Material below based on Michael Albert's 2003 book "PARECON - Participatory Economics"
We often hear about “the economy” and the important factors involved in its fluctuations that most of the public doesn't conceptually grasp, but it isn't very often that we talk about our underlying economic principles. This is because most of us unknowingly embrace the TINA principle – there is no alternative – when we cannot think or conceive of economies significantly different than our own. The traditional capitalist/communist debate has been all but settled, but still, many citizens living in the world's premiere capitalist nations feel at best ambivalent about the seemingly negative [side]effects stemming from our particular economic organization – gross inequality on local, national, and international level, ecological degradation, commodification of sacred institutions, poor job environments, cultural homogenization, etc. We should remember that no particular economic model is the natural destiny of humankind. Economies are socially constructed and correspond to specific cultural/political dynamics - they can be reorganized.
Conceptual Definitions of Economic Processes:
Economy = a system for producing, distributing, and consuming goods and services (wealth)
Allocation = deciding who produces how much of what, the price of exchanges, and how to distribute it
Ownership Relations = who can own the means of production – private individuals, the state, cooperatives
Division of Labor = deciding who should have what kind of job with what kind of decision making power
Decision Making = how economic relations are organized by actors and institutions
Remuneration = the process of deciding who deserves how much compensation for their labor
Different Kinds of Economies:
Capitalist : private ownership of the means of production, hierarchical corporate division of labor, central gov't planning and semi-centralized decision making, and remuneration based on market performance
State Socialist : state ownership of the means of production, corporate division of labor, centralized government economic planning by the coordinator class, and remuneration based on power/output
Market Socialist : mixed state/private ownership of production sites, market/centralized division of labor, central planning and semi-centralized decision making, market/coordinator class control of remuneration
Bioregionalist : public ownership of the means of production, decentralized exchange and cooperation guides division of labor and decision making, the central organizing goal is environmental sustainability
Participatory : public/socially relevant ownership, balanced job combinations guiding the division of labor, workers councils utilizing participatory planning organize economic decision making, and remuneration is based upon effort and sacrifice with the principles below serving as overarching guidelines
Judging the Effects of Past and Current Economic Institutions on Societies
Market Economies – the raw fact that the desires of workers and capitalists are so often diametrically opposed leads to exploitation and conflict. This competition for scarce resources manifests in sometimes vicious strife among different classes of workers inside a company (management, unions) and different groups outside the company who would like to have the jobs themselves (poorer foreign workers). Powerful coalitions of capitalists have been known to collude to manipulate public desires and political beliefs in order to enrich their own interests. Furthermore, the constant need for economic growth comes at the expense of public health and well being, especially when overconsumption damages the environment.
Command Economies – the central planning of communist nations has almost unequivocally failed on all similar measures, but open conflict remains more veiled in authoritarian political regimes. Often, the basic needs of the people were not met because the planners became an oppressive ruling class of their own who deprived the people to enhance their own power. The plans that came down on workers from the central gov't did not reflect the actual situation in the factory and were horribly inefficient. The process of allocation became more and more corrupt, exploitative, and alienating – mirroring the political system.
Principles of Participatory Economics:
Equity – How to decide what people deserve to be remunerated in the economy? Different norms exist…
Norm 1 = according to the contribution of a person's physical (property) and human (skills) assets
Norm 2 = according to the contribution of a person's human assets only
Norm 3 = according to a person's effort or personal sacrifice only
Norm 4 = according to a person's needs only
Self-Management – Who should get to decide how economic matters should be handled?
Norm 1 = give the lion's share of decision making power to the few “strongest” or “most able”
Norm 2 = give everyone participating an equal say in decision making – majority rule style
Norm 3 = vary the distribution of power in decision making based on how much one is affected
Diversity – Homogenization of life conditions, material outcomes, culture, and thought pattern is dangerous because it increases the risk of cascading catastrophe – innovative diversity thus represents security
Solidarity – Competition and cooperation shouldn't be conceptualized as mutually exclusive. We should encourage both, but seek to do so in a way that doesn't promote either stifling the other's potential.
Efficiency – Economic institutions must efficiently meet the expressed needs of the population they serve
The Particulars of PARECON Vision:
Socially Relevant Ownership – no one may own the means of production because everyone owns a fractional part proportionate to its affects on their life… the means of production have traditionally been defined as large scale land, capital, and machinery that is used to produce goods for economic exchange… thus this doesn't affect what one may own for their personal use value or small scale economic exchanges
Nested Economic Councils – worker and consumer councils of different scales (family, workplace, neighborhood, city, county, state, nation, etc.) will decide what needs to be produced and how to go about getting it done in the best possible way. Decision making procedures and communication methods would vary according to the nature of the task at hand and the potential effects on other worker/consumers
Balanced Job Complexes – the human costs and benefits of work must be equally distributed so that job complexes balance what workers define as more or less empowering/fulfilling tasks. People will have the ability to change their job complexes and acquire new skills to access new jobs as they desire so long as their job complex remains balanced overall and there are not dangerous losses in overall productivity.
Remuneration – Workers will be paid based on the personal effort and sacrifice they demonstrate in their work. This means that individuals should not be rewarded based on their productive output, bargaining power, or innate talent. Remuneration is based on how well they contribute utilizing their own abilities. Under these conditions, Mozart, Bill Gates, and a man disabled in a car crash should receive at least somewhat similar formal compensation for similar effort/sacrifice at a different quality/level of production.
Allocation – citizens must be able to effectively weigh the individual and social cost/benefit consequences of certain strategies of production/consumption to successfully guide the economy. Supply and demand data needed to coordinate the effort would be generated by worker and consumer councils and collated into overall plans for larger economic units. The feasibility of balancing these requests would be analyzed and the results sent back to the councils for revision in an iterative fashion, eventually producing viable plans.
Inefficiency/Lack of Incentives – if everyone is rewarded similarly (in consumption) for similar effort, why would anyone work hard? Wouldn't collective laziness thereby reduce efficiency and productivity?
Stifling Talent/Quality/Innovation – how would PARECON reward people with special talents that don't fit neatly into the balanced job complex like artists and inventors – would it limit or distort their creations?
Planning Compromises Individual Freedom/Privacy – one cannot escape the social pressure to participate in a PARECON… thus one cannot escape making one's views and needs known in a very public forum
Adjustment Issues – could PARECON adjust for changes in consumer needs as quickly and efficiently as markets? ex. technological innovation forces drastic remodeling or a massive tsunami hits the coastline
Negotiation of Needs – will individuals or groups be able to push for whatever needs they feel need fulfillment or will group pressure dictate exactly what are acceptable needs? ex. swimming pools, cigarettes
Compatibility – would PARECON be compatible with other core social institutions in our society or would drastically change our culture by bending things like religion, nationalism, or gender relations to its will?
Other Concerns – Wouldn't PARECON just lead to group formations and sectarian conflict? Doesn't it contradict what we know about “human nature”? Wouldn't capitalist markets just crush it from the start?
Just about all the public discussion and debate about PARECON can be found in the links at http://www.zmag.org/parecon/indexnew.htm
For economics buffs looking for a bit more scientific treatment of the PARECON theories compared with those utilized in market economies and centrally planned economies, http://www.zmag.org/books/5.htm provides a formal mathematical model that supposedly (though I don't claim to understand enough to evaluate them) demonstrates its superior convergence, efficiency, and stability properties.