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Chapter 7 

Remuneration 

 

In a society of an hundred thousand families, there will perhaps be one hundred who don’t labour at all, and who yet, either by violence, or by the more orderly oppression of law, employ a greater part of the labour of society than any other ten thousand in it. The division of what remains, too … is by no means made in proportion to the labour of each individual. On the contrary those who labour most get least. The opulent merchant, who spends a great part of his time in luxury … enjoys a much greater proportion of the profits … than all the Clerks and Accountants who do the business. These last, again, enjoying a great deal of leisure, and suffering scarce any other hardship besides the confinement of attendance, enjoy a much greater share of the produce, than three times an equal number of artisans, who, under their direction, labour much more severely ..... The artisan again, tho’ he works generally under cover, protected from the injuries of the weather … and assisted by the convenience of innumerable machines, enjoys a much greater share than the poor labourer who has the soil and the seasons to struggle with, and, who while he affords the materials for supplying the luxury of all the other members of the common wealth, and bears, as it were, upon his shoulders the whole fabric of human society, seems himself to be buried out of sight in the lowest foundations of the building.
— Adam Smith 

How can a rational being be ennobled by
anything that is not obtained by its own exertion?
— Mary Wollstonecraft 

 

What claim should each worker have on consumption goods, based on their involvement in the economy? Earlier we discussed the logic and morality of different approaches to defining and pursuing equity, and arrived at the conclusion that if people are able to work they should be remunerated for the effort or sacrifice they expend in contributing to the social product, and if they are not able to work they should be remunerated at some appropriate level based on social averages and special needs. Everyone might also enjoy certain basic guaranteed provisions—health care and education, for example—depending on what the society democratically deter- mines it can afford. 

This orientation establishes that no one should have claims on output on the basis of owning some means of production. No one should have claims on output on the basis of bargaining power. No one should have claims on output on the basis that they put a larger sum into the social product than others by using some special genetic endowment or talent or size, or due to having some highly productive learned skill, better tools, or more productive work- mates, or because they happen to produce things that are more highly valued. Rather, each worker should have a claim on output in proportion to the relative magnitude of the effort or sacrifice that they expend in their socially useful work. 

There is another angle from which we can see this. Why, if we believe in equality, don’t we give everybody one car, one tennis racquet, seven plums, thirteen books (one by Jacqueline Suzanne, one by Chomsky, etc.), and two green shirts? The answer, of course, is that being equally deserving does not mean that people have the same preferences. We want people to have the freedom to follow diverse preferences, but equality does imply that people shouldn’t draw more from the public supply than anyone else. Okay, so what if I prefer leisure time to an extra shirt? Shouldn’t I be allowed to take my “benefits” partly in extra time? Of course. Therefore, rewarding according to effort is another way of saying that we are all rewarded equally, but that some will choose shirts, some movies, some leisure or less stressful or onerous time at work, and some saving for next year. 

But are we sure what all this means? And, once sure, do we have any idea how it can occur? Though we did address the meaning of the aim when we highlighted our new values earlier, given how controversial the approach is, it will not hurt to recapitulate its logic here. We will then move on to the issue of implementation.

 

The Logic of Remunerative Justice 

Private enterprise market (capitalist) economies distribute consumption opportunities according to personal contribution to social output plus the contribution of property owned, with large allowance, in practice, for the impact of bargaining power. Public enterprise market economies (market socialist or what we call “market coordinatorist” economies) distribute consumption opportunities according to personal contribution only, having removed ownership of productive property from the equation, but with allowance, again, for the impact of bargaining power. 

We claim these approaches are inequitable in that they reward people for what does not deserve reward (such as a deed in one’s pocket, advantageous circumstances, or special genetic endowment); mis-reward people for things that do deserve reward if they are onerous (such as training and education); and do not properly reward people for what they have control over, are responsible for, and do merit compensation for—that is, the pain and loss they undergo while contributing to the social product. Contrary to these familiar norms of remuneration, we propose that desirable economies ought to distribute consumption opportunities only according to effort or sacrifice. 

Whereas differences in contribution to output will derive from differences in talent, training, job assignment, tools, luck, and effort, if we define effort as personal sacrifice for the sake of the social endeavor, only effort merits compensation. Of course effort can take many forms. It may be longer work hours, less pleasant work, or more intense, dangerous, or unhealthy work. It may consist of training that is less gratifying than the training experiences others undergo or than the work others do during the same period. 

The implications of rewarding property as compared to output or effort are pretty much self-evident. Bill Gates prospers tomorrow whether he does anything in the form of work, and he prospers to a degree that bears no relation whatever to what he (or any thousand humans) could personally produce. But how can we more concretely understand the difference between rewarding people for their actual personal contributions to output, which is the lynchpin remunerative proposal of most non-capitalist market models, and rewarding people only for their effort/sacrifice, which is the lynchpin remunerative proposal for parecon? 

By all accounts, the musician Salieri was a dedicated, hard- working, but plodding composer at the same time and in the same city as Mozart, who was a frivolous, irresponsible, genius. Assume these accounts are accurate. Assume also that both Mozart and Salieri could best serve the social interest by working as composers. If we reward output Mozart deserved to be paid thousands of times as much as Salieri. If we reward effort/sacrifice, Salieri likely deserved more pay than Mozart. 

So here we have a possible test of ethical inclinations. Ignore questions of incentives (a matter we will address shortly) and assume that amount and quality of output would not vary whatever your answer is. Also realize that you can listen to whomever you want, whatever your answer is, and assume that both composers do work that is socially valued enough for them to be paid for their musical pursuits. Would you pay Mozart or Salieri more? Do you monetarily reward Mozart on top of his fantastic luck in being born genetically endowed with special talent? Or do you just pay him for effort, enjoying the fantastic bounty it provides but not materially enriching him in accord with it? Do you punish Salieri (relative to Mozart) because he has to work longer and harder to produce a creditable composition? Or do you pay him for his effort too, like everyone else, then enjoy the product—although not nearly as much as you enjoy Mozart? We confront these options and opt for remunerating effort/sacrifice, not output, for all the reasons that we have offered in prior chapters. But how? 

If in a parecon we had jobs more or less like the ones that exist now, those doing the most onerous, harmful work would be highest paid; those doing the most pleasant and intrinsically uplifting work would be lowest paid—the opposite of the current condition. To achieve this goal we would have to assess each job’s characteristics for the effort or sacrifice per hour expended at an average level of exertion, plus have some means of oversight to keep track of which workers are expending effort at levels above or below average. 

But, a participatory economy wouldn’t have jobs like now. Instead it would have balanced job complexes and if we assume balance for empowerment (which we must have, by the arguments of the last chapter) and balance for quality of life effects as well, then each worker has a job complex for their standard work week—let’s say thirty-hours—that is comparable to every other worker’s. How much claim on consumption does each worker then have? 

Let’s call the amount a worker earns for working at an average intensity for him or her at a balanced job complex for thirty hours, the base income. With everyone having balanced job complexes, each worker will earn either the base income or some higher amount due to having worked longer or more intensely, or some lower amount due to having worked fewer hours or at below average intensity. Counting the hours a person works is easy; more difficult will be measuring effort expended. 

The precise methodology for doing this need not be the same from workplace to workplace. Adherence to the norm is what should be universal, not a particular specific approach to the nuts and bolts of implementation. Here is a general approach, however, that many workplaces might opt for. Imagine each worker receives a kind of “evaluation report” from their workplace that determines their income to be used for consumption expenditures. This evaluation report would indicate hours worked at a balanced job complex and intensity of work, yielding an “effort rating” in the form of a percentage multiplier. If the rating was one, the person’s remuneration would be the social average. If the rating was 1.1, a tenth more, if .9, a tenth less. What explains a person getting higher or lower remuneration is having worked more or less hours or at a higher or lower intensity of effort.  

But who judges these differentials, and by what form of evaluation? This would be the zone of variation from workplace to workplace. The assessment could be a highly precise numeric rating system where people are graded to two decimal places above or below average, for example. Or it might simply read “superior,” “average,” or “below average,” with the designation meaning average income, or a tenth above or a tenth below (that having been agreed in the workplace to be the only variation permitted). Similarly, the judgment could be made by a workplace committee (all members of which, of course, have balanced job complexes) or instead by a vote of whole councils, or by whatever other means the workplace opted for. (For those wondering what prevents a whole workplace from exaggerating their effort, regrettably, the full picture of parecon, as we warned at the outset, depends on all institutions and their interactions. In this case, allocation is also an essential factor, so the question must wait for next chapter.) 

One choice that might be prevalent is for a workplace to assume that everyone works at an average intensity level so that for the most part income will vary only with hours worked. The only exception to that, a workplace could decide, is by petition to the council—either by a person claiming to deserve more, or by workmates who are convinced some person deserves less, each of which would, in this model, occur only infrequently. 

Another quite different choice many might make is to implement a much tighter rating system that would yield a significant number of employees getting various amounts more or less than average. 

But the main point is that since circumstances and opinions will differ regarding the best and most accurate means to calibrate effort and how closely to do so, different workers’ councils will likely opt for different systems. And assuming different workplaces do opt for different methods of work evaluation, workers would presumably make this one of the factors to consider in selecting a job in the first place. And, most important, however different various procedures might be, they would surely not lead to extreme income differentials, since there can only be so much variation in time worked and in intensity, even if workplaces are very accommodating of different preferences on this score. 

Finally, we should clarify how a parecon will handle “free consumption.” Even in contemporary economies where there is little solidarity, the public sometimes allows individuals to consume at public expense on the basis of need. Since we believe one of the merits of an equitable economy is that it creates the necessary conditions for attaining humane economic outcomes, and since we incorporate features designed to build solidarity in our allocative procedures, we expect considerable consumption on the basis of need. This will occur in two different ways. 

First, particular consumption activities such as health care or public parks will be free to all. This does not mean that they have no social cost, or that they should be produced beyond the point where their social costs outweigh their social benefits. But individuals will not be expected to reduce their requests for other consumption activities because they consume more of these free goods. On the other hand, of course the average consumption per person will drop if society as a whole consumes more free goods. For example, if we produce more health care overall, we have less productive potential left for everything else. Basically, everyone pays for free goods equally (in the reduction of other output available), regardless of their direct participation in consuming the free goods. This occurs on the assumption that the benefits of the consumption are generalized, or that (with medicine, say) the costs ought to be socialized rather than penalizing those in need. What items should be on the free list is something that will have to be debated in consumer federations, but medical care is an obvious example. 

Second, people will also be able to make particular requests for need-based consumption to be addressed case by case by others in the economy. Frequently, for example, individuals or collectives might propose a consumption request above the level warranted by effort ratings accompanied by an explanation of what they regard as a justifiable special need. These requests are considered by relevant consumer councils and either approved or rejected. If approved, the costs would be spread over the population of the council approving. 

Note that the above discussion of remuneration only describes how parecon could remunerate in a just and equitable way. It does not provide evidence or logic that doing so will elicit desired quality and output or foster the values we favor, nor that there won’t be negative side effects mitigating benefits. In this chapter, the point was only to present the option we favor. Later we shall assess it, and test it against possible concerns.