[This is the fourteenth essay in a multipart series addressing the surge in interest in and support for Socialism, what the surge means, what it seeks or will seek, where it might extend, and how it might unfold.]
Any economy must allocate labor, goods, and resources. Ways of accomplishing this will affect who does what, who gets what, and what will be produced, consumed, and invested. Someone who believes civilization is best served by pitting people against one another will opt for allocation via competitive markets. Someone who thinks complicated decisions are best made by experts who should be materially rewarded for their (monopolized) expertise will opt for central planning. More, according to most economists, these are the only feasible allocation procedures. However, we claim this “impossibility theorem” is little more than prejudice and to make that case last essay we all too briefly described how consumers and producers could participate cooperatively in planning and coordinating their joint endeavors – without central planning and without markets, instead via cooperative negotiation.
So can people take control over their own lives, care for one another, and act to enhance their own situations and the situations of their fellow citizens? Can we have allocation that promotes solidarity by providing information necessary for people to empathize with one another and by creating a context in which people have not only the means to consider one another’s circumstances but also reason to do so? Can we have allocation that promotes variety at the same time that it supports balanced job complexes and ensures egalitarian consumption opportunities? Can we have allocation that promotes collective self-management by permitting every worker and consumer to propose and revise her/his activities? Can we have allocation that promotes equity rather than class division and hierarchy?
Everyone should certainly want affirmative answers to all the above questions. However, most economists deny that all this or even any of this is possible. In contrast, advocates of participatory planning believe economic activity can be made equitable by ensuring that empowering and disempowering tasks are mixed to create balanced work complexes, income for consumption is allotted to ensure equitable access to consumption opportunities, decision-making authority is available in proportion to how decisions affect people, and allocation is conducted via a participatory rather than a competitive or authoritarian approach.
After reading 12 essays in this series, hopefully you agree that participatory economics, also called participatory socialism, if it could be could be implemented, would enhance equity, diversity, solidarity, and self-management. The big question, in that case, is would participatory socialism have deleterious affects on other matters sufficient to dramatically offset its virtues.
For example, what if participatory economics is wasteful, doesn’t elicit sufficient effort to attain acceptable levels of productivity, or yields damning reductions of output for other reasons? What if participatory economics stifles creativity, obstructs merit, or prevents serendipitous discovery? Or what if it eliminates privacy or makes our lives too frenzied by imposing excessive responsibilities? Or what if it disorients economic priorities by exaggerating the importance of individuals as compared to collectives or vice versa? Or what if it sacrifices quality, produces chaos, or is ecologically unsustainable? Or what if it conflicts with other non-economic institutions that we desire, or is too dull to inspire support, or is impossible to attain?
Any of these problems might outweigh the virtues built into our participatory approach and cause a potential supporter to decide that while participatory economics is in many respects better than capitalism (or market or centrally planned coordinatorism), in some respects participatory economics is so much worse that we have to reject it. And that is why there is a very considerable array of books, lectures, interviews, and other materials exploring all these matters and, as well , offering further elaboration on the themes of the past essays in this series.
But within the limits of a single essay, and in reply to some requests I have received in email, it is worth noting here that for advocates of capitalism and/or coordinatorism, the main criticisms of our participatory approach seem to not be about fairness or virtue, but about whether the participatory approach can get things done sufficiently well. Though recognizing it would be humane and nice, that is, critics claim the participatory approach would leave us so poor or at least so far short of what our potentials ought to achieve as to be on balance detrimental. And the most usual form of this complaint is that a participatory approach provides inadequate incentives fo production.
In other words, even among those who accept that rewarding intensity, duration, and onerousness of socially valued labor (effort and sacrifice) is morally superior to other alternatives, many wonder if there is an unfortunate trade-off between rewarding effort to attain equity and having appropriate incentives to attain efficiency. Do we need to moderate our desire to reward only effort/sacrifice by incorporating other incentives that less admirably promote our equity values but better motivate laboring activities to avoid wasting assets?
The question is fair but a little surprising because it turns out that the case for rewarding only effort/sacrifice on efficiency grounds is, if anything, more straightforward than the case for rewarding only effort/sacrifice on grounds of morality.
Differences in productive outcomes arise from differences in talent, training, job placement, tools, luck, and effort/sacrifice. Once we clarify that “effort” includes personal sacrifices incurred in training, and assuming training is undertaken at public rather than private expense, the only one of these factors influencing performance over which a person has any individual discretion is his or her own effort. By definition, a person cannot enlarge his or her innate talent or luck to get a reward. Rewarding the occupant of a job for the contribution inherent in the job itself or for the good tools employed in that job also does not enhance the occupant’s performance, so long as productive jobs and good tools are promoted by the economy more generally. Thus the only factor we need to reward to enhance an individuals’ performance is the individual’s effort/sacrifice. This claim turns common wisdom on its head. Not only is rewarding only effort/sacrifice consistent with efficiency (assuming appropriate accompanying methods exist to elicit good allocation of energies and tools more broadly), but rewarding individuals for either talent, training incurred at public expense, job placement, or tools has no positive incentive effects. These rewards are literally wasted. We cannot change our genetic endowment because someone offers us a salary incentive for our output, nor can we change our luck, nor the quality of our workmates, nor the tools available.
So, we might wonder, why do many believe that seeking equity by rewarding only duration, intensity, and onerousness of socially valued labor conflicts with attaining efficiency and productivity? Three reasons typically arise. People tend to believe that:
1. If consumption opportunities are equal other than for differences in effort expended, people will have no reason to work up to their full talents or capabilities.
2. If payment is equal for equal effort, there is no incentive for people to train themselves to be most socially valuable.
3. Effort is difficult to measure accurately, while outcome is not, so rewarding performance is the practical option.
Responding to reason one, in situations where solidarity or pride in one’s work is insufficient to elicit effort without reward, and where greater consumption opportunities are the only effective rewards, it will be inefficient to award equal consumption opportunities to those exerting unequal effort. That much is correct. But that is not what we have proposed. We do not rule out correlating consumption opportunities with effort/sacrifice made at work, but precisely the opposite. The equity approach is that everyone should have a right to roughly equal consumption opportunities because the equity vision of production is that all should exert roughly equal effort/sacrifice in work. To the extent job complexes are balanced so no one is required to make greater personal work sacrifices than anyone else, effort is largely equalized and therefore consumption should be largely equalized as well. But this is not to say that variations cannot occur. Individual variations of effort and therefore consumption are perfectly acceptable and anticipated in a participatory economy. People can choose to work harder or longer, or perhaps to take up some onerous tasks that have not been allotted but need doing, to earn more. Conversely, people can choose to work less hard or less long to earn less. In short, people can work less and consume less, or work more and consume more, in each case in proportion to the effort/sacrifice involved.
But if there is no sky to reach for, you may be asking – if there is no vast advantage in consumption opportunities to be sought and won – will people lift their arms to work at all? It is one thing to say it is morally proper to remunerate only effort/sacrifice. It is another to say that doing so will elicit enough effort to yield efficient productivity.
In a society that makes every attempt to deprecate the esteem that derives from anything other than conspicuous consumption, we shouldn’t be surprised that many people feel that great income differentials are necessary to induce effort. But to assume that only the accumulation of disproportionate consumption opportunities can motivate people because under capitalism we have strained to make this so is not only unwarranted, it is self-deceptive. In the first place, very few people attain conspicuous consumption in modern capitalist societies. And those that do are not, for the most part, among the hardest working in the level of effort/sacrifice expended. Normal working people currently work hard in order to live at a modest level of income, not to consume conspicuously. People can therefore obviously be moved to exert effort and endure sacrifice, even sacrifices greater than they ought to have to put up with, for reasons other than a desire for immense personal wealth. Moreover, family members make sacrifices for one another without the slightest thought of material gain. Patriots die to defend their country’s sovereignty. And there is good reason to believe that for non-pathological people wealth is generally coveted overwhelmingly as a means of attaining other ends such as economic security, comfort, useful artifacts for pursuit of desirable hobbies, social esteem, respect, status, or power. If economic security is guaranteed, as in a participatory approach, there will be no need to accumulate excessively in the present out of fear for the future.
We need not debate the point at further length, but wish merely to note that if accumulating disproportionate consumption opportunities is often a means of achieving more fundamental non-material rewards, as we believe, then there is every reason to believe a powerful system of incentives need not be based on widely disparate consumption opportunities. If expertise and excellence are accorded social recognition directly, there will be no need to employ the intermediary device of conspicuous consumption to get people to engage in areas of work where their talents are best displayed. If people self mange, they will be more likely to carry out their responsibilities without recourse to excessive external motivation. If the allocation of duties, respon- sibilities, sacrifices, and rewards is fair, and is seen to be fair, one’s sense of social duty will be a more powerful incentive than it is today. And if a fair share of effort/sacrifice is in any event demanded by workmates who must otherwise pick up the slack, and additional effort/sacrifice are appreciated by one’s companions, recognized by society, and also awarded commensurate increases in consumption opportunities, why should anyone doubt that equity incentives will more than adequately elicit needed involvement and effort? The fact that there won’t be motivation to undertake excessive production for useless or egotistical ends would be a gain, not a loss.
But what about reason two? What incentive will people have to train themselves in the ways they can be most socially valuable if remuneration is only for effort/sacrifice, not output?
Since Mozart could contribute more by composing than being an engineer, it would have been inefficient for society in terms of lost potentials had he studied engineering. And if Salieri, a lesser composer of of the same period, would have made an even worse engineer than composer, the same holds true for him. Society benefits in accruing more valuable products if people develop the talents in which they have comparative advantages, and this means society benefits if its incentive systems facilitate rather than obstruct this outcome. If Mozart would be inclined to pursue engineering over composing by preference, it would be desirable that society provide enough incentives for him to compose concertos rather than design bridges so that he would happily follow that path. But the query embodied in issue two is how will a participatory economy do that if by composing Mozart would get the same rate of pay for the same effort/sacrifice as he would for designing bridges? Won’t we lose out on the remarkable compositions we could get from someone with the innate talents of a Mozart, with society suffering thereby?
First, there is good reason to believe that people generally prefer to train in areas where they have more talent and inclination rather than less, unless there is a very powerful incentive to do otherwise. Does anyone truly think that offered the same pay for using a lathe or a piano, Mozart would choose the lathe unless someone threatened convincingly to make his life utterly miserable were he to opt for the piano? In other words, in most instances, incentives are not even needed to get people to utilize their greatest talents, we just have to avoid disincentives, and there are no such disincentives in a participatory economy. Those who could become wonderful composers, playwrights, musicians, and actors (or dentists, doctors, engineers, scientists, or what have you) as part of their balanced work, will not pursue other avenues in which they are less apt to excel in pursuit of greater material reward because there is no greater material reward elsewhere. Nor will people in a participatory economy shun training that requires greater personal sacrifice since the training will be fully compensated. Second, for those cases where a little extra benefit of some sort would be needed to propel a person into his or her most productive pursuits, a participatory economy increases direct social recognition of excellence as compared to other economies. In a participatory economy, indeed, the best, and in some sense, the only way to earn social esteem related to one’s economic activity is to make notable contributions to others’ well-being through one’s efforts. Since working in accord with one’s talents can best do this, there are powerful incentives to develop innate talents. The only thing a participatory approach prohibits is paying ransoms to superstars. Instead, it employs direct social recognition and thereby avoids violations of our deeply held values. Will some prospective Mozart or Einstein, knowing their potential, opt to become an engineer or a violinist rather than a composer or physicist? It could happen, but it seems unlikely. Would this happen more frequently than in class-divided economic systems which squash most people’s talents due to imposing on people harsh poverty and robbing them of dignity and confidence? To ask is to answer. Not to mention that in capitalism many people with great potential squander their talents anyway by opting for the huge rewards they can gain from doing things like becoming a corporate lawyer whose main function is to help big firms avoid paying taxes – an outcome that is socially harmful, though of course beneficial to those with money.
What about reason three, the difficulty of measuring effort as compared to performance? While economic textbooks speak blithely of marginal revenue product in infinitely substitutable models, the real world of social endeavors rarely cooperates. There are many situations where assigning responsibility for outcome is ambiguous, and where determining who really contributed what to output is effectively unknown. As those who have attempted to calibrate contributions to team performance can testify, there are some situations where it is easier than others. Sports teams are certainly more suited to such calibration than production teams. But even there it is more difficult to calibrate individual contributions in football and basketball than in baseball. And even in baseball, arguably the easiest case of all, there are never ending debates over different ways of measuring direct contributions to victory in individual games, not to mention the difficulty of assessing a player’s impact on team chemistry.
Nor is measuring effort always so difficult. Anyone who has taught and graded students knows there are two different ways – at least – to proceed. Students’ performances can be compared to each other (output), or to an estimate of how well the student could have been expected to do (effort). Admitting the possibility of grading at least in part according to personal improvement (grades are not, in fact, rewards, but also measure absolute attainment as in mastery of some subject matter) is tantamount to recognizing that teachers can measure effort, and they can do it even though they are not in the dorm rooms of their students, monitoring their hours of study.
Now consider your workmates. They not only know your past productivity, which means they can compare your efforts to your past by comparing its product, they can actually see you exert each day. So co-workers are in a far better position to judge each person’s effort than a teacher is able to judge the effort of students. Indeed, who is in a better position to know if someone is only giving the appearance of trying than people working with him or her in the same kind of labors? It is actually not only more just to remunerate effort/sacrifice than output for all the reasons we have explored, but particularly in an economy with balanced job complexes, it is actually quite a bit easier. Errors will by definition be much smaller. Methods can be, and in a participatory economy would be, democratic and mutually acceptable. Entanglement of effects and factors is not a problem. And it is not nearly so easy to pull the wool over the eye’s of one’s workmates as it is to do so with a supervisor, as people do today.
One might admire the moral and logical structure of participatory economics, and even the incentive structure of its remuneration scheme, yet nonetheless still have fears about output being too low because one issue that some critics emphasize still remains. Will a participatory approach lead to steadily declining output or even to stagnation and decay due to people choosing to work too few hours?
The concern is not as odd as it might seem. Within a participatory approach it is true that people self-consciously decide the labor/leisure trade off and do so free from compulsion. That is, in each new planning period each person has two priority decisions.
1. How much, overall, do they want to consume?
2. How much, overall, do they want to work?
These two decisions are connected in that the sum total work in an economy creates the sum total output. In turn, the sum total output determines the average consumption per capita. We each consume that average tweaked in accord with our effort/sacrifice outlay. It follows that to consume more either I must work more or harder than average, or the average amount that everyone consumes must rise. Thus, aside from any increases in productivity gained from technical or social innovations, if I wish to consume more, I need to work more, pure and simple. And so, as one of their largest choices, all society’s actors in the participatory planning process decide their own level of work and simultaneously in sum the average level of work and overall productive output and thus the average consumption bundle across the economy. And not only do I have to work more if I want to consume more, but, if I wish to work less, then I will consume less.
The productivity complaint is therefore that people will collectively work many fewer hours in a participatory economy than in capitalist economies, and total output will drop compared to what it would have been had people worked longer hours or more intensely. The complaint is likely correct, we think, in that people will probably reduce the average time and intensity they work in a participatory economy as compared to that which they endure in a technologically comparable capitalist economy. But is this alteration worthy of complaint or compliment? It is tempting to answer snidely and leave it at that: Presumably, we should also oppose unions because under their influence workers went from ten-hour days to eight-hour days. Indeed, perhaps we should look back on the twelve-hour day sweat-shops of the early Industrial Revolution era as a near utopia. But, setting aside this easy reply, let’s explore further.
The sense in which the purported complaint is instead a compliment ought to be clear enough. The complaint highlights that participatory economy is more democratic than existing economies. In a market system more work is continually compelled even if literally everyone would prefer to slow down. Competition demands that each workplace maximize profits. But profits go up when employees work longer and more intensely. Owners and managers therefore seek to compel, cajole, entice, or otherwise generate longer and more intense work by employees, and endure similar pressures themselves, even if their personal preferences run in the opposite direction. Juliet Schor in her book on work and leisure in America provides an instructive indicator. Considering the US from the period after WWII – the golden age of capitalism – to the end of the twentieth century, Schor notes that per-capita output approximately doubled. She points out that an important decision should have been made in conjunction with that increase in productive capability. That is, should we maintain or even expand the work week to enjoy the much bigger social product that increased productivity made possible? Or should we retain the per capita output level of the 1950s, using the increase in productivity per hour to reduce the work week by establishing a schedule of working one week on and one week off, or working just two and a half days a week, or a month or a year on and a month or a year off, with no reduction in overall output per person. You do not have to decide which option you prefer to note that in fact no such democratic decision ever took place because the issue never arose. Markets ensured that work pace and workload climbed as high as they could without causing the system to reach a breaking point. The market itself and not a conscious collective and free choice yielded the outcome. So the sense in which the complaint about participatory socialism’s citizens making a work/leisure choice that diminishes output is a compliment is that in the transition from markets to participatory planning we recapture conscious social control over determining what labor/leisure trade-off we prefer rather than having market competition impose on us a singular and very debilitating outcome.
But then what is the complaint part of the observation? Presumably it is that humanity will make this labor/leisure trade-off choice stupidly. In other words, given that participatory economy permits us to choose between labor and leisure, we will opt to work so little that the fall in output will be horribly damaging to the economy as a whole. Either we will not produce enough to have pleasurable lives now – and will not realize that we can rectify that by working more – or, more subtly, while we may ourselves do fine in the short run, future generations will suffer dramatically compared to what might have been with more labor expended on our part today.
The first half of this logic is not worth serious discussion. It says that given the democratic choice between labor and leisure we will conduct ourselves so moronically that we will starve our stomachs on behalf of our time off, making ourselves suffer more from the hunger than we benefit from the leisure. We need to be compelled – this argument believes – by some outside agency, to work sufficiently to have even the level of short-term consumption that we ourselves desire in order to be presently fulfilled. Even without noting the change in quality of work time and circumstances that a participatory economy brings, and thus the improvement in work rather than its further debasement, as well as the improved relevance of output to human well-being and development as compared to enhancing firstly profit for the few as under capitalism, this humans-are-idiots logic cannot be at the root of a serious productivity complaint.
But the second half of the logic is more disturbing. Consider ancient Egypt, that is, in 4,000 BC or so. At its outset, Egyptian society was remarkable in many respects relative to others at the time, but over a period of roughly 4,000 years it was overwhelmingly stagnant. Life was essentially the same for each new generation as in the past, with little application of human insight to creating new conditions better than those enjoyed by one’s parents, or grandparents, or even great great (and repeat that word great 100 times or more) grandparents. The lack of change in ancient Egypt is literally mind-numbing in its scale. For a comparison, in 1900 the average life expectancy in the US was approximately 45, and in 2000 75, and we had gone from just a few people having barely functional telephones to omnipresent high-tech labor-saving and sensory enhancing tools throughout society. Of course the lack of change in Egypt had nothing to do with a labor/leisure trade-off since most people worked horribly long proportions of their bitterly short lives, but it does show at least the possibility of the condition of large-scale and enduring stagnation that participatory economy critics fear. That is, the complaint’s supposed dreaded condition, stagnation, is not impossible in real historical situations. In fact, it existed for most of human history so we must take seriously the accusation that stagnation could arise again with transition to a participatory economy. So would a participatory economy be stagnant or not?
The complaint assumes that without the compulsion of competition to propel productivity, humanity will fail to recognize the benefits of increasing output, seeing only the debits of increased workloads. This is an assumption, and a poor one at that. First, work is part of what makes us fulfilled humans. We do it not only to meet immediate needs, but also to express potentials and to open new future opportunities. In a participatory economy, there will be people whose work is to focus on innovation via investment. They will not earn if they do not work, with duties that would include clarifying the benefits of innovations to society to induce willingness among people to undertake them.
Most people under capitalism hate their jobs – with good reason. But some auto workers who hate their jobs enjoy working on their own cars after hours; some people with deadening careers serve in the local volunteer fire department. People don’t mind work per se – it gives lives meaning – what they hate is alienated labor. And jobs in a participatory economy are designed precisely to minimize the alienation of labor and maximize creative and empowering work.
Moreover, do parents not understand that the lives of their children will be improved by contemporary investments and will they not, therefore, allot some of their energies to improving future prospects? Consider how parents now choose to spend their meager incomes as between their own pleasures and those of their children. Is it remotely plausible that with improved conditions of work, improved dignity at work, improved quality of life from the products of work which are justly distributed, and greatly enhanced educational opportunities turning us all into confident agents and decision-makers, that we should decide not only to work less – which is reasonable enough – but, year in and year out, to work so much less that we and our children will suffer because of the choice? Is this a serious prospect at all, much less one that should cause us to doubt the desirability of replacing markets with participatory planning as a means to increase equity, solidarity, diversity, and in particular self-management?
Everyone has to decide for themselves, of course, but consider Schor’s example mentioned earlier. Suppose in 1955 the US had adopted a participatory economy. What would have been the impact on total volume of work and output – and derivatively on progress – even ignoring other benefits? The quality of work for 80 percent of the workforce would have improved greatly. Waste production of all kinds would have diminished and disappeared. Needless and excessive production would have disappeared as well. Innovations would have aimed at bettering the quality of work and consumption, not maximizing profit. And then there would have been the reductions in military, advertising, and luxury expenditures, and the gains in education and talent thereby made available for scientific, engineering, artistic, aesthetic, and other advances.
So let’s call the total output in 1955 Y. What would have happened in the years after WWII if we assume a participatory rather than a capitalist economy? Productivity per person would have doubled in our hypothetical example (though in reality it would do much better, not least because of increased creativity and talent devoted to the issue, but also because instead of innovation aiming at profit it would aim directly at fulfillment). As well, there would have been more public goods, of course. Less output need have been devoted to cleaning up pollution and curing socially caused diseases and to managing resistant workers, because all these adverse features would have been diminished or eliminated. Less would have gone into advertising to sell goods for reasons that have nothing to do with benefiting those who buy them because there would no longer have been any interest in doing that. Less would have gone to projecting military power, and to providing luxuries to the rich, and to incarcerating the poor, for similar reasons. This would all have occurred, in other words, because there would have been less pollution since we would have assigned proper values to external effects, fewer conditions that sicken citizens for the same reason, no managers above workers or workers below managers due to participatory economy’s balanced job complexes, no incentive to produce and distribute other than to meet real needs, no accumulation compulsions, no world to subjugate in order to profit by ripping off resources and energies from other countries, no rich to luxuriate, no poor forced to steal.
The point is, in addition to per-capita productivity doubling (or more) in the years in question, since much output in 1955 had nothing to do with human well-being in the first place and would have been replaced by new outputs that do benefit human well-being, not only would output per person have doubled due to technical innovations, but the relevance of output to fulfillment would have also gone dramatically upward, let’s say, very conservatively, by another 25 percent due to useless and pointless and even destructive production being removed, and desirable production put in its place. With just distribution it then would follow that the population could have opted to work in 1995 not only half as long as in 1955, as Schor suggested, but a bit more than a third as long, and still have the same per capita output relevant to meeting real needs and to expanding worthy potentials. At the same time, investment in innovation could have gone on all along at the same rate it did in 1955 under capitalism. So the workweek could go from 40 hours to about 13, in that scenario, over a run of 40 years, with no loss in fulfillment or in output earmarked to engender socially beneficial progress. Does anyone think that humanity is so blindingly lazy that it would opt to cut back work that is no longer alienated even that far, much less to cut it back still further? Isn’t it far more plausible that humanity would, in fact, opt for a lesser cutback, say from 40 to 30 or perhaps 25 hours, with, as well, a considerable number of those saved hours going to highly productive hobbies, volunteer pursuits, and self-education? In short, looked at in full context, the productivity complaint is not a serious one, but instead a compliment in disguise.
Are there other complaints? Certainly. Warding off an approach that would eliminate owners and equitably distribute empowering tasks and thereby also eliminating coordinator class rule attracts many critics. Some claim, for example, participatory economies would collapse in bureaucracy, or require too many meetings. And there are also criticisms from folks who feel participatory economy retains too much from the past so that it is insufficiently revolutionary. Again, such matters are dealt with in many places, but as two references you might particularly enjoy, the first is a long interview with Barbara Ehrenreich challenging aspects of participatory planning, and the second is a piece presenting and rebutting some views espoused by various anarchists, and in this case by the young Noam Chomsky in an essay about his visionary aspirations.