avatar
A Comparison of Economic Democracy and Participatory Economics


Introduction

Many advocates of economic justice have long believed that capitalism needs to be transcended. However, positive programs for a just economy have been lacking compared to the hailstorm of anti-capitalist critiques that the left has produced. This shortage of vision has resulted in activists lacking a common praxis and prevents them from connecting with potential sympathizers. In an attempt to remedy this problem, two schools of thought have developed visions for a post-capitalist economy: market socialism and what may be called democratic-participatory economics. The essential difference between the two schools is that the former believes markets are an appropriate, necessary allocation method, while the latter envisions an economy of direct citizen participation without markets. This paper will evaluate a specific model within each school: Economic Democracy, a market socialist model, and Participatory Economics (dubbed “Parecon”), a democratic-participatory model. Other models do exist, but are less developed, especially in the democratic-participatory school. 

The paper is divided into three main parts. The first part will describe Economic Democracy and Participatory Economics. In the second part, each author’s criticisms of the other’s model will be laid out. The third part will evaluate how each model performs in four areas: 1) division of labor, 2) managing externalities, 3) social relations, and 4) desirability. 

 
 
Economic Democracy: The Basic Model

David Schweickart has proposed a unique market socialist model called Economic Democracy. Its three core institutions are worker self-management, the market for goods and services, and social control of investment. The principle aims of these institutions are to democratize the workplace and the distribution of capital. 

Schweickart points out that in capitalist societies, “ordinary people are deemed competent enough to select their political leaders-but not their bosses. Contemporary capitalism celebrates democracy, yet denies us our democratic rights at precisely the point where they might be utilized most immediately and concretely: at the place where we spend most of the active and alert hours of our adult lives.” 

To remedy this ill Economic Democracy would entail worker self-management through worker councils and/or representation, the principle being one worker, one vote. Schweickart states that in large firms “some delegation of authority will be necessary” and “most enterprises will have an elected workers’ council that will appoint a general manager or chief executive officer.”  Schweickart stresses the significance of balancing “managerial accountability and managerial autonomy.” 

In Economic Democracy, as in capitalism, all workplaces apart from the public sector are subject to the profit motive and all goods and services are bought and sold on the market. However, the market for labor is abolished. Instead of wage labor, it is up to the workers in each workplace to determine how the firm’s profit will be divided.  Schweickart says, “[Economic Democracy] does not view the market as an absolute good…[but] as an instrument for accomplishing certain societal goals.”   

Ownership of the means of production is social and investment funds are considered a right, but cover new investments only, as firms are required to maintain their own capital depreciation funds. All firms pay a flat capital assets tax, which finances a social investment fund operated by the national government. The national government distributes these funds to regions on a per capita basis. This is subject to change by the national legislature on reasonable grounds, such as a region temporarily having greater need for investment than another. Regions then disperse investment funds to communities. Once communities are in control of investment funds, they distribute them to public banks based on three criteria: 1) how many workplaces a bank grants investment funds to, 2) past performance in making profitable investments and 3) past performance in increasing employment. Banks then grant funds to firms according to the latter two criteria. Banks are not for-profit institutions, since the funds they give to firms are grants, not loans. Basic tax revenues generate the income of bank employees, with greater income going to banks with better records of profitable investments and employment creation. Since any unused allocated money must be returned to the social investment fund, communities have incentive to develop new investment prospects. Thus, both banks and communities have material incentives to invest in profitable enterprises and entrepreneurship. 

New capital investments for producing public goods are also funded by the capital assets tax, while worker income and capital depreciation costs in the public sphere come from common tax revenue. The national legislature decides what public projects need capital investment at the national level and then passes on the remainder of the social investment fund to regions. Regional legislatures likewise decide on how to invest in local public goods, with the remainder going to communities. After communities allocate money for public good investment, the remaining money goes to the banks. Once money reaches the banks, all funds are for market investment. Governments face pressure from the citizenry to not overextend public investment, since more money spent in the public sphere means less money is available for profitable investment and, consequentially, less ability for workers at a firm to increase their personal income.    
  

 

Participatory Economics: The Basic Model

Michael Albert and Robin Hahnel developed the model of Participatory Economics. Parecon is based on five key values: solidarity, equity, self-management, diversity, and efficiency. 

The main institutions of a Parecon are “social ownership of productive assets, self-managing worker and consumer councils, balanced job complexes, remuneration for effort and sacrifice, and participatory planning.” 

Social ownership of the means of production negates the role of property in the traditional sense. One can conceive of social ownership as no one owning the means of production or everyone owning an equal share. Either way, ownership of the means of production confers nothing in terms of income or power. 

All working adults are members of their workplace worker council. The determinant of decision-making power in a workplace is the principle of self-management, i.e. the degree one is affected by a decision. Workers in a council may decide to delegate authority, but authority yields no change in income. Worker councils may have sub-councils for different functions or locations within the workplace. All worker councils belong to a federation of councils of those in the same industry.

All adults are also members of a consumer council, which are structured geographically. At the first level are the basic categories of an individual or family. A person or family is a member of his or her neighborhood council, which belongs to a federation of neighborhood councils, which in turn belongs to a federation of ward councils, and so on up to the national level. 

Worker and consumer councils are key components of ensuring work and consumption operate democratically, but also serve essential functions for participatory allocation, to be addressed shortly.

Balanced job complexes (BJC’s) are a key component of workplace democracy. BJC’s are a heterogeneous set of tasks that has equally empowering effects as that of a workmate.  There are two levels of BJC’s: intra-firm and inter-firm. Albert describes a hypothetical intra-firm BJC at a publishing house:

“Each [publishing] worker has a job complex that includes some editorial, some production, and some business responsibilities and encompassing roughly average positive and negative work attributes…no one enjoys an unfair abundance of creative tasks or gets stuck with an excess of numbing tasks.”

BJC’s are also balanced between workplaces so that a person at a workplace with a higher than average level of empowerment will also spend some time working at a below average workplace and vice versa. When intra and inter-firm BJC’s are combined, the average empowerment effect of all the work one person does will be about the same as all others in the economy.  

The justification for BJC’s is that the labor process produces human personality characteristics. For example, after a day’s work a janitor could be expected to feel mentally unchallenged and frustrated, while an engineer could be expected to feel a joy from creative work and a sense of accomplishment. Over time, the janitor’s cognitive abilities and self-esteem are likely to atrophy, while the engineer’s increase, creating a division of labor between manual and conceptual workers.          

Remunerating according to effort and sacrifice is the norm for rewarding social labor. The reason advocated by Albert and Hahnel for this norm is that effort and sacrifice are the only factors within an individual’s control. According to the authors, remunerating according to the contribution of one’s property rewards “inheritance, luck, unfair advantage, and profit-making,” while remunerating according to the contribution of one’s labor rewards “luck in external circumstance and in the genetic lottery,”  none of which an individual has control over. Effort and sacrifice include time worked, but also other factors such as the work’s desirability and dangerousness. Another component of remunerating according to effort and sacrifice is that training is publicly funded and rewarded using the same criteria as productive labor.

Combining the institutions of BJC’s and remuneration for effort and sacrifice demonstrates an important point. With BJC’s, since everyone’s average empowerment effect from labor will be about the same, a reasonable measurement of effort expended, and thus how much one is allowed to consume, is total hours worked. Therefore, one’s level of consumption is roughly proportionate to total hours worked. A person may consume above or below average if he or she decides to work a greater or lesser number of hours, but a BJC must be maintained, i.e. hours worked reduced or increased proportionately throughout the BJC. It must be kept in mind that this is only a general guideline, since effort and sacrifice includes qualitative factors of work, not just time worked.    

Participatory planning, also called participatory allocation, is the most complex and perhaps most controversial aspect of Participatory Economics. It is a non-market allocation system based on the yearly creation of plans.

Every individual or family unit proposes a first consumption proposal of all goods to be consumed in the coming year. Neighborhood consumption councils tally these first proposals and add collective consumption requests for the neighborhood to create a consumption proposal for the whole neighborhood. The process expands to geographically larger councils, up to the national level, all of which tally the proposals of the councils comprising them and make collective consumption requests. Thus, a total first consumption proposal for the whole Parecon is created.

Likewise, individual workers make first production proposals of the type and amount of labor they would like to do, the inputs required, and outputs to be produced. These proposals are averaged together into a first workplace proposal. Workplaces, along with their quantitative proposals, submit qualitative summaries explaining why they wish to make certain changes from the previous year, such as justifying producing less of something because it requires rote work. Worker council proposals are then aggregated by more encompassing councils, which can be delineated along industry and regional lines.  

Every constituent unit must receive approval from the council immediately encompassing it for its consumption or production request. For example, an individual’s consumption request can be rejected by one’s neighborhood council if it is considered disproportionate to one’s total work effort. Similarly, a worker proposal can be rejected if its social benefit-to-cost ratio is too far below average. This occurs at every council level, as ward councils must approve neighborhood council proposals, city councils must approve ward proposals, and so on up to the national level. The same applies to industry and regional worker federations.          

Consumers and workers make their first proposals in light of certain information provided by Iteration Facilitation Boards (IFB’s), such as what they consumed and produced the previous year, knowledge of long-term investment plans affecting their proposals for the year, and expected changes in “indicative prices.” Indicative prices reflect social benefit-to-cost ratios of a good.

Once first total production and consumption plans are completed, IFB’s calculate new indicative prices for every good that is in excess supply or demand. Goods in excess supply will then have lower prices, while those in excess demand will have higher prices. All worker and consumer councils will be given the new indicative prices and comparisons of each council’s proposal with other councils of the same type.

Since production and consumption proposals will not match supply and demand for most goods after one round, the planning process begins its second round. Consumer councils and individual consumers can adjust their proposals to request goods with lower indicative prices. Since each council encompassing smaller councils must approve their proposals, consumer councils or individuals with excessive consumption requests will face pressure to lower their proposals. Likewise, workers and worker councils with below average social benefit-to-cost ratios will be pressured to increase this ratio to win approval.

In the third round, limits may be placed on how much any one unit’s proposal may change by restricting proposal changes to the council level and limiting changes in the proposals for specific goods to a certain percentage. Through this iterative process supply and demand are brought closer to equilibrium until a plan is finally decided upon. One method for finalizing a plan is to have IFB’s adjust data to present five different plans that are then voted on.

It must be kept in mind that the above allocation procedure is only a rough outline given by the authors. As Albert states, “One thing to make clear about participatory planning and Parecon in general is that there is no single right answer to how to do most functions.”

Albert and Hahnel’s Critique of Markets

Neither Albert nor Hahnel have offered detailed critiques specific to Economic Democracy, but both have been highly critical of markets as a form of allocation, whether in capitalist or market socialist economies. They assert that markets are inherently flawed by four main characteristics: 1) commodity fetishism, 2) antagonistic roles, 3) workplace hierarchy, and 4) anti-social bias.

Commodity fetishism refers to the idea that “Outside each firm, relations between people and things or things and things remain evident, but relations between people and people are obscured.”  People are largely unable to consider the impact of their economic decisions on others, leaving people unaware of the social consequences of particular choices.

Antagonistic roles of buyers and sellers is said to make consideration of the needs of others irrational. If a buyer considers the well-being of the seller, he necessarily imposes greater cost upon himself, and vice versa. Also, competition for market share causes firms to externalize costs onto the public. The authors claim “market competition militates against solidarity, again, regardless of ownership relations.”

The authors assert that markets will cause qualitative factors, such as worker happiness, to become secondary to profit maximization, causing workers to turn over control of the workplace to managers emphasizing the bottom line. The authors describe this process:

“First, worker desire for self-management erodes. Next, workers hire managers who in turn hire engineers and administrators who transform job roles according to competitive dictates…increasing the fragmentation of work, bloating managerial prerogatives, and substituting managers’ goals for those of workers.” 

Anti-social bias refers to markets charging too much for goods with positive externalities and too little for goods with negative externalities. The authors believe that externalities are far more widespread than mainstream economics admits and that this results in great inefficiency. For example, since the price of gas cars does not reflect the social costs of pollution, demand for gas cars is higher than electric cars. If social costs and benefits were included in the prices of both products, the price of gas cars would be higher and the price and electric cars lower, resulting in lower demand for gas cars and higher for electric cars. However, the more socially inefficient outcome is what markets actually produce.  

Albert specifically critiques the vision of market socialism, seeing it as a better system than capitalism, but remaining fatally flawed. He praises market socialism for eradicating private ownership, but criticizes it for giving rise to a new class of intellectual workers he refers to as the “coordinator class.” He says that in market socialism, “there is still class division and class rule. There is still the alienation, misallocation, and immoral bases for remuneration intrinsic to markets, and there is still a division of labor that relegates most actors to greater tedium than warranted, reserving for a relative few greater power and reward.”

Schweickart’s Critique of Participatory Economics

In his book, Against Capitalism, David Schweickart critiques Albert and Hahnel’s model of participatory economics. His criticisms are that individuals composing consumption proposals is infeasible, participatory planning is too burdensome a process, and too much power is given to Iteration Facilitation Boards.

Schweickart believes that it is infeasible for consumers to compile a comprehensive list of all the products they would consume in a year. Since consumers in a Parecon have lists of the previous year’s consumption, Schweickart critically states, “At some point, people would have to resolve to keep a daily tally, for a full year, of everything purchased. Everyone would have to keep such a list…All these data would have to be collated and typed into the computer. Do we not have a feasibility problem of the first order?”

Schweickart sees participatory allocation as placing an unnecessary burden on consumers, since he feels that, when there is a fair income distribution, the market enables consumers to buy what they desire when they want to, rather than having to attend various meetings and get approval for one’s choices from others. In his view, under Economic Democracy people would have adequate resources to advocate for change if they feel consumption distribution were unjust. Schweickart also objects to the idea that members of society must participate in the planning process rather than having the right to choose whether or not to participate. The last desirability factor he mentions regards the emotional effects of participatory planning, stating “participatory democracy has a negative side, that it, too, like the market, can be alienating…The costs are not only time and effort; there can often be bruised emotions, feelings of frustration, inadequacy, and impotent anger.” 

Schweickart’s last criticism is that the process of converging upon a plan by voting among five possible ones is undemocratic. His rationale is that plans put before voters could not list every single item to be produced and consumed, since it would simply be too large for people to study. Since plans would have to combine data to be reviewable, he says that IFB’s that put forth the five plans will have the final power to decide how it is to be implemented. In effect, he argues that participatory allocation will inevitably result in a new form of central planning.

Evaluating the Models

The following section analyzes Economic Democracy and Participatory Economics on five issues: 1) division of labor, 2) managing externalities, 3) social relations, and 4) desirability. The criticisms offered by the authors of each other’s systems are addressed and further insights added.

Division of Labor

A major issue raised by Albert and Hahnel regarding division of labor is their claim that markets inherently produce class division. Albert says that even if everyone started out with a BJC in a market economy, class divisions would arise. Without taking the argument that far, it is evident that in a market system with uneven distribution of empowering work, such as Economic Democracy, some workers will be more able than others to capture the benefits of economic gain. For example, if one worker designs cars and another builds them, the designer will use his cognitive skills more frequently than the builder. In the long term, the designer will become more adept at conceptual work than the builder, giving the former greater bargaining power in a firm over the distribution of income. A conceptual worker who is not satisfied with his income can threaten to work for a company that will pay him more. The effect is a class division between conceptual and manual laborers, and ultimately managers and workers, and a de facto labor market for conceptual workers. 

Schweickart does not give any indication that this is not the case in Economic Democracy, or even that anything is wrong with it. He says that under Economic Democracy, “In a firm of significant size, some delegation of authority will be necessary.”  It is not disputable that managers can be held accountable to some degree, but Economic Democracy will structurally produce some who are better able to manage than others, not simply reward managers for possessing human capital independent of the economic system.

The question becomes whether or not BJC’s bring about a loss in efficiency by making highly valued workers do something less valued, e.g. a doctor doing less surgery and more table cleaning. Albert and Hahnel point out that BJC’s can actually increase the efficiency of highly valued labor by giving a greater portion of the population the chance to acquire valued skills.  This is a valid insight and even if there are efficiency losses, they need to be measured against gains in a fair distribution of labor.

BJC’s are clearly a requirement of a just economy, as they prevent unfair class divisions, and in this regard Participatory Economics performs better than Economic Democracy in terms of a just division of labor.

Managing Externalities

Inasmuch that negative externalities are addressed in the Economic Democracy model, they are managed outside of the economic system by legislative government. Schweickart states that Economic Democracy is structurally more compatible with environmental concerns than capitalism, since he believes the obsession with constant growth in capitalism is absent in Economic Democracy.  However, there is no built-in system to comprehensively handle social costs of production and consumption. Regarding environmental costs, even Schweickart himself states, “Economic Democracy is no environmental panacea”  and referring to overconsumption, says, “Economic Democracy is a market economy. Hence, stimulating consumer demand is in the immediate interest of every enterprise.”  Albert and Hahnel’s observation that in a market economy goods with positive externalities are overpriced and negative externalities underpriced applies to Economic Democracy.  There is room for government to effectively temper market externalities, since unproductive assets that protect the environment would likely come out of the social investment fund. If the unproductive assets were not considered a capital asset to be taxed and the social investment fund paid for their depreciation costs, then the incentives to externalize environmental costs would be reduced, if not eliminated, under Economic Democracy.

Participatory Economics is a model in which indicative prices are meant to accurately reflect social costs and benefits, thus externalities are to be managed within the economic system. The council structure is key to prices reflecting social costs and benefits. For example, if a city consumption council wishes to build a chemical factory it must gain approval from the state council to which it belongs. Presumably, pollution would drift to areas outside of the city and other members of the state council would need to be satisfied with the distribution of payment for costs and receipt of benefits in order for the city council’s proposal to gain approval. Thus, if the plant’s benefits will be large for the city, but small for the rest of the state, then for the proposal to gain approval the state could demand that the city residents pay the majority of pollution cleanup costs. Since a city’s overall consumption, collective and private, must be proportionate to total effort expended, greater costs of collective goods means city residents must lower their private consumption proposals or work longer hours. The high costs and low benefits for the state mean that as the cost of the chemical plant for the city rises, so does the opportunity cost, i.e. the indicative price.

However, if the benefits of the chemical plant extend to the whole state, then the state council will have incentive to share the costs of pollution cleanup. There will be lower decreases in private consumption since payment is distributed among more people. The larger benefits for the state will cause the indicative price to be lower than if the state suffers high costs and low benefits.

The same logic extends to private consumption. If individuals across a region request a type of clothing that requires a high amount of rote labor to produce, then worker councils will propose to produce a small amount of that clothing. The large disparity between proposed demand and proposed supply will cause the indicative price to rise, leading people to demand less of it. Likewise, clothing requiring labor that workers find enjoyable will cause workers to propose to do a high amount of that work, which will bring the indicative price down.  

All things being equal, Participatory Economics does a better job of accounting for negative and positive externalities than Economic Democracy. It does not rely on people’s goodwill, but institutionalizes the accounting of social costs and benefits, which operates even if everyone is self-serving. Moreover, Economic Democracy would require that the government interfere to correct market misallocation, because markets will not by themselves calculate social costs and benefits. Ignoring that Schweickart says Economic Democracy would be “largely free of governmental price controls,” , even under the most democratic circumstances, it is questionable how efficiently and accurately an institution external to the economic system can calculate social prices.                   

Social Relations

All other things being equal, in terms of social relations it is hard to understand why one would adopt markets if there were alternatives performing better on this front. Markets consistently set the interests of social actors against each other. Buyers and sellers constantly try to gain at the other’s expense and a firm profits if its competitors lose market share.

Furthermore, in a market economy there is a conflict between the social and individual interests. If a car firm considers the fact that its products create pollution and they decide to sell fewer cars, its profitability decreases. Within a firm, markets place material interests above others, so that if there is a conflict between democratic procedures and profitability, profitability will usually win out. For example, if a firm’s worker council in Economic Democracy votes to adopt BJC’s, if there is a profitability loss the firm will be pressured to return to hierarchical job structures, even though BJC’s would produce a gain in solidarity and equity. In Economic Democracy, there is no solution to any of these problems outside of government intervention.

The question then becomes whether Participatory Economics performs the same economic functions as markets without being anti-social. The principal functions of markets are to match supply and demand and provide incentives to individuals and firms to maximize efficiency. The indicative price system matches supply and demand, while efficiency is achieved through social pressure in the planning process. As an example of social pressure, if one workplace is producing a good with lower efficiency than other workplaces in the same industry, then it will be pressured to increase its efficiency to gain approval for its planning proposals from its industry council.  A Parecon does, therefore, perform the same functions as markets, but unlike Economic Democracy, does not promote competing interests.

Parecon buyers and sellers are not in opposed positions, since there is no such thing as profit. There are only producers and consumers, with one’s work effort being the only factor allowing higher consumption. Two firms producing the same good have no incentive to compete, because remuneration is based on effort and sacrifice.  One firm may have greater production, but no one gains greater income. One could envisage possible incentives for a firm to monopolize production so as to gain bargaining power in the allocation process, but that is questionable.

Parecon also gives incentives to producers and consumers to think of the social interest. For example, everyone has incentive to propose more empowering work and less rote work in order to raise the overall empowerment level of BJC’s. Thus, even selfishly thinking of one’s own interests enhances social well-being. 

Not only is democracy in the workplace not penalized in a Parecon, the price system promotes it. Putting aside the fact that BJC’s and the principle of self-management are central to Participatory Economics, if a workplace were run undemocratically fewer workers would propose to work there. The decrease in proposed supply of the good would raise its price, causing consumers to turn to goods produced in democratic workplaces, which would have lower prices since the supply would be greater due to more workers choosing democratic workplaces.

Therefore, Participatory Economics can achieve the functions of markets, while providing the institutions to achieve better social relations than Economic Democracy.

Desirability

The superiority of Participatory Economics to Economic Democracy on division of labor, managing externalities, and social relations has been described, but if a Parecon were to have major drawbacks making participation undesirable, then any moral superiority is irrelevant. It is helpful to address Schweickart’s and others’ criticisms of Parecon on desirability grounds.

Schweickart states that having every consumer list every item to be consumed in a year is an infeasible task. This is his weakest criticism. Except for unexpected changes, any individual should be able to approximate the amount of items one consumes in a week, a month, and a year, without having to do a daily tally. It is perplexing why Schweickart is so concerned about this.

Schweickart raises a considerably more realistic concern when challenging the desirability of participatory allocation. Schweickart believes that the council structure would require too many time and energy commitments to allocation decision-making from citizens. These commitments do not seem to be inherently undesirable, since the payoff would be an accurate accounting of social costs and benefits, which markets fail to achieve. But if citizens in a Parecon were to view the allocation system as an unnecessary burden, then one would have to look elsewhere for a viable system, perhaps back to markets. Citizens will see participatory allocation as a worthwhile institution if the benefits of taking part in the process are not outweighed by an inordinate time commitment. The benefits are the social nature of the allocation process, as described, and also the chance to democratically register one’s preferences. Regarding time obligations, Albert offers a clarification: “We did not propose a model of democratic planning in which people or their elected representatives, meet face-to-face to endlessly discuss and negotiate how to coordinate all their activities.”  Hahnel goes further saying, “Our participatory planning procedure is one that literally involves no meetings at all.”  While it is difficult to imagine “no meetings at all,” it is clear that participatory planning need not be an overburdening process. As Albert and Hahnel suggest, modern computer technology would save an enormous amount of time facilitating planning.

It also must be remembered that present capitalism requires a significant amount of planning. David Levy states in a review of Albert and Hahnel’s book “Looking Forward”: “Within [current capitalist] manufacturing firms we find echelons of managers and staff whose job it is to try to forecast demand and supply…Large corporations are already planned economies…These firms supplant the market for thousands of intermediate products. They coordinate vast amounts of information and intricate flows of goods and materials.” 

In any complex industrial society, some degree of planning meetings are required. The advantage of Parecon is that the power to plan is no longer exclusive to elites, or, as in Economic Democracy, unevenly distributed among conceptual and manual workers, but rather open to all.  

Schweickart’s statement that in participatory planning, “there can often be bruised emotions, feelings of frustration, inadequacy, and impotent anger” does not present any substantial argument against participatory allocation. If one takes the statement at face value, it implies that because people do not always get along it is better to keep people separated by markets. One advantage of participation is that the increased empathy it creates will allow people to effectively deal with negative interpersonal feelings. 

Schweickart’s final concern with Participatory Economics is that the workers at IFB’s would have the power to decide how a final plan is to be implemented, since the final plan that citizens approve must be understandable, not a listing of every single good that will be produced and consumed. He is correct that IFB workers, at least in theory, have discretion over a certain portion of economic planning. However, he exaggerates its scope, because by the time a final plan is near convergence the basic shape of the economy has already been planned. IFB’s may be able to manipulate figures to close the final gap between supply and demand, but the boundaries between which supply and demand can fluctuate are greatly limited. Rules could be set that require rotation of IFB board members or subject them to greater democratic scrutiny. Moreover, Albert and Hanhel make clear that IFB final plan proposals are only one feasible way of converging on a plan. 

A potential problem is how well social pressure will function to bring proposals in line with social optimality. As Michael Howard says, “If a workplace refuses to work the average, or a community insists on receiving what others judge to be more than its fair share, it is unclear how the plan will be enforced.”  Albert has addressed Howard’s criticism stating “It is a bit like saying, if I say I want more food at the restaurant tomorrow, than I am willing to pay for, [how] will I be prevented from being given it. Well, they won’t give it.”  Albert may be quite right since it is reasonable to think that citizens in a Parecon would penalize those who break the rules, as current societies punish criminal deviance. 

While there are plenty of problems with Schweickart’s criticisms of Parecon on desirability grounds, there is a sentiment underlying them that is quite reasonable: why should a person have to plan consumption for a year ahead and participate in the allocation process when, in a market system, he or she can have the freedom to buy whenever one wants? More broadly, instead of having the planning burden of Parecon, why not adopt Economic Democracy? Of course, it is completely reasonable to want to maximize people’s economic freedom. If, all other things being equal, Economic Democracy provides this economic freedom then it should be adopted. However, all other things are not equal. With Economic Democracy come the costs of structural division of labor , non-social pricing, and antagonistic social relations. One is certainly justified in questioning the desirability of Economic Democracy on these grounds.         

While desirability is admittedly the least predictable component of Parecon and Economic Democracy, potentially undesirable aspects of Parecon show the potential to be improved upon as citizens gain experience in the most effective methods of democratic planning. To the degree that time commitments may be more burdensome than in Economic Democracy, there is good reason to believe the benefits will be greater. The drawbacks of Economic Democracy, however, are difficult to improve upon as they are inherent to markets.  

Conclusion and Topics for Further Research

This paper has described Economic Democracy and Participatory Economics and evaluated how they would perform. It has concluded that Parecon is definitely superior on the problems of division of labor, managing externalities, and social relations, and likely to prove superior in terms of desirability. The larger issue is whether markets are necessary for economic allocation. This paper has not attempted to give a definitive answer to this issue, but has raised serious questions about whether markets should be retained in a just economy. Further research into the necessity of markets is certainly in order.

Another issue worth pursuing is how viable a transition from capitalism to either system is. Schweickart proposes a leftist political party enacting reforms to bring about Economic Democracy , while Albert places more emphasis on social movements as the principal agents of transition.   Elaborations of their presently rudimentary programs for change would be a great service to the cause of economic justice, since either system would be a monumental improvement upon capitalism. 

Bibliography

Albert, Michael. Parecon: Life After Capitalism: (London, New York: Verso, 2003).

Albert, Michael and Hahnel, Robin. Looking Forward: Participatory Economics for the Twenty First Century: (Cambridge, MA: South End Press, 1991).

Albert, Michael.  Movement for a Participatory Economy: 12 Commentaries on Vision and Program. Retrieved from http://www.zmag.org/Parecon/writings/12cmt.htm.

Albert, Michael.  Moving Forward: Program for a Participatory Economy: (AK Press, 2001).

Albert, Michael and Hahnel, Robin. The Political Economy of Participatory Economics: (Princeton, NJ: Princeton University Press, 1991).

Albert, Michael and Hahnel, Robin. Yes, Socialism Without Markets!: Socialist Review, July-September 1992, v22 n3, pp. 131-138.

Hahnel, Robin. Economic Justice and Democracy: From Competition to Cooperation: (New York: Routledge, 2005).

Hahnel, Robin. Response to Criticisms of Parecon, Retrieved from http://www.zmag.org/Parecon/writings/hahnelanwers.htm.

Howard, Michael. Self-Management and the Crisis of Socialism: The Rose in the Fist of the Present: (Lanham, MD: Rowman and Littlefield, 2000).

Schweickart, David.  Economic Democracy: A Worthy Socialism That Would Really Work: Science and Society, Spring 1992, v56 n1, pp. 9-38.

Schweickart, David.  After Capitalism: (Lanham, Maryland: Rowman and Littlefield, 2002).

Schweickart, David. Against Capitalism: (New York: Cambridge University Press, 1993).

Adam Weiss is a master’s student in political science at Northeastern University and can be reached at [email protected]

Leave a comment