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Is Participatory Planning New, Or Is It Just Another Name
for a Mix of Markets and Central Planning? 

In 1806 Pfuel had been one of those responsible for the plan of campaign that ended in Jena and Auerstadt, but he did not see the least proof of the fallibility of his theory in the disasters of that war. On the contrary, the deviations made from his theory were, in his opinion, the sole cause of the whole disaster, and with characteristically gleeful sarcasm he would remark, `There, I said the whole affair would go to the devil!’ Pfuel was one of those theoreticians who so love their theory that they lose sight of the theory’s object—its practical application. His love of theory made him hate everything practical, and he would not listen to it. He was even pleased by failures, for failures resulting from deviations in practice from the theory only proved to him the accuracy of his theory.
—Leo Tolstoy


Some critics say participatory planning is a system of exchange using prices and equilibrating supply and demand. Doesn’t that make it largely a market and therefore subject to many ills that afflict markets? Other critics ask, aren’t parecon’s facilitation workers just central planners? Don’t they disproportionately influence outcomes and won’t they bias results on their own behalf, thereby becoming a ruling coordinator class? 

The sentiments behind these complaints are very much in tune with our own values and aims. It would be very disturbing, therefore, if the claims themselves were accurate. 


Market Allocation By Another Name? 

It is certainly true that participatory planning has numeric indicators that we call indicative prices and that people and institutions in a parecon consult these indicative prices to make their decisions. And it is also certainly true that the mix and match of the decisions that people make in participatory planning come into accord, via a meshing of supply and demand. 

Some deduce from these facts that participatory planning must therefore be a disguised market system. It turns out this is mostly a matter of confused terminology, not substance. 

If one means by market system, a system in which there are prices and in which supply and demand come into accord during allocation, then, yes, participatory planning would be a market system. But with that definition, all non-trivial allocation systems would qualify as market systems (even including central planning) and instead of markets being a specific kind of allocation mechanism with its own particular properties, the word market would be a synonym for allocation itself, and we would need a new word for what economists more typically call a market system. 

When commentators use the term markets in that encompassing way, it makes folks think that what we have in the US, Italy, India, Australia, and Brazil … is essentially inevitable. After all, any economy will value items and try to avoid gluts or shortages by equilibrating supply and demand in accord with its valuations. So any economy must employ “markets,” if they are so defined. The next step, of course, is to say that we have markets, therefore there is no need for change. It is a powerful sleight of hand, generating passivity in the face of contemporary economic problems. 

Suppose you looked at the Soviet Union some time back. You would have seen the same thing that causes these critics to identify parecon as some type of market system. Economic items in the old Soviet Union had a price. Supply and demand came into proximity with each other by a process that in large part took note of people’s responses to prices. So was the old Soviet economy a market system? Only if we use a very misleading definition, of course.  

Any economic system beyond personal barter includes some kind of mechanism for people to compare options (some kind of prices, perhaps accompanied, as in parecon, by qualitative information as well). And if the economy isn’t horribly wasteful, any such system will also have supply and demand coming into proximity of one another, as occurred in the old Soviet economy. But no one would mistake the old Soviet economy for a market economy. Why?  

Of course, it is because the old Soviet institutional framework and its components, and in particular the allocation roles for each actor established by those institutions, were quite different than those promoted by what we call market exchange. In the old Soviet Union the prices were ultimately set by central planners (who did, however, consult people’s reactions to those prices). The workers— through their managers—had only to respond regarding their ability to fulfill instructions and to convey information about avail- able resources, 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, paying the established price and keeping within their budget—seemingly quite like at any supermarket. But there was no competition among buyers and sellers leading to competitive prices which prices in turn contoured the competition. 

The point is that yes, parecon has, among other features, a kind of budgeting, and a meshing of supply and demand, as does any complex economy. But, nonetheless, parecon does not incorporate a market, because, among other factors: 

Rather, parecon has other features entirely contrary to these, as noted throughout this volume. For example, it has far better estimates of true social costs and benefits, and very different incentives and rewards, different apportionment of influence over outcomes, and different personality and preference implications, as discussed in prior chapters. 

The critic might not relent so fast. If participatory planning persists as intended it is very different from markets, agrees the critic. But won’t market behavior intrude? Won’t people pursue market exchanges for personal advantage—black markets—until markets have subverted the participatory planning process? Isn’t parecon vulnerable to re-emerging market allocation?  

The logic of the complaint goes like this. Let’s say that a country has a parecon. A very skilled tailor finds that people appreciate his work and that he can charge them for favors. The tailor does so, and soon the tailor has made such a profit that he can employ other tailors to do his work on a larger scale, benefitting from his special knowledge. After a while the talented tailor has established an industry. With his profits, his empire can freely expand. Markets and capitalism return. 

Technically this is called a black market. One can imagine lots of different approaches to this type of finagling in different participatory economies. At the extremes:  

To decide which of these positions to favor, or something in between ... one might want to take into account a few things. 

1    The second part of the problem, hiring wage slaves with gains from black marketeering, is simply not an option in parecon. At an absolute minimum, the economy will not allocate resources to a production unit assembled in such a fashion—not to mention, why would anyone work there?  

To test the above claim, let’s make the problem more real. One country goes parecon, another does not. A rich person from the latter country comes into the parecon and advertises for wage slaves to work in a factory that he wants to build in the parecon country. He offers a high pay rate, let’s say, using his assets from without. This cannot happen, of course, but why not? 

On the one hand, if you believe in parecon, you think most people will look at this guy like he’s the devil and want nothing to do with him. On the other hand, what if some people, for whatever reasons, want to give up balanced job complexes and remuneration according to effort and sacrifice and proportionate impact on decisions and council democracy and so on, for the better wages this owner offers? It still cannot happen because society just doesn’t allow it. The planning process will not provide the newcomer’s firm with inputs, and it will not accept its outputs. (Even earlier, there is the matter of whether this owner from abroad could possibly make big profits paying wages sufficient to attract people away from parecon firms.) 

2    But what about the first part of the problem: individuals benefiting by selling their talents? For example suppose I have these wonderful ornaments that I make in my spare time from road kill, or stuff I find in the trash. (It cannot be made from inputs that I would have to get from the economy because the economy will not provide such inputs for profit-seeking.) Or, to make it more real … I am a mind- bogglingly good tennis player or pianist and I sell lessons on the sly. Why won’t this corrupt the system? 

Well, it is correct that in a parecon this is technically possible, but it is also important to realize that it is very hard in practice. For one thing, you cannot transfer income—actual money—because (a) there is no cash money to transfer and (b) even if there were, the black marketeer could not enter the planning process to consume with it without revealing, by its magnitude, that he/she was cheating the system. So the black marketeer has to be paid in goods just as if he traded his sweater for his neighbor’s shoes, but in this case he or she would be trading a service, like tennis lessons. It is very clumsy, to say the least, and this puts a lid on the problem even without taking into account the social onus. But if, in fact, the black marketeer manages to get people to pay for lessons, how does she explain her resulting abundance? The social ostracism that would accompany any ostentatious consumption that revealed cheating (and what other source could their be for wildly excessive consumption?) would be a very high price to pay for income above and beyond the already quite comfortable and socially rich existence parecon typically provides. And there is not only a social and moral loss to be incurred by this type behavior in a parecon since much consumption is collective, and that would be lost as well. 

So even without legal penalties, on the one side there is great difficulty in carrying off black market behavior and in accruing much by way of it, and on the other side, there is considerable loss in being identified as a social ingrate (which is almost impossible to avoid if you are benefiting significantly). 

Returning to the original social choice, believing all the above, one might figure it is not worth society’s time to worry about this problem because it is easier to turn the other cheek and if some folks manage a little extra lucre, so be it. Or one might decide, instead, that the dangers are significant (like the dangers of outright theft, which is outlawed) even with the social obstacles to such behavior, so that society ought to police the matter. Or, perhaps, one might move from the latter view to the former view as the system develops and as parecon values become commonplace. In any event, there is not, lurking here, a slippery slope back into markets.  

Still, the persistent critic might wonder, is it right for a person to not have the option—because society precludes it—to garner the highest income possible by trading his/her talents? 

This revisits points already addressed, but, of course if one thinks people should be remunerated according to what they can extract via their bargaining power—which is what markets foster—or according to their contribution to output —as markets are supposed to achieve—then one would not want parecon in the first place because it remunerates according to effort and sacrifice. But if one does favor remuneration for effort and sacrifice, then why should the existence of societal restrictions be a debit? There is no such thing as “anything goes” in any society. It cannot be anything goes for you and me when I want to do X which precludes your doing Y and you want to do Y which precludes my doing X. We cannot both implement our preferences once my anything conflicts with your anything, so it is not possible to say “anything goes.” 

More importantly, if we have institutions in a society—and there is no society that doesn’t have institutions—then by virtue of the roles the institutions embody and those they do not embody, even before considering laws and enforcement, there are restrictions. 

For example, we do not allow slave-owning in the US. It is not permitted. It doesn’t matter if I come to you with a million dollars and say sign here, be my slave—it is not legal. In fact, however, it is not really an issue. The law is relatively moot because save for interstices where one can operate without being visible, no one wants to be a slave and no one wants slaves. The social opprobrium on both sides is too great relative to the gains even for venal folks to attempt it. Now, having wage slaves is another matter—that is acceptable and therefore pursued with vigor and in fact taken as a given in capitalism. But in a parecon, in contrast, having wage slaves is not an option. You cannot be a part of a parecon as a wage slave or while employing a wage slave. You would not get inputs and your outputs would not be distributed. And trying to do it on the sly would be like trying to own a slave in capitalism on the sly: unacceptable and unlikely to succeed to any significant degree. 

Parecon does not perfectly eliminate—whether by definition, by incentives, or by consciousness-raising—every violation of its own morals that someone might entertain. And so this question is an apt form of a broader one—does parecon make most violations of its values so counter productive as to be not worth pursuing even if one could get away with it, and can it prosecute other violations when they occur as successfully as any other model prosecutes violations? 

Parecon’s claim is that the answer is yes on both counts—actually better than other systems on both counts. And if the next question is, well, what about murder, theft, and other crimes—or what about the black market if you decide to prosecute actors for that? Do these require police, and if so won’t that lead right back to old-fashioned coercion and hierarchy? The answer is yes, a society with a parecon is like any other society in that it has to deal with abuses of individuals and of society, and yes that entails—in fact it defines—a “police function.” But no, this does not imply old-fashioned political coercion and hierarchy any more than the fact that parecons have a “production and allocation function” implies old-fashioned market or corporate-based class division. But discussing how to accomplish police, judicial, legislative, or other political functions is a matter for a presentation about political vision outside the scope of this book, though it could be pursued by a similar approach—settling on needed functions, worthy values, and finally desired institutions. 


Central Planning By Another Name? 

The critic of participatory planning now takes an opposite approach. Aren’t the facilitators just central planners? Isn’t this not really a new system, but the same old authoritarian one, at least in practice? 

The planning process, and thus the role of “facilitation boards” is, remember, more or less like this. Each actor (which is sometimes an individual, sometimes a workplace, or sometimes a consumption council), submits a proposal for what they wish to consume or produce, that is, their economic activity. The proposals of course do not mesh into a workable plan immediately. For most goods more is sought for consumption than proposed as supply even when people try to make sensible proposals based on projections of the likely average income for the coming period and awareness of their past period’s actual results. Demand is brought into touch with supply and vice versa by a decentralized process of refining proposals in light of data from prior rounds of proposals as well as technical data about capabilities and other factors we have described. 

Facilitation boards are, in this process, just workplaces like any others in the economy. They include various tasks combined into balanced job complexes. If the facilitation board’s average job complex rating is better than the average for society, people working in a facilitation board have to work at sub-average options outside as well. If the facilitation board job complex is worse than for the rest of society, facilitation board workers have to work at better than average tasks outside the board as well. 

As to what a facilitation board does—there are different kinds, with different purposes, but basically they either accumulate proposals and information, prepare data for access by others, and with various socially agreed-upon algorithms cull insights from data, passing back into the process the resultant information, or they facilitate meeting people’s preferences, such as by helping people find new places to live or work. And that’s it. Facilitators make no decisions other than about their own circumstances. What facilitators do can be checked by anyone at any time since all information is freely available. Moreover, virtually everything facilitators do could be largely and perhaps completely automated— though in practice this would likely be inefficient. 

The critic hears all this and is not swayed. Surely you are starting to imply a coordinator class, just by having people working in an institution whose role is to decide who is affected by a certain decision and to what degree, are you not? 

To answer, one has to look further at the model, taking into account what it does and doesn’t address. The planning process has no need for anyone to play the role the critic indicates and indeed explicitly precludes it. The proportionate impacts on outcomes for different actors emerge organically from their involvement at various levels of the planning process and not from being decreed by some person or group from above. 

However, suppose such estimates did have to be made by someone specially assigned to the task, which in fact they do not. That would still not mean that there is a coordinator class in the economy any more than the fact that there is a managerial function in many industries in a parecon implies that there is a separate coordinator class there, or the fact that there is an engineering function, or a surgical function, or a need to have agencies that do calculations or that summarize information means that folks involved in those activities will be a separate and privileged class. It is not the existence of important technical or conceptual tasks per se that engenders class division, but rather how those tasks are distributed among the populace.  

If everyone has a balanced job complex, then no one has disproportionately more empowering work than others. Moreover, if there are no ways to make aggrandizing decisions to advance oneself or one’s class at the expense of others, then systematic abuse of even temporary powers is virtually impossible. If your work group needs to have a “conductor” and Leonard gets the nod next week, he can be good or bad at it, and can even be a pompous ass or an exemplary genius at it, but he cannot use the position to enrich himself or some class of actors. That option doesn’t exist because remuneration and circumstances are beyond his or anyone else’s capacity to privately manipulate. 

The critic is steadfast. Suppose I work in an institution that controls some of the critical levers of the economy, she says. Then even if I have a balanced job complex within that institution, I may still have an unbalanced job complex with regard to economic power and the broader community, right? 

No, at least not in a parecon, because if you worked in the type of institution just described, as part of your job complex you would have to work part time elsewhere, to attain a balance. 

But more important, which institution is it that the critic has in mind as providing a base for abuse? And what advantages does it bestow upon a worker there, such that he or she and others like him or her will become a class with advantages to defend and expand? 

The worry is valid in the abstract, of course, but then we have to look to see whether in any particular kind of economy this problem exists in practice. For example, if someone was a central planner in a centrally planned economy, they would be able to bend and massage economic outcomes to serve all planners and also all folks with relative monopolies on decision-making power in workplaces by further enlarging the advantages that such folks enjoy. They could accomplish this by promoting investment patterns that enhanced information centralization and thus further aggrandized coordinator class privilege, not to mention by directly decreeing greater rewards for such folks. So here the claim would be right. These individuals, by virtue of their central planning positions, would have means to advance their interests contrary to the interests of other actors. But, none of this exists in a parecon. 

Yes, there are boards or bureaus in a parecon that disseminate and even summarize information, but there is no way for anyone working in one of these boards (or doing other highly valued or conceptual functions as a part of their balanced job complex, for that matter) to benefit themselves, either in isolation or collectively, by doing anything other than what is also in everyone else’s interest—that is, by doing their work as well as they can. For one thing any deviation would be obvious. But, even more important, there could be no self-serving deviation in ways that were not trivial, such as direct theft. It is precisely this kind of attribute that is striking about parecon, in fact. 

The idea behind this claim is pretty simple. In a parecon or really any economy at all, to improve one’s economic lot one needs more income or better circumstances (or more power since that facilitates the other two). But in a parecon everyone gets a share of income based on the effort and sacrifice they expend in their work (or based on their need if they cannot work) which means there is no way to gain more for oneself or for a group other than by working harder or longer, which, in fact, benefits everyone. For me to get ahead, the total product must grow or I have to expend more effort and sacrifice in producing that product, which is fair enough. I cannot get ahead at the expense of others by grabbing a bigger share than I am entitled to and leaving them with less than they are entitled to. 

Similarly, since we all have balanced job complexes, my work situation only improves if the society’s average job complex improves so that everyone’s situation at work benefits. Yes, I can select from among balanced job complexes one I prefer over one that doesn’t suit me, and of course I will do so and I should do so, but that has no broad class implications and is as it should be for everyone. 

Could a class of fakers arise who make believe that they cannot work, who consume the average bundle, but who do not work the normal load? It is hard to imagine, but more important than being far-fetched, it would be a minimal achievement and they would not have any authority over anyone, and since they would have to show all the signs of a work-preventing ailment, on balance they would gain little, if anything, at considerable risk.  

At any rate, participatory planning is neither a market system nor a centrally planned system precisely because it has different defining institutions and roles than each and because in theory and also in practice there is no tendency for it to devolve into either.