It is increasingly apparent that neoliberal capitalism is not working well for most of us. Growing inequality of wealth and income is putting the famous American middle class in danger of becoming a distant memory as American children, for the first time in our history, now face economic prospects worse than what their parents enjoyed. We suffer from more frequent financial “shocks” and linger in recession far longer than in the past. Education and health care systems are being decimated. And if all this were not enough, environmental destruction continues to escalate as we stand on the verge of triggering irreversible, and perhaps cataclysmic, climate change.
However, in the midst of escalating economic dysfunction, new economic initiatives are sprouting up everywhere. What these diverse “new” or “future” economy initiatives have in common is that they reject the economics of competition and greed and aspire instead to develop an economics of equitable cooperation that is environmentally sustainable. What they also have in common is that they must survive in a hostile economic environment. Helping these exciting and hopeful future economy initiatives grow and stay true to their principles will require us to think more clearly about what kind of “next system” these initiatives point toward. It is in this spirit that the model of a participatory economy was created: What kind of “next system” would support the economics of sustainable and equitable cooperation?
The vision or model of a participatory economy is intended to demonstrate that a coherent, feasible, and desirable next economic system is perfectly possible; in short, it rebuts the “disenabling” myth that “There Is No Alternative” (TINA) to capitalism and command planning. The model should not be confused with a transition strategy or program to take us from the economics of competition and greed we are ensnared in today to an economics of equitable cooperation. However, clarity about what kinds of institutions and practices may best achieve our goals does have implications for strategy. So after explaining how a participatory economy might work, I comment briefly on what this implies about some priorities in the here and now.
The institutions and decision-making procedures of a participatory economy are designed to promote economic democracy, economic justice, environmental sustainability, and human solidarity—all while achieving economic efficiency.
The defining institutions of a capitalist economy are: private ownership of the means of production, limited liability corporations, and markets. In contrast, the major institutions that comprise a participatory economy are: social ownership of the productive “commons,” democratic worker councils and federations, neighborhood consumer councils and federations, and a very carefully constructed procedure we call participatory planning that these councils and federations use to coordinate, or plan, their interrelated activities themselves.
In a participatory economy, everything needed to produce our way of life belongs to everyone, no more to one person than any other. While individuals own personal property, everything we need to produce goods and services is owned in common.
This includes an expanded understanding of our natural environment to include “vital sinks” as well as natural resources (the natural commons), an increasingly complex array of useful manufactured artifacts (the produced commons), productive knowledge or “know-how” (the information commons), and all of the useful talents and skills people have that allow us to deploy all this natural and produced wherewithal to productive ends. All of this “commons for modern times” is treated as a joint inheritance—what Joel Mokyr calls a “gift from Athena”—bequeathed to us all by countless generations who went before us. In our view, nobody has any more right to decide how this gift is used, or benefit from its use, than anyone else.
Worker Councils: In a participatory economy, every worker in a workplace has one vote in the worker council, which is the ultimate decision-making body for the enterprise. Just as stockholder meetings, where each stockholder votes as many times as the number of shares she owns, are ultimately “sovereign” in a capitalist corporation, the worker council, where each worker-member has one vote irrespective of seniority, is “sovereign” in a participatory economy. This does not mean worker councils will not grant authority over some decisions to particular groups of workers who are more affected. Nor does it mean workers will no longer avail themselves of expertise when it is useful for making decisions.
Present economies are not just environmentally unsustainable, they are crashing vital ecosystems at breakneck speed. Absent a massive Green New Deal in the next several decades that replaces fossil fuels with renewable energy sources and dramatically increases energy efficiency in agriculture, industry, transportation, and all parts of the built environment, humans are at risk of behaving like the proverbial lemmings. The question we should ask regarding any economic system is whether or not its basic institutions and decision-making procedures afford creative ideas and proposals about how we relate to the natural environment. The profit motive ignores many environmental effects unmeasured in the commercial nexus and drives producers to grow or die.
Markets are biased in favor of economic activities that pollute and against activities that preserve and restore valuable ecosystems; promote throughput-intensive private consumption at the expense of less throughput-intensive social consumption; and promote consumerism at the expense of leisure—all to the detriment of the environment. In other words, capitalism is on a rapid road to environmental destruction and is incapable of granting ideas about how to better relate to the natural environment. The question is whether or not the basic institutions of a participatory economy create a setting and incentives that promote judicious relations with our natural environment. When ideas like organic farming, recycling, locally grown produce, smart growth, public transportation, energy conservation, solar and wind power, and more leisure are proposed in a participatory economy, will we discover they must swim against the current, as they do in capitalist economies today, or will they find the stream is at long last flowing in their direction?
Protecting the Environment in Annual Plans: As long as producers and consumers are not forced to bear the costs of pollution resulting from their decisions, we will continue to pollute too much. How does participatory planning internalize the negative external effects of pollution? In each iteration in the annual planning procedure, there is an estimate of the damage caused by every pollutant released. If a worker council proposes to emit x units of a particular pollutant into an affected region, they are charged the indicative price for releasing that pollutant in the region times x. Similarly, they are charged y times the social cost of producing a ton of steel if they propose to use y tons of steel, and z times the opportunity cost of an hour of welding labor if they propose to use z hours of welding labor. In other words, any pollutants the worker council proposes to emit are counted as part of the social cost of its proposal, just as the cost of making the steel and the opportunity cost using the welding labor are counted as part of the social cost of its proposal—all to be weighed against the social benefits of whatever outputs they propose to make.
The “community of affected parties” (CAP) living in the region affected looks at the current estimate of damages caused by a unit of the pollutant and decides how many units it wishes to allow to be emitted. A CAP can decide they do not wish to permit any emissions at all. But, if the CAP decides to allow X units of a pollutant to be emitted in the region, then the CAP is “credited” with X times the estimate of damages for the pollutant. What does it mean for a CAP to be “credited?” It means members of the CAP will be able to consume more than they would otherwise, given their effort ratings from work and allowances. In effect, tolerating some adverse effects from pollution is treated as a burden people choose to bear, worthy of compensation, just like the burdens people take on in work deserve compensation.
Protecting the Environment in Long-Run Plans: The fact that annual participatory planning can treat pollution and environmental preservation in an “incentive compatible” way is a major accomplishment and significant improvement over market economies. But while annual participatory planning may “settle accounts” efficiently and equitably concerning the environment for all those taking part in the various councils and federations, what protects the interests of future generations who cannot speak for themselves? How can we avoid intergenerational inequities and inefficiencies while preserving economic democracy when much of the adverse effects of environmental deterioration will fall on the unborn, who obviously cannot be part of democratic decision-making processes today?
The interests of future generations, which include the future state of the natural environment, must always be protected by the present generation. This is true whether it is a political or economic elite in the present generation that weighs the interests of the present generation against those of future generations, or a democratic decision-making process involving all members of the present generation. In a participatory economy, intergenerational efficiency and equity regarding the environment must be achieved in the same way intergenerational efficiency and equity is achieved in all other regards: by means of restraints the present generation places on itself in its democratic deliberations during the investment and development planning processes.
If the long-run plan calls for more overall investment, this decreases the amount of consumption available to the present generation in this year’s annual plan. If the long-run plan calls for reducing the automobile fleet and expanding rail service in the future, this reduces the amount of investment and productive resources this year’s annual plan is permitted to allocate to worker councils making automobiles, and it increases the amount of investment and resources to be allocated to worker councils making trains. If the long-run plan calls for a 25 percent reduction in national carbon emissions over five years, the national consumer federation must reduce the amount of carbon emissions it permits in each of the next five annual plans accordingly. Major changes in the energy, transportation, and housing sectors, as well as conversions from polluting to “green” technologies and products, are all determined by the long-run planning process that allow federations to express preferences for investments in environmental protection and restoration as easily as they can express preferences for investments that facilitate future increases in private consumption.
There is no way to guarantee that members of the present generation will take the interests of future generations sufficiently to heart or choose wisely for them. Whether or not the present generation decides on a long-run plan democratically or autocratically, there is no way to guarantee it will not make mistakes. Maybe replacing cars with trains for our descendants is a mistake because solar powered cars will prove to be as environmentally friendly as trains and more convenient. Nor is there any way to make sure the present generation will not behave like Louis XV and simply decide, Après moi, le deluge (After me, the deluge). We can hope that people who practice economic justice diligently among themselves, as a participatory economy requires, will practice it on behalf of their children, grandchildren, and great grandchildren as well. We can hope that people used to permitting pollution only when the benefits outweigh the costs will apply the same principle in their long-run planning and include the costs to those they know will follow them. We can hope that when people have choices posed in ways that make perfectly clear when they would be favoring themselves unfairly at the expense of their descendants, that they will be too ashamed to do so.
Long-run participatory planning is designed to make issues of intergenerational equity and efficiency as clear as possible. Annual participatory planning is designed to estimate the detrimental and beneficial effects of economic choices on the environment accurately and incorporate them into the overall costs and benefits that must be weighed. But even so, there is no guarantee that future generations and the environment might not be slighted. Some, like Dr. Seuss’s Lorax, will have to speak up in the long-run participatory planning process when they think others in their generation are neglecting future generations and the environment.
Additional Features that Protect the Environment: Besides the features of the annual and long-run planning processes discussed above, there are other aspects of a participatory economy that make it more likely that people will treat the natural environment judiciously: (1) An egalitarian distribution of wealth and income means nobody will be so poor and desperate that they cannot afford to prioritize environmental preservation over material consumption. There will be no destitute colonists cutting down and burning valuable rain forests because they have no other way to stay alive. There will be no poverty stricken local communities who acquiesce to host unsafe toxic waste dumps because they are desperate for jobs and income. An egalitarian distribution of income and wealth also means nobody will be so rich they can buy private environmental amenities while leaving the public environment to deteriorate.