I have never heard of participatory economics before. What is it?
Participatory economics, or parecon for short, is a new way for a society to organize its economic activity. In the United States, our economy is currently organized under a capitalist model. In the old Soviet Union, economic activity was organized using what is commonly referred to as socialism.
Parecon, however, is neither capitalism nor socialism. Both of those economic models are classist. That is, in both capitalism as well as socialism, working-class people have little-to-no say over their workplaces and generally follow orders given to them by others. Unlike capitalism and socialism, parecon is classless. In a parecon, workers manage their own affairs.
How is that possible?
A full answer to this question requires detailing the entire parecon model. However, to help you see the believability of the claim, let me first just highlight one aspect of parecon. It’s not the only aspect worth highlighting, but it is one of the most important. It’s called the “balanced job complex.” You most likely have never heard of a balanced job complex, or BJC, before. But it is one of parecon’s most important facets, and one of the biggest drivers of parecon’s classlessness.
See, every workplace is just a set of tasks. Tasks are bundled to create jobs. In both capitalist as well as socialist workplaces, particular types of tasks are bundled to create particular types of jobs. So, for example, cleaning-type tasks are bundled to create the job of janitor. Filing- and reception-type tasks are bundled to create the job of secretary. And decision-making tasks are bundled to create the job of manager.
As a result, capitalist workplaces and socialist workplaces are virtually indistinguishable. If you were a worker in a U.S. Ford factory in Detroit, and you were suddenly transported to a Soviet Lada plant in Moscow, you would probably not be able to tell the difference based on the nature of the work alone. Yes, there would be obvious language differences, cultural difference, and so on. But just based on the nature of the job itself, you most likely would not know which plant you were in unless somebody told you.
Those tasks that are bundled to create jobs like janitor, secretary, or manager don’t have to be bundled that way. We could just as easily re-apportion the tasks so that everyone has to do their fair share of unpleasant or undesirable work, and so that everyone gets to do some of the more empowering work.
This is the essence of a BJC. There is a bit more that actually needs to be said about BJCs, but for now, I just want to try to convince you that classlessness is possible. Most working-class people are very cynical, and justifiably so. But my claim is that classlessness is possible, and that parecon is in fact a classless model. Balanced job complexes are one of the first things to understand when assessing these claims.
Okay, wait a minute. You’re telling me that jobs in a parecon are fundamentally different than jobs in either capitalism or socialism? You’re telling me there’s a different division of labor?
Yes. Both capitalists as well as socialists organize their workplaces in the same fundamental way. They both take the tasks that are disempowering, unpleasant, rote, onerous, or perhaps even dangerous, and they bundle those tasks to create jobs that typify their workplaces. Then they skim off the creamy tasks and bundle them to create jobs like manager, lawyer, doctor, and engineer.
See, this unequal division of labor gives rise to a class of workers that socialists never tell you about: the coordinator class. In a capitalist economy, workplaces are privately owned by a class of people commonly referred to as capitalists (or sometimes simply owners). And people like janitors, secretaries, assembly-line workers, and the like are referred to as the working class (or sometimes simply workers). It’s true that capitalists and workers comprise two possible classes in an economy.
But there is a third class possible in an economy, the coordinator class. Coordinators are those people who do not own the workplaces, but who run the workplaces. Members of the coordinator class typically have a great deal of say over their own working conditions, as well as the conditions of working-class people below them. As a rough estimate, the working class makes up maybe 80% of a capitalist economy, coordinators 18-20%, and capitalists 1-2%. Examples of the coordinator class include doctors, lawyers, managers, engineers, college professors, accountants, and architects.
Now, in socialist economies like the old Soviet Union, there were no capitalists. Soviet workplaces were owned publicly, not privately. But socialism was not (and still is not) a classless economic model. Why? The answer is because ownership of workplaces is not the only way class divisions economy can arise in an economy. Class divisions can also arise through an unequal and unfair distribution of labor.
The socialists rightly got rid of workplace ownership by private individuals. However, the socialists did not get rid of the unfair division of labor that gives rise to the coordinator class. That’s why the Soviet Union did not have a classless economy. It is this unfair division of labor that parecon corrects through the inclusion of balanced job complexes (as well as some other factors we still have to get to).
Despite what socialists claim, socialism has never been about the working class. Here’s one way you can think about it: Capitalism is the economic theory of the capitalist class; that is, capitalism is really all about the economic interests of the owning class. Socialism is the economic theory of the coordinator class; that is, socialism is really all about the economic interests of the coordinator class.
And participatory economics, which is a fairly new economic model, having been introduced in only 1991, is the economic theory of the working class.
Okay, having balanced job complexes is necessary to have a classless economy. Does that mean all we need to do is switch our workplaces over to BJCs to make the economy classless?
No. BJCs are necessary, but not sufficient, to guarantee a classless economy. If we really want to have an economy that is classless, we must also address the way resources are allocated. Let me explain what I mean.
Every economy has producers, and every economy has consumers. In addition, every economy has a mechanism for distributing resources among those producers and consumers. In the United States, the mechanism we currently use for resource allocation is called the market.
When I say market, I don’t mean the grocery store. I mean a mechanism where producers and consumers come together over and over again in roles as buyers and sellers of goods and services. So the way the market allocates resources is determined by the ways in which buyers buy and sellers sell.
For purposes of contrast, consider how resources were allocated in the Soviet Union. There, a group of bureaucrats called planners got together and simply decided how resources were going to be disbursed throughout the economy. The mechanism of allocation used in the U.S.S.R. was called central planning.
So markets and central planning are two ways that an economy has for resource allocation. It turns, though, that both markets as well as central planning impose class divisions on economies in which they are used. That is, even if we in the U.S. were to switch over our workplaces from the current division of labor to a division of labor utilizing BJCs, ultimately the market would re-impose class divisions back on us.
The reason for this is because firms in any market economy must compete in order to survive. For example, if GM moves its plants from Detroit to Mexico in order to take advantage of cheaper Mexican labor, then Ford must follow suit. If Ford does not follow suit, then GM will out-compete Ford, and then there will no longer be a Ford.
Similarly, suppose one firm switches to BJCs but another firm does not. Presumably, the firm utilizing BJCs will want its members to earn a living wage, have good benefits, and so on. (Some things really should be said about wages, prices, money, and so on. Unfortunately, I won’t get to that in this essay.) The non-BJC firm will likely not feel the same way.
We can already see in our market economy what happens as companies continually cut wages, slash benefits, outsource jobs, and eliminate permanent positions in favor of hiring temporary workers. Companies do this because the logic of a market economy demands that they do, otherwise they’ll be out-competed and then they’ll go out of business.
Even if a few firms switch to BJCs, if the mechanism of resource allocation used in the economy is still markets, these pressures on firms to compete or die will still exist. Indeed, even if literally every firm switches to BJCs, if market allocation is still the rule, then again, competition among firms will eventually force companies to abandon those BJCs in order to survive.
Simply put, markets are utterly incompatible with a classless economy. You can have a classless economy, or you can have a market-based economy. You can’t have both.
Centrally planned economies are also not classless, but for different reasons. Centrally planned economies are, by nature, highly authoritarian. Since planners make decisions about what happens in the economy, the only way those planners can ensure that their dictates are carried out is if the whole economy takes on a highly authoritarian cast.
That is, the planners aren’t interested in what workers or consumers think about their decisions. The planners only want obedience. Central planning demands obedience. If you’re a worker, and you have ideas about your firm could be run more efficiently, the planners aren’t interested. They’ve already decided. As a worker, your only job is to do as you’re told.
The upshot here is that, while BJCs are absolutely crucial in order that we may have a classless economy, so too is a new method of allocation also required.
Okay, so to have a classless economy, we need balanced job complexes. We also need a way to allocate resources that is neither markets nor central planning. So if we’ve eliminated markets and central planning from consideration, how then are we going to allocate resources?
We’re going to use a new method of allocation called participatory (or horizontal) planning. For the most part, we are all workers and consumers at the same time. That is, we have a role within the economy as a producer, and at the same time we also have a role within the economy as a consumer.
In our role as a producer, or worker, we make a proposal as to how much we wish to produce for the upcoming year. In our role as a consumer, we make a proposal as to how much we wish to consume for the upcoming year. In effect, we each make two lists: a “to-do” list, and a “wish” list.
We then tally both lists across society, generating economy-wide “to-do” and “wish” lists. Chances are exceedingly good that the overall wish list is longer than the overall to-do list. Before we’d be able to proceed, we’d need to bring the lists in line with one another.
So, based on the available information, producer and consumers make new proposals. Consumers reduce the levels of their requests, and workplaces increase what they propose to produce. Consumers and producers repeat these processes until “to-do” and “wish” lists are brought in line.
Please understand, I am leaving out some important details here. Allocation isn’t rocket science. But at the same time, it’s a little more complicated than I’m making it sound. I’m not trying to pull a fast one on you. I’m trying to give you just the bare essentials necessary for even believing a classless economy is possible. If you find yourself skeptical that what I’ve described is sufficient to properly explain allocation, that’s a good thing. You should be skeptical, because what I’ve described is not sufficient. I’m just trying to help you be a little less cynical than you probably (understandably) are when you hear me claim a classless economy is really possible.
Certainly, more can and should be said about allocation. But for now, the important point is that people, in their dual roles and workers and consumers, make proposals about what they wish to produce and consume. It might be worth noting that, at the same time people make these proposals, they are also proposing the length of their work week. I know that’s not obvious yet, but for right now I hope you are willing to accept that it might be true. Hey, when’s the last time anyone gave you any real control over how many hours you worked?
Okay, we have balanced job complexes, and we have a new way to allocate resources. I realize more needs to be said here, especially about allocation, later on. So I’m willing to reserve judgment for the time being until I hear more. But what about how much money I make? I mean, I get that I’m a consumer. But how do I know how much I can consume? Do some people get to consume more than me? What determines any of this?
The questions you are raising are important ones. I’d like to first introduce a new term here, one that I think will make it a little easier for us to talk about these issues. The term is “remuneration.” It’s a term that economists use. I hate to start tossing around $50 words, but I think in the long run it will make understanding this topic a little easier.
Your remuneration is the level of consumption you are entitled to. In today’s economy, what I’m calling remuneration is really just the size of your paycheck. If you make a lot of money, you’re someone who is highly remunerated. If you don’t, then you’re not.
But what is it in any economy that determines the extent to which a person is remunerated? That is, whether we’re talking about capitalism, socialism, or parecon, what determines how much anybody is entitled to consume?
Historically, what people have is what they can take. Bargaining power. Brute force. Whatever. If you’re a professional athlete, few people can do what you can do, so you’re able to command a lot of money. After all, if the organization doesn’t hire you, who else are they going to get who can throw a 95 mph fastball, or throw a football 60 yards downfield on a frozen rope?
Or suppose you’re a big corporation selling products made by Chinese prison labor. You’ve got smaller competitors trying to compete with you. So you just lower your prices to levels your competitors can’t match, wait for them to go under, and then you’ve got a monopoly and you can do whatever you want.
Vlad the Impaler would probably have appreciated a capitalist economy. The Harvard Business School certainly does.
But socialism, even though it is not the same as capitalism, isn’t hugely different either. Not if you’re looking up from the bottom, anyway. The planners sit in nice offices, make big and important decisions, then go home at the end of the day to nicer homes than what you live in (if you’re a Communist peon.) Maybe Soviet planners didn’t have the wealth that big U.S. capitalists have, but they weren’t fishing their meals out of trash cans, either.
Do any of these important people, in either the U.S. or the former Soviet Union, deserve to live so high on the hog? To ask is to answer. Okay, so how should people be remunerated?
Rather than people getting what they can take, parecon proposes something more fair: People should be remunerated based only on their own effort and sacrifice. So, for example, if someone is going underground and mining coal all day (an extremely dangerous job), while someone else is sitting behind a desk playing computer solitaire and occasionally reading important documents, who’s really expending more effort and sacrificing more?
Put another way, solely on the basis of effort and sacrifice, who deserves to be more highly remunerated: a doctor or a garbage collector? A lawyer or a janitor? An investment banker or a nurse aide? In an economy with jobs like we currently have in the U.S., if remuneration were for effort and sacrifice only, the wage scales we have would be completely reversed. Actors would not be commanding 25 million per picture, while others were working temporary jobs on assembly lines.
But a participatory economy would not have jobs like the U.S. does currently. In a parecon, everyone would work a balanced job complex. What this is means that, in terms of effort and sacrifice, everyone’s job complex would be comparable to everyone else’s job complex, across the entire economy.
Would job complexes ever be able to be perfectly balanced, like some mathematical equation? Of course not. But it is certainly possible to look at work tasks across the economy, assess them on the basis of effort and sacrifice, and re-group them into jobs which are comparable to each other on these bases.
How do we know this? Well, every company already does this, except in reverse. Currently, companies look at the tasks in their workplaces, and bundled the undesirable into unpleasant, low-paying jobs, while bundled the more desirable and pleasant tasks into empowering, high-paying jobs. But what can be made, in this case, can be just as easily unmade. And then re-made. We may not be able to undo gravity, but we can certainly undo (and redo) the way we do our work. Perfectly? No. But over time, there’s no question we can create work roles that come closer and closer to being balanced for effort and sacrifice.
So if everyone is working in a BJC, comparable to everyone else’s BJC, then effort and sacrifice can be measured largely, if not entirely, in terms of hours worked. In this system, if you work 25 hours a week, you’re entitled to a level of consumption which is higher than someone who works only 20 hours a week. If someone works 30, they’re entitled to more consumption than you.
Now, who decides the length of the work week? We all do, as part of the allocation process. When you propose a level of work and consumption for yourself, you are also implicitly proposing a number of hours per week you wish to work.
Think of production and consumption requests as two piles of stuff. You propose to produce a pile of stuff, and you propose to consume a pile of stuff. That pile of stuff you propose to produce is going to require a certain number of weekly work hours in order to produce it all. And that pile you propose to consume will, likewise, require a certain number of hours worked per week in order for it to be produced.
So, as part of the allocation process, if you want a really big pile of stuff, that’s okay. It just means that you are implicitly saying to everyone in the entire economy, “Here’s how many hours I think we should all work this year.” On the other hand, if you want to consume less, you are saying to the entire economy, “Here’s how many hours I think we should work this year. We won’t have as much stuff, but we’ll have more free time.”
As part of the allocation process, eventually society will settle on an overall consumption pile for the entire economy, and an overall production pile for everyone. Society will also be settling on an average work week for everyone — for purposes of example, let’s say 25 hours.
So everyone will work an average of 25 hours. But some people want more stuff, so some of them work 30 (or perhaps even more) hours per week. Other people don’t care about stuff, they’d rather have more time with family and friends. So they work only 20. But since everyone across the entire economy is working a balanced job complex, everyone’s overall effort and sacrifice can be measured largely (if not entirely) in terms of hours worked. So the length of your work week determines your level of remuneration in a parecon.
Okay, let me see if I have this straight: We all work a BJC, so everyone’s work situation is comparable to everyone else’s. The allocation process, which you are calling participatory planning, determines how much stuff the economy produces, and also how much we all work. But individually, some people might choose to work less or more, depending on their own individual preferences. And remuneration in a parecon is strictly for effort and sacrifice. But since the economy is built to take effort and sacrifice into account, the most important thing to measure here is simply hours worked. Surely there’s more though?
Of course there’s more. I’m not trying to give you the full picture of participatory economics. For that, you really do need to read Michael Albert’s Parecon: Life After Capitalism (Verso Press, 2003) — the definitive parecon text. I definitely can’t do justice to the subject in a presentation as short as this.
I only have one goal here: I’m trying to give you a reason to think that a classless economy is possible, and without you having to swim through a tome to believe it. There’s so much more that needs to be said. However, if you think that further investigation is worth your time, I recommend you read Albert’s book, or perhaps you might check out some of the other essays that have been written about parecon, which can be found on the internet at the parecon website.