On April 22, ZNet posted a lecture Robin Hahnel was invited to deliver on April 10, 2010 at a Conference celebrating the 100th Anniversary of the founding of the Confederacion de Trabajadores, CNT, in Barcelona, Spain. The title of the Presentation was “Anarchist Planning for Twenty-first Century Economies: A Proposal.” Chris Spannos asked Robin Hahnel to respond to the following questions about the lecture, which concern whether or not participatory planning can really solve several important problems.
Spannos 1: First, you say that consumer councils and producer councils vote on the proposals of other councils – that they vote them up or down. I don’t understand what that means. Surely each council doesn’t vote yea or nay on tens or hundreds of thousands of producer proposals and on millions of consumer proposals, as that’s impossible. But if it doesn’t mean that, then what does it mean?
Hahnel 1: First of all, in a participatory economy the only people who vote on individual consumption proposals are other members of a person’s neighborhood consumption council – and presumably neighborhood councils will elect committees to review proposals from members and people will only serve on this committee from time to time. Individual consumers do not participate in the participatory planning procedure any more than individual workers do. Worker councils and neighborhood consumption councils, and federations of consumer councils participate in the participatory planning procedure by making “self-activity” proposals for their entire council or federation, and voting “yea” or “nay” on other council and federation “self-activity” proposals.
Who decides if a proposal is acceptable or not acceptable in any planning process? One possibility is that some central authority ultimately makes those decisions. That is how it is done in central planning. There may be much back and forth communication between the central planning authority and the production units in the economy, including proposals and counter proposals, but one answer to “who ultimately decides what is acceptable” is “the central planning authority.” Anarchists have long rejected this “solution” for political reasons. (1) It robs worker and consumer councils of autonomy over their own economic activities. And (2) it empowers a central authority to rule over them.
I believe these political reasons are sufficient reasons to reject the central authority “solution” to the “who decides” problem in planning for any libertarian socialist. However, it is worth considering the reasons advocates have always given for why a central authority must be given this power because, while some authoritarians see no political problem with allowing a central authority to make these decisions, other supporters of central planning have long defended this “solution” as a regrettable necessity. The standard reason given is that only a central authority can possess enough information and computing capability to be able to determine if a proposal about what a worker council will produce, and what a neighborhood consumer council will consume, are socially responsible, i.e. are efficient and fair. After all, when a group of workers propose to produce something in a particular way they are asking permission to use scarce productive resources belong to everyone, and unless one knows how valuable those resources would be if used by someone else, how is one to know if this group of workers would be using them as efficiently as they might be? And when a group of consumers propose to consume a long list of final goods and services, unless one knows how much it truly costs society to produce them, how is one to know if what they are asking permission to consume is fair? Advocates of central planning claim that this requires knowing a great deal about the overall economy, and only a central planning authority, and certainly not workers and consumers in their individual councils, can possibly collect and manipulate all the information necessary to make these judgments. Moreover, this argument has been generally accepted by all economists who favor comprehensive planning over market coordination.
I explained in the lecture why this rationale for why a central authority must decide what is acceptable is false. First, the central authority will not be able to gather accurate information about the true capabilities of the worker councils because there is a perverse incentive in central planning for production units to under estimate their true capabilities. Second, the participatory planning procedure, which is an entirely different planning procedure, not only eliminates the perverse incentive inherent in central planning to disguise one’s true capabilities (see my answer to your question below), it also provides all worker and consumer councils with sufficient information so that they can easily determine when any work or consumption proposal is socially responsible, i.e. fair and efficient. So, not only is a central planning authority not capable of making competent judgments about what is a socially responsible production or consumption proposal, it is possible for ordinary people to do so armed with the information generated by the participatory planning procedure.
Spannos 2: You often use the word efficient. I wonder how this word is different in participatory planning than in markets or central planning. For a lot of people that word has very bad connotations of getting as much as possible from workers regardless of effects on them, dropping costs by any means available including not cleaning up pollution, creating shoddy products if you can get away with it, and so on. Can you explain what you mean when you say proposals need to be efficient – presumably it doesn’t mean they have to minimize material costs and maximize some kind of material payments while ignoring social, ecological, and even most personal implications for all concerned? But, if not, then what does it mean?
Hahnel 2: Because the word efficiency has been defined and used incorrectly by pro-capitalists many on the Left recoil when they hear it. As you say, Leftists associate “efficiency” with lowering costs by reducing the quality of products and using cheaper technologies even though they pollute more. But if the loss of product quality is greater than the cost saving, then what is efficient is to produce the more expensive but higher quality product! And if the pollution causes more damage than the cost saving from the cheaper but dirtier technology, what is efficient is to use the more expensive technology that pollutes less! Properly defined efficiency means maximizing net social benefits, i.e. any and all benefits to any and all people (present and future) minus any and all costs to any and all people (present and future). There are some important implications:
(a) The proper definition is a good definition. Moreover, Leftists are lucky it is the definition mainstream economics surprisingly has committed to! There are many bad mainstream economists – and tons of pro-capitalist non-economists — who misuse the word efficiency. But the economics profession is committed to chastising them whenever they do, and we should always point out any who deserve to be chastised by the mainstream economics profession “efficiency police.” We on the Left should insist on a proper definition and proper usage and never let people get away with mis-defining or mis-applying the word efficiency.
(b) Efficiency properly defined is a good thing, and Leftists should favor efficiency. More efficient is better than less efficient, all other things being equal.
(c) But all other things are often not equal. Efficiency is NOT the only economic goal. Efficiency does not guarantee economic justice, or equity. Neither efficiency nor equity guarantees economic democracy or self-management. And neither efficiency, intra-generational equity, nor economic democracy guarantee sustainability. Where Leftists should often disagree with others is over the relative importance of advancing the cause of economic efficiency compared to advancing the cause of economic justice, democracy, or environmental sustainability when these goals conflict. But it is a mistake for Leftists to favor less efficiency over more efficiency if all other worthy goals are affected equally. I know that many on the Left do this, and given how often the word efficiency is abused this is understandable. But “understandable” does not mean “advisable.” Coming across as hostile to efficiency is one of the mistakes many on the Left make.
(d) There is not one definition for efficiency for capitalism, and a different definition for efficiency for participatory economics – any more than there are different definitions for economic justice or economic democracy for different economic systems. The whole point is to define worthy economic goals like efficiency, equity, and economic democracy independent of economic system, and then see to what extent they are achieved or not achieved by different economic systems. When we do this we will discover that capitalism is very inefficient compared to participatory economics, which is one reason, although not the main reason, that participatory economics is better than capitalism. The confusion arises when a capitalist talks about what is efficient for HIM. What is efficient for a capitalist is whatever maximizes his profits since that is his only goal. But whenever profit maximization does not maximize net social benefits then what is efficient for the capitalist is not efficient for the economy, and not efficient as the word is properly defined. I’m sure murders would say more lethal weapons are more efficient, but that does not mean that equipping murders with machine guns instead of pocket knives is more efficient for society!
Now, getting back to your first question which I have yet to answer: Just because every council can now easily determine if the proposals of other councils are socially responsible, just because we have created the objective conditions for allowing everyone to decide what is acceptable and what is not acceptable, does this mean we are really going to allow them all to vote on millions of proposals in every round of the planning procedure?
YES… because the only alternatives are unacceptable. And YES… because 99% of the voting can be done automatically, and 99% of the votes can be taken care of by federations rather than individual councils – so all this voting really takes up very little time.
If worker and consumer councils do not make these judgments either a central authority will, or each council will simply decide for itself. We have already reviewed why giving this power to a central authority is unacceptable – both politically and economically. Why can’t we simply let worker and consumer councils decide whether their own proposals are socially responsible themselves? If they have the information necessary to make this determination, which they will under the participatory planning procedure, why not let them decide about their own proposals? Because they would have perverse incentives to cheat. Worker councils would have a perverse incentive to propose to use resources that make their work easier or more pleasant even though they have information indicating that those resources would be more valuable if used elsewhere. Consumer councils would have a perverse incentive to propose to consume a more socially costly bundle of goods and services than is fair given how hard they worked, even though they have information indicating they would be doing something unfair to others. If they were socially responsible would they do this? No. But if they get to decide on their own proposals there is nothing to prevent them from doing this if they choose to behave in a socially irresponsible way, or more likely, figure out some way to rationalize why behaving irresponsibly isn’t REALLY irresponsible. Here is a useful analogy: Is it a good idea to have people leave open wallets with visible $20 bills on the seats of their cars, and then go off and leave their cars unlocked with the windows open in parking lots? Or is this tempting fate unnecessarily?
If we don’t want to tempt fate we need to give those who would be harmed by socially irresponsible proposals power to veto those proposals. And unless everyone trusts everyone else from the get go, we may discover that many are unwilling to participate in good faith if they do not believe others will do so, and if they have no means of protecting themselves from irresponsible behavior of others. Since we don’t want to give the authority to a central authority (even if the authority has the necessary, accurate information) then we must give it to everyone, i.e. to all the other councils.
But this does not mean every council must vote “yea” or “nay” on every proposal from every council, in every round of the planning procedure – although in theory, and in essence, that is what we are doing. Because 99% of the votes are “no brainers,” so to speak, this does not need to be a contentious, burdensome, and time consuming process. And because we have federations to handle this, for all councils that are members of the federation only councils within the federation need to vote on proposals of other councils within the federation. In other words councils don’t need to vote on 99% of other councils’ proposals – only on proposals of councils within their federation. (This is holds for federations of worker councils as well as federations of consumer councils.)
If a worker council proposal “costs out,” – if its social benefit to social cost ratio is one or higher — then all the rest of us are better off if they are given permission to do what they have proposed, otherwise we are worse off. Only if one believes the numbers lie because there are special circumstances is there reason not to do an automatic default vote, “yea” if SB/SC > 1; “nay” if SB/SC < 1. There is a similar “no brainer” rule for how to vote on consumer council proposals. So when all those proposals from other councils come in for our approval or disapproval, they all come in with a clear signal as to how we should vote without even thinking about it. All we have to do is tag a few we have doubts about, and for all the rest we just hit the default vote key and we’re done. Only if and when we think there is reason to doubt the numbers do we need to “think” about how to vote, and then possibly vote contrary to the default option.
Nor do we have to do this for millions of different proposals from councils in distant cities and states. If there are 10 neighborhood consumer councils in a ward federation only the other nine neighborhood councils in that ward federation need to vote on each of their proposals. If there are 10 ward federations in a city federation, only the other nine wards in that city need to vote on each ward proposal. Wards will need to check on other ward averages, and cities will need to check on other city averages, but this still eliminates 99% of the proposals any single entity must vote on. In other words, most of the voting can be decentralized and taken care of within federations.
Spannos 3: I know “SB” is somehow social benefit, and “SC” is social cost – but there is no God or authority who provides a number representing each of these for us so that we may know their true value. So why should I, or anyone, think that the number is somehow accurate? And therefore why should I think that the ratio of Social Benefit to Social Cost that the system is reporting is somehow accurate? You say the only reason to doubt it is due to thinking the numbers lie – but doesn’t ignorance, error, and also willful fraud cause numbers to be inaccurate in those instances?
Hahnel 3: How are you, Chris Spannos, going to know whether to vote yea or nay on a work proposal from a worker council where you do not work? How will you know if they are proposing to use scarce productive resources that belong to you as much as them effectively? How will you know that it would not be better to allow some other worker council to use the resources they have asked for instead? How will you know if the work they are proposing to do is fair given how hard you and others have to work? Are you going to read a long letter from the other council about how excited they are about their idea? Are you going to pay them a personal visit? Not when you have to pass judgment on many such proposals, and also participate in preparing and revising your own worker council proposal, and then actually do some work!