Friday, July 15, 2005


Participatory Economics, aka ParEcon, is an attempt by academic Michael Albert to create a new economic system more or less from scratch. While he draws on a long history of other political/economic systems, this one is really all Albert's own. You should definitely check out the ParEcon info on ZNet to get a better explanation than I'm about to give; Albert and his comrades have also written two books on the subject.

In brief, ParEcon is a system of largely decentralized socialism. I'll let Albert speak for himself quite often here, anything in [brackets] is my own comment.

Albert's description of the job-side of ParEcon sounds at first, very much like a system of cooperatives or simple worker-owned and managed factories. That's not terribly revolutionary; there are some of those already around the world.

Production would be carried out by workers’ councils where each member had one vote. Everyone would be free to apply for membership in the council of their choice, or form a new workers’ council with whomever they wished.

The far more radical part is how the work would be done. Albert wants to see people take up "balanced job complexes" rather than simply filling one job slot or narrow set of duties. There would still be specialization, he emphasizes, but every effort would be made to make sure that everyone does some of the empowering, useful work and everyone does at least a little of the scut work. So everyone has to sweep the floors, at least some of the time. This is actually a pretty good idea. It would certainly put doctors and janitors on a more equal social footing if the janitor was training to do some light nursing tasks, and the brain surgeon had to help clean the toilets once a month.

Albert also suggets that people should be paid based solely on effort and need, not on the specialization or market demand for their job. So the brain surgeon and the janitor make the same amount of money as well, unless one of them is putting in more hours. People should also be paid for increasing their education and skills training, which would at least partly offset the lack of a higher wage in encouraging people to learn and become more economically useful. So far, it seems a little hippy-dippy to me, but possibly workable. Then we get to the consumption side.

Every individual, family, or living unit would belong to a neighborhood consumption council. Each neighborhood council would belong to a federation of neighborhood councils the size of a ward or rural county. Each ward would belong to a city consumption council, each city and county council would belong to a state council, and each state council would belong to the national consumption council.

Ummmm... okay. Explain further, please.

The participants in the planning procedure are the workers’ councils and federations, the consumers’ councils and federations, and an Iteration Facilitation Board (IFB). Conceptually, the planning procedure is quite simple. The IFB announces what we call “indicative prices” for all goods, resources, categories of labor, and capital stocks. [And how do they arrive at these in the first place? Based on the market values that existed before ParEcon? Unknown.] Consumer councils and federations respond with consumption proposals taking the indicative prices of final goods and services as estimates of the social cost of providing them. Workers councils and federations respond with production proposals listing the outputs they would make available and the inputs they would need to make them, again, taking the indicative prices as estimates of the social benefits of outputs and true opportunity costs of inputs. The IFB then calculates the excess demand or supply for each good and adjusts the indicative price for the good up, or down, in light of the excess demand or supply. [So it's a centrally planned free market, then? Strange.] Using the new indicative prices consumer and worker councils and federations revise and resubmit their proposals.

Essentially the procedure “whittles” overly optimistic, infeasible proposals down to a feasible plan in two different ways: Consumers requesting more than their effort ratings warrant are forced to reduce their requests, or shift their requests to less socially costly items, to achieve the approval of other consumer councils who regard their requests as greedy. Workers councils whose proposals have lower than average social benefit to social cost ratios are forced to increase either their efforts or efficiency to win the approval of other workers. As iterations proceed, proposals move closer to mutual feasibility and indicative prices more closely approximate true social opportunity costs. Since no participant in the planning procedure enjoys advantage over others, the procedure generates equity and efficiency simultaneously.

It seems like an extra layer of effort has been slapped over the rough and ready market system of pricing. Admittedly, with no excess profit being accrued by capitalist owners, prices might more truly reflect the pure labour cost of the goods, but there are other schemes that have proposed similar ends with a lot less paperwork and more reliance on the market. And we already know that the market can set prices with reasonable accuracy based on supply and demand. But Albert doesn't like markets at all.

What about markets? First, markets misprice everything by accounting for only the wills of buyers and sellers and leaving out attention to impacts beyond buyers and sellers, such as from pollution (cars), health effects (cigarettes), and behavioral effects (liquor), etc. [I'll agree that negative externalities aren't taken into account, but by throwing booze in, it feels like Albert is being a thought policeman, here. If people harm others or misbehave while drunk, they can be restrained or punished. If they use alcohol responsibly, they need no restraint.] Positive wider impacts aren’t accounted for either. Second, markets induce buyers to try to sell dear and induce sellers to try to buy cheap, thereby imposing anti-sociality. Each tries to fleece the other. [But for most things, there is no fleecing involved. Sellers try to get the most money that others will part with. If they try to "fleece" by overpricing, other sellers of the same goods can enter the market and sell things cheaper, but still to their own gain. This does not, of course, apply to natural monopolies like land, water and sewage services and cable TV.] With markets, the pursuit of surplus compels accumulation for the sake of private profit and not for meeting needs. Each unit must compete with the rest by cutting costs, and, to do that, quite rationally each unit hires a layer of managers to impose austerity on workers while themselves being isolated from austerity. Markets produce the corporate division of labor and, in the absence of owners, coordinator rule.

But it seems like there is a coordinator involved, in the form of the IFB. It seems this group is a sort of facilitator or court system for the economy, in which case it has no real power except to arbitrate disputes between producers and consumers. If it does have real authority, on its own, to set a final price, then it will be the real ruler of this new system. That is somewhat worrying.

In a debate with socialist George Monbiot, Albert insists that it will be impossible to cheat in a ParEcon system (no black market) and that everything will be done through cooperative negotiations, which seems to imply a lack of final authority. While this is laudable in terms of attempting to avoid dictatorship, it does have a certain pie-in-the-sky ring to it. I'll give the final word here to Monbiot

You talk of "attaining parecon" much as Buddhists talk of attaining Nirvana, and I fear that this is what it is: a system which describes how human beings OUGHT to live, but not how they could or would. I'm sorry Michael. I really wanted to believe it could work, I really wanted to place parecon among the possible worlds we could inhabit. But a system which takes no account of human weakness is a system which might work for another planet, inhabited by the good and pure beings we ought to be. It cannot work for ours.


Peter Bazovsky said...

Mr. Claxton,

While I agree with your general assessment of ParEcon, I feel that it is unfair to immediately suggest in this article that it is "a new economic system more or less from scratch". From the succinct, yet I must admit superb, treatment of his theory in your article it can be seen that the "base" upon which Albert's "superstructure" has been built is essentially Marx's vision of communism.

The difference is, of course that while Marx drew the barest of outlines for a future after capitalism, Albert has decided that he will haphazardly complete the sketch with a "paint by numbers" grasp of Marx's thought. Where Marx reluctantly (at Engel's insistence) hinted at progressive income taxes, dictatorships of the proletariat and other tidbits, Albert has designed a full and complete system of (as you put it) "largely decentralized socialism". The problem is, as Marx realized a century earlier, that you cannot accurately predict what may come next. Rather, we are limited to simply assessing the current state of affairs from our respective positions as regards the "means of production".

That said, Albert's theory merely expounds on the political practicalities of a global communist society. The problem, as Monbiot noted, is that it sounds a tad hokey. While I agree, I am inclined to blame the esoteric nature of Albert's work on his lack of understanding of capitalism itself. As Bertell Ollman explained; capitalism and communism are two cities, the latter growing in the shadow of the former. Hence, as capitalism grows in strength so too does it's shadow, thereby permitting socialism more space in which to flourish.

If this is the case, post-capitalist societies can not be expounded in advance as they are intimately bound to the material conditions which currently govern our lives. As these conditions change, so too does any vision of the future.

Here, for me, is Albert's greatest error. Far from being based in any misinterpretation of huamn behaviour, it is simply a matter of him counting his chickens before the eggs have hatched.

(The commentator would like to request that the author contact him for the purpose of imbibing beer and viciously attacking contemporary thinkers. I feel it has been far, far too long.)


Matthew said...

Thanks Peter. Too long indeed, and if you're back in the northern hemisphere, we should definitely meet and have a drink/plot revolutionary futures. I keep getting error messages when I click on your link there. Send me an e-mail; John has my address.

And you're right about one of the major problems with ParEcon being its attempt to set up a complete framework for a future society that isn't even close to imanent. It's like designing stamps and setting up a postal system management flow chart before you figure out how to deliver the letters.