A Critique of Michael Albert’s Parecon: Life After Capitalism
My response to Michael Albert’s Parecon: Life After Capitalism (2004), will, I hope, come as a constructive contribution to the debate pertaining to visions for a more virtuous form of economic integration and sustainment. Historically and contemporarily implemented economic systems are clearly deficient and the assertion that a better world is not possible is not only depressing, but seems specious as well. This is where Albert’s work on parecon comes in: it offers a vision for political and economic progress and defies the “there is no alternative” windbags whose myopic doctrine seems to hang over us like a pall sometimes. I am drawn to the parecon idea, not only because it is a very well developed alternative economic model, which is both pragmatic and idealistic, but also because it bears some interesting contrasts with the Libertarian Mixed Economy (LME) model that I have been developing in recent years. Like the parecon model, I see the LME as a libertarian/anarchistic alternative to the “mainstream” economic systems which have been and are being employed in polities around the world. I do not mean to give the impression that parecon and the LME models are on equal ground however, as the parecon model is much more fully developed than LME, and the later is still a relatively inchoate idea. Despite this disparity, I still notice some key contrasts between the two models, and I write this essay primarily to discuss some of these contrasts, in hopes that I can make a constructive contribution to the discussion. In the following essay, I will begin by highlighting some of the main similarities and differences between the parecon and LME models. I will then underscore what I think are some of the potential problems with the parecon model stemming from these differences, focusing in particular on issues of human nature, worker incentive, privacy, and the trade off in social virtues. Next, I will posit one of the main features of the LME model as a possible solution to some of these potential problems with parecon.
The similarities and differences between the LME and parecon models
The LME bears some resemblance to parecon as well as some fundamental differences. Perhaps the biggest similarity between the two models is that they are both models which seek to maximize a set of rational social values (or what I also sometimes refer to as virtues). Parecon seeks to maximize equity, solidarity, self-management and diversity. Meanwhile, the LME model enshrines liberty, equality and peace as the universal social virtues to be more fully realized. I consider both of these sets of values as being consistent with the libertarian/anarchist ideal and I would observe that both models are essentially aimed at a closer approximation of this ideal. Other similarities between the two models, in more concrete terms, include the provision of essential goods and services, such as health care, education, and public parks, for free. Also like LME, the parecon model, while proclaiming its consistency with anarchist/libertarian principles, recognizes law as an essential tool which will be needed as we progress towards a more virtuous economic system. For example, in his discussion of international economic integration, Albert envisions international institutions whose policies will be aimed at maximizing equity, solidarity, diversity and self-management, the primary virtues which any just economy would strive to maintain or expand, according to the parecon advocates. These institutions would, “protect domestic laws, rules, and regulations designed to promote worker, consumer, environmental, health, safety, human rights, animal protection, or other non-profit centered interests by rewarding those who attain such aims most successfully” (5). This assertion is also consistent with Albert’s defense of reforms, which comes later in the text. Also like LME, parecon holds that work opportunities would be readily available for those who sought it. For instance, according to Albert, in a parecon-based society, “People are free to apply and live and work wherever they wish” (255). This is similar to the LME in that, an essential component of the model is the widespread availability of jobs in the public sector.
There are also some important differences between the LME and parecon models. Perhaps the main difference between the two models, is that the LME model places more emphasis on the distinction between the public and the private sectors of the economy. A few examples of what I mean by “public sector” include: the postal service, utilities such as water, electricity and gas, waste management, public broadcasting and media, highways and public transit, education and health care. On the other hand, the private sectors are those involved in the production and distribution of “luxury goods” which are those goods or services which are deemed inessential for public sustainment. Examples of private goods include sporting, recreation, and hobby tools and equipment, electronic goods such as DVRs and stereos, vehicles, beers, fancy clothing, and so on. Unlike parecon, the LME model is built upon the distinction between the public and the private sectors. According to the LME model, the public sector goods and services would ideally be free to everyone, while those distributed in the private sector would be bought and sold in markets, which would in its more ideal form be characterized by an approximately perfect competition.
Unlike the LME model, “pareconomists” (by which I mean advocates of parecon) see no place for markets in a virtuous society, as markets are inherently tyrannical they contend, and they will therefore undermine the social values which the parecon model seeks to more fully realize. Therefore, pareconomists prescribe a single overarching model, and make no clear demarcation between public and private economic sectors. It is important to note however, that parecon does allow much room for local discretion, which is also one indication of the flexibility and libertarian character of the model. For instance, discussing standards of remuneration and how to determine the level of work intensity expended by any one individual in completing a particular task, Albert observes that, “The precise methodology for doing this need not be the same from workplace to workplace. Adherence to the norm is what should be universal, not a particular specific approach to the nuts and bolts of implementation” (115). While the need for local flexibility is emphasized, adherence to the overarching parecon norms, in all sectors of the economy, will be essential for maintaining and/or maximizing the realization of the overarching social values of solidarity, equity, self-management, and diversity. As an example of this point, Albert states that, “(Parecon-oriented activists) would urge that each workplace be owned in equal part by all citizens so that ownership conveys no special rights or income advantages” (9, emphasis added).
This adherence to the parecon model in all sectors of the economy marks the biggest difference between parecon and LME model. Why do advocates of Parecon eschew the idea of markets, even in “non-essential” sectors of the economy, and what are the consequences of their exclusion of markets from the model? I will try to address these questions in the following paragraphs, and I will also attempt to point out some of the potential problems resulting from this approach.
Parecon and the reasons for the rejection of markets
Advocates of parecon reject markets for several reasons. Here are some of the reasons Albert gives for rejecting markets:
“market economies will subvert equity whether combined with private or public enterprise” (59).
“market valuations of workers’ contributions systematically diverge from an accurate measure of their true social contribution…” (59).
“the economically advantaged (would) translate their advantages in resources and leisure into disproportionate political power with which to defend market wage rates against critics” (63).
“markets pit buyers against sellers creating an environment that is almost precisely the opposite of what any reasonable person would associate with solidarity” (67).
Later, in Chapter 21, titled, “Flexibility: Should a Parecon Incorporate Limited Markets?”, Albert addresses flexibility and efficiency concerns regarding parecon, making a compelling case that parecons are just as, if not more efficient and flexible than markets. However, Albert contends that even if markets were shown to be more flexible and efficient than parecons, we could not include markets in a virtuous society for more fundamental, theoretical and empirically verified reasons. In Albert’s own words, “Having a little markets in a parecon is a bit like having a little slavery in a democracy…The logic of markets invalidates the logic of participatory planning and of the whole parecon, and it is also imperial, once it exists trying to spread as far as it can” (277). But is this necessarily the case? Can there be room for markets in a more virtuous society?
In contrast to the parecon vision, LME, as the name of the model suggests, allows for both public sector organizational forms (such as parecon), as well as markets in the private sector. The LME model allows for markets, not because I deny the critical points about markets which Albert identifies, but rather, because an economic system hoping to more closely approximate libertarian social virtues would need to include markets in the economic landscape. I base this proclamation primarily on two main ideas: one pertains to human nature and the different motives which stem from it, and the other idea has to do with the ability of the public sector to check the worst excesses of the private sector when properly implemented. I will now discuss each of these ideas in a bit more detail.
Human nature and the incentive to innovate: the inadequacy of remuneration
While Albert seems to argue that human nature is essentially social, and that the individualistic tendencies and actions of people are largely a product of contemporary capitalist economic institutional structures (Ch. 24), the LME model holds a more balanced view of human nature. The basic idea is that people are, to varying extents, both social and individualistic: some people are very greedy while others are very altruistic and cooperative. Meanwhile, most are somewhere between these two extremes. If this understanding of human nature is true, or at least intuitively plausible enough for the purposes of the argument, would not individuals within a libertarian society, i.e., a society which sought to maximize social virtues such as liberty and solidarity, need to work within economic systems which allowed them to utilize and tap into both their individualistic and social energies as a means of self-sustainment? The LME accepts and accounts for the variation in human nature by incorporating both markets (which allow for the free expression of peoples’ individualistic/self-centered ambitions), and public sectors (which build upon peoples’ “social” instincts). To be fair, Albert doesn’t deny the existence of mankind’s individualistic tendencies, but the identified means of allowing for its expression are, in my view, inadequate. This inadequacy will stifle of our individualistic/self-centered ambitions, and ultimately make the parecon idea unsustainable.
Albert claims that the parecon system would allow for both “material and social incentives” (252) to be expressed, and that parecon actually contains mechanisms which cause people to think socially, rather than selfishly as in a capitalist system. This is largely achieved through the parecon idea of remuneration, in which payment for work is allocated based on the duration, intensity and onerousness of the work carried out by individuals. Remuneration will serve as an incentive and will tap into peoples’ desire to accumulate things: If somebody wants to acquire more goods and services than would be allowed by the base income level, then they would simply need to do more of society’s unpleasant work, allowing them to accrue more “credit”, which they could then use to consume more goods and services. There is a Dead Kennedy’s song from the 1980s titled, “Where do you draw the line?”, in which Jello Biafra states that, “Anarchy sounds good to me, but then somebody asks ‘who will fix the sewers?’ Every theory has its holes when real life steps in.” Parecon’s answer is: the worker who seeks to accumulate more credit for goods and services will fix the sewers, and perform other unpleasant tasks such as waste collection, because he or she will be paid more handsomely for doing such tasks. This parecon idea of remuneration sounds good, but at least one potential problem arises from it.
It is unclear that the individualistic incentives of people will be allowed adequate room for expression under parecon. Consider not only the incentives to do society’s onerous tasks, but also the incentives to innovate new products and to start small businesses. Albert states that, “In a participatory economy the only reason people would have different levels of consumption would be differences in work effort or differences in need in the event of special circumstances. By effort we mean anything that constitutes a personal sacrifice for the purpose of providing socially useful goods and services” (152, emphasis added). The problem with this logic is that innovative ideas for goods and services established by entrepreneurs won’t necessarily be “socially useful”, as is required to receive remuneration in a parecon. And since this entrepreneur won’t be able to sell his new product on an open market, he won’t be able to make as much under a parecon as he would in a market. This could stifle innovation. For example, goods that benefit only a very small segment of the population, such as a new type of spray paint to be used by graffiti artists, might not be seen as “socially useful”, and so might not generate a remuneration in a parecon. Meanwhile, the monetary gains made from developing a new type of paint in an open market would be likely to far outweigh any remunerative gains made from developing the same product under a parecon. Therefore, the entrepreneur living in the parecon wouldn’t have as great an incentive to develop his idea as he would in a market. The stifling of individualistic ambitions in cases like this would be detrimental for a few reasons: (1) society would be deprived of new and interesting goods and services, even if those goods or services individually only benefit a small segment of the population, (2) the consistency of the parecon model with libertarian norms is brought into question to some extent, and, worst case scenario: (3) the stifling of people’s individualistic ambitions could make parecon unsustainable, eventually leading to a “fall of the Berlin wall”, so to speak, as the desire to participate in markets freely would eventually boil over and cause the economic system to collapse.
Another potential problem with the parecon model: Council approval vs. market liberty
Another potential problem with the parecon model, is that it doesn’t allow people sufficient private space in making consumption choices, and would seem to be too slow moving at times. The following passage from Albert’s text brings this point into relief:
“…individuals or collectives might propose a consumption request above the level warranted by effort ratings accompanied by an explanation of what they regard as a justifiable special need. These requests are considered by relevant consumer councils and either approved or rejected” (117).
Do purchases always need to be “approved”? Do people have to place an order via consumer councils for everything they want, rather than just going to a store and buying something? Speaking on a practical level, it is hard to imagine such a norm developing, especially in the United States. People value their privacy and would much rather have the freedom to go to the store when they choose to purchase an item, rather than having to submit a request to a consumer council and then having to wait for an approval and for the good to be made available. There is a real loss of privacy and expedition, it seems, in switching from the market-based approach, in which individuals can go to the store at will and make a private purchase when they want, to a parecon approach of consumer council approval. Meanwhile, if individuals wanted to acquire what Albert referred to as “basic guaranteed provisions,” provided by the public sector in an LME, such acquisitions might be subject to pre-approval from consumer councils. I don’t reject the parecon model outright, I just see it as more applicable to the public sector, rather than the entire economic landscape. That is, parecon could fit into a libertarian mixed economic system vary nicely, but I would argue that it should be seen as limited to the public sector, rather than a model to be applied across the political-economic landscape.
Which approach nets a greater realization of social virtue: allowing or excluding markets?
“…though these values mean to be encompassing and critically important so that not furthering them is a damning criticism, there are many other values—such as privacy, personal freedom, artistic fulfillment, or even something specific like the right to employ others for personal gain—which might (or might not) also merit attention. And we can imagine that our favored values could come into conflict with one or more of these other values in certain contexts…” (42).
I have yet to deal with the basic problems of markets identified by Albert in the Parecon text. As a point of departure, it may be useful to focus on the universal social values identified by both the parecon and LME models. The parecon model identifies equity, solidarity, self-management, and diversity as the social virtues to be more closely approximated, while the LME model holds liberty, equality and peace to be paramount. There is some overlap with these two sets of social virtues, and there is also some incongruence between them which may explain the main disparity between the models. The notion of workplace democracy is taken seriously in the parecon model, and it stands as a democratic alternative to capitalism, which is undemocratic in both theory and practice. The LME model, meanwhile, is built upon the idea that its okay that markets aren’t democratic because democracy need not apply to all aspects of our lives. Democracy need only apply to those aspects of society which concern us collectively and the private sector is, by definition, not a concern of the public (in an idealized sense of the public/private dichotomy, that is).
The pareconomist would reply that business decisions of the private firm, while perhaps not concerning society at large (maybe the people consuming the goods), do at least concern the workers within that private sector business, and so the business ought to be internally democratic. Yet, because private sector firms are undemocratic in both theory and practice, we cannot have both workplace democracy and markets; one or the other would have to be sacrificed. So which is to be sacrificed? Which is more essential, in this tradeoff, for the betterment of society and a closer approximation of social virtue? The pareconomist places workplace democracy above the libertarian virtues inherent in the ability of business owners to manage their firms hierarchically. The LME, on the other hand, allows for nondemocratic firms to exist and thrive because democracy need not apply to all sectors of the economy, only the public sectors, in order to remain consistent with libertarian norms. Because pareconomists see “solidarity” and “equity” as values to be maximized in all cases, (i.e., because these are among the universal values to be striven for) they infringe unnecessarily on the value of “self-management” (or liberty) as it would be realized in private sector market endeavors. I would argue that the gains in liberty which result from allowing nondemocratic markets to exist, outweigh the losses in equity and solidarity which result from including markets in the economic model. One might be wondering at this point how it is that a society can be remain virtuous if undemocratic private sector firms are allowed to exist and pursue profits in economic markets, given that the existence of markets have been known to foster inequality and to “impose antisocial motives” (277). The answer to this concern is found in striking the appropriate balance between public and private sectors.
Striking the balance between public and private sectors in the LME
With regards to the “imperialistic” tendencies of markets and business owners, I would argue that this is in large part a reflection of the selfish aspect of human nature, rather than simply something that markets “cause”. It is therefore essential that a more virtuous society allow a place for markets, both for the sake of society collectively who will benefit from the innovations catalyzed by market-based incentives, as well as for the sake of the individuals who will enjoy the liberty to act upon their self-centered instincts and ambitions. But, while maximizing liberty with the inclusion of markets, how do we at the same time check the negative impacts of markets such as the “imperialistic” tendencies of markets to encroach upon the public sector? A key assertion of the LME model is that striking the appropriate balance between the private and public sectors would allow the public sector to check the worst tendencies of the private sector. But where is the balance to be struck between the public and private sectors? Earlier in this essay, I identified several goods and services which are or ought to be managed in the public sector, but ultimately, where the line is drawn will be a matter of public debate. In a similar vein, Albert notes that, “What items should be on the free list is something that will have to be debated in consumer federations” (117).
The key point is this: with a vibrant and expansive public sector, (organized into parecons, perhaps), where job opportunities for people are readily available, and where essential resources for popular sustainment are provided to individuals free of charge, the leverage that private sector firms currently enjoy over workers, allowing them to mistreat their workers and consolidate private power, would be diminished. For instance, if in a LME society individuals chose to enter the private sector to accumulate wealth by working for private sector firms, and if in those firms those workers were mistreated by the company’s managers, those workers wouldn’t need to remain employees of that firm, because they would have public sector jobs and resources to fall back on. Thus, the mixed economic approach could also cause employers to treat their employees better by providing higher wages, and giving them more discretion and respect within the company. Also, by having the public sector institutions as fortified, central “pillars” of the society while the markets exist more chaotically around the peripheries of those public sector institutions, (as LME envisions it), the availability of jobs and resources in the public sector could serve as a natural check on the growth of private sector firms and the “imperialistic” tendencies of markets and business owners, as they won’t necessarily have a willing and ready supply of workers to hire. This reduced availability of workers, and the enhanced ability of workers to leave the private firms, could conceivably make it more difficult for private firms to grow, in the sense that businesses which grow usually need more workers.
To summarize: under a LME-based society, workers would not need to enter the private sector if they didn’t want to, unlike now, where people are essentially forced into the hands of the private sector firms, who can then mistreat their workers because those workers depend on the private sector firms for their own sustainment. Under LME, the leverage that the private sector firms once had will be largely taken away from them, as the work force will have public sector resources and employment to fall back on. The popular sustainment of the public sector, as a set of institutions able to maintain their adherence to social virtues while standing as an alternative to the private sector, will be a test of whether or not a libertarian society and the appropriate mixture of public and private sectors upon which it depends, can be sustained long term. Levels of popular support for and contributions to the public sector might also be seen as a measure of the extent to which mankind truly is social.
With this essay, I wanted to offer a relatively brief response to Michael Albert’s Parecon: Life After Capitalism, by focusing on some of the main issues with the parecon model which came to mind as I read the text. Ultimately, I see parecon as a libertarian model for the public sector, and so I would study it as a more fleshed-out and detailed explanation of how public economic sectors can be organized so as to maximize our social values. Thus, my main critiques of the model include the underemphasis on the key distinction between the public and private sectors of the economy, and the appropriateness of different economic ideas for these two disparate spheres. Just as I think the parecon model can be further developed based on critiques offered in this essay, the LME will be further refined in light of the lessons of the parecon model as well. For instance, the idea of remuneration was not a part of my vision for public sector organization initially, as I thought this idea was incompatible with libertarian principles. I had held that people must maintain the public sector based entirely on voluntary contributions: Remuneration for public sector work would require a state to tax the population and then use those revenues to pay the workers in the public sector. Because taxation is incompatible with libertarianism, I didn’t see how remuneration could be reconciled with the idea of a libertarian economic model, and thus I had developed the LME in large part based on the perceived need for public sector workers to contribute as volunteers without pay. In that case, the workers’ incentive to contribute would simply be the desire to preserve the free society, rather than a desire for remuneration and “material goods”, which workers could acquire by entering the private sector and acquiring money. Regardless of the extent to which this essay impacts the development of the parecon model, or the extent to which Albert’s Parecon influences the development of the LME model, debates about ideas for economic progress are undoubtedly called for, given the chasm between what should be and what is with regards to systems of economic integration and sustainment.