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Life After Capitalism – And Now Too


[This is a talk given in Rimini Italy at the Conference of the Pio Manzu Institute…on the occasion of Albert receiving the Medal the President of the Italian Republic for work on Parecon. The Citation on the Medal was…

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Medal of the President of the Italian Republic Awarded by the International Scientific Committee of the Pio Manzu Centre to Michael Albert

The highly prolific American economist Michael Albert is the author of a bold, innovative economic theory aimed at replacing self-serving competition in the economic field with egalitarian cooperation.

Together with his co-author Robin Hahnel, Professor of Economics at American University, Washington D.C., he has developed and popularised a radical economic model, known as Participatory Economics, which constitutes an alternative both to capitalism and to what used to be the Soviet-style model of Real Socialism.

In Participatory Economics, solidarity takes the place of competition and remuneration for duration, intensity, and onerousness of work replaces remuneration for property, power, or output. Likewise, methods of self management replace authoritarian decision making and a new method of allocation called participatory planning replaces markets.

To realise his project of radically changing a private-enterprise production system that generates economic inefficiency, Michael Albert counts on workers and consumers operating in councils according to the principle of participatory self-management.

The Pio Manzu¹ Centre recognises that this American economist’s radical new theory constitutes the most powerful and fully articulated challenge to the current models of socio-economic thought and that Albert’s outstanding merit lies in the fact that he has indicated a new major highway in economic organisation as a feasible proposition.

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Mikhail Gorbachev, President
17 October 2004

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The Talk was:

Why have my frequent co-author Robin Hahnel and I devoted great time and energy to developing, describing, and now advocating an economic model to replace capitalism? What are the model’s features? How does it differ from other models. And what are its immediate implications?   

We address economic vision because in the words of the great economist John Maynard Keynes: “[Capitalism] is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous — and it doesn’t deliver the goods. In short, we dislike it, and we are beginning to despise it. But when we wonder what to put in its place, we are extremely perplexed.” We address economic vision to undo that perplexity.  

Capitalism is theft. The harsh and subservient labors of most citizens fantastically enrich a few others who don’t have to labor at all. In general, those who work longer and harder get less. Those who work less long and less hard get more.   

On the upper West Side of New York City, barely a mile apart exist neighborhoods in which the average disposable income is on the poorer side about $5,000 per year and on the richer side about $500,000 per year. The richest people in the U.S. are worth more than the populations of whole countries. The poorest people in the U.S. live under bridges in threadbare cardboard shelters, or stop living at all. This gap is not due to different industriousness or talent. It is due to social relations that force the many to enrich the few.   

Capitalism is alienation and anti-sociality. Within capitalism the motives guiding decisions are pecuniary not personal, selfish not social. We each seek individual advance at the expense of others. The result, unsurprisingly, is an anti-social environment in which nice guys finish last.   

In U.S. hospitals, tens of thousands of people a year die of diseases they did not have when they entered. This is in considerable part a matter of hygiene and other correctable problems. Yet there is no massive campaign to save these lives. It would not be profitable. Starvation the world over has the same root cause; to feed the poor sufficiently is not as profitable as over-feeding the rich. What health we attain, what food we eat, what housing we inhabit, comes to us because someone was seeking not health, sustenance, or shelter for all, but profit for themselves. Economic logic seeks profit rather than social well being. Benefits for the weak arise only as a byproduct, not an intention, and rarely at that. As Keynes put it, “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”   

Capitalism is authoritarian. Within capitalism’s workplaces those who labor at rote and tedious jobs have nearly zero say over the conditions, output, and purpose of their efforts. Those who own or who monopolize empowering positions have near total say. Not even Stalin controlled when people could rest, eat, or go to the bathroom, but corporate owners routinely exercise such power. Corporations annihilate democracy.   

Capitalism is inefficient. Capitalism squanders the productive capacities of about 80% of the population by training them primarily to endure boredom and take orders, not to fulfill their greatest potentials. It wastes inordinate resources on producing sales that aren’t beneficial, and on enforcing work assignments that are coerced and therefore resisted.   

Capitalism is racist and sexist. This is not intrinsic to the relations of production, but occurs because under the pressure of market competition owners inevitably exploit racial and gender hierarchies produced in other parts of society. When extra economic factors reduce the bargaining power of some actors and raise that of others or when they impact expectations about who should rule and who should obey — seeking profit, capitalists abide and even enlarge the injustices.   

Capitalism is violent. The pursuit of capitalist market domination produces nations at odds with other nations. Those with sufficient weaponry exploit the resources and populations of those lacking means to defend themselves, at times even unleashing unholy war.   

Capitalism is unsustainable. Markets propel short term calculations and make dumping waste on others to avoid costs an easy and unavoidable road to profit. As a result, money grabbers accumulate and accumulate, ignoring or willfully obscuring the impact not only on workers and consumers, but also on today’s environment and tomorrow’s resources. We see the results in sky, water, and soil, mitigated only by social movements that force wiser behavior.   

I could continue detailing the morbid failings of capitalism, but I don’t think it’s necessary.   

In 2004 only a relatively few people are made so immoral by their advantages, or so profoundly ignorant by their advanced educations, or so confused by media, that they still fail to see that capitalism is now a gigantic holocaust of injustice that is anti-human in virtually every respect.   

As John Stuart Mill put it, “I confess that I am not charmed with the ideal of life held out by those who think that the normal state of human beings is that of struggling to get on; that the trampling, crushing, elbowing, and treading on each other’s heels, which form the existing type of social life, are the most desirable lot of human beings.” But what do we want instead?   

Participatory Economics, or parecon, is built on four institutional commitments.   

First, in parecon people participate in economic life via nested workers and consumers councils that repeatedly arise whenever people seek to control their own economies, as most recently in Argentina. The added feature of parecon’s councils is a commitment to self managed decision making. People should influence decisions in proportion as they are in turn affected by them.   

Sometimes self management is best accomplished via one person one vote and majority rule. Sometimes it entails that a different tally is needed, or consensus, or that only some segment of the whole populace votes. In parecon, the tallying procedures we use are tactics to attain the appropriate self managing say for all involved actors. Such self managing workers and consumers councils of course bear little resemblance to the top down corporate entities we endure today.   

Second, remuneration in a parecon is for effort and sacrifice, not for output or bargaining power. In a parecon we will earn more if we work longer, if we work harder, or if we work under more harsh or harmful conditions.   

Parecon rejects someone earning by virtue of having a deed in his or her pocket. There is no moral or incentive warrant for that. Parecon also rejects a thuggish economy in which people get what they can take, as in market exchange. More controversially, parecon also rejects that we should get back from an economy the amount we contribute to it by our personal labors.   

How much we produce depends on many factors we can’t control: our having better tools, or our working in a more productive environment, or our producing more valued items, or our having innate qualities that increase our productivity. Economic incentives need to induce productive labor even when it is onerous. Remuneration for effort and sacrifice makes moral and economic sense. Rewarding the luck of having more productive genes, tools, etc., does not.   

Third, participatory economics needs a new division of labor. If a new economy were to remove private profit, utilize self managing councils, and remunerate effort and sacrifice, but were to simultaneously retain the current corporate division of labor, its commitments would be inconsistent. Having 20% of the workforce monopolize largely empowering and pleasurable work and leaving 80% with more obedient, rote, stultifying, and onerous work, guarantees that the former group – who I call the coordinator class – will rule over the latter working class.   

Even with a formal commitment to self management, as a result of the work they do, the coordinators will enter each decision discussion having defined its agenda, owning the information relevant to debate, possessing compelling habits of communication, and embodying the confidence and energy to fully participate. In contrast, having been deadened and exhausted by the work they do, workers will come to decision discussions only disempowered and exhausted. Coordinators will determine outcomes, including choosing to remunerate themselves more, to streamline meetings and decision-making by excluding those below, and to orient economic decisions in their own interests.   

This is about classes, ultimately.   

By virtue of their deed to property, owners in capitalism preside over means of production. They hire and fire wage slaves. But eliminating this relation is not the same as attaining classlessness. Another group in place of owners and also defined by its position in the economy, can wield virtually complete power and aggrandize itself above workers. To avoid rule by this coordinator class over workers requires that we replace corporate divisions of labor with a new approach to defining work roles. Parecon calls this third institutional commitment balanced job complexes.   

Everyone in any society will by definition be doing some collection of tasks as his or her job. If the economy employs a corporate division of labor our tasks will combine into a job that is either largely empowering or that is largely disempowering. In contrast, a participatory economy will combine tasks into jobs so that the overall empowerment effect of each job is like the overall empowerment effect of every other job. We won’t have managers and assemblers, editors and secretaries, surgeons and nurses. The functions these actors now fulfill persist in a parecon, but the labor is divided up differently. Of course some people do surgery while most don’t, but those who take scalpel to brains also clean bed pans, or sweep floors, or assist with other hospital functions.   

The total empowerment and pleasure that the surgeon’s new job affords is made average by remixing tasks. She now has a balanced job complex that conveys the same total empowerment and pleasure as the new job of the person who previously only cleaned up. The domination of what I call the coordinator class over all other workers is removed not by eliminating empowering tasks or by everyone doing the same things. Both these options are not only irrational but impossible. Nor is coordinator class rule eliminated by just extolling rote work as important, which is possible and has even been tried, but which is structurally vacuous. What eliminates coordinator class rule is distributing empowering and rote work so that all economic actors are able to participate in self managed decision making without undue advantage accruing to some due to their economic roles.   

Finally, fourth, what if we have lots of workplaces and communities that are all committed to having workers and consumers councils, to using self managed decision making procedures, to having balanced job complexes, and to remunerating for effort and sacrifice, but, in addition to these features, we opt for central planning or for markets for allocation? Would this constitute a new and worthy vision?   

With central planning the planners would be distinguished by the conceptual and design character of their labor, and no doubt also by their academic or other credentials. They would seek to have agents in each workplace with whom they could interact and who would be responsible for enforcing the central plan, people who held similar credentials to the planners and were vested with similar dominating rights. The dynamics of central planning are down go instructions up comes information about the possibility of fulfilling them, down go altered instructions up comes more information, down go final instructions up comes obedience. The command structure is authoritarian and as we saw in the old Soviet Union the class implication is to resurrect the coordinator/worker distinction in each workplace and in the whole economy. Central planning undoes our other innovations and so must be rejected as unfit for allocation.   

Markets are similar in their unworthiness, and the case is even more important because markets have so much more support around the world, and even on the left.   

First, markets would destroy equitable remuneration by rewarding output and bargaining power instead of rewarding only effort and sacrifice.   

Second, markets would force buyers and sellers to try to buy cheap and sell dear, each fleecing the other as much as possible in the name of private advance and even economic survival. Markets subvert solidarity.   

Third, markets would even produce dissatisfaction as an aim, because only the dissatisfied will buy, and then buy again, and again. As the general director of General Motors’ Research Labs, Charles Kettering put it, business needs to create a “dissatisfied consumer”; its mission is “the organized creation of dissatisfaction.” Following his own advice, Kettering introduced annual model changes for GM cars — planned obsolescence designed to make the consumer discontented with what he or she already had.   

Fourth, markets also mis-price transactions, taking into account only their impact on immediate buyers and sellers but not on those affected by pollution or, for that matter, by positive side effects. This means markets routinely violate ecological balance and sustainability.   

Fifth, markets create a competitive context in which workplaces have to cut costs and seek market share regardless of implications for others.   

To do what markets force them to, even new workplaces with self managing councils that favor equitable remuneration and balanced job complexes would have no choice but to maximize revenues to keep up with or to outstrip competitors. We would have to dump our costs on others, gain revenues by inducing excessive consumption, and cut production costs at workers expense. And since to do these things requires both a managerial surplus-seeking mindset, and also freedom from suffering the pains that the managerial choices induce, we would hire folks with the appropriately callous and calculating minds business schools produce, and we would give these managers air conditioned offices and comfortable surroundings, and tell them, okay, cut our costs.   

Ironically due to the pressure of markets we would impose on ourselves a coordinator class, not via natural law, and not because we seek to be subservient, but because markets force us to do it to win market share and avoid going out of business.   

All these particular ills, I should note, are aggravated the more unencumbered – or in the current lexicon, the more free – our markets are. There have rarely if ever been markets as competitive as those of Britain in the early nineteenth century. Under the sway of those nearly perfectly free markets, however, as the economist Robert Solow put it, “infants typically toiled their way to an early death in the pits and mills of the Black Country.” Solow adds that “well-functioning markets have no innate tendency to promote excellence in any form. They offer no resistance to forces making for a descent into cultural barbarity or moral depravity.” Markets are therefore ruled out for a desirable economy.   

So what replaces markets and central planning to round out the defining features of participatory economics? Parecon’s answer is participatory planning.   

What we need in place of central planning and competitive market allocation is for informed self managed workers and consumers with appropriate training and confidence and with social motivations to cooperatively negotiate inputs and outputs each accessing accurate information and valuations and each having a say in proportion as choices impact them. What allocation system can accomplish all that?   

Worker and consumer councils propose their work activities and consumption preferences in light of best available and constantly updated knowledge of true valuations of the full social benefits and costs of their choices. Councils engage in a back and forth cooperative communication of mutually informed preferences. They utilize a variety of simple communicative tools including indicative prices, facilitation boards, and other features which permit actors to express, mediate, and refine their desires in light of other actor’s desires.   

Workers and consumers indicate their personal and also their group preferences. They learn what others have indicated. They alter their preferences in an effort to move toward personally fulfilling work and consumption as well as a viable overall plan. At each new step in the negotiation each actor seeks personal well being and development, but each can improve their lot only by acting in accord with more general social benefit and not by exploiting others.   

As in any economy, consumers take account of their income and the relative costs of available items and choose what they desire. Workers similarly indicate how much work they wish to do in light of requests for their output, as well as their own labor/leisure preferences.   

In capitalism, as the famous advertising executive Ernest Dichter says: “We must use the modern techniques of motivational thinking and social science to make people constructively discontented…. If you are relatively happy with your life, if you enjoy spending time with your children, playing with them and talking with them; if you like nature…if you just like talking to people…if you enjoy living simply, if you sense no need to compete with your friends or neighbors–what good are you economically?”   

But in a parecon, not only does no one have any interest in selling at an inflated price, no one has any interest in selling more for the sake of income either – because selling more is not how income is earned. Nor is there any competition for market share. Motives are simply to meet needs and to develop potentials without wasting assets. We seek to produce what is socially acceptable and useful and to fulfill our own as well as the rest of society’s preferences as the only way to get ahead personally or collectively.   

Negotiations occur in a series of planning rounds. Every actor has an interest in the most effective utilization of productive potentials to meet needs because each gets a share of output that is equitable and grows as the whole output grows. Every actor also has an interest in investments that reduce drudge work and improve the quality and empowerment of the average balanced job complex because this is the job quality and empowerment level that everyone on average enjoys.   

I can’t fully describe parecon and all its diverse mechanisms and show how the model is both viable and worthy in a summary talk such as this. But my claim is that parecon is not only classless and not only propels solidarity, diversity, and equity – but to the extent possible and with no recurring biases, that parecon apportions to each worker and consumer an appropriate level of self managing influence about each economic decision.   

Parecon doesn’t reduce productivity but instead provides adequate and proper incentives to work to the level people desire to consume. It doesn’t bias toward longer hours but allows free choice of work versus leisure. It doesn’t pursue what is most profitable regardless of impact on workers, ecology, and even consumers, but it reorients output toward what is truly beneficial in light of full social and environmental costs and benefits.   

Parecon doesn’t waste the human talents of people now doing surgery, composing music, or otherwise engaging in skilled labor by requiring that they do offsetting less empowering labor as well, but by this requirement surfaces a gargantuan reservoir of previously untapped talents throughout the populace while apportioning empowering and rote labor not only justly, but in accord with self management and classlessness.   

Parecon doesn’t assume sociable much less divine citizens. Rather it creates an institutional setting in which to get ahead in their economic engagements even people who grow up entirely self seeking and anti-social must attend to the general social good and the well being of others.   

In capitalism buyers seek to fleece sellers and vice versa. Capitalism trains people to be anti-social. To get ahead they must learn the lesson well. In parecon, in contrast, solidarity among citizens is produced by economic life just like vehicles, homes, clothes, and musical instruments are. Due to the logic of remuneration and planning, my gain is built on and derives from your gain and social gain, rather than opposed to each.   

Finally, what difference does advocating parecon make for present behavior? When Margaret Thatcher said “There is no alternative,” she accurately identified a central obstacle to masses of people actively seeking a better world. If a person sincerely believes there is no better future, then he or she will understandably react to calls to fight against poverty, alienation, and even war by replying, go get a life, grow up, face reality.

You might say to me, you can’t fight war and poverty, that’s a fool’s errand. It is like blowing in the wind. It is like fighting gravity. In that context, parecon is a vision aimed to replace cynicism with hope and reason. It seeks to clarify that capitalism is not like gravity – we can replace it.   

The citation for the Award of the President of the ItalianRepublic that I was graciously given yesterday, said that parecon is the “the most powerful and fully articulated challenge to the current models of socio-economic thought” providing “a new major highway in economic organization as a feasible proposition.”   

Anyone who believes that about parecon, it seems to me, ought to fight like the dickens not only to ameliorate the current ills produced by capitalism, but to usher in the benefits of this new type economy.   

When we all go to movies and see courageous souls of the past represented on the screen, fighting against slavery, or against the subordination of women, or against colonialism, or for peace and justice and against dictatorships, we rightly feel sympathy and admiration for these acts. The abolitionists, the suffragists, the labor union organizers, the anti apartheid activists, all the seekers of freedom and dignity are heroes for us.   

It seems to me we should not admire something and then avoid doing that same thing. If we admire standing up against injustice, we ought to ourselves stand up against injustice. If we admire seeking a better world, we should ourselves seek a better world. If we admire rejecting exploitation, alienation, domination, and its violent maintenance, we should ourselves advocate and fight for an economic model and societal structure that will eliminate these horrors.   

I believe that participatory economics is such an economy and should be part of such a new

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