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Participatory economics, often abbreviated Parecon, is an
economic system An economic system, or economic order, is a system of Production (economics), production, resource allocation and Distribution (economics), distribution of goods and services within a society or a given geographic area. It includes the combinati ...
based on
participatory decision making Citizen Participation or Public Participation in social science refers to different mechanisms for the Public consultation, public to express opinions—and ideally exert influence—regarding political, economic, management or other social dec ...
as the primary economic mechanism for
allocation Allocation may refer to: Computing * Block allocation map * C++ allocators * Delayed allocation * File allocation table * IP address allocation * Memory allocation * No-write allocation (cache) * Register allocation Economics * Asset alloca ...
in society. In the system, the say in decision-making is proportional to the impact on a person or group of people. Participatory economics is a form of
socialist Socialism is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes the e ...
decentralized planned economy A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, parti ...
involving the
common ownership Common ownership refers to holding the assets of an organization, enterprise or community indivisibly rather than in the names of the individual members or groups of members as common property. Forms of common ownership exist in every economi ...
of the
means of production The means of production is a term which describes land, labor and capital that can be used to produce products (such as goods or services); however, the term can also refer to anything that is used to produce products. It can also be used as an ...
. It is a proposed alternative to contemporary
capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for Profit (economics), profit. Central characteristics of capitalism include capital accumulation, competitive markets, pric ...
and
centralized planning A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, part ...
. This
economic model In economics, a model is a theoretical construct representing economic processes by a set of variables and a set of logical and/or quantitative relationships between them. The economic model is a simplified, often mathematical, framework desig ...
is primarily associated with political theorist
Michael Albert Michael Albert (born April 8, 1947) is an American economist, speaker, writer, and political critic. Since the late 1970s, he has published books, articles, and other contributions on a wide array of subjects. He has also set up his own media ...
and
economist An economist is a professional and practitioner in the social sciences, social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this ...
Robin Hahnel Robin Eric Hahnel (born March 25, 1946) is an American economist and professor emeritus of economics at American University. He was a professor at American University for many years and traveled extensively advising on economic matters all over t ...
, who describes participatory economics as an
anarchist Anarchism is a political philosophy and movement that is skeptical of all justifications for authority and seeks to abolish the institutions it claims maintain unnecessary coercion and hierarchy, typically including, though not neces ...
economic vision. The underlying values that parecon seeks to implement are
equity Equity may refer to: Finance, accounting and ownership * Equity (finance), ownership of assets that have liabilities attached to them ** Stock, equity based on original contributions of cash or other value to a business ** Home equity, the dif ...
,
solidarity ''Solidarity'' is an awareness of shared interests, objectives, standards, and sympathies creating a psychological sense of unity of groups or classes. It is based on class collaboration.''Merriam Webster'', http://www.merriam-webster.com/dictio ...
, diversity,
workers' self-management Workers' self-management, also referred to as labor management and organizational self-management, is a form of organizational management based on self-directed work processes on the part of an organization's workforce. Self-management is a def ...
,
efficiency Efficiency is the often measurable ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result. In a more general sense, it is the ability to do things well, successfully, and without ...
(defined as accomplishing goals without wasting valued
asset In financial accountancy, financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value ...
s) and
sustainability Specific definitions of sustainability are difficult to agree on and have varied in the literature and over time. The concept of sustainability can be used to guide decisions at the global, national, and individual levels (e.g. sustainable livi ...
. The institutions of parecon include workers' and consumers' councils utilising self-managerial methods for decision-making,
balanced job complex A balanced job complex is a way of organizing a workplace or group that is both directly democratic and also creates relative equal empowerment among all people involved. Specifically a balanced job complex is a collection of tasks within a given ...
es,
remuneration Remuneration is the pay or other financial compensation provided in exchange for an employee's ''services performed'' (not to be confused with giving (away), or donating, or the act of providing to). A number of complementary benefits in additio ...
based on individual effort, and wide
decentralized planning A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, ...
.


Decision-making principle

In parecon, self-management constitutes a replacement for the mainstream conception of
economic freedom Economic freedom, or economic liberty, is the ability of people of a society to take economic actions. This is a term used in economic and policy debates as well as in the philosophy of economics. One approach to economic freedom comes from the l ...
, which Albert and Hahnel argue by its very vagueness has allowed it to be abused by
capitalist Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, price system, priva ...
ideologues An ideology is a set of beliefs or philosophies attributed to a person or group of persons, especially those held for reasons that are not purely epistemic, in which "practical elements are as prominent as theoretical ones." Formerly applied prim ...
. In their councils, workers deliberate over plans regarding the productive enterprise and employ whichever voting scheme best instantiates the principle that each worker's decision-making power ought to be in proportion to the impact upon them of the particular decision being voted on. Generally, a workers' council is not constrained to adopt a single threshold (i.e. 50%+1) to pass their resolutions, but can tailor their voting procedures to reflect the variation in impact of the enterprise's decisions.


Work and distribution


Balanced job complexes

A main goal of
socialism Socialism is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes the e ...
is to create a
society A society is a group of individuals involved in persistent social interaction, or a large social group sharing the same spatial or social territory, typically subject to the same political authority and dominant cultural expectations. Socie ...
without classes, and traditional socialist thinking identifies classes based on ownership of the means of production (in
capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for Profit (economics), profit. Central characteristics of capitalism include capital accumulation, competitive markets, pric ...
, those are the
capitalist class The bourgeoisie ( , ) is a social class, equivalent to the middle or upper middle class. They are distinguished from, and traditionally contrasted with, the proletariat by their affluence, and their great cultural and financial capital. They ...
and the
proletarian The proletariat (; ) is the social class of wage-earners, those members of a society whose only possession of significant economic value is their labour power (their capacity to work). A member of such a class is a proletarian. Marxist philoso ...
class). However, Albert and Hahnel identify a third class created by the particular
division of labor The division of labour is the separation of the tasks in any economic system or organisation so that participants may specialise (specialisation). Individuals, organizations, and nations are endowed with, or acquire specialised capabilities, and ...
. Some tasks and jobs are more desirable than others; also some are more empowering. Hahnel and Albert argue that empowering jobs, such as accounting or management, provide access to information and skills to formulate ideas and plans for decision making, while other jobs, such as cleaning, do not provide these. Thus workers with disempowering jobs can at best ratify proposals by empowered workers, and have little reason to participate in collective decision making. Workers with empowering jobs are a third class, "coordinator class" that does not own the means of production but has more power than menial workers. This class exists in current and past capitalist,
socialist Socialism is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes the e ...
and cooperative economies. Coordinator jobs include political office, management, law, medicine, accounting, and research. To distribute work equitably and empower all workers in decisions in their workplace, in participatory economics each worker does tasks, which, taken together, result in an average desirability and average
empowerment Empowerment is the degree of autonomy and self-determination in people and in communities. This enables them to represent their interests in a responsible and self-determined way, acting on their own authority. It is the process of becoming strong ...
among all workers.


Compensation for effort and sacrifice (principle for distribution)

Albert and Hahnel argue that it is inequitable and ineffective to compensate people on the basis of luck (e.g. skills or talents that owe to their birth or heredity), or by virtue of workers' productivity (as measured by the ''value'' of the goods they produce). Therefore, the primary principle of participatory economics is to reward workers for their effort and sacrifice.Albert, Michael Parecon: Life After Capitalism Part II, Chapter 7: Remuneration pp. 112–17. For example, mining work—which is dangerous and uncomfortable—would be more highly paid than office work for the same amount of time, thus allowing the miner to work fewer hours for the same pay, and the burden of highly dangerous and strenuous jobs to be shared among the populace. Additionally, participatory economics would provide exemptions from the compensation for effort principle. People with disabilities who are unable to work, children, the elderly, the infirm and workers who are legitimately in transitional circumstances, can be remunerated according to need. However, every ''able'' adult has the obligation to perform some socially useful work as a requirement for receiving reward. However, everyone would be entitled to free health care,
education Education is a purposeful activity directed at achieving certain aims, such as transmitting knowledge or fostering skills and character traits. These aims may include the development of understanding, rationality, kindness, and honesty. Va ...
, skills training, and the freedom to choose between various democratically structured workplaces with balanced jobs balanced for desirability and empowerment. The starting point for the income of all workers in a participatory economy is an equal share of the social product. From this point, incomes for personal
expenditure An expense is an item requiring an outflow of money, or any form of fortune in general, to another person or group as payment for an item, service, or other category of costs. For a tenant, rent is an expense. For students or parents, tuition is a ...
s and consumption rights for
public goods In economics, a public good (also referred to as a social good or collective good)Oakland, W. H. (1987). Theory of public goods. In Handbook of public economics (Vol. 2, pp. 485-535). Elsevier. is a good that is both non-excludable and non-riva ...
can be expected to diverge by small degrees, reflecting the choices that individuals make in between work and
leisure Leisure has often been defined as a quality of experience or as free time. Free time is time spent away from business, work, job hunting, domestic chores, and education, as well as necessary activities such as eating and sleeping. Leisure ...
time, and the level of danger and difficulty of a job as judged by their immediate workplace peers.


Allocation of resource

Participatory planning Participatory planning is an urban planning paradigm that emphasizes involving the entire community in the community planning process. Participatory planning emerged in response to the centralized and rationalistic approaches that defined early ...
is the allocation mechanism in a participatory economy, and is meant to provide a workable alternative to
market competition In economics, competition is a scenario where different Economic agent, economic firmsThis article follows the general economic convention of referring to all actors as firms; examples in include individuals and brands or divisions within the sa ...
and
centralized planning A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, part ...
. The planning procedure is conceived as an iterative process in which, (1) production proposals made by workers
councils A council is a group of people who come together to consult, deliberate, or make decisions. A council may function as a legislature, especially at a town, city or county/ shire level, but most legislative bodies at the state/provincial or nati ...
and (2) consumption proposals made by individuals and their
neighborhood council A neighborhood council (also known as a community league) is a governmental or non-governmental body, whose purpose is to promote citizen participation in local government.Martin Minogue, ''Documents on Contemporary British Government: Volume 2, L ...
s, are submitted and revised through multiple rounds of pricing updates until the
process A process is a series or set of activities that interact to produce a result; it may occur once-only or be recurrent or periodic. Things called a process include: Business and management *Business process, activities that produce a specific se ...
converges on a feasible plan for the upcoming year. The process begins when the facilitation board (see below) announces a list of indicative
prices A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for goods or services. In some situations, the price of production has a different name. If the product is a "good" in the c ...
for each final
consumer good A final good or consumer good is a final product ready for sale that is used by the consumer to satisfy current wants or needs, unlike a intermediate good, which is used to produce other goods. A microwave oven or a bicycle is a final good, but t ...
, as well as for each
capital good The economic concept of a capital good (also called complex product systems (CoPS),H. Rush, "Managing innovation in complex product systems (CoPS)," IEE Colloquium on EPSRC Technology Management Initiative (Engineering & Physical Sciences Researc ...
,
natural resource Natural resources are resources that are drawn from nature and used with few modifications. This includes the sources of valued characteristics such as commercial and industrial use, aesthetic value, scientific interest and cultural value. O ...
, and category of labor that is available to society. These indicative prices are calculated to reflect the estimated
opportunity cost In microeconomic theory, the opportunity cost of a particular activity is the value or benefit given up by engaging in that activity, relative to engaging in an alternative activity. More effective it means if you chose one activity (for example ...
s for producing various goods and services, and incorporate both social costs and
pollution Pollution is the introduction of contaminants into the natural environment that cause adverse change. Pollution can take the form of any substance (solid, liquid, or gas) or energy (such as radioactivity, heat, sound, or light). Pollutants, the ...
impacts. In response to this list of prices, individuals draft an annual consumption plan for goods/services they wish to consume in the coming year, and also meet in their neighborhood councils to deliberate and
democratically Democracy (From grc, δημοκρατία, dēmokratía, ''dēmos'' 'people' and ''kratos'' 'rule') is a form of government in which the people have the authority to deliberate and decide legislation (" direct democracy"), or to choose gov ...
arrive at a plan for the consumption of public goods (e.g. obtaining resources to build a public playground). As workers, individuals also meet in their
workplace A workplace is a location where someone Work (human activity), works, for their employer or themselves, a place of employment. Such a place can range from a Small office/home office, home office to a large office building or factory. For Indust ...
s to determine what outputs they will produce and what inputs they will consume in the production process, as well as how much they would each like to work. Thus, workers and consumers (as well as any
federation A federation (also known as a federal state) is a political entity characterized by a union of partially self-governing provinces, states, or other regions under a central federal government (federalism). In a federation, the self-governin ...
s of workers or consumers) submit their initial requests to the facilitation board, which aggregates this information. Because the conclusion of the first round of this process will almost certainly not be a workable plan, the facilitation board proceeds to update the list of indicative prices for each good up or down, in
proportion Proportionality, proportion or proportional may refer to: Mathematics * Proportionality (mathematics), the property of two variables being in a multiplicative relation to a constant * Ratio, of one quantity to another, especially of a part compare ...
to the
excess demand In economics, a shortage or excess demand is a situation in which the demand for a product or service exceeds its supply in a market. It is the opposite of an excess supply (surplus). Definitions In a perfect market (one that matches a sim ...
and
supply Supply may refer to: *The amount of a resource that is available **Supply (economics), the amount of a product which is available to customers **Materiel, the goods and equipment for a military unit to fulfill its mission *Supply, as in confidenc ...
for each, so that the updated prices reflect a more accurate estimate of the social opportunity costs of each item. The announcement of updated indicative prices then initiates the second round of the planning process, in which consumers and workers revise and resubmit their proposals in light of the new
information Information is an abstract concept that refers to that which has the power to inform. At the most fundamental level information pertains to the interpretation of that which may be sensed. Any natural process that is not completely random ...
. In particular, consumption proposals in which the individual's proposed effort
rating A rating is an evaluation or assessment of something, in terms of quality, quantity, or some combination of both. Rating or ratings may also refer to: Business and economics * Credit rating, estimating the credit worthiness of an individual, c ...
does not warrant the proposed level of consumption will need to be adjusted, so that the individual will either have to reduce his/her consumption requests, shift them to less costly products, or increase his/her projected work-hours for the coming year. Other consumers may discover that their initial proposals were too modest, and can revise their consumption upwards, if they choose, or they can revise their projected effort rating downwards by proposing to work fewer hours and increasing
leisure time Leisure has often been defined as a quality of experience or as free time. Free time is time spent away from business, work, job hunting, domestic chores, and education, as well as necessary activities such as eating and sleeping. Leisure a ...
. Production proposals are also summarized and evaluated on a quantitative basis, in this case by the ratio of
social benefits Welfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet Basic needs, basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refe ...
to
social costs Social cost in neoclassical economics is the sum of the private costs resulting from a transaction and the costs imposed on the consumers as a consequence of being exposed to the transaction for which they are not compensated or charged. In other w ...
. (The social benefit part of the ratio is calculated by multiplying the proposed quantity of outputs from a workplace by their indicative prices, adding negative prices for any proposed pollution emissions and summing. The social costs are calculated by multiplying the quantity of requested inputs by their indicative prices and summing.) Proposals with a benefits-to-cost ratio below one will need to make adjustments in order to gain approval in the next round, either by switching to a less polluting technology, producing a more socially desirable set of outputs, or using less costly inputs. After receiving the revised proposals, the facilitation board once again updates the list of indicative prices. After several rounds of this revision and resubmission process, the result is
convergence Convergence may refer to: Arts and media Literature *''Convergence'' (book series), edited by Ruth Nanda Anshen * "Convergence" (comics), two separate story lines published by DC Comics: **A four-part crossover storyline that united the four Wei ...
to a feasible plan in which workers and consumers are able to accomplish the activities that they detailed in their final submissions. Even after a feasible plan is achieved, flexible mid-year revisions of consumer/worker proposals can also be incorporated into the planning process. In
academic An academy (Attic Greek: Ἀκαδήμεια; Koine Greek Ἀκαδημία) is an institution of secondary education, secondary or tertiary education, tertiary higher education, higher learning (and generally also research or honorary membershi ...
work, Albert and Hahnel prove that
participatory planning Participatory planning is an urban planning paradigm that emphasizes involving the entire community in the community planning process. Participatory planning emerged in response to the centralized and rationalistic approaches that defined early ...
arrives at a
Pareto optimum Pareto efficiency or Pareto optimality is a situation where no action or allocation is available that makes one individual better off without making another worse off. The concept is named after Vilfredo Pareto (1848–1923), Italian civil engine ...
, and does so under less restrictive assumptions than markets; that is, participatory planning is Pareto optimal even though it incorporates both public goods and externalities, whereas markets do not achieve Pareto optimality with these two assumptions. A feature of participatory planning which differs from other modes of democratic planning is that all
deliberation Deliberation is a process of thoughtfully weighing options, usually prior to voting. Deliberation emphasizes the use of logic and reason as opposed to power-struggle, creativity, or dialogue. Group decisions are generally made after deliberation ...
on proposals occurs within councils, but does not take place between councils. That is, under parecon, a feasible economic plan is constructed due to an
iterative Iteration is the repetition of a process in order to generate a (possibly unbounded) sequence of outcomes. Each repetition of the process is a single iteration, and the outcome of each iteration is then the starting point of the next iteration. ...
adjustment of prices based on the information from councils' self-activity proposals, rather than owing to a procedure of deliberation among delegates from various workplaces/industries. This is potentially desirable by cutting down on the meeting time and bureaucratic burdens needed to converge on an annual plan.


Facilitation boards

In a proposed participatory economy, key information relevant to converging on an economic plan would be made available by Iteration Facilitation Boards (IFBs), which, based on proposals from worker/consumer councils and economic data, present indicative prices and economic projections at each round of the planning process. The IFB has no decision-making authority. In theory, the IFB's activity can consist mainly of computers performing the (agreed upon)
algorithms In mathematics and computer science, an algorithm () is a finite sequence of rigorous instructions, typically used to solve a class of specific problems or to perform a computation. Algorithms are used as specifications for performing c ...
for adjusting prices and forecasts, with little human involvement.


Motivations (opposition to central planning and capitalism)

Robin Hahnel Robin Eric Hahnel (born March 25, 1946) is an American economist and professor emeritus of economics at American University. He was a professor at American University for many years and traveled extensively advising on economic matters all over t ...
has argued that "participatory planning is not central planning", stating "The procedures are completely different and the
incentive In general, incentives are anything that persuade a person to alter their behaviour. It is emphasised that incentives matter by the basic law of economists and the laws of behaviour, which state that higher incentives amount to greater levels of ...
s are completely different. And one of the important ways in which it is different from central planning is that it is incentive compatible, that is, actors have an incentive to report truthfully rather than an incentive to misrepresent their capabilities or preferences." Unlike historical examples of central planning, the parecon proposal advocates the use and adjustment of price information reflecting marginal social opportunity costs and benefits as integral elements of the planning process. Hahnel has argued emphatically against
Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...
's
a priori ("from the earlier") and ("from the later") are Latin phrases used in philosophy to distinguish types of knowledge, justification, or argument by their reliance on empirical evidence or experience. knowledge is independent from current ex ...
tendency to deny the possibility of alternatives:
Friedman assumes away the best solution for coordinating economic activities. He simply asserts "there are only two ways of coordinating the economic activities of millions—central direction involving the use of coercion—and voluntary cooperation, the technique of the marketplace." ..a participatory economy can permit all to partake in economic decision making in proportion to the degree they are affected by outcomes. Since a participatory system uses a system of participatory planning instead of markets to coordinate economic activities, Friedman would have us believe that participatory planning must fall into the category of "central direction involving the use of coercion."
Albert and Hahnel have voiced detailed critiques of centrally-planned economies in theory and practice, but are also highly-critical of
capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for Profit (economics), profit. Central characteristics of capitalism include capital accumulation, competitive markets, pric ...
. Hahnel claims "the truth is capitalism aggravates prejudice, is the most inequitable economy ever devised, is grossly inefficient—even if highly energetic—and is incompatible with both economic and political democracy. In the present era of free-market triumphalism it is useful to organize a sober evaluation of capitalism responding to Friedman's claims one by one."


Critique of markets

Mainstream economists largely acknowledge the problem of externalities but believe they can be addressed either through Coasian bargaining or the use of
Pigovian tax A Pigouvian tax (also spelled Pigovian tax) is a tax on any market activity that generates negative externalities (i.e., external costs incurred by the producer that are not included in the market price). The tax is normally set by the government ...
es—extra taxes on goods that have externalities. According to economic theory, if Pigovian taxes are set so that the after-tax cost of the goods is equal to the social cost of the goods, the direct cost of production plus cost of externalities, then quantities produced will tend toward a socially optimal level. Hahnel observes, "more and more economists outside the mainstream are challenging this assumption, and a growing number of skeptics now dare to suggest that externalities are prevalent, and often substantial". Or, as E.K. Hunt put it: externalities are the rule rather than the exception, and therefore markets often work as if they were guided by a "malevolent invisible foot" that keeps kicking us to produce more of some things, and less of others than is socially efficient." As long as a market economy is in place, Albert and Hahnel favour Pigovian taxes over other solutions to environmental problems such as
command and control Command and control (abbr. C2) is a "set of organizational and technical attributes and processes ... hatemploys human, physical, and information resources to solve problems and accomplish missions" to achieve the goals of an organization or en ...
, or the issuance of marketable permits. However, Hahnel, who teaches ecological economics at
American University The American University (AU or American) is a private federally chartered research university in Washington, D.C. Its main campus spans 90 acres (36 ha) on Ward Circle, mostly in the Spring Valley neighborhood of Northwest D.C. AU was charte ...
, argues that in a market economy businesses try to avoid the "polluter pays principle" by shifting the burden of the costs for their polluting activities to consumers. In terms of incentives, he argues this might be considered a positive development because it would penalize consumers for "dirty" consumption. However, it also has regressive implications since
tax incidence In economics, tax incidence or tax burden is the effect of a particular tax on the distribution of economic welfare. Economists distinguish between the entities who ultimately bear the tax burden and those on whom tax is initially imposed. The tax ...
studies show that ultimately it would be poor people who would bear a great deal of the burden of many pollution taxes. "In other words, many pollution taxes would be highly regressive and therefore aggravate economic injustice." He, therefore, recommends that pollution taxes be linked to cuts in regressive taxes such as social security taxes. Hahnel argues that Pigovian taxes, along with associated corrective measures advanced by market economists, ultimately fall far short of adequately or fairly addressing
externalities In economics, an externality or external cost is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced goods involved in either co ...
. He argues such methods are incapable of attaining accurate assessments of social costs:
Markets corrected by pollution taxes only lead to the efficient amount of pollution and satisfy the polluter pays principle if the taxes are set equal to the magnitude of the damage victims suffer. But because markets are not incentive compatible for polluters and pollution victims, markets provide no reliable way to estimate the magnitudes of efficient taxes for pollutants. Ambiguity over who has the property right, polluters or pollution victims, free rider problems among multiple victims, and the transaction costs of forming and maintaining an effective coalition of pollution victims, each of whom is affected to a small but unequal degree, all combine to render market systems incapable of eliciting accurate information from pollution victims about the damages they suffer, or acting upon that information even if it were known.


Class and hierarchy

Advocates of parecon say the intention is that the four main ingredients of parecon be implemented with a minimum of hierarchy and a maximum of transparency in all discussions and decision-making. This model is designed to eliminate secrecy in economic decision-making, and instead encourage friendly cooperation and mutual support. This avoidance of power hierarchies puts parecon in the
libertarian socialist Libertarian socialism, also known by various other names, is a left-wing,Diemer, Ulli (1997)"What Is Libertarian Socialism?" The Anarchist Library. Retrieved 4 August 2019. anti-authoritarian, anti-statist and libertarianLong, Roderick T. (201 ...
political tradition. Stephen Shalom has produced a political system meant to complement parecon, called
parpolity Stephen Rosskamm Shalom is a professor of political science at William Paterson University where he has taught since 1977. He is a writer on social and political issues and is a contributor to Znet and '' Democratic Left''. He is on the editorial ...
. Although parecon falls under
left-wing Left-wing politics describes the range of political ideologies that support and seek to achieve social equality and egalitarianism, often in opposition to social hierarchy. Left-wing politics typically involve a concern for those in soci ...
political tradition, it is designed to avoid the creation of powerful intellectual elites or the rule of a
bureaucracy The term bureaucracy () refers to a body of non-elected governing officials as well as to an administrative policy-making group. Historically, a bureaucracy was a government administration managed by departments staffed with non-elected offi ...
, which is perceived as the major problem of the economies of the
communist state A communist state, also known as a Marxist–Leninist state, is a one-party state that is administered and governed by a communist party guided by Marxism–Leninism. Marxism–Leninism was the state ideology of the Soviet Union, the Comint ...
s of the 20th century. In their book ''Looking Forward'' Albert and Hanhel termed this situation 'coordinatorism'. Parecon advocates recognize that
monopolization In United States antitrust law, monopolization is illegal monopoly behavior. The main categories of prohibited behavior include exclusive dealing, price discrimination, refusing to supply an essential facility, product tying and predatory pricing ...
of empowering labor, in addition to private ownership, can be a source of
class division Class or The Class may refer to: Common uses not otherwise categorized * Class (biology), a taxonomic rank * Class (knowledge representation), a collection of individuals or objects * Class (philosophy), an analytical concept used differently ...
. Thus, a three-class view of the economy (capitalists, coordinators, and workers) is stressed, in contrast to the traditional two-class view of
Marxism Marxism is a Left-wing politics, left-wing to Far-left politics, far-left method of socioeconomic analysis that uses a Materialism, materialist interpretation of historical development, better known as historical materialism, to understand S ...
. The coordinator class, emphasized in parecon, refers to those who have a monopoly on empowering skills and knowledge, and corresponds to the doctors, lawyers, managers, engineers, and other professionals in present economies. Parecon advocates argue that, historically,
Marxism Marxism is a Left-wing politics, left-wing to Far-left politics, far-left method of socioeconomic analysis that uses a Materialism, materialist interpretation of historical development, better known as historical materialism, to understand S ...
ignored the ability of coordinators to become a new ruling class in a
post-capitalist Post-capitalism is a state in which the economic systems of the world can no longer be described as forms of capitalism. Various individuals and political ideologies have speculated on what would define such a world. According to classical Marx ...
society.


Innovation

Hahnel has also written a detailed discussion of parecon's desirability compared to capitalism with respect to incentives to innovate. In capitalism,
patent law A patent is a type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing an enabling disclosure of the invention."A p ...
s,
intellectual property rights Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, cop ...
and barriers to market entry are institutional features that reward individual innovators while limiting the use of new technologies. Hahnel notes that, in contrast, "in a participatory economy all innovations will immediately be made available to all enterprises, so there will never be any loss of static efficiency.". Innovation is sometimes the outcome of cumulative creativity, which pareconomists believe may not be legitimately attributed to individuals.


Limitations

Participatory economics is not in itself intended to provide a general political system. Its practical implementation would depend on an accompanying
political system In political science, a political system means the type of political organization that can be recognized, observed or otherwise declared by a state. It defines the process for making official government decisions. It usually comprizes the govern ...
. According to Albert and Hahnel, parecon addresses only an alternative economic theory and must be accompanied by equally important alternatives in the fields of politics, culture and kinship. The authors have also discussed elements of anarchism in the field of politics,
polyculturalism Polyculturalism is an ideological approach to the consequences of intercultural engagements within a geographical area which emphasises similarities between, and the enduring interconnectedness of, groups which self-identify as distinct, thus blu ...
in the field of culture, and feminism in the field of family and gender relations as being possible foundations for future alternative visions in these other spheres of society; the totality of such changes is often referred to as 'participatory society'. Stephen R. Shalom has begun work on a participatory political vision he calls "
parpolity Stephen Rosskamm Shalom is a professor of political science at William Paterson University where he has taught since 1977. He is a writer on social and political issues and is a contributor to Znet and '' Democratic Left''. He is on the editorial ...
".


Criticism

David Schweickart David Schweickart (born 1942) is an Americans, American mathematician and philosopher. He holds a Bachelor's Degree, BS in Mathematics from University of Dayton, a Doctor of Philosophy, PhD in Mathematics from University of Virginia, and a PhD in ...
suggests participatory economics would be undesirable even if it was possible:
It is a system obsessed with comparison (Is your job complex more empowering than mine?), with monitoring (You are not working at average intensity, mate—get with the program), with the details of consumption (How many rolls of toilet paper will I need next year? Why are some of my neighbors still using the kind not made of recycled paper?)
Other criticism raised by Schweickart include: * Difficulty with creating balanced job complexes and ensuring they do not suffer from
inefficiency Efficiency is the often measurable ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result. In a more general sense, it is the ability to do things well, successfully, and without ...
. * A system based on peer evaluation may not work as workers could slack off and there would be little incentive for colleagues to damage their relationships by giving them bad reviews. Alternatively it may cause workers to become suspicious of one another, undermining
solidarity ''Solidarity'' is an awareness of shared interests, objectives, standards, and sympathies creating a psychological sense of unity of groups or classes. It is based on class collaboration.''Merriam Webster'', http://www.merriam-webster.com/dictio ...
. * A compensation system based on effort would be difficult to measure and would need to be based on an average rating system of effort. * Parecon's compensation system would be overly
egalitarian Egalitarianism (), or equalitarianism, is a school of thought within political philosophy that builds from the concept of social equality, prioritizing it for all people. Egalitarian doctrines are generally characterized by the idea that all hum ...
and likely cause
resentment Resentment (also called ranklement or bitterness) is a complex, multilayered emotion that has been described as a mixture of disappointment, disgust and anger. Other psychologists consider it a mood or as a secondary emotion (including cogniti ...
among workers who work harder while also discouraging them from putting in extra effort since they will gain no greater compensation. * Parecon would likely produce an onerous and tiresome requirement to list off all things people want produced, which would likely suffer from uncertainty given people do not always know what they desire, as well as issues with how much information they should be required to supply and complexities with the negotiations required between worker and consumer councils.


Planning

Participatory economics would create a large amount of administrative work for individual workers, who would have to plan their consumption in advance, and a new bureaucratic class. Proponents of parecon argue that capitalist economies are hardly free of bureaucracy or meetings, and a parecon would eliminate banks, advertising, stock market, tax returns and long-term financial planning. Albert and Hahnel claim that it is probable that a similar number of workers will be involved in a parecon bureaucracy as in a capitalist
bureaucracy The term bureaucracy () refers to a body of non-elected governing officials as well as to an administrative policy-making group. Historically, a bureaucracy was a government administration managed by departments staffed with non-elected offi ...
, with much of the voting achieved by computer rather than meeting, and those who are not interested in the collective consumption proposals not required to attend. Critics suggest that proposals require consideration of an unfeasibly large set of policy choices, and that lessons from planned societies show that peoples' daily needs cannot be established well in advance simply by asking people what they want. Albert and Hahnel note that markets themselves hardly adjust prices instantaneously, and suggest that in a participatory economy facilitation boards could modify prices on a regular basis. According to Hahnel these act according to democratically decided guidelines, can be composed of members from other regions and are impossible to bribe due to parecon's non-transferable currency.Michael Albert and Robin Hahnel, "Looking Forward" pp. 92–93. However,
Takis Fotopoulos Takis Fotopoulos ( el, Τάκης Φωτόπουλος born 14 October 1940) is a Greek people, Greek political philosophy, political philosopher, economist and writer who founded the inclusive democracy, Inclusive Democracy movement, aiming at a ...
argues that "no kind of economic organisation based on planning alone, however democratic and decentralized it is, can secure real self-management and freedom of choice."Takis Fotopoulos (2003), "Inclusive Democracy and Participatory Economics", ''Democracy & Nature'', Volume 9, Issue 3 November 2003, pp. 401–25.


Loss of efficiency

Parecon might reduce efficiency in the workplace. For one, expert and exceptional workers (e.g. exceptional surgeons and scientists) would not be performing their tasks full-time. Participatory economics would expect them to share in "disempowering work" and would not offer opportunities to seek additional compensation for their high ability or finding solutions to problems. In a lecture at
Willamette University Willamette University is a private liberal arts college with locations in Salem and Portland, Oregon. Founded in 1842, it is the oldest college in the Western United States. Originally named the Oregon Institute, the school was an unaffiliated ...
in Oregon in 2015, Hahnel responded to this criticism by explaining that these jobs could be filled by machines, which are underutilized in capitalist economic systems due to the lowered rates of profit, and also division of labor wouldn't exist under a participatory economic system as much as it does under capitalism, so people would not always have the same jobs. Theodore Burczak argues that it is impossible for workers to give the unbiased assessments of the "largely unobservable" characteristics of effort proposed as the basis for salary levels, and the absence of market exchange mechanisms likewise makes calculating social costs of production and consumption impossible.


See also

*
Anarchist economics Anarchist economics is the set of theories and practices of economic activity within the political philosophy of anarchism. Many anarchists are anti-authoritarian anti-capitalists, with anarchism usually referred to as a form of libertarian socia ...
*
Anarcho-syndicalism Anarcho-syndicalism is a political philosophy and anarchist school of thought that views revolutionary industrial unionism or syndicalism as a method for workers in capitalist society to gain control of an economy and thus control influence in b ...
*
Collaborative e-democracy Collaborative e-democracy is a democratic conception that combines key features of direct democracy, representative democracy, and e-democracy (i.e. the use of ICTs for democratic processes). The concept was first published at two international ...
*
Complementary holism Complementary holism is a social theory or conceptual framework proposed by Michael Albert and Robin Hahnel, that sees all societies as consisting of a Human Center and Institutional Boundaries, and all social relations in the political, economic, ...
*
Co-operative A cooperative (also known as co-operative, co-op, or coop) is "an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically-control ...
*
Economic democracy Economic democracy is a socioeconomic philosophy that proposes to shift decision-making power from corporate managers and corporate shareholders to a larger group of public stakeholders that includes workers, customers, suppliers, neighbour ...
*
Inclusive Democracy Inclusive Democracy (ID) is a project that aims for direct democracy; economic democracy in a stateless, moneyless and marketless economy; self-management (democracy in the socio-economic realm); and ecological democracy. The theoretical p ...
*
Libertarian municipalism Murray Bookchin (January 14, 1921 – July 30, 2006) was an American social theorist, author, orator, historian, and political philosopher. A pioneer in the environmental movement, Bookchin formulated and developed the theory of social ec ...
*
Participatory politics Stephen Rosskamm Shalom is a professor of political science at William Paterson University where he has taught since 1977. He is a writer on social and political issues and is a contributor to Znet and '' Democratic Left''. He is on the editorial ...
*
Social justice Social justice is justice in terms of the distribution of wealth, opportunities, and privileges within a society. In Western and Asian cultures, the concept of social justice has often referred to the process of ensuring that individuals fu ...


References


Further reading

*
A Quiet Revolution In Welfare Economics
', Albert and Hahnel,
Princeton University Press Princeton University Press is an independent publisher with close connections to Princeton University. Its mission is to disseminate scholarship within academia and society at large. The press was founded by Whitney Darrow, with the financial su ...
, 1990. *
Looking Forward: Participatory Economics for the Twenty First Century
', Albert and Hahnel,
South End Press South End Press was a non-profit book publisher run on a model of participatory economics. It was founded in 1977 by Michael Albert, Lydia Sargent, Juliet Schor, among others, in Boston's South End. It published books written by political activi ...
, 1991. *
The Political Economy of Participatory Economics
', Albert and Hahnel, Princeton University Press, 1991. *
Moving Forward: Program for a Participatory Economy
', Albert, AK Press, 1997. *

', Albert, Verso Books, 2003. *
Economic Justice And Democracy: From Competition To Cooperation
', Hahnel, Routledge, 2005. *

', Albert, Zed Press, 2006. *
Real Utopia: Participatory Society for the 21st Century
', Chris Spannos (Ed.), AK Press, 2008. *
Takis Fotopoulos Takis Fotopoulos ( el, Τάκης Φωτόπουλος born 14 October 1940) is a Greek people, Greek political philosophy, political philosopher, economist and writer who founded the inclusive democracy, Inclusive Democracy movement, aiming at a ...
(2003)
Inclusive Democracy and Participatory Economics
'' Democracy & Nature'', Volume 9, Issue 3 November 2003, pp. 401–25 – a comparison with
Inclusive Democracy Inclusive Democracy (ID) is a project that aims for direct democracy; economic democracy in a stateless, moneyless and marketless economy; self-management (democracy in the socio-economic realm); and ecological democracy. The theoretical p ...
* Rameez Rahman, Michel Meulpolder, David Hales, Johan Pouwelse, Henk Sips (2009),
Revisiting Social Welfare in P2P
, Delft University of Technology Report. – applying Participatory Economics principles to analysis of
peer-to-peer Peer-to-peer (P2P) computing or networking is a distributed application architecture that partitions tasks or workloads between peers. Peers are equally privileged, equipotent participants in the network. They are said to form a peer-to-peer n ...
computing systems {{DEFAULTSORT:Participatory Economics Anarchist economic schools Criticism of intellectual property Economic democracy Economic ideologies Economic planning Economic systems
Economics Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and intera ...
Social anarchism Socialism