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Participatory economics

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Participatory economics, or parecon, a participatory economics system proposed as an alternative to contemporary capitalism and also an alternative to centrally planned socialism or coordinatorism, emerged from the work of the radical theorist Michael Albert and of the radical economist Robin Hahnel, beginning in the 1980s and 1990s.

The underlying values parecon seeks to implement are equity, solidarity, diversity, and participatory self management. The main institutions to attain these ends are workers and consumers councils utilizing self management decision making methods, balanced job complexes, remuneration according to effort & sacrifice, and participatory planning.

Parecon only addresses economics, but its creators see it as complementary to changes in other areas: for example, anarchism in the area of politics or feminism in the area of family and gender relations.

Parecon's institutional framework

Decision-making principle

Every person should have say in a decision proportionate to the degree to which she or he is affected by it.

Consumers' and Producers' Councils

To achieve this decision-making principle, a parecon would be organized in consumers' and producers' councils. Many individuals would participate in both.

Geographically, these councils would probably be nested, with neighborhood councils, ward councils, city or regional councils and a country council. Decisions would be achieved sometimes by consensus, sometimes by majority votes, and sometimes by other means, as the most appropriate method is decided on by the councils. Local decisions like the construction of a playground might be made in the ward or maybe city consumers' council, probably interacting with both city and countrywide producers' councils. Countrywide decisions, like the construction of a high speed mass transportation system, would be discussed by the country consumers' council, possibly interacting with a city producers' council of the city where materials are produced, or maybe countrywide or international producers' councils.

The producers' councils would probably correspond to workplace councils in each workplace and similar workplaces would group into nested councils on successively larger geographical and linguistic scales.

Remuneration for effort and sacrifice

Promoters of Parecon hold that it is inequitable, and also ineffective, to remunerate people on the basis of their birth, their possession or their innate talents and intelligence. Therefore, a parecon would reward only effort and sacrifice. Someone who works in a mine, which is dangerous, uncomfortable and confers no power whatsoever on the worker, would get a higher income than someone who works in an office.

Economic Planning: feedbacks and successive iterations

Every planning period begins with a proposal of estimated consumption by every citizen, discussions of collective consumers' needs in the consumers' councils and proposals of estimated production and prices from every workplace.

Facilitation boards then compare the prices for goods and services from these proposals and make these data available for everyone. If the prices representing demand from the consumers and supply from the producers do not match, then the facilitation boards estimate compromise prices and/or production levels, and send these back to the consumers' and producers' councils.

The consumers' and producers' councils rediscuss their proposals, and send new proposals to the facilitation boards, which again check if consensus has been reached, and if not, send new compromise proposals to both councils.

This process of iterations continues according to some predefined method which is likely to converge within an acceptable time delay.

The facilitation boards should function according to a maximum level of radical transparency and only have very limited powers of mediation - the real decisions are made in the consumers' and producers' councils.

Job Complexes

Some tasks and jobs are more comfortable than others, and some tasks are more empowering than others. To achieve an equitable division of labour, it is therefore proposed that every person must do different tasks, which, taken together, bring an average comfort and an average empowerment. For instance, someone who works in a facilitation board for one year might then have to work in a steel plant, or in another uncomfortable workplace of his or her choice, for a year, or else would not get a higher salary than the standard for everyone. This assures that no class of coordinators can develop.

Parecon critique of other systems

Both Albert and Hahnel came from intellectual backgrounds where the two most prominent economic models were markets and central planning. Their arguments for parecon are often framed through criticisms of one or both of these systems.

The critique of markets

Only the interests of buyer and seller are considered in a typical market transaction, while others who are affected by the transaction have no voice in it. For instance, the sale of highly addictive drugs, like alcohol and tobacco, is in the interest of the seller and at least in the short term interest of the buyer, but others outside the transaction end up bearing costs in the form of social problems and medical treatment. When fossil-fueled vehicles are sold others outside the transaction end up bearing costs in the form of pollution and resource depletion etc. The market price of such vehicles and drugs does not include these costs, hence their label of 'externalities'.

Summary and remarks

These four ingredients are intended to be implemented with a minimum of hierarchy and a maximum of openness in discussions and decision-making. This model is designed to eliminate secrecy in economic decision-making, replaced by friendly cooperation and mutual support.

Although a participatory economy falls under the left-wing political tradition (and also under the anarchist political tradition), it is specifically designed to avoid the creation of powerful intellectual elites ("coordinatorism"), the trap into which the economies of the communist states of the 20th century fell. It is not intended to provide a general political system, though clearly its practical implementation (experimentation) would depend on the accompanying political system.

While many types of production and consumption might become more localised under participatory economics, the model does not exclude economies of scale.

A few workplaces have been established based on principles akin to parecon:

See also

External Resources

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