When Markets Cease to Control Human Economic Life

Our most important contribution is to have demonstrated concretely how to reconcile democratic planning with worker and consumer autonomy. We believe this was the Achilles’ heel of socialism during the twentieth century, which must be resolved if there is to be a future for socialism in the twenty-first century.

— Robin Hahnel speaking to the breakthrough that would be achieved in A Participatory Economy, 2022 (p 236-237)

In his book, A Participatory Economy, Robin Hahnel, a professor emeritus of economics at American University, begins by clarifying the goals of a participatory economy: economic freedom, economic justice, solidarity, efficiency, environmentally sustainable, and economic variety.

Economic justice is achieved by remunerating people based on their effort and sacrifice, how much of the burden one bears. Effort and sacrifice will be judged by colleagues in the workplace. Efficiency is the converse of wastefulness — that work performed is beneficial. Environmental sustainability means attaining intergenerational equity. Economic variety recognizes that people are different, have different tastes and wants; therefore, achieving an economy that produces a diversity of outcomes and lifestyles is sought.

Chapter 2 looks at different political-economic models and discusses why a participatory economy (parecon) is preferable and superior to capitalism, communism, and democratic socialism.

Hahnel shoots down the canard relentlessly propounded by adherents of capitalism that humans are motivated by greed. Hahnel writes, “The fallacy is in asserting that people will act in the same greedy and fearful ways in a system where they are given the opportunity to make their own decisions, are positively rewarded for embracing a fair distribution of the benefits and burdens of economic activity, and are rewarded, not punished, for acting in solidarity with others.” (p 32-33)

Perhaps the most controversial feature in a parecon is that there will be no private enterprise. This is because of the belief that “… only full social ownership of all productive resources is capable of achieving economic justice and distributive justice.” (p 40)

Markets are also eschewed for a variety of reasons, including their unfairness and subversion of democracy.

Instead of markets determining outcomes, people will get together and plan the economy. This is not a centralized command economy. A permanent top-down hierarchy has been eliminated. All workers and consumers are equally empowered in a parecon, although workers within a job complex will have greater input into their particular job complex than others outside that job complex.

There are many factors that go into protecting the environment (by, e.g., eliminating externalities), determining planning, creating balanced job complexes, determining effort, special needs, etc. Nonetheless, parecon and its planning are not pie-in-the-sky. Hahnel cites the promising results of computer simulations that support the feasibility and efficiency of annual planning. (see chapter 5)

A Participatory Economy also includes a chapter on reproductive labor. Thus labor, that has traditionally been heavily skewed to women (e.g., housework, child care), is recognized for its value to not only the family unit but society. Women’s equal participation in the workplace and economic life is a given in a parecon.

Parecon is a system in which fairness means fairness is across all ethnicities, genders, and whichever identifying features people choose for themselves. Application of the principles that underlie parecon must be accorded to all human distinctions with fairness. This is a sine qua non to be faithful to parecon’s principles.

Subsequent chapters examine participatory investment planning and long-run development planning.

But how does all the forgoing relate to international economic relations? Hahnel relates that a parecon rejects foreign direct investment in all forms because it is at odds with worker self-management. Private, for-profit business is not allowed in a parecon.

Foreign trade would take into account the level of economic development in a trade partner and seek to rectify long-standing economic injustices. Hahnel details a more-than-50-percent rule to greater benefit disadvantaged economies and respect a commitment to economic justice.

Parecon is not considered a finished product. Neither is it a process. It answers the question of what kind of economy and world do we desire once markets are supplanted and the masses of people have gained control of the resources, economy, and their futures.

A Participatory Economy is an eminently worthwhile read for people devoted to social justice and an economically just society. Seek answers to your questions and gain a deeper understanding of the principles and details of a promising people-oriented economic model that cannot be sufficiently covered in a book review.

Kim Petersen is an independent writer. He can be emailed at: kimohp at gmail.com. Read other articles by Kim.