Comparing Capitalism and Parecon

Comparing Capitalism & ParEcon Remuneration

In any economy people receive claims on a share of economic output, called their income. They get so much, but no more. This income can be greater or smaller from person to person. The criteria of remuneration is generally either payment for property, for power, for output, for effort/sacrifice, or for need. This page briefly compares the norms and factors impacting income shares, or remuneration, in capitalism versus parecon.

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“The Potato Eaters”
by Vincent Van Gogh


“Starry Night”
by Vincent Van Gogh

Introducing Capitalist Remuneration

In capitalism the first basis for remuneration is property ownership. If you own capital, you are entitled to the profits accrued from its use. The second basis for remuneration is power. In negotiations with owners to determine your wage, the power you bring to bear — versus the power the owner brings to bear, settles the matter.

What about output? Advocates of capitalism claim that it rewards output — that is, that you get income based on what your work contributes to the social output. This has an element of truth. How much your work produces often impacts your bargaining power, in turn impacting your income. But additional factors in this equation include your organizational power (such as unions or professional organizations), laws (minimum wage, property rights, etc.), social ascriptions (gender, race), your access to monopolies of information or skill or decision making access which in turn afford power, the relative power of the capitalist you are negotiating with, and so on.

As a result, the amount people earn usually bears some relation to, but far from determinative relations to the amount they produce.











Introducing ParEcon Remuneration

In a parecon remuneration is for effort and sacrifice expended in socially valued labors. Your income depends on how long you work, how hard you work, and on any hardships that are associated with your work. However, in a parecon jobs are balanced for empowerment and quality of life. Thus, save for minor variations, your job, my job, and everyone else’s job are similar regarding sacrifice. Our incomes therefore differ due to working longer or less long, or harder or less hard.

I don’t earn more by virtue of selling more. I don’t earn more by virtue of selling at a higher price. I don’t earn more by virtue of amassing power or having talents or even skills. I am remunerated for my effort and sacrifice, but it has to be socially useful, which means I have to be utilizing assets at my disposal effectively and producing the amount that is socially beneficial, but not more or less. I am also remunerated for the effort and sacrifice involved in the training I undego.

How is our effort and sacrifice — the longevity and the intensity of our labor — decided? By our fellow workers, of course, or those of our fellow workers who are assigned the task as part of their balanced job complex, if that happens to be what our worker’s council decided was the best approach.

In one workplace, in other words,it could be that one task — like all other tasks, a part of a balanced job complex — is grading work effort and tracking work duration very closely, for a very finely graded remuneration scheme.

In another workplace, it could be that the workers think that such fine tuning is a waste of time and energy. They may opt for just a few classes of payment — for the very intense, the somewhat intense, the average, the below average, and the lazy — with time one works of course closely tracked as that is so easy to do.

Given this norm and these and any other consistent methodologies, the span of income earned across the whole society will be relatively narrow. After all, how many more hours and how much more intensely can any one person work?

Evaluating Capitalist Remuneration

If one believes that having a deed to property conveys moral or economic rights to the output the property facilitates, and if one believes in the law of Genghis Khan — he or she who can take more has every right to receive more — than capitalism scores well regarding remuneration since it accomplishes these aims admirably. Of course this leads to huge disparities in income and wealth among its participants, barely correlated to their contribution to output, but some people might find that unobjectionable.

One could imagine making a case, as well, that capitalism comes closer to rewarding output than other available or perhaps even conceivable options — especially if we append various tax schemes, etc. But then one would have to favor this norm, and not be too upset by deviations from it in the direction of rewarding property or power.

On the other hand, if one believes that remuneration should be according to effort and sacrifice only for those able to work, then of course capitalism fails miserably. Most often it rewards those who expend greatest effort and sacrifice least and rewards those who expend least or modest effort and sacrifice most, turning the proposed axiom upside down.

Evaluating ParEcon Remuneration

Assuming other parts of the economy work properly, parecon remuneration generates effective incentives. It rewards us for what we can in fact impact — the length of our work and its intensity, and for its onerousness, should that be a factor. It elicits more productivity, and does so to an appropriate degree. It is morally warranted — those who work longer or harder deserve proportionately more. It rewards with an incentive what we can regulate in accord with our values. It does not induce huge income differentials or class differences.








 Next Entry: Comparing Regarding Allocation


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