Comparing Capitalism and Parecon Allocation

 Allocation is the process by which an economy settles on inputs and outputs for all its operations. What institutions accomplish allocation? What properties do those institutions have vis a vis the inputs and outputs arrived at, and also regarding people’s daily life activities and situations? Allocation options include central planning, markets, barter, and decentralized planning including, in particular, what is called participatory planning. This page compares Capitalist and Parecon allocation.

 Next Entry: Comparing Regarding Incentives

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“Migrant Mother”
by Dorothea Lang

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“The Syndics of the
Clothmaker’s Guild”
by Rembrandt

Introducing Capitalist Allocation

In a capitalist economy, allocation is handled by a combination of markets and authoritarian planning (the latter in the state sector and within major corporations in internal dealings). Markets function by way of buyers and sellers each trying to fleece the other as best they can — buy cheap, sell dear. Either advances at the expense of the other in labor markets and in all others as well.

The competitive dance of all buyers and sellers establishes mutual exchange rates. In essence these relative valuations reflect in part actual relative values and costs, but also relative bargaining power. In any transaction, it is only the will of the buyer and seller that impacts outcomes. If other actors are affected by an exchange — such as via pollution or other negative (or positive) “external effects” that affect people beyond immediate buyers and sellers, their desires are ignored in deciding the transaction and thus also in how the exchange contributes to the overall price setting in the economy.

Like most aspects of capitalism, markets are a complex institution and full treatment of their features would require at least a book-length presentation. But, it is also true that we know markets from the experience of having our behavior curbed and driven by them. We must compete. We must look out for number one. Markets establish a rat race in which even the victors are rats and in which nice guys finish last.

 

 

 

Introducing ParEcon Allocation

In a parecon, allocation occurs via a new institutional arrangmeent called participatory planning. Workers and consumers, via there councils, cooperatively negotiate economic inputs and outputs. Workers propose what they would like to produce. Consumers propose what they would like to consume. Proposals are adapted in light of overall information about the implications of both production and consumption on all affected, and the emerging relative valuations of inputs and outputs. Everyone involved whether as producers and consumers in respective workers and consumers councils, or as facilitators and abettors of information exchange and negotiation in various roles to that end, of course works in a balanced job complex and is remunerated for effort and sacrifice.

Valuations account for all social implications via inputs from all councils as best peoples’ knowledge permits and with each actor impacting allocation’s aspects in proportion as the aspects impact them. Relative valuations reflect true social and environmental costs and benefits. Decisions reflect the wills of workers and consumers that are manifested in a self managing manner.

Of course participatory planning is a diverse and rich social process requiring considerable description to fully specify and still more analysis to judge. But, simply stating results, which is all we can do here, it is a horizontal, self managing, mechanism for determining inputs and outputs in a manner that generates solidarity rather than anti sociality. It creates a context in which even those who are anti-social by upbringing have no choice but to act in ways benefitting the whole community in order to pursue their own personal well being. It aligns the interests of workers and consumers with one another, rather than pitting each against all.

Evaluating Capitalist Allocation

Market allocation by ignoring implications beyond directly involved buyers and sellers misprices everything, in particular undervaluing and thus short changing the ecology and our social needs and potentials. Market behavior produces in buyers and sellers the worst kind of individualism and greed, generating anti-sociality as a systemic imposition on actors that we can avoid only at great personal loss. With private ownership and profits, as in capitalism, market exchange produces a trajectory of development favoring the rich and powerful. Without profits the richer and more powerful are still favored, only now it is the coordinator class which markets call into being and enshrine above workers, not an owning class. Markets do not allocate in accord with social or individual needs or potentials. They destroy natural environments, maladjust people’s personalities, inject commercial criteria throughout all social change, alienate all economic activity, and produce uniquitous class division and class rule including collossal inequality and indignity, but at the same time markets are, of course, an ideal allocative insitution from the single vantage point of economic elites who benefit from all their drawbacks.

Like other features of capitalism, then, markets are good and even wonderful, from the perspective of owners and entirely self interested (many will transcend this condition) coordinators — but are vile from the perspective of workers and all but a relative few consumers.

 

 

Evaluating ParEcon Allocation

Participatory planning calls forth from actors behavior that accounts for one another’s well being. It aligns my gain with your gain and my loss with your loss, compelling us to act in a social rather than anti social manner. It leads to accurate valuations that account for full social and environmental costs and benefits –as best human knowledge currently permits. It ratifies and enhances the operations of worker and consumer councils, abides and even rquires balanced job complexes, permits and even demands remuneration for effort and sacrfiice, and calls forth and reinforces self management throughout the economy. Participatory planning recognizes no structural differences among constituencies. It is classless in its operations. Participatory planning is good, even wonderful from the perspective of workers and all but a relayive few consumers — but vile from the perspective of owners and entirely self interested (many will transcend this condition) coordinators.

(Of course, all the above is merely asserted/summarized here, as in other sections throughout this succinct comparison facility. The point of hte comparison is, if the reader would like what is claimed for participatory planning to be true, and would be an advocate if it were true, then pursuing the model further to judge for yourself based on more material makes sense. If the claimed virtues don’t seem important to you, or you even find them uncongenial, then there is no point in pusuing the model further.)

  Next Entry: Comparing Regarding Incentives  

 

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