Markets, Participatory Planning and Doing the Right Thing

"The market does not drive scientists, thinkers, or governments to do the right things. Only by paying attention and making people care can we make as much progress as we need to."  ~ Bill Gates


These are odd words for Bill Gates. It was also odd that he spoke to a group at a TED (Technology, Entertainment, Design) conference about how mosquitoes cause malaria and then let loose a jar-full of them into the crowd.

But for anti-capitalists, and pareconistas in particular, the quote is understood all too well.

Markets do not drive people "to do the right things." We can look at the economic crises that have been engulfing the world for centuries and see that. You may be wondering why I have said the economic crises have been going on for centuries and not just "since September."

I say "centuries" because the poor and unprivileged, the workers and the "third world," women and people of color, the downtrodden and the oppressed have been living in a perpetual crisis without pause for quite some time. The "financial crisis" is largely framed in the context of how it has been a crisis for the rich, and not the poor who have always suffered. While hundreds of thousands of American workers are getting laid off and millions more around the world are stressing about how they will feed their families, the corporate executives of failing banks (who are failing due to their own intentional mismanagement) are stressing about having to possibly make due with a mere $500,000 annual salary. The rich man’s burden!

And why we, the poor, suffer leads us to seeing how markets "drive scientists, thinkers, or governments to do the [wrong] things." A huge part of the answer lies in Gates’ following sentence: markets don’t "drive" those who own and manage economies to "pay attention" to the needs of others. Nor does it "drive" them" to "care." And the lack of caring doesn’t just come from the property owners or the coordinator class (i.e. corporate executives, managers, intellectuals, doctors, lawyers and so on). The lack of caring is also instilled in the rest of us through market discipline.

Markets are deeply anti-social. They pit buyers and sellers against each other where buyers are always trying to fleece the sellers by getting the most for their buck, while the sellers are likewise trying to fleece the buyers into paying more for the most cheaply made products. And how others not involved with these transactions are impacted gets almost completely ignored.

Gates knows this and admitted so.

In markets people vote with their dollars and clearly those with the most dollars get the most "votes" and thus have the bigger impact on how decisions are made.

So those interested in doing the "right thing" need to understand what it is about markets that need to be undone because if we are serious about learning from the past we will need to seriously try and avoid repeating the same mistakes. Then we need to devise institutions and practices that aid us in doing the "right thing."

Luckily, Michael Albert and Robin Hahnel have made a huge contribution to this endeavor with their creation of the alternative economic model, Participatory Economics (parecon).

In his book, PARECON; Life After Capitalism, Michael Albert writes this about markets:

Markets undeniably often permit buyers and sellers to interact conveniently for mutual benefit. In fact, taking into account only their own immediate circumstances, market exchanges nearly always benefit both buyer and seller. But unfortunately, immediate convenience and relative short-run benefit for both buyer and seller do not imply immediate equity or efficiency, much less a positive social interaction over extended periods. In these wider dimensions market exchange aggravates inequities, generates grossly under- estimated inefficiencies, and disastrously distorts human relations.

Like all social institutions, markets provide incentives that promote some kinds of behavior and discourage others. Markets minimize the transaction costs of some forms of economic interaction, especially those that are personal and involve private agents, thereby facilitating them, but markets do nothing to reduce the transaction costs and thereby facilitate other forms of interaction, especially those that are public and involve collective implications.

Confusing the cause of free markets with that of democracy is typical of modern commentary, but astounding given the overwhelming evidence that market systems have disenfranchised larger and larger segments of the world’s body politic. First, markets undermine rather than promote the kinds of human traits critical to the democratic process… Second, markets empower those with greater ability to extract rewards at the expense of those "less able" to do so. By concentrating economic and therefore political power in the hands of a few, markets work to the comparative advantage of the more "able," and therefore, of those who are likely to be more powerful in the first place. If the more powerful party succeeds in appropriating more than 50 percent of the benefits of an exchange, as will generally occur, the exchange further disempowers the less powerful party and further empowers the more powerful party. In the next round of exchange, the deck is stacked a little more, and so on, ultimately leading to wide disparities.

This can surely help us understand how and why markets are not preferable. So what is the solution? In parecon, the creators propose we address a few key features of economies: ownership, remuneration, division of labor and allocation. The last of which is the focus of this essay.

In market systems markets are used to allocate goods and services. In a parecon system "participatory planning" would be used instead. Consumers want to consume and workers want to work in order to provide those goods and services. This is a given. But determining how we get the appropriate amount of goods and services to those who desire it would need feedback from the consumers and workers. Workers need to know what the benefits are to working/producing less (or more) against the cost in the welfare of consumers (produce too little food and people starve) and the environment (producing too much might exhaust vital natural resources). Likewise, consumers need to know the benefits of consumption against the costs of producing it.

Through a participatory planning system we would regularly fill out a basic list of items we wish to consume in the coming year (exact items, sizes and colors would not be necessary) and submit it to our local consumer councils where other submissions would be compiled and delivered up the chain of federated councils – for the purpose of considering production and consumption trends that are felt more broadly (for local decisions that would not affect state or national levels the decision making would occur solely on the local level, but where local decisions affect state or national levels then those affected would be able to participate in the decision-making process).

This would be done in order to get an idea of what consumers want, and based on the proposals submitted by various workers councils you might need to adjust your requests to compensate for what resources are available and so forth. If producing X amount of an item would exhaust natural resources, and thus affect the price, we might want to consider consuming less, or something else entirely. In other words, both workers and consumers need to be able to consider and possibly modify their proposals in light of the costs and benefits of their choices. This would not require every consumer and every worker to attend countless meetings over every proposal. It would not necessarily require meetings at all and one would only need to respond to that which they are affected by. You submit a proposal and the workers councils submit theirs. Through a series of modifications and updates we still may not come to a consensus on the final outcome. It could be best that an Iteration Facilitation Board - which would, as the name gives away, facilitates the iteration process between workers and consumers – write up a few proposals to resolve what differences there are and put the proposals to a vote.

Recently President Obama issued a memorandum on "Transparency and Open Government" in which he wrote:

Government should be transparent. Transparency promotes accountability and provides information for citizens about what their Government is doing. Information maintained by the Federal Government is a national asset. My Administration will take appropriate action, consistent with law and policy, to disclose information rapidly in forms that the public can readily find and use. Executive departments and agencies should harness new technologies to put information about their operations and decisions online and readily available to the public. Executive departments and agencies should also solicit public feedback to identify information of greatest use to the public.

Government should be participatory. Public engagement enhances the Government’s effectiveness and improves the quality of its decisions. Knowledge is widely dispersed in society, and public officials benefit from having access to that dispersed knowledge. Executive departments and agencies should offer Americans increased opportunities to participate in policymaking and to provide their Government with the benefits of their collective expertise and information. Executive departments and agencies should also solicit public input on how we can increase and improve opportunities for public participation in Government.

To a very large extent this is precisely what the participatory planning process aims to do. When he writes that, "information maintained by the Federal Government is a national asset. My Administration will take appropriate action, consistent with law and policy, to disclose information rapidly in forms that the public can readily find and use" we, advocates of parecon, say that is the function of the Iteration Facilitation Board. It too is an "asset" designed "to disclose information rapidly in forms that [workers and consumers] can readily find and use" when individually and collectively managing their lives. Nearly everything he wrote in that memorandum is a good representation of the logic of parecon, and the participatory planning process in general. "Knowledge is widely dispersed in society" and we should be offered "increased opportunities to participate in [decision]-making [to the degree we are affected] and to provide [our society] with the benefits of [our] collective expertise and information."

What we could have are workers and consumers managing their own lives while considering the impacts their choices have on others and the environment in a practical, participatory and democratic fashion that also helps establish the true costs and benefits of production and consumption. It is not necessary to continue the wrong, anti-social and destructive path of markets. It is sufficient to recognize what is wrong, and organize with others in making real the institutional necessities to do what is right.

Leave a comment