Parecon Confusions/Debate

There was a review of Parecon: Life After Capitalism in the Socialist Standard recently. It was short. Here it is.
Post-capitalist capitalism
Michael Albert: Parecon: Life After Capitalism. Verso, £9.
Participatory economics, or parecon for short, is a vision of life after capitalism favoured by many in the anti-capitalist movement. The author of this particular vision helped to establish Z Magazine and its web site Zmag (zmag.org), including its subsidiary page devoted to parecon (zmag.org/parecon), which debates the issues raised by this book.
Parecon opposes “corporate globalisation” and argues for its replacement by “equity, solidarity, diversity and self-management.” For Albert, capitalism means “private ownership of the means of production, market allocation, and corporate divisions of labour.” Life after capitalism is said to combine “social ownership, participatory planning allocation, council structure, balanced job complexes, remuneration for effort and sacrifice, and participatory self-management with no class differentiation.” The council structure involves workplaces, neighbourhoods, and “facilitation boards” which co-ordinate planning.
So-called “market socialism” is rejected because the market and class differentials would remain, as would buyers and sellers of labour power (capacity to work). In Albert’s account, because class differentiation disappears in parecon, “you cannot choose to hire wage slaves nor to sell yourself as a wage slave.” Parecon permits workers to assess their own pay and conditions in their decision-making by inputting their preferences via councils. It apportions income in accord with effort and “does not force or even permit people to try to maximise profits, surplus, or even revenues.”
Notice however that Albert is specifically talking about prohibiting profit maximisation, not profits as such. Profits are acceptable; “excessive” profits are not. In the procedure envisaged, individuals and councils submit proposals for their own activities, receive new information including new indicative prices, and submit revised proposals until they reach a point of agreement. This process is open-ended and in Albert’s book a hypothetical example is discussed which reaches a seventh planning cycle, or as Albert calls it “planning iteration.” In reviews of this book much has been made of the potential for bureaucracy in this procedure, but a more telling criticism would be its unquestioning acceptance of the profit system. Wages cannot rise to the point which prevent profits being made; and a fall in profits will put a downward pressure on wages. This is called the class struggle.
“Parecon is basically an anarchistic economic vision”, admits Albert, and it shows. Like many on the left, the difference between capitalism and post-capitalism presented here is essentially political, not economic. As indicated by the title, the crucial factor is participatory planning. The capitalist economy would remain substantially the same in parecon: the accumulation of capital out of profits produced by the unpaid labour of the working class.

I have to admit, I was a bit concerned by the above. The issues, surprisingly to me, seem to be resonant with many, even at a socialist party periodical. People seem to think, often, that what marks an economy as capitalist is that it has money or wages, or surpluses. These are very odd confusions, not as bad as thinking that the mere presense of exchange makes an economy capitalist, but only by a small margin.  So I sent off a response. It went like this.
Response to Review
Michael Albert
The review of Parecon: Life After Capitalism, signed LEW, and appearing in Socialist Standard, was troubling. The review says the economic system proposed in the book called participatory economics, or parecon for short, permits profits, just not excessive profits. But in parecon there are no owners. In fact there are no classes. More, no one earns income based on ownership of any kind. There are, therefore, no profits – none.
Yes, society produces a social product. Yes, some plants produce a total value of output greater, and in some cases even much greater, than the total value of their inputs, including their labor. But, no, this does not enrich anyone associated with those plants relative to the incomes, say, of people working at plants that are far less productive. Remuneration is uncorrelated to value of output save that people must do socially valuable labor to be remunerated for labor at all. What the reviewer says about profit affecting wages, etc., in parecon, is simply about some other system…unless the reviewer is saying, if total output for a parecon is lower, average income is lower, which is, of course, a truism, having zero to do with profits, which don’t exist in a parecon.
The reviewer says, incredibly, that getting rid of private ownership of production, markets, top down decision making, the corporate division of labor, and remuneration for property and power, the core economic institutions of capitalism, and replacing them with self managing workers and consumers councils, balanced job complexes, remuneration for duration, intensity, and onerousness of labor, and participatory planning, the core economic institutions of parecon – is correcting political dimensions, but not economics. I doubt the reviewer read the book. It is confined to addressing economic dimensions, not the polity.
I suspect that this reviewer thinks that because in parecon there are income, wages, and valuations – prices – it must be capitalism. This marks a major confusion. A letter I received from the host periodical signed off, "Yours for a moneyless, wageless world of common ownership." This too, is troubling.
In this world you desire to attain there is, I presume, production. Likewise, I assume you agree that people will consume. More, beyond production and consumption, is there some regulation of what is produced and in what quantity? The alternative would be that anyone can produce anything, with no concern other than that they wish to. This is nonsense, but if there is regulation of how resources, energies, and labor are allocated to generate outputs, does that regulation reflect the preferences that both producers and consumers have and especially a full valuation of the relative contribution to well being and development of different choices? If it does, then to that extent it includes "money." The valuations are prices, albeit not necessarily as we have known them in market and centrally planned systems.
In turn, do people receive a share of the product? Obviously they must if they are to survive, much less attain their capacities. So, that being true, is there any correlation between the share one gets and what one does as one’s work? If not, anyone can take anything, in any amount, and do no work – which, of course, is absurd, since demand would exceed supply. If there is a correlation, however, then there are to that extent "wages" according to some norm, even if the correlation is due to people collectively and responsibly establishing their own incomes. In parecon, these are the reasons why there are "money" and "wages." The task becomes having this limited money and wages, which is to say valuations and shares of income, inevitably present in any economy, in accord with our full aspirations and values.
Money – more importantly, relative valuations of products and processes – exists in a parecon, therefore, so that people might make choices in light of full and true social costs and benefits. Participatory planning facilitates the determination of true and full values as decided by the self managing population.
Wages – more importantly, shares of social product alloted to citizens – exists in a parecon so that, of course, we can all equitably benefit from the social product, and specifically so that choices regarding such things as how long people work, how hard we work, producing what items, and what we justly consume, can be determined by the population, again, in accord with true social costs and benefits and, as well, with attaining equitable outcomes and self management.
I would claim, and the book does claim, that parecon is not only a serious economy able to meet needs, develop potentials, incorporate true self management, and be not just profitless but, beyond that, classless – but is also as close to having no money and no wages as is possible without incurring immense damage. That is, it has valuations and it has income shares, like any economy, but not the pejorative aspects of either – distinguising it from all capitalist, market, or centrally planned economies.

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