Participatory Economics


First off, like all of you I despise capitalism. I don’t want an economy in which Bill Gates has as much wealth as the population of Norway. I don’t want homeless people living under bridges and CEOs having huge mansions. I don’t want people fleecing one another, oblivious to social well being, competing for crumbs or fortunes. I don’t want a rat race in which most people lose, and the winners are the biggest, baddest rats. I don’t want corporate dictatorships in which most people have no dignity, no influence, no power, and even no food. I don’t want markets or central planning. I don’t want wage slavery. I don’t want class division and class rule.

I don’t want an economy which produces people like Bush and Rumsfeld – people with tremendous power who think that if you are Afghan you are expendable, if you are Iraqi you are expendable, if you are Palestinian you are expendable, if you are Korean you are expendable, if you are Venezuelan, or Argentinean, or Brazilian you are expendable, or if you are from the Bronx, or Watts, or in fact if you are from anything other than Bush and Rumseld’s ruling class family and constituency class – you are expendable. What is in fact expendable is capitalism. And we are the ones, with millions more, who must remove it from history.
But, if we don’t want capitalism – what do we want in its place? If we believe another, better world is possible – what are some of its features?
Instead of some people dining on caviar and owning their own private airplanes and other people dining on garbage and living under bridges, we want equitable distribution of assets and circumstances.
Instead of hierarchies of power with owners able to move huge industries and lay waste to regions and populations, and with managers and intellectuals able to govern when workers can even go to the bathroom and the shape of our lives, and with about 80% of the population — the working class — having virtually no say over their economic circumstances, from how much they work, to what they do, to when they do it, to what the product is–we want classlessness and self-managed decision making structures. We want people to have input into decisions in proportion as they are affected by them.
Instead of competitive or authoritarian allocation which expands the profit and power of ruling classes, we want cooperative, self-managed allocation that expands social well being, development, and justice.
Participatory Economics is an economic alternative to capitalism and also to what has in Russia, China, and other countries opportunistically been called socialism.
Participatory Economics rebuts Margaret Thatcher’s grotesque assertion that “There Is No Alternative.” Thatcher wants us to believe that suffering poverty and indignity is as inevitable as gravity, that it is a fact of life. But that is a lie.
The economic alternative called Participatory Economics, or Parecon for short, is built on four key values, and it uses four defining institutions to fulfill those values.
The first value is Solidarity. Economies affect how people interact. They affect the broad attitudes people have toward one another.
Capitalism is a zero sum system in which to get ahead one must trample others. You must ignore the horrible pain suffered by those left below or you must literally step on them, pushing them farther down. In capitalism, a famous baseball manager of a team called the Yankees, used to say…”nice guys finish last” which is actuallya horrible critique of market exchange. My version of the insight is that in capitalism “garbage rises.” Witness, again, our exalted leaders.
Participatory economics, or Parecon, is in contrast intrinsically a Solidarity Economy. Its institutions for production, consumption, and allocation don’t destroy or obstruct mutuality and sympathy but instead propel even antisocial people into having to address others well being. To get ahead in a Parecon you have to act on the basis of solidarity.
And this first parecon value is entirely uncontroversial. Only a psychopath would argue that all other things equal, an economy is better if it produces hostility and anti-sociality. Everyone sane will agree that other things equal, an economy is better if it produces solidarity. So we have our first value: Solidarity.
The second value we want a good economy to advance is Diversity. Economies affect the range of options that people have in their work and in consumption.
Capitalist markets homogenize options. They trumpet opportunity but in fact curtail most avenues of satisfaction and development by replacing everything human and caring with only what is most commercial, most profitable, and especially most in accord with the maintenance of domineering power and wealth.
But a Participatory Economy is a Diversity Economy. Parecon’s institutions for production, consumption, and allocation not only don’t reduce variety, they emphasize finding and respecting diverse channels and solutions to problems. Parecon recognizes that we are finite beings who can benefit from enjoying what others do that we ourselves have no time to do, and also that we are fallible beings who should not vest all our hopes in single channels of advance, instead insuring against damage by trying preserving and exploring diverse avenues and options.
And this value too is entirely uncontroversial. It would require a tremendously perverse individual to argue that all other things equal, an economy is better if it reduces options. Instead, everyone will agree that other things equal, an economy is better if it produces and protects diversity. So we have our second value: Diversity.
The third value we want a good economy to advance is Equity. Economies affect the distribution of output among actors. They determine our budgets or what share of the social product we receive.
Capitalism overwhelmingly rewards property and bargaining power. It says that those who have a deed to productive property by virtue of having that piece of paper and nothing else, deserve profits. And it says that those who have great bargaining power based on anything from monopolizing knowledge or skills, to having better tools or organizational advantages, to being born with special talents, or to being able to command brute force, are entitled to whatever they can take. Capitalism in this respect encapsulates the morality of Al Capone and the Harvard business school — which are, minuscule matters aside, identical. You get what you can take – the rest get leftovers or nothing at all.
But a Participatory Economy is an Equity Economy in that Parecon’s institutions for production, consumption, and allocation not only don’t destroy or obstruct equity, they propel it. But now a complication arises. What do we mean by equity. And this is controversial.
Parecon of course rejects rewarding property ownership. And it of course it also rejects rewarding power. But what about output? Should people be remunerated for the volume and value of the things they produce? Should we get back from the social product an amount equal to what we produced as part of the social product? It seems equitable…but is it?
Supposing they do the same work for the same length of time at the same intensity, why should someone who has better tools get more income than someone with worse tools” Why should someone who happens to produce something highly valued be rewarded more than someone who produces something less valued, but still socially desired, again if they work the same number of hours and the same intensity at a comparable job vis-à-vis effects on quality of life? Why should someone who was lucky in the genetic lottery, perhaps getting genes for big size, or great strength, or for fast reflexes, or for musical composition talent …get rewarded more than someone who was less lucky genetically, supposing again that both work in their field at the same intensity and same level of exertion and discomfort?
In a Participatory Economy for those who can work, remuneration is for effort and sacrifice.
If two people go out in the field to harvest some crop and one of them is much stronger, or has better tools, and they both work the same length of time at the same level of exertion under the same sun…then even though the one with better tools has more crop harvested at the end of the day, in a Parecon they get the same pay for their equal effort and sacrifice.
If a great composer produces a masterpiece and a good composer produces only a worthy piece, and they each work for the same duration and under the same conditions, then in a Parecon they get the same pay, even though their outputs are markedly different.
If you work longer, you get more reward. If you work harder, you get more reward. If you work in worse conditions and at more onerous tasks, you get more reward.
But you do not get more reward – higher pay — for having better tools, or for producing something that happens to be more valued, or even for having innate highly productive talents. And regarding their learned skills, people get rewarded for the work involved in learning them, for the effort and sacrifice expended, but not for the ensuing output.
Rewarding only the effort and sacrifice that people expend in their work is controversial. Some anti-capitalists think that people should be rewarded for output, so that a great athlete should earn fortunes, and a comfortable doctor should earn way more than a hard working farmer or short order cook. Parecon rejects that norm. In fact, in a Parecon, if one person had a nice, comfortable, pleasant, highly productive job, and another person had an onerous, debilitating, and less productive but still socially valuable job, the later person would earn more, not the former.
So, we have our third value, a controversial one. We want a good economy to remunerate effort and sacrifice, and, of course, when people can’t work, to provide full income anyway. We don’t know that we can do this without harsh and offsetting consequences, but if we can attain this type of Equity, then we certainly should want to.
The fourth and final value on which Parecon is built has to do with decisions and is called self-management. Economics affect how much say each actor has in decisions about production, consumption, and allocation.
In capitalism owners or capitalists have tremendous say. Managers, and high level intellectual workers who monopolize daily decision-making levers like lawyers, engineers, financial officers, and doctors, have very substantial say. And some people have virtually zero say. In fact, people doing rote and obedient labor rarely even know what decisions are being made, much less impact them.
Within capitalist firms there is a hierarchy of power that is greater even than that in dictatorships. Stalin himself never dreamed of demanding that the Russian population should have to ask permission to go to the bathroom…a condition that very often prevails for workers in corporations.
But a Participatory Economy is a democratic economy. People control their own lives to appropriate degrees. Each person has a level of say that doesn’t impinge on other people having the same level of say. We impact decision in proportion as we are affected by them. This is called Self Management.
Imagine a worker in a large group. He or she wants to place a picture of a daughter on his or her workstation. Who should make that decision? Should some owner decide? Should a manager decide? Should all the workers decide? Obviously, none of that makes sense. The one worker whose child it is should decide, alone, with full authority. He or she should be literally a dictator in this particular case.
Now suppose instead that the same worker wants to put a radio on his or her desk, and to play it very loud, listening to raucous rock and roll or even heavy metal. Now who should decide? We all intuitively know that the answer is that those who will hear the radio should have a say. And that those who will be more bothered – or more benefited – should have more say.
And at this point, we have already arrived at a value vis-à-vis decision making. We don’t need a Phd philosopher. We don’t need incomprehensible language. We simply realize that we don’t want one person one vote and 50% rules all the time. Nor do we always want one person one vote and some other percentage required for agreement. Nor do we always want one person to decide authoritatively, as a dictator. Nor do we always want consensus. Nor do we always want any other single approach. All these methods of making decisions make sense in some cases, but they are horrible in other cases.
What we hope to accomplish when we choose a mode of decision making as well as associated processes of discussion, agenda setting, and so on, is that each actor should have an influence on decisions in proportion to the degree they are affected by them.
The logic is actually quite simple. If we don’t all have a say in decisions in proportion as we are affected by them, then some people will have a say more than they are affected and other people will have a say less than they are affected, but there is no moral basis for such a differential, nor even an argument on grounds of reaching the best decisions. Expertise is certainly essential to arriving at good dccisions – tht is, to generate and provide information bearing on decisions. And yes, expertise also plays a role when we get to actually registering our preferences, because, in fact, we are each the world’s foremost expert on our own preferences, so we each be responsible for our expressing them. And so we haves our fourth value…Self Management.
There is another value I want to mention – though it is certainly more general and really almost a truism.
In a Participatory Economy we want to be Efficient.
Does the word induce a bit of nausea in some of you? It does in me. But we need to get over that, because efficiency really means seeking to attain our aims and in doing so not wasting things we value. We should all therefore favor efficiency. The alternative to favoring efficiency is to favor either not attaining our aims, or to favor wasting things that we value.
So why does the word induce some nausea? In capitalism owners preference become the sought after ends, and what owners value is not wasted. So in capitalism efficiency means seeking maximum profits while reproducing the conditions of profit-making without wasting assets that owners can exploit. Capitalists don’t mind destroying humans with black lung disease, or exterminating humans with weapons or with hunger, when the people afflicted are expendable as far as profit is concerned. Capitalists don’t mind sickening people in the wake of their workplaces’ pollution. They don’t mind blowing up or destroying assets that they themselves can’t exploit, though others will suffer from the loss. Under capitalism being efficient means being vile, because it is a vile system – and this is why we have some antipathy to the word efficiency as it is used all around us.
But in a parecon being efficient means producing, consuming, and allocating to meet needs and to develop potentials consistent with expanding solidarity, diversity, equity, and self-management. And it means not wasting anything that we can enjoy and benefit from. So, a Parecon should be efficient, in this precise sense, of course.
Now that we have some guiding values, we can judge economies and try to describe an economy that we all deem worthy.
Briefly, to judge existing options – private ownership economics, market economics, centrally planned economies, economies with corporate divisions of labor, and economies that reward property or power or even output—all fail to propel the values we now hold dear. These are anti-social economies, authoritarian economies, inequitable economies, un-ecological economies, un-caring economies, and class-divided and class-ruled economies. They are oppressive and unworthy economics. They destroy solidarity, diminish diversity, annihilate equity, and they don’t even comprehend self management. Se we reject capitalist ownership, markets, central planning, corporate divisions of labor, and remuneration for output or power.
Participatory Economics is built on a few centrally defining institutional choices other than the ones we reject.
Workers and consumers need a place to express and pursue their preferences. Historically these have been organizations where workers congregate. In workplaces we call them workers councils. Regarding consumption, we call them consumers councils. Councils form whenever people rise up to try to take control of their economic lives…it has occurred virtually every time in history, most recently in Argentina. Councils are organs of direct organization by those working and consuming. Among anti-capitalist, I don’t think favoring councils is controversial, though not everyone makes it a priority like Pareconists do..
But in a parecon, within councils, there is an additional commitment to using decision making procedures and modes of communication that apportions to each actor, about each decision, a degree of say proportionate to the degree he or she is affected. Sometimes this is typical democratic voting, sometimes it is consensus, sometimes it is other options. But it is never permanent rule by a few over the many.
So in a Parecon workers and consumers are organized into democratic councils with the norm for decisions being that methods of dispersing information to decision-makers and of arriving at preferences and then tallying them into decisions should convey to each actor about each decision influence over the decision in proportion to the degree the actor will be affected by it.
Councils become the seat of decision-making power and exist at many levels, including individual workers and consumers, subunits such as work groups and work teams, and supra units such as divisions and workplaces and whole industries, as well as neighborhoods, counties, and whole states.
People in councils are the economy’s decision-makers. Votes could be majority rule, three quarters, two-thirds, consensus, or other possibilities. They are taken at different levels, with fewer or more participants, and different procedures, depending on the particular implications of the decisions in question. Sometimes a team or individual makes a decision pretty much on its own. Sometimes a whole workplace or even an industry would be the decision body. Different voting and tallying methods would be employed as needed for different decisions. There is no a priori single correct choice. There is, however, a right norm to try to efficiently and sensibly implement: decision-making input should be in proportion as one is affected by decisions.
The next institutional commitment of a parecon is to remunerate for effort and sacrifice, not for property, power, or even output.
We work. This entitles us to a share of the product of work. But this new vision says that we ought to receive for our labors an amount in tune with how hard we have worked, with how long we have worked, and with what sacrifices we have endured at our work. We shouldn’t get more income by virtue of being more productive due to having better tools, more skills, or greater inborn talent, much less by virtue of having more power or owning more property. We should be entitled to more consumption only by virtue of expending more of our effort or otherwise enduring more sacrifice. This is morally appropriate and it also provides proper incentives due to rewarding only what we can affect, and not what we can’t.
Who decides how hard we have worked? Our workers councils in context of the broad economic setting established by other institutions as well. If you work longer, you are entitled to more of the social product. If you work more intensely, again you are entitled to more income. If you work at more onerous or dangerous or boring tasks, again, you are entitled to more income. But you aren’t entitled to more income due to owning productive property because no one owns productive property – it is all socially owned. And you aren’t entitled to more income due to working with better tools, or producing something more valued, or even having personal traits that make you more productive, because these don’t involve effort or sacrifice, but luck or endowment. Greater output is appreciated, of course…but there is no extra pay for it. Both morally and in terms of incentives parecon does precisely what makes sense. The extra pay we get is for what we deserve to have rewarded – our sacrifice at work. And that extra pay elicits what we can in fact generate more of–our effort.
Alright, but suppose we have workers and consumers councils. Suppose we believe in participation, democracy, and even self management. And also suppose our workplace has a typical corporate division of labor. What will happen?
The roughly 20% of the workforce who monopolize via their positions in this corporate division of labor the daily decision making positions and the knowledge that is essential to knowing what is going on and what options exist and to evaluating them, are going to set agendas. Their pronouncements will be authoritative. Even if other workers have voting rights, it will be to vote on plans and options put forth only by this coordinator class. It will be the will of this class that decides outcomes. In time this elite will also decide that it deserves more pay to nurture its great wisdom. It will separate itself not only in power, but in income and status.
So what is the alternative?
Participatory Economics utilizes balanced job complexes. Instead of combining tasks so that some jobs are highly empowering and other jobs are horribly stultifying, so that some jobs convey knowledge and have authority while other jobs rob mentality and only obey orders – Parecon says let’s make each job comparable to all others in its quality of life effects and in its empowerment effects.
Each person has a job. Each job involves many tasks. In a parecon, of course each job is suited to the talents and capacities and energies of the person doing it. But each job is a mix of tasks and responsibilities, such that the overall quality of life and especially the overall empowerment effects of the work are comparable for all.
A Parecon doesn’t have someone who does only surgery, but instead has people who do some surgery, and some cleaning of the hospital, and some other tasks – such that the sum of all that they do incorporates a fair mix of tasks. A Parecon doesn’t have managers and workers. It doesn’t have lawyers and short order cooks. It doesn’t have engineers and assembly line workers. A Parecon has people all of whom do a mix of things in their work, such that each person’s mix accords with their abilities and also conveys a fair share of rote and tedious and interesting and empowering conditions and responsibilities.
Our work doesn’t prepare a few of us to rule and the rest of us to obey. It prepares us all to participate in self-managing workers and consumers councils. It readies all of us to engage sensibly and productively in self managing our lives and institutions.
But what if we have a new economy with workers and consumers councils, with self-managing decision making rules, with remuneration for effort and sacrifice, and with balanced job complexes – but we combined all this with markets or central planning for allocation? Would that work?
It turns out that, no, it wouldn’t work.
Markets destroy the remuneration scheme and create a competitive context in which workplaces have to cut costs and seek market share. To do this they virtually have no choice but to insulate some people from the discomfort that cost-cutting imposes, precisely the people who are earmarked to figure out what costs to cut, how to exploit more output at the expense of great fulfillment—and so emerges, again, the coordinator class, located above workers, violating our preferred norms of remuneration, accruing power and smashing the self-management we desire.
Markets for allocation would undo all the wonderful innovations we have sought, imposing, instead, coordinator rule with old-style divisions of labor and hierarchies of income and power.

And the same would hold for central planning. It too would immediately elevate planners, and shortly after that elevate planners’ managerial agents in each workplace, and then also all those actors in the economy sharing the same type of credentials. Central planning would also impose a coordinator class division and coordinator rule over workers, who would be made subordinate.

The problem is that markets and central planning each subvert the values and associated structures we have deemed worthy. Markets, even without private ownership of productive property, distort valuations to favor private over public benefits and to competitively channel personalities in anti-social directions. They diminish and even destroy solidarity. They reward primarily output and power and not effort and sacrifice. They divide economic actors into a class that is saddled with rote and obedient labor and a class that enjoys empowering circumstances and determines economic outcomes, while also accruing most income. They isolate buyers and sellers from the larger population and leave them no choice but to competitively ignore the wider implications of their efforts, including effects on the ecology. 
Central planning, in contrast, is authoritarian. It too denies self-management and produces the same class division and hierarchy as markets, first around the distinction between planners and those who implement their plans, and then regarding empowered and dis-empowered workers more generally. Both these allocation systems subvert rather than propel the values we hold dear. What is the Participatory Economic alternative to markets and central planning?
Suppose in place of top-down imposition of centrally planned choices and in place of competitive market exchange by atomized buyers and sellers, we opt for cooperative, informed self managed negotiation of allocation by socially entwined actors who each have a say in proportion as choices impact them and who are each able to access needed accurate information and valuations, and who each have appropriate training and confidence to develop and communicate their preferences. That would compatibly further council centered participatory self-management, remuneration for effort and sacrifice, and balanced job complexes, and it would also provide proper valuations of personal, social, and ecological impacts, and promote classlessness.
Participatory planning is a system in which worker and consumer councils propose their work activities and their consumption preferences in light of accurate knowledge of local and global implications and true valuations of the full social benefits and costs of their choices. The system utilizes a back and forth cooperative communication of mutually informed preferences via a variety of simple communicative and organizing principles and vehicles including what are called indicative prices, facilitation boards, rounds of accommodation to new information, and other features—all of which permit actors to express their desires and to mediate and refine them in light of feedback about other’s desires, arriving at compatible choices consistent with remuneration for effort and sacrifice, balanced job complexes, and participatory self-management.
Actors indicate their preferences. They learn what others have indicated. They alter their preferences in an effort to move toward a viable plan. At each new step in the cooperative negotiation each actor is seeking well being and development, but each can get ahead only in accord with social advance, not by exploiting others. It is impossible to describe this whole system and all its features, and to show how it is that they are both viable and worthy, in a short talk like this. I’d like to recommend the website www.parecon.org – which has all kinds of material about Parecon, from interviews, to questions and answers, to essays, to whole books, on the one hand – and also give just a brief summary of the situation…
Participatory economics creates a context of classlessness. I can get better work conditions if the average job complex throughout a Parecon improves. I can get higher income if I work harder or longer with my workmates, or if the average income throughout society increases. I, not only advance in solidarity with other economic actors, but influence all economic decisions, including those in my workplace and those throughout the rest of the economy, with an influence proportionate to the impact of those decisions on me.
Parecon not only eliminates inequitable disparities in wealth and income, it attains just distribution. It not only doesn’t force actors to compete with and violate one another’s lives, it produces solidarity. It not only doesn’t homogeniize outcomes, it generates diversity. It not only doesn’t give a small ruling class tremendous power while burdening the bulk of the population with near no influence over their own lives, it produces self management in which we all have appropriate influence.
We are presently taught in schools to endure boredom and to take orders – because that’s what capitalism needs from most of us. In a Parecon we will learn to become as capable and creative and productive as we can, and to participate as full citizens.
Participatory economics is a solidarity economy, a diversity economy, an equity economy, and a self-managing economy. It is a classless economy.
In a talk like this, these are all merely claims I am making with a little bit of argument and motivation. A short talk can’t present a strong case, of course. But I hope this talk has left you feeling that just maybe all these claims are true, that maybe there is a full, well specified, compelling, convincing, and fantastically desirable alternative to capitalism that really does answer the questions, how would you produce, consume, and allocate more effectively and more morally than now.
Parecon is about attaining life after capitalism – which is our task.
Thank You.

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