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Participatory economics, often abbreviated Parecon, is an
economic system An economic system, or economic order, is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by its environm ...
based on participatory decision making as the primary
economic mechanism
economic mechanism
for
allocation
allocation
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 political Politics (from , ) is the set of activities that are associated with making decisions In psychology, decision-making (also spelled decision making and decisionmaking) is regarded as the Cognition, cognitive pr ...
decentralized planned economy A planned economy is a type of economic system An economic system, or economic order, is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A ...
involving the
common ownership Common ownership refers to holding the assets of an organization, enterprise Enterprise (or the archaic spelling Enterprize) may refer to: Business and economics Brands and enterprises * Enterprise GP Holdings Enterprise GP Holdings ...
of the many
means of production The means of production is a concept that encompasses the social use and ownership Ownership is the state or fact of exclusive right In Anglo-Saxon law Anglo-Saxon law (Old English Old English (, ), or Anglo-Saxon, is the earliest record ...
. It is a proposed alternative to contemporary
capitalism Capitalism is an economic system An economic system, or economic order, is a system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects have an effect upon one another. The idea o ...

capitalism
and
centralized planning Centralisation or centralization (see American and British English spelling differences#iseize, spelling differences) is the process by which the activities of an organisation, particularly those regarding planning and decision-making, framing ...
. This
economic model In economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behav ...

economic model
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 science Social science is the branch A branch ( or , ) or tree branch (sometimes referred to in botany Botany, also called , plant biology or phytology, is the s ...

economist
Robin Hahnel Robin Eric Hahnel (born March 25, 1946) is an American economist and professor of economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (e ...
, who describes participatory economics as an
anarchist Anarchism is a political philosophy and Political movement, movement that is sceptical of authority and rejects all involuntary, coercive forms of hierarchy. Anarchism calls for the abolition of the State (polity), state, which it holds to ...

anarchist
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 diffe ...
,
solidarity Solidarity is an awareness of shared interests, objectives, standards, and sympathies creating a psychological sense of unity of groups or classes, which rejects the class conflict Class conflict, also referred to as class struggle and clas ...
, diversity,
workers' self-management Workers' self-management, also referred to as labor management and organizational self-management, is a form of organizational management Management (or managing) is the administration of an organization An organization, or organisa ...
,
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 withou ...

efficiency
(defined as accomplishing goals without wasting valued
assets In financial accounting Financial accounting is the field of accounting Accounting or Accountancy is the measurement, processing, and communication of financial and non financial information about economic entity, economic entities such ...
) and
sustainability Sustainability is the capacity to endure in a relatively ongoing way across various domains of life. In the 21st century, it refers generally to the capacity for Earth's biosphere and human civilization to co-exist. For many, sustainability is ...

sustainability
. The institutions of parecon include workers' and consumers' councils utilising self-managerial methods for decision-making, balanced job complexes,
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 Employee benefit, ben ...

remuneration
based on individual effort, and wide participatory planning.


Decision-making principle

In parecon, it constitutes a replacement for the mainstream economic 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 debate Policy debate is a form of debate competition in which teams of two advocate for and again ...
, which Albert and Hahnel argue by its very vagueness has allowed it to be abused by
capitalist Capitalism is an economic system An economic system, or economic order, is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, ...

capitalist
ideologues An ideology () is a set of beliefs or philosophies attributed to a person or group of persons, especially as held for reasons that are not purely epistemic, in which "practical elements are as prominent as theoretical ones." Formerly applied prim ...
.


Work and distribution


Balanced job complexes

A main goal of
socialism Socialism is a political Politics (from , ) is the set of activities that are associated with Decision-making, making decisions in Social group, groups, or other forms of Power (social and political), power relations between individuals, ...
is to create a
society A society is a group A group is a number A number is a mathematical object used to counting, count, measurement, measure, and nominal number, label. The original examples are the natural numbers 1, 2, 3, 4, and so forth. Numbers can be ...

society
without classes, and traditional socialist thinking identifies classes based on ownership of the means of production (in
capitalism Capitalism is an economic system An economic system, or economic order, is a system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects have an effect upon one another. The idea o ...

capitalism
, those are the
capitalist class Bourgeoisie (; ) is a Polysemy, polysemous French term that can mean: * a sociologically defined social class, especially in contemporary times, referring to people with a certain Cultural capital, cultural and financial capital belonging to ...

capitalist class
and the
proletarian The proletariat (; ) is the social class A social class is a set of concepts in the social sciences Social science is the Branches of science, branch of science devoted to the study of society, societies and the Social relation, re ...

proletarian
class). However, Albert and Hahnel identify a third class created by the particular
division of labor Division or divider may refer to: Mathematics *Division (mathematics) Division is one of the four basic operations of arithmetic, the ways that numbers are combined to make new numbers. The other operations are addition, subtraction, and mult ...
. 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 political Politics (from , ) is the set of activities that are associated with making decisions In psychology, decision-making (also spelled decision making and decisionmaking) is regarded as the Cognition, cognitive pr ...
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 ...

empowerment
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
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 ,
education Education is the process of facilitating learning, or the acquisition of knowledge, skills, value (ethics), values, morals, beliefs, habits, and personal development. Educational methods include teaching, training, storytelling, discussion ...

education
, 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 Expenditure is an outflow of money, or any form of Wealth, fortune in general, to another person or group as payment for an item, service, or other category of costs. For a leasehold estate, tenant, renting, rent is an expense. For students or paren ...
s and consumption rights for
public goods In economics Economics () is a social science Social science is the branch A branch ( or , ) or tree branch (sometimes referred to in botany Botany, also called , plant biology or phytology, is the science of pla ...
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 Time is the continued sequence of existence and event (philosophy), events that occurs in an apparently irreversible process, irreversible s ...

leisure
time, and the level of danger and difficulty of a job as judged by their immediate workplace peers.


Scale

While many types of production and consumption may become more localized under participatory economics, the model does not exclude
economies of scale In microeconomics Microeconomics is a branch of mainstream economics Mainstream economics is the body of knowledge, theories, and models of economics, as taught by universities worldwide, that are generally accepted by economists as a basis ...

economies of scale
.


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 Rationalism, rationalistic approaches that de ...
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 sam ...
and
centralized planning Centralisation or centralization (see American and British English spelling differences#iseize, spelling differences) is the process by which the activities of an organisation, particularly those regarding planning and decision-making, framing ...
. 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 A legislature is a deliberative assembly with the authority In the fields of sociology Sociology is the ...
and (2) consumption proposals made by individuals and their neighborhood councils, 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 A business process, business method ...

process
converges on a feasible plan for the upcoming year. The process begins when the facilitation board (see below) announces a list of indicative prices for each final
consumer good A final good or consumer good is a final product In production Production may be: Economics and business * Production (economics) * Production, the act of manufacturing goods * Production, in the outline of industrial organization, the act o ...
, 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 Research ...
,
natural resource Natural resources are resource Resource refers to all the materials available in our environment which help us to satisfy our needs and wants. Resources can broadly be classified upon their availability — they are classified into renewabl ...
, and category of labor that is available to society. These indicative prices are calculated to reflect the estimated
opportunity costs In microeconomic theory Microeconomics (from Greek prefix ''mikro-'' meaning "small" + ''economics'') is a branch of economics Economics () is the social science that studies how people interact with value; in particular, the Produc ...
for producing various goods and services, and incorporate both social costs and
pollution Pollution is the introduction of contaminant Contamination is the presence of a constituent, impurity, or some other undesirable element that spoils, corrupts, infects, makes unfit, or makes inferior a material, physical body, natural en ...

pollution
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 ( gr, δημοκρατία, ''dēmokratiā'', from ''dēmos'' 'people' and ''kratos'' 'rule') is a form of government in which people, the people have the authority to deliberate and decide legislation ("direct democracy"), or to cho ...

democratically
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 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
federations A federation (also known as a federal state) is a political entity A polity is an identifiable political Politics (from , ) is the set of activities that are associated with Decision-making, making decisions in Social group, groups, ...

federations
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 to the excess demand and supply 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. In particular, consumption proposals in which the individual's proposed effort
rating A rating is an evaluation Evaluation is a system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects have an effect upon one another. The idea of a two-way effect is essential in the conc ...
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 Time is the continued sequence of existence and event (philosophy), events that occurs in an apparently irreversible process, irreversible s ...

leisure time
. Production proposals are also summarized and evaluated on a quantitative basis, in this case by the ratio of social benefits to social costs. (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 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 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, research, or honorary membership. Academia is the ...
work, Albert and Hahnel (1991) 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 Rationalism, rationalistic approaches that de ...
arrives at a
Pareto optimum Pareto efficiency or Pareto optimality is a situation where no individual or preference criterion can be better off without making at least one individual or preference criterion worse off or without any loss thereof. The concept is named after ...
, 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 Democrat, Democrats, or Democratic may refer to: Politics *A proponent of democracy Democracy ( gr, δημοκρατία, ''dēmokratiā'', from ''dēmos'' 'people' and ''kratos'' 'rule') is a form of government in which people, the people ...

democratic
planning is that all 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 (participatory planning) based on councils' self-activity proposals, rather than owing to a procedure of deliberation among delegates across 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 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 of economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (e ...
has argued that "participatory planning is not central planning", stating "The procedures are completely different and the
incentives An incentive is something that motivates or drives one to do something or behave in a certain way. There are two types of incentives that affect human decision making. These are: intrinsic and extrinsic incentives. Intrinsic incentives are ...
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 An economist is a professional and practitioner in the social science Social science is the branch The branches and leaves of a tree. A branch ( ...

Milton Friedman
's
a priori ''A priori'' and ''a posteriori'' ('from the earlier' and 'from the later', respectively) are Latin phrases used in philosophy Philosophy (from , ) is the study of general and fundamental questions, such as those about Metaphysics, exi ...
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 An economic system, or economic order, is a system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects have an effect upon one another. The idea o ...

capitalism
. 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 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 Pigovian tax (also spelled Pigouvian tax) is a tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity In law Law is a system A system is a group of Interacti ...

Pigovian tax
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 is a "set of organizational and technical attributes and processes ...
hat A collection of 18th and 19th century men's beaver felt hats A hat is a head covering which is worn for various reasons, including protection against weather conditions, ceremonial reasons such as university graduation, religious reasons, safet ...

hat
employs human, physical, and information resources to solve problems and accomplish missions" to achieve the goals of an organization or enterpris ...
, or the issuance of marketable permits. However, Hahnel, who teaches ecological economics at
American University The American University (AU or American) is a private Private or privates may refer to: Music * "In Private "In Private" was the third single in a row to be a charting success for United Kingdom, British singer Dusty Springfield, after an ...
, argues that in a market economy businesses try to avoid the 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 Economics () is a social science Social science is the branch A branch ( or , ) or tree branch (sometimes referred to in botany Botany, also called , plant biology or phytology, is the science of plant l ...
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 Economics () is a social science Social science is the branch A branch ( or , ) or tree branch (sometimes referred to in botany Botany, also called , plant biology or phytology, is the science of plan ...

externalities
. 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 referred to as anarcho-socialism, anarchist socialism, free socialism, stateless socialism, socialist anarchism and socialist libertarianism,Carlson, Jennifer D. (2012). "Libertarianism". In Miller, Wilburn R., ed. '' ...
political tradition.
Stephen Shalom Stephen Rosskamm Shalom is a professor of political science at William Paterson University in New Jersey. He is a writer on social and political issues and is a contributor to Znet and ''Democratic Left'', the publication of Democratic Socialists ...
has produced a political system meant to complement parecon, called
parpolity Participatory politics or parpolity is a theoretical political system proposed by Stephen Shalom Stephen Rosskamm Shalom is a professor of political science Political science is the scientific study of politics. It is a social science dealing w ...
. Although parecon falls under
left-wing Left-wing politics support social equality Social equality is a state of affairs in which all people within a specific society A society is a Social group, group of individuals involved in persistent Social relation, social in ...
political tradition, it is designed to avoid the creation of powerful intellectual elites or the rule of a
bureaucracy The term bureaucracy () may refer both to a body of non-elected governing officials and to an administrative policy-making group. Historically, a bureaucracy was a government administration managed by departments staffed with non-elected off ...

bureaucracy
, 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 A one-party state, single-party state, one-party system, or single-party system is a type of sovereign state A sovereign state is a political entity that ...
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. ...

monopolization
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 method of socioeconomic Socioeconomics (also known as social economics) is the social science that studies how economic activity affects and is shaped by social processes. In general it analyzes how modern society, societies soci ...
. 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 method of socioeconomic Socioeconomics (also known as social economics) is the social science that studies how economic activity affects and is shaped by social processes. In general it analyzes how modern society, societies soci ...
ignored the ability of coordinators to become a new ruling class in a post-capitalist society.http://www.zcommunications.org/parecon-and-marxism-by-michael-albert


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 Intellectual property (IP) is a category of property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depe ...
s,
intellectual property rights Intellectual property (IP) is a category of property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner o ...
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.


Examples of application


Workplace democracy

The archetypal
workplace democracy A workplace is a location where someone works for their employer, a place of employment Employment is a relationship between two party (law), parties, usually based on employment contract, contract where work is paid for, where one party, wh ...
model, the Wobbly Shop was pioneered by the
Industrial Workers of the World The Industrial Workers of the World (IWW), members of which are commonly termed "Wobblies", is an international labor union that was founded in Chicago (''City in a Garden''); I Will , image_map = , map_caption ...

Industrial Workers of the World
, in which the self-managing norms of
grassroots democracy Grassroots democracy is a tendency towards designing political Politics (from , ) is the set of activities that are associated with Decision-making, making decisions in Social group, groups, or other forms of Power (social and political), ...
were applied.


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 Political science is the scientific study of politics Politics (from , ) is the set of activities that are associated with making decisions in groups, or other forms of power relations between individuals, such ...
. 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 blurr ...
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.
Stephen R. Shalom Stephen Rosskamm Shalom is a professor of political science Political science is the scientific study of politics. It is a social science dealing with systems of governance and power, and the analysis of politics, political activities, political ...
has begun work on a participatory political vision he calls "
parpolity Participatory politics or parpolity is a theoretical political system proposed by Stephen Shalom Stephen Rosskamm Shalom is a professor of political science Political science is the scientific study of politics. It is a social science dealing w ...
". Both systems together make up the political philosophy of
Participism Participism is a libertarian socialist Libertarian socialism, also referred to as anarcho-socialism, anarchist socialism, free socialism, stateless socialism, socialist anarchism and socialist libertarianism,Carlson, Jennifer D. (2012). "Lib ...
.


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 The Term (language), term inefficiency generally refers to an absence of efficiency. It has several meanings depending on the context in which it is used: *Allocative efficiency, Allocative inefficiency - Allocative efficiency refers to a situati ...
. * 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, which rejects the class conflict Class conflict, also referred to as class struggle and clas ...

solidarity
. * 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 A school of thought, or intellectual tradition, is the perspective of a group of people who share common characteristics of opinion or outlook of a philosophy Philosophy ...
and likely cause
resentment Resentment (also called ranklement or bitterness) is a complex, multilayered that has been described as a mixture of , , , and . Other psychologists consider it a or as a secondary emotion (including cognitive elements) that can be elicited i ...

resentment
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 () may refer both to a body of non-elected governing officials and to an administrative policy-making group. Historically, a bureaucracy was a government administration managed by departments staffed with non-elected off ...

bureaucracy
, 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, 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 university in Salem, Oregon. Founded in 1842, it is the oldest university in the Western United States. Willamette is a member of the Annapolis Group of colleges, and is made up of an undergraduate College of A ...

Willamette University
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.


Influence

In 2012, the International Organization for a Participatory Society was founded, advocating for a participatory society including participatory economics, also referred to as
participism Participism is a libertarian socialist Libertarian socialism, also referred to as anarcho-socialism, anarchist socialism, free socialism, stateless socialism, socialist anarchism and socialist libertarianism,Carlson, Jennifer D. (2012). "Lib ...
.http://www.iopsociety.org/about


See also

*
Analytical Marxism Analytical Marxism is an approach to Marxist theory Marxist philosophy or Marxist theory are works in philosophy Philosophy (from , ) is the study of general and fundamental questions, such as those about reason, Metaphysics, existen ...
*
Anarchism Anarchism is a political philosophy Political philosophy or political theory is the philosophical Philosophy (from , ) is the study of general and fundamental questions, such as those about reason, existence, knowledge ...

Anarchism
*
Anarchist economics Anarchist economics is the set of theories and practices of economic activity within the political philosophy of anarchism Anarchism is a political philosophy Political philosophy or political theory is the philosophical P ...
*
Anarcho-Syndicalism Anarcho-syndicalism is a political philosophy Political philosophy or political theory is the philosophical Philosophy (from , ) is the study of general and fundamental questions, such as those about reason, existence, knowledge ...
*
Collective bargaining Collective bargaining is a process of negotiation Negotiation is a between two or more people or parties intended to reach a beneficial outcome over one or more issues where a conflict exists with respect to at least one of these issu ...
*
Complementary holism Complementary holism is a social theory Social theories are analytical frameworks, or paradigm In science Science () is a systematic enterprise that builds and organizes knowledge Knowledge is a familiarity, awareness, or understand ...
*
Co-operative A cooperative (also known as co-operative, co-op, or coop) is "an autonomous The federal subject The federal subjects of Russia, also referred to as the subjects of the Russian Federation (russian: субъекты Российск ...
*
Direct democracy Direct democracy or pure democracy is a form of democracy in which the Election#Electorate, electorate decides on policy initiatives without legislator, legislative representatives as proxies. This differs from the majority of currently estab ...
*
Decentralized planning (economics) A planned economy is a type of economic system An economic system, or economic order, is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A ...
*
Ecological economics Ecological economics, bioeconomics, ecolonomy, eco-economics, or ecol-econ is both a transdisciplinary Transdisciplinarity connotes a research strategy that crosses many disciplinary boundaries to create a holistic Holism (from Ancient Gre ...
*
Economic democracy Economic democracy is a socioeconomic Socioeconomics (also known as social economics) is the social science that studies how economic activity affects and is shaped by social processes. In general it analyzes how modern society, societies soci ...
*
Horizontalidad ''Horizontalidad'' (, horizontality or horizontalism) is a social relationship that advocates the creation, development, and maintenance of social structures for the equitable distribution of management Management (or managing) is the admini ...

Horizontalidad
*
Inclusive democracy #REDIRECT 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 ...
* Mutualism *
Post-autistic economics The post-autistic economics movement (french: autisme-économie) or movement of students for the reform of economics teaching (french: mouvement des étudiants pour une réforme de l'enseignement de l'économie) is a political movement which criti ...
*
Post-capitalism Post-capitalism is a state in which the economic system An economic system, or economic order, is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified w ...
*
Participatory budgeting Participatory budgeting (PB) is a process of democratic deliberation and decision-making, in which ordinary people decide how to allocate part of a municipal A municipality is usually a single administrative division Administrative divi ...

Participatory budgeting
*
Participatory democracy Participatory democracy or participative democracy is a model of democracy in which citizens are provided power to make political decisions. Etymological roots of ''democracy Democracy ( gr, δημοκρατία, ''dēmokratiā'', from ''dē ...
* Participatory justice *
Participatory politics Participatory politics or parpolity is a theoretical political system proposed by Stephen Shalom Stephen Rosskamm Shalom is a professor of political science Political science is the scientific study of politics. It is a social science dealing w ...
*
Public participation Public participation, also known as citizen participation or patient and public involvement, is the inclusion of the public in the activities of any organization or project. Public participation is similar to but more inclusive than stakeholder en ...
*
Socialism Socialism is a political Politics (from , ) is the set of activities that are associated with Decision-making, making decisions in Social group, groups, or other forms of Power (social and political), power relations between individuals, ...
*
Socialist economics Socialist economics comprises the economic theories, practices and norms of hypothetical and existing socialist Socialism is a political Politics (from , ) is the set of activities that are associated with Decision-making, making decisi ...
* Surplus economics *
Syndicalism Syndicalism is a current in the labor movement The labour movement or labor movement consists of two main wings: the trade union movement ( British English) or labor union movement (American English American English (AmE, AE, AmEng, USE ...

Syndicalism
*
Workers' council A workers' council or labor council is a form of political and economic organization in which a single local administrative division, such as a municipality A municipality is usually a single administrative division Administrative di ...
*
Workers' self-management Workers' self-management, also referred to as labor management and organizational self-management, is a form of organizational management Management (or managing) is the administration of an organization An organization, or organisa ...
*
Workplace democracy A workplace is a location where someone works for their employer, a place of employment Employment is a relationship between two party (law), parties, usually based on employment contract, contract where work is paid for, where one party, wh ...
*
Z CommunicationsZ Communications is a left-wing activist-oriented media group founded in 1986 by Michael Albert and Lydia Sargent.Max Elbaum''Revolution in the air: sixties radicals turn to Lenin, Mao and Che'' London, England, UK; New York, New York, USA: Verso, ...


References


Further reading

*
A Quiet Revolution In Welfare Economics
', Albert and Hahnel,
Princeton University Press Princeton University Press is an independent publisher Publishing is the activity of making information, literature, music, software and other content available to the public for sale or for free. Traditionally, the term refers to the creatio ...

Princeton University Press
, 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, Boston, South End. It published books written by ...
, 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. * (2003)
Inclusive Democracy and Participatory Economics
'' Democracy & Nature'', Volume 9, Issue 3 November 2003, pp. 401–25 – a comparison with
Inclusive Democracy #REDIRECT 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 ...
* 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 Distributed computing is a field of computer science that studies distributed systems. A ''distributed system'' is a system whose components are located on different co ...

peer-to-peer
computing systems {{DEFAULTSORT:Participatory Economics Anarchist economic schools Socialism Social anarchism Economic ideologies Economic planning Economic systems Participatory democracy, Economics Economic democracy