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Chapter 21 


Should A Parecon Incorporate Limited Markets 

When we should have been planning switches to smaller, more fuel efficient, lighter cars in the late 1960s, in response to a growing demand in the marketplace, GM refused because “we make more money on big cars.” It mattered not that customers wanted the smaller cars, or that a national balance of payments deficit was being built .... Refusal to enter the small car market when the profits were better on bigger cars, despite the needs of the public and the national economy, was not an isolated case of corporate insensitivity. It was typical.
— John DeLorean 


The idea in this chapter is different than in the rest of our critical chapters. The hypothetical critic in this chapter accepts that parecon is a fine idea. She accepts that markets and central planning are horribly flawed. She accepts the desirability of councils, balanced job complexes, self-management decision- making norms and procedures, and remuneration for effort and sacrifice. She accepts that participatory planning fosters all those features and has additional virtues as well, and she supports it for those reasons. But, even with all that celebration, she worries about it being too doctrinaire. 

Okay, markets for all our allocation is a horrible idea, but why not just for some of it, she urges. Why not try to capture the benefits markets have for those items where its benefits will be greatest and where we can curtail accompanying debits? She claims markets are responsive. They react to shocks quickly and they can update weekly, daily, or even hourly. Participatory planning cannot re-plan repeatedly, she says, so can’t we therefore benefit by using markets to augment or along with or even in place of pareconish approaches, at least for the items where speed of reaction is needed? 

In other words, can’t we have a slightly mixed economy? Can’t we take the essence of participatory economics and strengthen it by adding some limited attributes of other economies—in particular, some market mediation of exchange? The critic continues, you have some product that you know will have frequent innovation. When you plan it in the participatory planning process at the outset of the year, you get a very fine assessment of its true costs and benefits (or exchange value) at the start of your year. The procedures support the economy’s broad values. They respect and foster self- management, and so on. But what happens when innovations occur for the item in question well before the next planning period comes around, say only two or three months into the year? 

I know the system handles modest typical preference changes fine, says the critic, including those arising from changes in the product, but what if there is a really large change because an innovation makes the product really much better or perhaps due to a massive fire destroying lots of production potential, and, as a result, many more people want the product than planned to get it (well beyond what slack planning can handle)? Wouldn’t it be good to let the consumers and producers of the item operate as they would via a market, so that the price would move quickly and in the correct direction, and so that demand would properly fall? Wouldn’t this improve on having to replan the whole economy? 

Our answer to this very fair question comes in two parts. 

First, if in such cases the only option was to persist with the plan as conceived in the initial planning period or to incorporate market features, we would favor the former. The loss in efficiency induced by having to wait to adjust until the next planning period would be quite modest compared to the debits of ushering market allocation back into the system. The short of it is that moving quickly by markets from wrong prices to still wrong prices by methods that subvert all the values we hold dear is not improving matters. 

But, second, this is not the actual situation. There is no reason why parecon consumers should have to sit tight with the initially planned exchange rates and allocations, rather than correct for surprising innovations or calamities, even for large ones such as is hypothesized here. To compare, suppose an innovation or a calamitous destruction of productive potential occurs in a market economy. The conditions prevailing have changed. Old prices no longer clear markets properly. How do prices and material choices by actors respond? 

With markets, buyers and sellers try to get as much benefit for themselves, regardless of the effect on others, in the new situation, just as in the old one. The market response, in other words, will likely go in the right direction, but the motive driving the correction, as at all times with markets, will be pursuit of profit/surplus and advance of competing actors via enlarging market share. The process will ignore the will of agents not directly involved in the exchange. It will impose antisocial motives, and other failings, as we have discussed at length about markets in general.  

Additionally, the idea that markets respond well to shocks and changes is, in any event, only a mathematician’s assumption. In fact, the rippling changes percolating from an unexpected major change in demand or supply take time to unfold and the assertion that they will inevitably occur quickly and accurately (even if we set aside other reasons for market prices diverging from true costs and benefits and market outputs diverging from accurate repre- sentations of people’s unbiased preferences) conveniently ignores a host of disequilibrating dynamics that actually afflict market systems and that may mean that the initial markets affected by the shock do not re-equilibrate quickly, or at all; and/or that inter- actions between interconnected markets produce a disequilibrating dynamic that pushes all markets farther from a new equilibrium. 

Thus re-equilibration in a market economy typically requires a change in some initial market affected by the unforeseen event followed by changes in any markets where supply or demand is affected by the change in the first market, followed by changes in other markets where supply and demand is affected by changes in the second tier affected, and so on. How much of this re-equilibration takes place how quickly is anybody’s guess. Market enthusiasts assume it all happens very quickly, and that market prices are good in the first place and good after re-equilibration as well. Of course in reality only some of it happens. None of it happens instantly. And worst, market prices diverge from accurate valuations of true social costs and benefits both before and after any shock. In sum, to the extent that re-equilibration does not reach all markets, and to the extent that markets which do eventually re-equilibrate do not do so instantaneously, market systems will perform inefficiently and inequitably in response to the unforeseen event even if its prices were efficient before and wound up efficient after the shock. Of course, when its prices aren’t efficient before and don’t wind up efficient afterward, things are that much worse. 

For such reasons, we would not want to have some items handled by market processes in a parecon even if it were an otherwise plausible option, but more, we really could not sensibly do so even if we wanted to. Having a little markets in a parecon is a bit like having a little slavery in a democracy, though even less tenable. The logic of markets invalidates the logic of participatory planning and of the whole parecon, and it is also imperial, once it exists trying to spread as far and wide as it can. You cannot have some workplaces seeking market share, trying to induce purchases regardless of impact on consumers and society, ignoring external effects, trying to elevate remuneration according to power or output or surpluses, and expect those firms to interface congenially with the rest of the participatory economy. So, in contrast, if we have to live or die with it in full, what about participatory planning’s responsiveness? 

Again an innovation occurs, this time in a parecon. The unforeseen event significantly affects demands and valuations so that the original plan—which was efficient and equitable before the shock—is no longer efficient and equitable. The optimal solution, at least regarding the choice of material inputs and outputs and their valuation and thus distribution, is to redo the entire planning process and arrive at a new plan perfectly efficient and equitable in light of the new conditions. Doing so is in that sense the analog of a market system jumping from allocations before the shock all the way to allocations after all of the interconnected markets re- equilibrate, without any misallocations in the interim. But wait says the critic, this answer won’t do because re-planning is impractical except in cases of huge unforeseen events with large enough impact to merit that big an undertaking, even if I will admit that in such cases nothing would prevent redoing the plan—which would be much simpler than planning from scratch. My point is, says the critic, most of the time deviations are important yet not worth cranking up the entire planning process involving all workers and consumers councils, federations, and IFBs. To appease me regarding parecon’s flexibility, you need to have something more convenient, even if a little less perfectly efficient and equitable, than entirely replanning the whole economy. 

In short, when a shock requires significant adjustments, how do we tide over with appended alterations until the next scheduled planning period fixes things “perfectly”—never more than 12 months away? The answer is that different instances of parecon might have different approaches to doing this. Here is one. 

Workers in a parecon industry notice markedly changed demand or valuations. Many more people than planned come to want some product. The easiest adjustment is if the original plan allowed for production of a certain amount extra of the good in question, so that unexpected increased demand can be met by actualizing this extra potential. The name for a plan with no extra potential built in is a “taut plan,” and the name for a plan with extra potential built in is a “slack plan,” with the amount of “slack” varying for the economy and its industries. This is exactly analogous to business inventories in a market system, whether kept on hand, or able to be generated.

But suppose workers notice that the increased demand will take them beyond the available slack. As a result, they begin to contact facilitation boards seeking extra workers and begin consulting suppliers for additional inputs. If this can be had to the extent needed, they report the results and the facilitation boards calculate the effect on final prices. The predictions are made available to all consumers. If assets for the desired production can’t be had, supply won’t rise sufficiently and, instead, decisions will have to be made regarding allocation of the limited available products. Of course all the usual methods and motives of parecon operate at each step, whatever specific approaches a particular parecon might employ. 

Let’s pick a simple unforseen event. An unprecedented warm spell dramatically increases people’s desires for air conditioners beyond what was planned plus available slack. 

An easy possibility is to ration the existing supply of air conditioners at the level set by the original plan. This could be done in a variety of ways. (1) Give everyone seeking air conditioners only X percent of the what they they asked for, where X equates demand with available supply. Of course, this is not possible for items that are not divisible. So (2) give air conditioners only to those who asked for one in the original plan and only in the quantity they asked for. Do not accommodate new demanders or increased demands. But another option is (3) raise the price of air conditioners until the excess demand disappears, i.e. employ increased prices to ration air conditioners. In this case we would have to have an IFB in place to adjust indicative prices during the year. Or we could have the national consumer federation and the national air conditioner industry federation make the price adjustments. If we adjust the price of air conditioners to eliminate the excess demand we have to charge users the higher price or their demand will not fall to the existing level of supply. Those who get the air conditioners and are charged the higher price now must either reduce the amount of some other goods they consume—not picking up all they ordered in their original plan—or they must increase borrowing which is monitored in a participatory economy by their consumer federation. 

But of course as this example intentionally makes evident, a more desirable adjustment to the unforeseen event would be increasing production of air conditioners. We now know that more of society’s scarce productive resources should be devoted to air conditioners than the original plan called for, and therefore by implication, less of society’s scarce productive resources should be devoted to producing other goods and services. Adjusting production of air conditioners is in this event more complicated than simply rationing the existing supply in any of the above ways, but to do so also better meets real needs, and is therefore more efficient. 

The simplest way to increase production is to ask the air conditioner federation to increase output via overtime. If the workers can produce more by working more hours without needing significantly more inputs, the only remaining issue is an equity matter—how much to compensate them for their extra sacrifice. They will re-rate themselves and presumably claim sacrifices equal to the extra hours plus extra sacrifice they consider the after hours nature of their work to be. They will produce more air conditioners credited to their firm’s social benefit to social cost ratio. 

But what if more air conditioners cannot be produced without more non-labor inputs which must be obtained from other workers’ federations? Then a fuller and more efficient mid-plan adjustment requires renegotiation between the air conditioner federation and the workers’ federations who supply them. This is just the percolating and spreading implication of a shock in an entwined economy, the same as would occur were allocation handled by markets. But in all cases of all involved parecon firms the choices about (1) rationing and (2) adjusting production schedules, simply repeat themselves. How much mid-term adjusting to do—rather than just waiting for the new planning period to get inputs and outputs all “perfect” again; and then how much of that mid-term adjusting to do simply by rationing, i.e. adjusting consumption only; how much to by adjusting production of the initial item affected and/or of other items that are inputs, etc.; and which of the various options to use in any part of an adjustment, including whether or not to recalibrate prices, are all practical issues to be decided by those who work and consume in a participatory economy following general norms and procedures applicable in specific cases, though not via one single right norm or procedure that must be followed always in all cases and in all parecons, we would guess. 

In any event, there is no reason to think that the proliferating adjustments in a participatory economy are any more difficult or cumbersome than in market economies—unless one makes the unrealistic assumption that markets adjust infinitely quickly to their new equilibria. And so the overall difference from a market system is increased rather than diminished flexibility, in that options can be consciously chosen, the elimination of various (competitive) causes of spiraling divergence from equilibrium, plus, of course, that the procedure’s guiding motives are social rather than profit seeking, the valuations are accurate rather than distorted, and the influence of actors is proportionate to the degree they are affected rather than enormous for ruling classes and minuscule for subordinate classes. 

Thus, with a large change in desirability of a product or some other major shock in a parecon that goes beyond what slack can accommodate, everyone who wants some affected good could be supplied, or only those who originally placed orders could be, or only those willing to pay a new higher price could be. In any of these events, there would be some change in the real price, rising above or falling below the planning period’s indicative price. A parecon can handle all these matters in numerous ways. 

Indeed here is another angle from which to think of the whole situation. Think in terms of the year’s end. Suppose you got everything you sought, exactly as you sought it. But suppose the total value assessed at year’s end was less than the total you allotted from your budget—final prices for the year changed from planned prices so that the total cost of all that you consumed was less in final fact than it was in your initial planning. Then you would be entitled to a refund, or else you would have unfairly lost out. Or suppose the total value of what you consumed in final prices turned out higher than originally indicated in planned prices. Then you would owe some, or would have received more than you deserved. But parecon has no trouble correcting in regard to either result. It can properly allot credit or debit to your account. 

The only difficulty in the above trivially simple approach is that you would not have had a chance to reassess your choices based on the accurate prices. But a parecon can meet this problem too. It need only provide monthly updated price estimates based on the year’s unfolding patterns, so that you can, in fact, continually reassess your remaining choices against slightly altering price projections. With slack and the averaging of different consumers’ choices, the amount of replanning would likely be very modest. 

The main point of all this, however, is that speed of response is not all that much of a virtue in the first place, nor do markets possess as much speed as people think, nor do they speedily arrive places where people should knowingly wish to go in any event—and certainly that speed of response should never be “bought” by incurring costs that are way more damning than the modest gains achieved. 



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Elevating Need? 

Does Parecon Honor or Denigrate Need? 

Reason, or the ratio of all we have already known, is not the same that it shall be when we know more.
–William Blake 


In a participatory economy remuneration is for effort expended and sacrifice endured in work. Does this mistakenly reject providing according to needs? Does it prevent needs from being properly met? Does it elevate a self-interested calculus denying more social motivations? Does it induce individualist rather than social inclinations? Even supporters of parecon wonder about these questions. How do we respond? 

One issue is does parecon address the needs of people who cannot work? Yes, parecon provides an average income to those who cannot work. What about people with special health needs? Health care is a free public good in a parecon. What about calamity victims? Insurance is also a public good, so again parecon provides appropriately. What about children? Do parents have to take less social product for themselves in order to clothe, feed, and otherwise provide for children? No, an average income goes to children, by right of being human. Children do not have to work to get their fair share. Parecon remunerates effort and sacrifice but that doesn’t impede meeting needs of those who cannot work because if you cannot work in a parecon, you get an income anyhow. And if you have added health needs, those are met as well. 

But wondering about needs-based allocation might involve more subtle matters. Suppose there is a severe cold snap in your region. Should you have to pay for needed heat out of your income, thus leaving less budget for desirable goods than you anticipated just because of bad luck regarding the weather? Should bad weather diminish you budget for getting goods to enhance your life? Or should the cost of heating to withstand the cold snap be provided socially? 

Ultimately, we are asking what counts as a health or a calamity request handled outside one’s budget—and what counts as our responsibility within our budgets. No single answer universally applies. Different countries could arrive at different norms. So could a single country at different times or even different regions inside a country. The self-managing choices of the polity and/or workers and consumers councils decide. But it’s plausible to predict that pareconish people will have a bias. To the extent society can protect everyone against harsh circumstances without abrogating other values and without incurring undue expense and disruption, I would imagine pareconish people will likely agree that adjustment policies should reduce any serious suffering for external unforeseeable circumstances, not only in the case of catastrophic calamity, but in lesser cases, as well. In any event, that’s my bias. It seems to me that there is no moral reason to allow some people to fall victim to unpredictable but truly harmful bad luck, while others relatively benefit. But this choice is not built into parecon as an abiding norm in the way that balanced job complexes are built in, for example, and different possibilities exist for how to try to fulfill this aspiration and for the degree to seek to fulfill it, and these differences will be explored differently in different cases, no doubt. 

The critic worried about providing for needs may yet be unappeased. His or her concerns may have a different logic. Isn’t there something wrong when an economy rewards our labors with remuneration rather than simply giving us what we need by virtue of our being human? Why do we have to earn a share? Why isn’t a share ours by right? For that matter, why do we need an incentive to work? Why do we need to get a share of output for our labors, withheld if we don’t do them, rather than each of us working simply because it is our social responsibility to do so—and getting whatever we need, simply by right of our humanity? 

The description sounds exalted, but imagine being ship-wrecked on an island with fifty other folks. We have a lot of toys salvaged from our ship. There is a beautiful swimming area. There are games to be played, music to be performed and heard, relationships to explore, poetry to write, nature to experience, and so on. There is also, however, a need to build housing, grow and harvest food, pot fresh water, maintain single fires, and so on. So there is hard, boring labor, and there is fun and enriched leisure time. 

Suppose I announce that I need a dwelling, fresh water, food, a luxurious carved flute, and some newly made clothes. My hap- piness, sanity, and fulfillment depend on having all that, I say. I need it. But I also announce that I would rather not work producing that stuff or anything else. I enjoy swimming and hanging out too much to give time to anything more onerous each day. I need a lot of leisure. That is just me. 

Does anyone seriously think my announcements should be honored? But what else does it mean to say that I ought to get what I need regardless than that these announcements are acceptable? If it means, as I suspect it always does, sure, you get what you need, but you have to work the fair amount for it, and what you need isn’t what you say it is but instead what society somehow agrees on in context of what you say, then the phrase “getting what you need unconnected to labor” is misleading rhetoric. 

In practice, moreover, in addition to being utopian regarding the amount of output available—we cannot all get all that we want and isn’t what we want in fact what we need?—rewarding need without labor (for those who can work) is actually not equitable at all. And if the assumption is that we will behave to make it equitable, how do we do that without an allocation mechanism which tells us what is a fair amount to work and consume? Likewise, even if I do a fair share of work, should I be able to say I need more than my correlated fair share of food or housing or carved musical instruments just because I determine that it would make me happier? If that is not my unilateral right, then how is appropriate need assessed? 

The answer should be that a social process decides what is appropriate, with each actor having proportionate input, and with the decision made in light of an accurate understanding of the full social costs and benefits of the creation and utilization of each product, including of the labor involved. This, of course, is precisely what parecon delivers by accounting for time and effort in production as well as the value of outputs and processes. The point is, for an economy to respect the needs of each actor in the same degree as it respects the needs of all other actors requires that the economy arrive at proper valuations of full social costs and benefits of work and its inputs and outputs and that it apportion shares of output in accord with effort and sacrifice expended, with allowance, of course, for special cases of the sort noted earlier. 

So it is precisely because parecon is geared to meet needs and develop potentials that parecon remunerates as it does, determines values as it does, and involves actors in decisions and apportions work responsibilities as it does. If we break the relation between work and income we eliminate the possibility of people knowing what is greedy and what is appropriate, even assuming everyone wants to abide such guides spontaneously, and also of knowing the direction people wish the economy to go in. 

And there is another point to be made. A critic may worry that remunerating effort and sacrifice rather than providing for needs irrespective of work will propel actors to seek personal income rather than care about one another. But, in fact, as we have seen, parecon creates a context in which to get ahead personally, even someone who starts out quite self-interested, greedy, and dismissive of the needs of others, has no choice but to address the needs of others. In a parecon we enjoy improved work conditions if society’s average job complex improves, which means we must favor not all changes in our own work place, irrespective of impact outside, but only changes in the whole economy that make the largest gains in quality of life implications of work, even if none of those changes are situated in our own workplace. And the amount we get per hour of average labor at average intensity goes up, likewise, if the whole social product goes up, again imposing on actors attentiveness to society and not just self. 

Ironically, therefore, it turns out that giving people what they declare they need with no attention to their participation in production does far less to produce social concern and mutual awareness than rewarding effort and sacrifice, since the former says we need only concern ourselves with assessing our own desires in determining what we want and receiving it, while the later requires that we pay attention to the well-being of the whole community even if we are solely interested in advancing our own well-being. That is, giving people from the social product simply for what they proclaim to be their needs promotes an individualistic, anti-social calculus in everyone, whereas rewarding effort and sacrifice and operating via participatory planning from within balanced job complexes literally requires that we pay attention to the entire social condition, including the situations, needs, and possibilities of others. 



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Chapter 23 


Can a Parecon Accommodate and Be
Accommodated By Other Institutions? 

I wish that every human life might be pure transparent freedom.
— Simone De Beauvoir 

My notion of democracy is that under it the weakest shall have the same opportunities as the strongest … no country in the world today shows any but patronizing regard for the weak … Western democracy, as it functions today, is diluted fascism … true democracy cannot be worked by twenty men sitting at the center. It has to be worked from below, by the people of every village.
— Gandhi 


Humans are social beings and we do not live by bread alone. Economics is neither the sole nor even the sole centrally important aspect of life. It is critical, but so are culture, politics, kinship, ecology, and international relations. The good society we aspire to will have a transformed economy but very likely also transformed kinship, polity, and cultural relations, transformed relations with nature, and transformed relations among societies. 

In fact, what makes some part of social life central? The answer is that it depends on your purpose. Central relative to what? We are interested in changing society for the better. So our question is, what makes some domain of society central to the effort to change society for the better?  

One answer is that centrally important means (a) providing pervasively influential pressures on the way society is and the way it could be, and (b) impacting broad constituencies so that they can potentially act in light of their aims to try to make desirable changes. The economy does this, of course, by defining how we produce, consume, and allocate and by exerting pressure on other areas of our lives via its impact on these other functions and by demarcating us into the capitalist, coordinator, and working classes, which, by virtue of the different roles they play in economic and social life can both perceive the economy’s importance and also develop interests and agendas to perpetuate or to change its features. But the polity also does all this, though with respect to adjudication, legislation, and the implementation and enforcement of shared programs. And what we might call kinship also does it, regarding procreation, nurturance, socialization, and other func- tions related to the creation and emergence of each new generation. And the culture does it as well, regarding the way communities define their mutual relations, celebrations, and broad identities. 

Each of these four realms of social interaction defines centrally important features in societies and demarcates conflicting social groups, and each sphere can generate movements seeking new structures critical to the definition of a new society. So all are central, not only one or another, not only economics. But if a good society is one where all these domains emanate liberating influences, is a parecon compatible with a positive vision we may adopt for other spheres of social life? Does it emanate pressures that will foster their logic? Do they emanate pressures that will foster parecon’s logic? If not, can parecon be modified by tweaking it without losing its benefits or undercutting its operations? 

This question can only be answered definitively by setting forth visions for other spheres and evaluating the interrelations. We know, obviously, that many models for other spheres would conflict with a parecon—for example those that would involve hierarchies of privilege or restrictions on freedom, including those with racist cultures, sexist kinship relations, and authoritarian politics, or, for that matter, relations to ecology denying human well being and development, and relations among nations contrary to equity, diversity, solidarity, and self-management. Institutions existing alongside a parecon will have to respect balanced job complexes, remuneration for effort and sacrifice, and self-management and to the degree that they need inputs and render outputs, will have to interface with participatory planning. A parecon, operating alongside other domains of life, will likewise have to respect and mesh with their operations. 

The idea is relatively simple. Major institutions in society have roles that people fill and that in turn influence people’s beliefs, aspirations, and expectations. You cannot have people propelled toward type “a” beliefs, desires, and expectations in one major part of their lives, and toward type “b” beliefs, expectations, and desires in another major part of their lives when the implications of “a” and “b” are strongly at odds. For an obvious case, you cannot have home lives or educational systems producing new recruits for a parecon who lack the confidence and learning to participate in it, nor, for that matter, can you have homes or schooling producing new recruits for a capitalist economy that have too much confidence and learning to accept the subordinate roles they will play in it. And vice versa, you can’t have an economy producing hierarchies and expectations in men and women, or in people of different races and cultural communities, or in citizens playing various roles in the polity, that are contrary to what the kinship, cultural, and political institutions of society require to function. 

So are the people parecon presents to the rest of society the kind of people who will be compatible with and thrive in institutions designed to eliminate racism, sexism, heterosexism, political authoritarianism, environmental degradation, and global imper- ialism? Models for such institutions still await development, but we believe that we can provisionally answer this question in the affirmative, given that people in parecon feel solidarity, are used to participation, expect and seek equity, have practice with and value self-management, and anticipate and appreciate diversity.