[re: below-- I've been reading Michael Albert's writings on participatory economics in Z magazine since the 90's-- and am absolutely thrilled that the young men and women of Occupy Albany are picking up the torch on this; join us if you can for this today-- no time like the present to seriously push for truly participatory economics!...Joel]
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Occupy Albany: Teach-In on Participatory Economics
By Colin Donnaruma and Nick Partyka
Time: 12:00pm until 1:30pm
Where: Academy Park
Most of us agree that capitalism is broken but many of us are unclear about what a positive democratic alternative would look like and how it would be organized. Colin Donnaruma and Nick Partyka, doctoral students in poltical economics at UAlbany, will facilitate a teach-in on participatory economics and non-hierarchical alternatives to market-based capitalism.
Come discuss and learn about democratic and cooperative ways to structure economic activity. All are welcome!!
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A few workplaces have been established based on principles akin to parecon, particularly in Canada and the USA:
* South End Press, a book publisher in Boston, Massachusetts.
* G7 Welcoming Committee, an independent record label closely tied to the Winnipeg band Propagandhi.
* Z Magazine, a progressive/radical magazine.
* The Old Market Autonomous Zone, a three-story building in Winnipeg, Canada that houses organizations which have similar principles, including: Mondragon Bookstore (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 Publishing, 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 Goldman Grassroots Centre is the A-Zone's second floor, where many activist groups share communal meeting and organizing space.
* The NewStandard, an online progressive hard news website published by the PeoplesNetWorks Collective, headquartered in Syracuse, New York. 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.
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By Michael Albert
Tuesday, October 11, 2011
Text of a speech delivered to a CNT Sponsored gathering in Barcelona, Spain.
Thank you for having me. It is a pleasure to be here.
I hope we will have time for ample discussion as I very much look forward to hearing your insights on our topic which is participatory economic vision.
To begin, then, in the words of the great British economist John Maynard Keynes –
“[Capitalism] 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.”
Let’s see if we can undue that perplexity.
First, briefly, what is capitalism's real problem?
Capitalism is theft.
The richest in the U.S., for example, have wealth unparalleled in history.
The poorest in the U.S., however, live under bridges inside cardboard shelters, or stop living at all.
The gap, in the U.S. and similarly here in Spain, is a social product, a theft.
Capitalism is alienation and anti-sociality.
Within capitalism the motives guiding decisions are pecuniary not personal.
The motives are selfish not social.
We seek individual advance at the expense of others. Not collective advance to mutual benefit.
The result is an anti-social environment in which nice guys finish last and economic logic seeks profit rather than social well being.
Capitalism is authoritarian.
Within capitalist workplaces those who labor at rote and tedious jobs have nearly zero say over conditions, output, and aims. Those who own the workplaces or who monopolize empowering positions have nearly all say.
Not even Stalin, for example, ever dreamed of people having to ask his permission to eat or to go to the bathroom, yet corporate owners routinely exercise such power.
Corporations bear the same resemblance to democracy that killing fields bear to peace.
Capitalism is inefficient.
Market profit seeking squanders the capacities of about 80% of the population by training them to endure boredom and to take orders, not to fulfill their greatest potentials.
Market profit seeking also wastes inordinate resources on producing items that aren’t beneficial, and enforcing work assignments that are coerced and therefore resisted.
Capitalism is racist and sexist.
Under market competition owners inevitably exploit racial and gender hierarchies produced in other parts of society.
If extra economic factors reduce the bargaining power of some actors while raising that of others, creating hierarchical expectations about who should rule and who should obey, capitalists will exploit the hierarchies.
Capitalism is violent.
The race for capitalist market domination produces nations at odds with other nations until those which accrue sufficient power are in position to exploit the resources and populations of those who lack defensive means.
The ultimate manifestation is imperialism, colonialism, and unholy war.
Capitalism is unsustainable.
The money grabbers accumulate and accumulate, regardless of human need and desire. They ignore or willfully obscure the impact of what they do not only on workers and consumers, but also on the environment.
The market propels short term calculations. It makes dumping waste to avoid costs an easy and competitively enforced avenue to gain. The results appear in sky and soil. They are mitigated only by social movements that compel wiser behavior.
I could of course recount for many hours the failings of capitalism, its morbid human implications both in theory and in hard statistics, as I am sure you all could too.
But I think there is no point in doing that here, or really, almost anywhere, anymore.
I think by this second decade of the twenty first century only a relatively few people are made so callous by their advantages, or are made so profoundly ignorant by their advanced educations, or are so manipulated by media and their own naiveté, or so coerced by their positions that they fail to see that capitalism is now a gigantic holocaust of injustice.
Everything is broken in virtually every respect, and everyone knows it.
As Keynes said, capitalism is not intelligent, is not beautiful, is not just, is not virtuous -- and is not even delivering the goods.
So what do we want instead?
Participatory Economics, or parecon, which the replacement for capitalism that I advocate, is built on just four institutional commitments.
Parecon is therefore not a blueprint for a whole economy. It is a description of key features of just a few centrally important aspects of an economy.
Parecon is enough, and just enough, for us to know that with parecon future people will self manage their economic lives as they decide.
Workers and Consumers Councils
The first feature of participatory economics is nested workers and consumers councils of the sort we have seen arise most recently in places such as Argentina and Venezuela.
The added feature of parecon’s councils, however, is a very explicit commitment to self managed decision making.
People in a parecon influence decisions in proportion as they are in turn affected by them. If a decision will affect me more, I will have more say in it. If it will affect me less, I will have less say in it.
Sometimes self management entails one person one vote majority rule. Think of deciding the start time for the work day.
Sometimes self management could require a different tally, maybe two thirds or three quarters needed to win, or that only some segment of the whole populace votes. Think of decisions that mostly affect a work team, where only that team votes.
Sometimes for those who are deciding to best approximate perfect self management, consensus is needed. Think of a team deciding its schedule, giving everyone a veto because a bad schedule can so adversely affect each person.
There are even times, many times, when we all believe dictatorial decision making most accords with self management. I decide whose picture I place in my work area, of what color socks I wear, and I do it alone, by myself, like Stalin.
The point is, in a parecon, all such voting approaches and even particular ways of presenting, discussing, and debating before finally voting, are tactics we utilize to attain as closely as makes sense the appropriate self managing say for all involved actors.
So as our first commitment we have self managed workers and consumers councils.
The second central feature of parecon, is about equitable remuneration.
Other things equal, in a parecon we will earn more if we work longer, if we work harder, or if we work under more harsh or harmful conditions.
Remuneration will be for duration, intensity, and harshness endured. It will not be for property, power, or output.
Parecon rejects the idea that someone should earn more by virtue of having a deed in his or her pocket. There is no moral warrant for profit nor is there any incentive warrant for it.
Parecon also rejects a thuggish economy in which one gets what one can take. This is characteristic of market exchange. It is the kind of remuneration that business school graduates celebrate. You get more if you have the power to take it.
Al Capone, the famous American Gangster, was once asked about his feelings toward the U.S.
He answered, "I love America. America is great. In American, you get what you can take."
So business school graduates and Al Capone agree, keep what you can take - but parecon rejects thuggish remuneration.
Most controversially, parecon also rejects that we should get back from the economy an amount equal to what we contributed to it by our own labor.
Many socialists favor this norm, but parecon rejects it. The reason for this rejection is that parecon understands that our output depends on many factors and rewarding output rewards each of those factors.
If we have better tools, we produce more. Should we get more income due to the luck of having better tools?
If we work in a more productive environment, or producing more valued items, we produce great value. Should we get more income due to the luck of working one place rather than another?
If we have innate qualities that increase our productivity, we produce more. Should we get more income due to having been born with a great voice, or great reflexes, or large size, or a fantastic talent for calculation?
Parecon says no to all three.
We should not get more for luck in tools, luck in our workplace, or luck in the genetic lottery.
Instead, we should get more only if we work longer, or harder, or at more onerous conditions, doing socially valued labor.
Parecon's remuneration makes moral sense and also induces productive labor as incentives should.
The usual complaint about pareconish equitable remuneration goes like this.
Doctors won't go to college and medical school and endure training if they aren't paid way more than coal miners digging in the ground and folks flipping burgers at MacDonalds.
Thus with parecon's remuneration scheme we will lose doctors and other creative, necessary workers, and will all suffer. The economists tell us this, students repeat it, virtually everyone takes it for granted.
In fact, however, the claim is utter nonsense. It is repeated so often that most people take it as gospel, but it is far from that.
Consider that if you think about it for just a couple of minutes, this is what it says.
Sam and Sara are just getting out of High School. Sara is heading to a coal mine, or MacDonalds. Sam is headed to college, then medical school, then to be an intern.
Sara, let's be generous, is going to earn $60,000 a year for the next 45 years, and retire. Sam is going to earn, once a doctor, $600,000 a year, until he retires.
So here is what the economists are telling us.
Sam needs to get that salary because if we pay him less he will not go to college, not go to medical school, not be an intern, and not be a rich doctor.
Apparently, the suffering of college compared to being in a coal mine for the same period, and of medical school compared to being in a coal mine for those years, and of interning compared to being in a coal mine, is so horrible, that the payment for the next few decades is needed as a kind of bribe.
I hope you can already see this is absurd.
In fact, if we asked Sam to choose between his doctoring path and the coal mine or MacDonalds path - and to do it in light of a lower salary offered for a doctor...and we then started dropping the proposed salary, and said, tell us, Sam, when you are ready to give up doctoring to switch because you are not being paid enough - the results are absolutely predictable.
I have done this experiment dozens of times, with pre med students, with doctors, with other students, all of whom not five minutes earlier told me pareconish remuneration was idiotic and would lead to no doctors, and I have always gotten the same result.
They say no to switching from medicine to coal or burgers at $500,000, $400,000...all the way down to $60,000 and then $50,000 and then they typically stop me. And they say, well, I don't know. How low can I go and still survive? And they are always laughing, addled at how obvious it is that their economist teachers were either lying or idiots.
The reality is, of course, that doctors make as much as they do because in capitalism they have the power to take that much. It has nothing to do with justice or incentives. It has everything to do with market competition and power based on a monopoly on skills and knowledge, which is very carefully maintained.
And in a parecon, even though paid instead only for duration, intensity, and onerousness of socially valued labor, of course we will all want to do things we are good at and can make a contribution at. This is not only moral, it generates economically correct incentives.
Balanced Job Complexes
For its third feature, participatory economics needs a new division of labor.
If a new economy were to remove private profit and install equitable remuneration and also incorporate self managing councils, but were to simultaneously retain the current corporate division of labor, its commitments would be inconsistent.
If you look at workplaces here, around the world, or for that matter in 20th century socialist economies, you will find a startling commonality. The way work is parceled out into jobs is very consistent.
One job has only empowering tasks. The next four jobs have only disempowering tasks. Another job has only empowering tasks. The next four have only disempowering tasks.
Having 20% of the workforce monopolize empowering work and 80% do only more obedient, rote, stultifying work is the corporate division of labor.
It ensures that the former group – who I want to call the coordinator class – including, by the way, doctors - rules over the latter group, the working class.
The coordinators have all the knowledge, social skills, confidence, and even energy needed for discussing and making decisions. The workers are robbed of knowledge, not allowed to advance their social skills, and exhausted.
Even with a formal commitment to self management, the coordinators enter each decision discussion in a workers council having set the agenda for the discussion, owning all the information relevant to the ensuing debate, alone possessing the habits of communication that will inform the debate, and alone possessing and exuding the confidence and energy to fully participate.
The workers, in contrast, having been bored and exhausted by the repetitive and disempowering work they do, will come to decision discussions only ill prepared and eager to get home.
The coordinators will therefore determine outcomes. In time they will begin to see themselves as superior. Disempowered workers will begin to avoid the meetings. The coordinators will then choose to remunerate themselves more, to streamline meetings and decision-making by excluding those below, and to orient economic decisions in their own ruling class interests.
I sat in a room in Argentina some years back with about fifty workers, each from a different occupied factory. I was to give a talk, but suggested we go around the room with people telling of their experiences, first.
These folks were just meeting each other, and initially very upbeat. They were, after all, all occupying and making successes out of factories taken over from the prior owner.
By the third person to report, the room was quiet and the upbeat mood had dissipated. By the fifth person, things were maudlin. There were tears in people's eyes by the seventh person, and I intervened and said I had heard enough to begin my talk, which I did.
Each worker had told a similar story. The last one put it roughly like this. "I never thought I would ever say anything like this, but maybe Margaret Thatcher was right."
"We took over our factory," she continued. "We equalized wages, save for differences in time worked. We instituted democracy and even elements of self management. Time passed. We made a success of the workplace, but now, I hate to say it, all the old crap is coming back. Our democracy is becoming sham. Incomes are diverging. Alienation is setting in. Maybe it is just impossible."
So I spoke about the effects of the corporate divisions of labor they had retained, and why that was the explanation for the coordinators accruing more power and eventually also more income.
Due to about four fifths doing working class jobs, and about one fifth doing coordinator class jobs, the latter dominated, and developed warped self perceptions and perceptions of others, too, and in time the old crap returned.
Having this knowledge was the difference between folks succumbing to cynicism and despair, and folks realizing that there was a way forward.
The large scale upshot of all this is that one kind of class that exists above workers is owners. Having a deed to property, capitalists own means of production. They hire and fire wage slaves. They seek profits.
But the startling point about the oberservations is that even with this owning class eliminated, classlessness is not necessarily attained.
Another group that is also defined by its position in the economy, not by ownership but by its position in the division of labor, can still wield virtually complete power, including aggrandizing itself above workers.
It follows, that to avoid coordinator class rule, which is exactly what exists in what is called market and centrally planned socialism, we must replace the corporate division of labor with a new approach to defining work roles that doesn't overwhelmingly empower some while overwhelmingly disempowering the rest.
Parecon calls this third institutional commitment balanced job complexes. Each of us in any society, will by definition be doing some collection of tasks. That is what a job is.
If the economy employs a corporate division of labor, our tasks will combine into a job that is either largely empowering due to including mainly empowering tasks, or is largely disempowering due to including mainly disempowering tasks.
In a participatory economy, instead, we combine tasks into jobs so that for each worker the overall empowerment effect of his or her job is like the overall empowerment effect of every other worker's job. Everyone has what we call an average balanced job complex.
In parecon, that is, we don’t have managers and assemblers, editors and secretaries, surgeons and nurses as we now do. The functions these actors now fulfill persist, but the labor of accomplishing the functions is divided up differently.
Of course some people still do surgery while most don’t. However, those who do take scalpel to brains also clean bed pans, or sweep floors, or assist with other hospital functions.
The total empowerment the current surgeon’s job affords is altered by remixing tasks in a parecon. She still does some surgery but she winds up with a balanced job complex including other tasks, like cleaning bed pans, in sum conveying the same total empowerment as the new job of the person who previously only cleaned up.
The domination of the coordinator class over all other workers is removed not by eliminating empowering tasks, nor by everyone doing the same things, both of which options are impossible.
Instead, we distribute empowering and rote tasks so that all economic actors participate in self managed decision making without advantage or disadvantage due to their economic roles. There are only people who work. There is no division of that large group into two classes.
Some say this approach will waste talents and as a result, fall short in delivering the goods. Their feeling is that we will lose some of the highly productive labors of doctors and lawyers and engineers, and so on, who will have to do a mix of work, including a fair share that is disempowering.
In truth, this viewpoint is either sloppy thinking, or is classist.
Yes, if Sam does surgery in capitalism 40 hours a week, and then in parecon does it only 20 hours a week, or 15, then we have indeed lost 20 or 25 hours of Sam's highly productive labors since Sam is spending that much time cleaning up.
And if this happens for all doctors, the total doctoring done by the old doctors has dropped by half, or more.
The critic smiles and proclaims that this approach will not deliver the goods.
This is sloppy thinking if the critic simply failed to notice that we altered society so that the 80% who previously were schooled to endure boredom and take orders, thereby crushing the creativity out of them, are in parecon instead schooled to fulfill all their talents and capacities - so that that huge new pool of people is available to provide additional folks doing surgery.
It is classist thinking, however, if the critic remembered this fact, but felt it was irrelevant because people in the 80% would be incapable of doing good surgery - or good lawyering, doctoring, managing, etc.
Why is that classist? Because it says that working people are intrinsically incapable, and not merely beaten down.
Now none of you need to be convinced this is nonsense, I hope, but you will find yourselves having to convince others of the point, often. So here are two techniques I find very effective.
First, I ask them to imagine that it is 1955 and we have taken all the surgeons in the U.S. and put them in a gigantic stadium. I say, look around and tell me if there is anything noteworthy.
They say, yes, of course, they are all men. And I point out that at the time, all of those men, and even a very large percentage of women, would have said that this was due to women being inherently incapable of doing good surgery.
I then add that now 51% of medical students in the U.S. are women, so that this virtually universal belief was not wisdom, but was sexism, and I point out that it is exactly the same thing to look around at working people now and see that they aren't surgeons and don't have other empowering work, and attribute this to their lack of capacity rather than to injustice.
The second way I try to overcome such prejudice is by telling a story about Argentina.
I was there, in a glass factory that had been occupied by its workforce when the capitalist gave up and wanted to sell it.
The coordinator class folks also left, figuring they were better off elsewhere. But the workers stayed. And months later, when I visited, the workers had the plant working, and indeed thriving.
I spoke with a woman who was doing the chief financial officer job, basically accounting, financial policy making, etc. She has been, before, working at an open furnace.
All day she would repeat a few movements, tedious, unskilled, deadly. Day after day she did it. Then, after the take over, she was assigned to do finances.
So I asked, what was the hardest thing to learn. She didn't want to answer - she was shy.
So I said, was it using computers? No. Using spread sheets on the computer? No. Learning accounting concepts? No.
I was running out of guesses, so I said, okay, please, tell me.
And she said, well the hardest thing was that first I had to learn to read.
Just think about that. From working class boredom, through learning to read, to running the finances, in a matter of months. So much for a lack of capacity.
Finally, we come to parecon's fourth institutional commitment.
Suppose we have lots of workplaces and communities all committed to having workers and consumers councils, to using self managed decision making procedures, to having balanced job complexes, and to remunerating for effort and sacrifice.
Suppose, in addition, we opt for central planning or for markets for allocation. Would this constitute, all together, a new and worthy vision?
No, it would not. Both central planning and markets, by their impositions on behavior and options, would destroy self management, balanced job complexes, and equitable remuneration.
With central planning the authoritarian logic of order giving and order taking would impose coordinator class rule.
With markets, the competitive dictates would not only violate equitable remuneration and self management, they too would impose coordinator rule.
These results are not only predictable, following out the logic of these modes of allocation - and if we had time for that we could show it - but they are and have been visible in real world situations, notably what have been labelled centrally planned and market socialist economies, which would have been better labelled, however, coordinatorist.
But then what replaces markets and central planning to round out the defining features of participatory economics?
Participatory planning is the fourth institutional commitment of parecon. It is essentially cooperative negotiation of inputs and outputs by the workers and consumers self managing councils.
There is no time to walk through what this looks like in any detail beyond saying that it has no center, no top, and no bottom.
The dynamics of participatory planning reveal true social costs and benefits.
They provide appropriate incentives enabling equitable remuneration.
They convey motivations for actors to mutually aid and benefit one another via solidarity.
And they arrive at self managed decisions in an efficient manner.
Okay, so suppose we combine workers and consumers councils, self managed decision making, remuneration for effort and sacrifice, balanced job complexes, and participatory planning.
That is participatory economics, or parecon.
Our claim is that parecon is not only classless, and not only fosters solidarity, diversity, and equity – but to the extent possible and with no recurring biases, it apportions to each worker and consumer about each economic decision, an appropriate level of self managing influence.
Parecon doesn’t reduce productivity per worker hour but provides adequate and proper incentives for everyone to work well.
Parecon doesn’t bias toward longer hours but allows free choice of work versus leisure.
Parecon doesn’t pursue what is most profitable for a few regardless of impact on workers, the ecology, and often even consumers, but instead orients output toward what is truly beneficial in light of full social and environmental costs and benefits for all.
Parecon doesn’t waste the human talents of people now doing surgery, or composing music, or otherwise engaging in difficult and skilled labor by requiring that they do offsetting less empowering labor as well, but instead by that means surfaces a gargantuan reservoir of previously untapped talents throughout the populace.
Parecon apportions empowering and rote labor not only justly, but in accord with self management and classlessness.
Parecon doesn’t assume divine citizens. Instead, it creates a context in which to get ahead in their economic engagements even people who grow up entirely self seeking and anti-social must be concerned for the general social good and the well being of others.
In capitalism buyers seek to fleece sellers and vice versa. People are trained by the economy to be anti-social and to get ahead they must learn those lessons well. In capitalism, nice guys finish last – or in my own more pithy rendition, garbage rises.
In parecon, in contrast, solidarity among citizens is produced by economic life just as vehicles, homes, clothes, and musical instruments are. We all gain if the whole society benefits by larger overall output, or by increased productivity per hour, or by less onerous work conditions - or if we work harder or longer to gain the extra income.
We all have an interest in changes in the economy that improve society's overall average job complex - because we all share in its attributes.
Finally, what difference does advocating parecon make for our present behavior?
When Margaret Thatcher, the British reactionary Prime Minister, said “There is no alternative,” she accurately identified a central obstacle to masses of people actively seeking a better world.
If one sincerely believes there is no better future, then it follows that to reject a call to fight against poverty, alienation, and even war, is understandable.
If I were delivering the most powerful speech any of you had ever heard, a tear-jerking description of a scourge of humanity that undeniably diminishes all our lives and in the end kills almost of us, and at the end I said please, in the name of justice and your own well being, come join me in a movement against this horrible devastator of humans - aging – you would all laugh at me. You might even say, thinking I was a bit nuts, go get a life. Grow up. Face reality. You can’t fight aging, that’s a fool’s errand. And you might say it, dismissively, and with good reason.
And haven't we all encountered people talking to us like that?
Well, the truth is most people sincerely think capitalism is forever. Capitalism is like a law of nature.
And in their view, to fight against capitalism, or even against its symptoms, can indeed seem like a fool’s errand.
When we say come join us in a movement against capitalism, they hear us saying, come be an idiot - come fight for the impossible. And they tell us to grow up and get a life.
As an advocate of parecon I hope to provide an economic vision able to turn that feeling upside down, a vision able to replace cynicism with hope and reason.
I am not suggesting that you should have heard this talk and become a pareconist.
This talk doesn't provide enough detail, enough evidence, and nor have you had sufficient time to mull it over.
What I do hope is that you will be feeling, hey, what if parecon really does answer the claim that there is no alternative? What if it is a viable and worthy alternative to capitalism?
In that case, you might think to yourself - I would need to know about it, I would even need to advocate it. So, to find out - I need to explore it further.
When we all go to movies and see courageous souls of the past represented on the screen, fighting against slavery, or against the subordination of women, or against colonialism, or for peace and justice and against dictatorships, we rightly feel sympathy and admiration for their acts.
Abolitionists, suffragettes, labor organizers, anti apartheid activists, all seekers of freedom and dignity are heroes to us.
But if we admire standing up against injustice, shouldn't we ourselves stand up against injustice. If we admire seeking a better world, shouldn't we ourselves seek a better world.
If we admire rejecting exploitation, alienation, domination, and its violent maintenance, shouldn't we ourselves advocate and fight for an economic model and societal structure that will eliminate these horrors.
I believe participatory economics is such an economy and should be part of such a new society.
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From http://en.wikipedia.org/wiki/Participatory_economics ...
From Wikipedia, the free 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:
* workers' and consumers' councils utilizing self-managerial methods for making decisions,
* balanced job complexes,
* remuneration 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, 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.
 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 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 labour, 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 heredity, 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, children, 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.
 Allocation in a Participatory Economy
 Consumers' and producers' councils
Albert and Hahnel proposed the creation and organization of consumer's and producers' councils to implement the decision making principle. Many individuals would participate in both types of councils. These would be similar to workers' councils. 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.
 Facilitation Boards
Iteration Facilitation Boards (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.
 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 boards 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.
Iterations 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.
 Money in a participatory economy
Main article: Labour voucher
"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 voucher 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.
 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 alcohol 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 fuels, 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 taxes — 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:
"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 problems 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 corporations. 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.
 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 hierarchy 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 states 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.