Mar 13 2007

Parecon: Participatory Economics and Socialism for the 21st Century

Category: Emancipation & Liberation,Issue 14RCN @ 7:17 pm

by Neil Bennet

What do you want?

It’s a question that we, as revolutionary socialists (or communists) face more often than any other when talking about our politics. We are more than happy to tell people what we are against – war, exploitation, suffering, injustice…but more often than not, when it comes to telling people exactly what it is we stand for, our answers fall short.

We might point out, for example that we stand for real socialism, for a democratic socialism – and contrast this with what was called ‘socialism’ or ‘communism’ in the Soviet Union, for the propaganda purposes of both sides of the Cold War.

But what does this really mean?

None of the phrases we might use goes into much detail about what an alternative to capitalism, a ‘socialist’ or ‘communist’ economy, might look like. What do we imagine the structures of such an economy to be? And how will it function?

These are questions that the socialist movement, and even the broader global anti-capitalist movement cannot leave unanswered. Sure we can make powerful and legitimate demands – from shutting down the WTO and stopping climate change to scrapping the council tax and getting free school meals. But without an economic vision, our campaigning will lack structure and direction, and we will struggle to convince more people to join us in the fight if we cannot articulate more clearly what it is we are fighting for.

An economic vision

As a starting point for exploring the question of what socialism might look like, it is important to discuss what an economy is, and what features characterise the different possible forms one might take.

The primary functions of any economy are the production, allocation and consumption of goods and services. Historically the most important division for socialists has been concerning ownership – that is who owns the means of production. However other things can influence class relationships in an economy just as powerfully, and must be considered when proposing a good economy or socialist economic model. But first let’s look at the basic differences between economic systems.

The two defining features of capitalism are the private ownership of the means of production (utilised for profit) and a market allocation system – that is a system where buyers and sellers attempt to maximise their own advantage at the expense of the other. There are many other features which flow from these, such as massive hierarchies of wealth and power, wage slavery and remuneration (payment) according to output and bargaining power. However ownership and market allocation are the aspects that define an economy as ‘capitalist’ in the commonly understood sense, so let’s stick with those.

So what other models have existed in the past? The most obvious answer is the command economy that existed in the former Soviet Union and Eastern Block countries. What had changed in these places that differentiated them from capitalism? Well ownership has certainly changed – in place of private capitalists we have an authoritarian state. And market allocation no longer exists, having been replaced with central planning performed by the state bureaucracy. But which of the injustices of capitalism does this actually resolve? Jobs still exist in a hierarchy – with people at the top having greater access to wealth and power, compared to those at the bottom. Some people are still forced into demeaning work for little reward, while other use power to gain privilege, and privilege to gather yet more power. In fact by concentrating power in ever fewer hands, command economies create new horrors, distinct but comparable to those inherent in capitalism.

What about ‘market socialism’? In this model (such as could have said to have been attempted in Tito’s Yugoslavia) ownership is distinct from capitalism, the means of production either being owned by the state, or by workers collectively. However the market allocation remains, the profits ostensibly shared amongst the workforce. So the question arises – do markets themselves have a negative impact on the people in an economy, or are they only so destructive when combined with private ownership? I think the answer becomes obvious if we again look at the defining features of a market – that is selfishly motivated buyers and sellers, prices determined by competition, profit and surplus maximisation and remuneration according to output and bargaining power – again necessitating hierarchical corporate divisions of labour.

So we have reached a crossroads.

We understand that no current or historical economic model achieves what we want to achieve. So what model can? Well first we have to consider what it is exactly that we want from our economic system.

An economy of values

What do we want our economy to do? We know we want it to produce, allocate and consume things, and we know we want to avoid the destructive and unjust qualities of other systems. So what values should our economy promote? Advocates of Parecon (or participatory economics) suggest they should be the same values we hold as important: equity, diversity, solidarity, and participatory self management. The last of those values is of fundamental importance, and is reflective of what should be meant when we talk of democratic socialism – that is that decisions should be made democratically by people in proportion to how much they are affected by those decisions.

Parecon overview

What are the important questions we have to answer when proposing a new economic model? What areas merit our attention when deciding on the institutions our model needs? The points highlighted below should be of primary concern:

  • how people should be remunerated (paid)
  • how workplaces should be organised
  • how decision-making should take place
  • how we can settle on what is produced and consumed

Remuneration due to effort and sacrifice

How do we define a just form of economic remuneration? Marx wrote From each according to ability: to each according to need. But is that an accurate picture of a just economy? And is it a realistic one?

I would suggest that it is not – that it is utopian and fails to take into account a concept of just rewards – making it wholly unworkable. What then are the alternative norms of remuneration we could consider? The forms that exist currently are mixed, and dependent on many variables. Income can be determined by output (i.e. the productive output of you as an individual), by bargaining power, by some natural advantage (perhaps you a smarter or stronger than I am), or often simply by luck. Under capitalism greed and cunning are also useful attributes in maximising your income.

However none of these could be said to just. There is no moral reason why someone should have more money because they were born into a rich family, happened to have a particularly useful skill, or worse because they lacked compassion for their fellow human beings.

The only just way for workers to be remunerated in an economy is according to effort and sacrifice.

In other words it is not economic output that should be measured in a just socialist economy, but the amount of work someone puts in – that is how hard they work and for how many hours. Who can determine how much effort and sacrifice is expended? Peers in the same workplace would presumably be better able the mos to determine such a thing. What’s more, in an optimal economy, effort and sacrifice would tend towards an average – meaning most people would be remunerated to a similar degree, variation occurring mostly in number of hours worked. But more on this later.

But let’s go back to Marx’s catch-all phrase first. There is something I’ve neglected to account for above. There will of course in any economy be those unable to work – be they too old, in hospital, incapacitated etc. Here Marx’s phrase comes into some relevance, as there are those with need but without ability. According to Parecon, those unable to work (and those between jobs) should be remunerated according to social averages. That is they should be paid as if doing the ‘average’ amount of work in an economy – that way neither gaining significantly nor losing out significantly from being unable to work. Of course medical treatment etc should be considered a social cost and underwritten by all.

Balanced job complexes

Orthodox Marxist theory defines two social classes – the capitalist class (who own the means of production) and the working class (who sell their labour to the capitalists). In other words the class system is solely down to ownership of the means of production. Sure there are other sub-classes described, but that is the basic model as understood by most.

Advocates of Parecon see things differently. Ask any regular worker about their job, and what pisses them off about it, what do you think they will say? Will they name some remote venture capitalist, or board of investors?

Or will they tell you how their boss treats them like shit?

Pareconists define three broad economic classes. As well as the capitalists and the majority working class, there is a third class situated between the two know as the ‘coordinator’ class. These coordinators include managers, professionals, doctors, lawyers, academics. They have a large degree of empowerment in their workplace, are often in charge of others and usually receive far greater levels of income than the majority working class. They have their own class interest – acting (like the working class) for greater gains and concessions from the capitalists, but at the same time trying to maintain their position of privilege and power over the majority working class.

Economists estimate the coordinator class to compose around 20% of the working population in developed countries such as in Western Europe and the USA.

It is this class of people that – with the absence of the capitalists – came to power in the Soviet Union.

And while we continue to allow this class division to exist, we will never achieve true equality of circumstance. Workplace hierarchies are an anathema to equity and diversity, and so have no place in a socialist economy.

So what is the answer? If we are to rid ourselves of the capitalist divisions of labour, what are we to replace them with? Parecon’s answer is the ‘balanced job complex’.

Put simply our demand is that everyone should do their fair share empowering, interesting work, and their fair share rote, boring, or unpleasant tasks. As we have already decided on remuneration according to effort and sacrifice, if we were to maintain capitalist labour divisions, people doing crappy jobs would be paid more for their extra sacrifice. This would be just, but would undermine equity. Similarly those doing more empowering jobs would be more able to take part in decision making, meaning others would be overpowered and lose all relative influence. This would undermine self-management and democracy.

If however peoples work is balanced into a variety of empowering and rote tasks, so that everyone’s job is more or less equal (though all very different), we re-enforce all the values we seek to promote.

Of course certain workplaces will sometimes have more or less empowering tasks than the social average. In these circumstances individual workers will have to spend some of their working week (or month, or quarter etc) in another workplace, in order to balance their complex.

Workplace decision-making

At the moment in capitalist workplaces, with corporate hierarchies, decision making is concentrated in the hands of the few. At the top level the capitalists decide where to invest their money. Below that decision making powers are monopolised by high-level management – whose decisions are influenced less by the needs of the workers or consumers, but more by the need for company profit and their own power within the organisation.

In a parecon workplace – where as we have established all workers will be paid according to effort and sacrifice for doing more-or-less balanced job complexes – decisions will be made by the whole workforce. But not by some abstract mechanism of majority rule. Rather each individual worker will have a say relevant to how each decision affects him or her. So if we are deciding which colour to paint your office, only you have the power to influence that decision, as only you are affected by it to any large extent (presuming you don’t share the office, and you don’t choose extravagantly expensive paint!). If however a decision affects a whole team – such as hiring a new colleague – then that decision must be made by the team as a whole, using norms they themselves have agreed upon. This system of democratic decision-making would form part of a working day, and would be paid for as such.

Larger scale decisions – such as on workload, productive outputs etc – for whole workplaces or even whole industries would be conducted by democratic councils of workers, with each group or department sending a delegate. Delegates would of course be immediately recallable and all decision-making and background information available to all. This brings us neatly onto the process itself.

Participatory planning

Readers may be familiar with the participatory budgeting, as practised by some Workers Party controlled local authorities in Brazil, such as in Porto Alegre. In these projects the limited local budget is controlled directly by delegated popular assemblies – an example of a community taking control of public spending and deciding its own priorities. This could be described as a form of participatory planning, only limited to social consumption. In a parecon, we would apply a similar model to the whole of the economy, for both production and consumption.

Participatory planning is the form of allocation system we describe as an alternative to markets and the central planning of the command economies. The main process is that of council democracy – both of workers in a workplace or industry, and of consumers in a community. The reasons for this are quite simple – every worker is also a consumer – that is they have two specific relationships within the economy. If we want a democratic economy we have to democratise both these relationships.

So how does the participatory economy settle on what is to be produced and consumed in any given time?

At the start of each planning period (say a year) every individual makes a proposal of how much they want to work, and how much they want to consume. This is easier than it sounds – last years production and consumption information will be available, so any changes can be considered relative to this. These proposals are taken to workplace and community councils and combined into joint proposals. These proposals are delegated to higher level councils and federations of councils, until at the end of the first round of planning there are full production and consumption proposals for the whole economy.

Now after this first round, it is quite likely that consumption proposals and production proposals do not match. These initial proposals are submitted to what are known as Iteration Facilitation Boards (IFBs). These would process the submissions, generating indicative prices based on the value of social inputs needed to produce different products and services. Based on these values, as well as all available qualitative information, people reassess there proposals and come up with new ones. This is repeated several times (i.e. iteratively) until consumption and production proposals are reasonably close, and a workable plan is created.

It should be made clear that the IFBs hold no economic power – they will simply be making calculations based on various data and socially agreed algorithms. In fact most of the process could be automated. To the extent that work has to be done, the IFBs would be a workplace like any other and subject to the same conditions of remuneration and balanced job complexes. If there was still any concern over the possibility of IFBs employees gaining some undue economic influence, the positions could be rotated amongst many individuals. However this would be exceedingly cautious.

Socialism for the 21st century?

Described above are the basic attributes of the parecon model of a democratic socialist or communist economy. I hope from this introduction that I have at the very least convinced you of the need for economic vision. I hope too that you might consider that some of the arguments for participatory economics make sense, and that you might be interested enough to explore these ideas further.

If so, I suggest you visit the website, or read some of the many books and articles on the subject by Michael Albert and Robin Hahnel – the principal proponents of Parecon. immediately recallable and all decision-making and background information available to all. This brings us neatly onto the process itself.

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One Response to “Parecon: Participatory Economics and Socialism for the 21st Century”

  1. Emancipation & Liberation » Emancipation & Liberation Index 14 says:

    […] Parecon: participatory economics and socialism for the 21st century, Neil Bennett […]

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