11. Q&A: Participatory Allocation 

As it happens, there are no columns in standard
double-entry book-keeping to keep track of satisfaction
and demoralization. There is no credit entry for feelings
of self-worth and confidence, no debit column for
feelings of uselessness and worthlessness. There are no monthly, quarterly, or even annual statements of pride
and no closing statement of bankruptcy when the
worker finally comes to feel that after all he couldn’t
do anything else, and doesn’t deserve anything better.
-Barbara Garson 

Is It A Market? 

This question has been raised as well by a couple of economists, three or four years ago, if I remember right, in Socialist Review magazine. It only got raised once, because most economists are so horrified by what we propose that they would never see it this way, or because they perceive just how different it is—I don’t know which. Those two economists look at participatory planning and see 


a) There are numeric indicators we call indicative prices, but which look quite like any price you have ever known, which people and institutions consult to make their decisions. 

b) The mix and match of the decisions people make come into accord, by a meshing of supply and demand. 

You then deduce, as they do, that this is, after all, some kind of market system, prices and supply and demand being “market” features. 

Well, the answer I offer depends on what we mean by “a market system.” 

If we mean a system in which there are any prices at all and in which supply and demand come into accord, then, yes, you would be right. But by this logic, all non-trivial allocation systems would be “some kind of market system” (including even central planning which also has prices and supply and demand coming into accord) and instead of markets being a specific kind of allocation mechanism, the word market would be a synonym for allocation itself, and we would need a new word for what economists more typically mean by a market system... 

More, when you use the term “markets” in that very encompassing way, which many people do, it makes folks think that having markets is essentially inevitable, so that what we have in the U.S. is essentially inevitable.  

Suppose you looked at the Soviet Union some time back. You would see the same thing as what has caused you to identify parecon as some type of market system. Everything had a price. Supply and demand came into proximity, and it happened via a process that in large part took note of responses of actors to prices. Yet you wouldn’t have called it a market economy, I think, quite rightly. 

Any economy beyond direct personal barter includes some kind of mechanism for people to make comparisons among options (including some kind of prices perhaps accompanied, as in our parecon case, by qualitative information as well) and if it isn’t horribly wasteful, any such system also involves supply and demand coming into proximity of one another, as did the Soviet economy. But no one would mistake the old Soviet economy for a market economy, nonetheless. 


Why? Well, because the Soviet institutional framework and its components, and in particular the roles for each actor in allocation established by these institutions, were quite different than those that define what we call market exchange. In the Soviet Union, prices were ultimately set by planners (who did, however, consult people’s reactions to those prices). The workers had only to respond regarding their ability to fulfill instructions and to convey information about available resources, etc., as well as to obey instructions. The planners had only to calculate and set prices and issue marching orders. Managers had to administer as well as obey. Consumers had to go to the store and pick what they wanted to consume, paying the established price and keeping within their budget—seemingly quite like at A&P in the U.S. And so on. 

My point is that, yes, parecon has, among other features, a kind of prices, a kind of budgeting, and a meshing of supply and demand. But, nonetheless, it is not a market system because it not only doesn’t have the basic defining features of markets—buyers and sellers each motivated to maximize their own advantage at the cost of the other; competitively determined prices; profit or surplus maximization; remuneration to labor according to its bargaining power or its output—but because it has other features that are entirely contrary to these, such as balanced job complexes, worker and consumer councils, remuneration according to effort and sacrifice, participatory planning guided by human well being and development. 

It would be an iterative (round by round) process in which what consumers want to receive matches up to what producers are ready to offer and each side steadily expands or diminishes its preferences until there is a mesh. The interchange would be facilitated by comprehensive quantitative and qualitative information concerning social costs and benefits of all production and consumption, both in text form (qualitative) and in what are called indicative prices (for calculation purposes). There are also various facilitating institutions that encapsulate and relay information. As to its efficiency properties (would it waste anything people value) no economist has challenged these, perhaps because of the proofs we offer in our more technical presentations of the model. 


Individual Participation and Local Effects 

Individuals would partake as well as other size units, but  for a year, and, as you imagine, it would be largely based on past years, and on projections for changes in overall output and in each individual’s share for the year, etc. 

Any system that has any connection to actual humans must, of course, respond to human choices. Markets do this daily. Parecon gets a prior indication of totals, a good one, during the yearly planning period. There are many reasons for this. Suppose you are in a local community that could as a collective, buy a new park, or new joint music equipment, or large computers for a kids center, or whatever. Such collective consumption is charged against the incomes of all the community members ,of course. So getting more means getting less individual consumption, and getting less of the collectively enjoyed items means getting more individual consumption. So, one reason for planning with a longer period at stake is to decide on this ratio. Another thing to be aware of is possible changes in output, and thus income. Another is changes in taste, particularly for new outputs. And so on. But all this adjustment is manageable in participatory planning, and consistently with our values (as is described in considerable detail in longer works on the vision, such as Looking Forward (SEP). 


All the component calculations and sorting done by such boards would be on record and easy to check—not simply the final data sorted and summarized information that is plugged back into the planning process. This isn’t very important, I think, as a guard against ill-doing, not only because parecon would have gentle people, but because in a parecon it would be virtually impossible even for someone intent on doing so and with no qualms about it, to misuse their role at a facilitation board. What the availability of facilitation boards’ data and ruminations would be useful for, however, is learning about past algorithms to make improvements in the future. 

Personal consumption requests, however, would presumably be private, though the requests could be be accessed without the accompanying names. (This choice of privacy, like many other choices one might make about a parecon, isn’t somehow intrinsic to being a parecon, though—at least in my thinking. That is, I think one could have a parecon with all requests publicly accessible or not, with no effect on the defining economy per se, though other issues people may care a lot about are at stake. I think privacy is preferable but it isn’t intrinsic to parecon, only quite consistent with it.) 

Would there be smaller production units and larger ones? Sure. But there would be no marketing in the sense that it exists now. There would be no sales aimed at volume/profits rather than at fulfillment/use. No one would have any interest in having someone consume something unless the consumer benefits thereby. 


Why do you think there are such things?  If you mean one can’t know in advance that one will want a product that only arrives as an option six months later—say a book not yet published, for example—sure. But you can know that last year you got x books and your prediction, flexible and updateable as the year proceeds, is that this year you will want y more or less than last year (perhaps due to having more or less time for reading, or a change in your taste, etc.) And similarly for other choices; sometimes your expectations are quite precise, sometimes they are general and broad. Individuals don’t know the precise clothes they will want (new designs, etc.) but can say, pretty closely (with up and down fluctuations across many people averaging to near zero change for the total request), what overall clothes expenditures they anticipate making. (All this kind of thing is dealt with in considerable  detail in the longer books on the model such as SEP’s Looking Forward or PUP’s Political Economy of Participatory Economics, by the way.) 

Of course one doesn’t plan for the whimsical personal purchase, or items that are just not known about in advance (responses to illness, for example). But one can in broad terms indicate the parts of one’s income that will go to this and that area—sometimes only broadly, sometimes in detail (e.g. wanting a new vehicle or other large items). When averaged over communities and societies, this data becomes powerful information that translates into requests for products that exist alongside offers of production from the workplaces, which then must be brought into alignment by a back and forth modifying of desires in light of continually updated information. 

Allocation Details - Creeping Authority?