ParEcon Questions & Answers

Next Entry: Trade

Ecology and ParEcon

The content below is first from forums, then excerpted from Realizing Hope…

vHow would natural resource and pollution management would work under a ParEcon? Take trees, for example. I assume that legislation would need to be passed that legislation would have to be passed, saying that the economy as a whole can cut down so many trees a year (a sustainable number), as long as they are replanted, etc.

Perhaps, perhaps not. Take, instead for a minute, some animal with no relevance whatever for human well being and development. Say a species people don’t see, interact with, or get anything from, as far as anyone knows. Suppose this species, in part, exists in places where humans might clear land for use. If society wants to preserve the species it would need to pass a law, as you say, imposing restraints on the economy which might otherwise just wipe it out. The point is, economic calculation of true and complete human and social costs and benefits wouldn’t even include reference to this particular species so unless there was a law protecting it, there would be no gainsay it wouldn’t be wiped out.

But the logging case is different. The trees do have great value, one presumes, for human well being and development, and so the cost of their use climbs immensely as they are treated in a manner that would make them irreplaceable. So, the economy actually prices the trees to take into account true social costs and benefits associated with using them…as best it can. Whether you would need rules on top of that or not isn’t clear. I doubt it, I am actually quite confident you wouldn’t – but it could be done, however, no problem.


But with such laws would the indicative price then rise until the workplaces harvesting trees weren’t asking for more than were available?

Go back to the peculiar species. The law preventing its decimation wouldn’t cause the social costs of clearing the land it lived on to go up and therefore wouldn’t affect the indicative price. Economic actors might WANT to do it, as they rightly should, being motivated by human well being and development. The law would simply prevent their doing it. In the forest case, you describe the dynamic of the economic system rightly perceiving the social cost implications of the cutting, not the impact of the law, which would be like the above species case.


Now, let’s say that consumers want all these wooden products, and are not discouraged by the high price. They can’t all have them. How would this conflict be resolved?

I think you may be asking two questions.

First, if the price doesn’t stop the clear cutting, but the society wants it stopped, then what? A law.

Second, if something is scarce, who gets it? First come first served, presumably. This can happen, as well, when something innovative takes off. Suppose people’s plans say so much of item a is needed in the economy for this year, and the third month into the planed year something happens that makes item a much more desirable and way more people want it, so the firm producing it can’t keep up. Well, there are adjustments that would increase output, but perhaps much less than demand, for some items. Then in fact not everyone who wants it now (wants to change their consumption request to favor this item) and can afford it now gets it now. Why? Because the price doesn’t climb to preclude buyers. This is also a phenomenon in centrally planned economies and is why there are cues there rather than rising prices reducing the length of the line until there are only as many people as items to be had.


Can you also explain how setting pollution controls might work under a ParEcon? Are the levels set for the economy as a whole? What if I don’t want any such pollution in my neighborhood? Do I have to resort to legal means to stop workplace Y from polluting there, or are there economic means at my disposal?

Pollution is part of what is counted into the social costs and benefits associated with production and consumption. So the price of products reflects the pollution – and the cost of cleaning it up. For example, if there is a plant that produces something for a national audience, and, given the social costs and benefits there is lots of demand. But, suppose the pollution leaves the plant and congregates above a local community, primarily affecting its citizens.

Now what?

Well, what is the just approach? It isn’t automatic, I think, it involves assessment of social costs and benefits, and options. Suppose it is a relatively unimportant product and the local environmental affect is devastating. Then, by the principle that those affected have a say proportional to the affect on them, the price should go way way high, due to the high effect on the community, and the potential buyers wouldn’t want the relatively minor product, priced out of desireability. The same plant located somewhere where the human impact of the pollution is nil, however, might be fine.

Suppose the product is absolutely critical – there is no way to have the plant be anywhere else, for the coming year. Now what? Well, maybe the community of people needs to be moved, if it is suffering that greatly – or somehow protected, etc. But the plant continues…

Now what kind of economic system can measure the desires and benefits and negative and positive impacts of economic activities (production and consumption) such as to provide indicative prices reflecting them properly, and such as to levy fees so that such clean-ups and the like can be done, humanely, etc. Parecon is, I believe, the answer.

In Neoclassical economics there is a whole subdivision of analysts that tries to figure out how you modify markets to address such matters. Some of these folks are just tinkering in the interests of capital. But some take the problem seriously, albeit accepting markets as inevitable. When you take their quite technical answers and you recognize the ubiquity of external effects (which they don’t) you get a pattern of alterations and reforms, which, quite interestingly, leads rather inexorably to an inefficient and clumsy version of what parecon does rather smoothly. Anyhow, take a look at the books, if your interest is that great, for how the production units are charged for their costs of production, including pollution clean-up, etc. The logic is here, the details are there.


The following extended answers are excerpted from the book Realizing Hope

Okay, so what does ecnomics have to do with ecology?

Economies impact natural environments in diverse ways, of course. They either add new contents to the environment, deplete contents from the environment, or alter the arrangement and composition of attributes in the environment. And each of these acts can, in turn, have ripple effects on people’s lives.

Thus, for example, first an economy can add economic byproducts to the environment. Gases spewing from cars or smoke stacks can accumulate in the atmosphere. In turn these effluents can affect breathing or the way the sun’s light impacts atmospheric temperatures. Both these economic implications can have ripple effects, for example on people’s health directly, or on air currents, then sea currents, then the polar ice caps, and then weather patterns, sea levels, and crop yields, and of course human options and conditions.

Or second, an economy can use up resources such as oil, water, or forests leading to people having to reduce use of the resources or simply to do without them, in this case meaning doing without the energy which of course sustains the total level of both production and consumption around the world, or the water essential to life, or the wood which provides building materials key to creating dwellings in many parts of the world.

Or an economy can impact the shape and content of the natural environment’s dynamics, as for example when by reducing forests we reduce the supply of the oxygen they pour into the atmosphere, or when by increasing the number of cows and affecting their eating patterns (to produce more tasty steak) we increase the methane they expel again effecting greenhouse effects in turn altering global weather patterns.

In the above cases and countless others having to do with the supply or the quality of weather, air, water, or even noise globally or in regions, or with resource availabilities, or even with the availability or imposition of enjoyable or oppressive natural environments, what we do in our economic lives impacts either directly or by a many step process how we environmentally prosper or suffer in our daily lives, whether now or in the future.

In other words, economic acts have direct, secondary, and tertiary impact on the environment around us which in turn have direct, secondary, and tertiary impact on our life conditions.

Sometimes these effects are quite tremendous, as in seas rising to swallow coastal areas and even whole low lying countries or as in crop, resource, or water depletion that causes starvation or other extreme widespread deprivations. Or maybe they are just quite major as in tornados and hurricanes devastating large swaths of populations, or as in inflated cancer rates cutting down large numbers of people early in life due to polluted ground water or escalated radiation, or as in damns that eliminate whole towns or villages in the backwash of their impact. Or maybe the effects are just quite serious as in limited areas suffering loss of enriching environmental surroundings due to mountains being leveled or to the imposition of noise from loud production or consumption or due to other more modest but nonetheless life diminishing environmental degradations.

It follows from all these possibilities, that the relations of an economy to the surrounding natural environment are deadly serious and that to fail on this score, even if succeeding on all others, would be a knockout weakness for any proposed economic model–or would be a knockout weakness, at any rate, if and when rational collective judgments could be brought to bear on assessing whether or not to keep or to reject an environmentally detrimental economy.


Is capitalism as bad for the ecology as leftists like to claim?

Capitalism fails quite miserably regarding the environment. This occurs primarily because capitalism’s market system has on the one hand a very short time horizon in which decisions are made in light of maximizing short run profit via winning short run market share or reducing short run costs regardless of long run implications–and on the other hand, because markets literally ignore environmental effects and have built in incentives to violate the environment whenever doing so will yield profits or, for that matter, consumer fulfillment at the cost of others. And then, third, there is the capitalist drive to accumulate regardless of impact on life and all other variables.

In markets a seller encounters a buyer.

The seller tries to get as high a price as possible for the item of transaction while also diminishing its costs of production in any non-profit disrupting ways available. This is done to maximize profits which in turn not only yields higher income, but also facilitates competition-enhancing investments undertaken to win market share and thereby stay in business.

The buyer, meanwhile, tries to pay for the item of transaction as low a price as possible and then to consume it with as much fulfillment as possible in any ways available, again regardless of impact on distant others about whom little or no information is available.

For both parties there market exchange obscure the effects of choices on people operating outside the transaction, and prevent taking into account the well being of those who feel the external effects.

More, if some course of action will lower the cost of production of the transacted item, or will increase the fulfillment of its consumption, but will also incur environmental degradation that impacts someone other than the buyer or the seller, that course of action will be undertaken.

Consider the following instructive example that comes from the work of Andrew Bard Schmookler.

Rock salt, it turns out, is a very effective tool for “keeping both private driveways and public highways from icing up.” Schmookler reports that “in a highly informative communication to the Washington Post in 1988, David Morris clarified the problem with rock salt. The runoff of the salt, he explained, causes damage to underground cables, car bodies, bridges, and groundwater. The cost of these damages is twenty to forty times the price of the salt to the persons of organization buying and using it.”

In other words, rock salt has unaccounted adverse effects beyond the buyers and sellers who choose to produce it, sell it, buy it, and use it, to keep road from icing up.

Schmookler then reports, based on the communiqué, that “there is an alternative product to rock salt that produces no such damage from runoff. It is called CMA, and it costs a good deal more than the salt. It costs less, however, than the damages the salt inflicts.”

Schmookler then quotes the communiqué itself noting that as Morris writes, “No highway department, homeowner, or business would purchase large quantities of CMA today even if it were widely available, because the individual doesn’t care about [social] cost, only [about private] price.”

In other words, markets create incentives to violate environment, and anything else external to the buyer and seller whenever doing so will enhance the producer’s profit which includes the consumer’s propensity to purchase or the consumer’s benefit because the impact on the mass of people external to the exchange will go unaccounted and have no impact. As Schmookler puts it, market forces “will make changes flow in a predictable direction, like water draining off the land, downhill, to the sea.”

Sellers will use production methods that spew pollution but that cost less than using clean technologies, or they will use production methods that damage ground water or use up resources but that cost less, or they will use production methods that build into products secondary spewing, using, or damaging which consumers who buy the product won’t directly suffer but others will, and which cost less. And the same logic will typically hold for consumer choices about how to utilize the items they have bought. Impact on others will most often be unknown and unaccounted.

And it isn’t only that in each transaction the actors have an incentive to find the cheapest most profitable course of production and the most personally fulfilling course of consumption, it is that markets compel the absolute maximum of transacting that can be attained. There is a drive to buy and sell even beyond the direct benefits of doing so compared to taking a break because each producer is weighing off not the benefits of a little more income versus a little more leisure due to working less but, instead, the benefits of staying in business versus going out of business. That is, each actor competes for market share largely via accumulated surpluses with which to in turn invest and reduce future costs, pay for future advertising, etc., and these surpluses must be maximized lest one is out competed.

The race for market share becomes a drive to continually amass profit without respite, which means to do so even beyond what the greed of owners might otherwise entail.


But can’t the owners cut back, shorten hours, reduce output, to serve ecological needs?

It is one thing to understand the above theoretically and even to see the frantic, depleting, spewing results all around us. It is another thing to hear the impetus described by those who suffer its force. I had lunch once with a fellow who had been, not that long before, a four hundred dollar and hour senior partner in a large and lucrative law firm in Boston Massachusetts. He had quit his position to take a job with a non profit organization that did fund raising and direct mail work for progressive clients, candidates, etc. At one point over lunch I asked him why he had made such a dramatic and income reducing change. He replied that while it was certainly in part due to wanting to do socially valuable work rather than winning large fortunes for already overly fortunate corporate clients, he could not claim that that was the only reason. Instead, he had not only been seeking a more morally sound employment, he had been seeking to escape his lofty employment. And he had been seeking to escape not only due to having lost a taste for the clients and their skullduggery, but due to self interest. He wanted a life.

He told me that in his prior job while he had tremendous income, he had to work seventy and even eighty hours a week and more, which left him too little time to live. He wanted more time off.

But, I said–knowing the theoretical answer well–why didn’t he just work less. He was a boss, after all. Why didn’t he pack up and go home each week after fifty hours, or forty, or, jeez, given his income, after thirty or even twenty?

He chuckled and said it was because his choice was always more work hours or no work hours, not more work hours of fewer work hours. The firm competed with other firms. The competition occurred not only in the obvious form of having excellent lawyers (by the standards of the clients) which included the lawyers being steeped in the ways and tastes of the clients and being able to wine and dine them and communicate with them, and hand hold them, and so on), but also all the accoutrements. If the firm started to take in less revenue and have less funds available for its lawyers to attain lofty living standards that marked them as rich and successful, and also for the firm to purchase rugs, wall hangings, high end parties and meetings, high rent occupancy, high end travel costs, and maximum expenditures on experts, and so on and so forth, in short order its clients would begin to switch to other firms better able to serve their every need. This shift of clients however slight it was at first would snowball over time. A few less clients means less surplus, which in turn means less wining and dining, and then other lost clients, and so on.

He explained to me, in other words, how even in competing law firms, not only in auto plants, the drive to amass revenues to utilize to retain and if possible enhance market share, was ever present and permanent. It could be bent somewhat, but only by pressures which worked equally on all firms such as the bargaining power of workers. But wherever the pressure could bend wills to accumulate ever more, it would. In his case, if other bosses would work longer–and surely there were many who had so reconstructed themselves that it was their reason for being–then he would have to do so as well. And the only escape was to completely escape, as he had done, with another aspiring corporate climber taking his place.

In all markets, and particularly capitalist markets, growth is god, grow or die, which not only violates attentiveness to sustainability regarding resources but also produces a steadily escalating flow of garbage and pollution. Transactions multiply and in each transaction the incentive to pollute and otherwise violate the environment persist. In the end what we get is an economy spewing into, using up, and damaging the environment on a massive scale ranging from communities that are veritable dump sites, cities that are made sickly by smog, regions that have pollutant flooded ground waters that in turn escalate cancer rates, or a planet that is facing warming trends that threaten not only raging storms but even vast upheavals of ocean levels and agriculture with untold costs to follow.


Okay, will a participatory economy do any better than capitalism in these environmental regards?

The answer is yes for a number of reasons.

First, in a parecon there is no accumulation pressure. Each actor is not compelled to try to expand surplus in order to compete with other actors for market share, but, instead, the level of output reflects a true mediation between desires for more consumption and desires for a lower overall amount of work.

In other words, whereas in capitalism the labor/leisure trade off is biased heavily toward more production at all times due to the need for overall growth to avoid shrinkage and failure, in parecon it is an actual, real, unbiased trade off. In a participatory economy we each face a choice between increasing the overall duration and intensity of our labor to increase our consumption budget, or instead working less to increase our overall time available to enjoy our labor’s products and the rest of life’s options. And so too does society as a whole face this exact same choice. And we can reasonably predict that instead of a virtually limitless drive to increase work hours and intensity, a parecon will have no drive to accumulate output other than to meet needs and develop potentials and will therefore stabilize at a much lower output level and work level–say perhaps thirty hours of work a week, and eventually even less. Interestingly and revealingly, some mainstream economists criticize this attribute of parecon–that people decide their work levels and that they will likely decide on less than now–as a flaw rather than seeing it as a virtue, which we take it to be.

The second issue is one of valuation. Again unlike in capitalism and with markets more generally, participatory planning doesn’t have each transaction determined only by the actor who directly produces and the actor who directly consumes, with each of these participants having structural incentives to maximize personal benefits regardless of impact on others. Instead, every act of production and consumption in a parecon is part of a total overall economic plan. The entwinements of each actor and each act with all other actors and all other acts are not just real and highly consequential–which is of course always true–but are also properly accounted for.

In a parecon production or consumption of gas or cigarettes and other items with either positive or negative effects on people beyond the buyer and seller take into account those effects. The same holds for decisions about larger projects, for example building a dam or installing wind turbines, or cutting back on certain resources. Projects are amended in light of feedback from affected councils at all levels of society from individuals and neighborhoods through countries or states to the whole population.

The social procedures which facilitate all this ecological rationality are summarized in earlier chapters but also spelled out in considerable detail in the book Parecon: Life after Capitalism.

The bottom line is relatively simple, however. By eliminating the market drive to accumulate and to have only a short time horizon, and by eliminating market-induced ignorance of economic effects that impact beyond buyers and sellers (such as on the environment) and the consequent market mispricing of items, parecon properly accounts and provides means, as well, to sensibly navigate as well as self manage environmental impacts.

It isn’t that there is no pollution in a parecon. And it isn’t that no non-renewable items are ever used. These norms would make no sense. You can’t produce without some waste and you can’t prosper without using up some available resources.

Rather, what is necessary is that when production or consumption generates negative externalities in the environment, or when it uses up resources that we value and cannot replace, the decision to do these things ought to be made not ignoring these implications but accounting for them.

We should not do it when the benefits don’t outweigh the detriments. And we should not do it unless the distribution of benefits and detriments is just, rather than some people suffering unduly so other people can gain unduly.

This is what parecon via participatory planning ecologically accomplishes and really all that we can ask an economy to ecologically accomplish. What is left to assess is what people decide, and on this score all that we can ask of an economy is that people not be biased by institutional pressures or made ignorant due to institutional biases, both of which benefits parecon guarantees, and that people should be free and self managing, also a parecon provision.

Under these circumstances it is reasonable to think that parecon’s citizens will not only make wise choices for their own interests, but for their children and grand children as well.


What about other species?

We live on a planet, earth, a gigantic rock swirling in space around an almost unfathomably larger and hugely energy generating sphere of combustion, the sun, in an even vaster sea of similar entities born billions of years ago and maturing ever since. We share the bounty or resources and energy of our planet and the sun’s rays with a huge diversity of other species who in fact themselves contribute in a multitude of ways to defining how the planet produces, processes, and presents its assets to us.

Indeed, our own existence arose from a sequence of other species modified by chance occurrences and selected by dynamics of cooperation and competition, and our existence depends for its continuation on a vast number of current species as well.

A capitalist economy views other species as it does everything else, in light of profit-making possibilities. If directly preserving or nurturing a species is profitable, then do it. If ignoring another species and leaving it to its own wiles is profitable, then do that. If directly consuming or indirectly obliterating via effects on its habitats another species is profitable, again, that is the economic way to go.

Capitalism via its market competition looks around and assesses profitable possibilities and pursues them. If we add to capitalist economy governments or other agencies with additional priorities, they may ameliorate many ills, though if they defy or impede profit-making their maintenance will be a difficult struggle against the logic of capitalist accumulation both in the pressures the economy manifests against impositions and in the tendency for capitalism to produce a population unreceptive to even thinking about the long-term benefits of other species to people, much less the independent rights of other species.

These insights encapsulate the well known history of environmental concerns in our countries today. The results we see around us are indicative of the weight of profit-seeking pressures.

What would be different from the above possibly suicidal and certainly horribly gory picture of current interspecies relations if we instead had a participatory economy’s interface with the non-human species on our planet?

First, from profit as the guiding norm of economic choice, parecon would move us to human fulfillment and well being in accord with guiding social values (solidarity, diversity, equity, and self management). And second, from having a driving profit-seeking logic that will constantly tend to overpower and undue any ecologically or otherwise non-profit justified restrictions placed on the economy, parecon becomes, instead, responsively susceptible to outwardly imposed extra-economic constraints.

The first point is a change of guiding logic or motivation. The second point is a change in its intensity. A third issue, more conjectural, is whether people who operate as workers and consumers in a parecon are likely to be more receptive to arguments regarding the rights of other species.

Regarding the guiding logic of the newly proposed economy, a participatory economy views other species, as it does everything else, in light of human fulfillment and development possibilities consistent with promoting solidarity, advancing diversity, maintaining equity, and ensuring self management. In a parecon, if directly preserving or nurturing a species is humanly beneficial, do it. If ignoring and leaving a species to its own wiles is humanly beneficial, why not? If directly consuming or indirectly obliterating via effects on its habitats another species is humanly beneficial, again, that is the purely economic way to go.

Parecon via its participatory planning looks around and assesses humanly beneficial possibilities (with equity foremost, not aggrandizement of the few), and pursues them. It does not, of its own accord, internal to its economic logic, incorporate the interests of non human species.

If we add to parecon governmental or other agencies with additional extra economic priorities, they can, however, be smoothly incorporated even if they defy or impede possible human benefits on behalf of the rights of other species. Indeed, even in such cases, while they will need to be imposed from outside on the economy which has no such internal tendency left on its own, and while they will therefore presumably need to have popular support, maintenance of restraints on economic activity will not require a continuous difficult struggle against the continually re-impinging logic of capitalist accumulation. In a parecon, once there is a restriction placed on the economy–let’s say, the economy is not to interfere with the nesting habitats of some bird, or the economy must, if altering those habitats, move all potentially affected birds to new and at least as sustainable environments–the economy functions thereafter in accord with the external ruling, not continually throwing up pressures and practices that try to overcome or remove the restriction.

Where capitalism has an accumulation process that propels each producer to try to maximize profits at the risk of disastrous loss of market share and economic failure, as a result continually pushing for outcomes in accord with maximally accumulating output regardless of external restraints, parecon functions in context of external restraints with no built-in tendency that aggressively seeks to continually overcome or thwart them.

The question remains, can we expect such external constraints to arise in a society with a participatory economy? That is, will the populace be more or less receptive to arguments on behalf of other species in a parecon than they would if their economy were capitalist?

It is hard to answer a question like this definitively before the fact, of course. But given that parecon elevates human solidarity to a prime value, rather than propelling an egocentric approach to life that is largely oblivious to other people’s needs, it seems quite plausible that whatever factors tend to cause people to become concerned for other species they will be less thwarted by a solidarity producing context than by an anti sociality producing context.

Similarly, a parecon exalts to high priority diversity. This embodies not only recognition of the benefits that accrue from variety, but also the need to avoid narrow scenarios that eliminate options we might later find to be superior or even essential. Both insights tend to militate for a popular awareness of the richness of biodiversity and its intricate interconnectivity as well. Hurting species much less eliminating them curbs diversity and risks long-term losses to humanity as well. While this isn’t restraint based on rights of others despite the interests of humanity, it is plausible that such attentiveness would yield a greater sensitivity to the existence and conditions of other species, and certainly wouldn’t impede such inclinations, wherever they might arise.

In sum then, parecon removes the accumulation drive for corporate profit seeking which compels, in a capitalist economy, behavior that hurts and even decimates other species. It puts in its place a concern for human well being and development that doesn’t preclude harming other species, but which, in any event, is receptive to and respectful of governmental or other social or ecological restraints on its operations. If other species had votes, in other words, they would vote for parecon.

Next Entry: Trade

Leave a comment

Skip to toolbar