’s interest sufficiently to check out the above, much more comprehensive, resources.

So what is parecon offering that is new? As I discussed here, capitalism uses private ownership of the means of production and distribution via markets. 20th century socialism has instead used state ownership of the means of production, with distribution either via central planning (e.g. in former USSR) or via markets (e.g. in former Yugoslavia). Parecon offers both alternative structures of ownership and an alternative method of distribution, which is neither centrally planned nor market coordinated. Impossible? Let’s first examine the ethical basis of the system, which is twofold:

  1. Participatory democracy: people should have a say in economic decisions that affect them, in proportion to the degree to which they will be affected.
  2. Remuneration for effort/sacrifice: socially useful work should be monetarily rewarded, but people should be rewarded more for socially useful work that is more effort intense and less generally desired, less for socially useful work that is less effort intense and more generally desired. Rewards go in proportion to total effort, not to total output.

These are important differences to both capitalism and 20th century socialism. Take the first point: in capitalist parliamentary democracies, we are more spectators than participants. We are able to vote on collective proposals which affect us (i.e. on election manifesto pledges) but we do not participate meaningfully in deciding the substance of these proposals; our influence on shaping election agendas is not in proportion to the degree to which we are affected by them, but depends on other factors, such as whether or not we own a corporation, or a newspaper, or can provide salaries for private armies of political lobbyists and funds to sponsor political campaigns. This democratic spectator-ship occurs in large part because the economic system itself is not democratic. In John Dewey’s words:

“As long as politics is the shadow cast on society by big business, the attenuation of the shadow will not change the substance.

Our economies also don’t reward personal effort, despite much ideological special pleading to the contrary! They reward a combination of property and output. If I am lucky enough to inherit a large estate or company from a recently deceased relative, capitalism will shower vast, entirely unearned, monetary rewards upon me. And it’s a similar story if I am lucky enough to genetically inherit some marketable talent. Parecon asks, is it fair that somebody else, who may work harder but does not possess my level of talent, should be rewarded far less for their efforts? Rewarding inheritance or talent is illogical as well as immoral, since both are fixed and as such cannot be increased by incentives. While money might induce a lazy person to work harder to make the most of their innate talents, it cannot possibly induce anyone to acquire such innate talents! So parecon says, why reward output, the product of property, talent (i.e. luck) and effort, rather than rewarding effort directly?

To try and achieve these aims systematically throughout the economy, parecon employs the following structures:

Workplace democracy: people will belong to worker’s councils and hence be directly involved in decisions affecting their workplace. Different democratic structures can be employed depending on the degree to which different actors will be influenced by each decision. Decisions where the impact might be serious for individual actors would be made via consensus – i.e. individuals would have veto rights. This eliminates common concerns about “strawman democracy”, such as the infamous  “two wolves and a sheep voting on what to have for dinner” problem. Solution: the sheep would be able to veto such a decision! Where individual impacts are more minor / impacts are spread uniformly over many actors, voting systems such as one-person one vote with a two-thirds majority passing of motions could be employed to make faster decisions.

Balanced job complexes: as part of accepting a given job, people agree to a balanced mixture of high-intensity, dis-empowering work and low-intensity empowering work. Average effort/sacrifice is equalised across distinct workplaces, with producer’s councils to ensure sufficiently uniform standards are maintained. Do we take this to imply that circus performers take their turn at surgery and surgeons take their turn at juggling? No – I haven’t the space to go into all such concerns here, so if you want further elaboration, go to the book or the website.

Allocation via participatory planning: The alternative to markets and central planning will be participatory planning, from the bottom up rather than via top-down, hierarchical bureaucracies. Representatives from worker’s councils will submit requests for required capital and/or material resources to the relevant consumer’s council. Consumer council representatives then meet to evaluate the proposals and vote on which to approve, how much to allocate each workplace etc. Representatives are drawn from the workplaces themselves, to which they return after each round of allocative decision making. Planning/management is just another aspect of balanced job complexes. There are no “career politicians” in parecon, no middle class of “coordinators” monopolising empowering work with a lower class forced to performs all the undesired, dis-empowering work and certainly no upper class of capitalists making all key economic decisions in a manner largely unaccountable to the public.

Why does parecon reject allocation via markets, in contrast to “market socialism” or proposals such as Proudhon’s “mutualism”? Well, markets are fine when it comes to a pair of actors, equal in bargaining power, entering contracts that only impact on them. However to apply markets to society at large introduces a lot of problems. First of all,  actors are not equal in bargaining power. A “freely entered” contract can be mutually beneficial, but still exploitative. Say I own all the water in town and charge everyone £10 for a glass of water. The contract is mutually beneficial – I get money and they get water – but is a highly exploitative one due to discrepancies in relative bargaining power; I can go without money more easily than they can go without water. Prices of all commodities in capitalist economies reflect this dynamic to a greater or lesser extent.

Market socialism mostly removes this problem by removing private ownership of the means of production as an issue, but is still left with the problem of “externalities”: market transactions made between two parties, even ones that don’t exploit either party, cannot take into account systemic costs or benefits. These go unaccounted for, hence systemically beneficial (but individually costly) things get under-produced, while systemically costly (but individually beneficial) things get over-produced.

What is the solution to “externalities”? Market socialism might propose government subsidies and taxes, but this complicates market systems a great deal, since in an increasingly sociable society (such as any socialism worth its name would presumably encourage!) externalities become the rule rather than the exception. If we are able to know how much to subsidise and how much to tax things by, we presumably have some sense of their actual social costs, costs that markets are unable in priciple to tell us. So in that case, why use markets at all? This is the logic behind parecon’s alternative system of allocation via consumer council “horizontal” (rather than Soviet style “top-down”) planning.

Parecon aims at a classless society founded upon the idea of solidarity; the mutual respect for and dependance upon the efforts and talents of each individual. By rewarding solely effort, such talents cease to be a source of envy and become a source of admiration. Parecon does not pit us in anti-social competition against our fellow human beings – one person does not need to fail so that others can succeed, as with capitalism. We can all succeed together, and moreover the more others succeed the more each of us will individually.

To use a physiological analogy if I may: a healthy body is not maintained via competition between the heart and liver for example, but by mutually beneficial co-operation between all bodily organs. Similarly, a healthy “body economic” is maintained through systemically supported solidarity between the citizens forming the organelles of its cells, the cells themselves being our workplaces, and finally between the organs formed from these cells, the overall productive industries associated with them, whose mutually beneficial inter-relations are coordinated via the consumer’s councils.

If such a system as I outlined in this post sounds attractive to you, I encourage you to both visit the linked resources to learn more and to become active in conversations to develop it further. In turn, I encourage seasoned activists both to develop ideas on how we can each involve ourselves in developing such participatory systems, “the living germs of the new society” (in Bakunin’s words) within the existing hostile capitalist infra-structures, and to signpost the potential problems this entails for interested but inexperienced folk like myself.


~ by freedomthistime on July 25, 2011.

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