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Participatory economics, or parecon, a participatory economics system proposed as an alternative to other systems such as capitalism and coordinatorism, emerged from the work of the radical theorist Michael Albert and of the radical economist Robin Hahnel, beginning in the 1980s and 1990s. Parecon only addresses economics, but its creators see it as complementary to changes in other areas: for example, anarchism in the area of politics or feminism in the area of family and gender relations.
Parecon critique of capitalism
The critique of markets Only the interests of buyer and seller are considered in a typical market transaction, but others who can be affected by the transaction have no voice in it. For instance, the sale of highly addictive drugs, like alcohol and tobacco, is in the interest of the seller and at least in the short term interest of the buyer, but others outside the transaction end up bearing costs in the form of social problems and medical treatment. When fossil-fueled vehicles are sold others outside the transaction end up bearing costs in the form of pollution and resource depletion etc. The market price of such vehicles and drugs does not include these costs, hence their label of 'externalities'.
The critique of corporate personhood The basis of capitalism is the concept of so-called private ownership, which confers upon the owner the right to do with this possession as the owner pleases, even though decisions relating to that possession may have big effects on other people. This concept extended to the private possession of huge corporations, which are themselves not human, won't ever die, and have, in human terms, unlimited time to extend their power and importance. In the course of the late nineteenth and early twentieth century, a stepwise juridical revolution made them into "juridical persons," with the rights of citizens (see corporate personhood). In a way these possessions got their own owners, with the right to do as they please. People outside a corporation don't have any right to interfere with it; the theoretical possibility of the state interfering for the benefit of all citizens is unlikely, as economic history has shown that it is rather the other way around: such huge agglomerations of economic power interfere with the decision making of states in their interests. Promoters of parecon hold that the pursuit of private profit and power by such corporations is not in the interest of the majority of citizens.
Parecon's institutional framework
Decision-making principle Every person should have say in a decision proportionate to the degree to which she or he is affected by it.
Consumers' and Producers' Councils To achieve this decision-making principle, a parecon would be organized in consumers' and producers' councils. Many individuals would participate in both.
Geographically, these councils would probably be nested, with neighborhood councils, ward councils, city or regional councils and a country council. Decisions would be achieved sometimes by consensus, sometimes by majority votes, and sometimes by other means, as the most appropriate method is decided on by the councils. Local decisions like the construction of a playground might be made in the ward or maybe city consumers' council, probably interacting with both city and countrywide producers' councils. Countrywide decisions, like the construction of a high speed mass transportation system, would be discussed by the country consumers' council, possibly interacting with a city producers' council of the city where materials are produced, or maybe countrywide or international producers' councils.
The producers' councils would probably correspond to workplace councils in each workplace and similar workplaces would group into nested councils on successively larger geographical and linguistic scales.
Remuneration for effort and sacrifice Promoters of Parecon hold that it is inequitable, and also ineffective, to remunerate people on the basis of their birth, their possession or their innate talents and intelligence. Therefore, a parecon would reward only effort and sacrifice. Someone who works in a mine, which is dangerous, uncomfortable and confers no power whatsoever on the worker, would get a higher income than someone who works in an office.
Economic Planning: feedbacks and successive iterations Every planning period begins with a proposal of estimated consumption by every citizen, discussions of collective consumers' needs in the consumers' councils and proposals of estimated production and prices from every workplace.
Facilitation boards then compare the prices for goods and services from these proposals and make these data available for everyone. If the prices representing demand from the consumers and supply from the producers do not match, then the facilitation boards estimate compromise prices and/or production levels, and send these back to the consumers' and producers' councils.
The consumers' and producers' councils rediscuss their proposals, and send new proposals to the facilitation boards, which again check if consensus has been reached, and if not, send new compromise proposals to both councils.
This process of iterations continues according to some predefined method which is likely to converge within an acceptable time delay.
The facilitation boards should function according to a maximum level of radical transparency and only have very limited powers of mediation - the real decisions are made in the consumers' and producers' councils.
Job Complexes Some tasks and jobs are more comfortable than others, and some tasks are more empowering than others. To achieve an equitable division of labour, it is therefore proposed that every person must do different jobs, which, taken together, bring an average comfort and an average empowerment. For instance, someone who works in a facilitation board for one year might then have to work in a steel plant, or in another uncomfortable workplace of his or her choice, for a year, or else would not get a higher salary than the standard for everyone. This assures that no class of coordinators can develop.
Summary and remarks These four ingredients are intended to be implemented with a minimum of hierarchy and a maximum of openness in discussions and decision-making. This model is designed to eliminate secrecy in economic decision-making, replaced by friendly cooperation and mutual support.
Although a participatory economy probably falls under the left-wing political tradition (and also under the anarchist political tradition), it is specifically designed to avoid the creation of powerful intellectual elites ("coordinatorism"), the trap into which the economies of the communist countries of the 20th century fell. It is not intended to provide a general political system, though clearly its practical implementation (experimentation) would depend on the accompanying political system.
While many types of production and consumption might become more localised under participatory economics, the model does not exclude economies of scale.
A few workplaces have been established based on parecon-ish principles:
- South End Press, a book publisher in Boston, Massachusetts.
- ZMag, a progressive/radical magazine.
- Mondragon Cafe, a bookstore and restaurant in Winnipeg, Manitoba.
Contrast: guild, co-operative, syndicalism, collective bargaining, participatory democracy, transformative economics
External links - Participatory economics website (http://www.zmag.org/parecon/indexnew.htm)
- Online version of Parecon: Life After Capitalism (http://www.zmag.org/books/pareconv/parefinal.htm)
- Parecon related debates:
- South End Press (http://www.southendpress.org/)
- A Marxist critique of Parecon (http://home.flash.net/~comvoice/32cPareconOverall.html/)
External Resources - Looking Forward: Participatory Economics for the Twenty First Century, Albert and Hahnel, South End Press, 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
- Parecon: Life After Capitalism, Albert, Verso Books, 2003
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