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Summary of Parecon


This essay is excerpted from the Zed Press book, Realizing Hope

 

Economies incorporate an almost infinite array of components. Two different societies, whether France and Mexico, or the U.S. and South Africa, even if they have the same type of economic system, will have a myriad of economic differences ranging from population numbers and skills to resources and infrastructure, different industries, organizational approaches, patterns of ownership structure, secondary economic  institutions, class histories and relations, and details of organization. 

 

The same will also hold for other economic types than capitalism. Different societies with new participatory economies, say a future Italy, Mexico, the U.S., Malaysia, Guatemala, Poland, and South Africa, will have different features beyond the few shared ones that define the economic type. Participatory economics is a proposal for the defining features of a post-capitalist economy.

 

Capitalism

 

Capitalism’s first defining feature is private ownership of the means of production. A few percent of the population own almost all industry, machinery, resources, and farmland. They have ultimate control over the disposal and use of this property. They accrue profits from their property’s productivity.

 

Capitalism is also defined by corporate workplace divisions of labor and authoritative decision making. About 20% of the employees of capitalist workplaces do mostly conceptual and empowering tasks for their jobs, while the other 80% do mostly rote and obedient tasks. The 20% make many decisions and affect social choices. The 80% make few decisions and mainly obey orders. 

 

People’s income in capitalist economies comes mostly from their bargaining power. We get from economic output what we can take. Ownership of property, a very important contributor to bargaining power, conveys rights to profit. Also important to one’s bargaining power, and thus to the income one can take, is the control one has over needed assets or skills, the value of the output one generates, one’s social attributes like gender and race, and one’s organizational affiliations such as union membership. 

 

Another defining feature of capitalism is markets. Markets mediate the amount of any particular good or service produced, the relative valuations of different products, and their distribution to different actors. Buyers and sellers benefit themselves oblivious to impact on others. I sell at the highest price I can the least costly items I can. You buy at the lowest price you can the most valuable items you can. We fleece each other.

 

Competition drives growth and determines relative valuations. The preferences and bargaining power of direct buyers and sellers determine prices. The preferences of people who are affected by but who aren’t directly involved in specific transactions go unaccounted. Your desire for a car matters. My dislike for the pollution it will spew doesn’t matter. In market exchanges those with more power make out like bandits and “nice guys finish last.”

 

Beyond private ownership of means of production, corporate workplace organization, authoritative decision making, remuneration for bargaining power, property, and output, and market allocation, myriad variations in secondary institutions, population, local history, and impositions from other parts of society distinguish different instances of capitalism from one another. South Africa is different from the U.S. England circa 1900 is different from England circa 2000. India is different from Mexico.

 

Referring to capitalism, John Stuart Mill, one of the foremost philosophers of the nineteenth century wrote, “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.” 

 

And the great Latin American writer Eduardo Galeano, explained how capitalism has nearly all its valuations upside down: “From the point of view of the economy, the sale of weapons is indistinguishable from the sale of food. When a building collapses or a plane crashes, it’s rather inconvenient from the point of view of those inside, but it’s altogether convenient for the growth of the gross national product, which sometimes ought to be called the `gross criminal product’." 

 

In my own view, admittedly only briefly evidenced here, capitalism is a thug’s economy, a heartless economy, a base and vile and largely boring economy. It is the antithesis of human fulfillment and development. It mocks equity and justice. It enshrines greed. It does not serve humanity.

 

I doubt that many who are reading this book want to contest these claims. Similar characterizations of capitalism, for example, are rampant in contemporary literature and other media. In fact, I think that while many people might talk about a humane capitalism, or might not decry capitalism out loud, deep down this isn’t due to denying capitalism’s ills or to feeling capitalism is liberatory. It is due to feeling there is nothing possible but capitalism, so that operating within its jurisdiction is unavoidable and decrying it is whining about the inevitable. In any event, given my distaste for capitalism, I feel the need to transcend perplexity and proceed to a better economy.

 

Parecon’s Values

 

Participatory economics has completely different defining features than capitalism. Extensive explorations of its economic logic are available online at the parecon web site via (www.zcomm.org). Parecon seeks to fulfill four key values: solidarity, diversity, equity, and self management. 

 

Solidarity

 

The first value a good economy ought to have bears upon how its workers and consumers relate to one another. In capitalism, to get ahead, one must trample others. To increase your income and power you must ignore the horrible pain suffered by those left below or even help to push them farther down. In capitalism, not only do nice guys finish last, but in my own somewhat more aggressive formulation of the same sentiment, “garbage rises.”

 

In contrast to the capitalist rat race, a good economy should be a solidarity economy generating sociality rather than social irresponsibility. Its institutions for production, consumption, and allocation should propel even antisocial people into addressing other people’s well being to advance their own. To get ahead in a good economy, in other words, you should have to act on the basis of considering and respecting the conditions of others. 

 

Interestingly, this first parecon value, so contrary to the capitalist logic of “me first and everyone else be damned,” is entirely uncontroversial. Only a psychopath would argue that if we could have the same output, the same conditions, and the same distribution of income, an economy would be better if it produced more hostility and ant-sociality in its participants than if it produced more mutual concern. Other than psychopaths, we all value solidarity and would prefer not to trample others.

 

Diversity

 

The second value a good economy ought to advance has to do with the options an economy generates. Capitalist market rhetoric trumpets opportunity but capitalist market discipline curtails satisfaction and development by replacing what is human and caring with what is commercial, profitable, and in accord with existing hierarchies of power and wealth. The tremendous variety of tastes, preferences, and choices that humans naturally display are truncated by capitalism into conformist patterns imposed by advertising, by narrow class delimited role offerings, and by coercive marketing environments that produce commercial attitudes and habits. 

 

As a result, within capitalism we seek best sellers regardless of their impact on society instead of seeking a wide range of sellers with as desirable an impact as possible. We seek the one most profitable method instead of many parallel methods suiting a range of priorities, and we seek the biggest of almost everything, virtually always crowding out more diverse choices supporting greater and more widespread fulfillment.

 

In contrast, responsible institutions for production, consumption, and allocation not only wouldn’t reduce variety but would emphasize finding and respecting diverse solutions to problems. A good economy would recognize that we are finite beings who can benefit from enjoying what others do that we ourselves have no time to do, and also that we are fallible beings who should not vest all our hopes in single routes of advance but should instead insure against damage by exploring diverse parallel avenues and options. 

 

Interestingly, this value of diversity, like solidarity, is entirely uncontroversial. Only a perverse individual would argue that all other things equal, an economy is better if it homogenizes and narrows options than if it diversifies and expands them. So we value diversity, not homogeneity.

 

Equity

 

The third value we want a good economy to advance has to do with distribution of outputs. Capitalism overwhelmingly rewards property and bargaining power. It says that those who own productive property, by virtue of their ownership, deserve profits. And it says that those who have great bargaining power based on anything from monopolizing knowledge or skills, to using better tools or organization, being born with special talents, or being able to command brute force, are entitled to whatever they can take. 

 

A good economy would instead be an equity economy whose institutions for production, consumption, and allocation not only wouldn’t destroy or obstruct equity, but would propel it. But what is equity?

 

People seeking equity, of course, reject rewarding property ownership. It can’t be equitable that due to having a deed in your pocket you earn 100, 1000, or even a million or ten million times the income some other person earns who works harder and longer. To be born and inherit ownership and by virtue of that ownership, despite having done nothing of merit, to vastly exceed others circumstances and influence cannot possibly be equitable. 

 

We also reject rewarding power with income. The logic of Al Capone, Genghis Khan, and the Harvard Business School is that each actor should earn as remuneration for their economic activity whatever they can take. This norm worships not equitable outcomes, but being a thug. Since we are civilized, we of course reject it.

 

What about output? Should people get back from the social product an amount equal to what they themselves produce as part of that social product? After all, what reason can justify that we should get less then what we ourselves contribute, or for that matter that we should get more than our own contribution? Surely we should get an amount equivalent to what we produce, shouldn’t we? 

 

It may seem so, but suppose Bill and Jill do the same work for the same length of time at the same intensity. If Jill has better tools with which to generate more output should she get more

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