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"Workers desiring
goods to enact improvements request them. Workers at plants producing the
goods requested decide whether they wish to provide them. The dynamic is like
any other consumer/producer interaction."
"Differences in
consumers' desires and the desires and capabilities of different workers'
councils are accounted for, as well as variations in the timing of people’s
contributions and receipt of benefits. The pressure brought to bear on
participants promotes efficiency and equity, not uniformity."
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Going from One Proposal to Another
First
proposals are in. We have all answered how much and in what form we think we
want to work and consume under an optimistic assessment of possibilities. Are
we ready to call the resulting aggregate a plan, or must we have another
round?
To decide we
sum all consumption requests and all production proposals and compare demand
with supply for every class of good. In the first iteration or round, when consumers
are supposed to propose ambitious consumption bundles and workers are
supposed to propose desirable work plans, for most goods demand exceeds
supply which means everyone's initial proposals cannot be simultaneously
implemented. In planning terminology, the initial proposals do not yield a
feasible plan and the status of most goods is in excess demand by some
percentage.
Next, every
council receives new data regarding the degree to which goods it offered or
requested were in excess supply or excess demand and how its requests
compared with those of other units. Did my workplace council offer to produce
less than other similar production units; did my consumers' council request a
bundle larger than others' consumption requests?
lFBs
translate excess demands and any excess supplies into appropriate changes in
the "indicative" prices for those goods by raising the prices of
goods in excess demand and lowering the prices of goods in excess supply,
with greater changes the higher the percent of excess demand or supply. The
changed indicative prices in turn provide councils new estimates of the
social costs and benefits of different items they request or offer to
produce.
Next since
councils must eventually win the approval of other councils for their proposals,
consumers' councils are under "peer" pressure to bring their
overall consumption requests into line with average per capita consumption,
and workers' councils are under "peer'' pressure to bring the ratio of
the social benefits of their outputs to the social costs of their inputs up
to the national average. But this does not mean that every consumer council
must consume the average amount of every item, or that every workplace in an
industry must use inputs in the same proportions to make their output. By
multiplying the amount of each good requested by its "indicative"
price and summing on its computer terminals, each consumers' council can
compare the average per member value of its requests to the average per
member value of other councils' requests and to the national average. Of
course, in the participatory economy "overall value" of a
consumption request is just another way of saying the "overall burden on
scarce resources and laboring capacities" that a consumption request
places on the rest of the economy. Likewise, by multiplying outputs by their
indicative prices and summing to attain the total value of products (social
benefit), and multiplying inputs by their indicative prices and summing to
attain the total value of inputs used (social cost), each workers' council
can calculate its own social benefit to social cost ratio for comparison to
the ratios of other workplaces and industry and economy-wide averages.
With each new
round of planning, goods previously in excess demand will have a higher price
when councils next decide how much they want and that goods previously in
excess supply will have a lower price. These changed prices will create a new
context for decision making. Councils will usually revise proposals first by
substituting inputs whose indicative prices have fallen for inputs whose
indicative prices have risen, and for workplaces, substituting outputs whose
indicative prices have risen for outputs whose prices have fallen. These shifting adjustments will promote
economic efficiency and alleviate the extent to which individual councils
must engage in the other kind of proposal revision, reducing adjustments. But if after making shifting adjustments,
the value of a consumption request remains higher than the national average,
and if work effort proposals and borrowing/saving plans do not justify the
excess, and if no special circumstances are deemed to warrant the excess, and
if there is no expectation in the consumers' council that circumstances in
coming iterations will change in favor of the council, then the council will
feel pressure to reduce its overall
request to bring
"The changed indicative prices in turn
provide councils new estimates of the social costs and benefits of different
items they request or offer to produce."
"With each new iteration, the fact
that goods previously in excess demand will have a higher price when councils
next decide how much they want and that goods previously in excess supply
will have a lower price, will create a new context for decision making."
its per-member value into line with the national average. And, likewise, if
after shifting adjustments a workers' council still cannot generate an
acceptable excess of social benefits over social costs, and if it has no
viable excuse (such a greater need) and no sensible expectation that
conditions will change in its favor in the following iteration, it will feel
pressure to increase its work effort. Moreover, as the rounds of planning
proceed, price indicators will begin to approach their final resting places
and consumers and workers will have less justification for "holding
out" in overly expensive consumption requests or insufficient production
offerings expecting new prices to ratify their stance. Ultimately a workplace
unable to sufficiently improve its ratio of social benefits to social costs
might even be asked to disperse, since it is not in society's interest to
permit resources that could be used more productively elsewhere to be used
unproductively in such a unit.
In the above
summary, the essential logic of proposal revision is straightforward: peer
review backed by the necessity of getting one's proposal accepted pressures
actors to bring their consumption and work proposals "into line,"
so that people contribute efforts commensurate to the efforts they implicitly
demand from others. Ever more accurate estimates of social costs and benefits
of goods induce workers and consumers to shift from goods in greater excess
demand to goods in greater excess supply thereby promoting the social interest
via an efficient allocation of scarce productive resources. Simultaneously,
reductions of unacceptably expensive consumption requests or lazy production
proposals are promoted. In a context where socially responsible behavior is
induced, individual actors receive the information they need to reconcile
their individual pursuit of well being with others' equally deserving
attempts to do likewise. Differences in consumers' desires and the desires
and capabilities of different workers' councils are accounted for, as well as
variations in the timing of people's contributions and receipt of benefits.
The pressure brought to bear on participants promotes efficiency and equity,
not uniformity.
Each new
round of planning yields a new set of proposed activities for all consumers
and producers as well as new estimates of indicative prices, average
consumption, and average work productivity. But what propels the process
toward a conclusion that everyone will accept? How do we know the final
allocation will be superior to what a central planner or market system would
have arrived at? Moreover, how do we update when conditions change during the
year? We'll address the last concern first, since it helps clarify how the
other concerns are addressed.
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