Participatory economics (Participatory economy)

Participatory economics, or parecon (English participatory economics, parecon), is a form of socialist decentralized planned economy proposed by the economists Michael Albert and Robin Hahnel as an alternative to capitalism and centralized economic planning.

The fundamental values that participatory economics seeks to realize are solidarity, diversity, equity, self-management, internationalism and ecological sustainability . In contemporary society three classes are distinguished: workers, owners, and "coordinators," that is, people occupying managerial positions, such as management. Michael Albert holds that the decisive failure of the countries of Soviet socialism was the emergence of a managerial class that took from workers the right to make decisions and to dispose of the means of production. In order to change this situation, he proposes abolishing not only private ownership of the means of production, but also any form of "coordinatorism." In accordance with the value of self-management, all questions in participatory economics are decided by councils of all interested parties, both producers and consumers.

Coordination of work within an enterprise is provided by the workers' council, at which questions concerning the organization of the work process, the preferred method of decision-making, and other questions concerning the activity of the entire enterprise are decided. In accordance with the scale of the questions arising, councils may be convened within divisions and work groups.

Positions at workplaces in participatory economics are formed by means of so-called balanced job complexes — a method of distributing work within an enterprise or group (proposed as an alternative to the corporate division of labour), under which the complex of tasks performed by each worker ensures comparable habits and capacities for decision-making among all workers. Each worker's job description includes a fair share both of empowering tasks that develop autonomy and of routine and mechanical tasks. Thanks to this, a situation is maintained in which every worker acquires the knowledge, information, skills and self-confidence for the collective coordination of work activity and for decision-making on the basis of self-management.

Albert and Hahnel argue that it is unjust and inefficient to compensate people on the basis of luck (for example, skills or talents determined by the circumstances of their birth or by heredity, differences in the efficiency of equipment, and so on) or according to workers' productivity (measured by the value of the goods they produce). Thus, the basic principle of participatory economics is the remuneration of workers in proportion to the duration of their work, the effort expended, and the discomfort or harmfulness of the work. For example, work in the mining industry, which is dangerous and burdensome, will be more highly paid than office work for the same amount of time, which will allow the miner to work fewer hours for the same pay, and also to distribute the burden of very dangerous and hard jobs among the population. Participatory economics will provide for exceptions to the principle of compensation for effort in the case of the disabled, children, pensioners, workers who have fallen ill, and workers temporarily in transitional circumstances, who will receive average remuneration or compensation in accordance with special needs.

Consumers' councils, formed according to the number of interested people (within families, neighbourhoods, buildings, districts), draw up an approximate set of goods and services that will be required in the next accounting period.

Assistance in negotiations between workers' and consumers' councils will be provided by so-called facilitation boards[English]. These boards will also submit for the councils' consideration a preliminary plan and indicative prices for goods and services for the next accounting cycle.

The creation of a plan satisfying all parties to the negotiations is achieved by means of an iterative procedure called participatory planning, which consists of three stages.

At the first stage the facilitation boards announce the indicative values of all resources, goods and services. Workers and consumers use these data during the planning procedure in order to learn how much the various options for choosing goods and services for production and consumption in the coming accounting period cost society.

Each individual person submits requests for items of personal consumption. Consumers' councils submit their requests for services and items of collective consumption. Workers' councils submit proposals concerning what their enterprise plans to produce in the coming period. The proposal is supported by a request for the necessary materials, such as raw materials and equipment. Also at this stage each of the workers may decide how many hours a week he would like to work in the next accounting period.

The facilitation board, using a software algorithm, updates the values of all production inputs, pollutants and final goods and services upwards or downwards. In the case of excess demand for a particular good, its value rises; in the case of excess supply, it falls.

The stages are repeated several times until excesses of demand and supply disappear. By the end of the process an efficient, equitable and ecologically sustainable plan for the next accounting period is reached.

The market socialist David Schweickart believes that participatory economics would be undesirable even if it were possible:

It is a system obsessed with comparison (Is your work more efficient than mine?), with monitoring (You're not working at average intensity, buddy — it's about time you got up to speed), with the details of consumption (How many rolls of toilet paper will I need next year? Why are some of my neighbours still using the kind that isn't made from recycled paper?)

Among the other critical remarks made by Schweickart, the following may be noted:

• Difficulties in creating balanced job complexes and ensuring that they do not suffer from inefficiency .
• A system based on mutual evaluation may prove ineffective, since workers may begin to shirk work, and colleagues will have little incentive to spoil relations by giving bad reviews. Alternatively, it may lead workers to become suspicious of one another, undermining solidarity .
• A remuneration system based on the effort expended would be difficult to measure, and its assessment would require a system of averaged indicators.
• The system of remuneration proposed by Parecon will be excessively egalitarian and will probably cause resentment among workers who work harder, and will also discourage them from expending additional effort, since they will not receive higher pay.
• In the case of Parecon, there will probably arise a burdensome and tedious requirement to list all the goods that people want to see produced, which will most likely lead to uncertainty, since people do not always know what they want, and also to problems with the volume of information they must provide, and to difficulties in negotiations between workers' and consumers' councils.

Theodore Burczak argues that it would be difficult for others to measure the sacrifice in another person's labour, which is largely unobservable.

Participatory economics would create a large volume of administrative work for individual workers, who would have to plan their consumption in advance, and a new bureaucratic class. Supporters of parecon argue that capitalist economies are hardly free of bureaucracy or meetings, and that parecon would eliminate banks, advertising, the stock market, tax returns and long-term financial planning. Albert and Hahnel argue that approximately the same number of workers would probably be engaged in parecon's bureaucracy as in the capitalist bureaucracy , with most of the voting being carried out by means of computers rather than meetings, and those not interested in proposals for collective consumption would not need to attend

Critics argue that the proposals require the consideration of a prohibitively large set of policy options , and that the lessons of planned societies show that people's everyday needs cannot be established in advance simply by asking people what they want. Albert and Hahnel note that markets themselves hardly adjust prices instantaneously , and suggest that in participatory economics the facilitation boards could regularly change prices. In Hahnel's view, they operate in accordance with democratically determined rules, may consist of members from other regions, and cannot be bribed because of parecon's non-transferable currency . However, Takis Fotopoulos argues that "no economic organisation based exclusively on planning, however democratic and decentralised it may be, can ensure real self-management and freedom of choice"