10. Participatory Allocation 

Buying and selling is essentially antisocial.
-Edward Bellamy 

The only possible alternative to being either the oppressed
or the oppressor is voluntary cooperation for the good of all.
-William  Von Humboldt 

An economy needs some procedure for coordinating different workers’ activities with one another and with the desires of consumers. The procedure, called economic allocation, determines how much of each input and output is used or produced, and where it winds up. 

The current overwhelming consensus is that markets are a worthy economic allocation institution. Some dissidents still support central planning instead. In our view, however, both markets and central planning are abysmal and we need participatory planning as an alternative. Beyond what a short chapter can argue, I hope folks will pursue the more substantial arguments available at http://www.parecon.org 

Markets, No 

Few markets can ever have been as competitive as those
that flourished in Britain in the first half of the
nineteenth century, when infants became deformed
as they toiled their way to an early death in the pits
and mills of the Black Country. And there is no lack of examples today to confirm the fact also 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.
-Robert Solo 


Markets involve buyers and sellers coming together with each trying to maximize his or her own benefit. In any transaction the buyer and seller compete to buy cheap and sell dear. For one to get more, the other must get less. Those affected by the transaction but not directly involved as buyer or seller have no say in it. Pollution or other effects on non-buyer/sellers go unaccounted for and can’t influence the transaction. Even with markets that are working optimally, actors become individualist. Their motives and preference development are skewed toward me-firstism. No wonder “nice guys finish last.” Exchange rates ignore social and external effects and therefore diverge from true social costs. A class division emerges between those few “coordinators” who monopolize decision-making skills, opportunities, and information, and a much larger group of workers disenfranchised from decision making. The coordinators, with owners, rule the economy. The workers follow orders.  

In these ways and others, markets cause people to trample one another’s well being. They homogenize tastes within classes and reduce all activity to the cash nexus. They remunerate power or output, creating grotesque income differentials, and allot disproportionate power to a class that monopolizes decision-making access at the expense of the majority who only follow orders. 


Central Planning, No 

Just as the functions of the bodily organs of plants
and animals cannot be arbitrarily altered, so that, for example, one cannot at will hear with his eyes and see with his ears, so one also cannot at pleasure transform an organ
of social repression into an instrument for the liberation.
-Rudolf Rocker 

Central planning is conceptually simpler than market allocation. Planners accumulate information by diverse means and then decide exchange rates, amounts to produce, and incomes. Workers and consumers abide the planners’ decisions. The only wrinkle is that the planners have to issue orders and get some feedback on their possibility…orders go down, feedback comes back up, orders go down, obedience comes back up. The feedback comes from “agents” of the planners in each workplace, the managers and other members of the coordinator class.  

On the plus side, central planning can conceivably overcome the intrinsic inability of markets to account for the social and public implications of transactions and can also conceivably reduce the individualizing effects of market competition and even take into account production and consumption effects on workers and consumers. But an inherent problem is that central planning inevitably produces coordinator class rule with planners allying with their managerial agents in each workplace to in turn control rote workers while also adding generalized authoritarianism and subordination to economics, thereby strongly violating self-management. The class dynamics and increased authoritarianism of central planning tend over time to swamp the technical potential it has to pay better attention to generalized social and personal development. Instead in practice central planning biases outcomes toward the enhancement of the power, status, and conditions of elite planners, managers, and other educated coordinator class members, at the expense of workers. 


Markets and central planning therefore not only don’t promote just rewards, self-management, and dignified work, they severely impede their achievement, even as they also undermine solidarity, diversity, and other civilized social norms. 

Participatory Planning, Yes 

In the individual expression of my own life I would
have brought about the immediate expression of your life, and so in my individual activity I would have directly confirmed and realized my authentic nature, my human, communal nature. Our productions would be as many mirrors from which our natures would shine forth.
This relation would be mutual: what applies to me
would also apply to you. My labor would be
the free expression and hence the enjoyment of life.
-Karl Marx 

So what’s our alternative? Well, why can’t workers in different enterprises and industries, and consumers in different neighborhoods and regions, coordinate their joint endeavors themselves—consciously, democratically, equitably, and efficiently? Why can’t councils of consumers and workers propose what they would like to do, and revise their own proposals as they discover more about the impact of their desires on others? What is impossible about a social, multi-step planning procedure in which other workers approve production proposals only when, in light of full qualitative information and accurate valuations, they are convinced the proposals are socially efficient, and in which other consumers approve consumption requests only when, in light of full information, they are convinced the requests are not socially abusive? What is impossible, in other words, about the associated producers and consumers together planning their related activities without the debilitating effects of markets or central planning? 

We have already argued for workers’ and consumers’ councils and federations of councils, for remuneration according to effort and sacrifice, for balanced job complexes, and for actors to influence decisions in proportion as they are affected by them. 


The participants in participatory planning will be individual workers and consumers, the workers’ and consumers’ councils and federations, and various groups of people a part of whose balanced job complex is to do data handling to assist allocation. They will work in what we call “Iteration Facilitation Boards” (IFBs). 

Conceptually, the participatory planning procedure is pretty simple, but quite different than anything we are accustomed to. Workers and consumers negotiate outcomes based on full knowledge of effects. They have proportionate influence in decisions. The facilitation board announces what we call “indicative prices” for all goods, resources, categories of labor, and capital stocks. These indicative prices are calculated based on the prior year’s experience and knowledge of general changes since. Consumers, consumer councils, and federations respond with consumption proposals, taking the indicative prices as estimates of a true valuation of all the resources, equipment, labor, bad byproducts, and social benefits associated with each good or service. Workers, workers councils, and council federations simultaneously offer production proposals, listing the outputs they would make available and the inputs they would need to produce them, taking the indicative prices as estimates of the full social benefits of outputs and costs of all inputs. Receiving the public proposals from workers, consumers, and their councils, the facilitation boards calculate the excess demand or supply for each good and mechanically adjust the indicative price for the good up or down in light of the new data and in accord with socially agreed formulas for these alterations. Then, using the new indicative prices, taking account of the first round of production and consumption proposals, plus full qualitative information, consumer and worker councils and federations revise and resubmit their proposals, in a second round. 

Essentially the back and forth procedure “whittles” overly optimistic, infeasible proposals down to a feasible plan in which what is offered by producers matches what is sought by consumers in two different ways: Consumers requesting more than their effort ratings (income) warrant, or together wanting more of some good than workers propose to produce, are pressured by new indicative prices and the desire to attain a viable final plan to reduce or shift requests to less socially costly items. These requests garner the approval of other consumer councils, who regard their prior requests as excessive, or of workers reluctant to supply the outputs previously sought. Workers’ councils whose proposals have lower than average social benefit given the resources at their disposal or who are proposing less than consumers desire of their product, are pressured to increase either their efforts or their efficiency (or their number of employees) to win the approval of other workers and meet consumer desires. In other words, if you are asking for too much stuff relative to your income, or if groups want too much of some item collectively, or if as a worker your workplace isn’t producing sufficiently for its available assets or there is more desire for what you are producing than you have accounted for, you raise or lower your proposals in accord. The goals is to get your proposals to an acceptable range, on the one hand, and to facilitate arriving at a viable plan, on the other. As a consumer, your income is a function of your effort and sacrifice at work. As a producer or workplace, the output expected from your firm is a function of the productive capacity of the assets you are employing. 


As each round of the planning process proceeds, or with each iteration, in the technical parlance, proposals move closer to mutual feasibility while (and because) indicative prices converge toward true social opportunity costs, which is to say, true representations of the actual benefits and costs associated with the production and consumption of each economic item. Since no participant in the planning procedure enjoys an advantage in influence over any other, and since each participant impacts the valuation of social costs and benefits like all others do, but with each having more impact on what they are involved in producing and consuming and less on what they aren’t affected by, the procedure generates equity, efficiency, and self-management simultaneously. 


In other words, individuals make proposals for their own private consumption. Neighborhood councils make proposals that include approved requests for private goods as well as shared requests for the neighborhood’s collective consumption. Higher-level federations of consumer councils make proposals that include approved requests from member councils as well as the federation’s collective consumption request. 

Similarly, each production unit proposes a production plan. Workplaces enumerate the inputs they want and outputs they propose to make available. Regional and industry federations aggregate proposals and keep track of excess supply and demand. Having proposed its own plan, every “actor” (individual or collective) receives information regarding other actors’ proposals and the response of other actors to its proposal. Each actor (individual or collective), then makes a new proposal. As every actor “bargains” through successive “iterations,” reacting to “indicative prices,” their own agreed measures of effort and sacrifice, and detailed qualitative information from one another available on request, the process converges to a viable plan. 

The attained plan manifests actors’ preferences proportionately as they are impacted. More, each actor benefits only insofar as do all others. That is, my income depends directly on the socially average income (I get somewhat more or somewhat less due to my contributing a greater or lesser amount of effort and sacrifice than average) and my job comfort depends on the quality of the socially average job complex (since we all have a balanced job complex, each equal to the others in quality of life and empowerment impact). Even my benefit from any investment I propose for my own workplace depends on how that investment raises social averages for jobs or alters average income by expanding the total social product that we all share in—and so does yours. 

Solidarity is therefore enhanced by participatory planning because our interests are entwined and our daily economic calculations occur in light of one another’s situations. For my income to go up, either I have to expend more effort and sacrifice, or the social average has to go up with everyone benefitting. For the quality of my work situation to improve, the quality of society’s balanced job complex must improve, and thus everyone’s situation must improve. Diversity is fostered to gain the benefits that accrue from many options and checks and balances. Equity is guaranteed by the remunerative norm. Self-management is intrinsic to the allocation system’s foundational logic and operation, fostered by its every feature. 


To clarify the process, prices are “indicative” during the planning process in the sense of indicating the best current estimates of final valuations. These indicative prices are not binding at each stage, but are instead flexible guides in that everyone knows that they may change in a future round of planning, but also in that qualitative information provides important additional guidance that can lead people to act contrary to what quantitative prices indicate. More, the indicative prices up to and including the final rates of exchange do not stem from competition between buyers and sellers trying to fleece one another or from authoritarian determinations biased toward the well-being of the decision makers, but from social consultation and compromise. The appended qualitative information comes directly from concerned parties and enters the process to help keep the quantitative indicators as accurate as possible, as well as to develop workers’ and consumers’ sensitivity to fellow workers’ and consumers’ situations and everyone’s understanding of the intricate tapestry of human relations that determines what we can and cannot consume or produce.  

Obviously, the above just touches the surface of participatory planning…not providing a detailed picture of either the planning “iterations” or the background of motives, actions, and institutions that make them viable, nor elaborating on the day-to-day roles nor social implications. But if interested you can certainly access more comprehensive discussions at http://www.parecon.org. The main point is that the balancing of what is produced and what is consumed in light of the relative costs and benefits that go into each part of the equation, can be achieved cooperatively rather than via methods that distort both personalities and outcomes. It can be attained in accord with self-management and fostering diversity, solidarity, and equity, rather than violating all these values. 


In the next chapter we will address short-term program for attaining participatory planning. For now, however, regarding a vision for allocation…it comes down to this. 

And do we want economic decisions to be determined by groups competing against one another for well-being and survival, the enhancement of any one being attained only at the expense of some other? Or do we want to plan our joint endeavors democratically, equitably, and efficiently, with all actors having the proper influence and each benefiting in parallel with the rest? In other words, do we want to abdicate economic decision making to the market, or do we want to embrace the possibility of participatory planning?