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(DV) Patton: Assessing Economic Options







Assessing Economic Options
by Eric Patton
March 4, 2007

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Anti-capitalism is in vogue on the left.  From environmentalists to media activists to labor activists, it seems like everyone can find something to hate about capitalism. Now, this is not a bad thing. However, if youíre going to be able to intelligently assess post-capitalist options, what are some things you need to keep in mind? Put another way, itís all well and good to despise capitalism -- as well you should -- but how do you usefully think about what to replace it with? How does one think about economics at this level, when one is not an economist?


Any economy in any society is going to have to be able to accomplish certain functions. Every economy must accomplish production.  Every economy must facilitate consumption. Every economy must allocate resources between producers and consumers. And in every economy, the question of who owns productive resources must be addressed. So in looking at any economy, we must consider questions of production, consumption, allocation, and ownership.


Itís also worth pointing out here that any society of any scale is going to have an economy. We canít just say we donít care how economic functions are accomplished because we somehow envision a society without an economy. If weíve got a society and our society has any size to it at all, itís going to have economic functions that must be accomplished and will be accomplished in some fashion. Our task is to begin to think about how those necessary economic functions are accomplished.


Weíd like to first know how to classify economic models, whether such models already exist, or might perhaps be invented down the road. How can we compare, say, U.S. capitalism with whatever it was that existed in the former Soviet Union? What was it that made Yugoslavia different from both? And what made Nazi Germany different from all three? How can we begin to make sense of any of this before even beginning the task of thinking about new possibilities that havenít been tried yet?


To classify various economic models, it suffices to consider ownership, production, and allocation. Of course, questions about consumption are important.  But in digging deeper into economic models, we can more usefully consider questions of consumption when we consider allocation. For our purposes here, which are just to develop a first-approximation method for non-economists to be able to usefully think about economic models, we only need to look at ownership, production, and allocation.


There actually arenít many options here, which makes the job easier. Letís begin with ownership. What are the options for an economy? Well, a given economy could have productive resources owned privately, as in the U.S. economy. Or a given economy could have its productive resources owned publicly or by the state, as in the former Soviet Union. (Note: Real economists will distinguish between state ownership and public ownership. For our purposes though, since weíre not working on a Ph.D. dissertation in economic theory here, we may just as usefully simplify things by lumping the two together. Itís only the broad picture weíre interested in focusing on.) Lastly, productive resources in an economy could be owned collectively, meaning that everyone owns then, or, if you prefer, that no one owns them. Anyway, thatís it for ownership -- just three options.


What about production? When we ask this, what we want to know is, how can workplaces be structured internally? That is, how are workplaces organized?  It turns out that, as with ownership, there arenít many options here either. Production organizations can have a corporate workplace structure, as exists currently in the U.S., or, for that matter, as existed in the former Soviet Union. Or, workplaces can have what we might term formal worker control -- or what we might more accurately term formal but unimplemented worker control, for reasons that wonít become apparent until we discuss allocation. However, when I refer to ďformal worker controlĒ as a mode for organizing workplaces, the specific example I have in mind here is the former Yugoslavia. But again, more detail about this will have to wait for just a little bit. Our third and final option for organizing a workplace is what might most accurately be termed participatory workplace structure. This also requires explanation to understand what it means, and to truly understand it requires saying a bit about allocation as well. But for now, letís just review the list of production organization options weíve constructed. Weíll note we have three of them, and they are corporate workplace structure, formal worker control, and participatory workplace structure.


Lastly comes allocation. While allocation is actually a little more complicated than anything else when understanding economic models, in a weird way itís actually a little easier to what the options are. Remember, allocation is how resources in any economy are distributed among producers and consumers. So what are the options? We can have resource allocation by markets, as in the U.S. We can have allocation by central planning, as in the Soviet Union. Or we can have allocation by a mode of allocation that you may never have heard of, called participatory planning. (Participatory planning requires a little bit of explanation to understand, explanation which is really beyond the scope of this essay.) 


Note that some economists might also include as another option allocation by a mix of markets and central planning, not without validity since Western market-based economies like in the United States do include some planning that might not be apparent unless youíre looking for it. Note also that some economists might include another option which might be termed ďcomplete decentralization.Ē However, this option is not well-defined and therefore cannot really be assessed. Itís a theoretical idea that doesnít have enough structure to it to enable us to usefully discuss it. Therefore, I exclude it from consideration. I also exclude allocation by a mix of markets and central planning as an option, because it doesnít really add anything to our understanding. If we were all economists, then perhaps it would be usefully considered. But weíre not all economists, and none of us need to be economists to be able to usefully think about questions of economic theory for a better society than the one we currently live in. Therefore, I restrict the list of possible modes of allocation to three: markets, central planning, and participatory (or horizontal) planning.


Now, before we go on, letís mix and match some of the above options to create economic models. First, what is capitalism? Capitalism consists of private ownership, corporate workplace structure, and market-based allocation. Okay, so what was it that existed in the former Soviet Union? In the old U.S.S.R., they had state ownership, corporate workplace structure, and allocation by central planning. How about the former Yugoslavia? In that country, the economy consisted of state ownership, formal (but unimplemented) worker control, and allocation by markets. Lastly, in Nazi Germany, ownership was private, workplaces were organized corporately, and allocation was centrally planned.


Letís flesh a few of these ideas out a little bit. What is corporate workplace organization really? What does ďformal worker controlĒ really mean? And how does an economyís  mode of allocation affect it -- that is, why is allocation such an important question to consider when evaluating economic models? 


Every workplace is really just a set of tasks. There are tasks that need to be accomplished when one is interested in producing bicycles, or caring for the ill, or publishing books, or manufacturing bleach products, or whatever. In any workplace -- indeed, in any economy -- tasks are bundled to create jobs. Now, in an economy with corporate workplace structure, jobs are created from bundled tasks that share similar effects in terms of their empowerment or desirability.


In any economy, there are some tasks that are pleasant, empowering, or more desirable. There are other tasks that are unpleasant, rote, onerous, disempowering, or even downright dangerous. So in a corporately organized workplace, we see jobs like janitor or coal miner, and we see jobs like doctor or finance director. Janitors have virtually no say over anything that goes in the workplace, and moreover they donít even have access to important information that would be required for them to even be able to form informed opinions about anything. At the end of the day, their constant performing of the tasks required by their jobs leaves them tired, de-skilled, disempowering, and lacking the confidence they can do much more than theyíre already doing. On the other hand, the tasks done by doctors in their jobs leaves them empowered, confident, and able to exert a high degree of control over the workplace.


Organizing tasks in this fashion, to create a few highly-empowering jobs, with most jobs much less empowering, is what constitutes corporate workplace structure. Itís what workplaces look like today in the United States. Itís what workplaces looked like in the old Soviet Union. Itís what workplaces looked like in Hitlerís Germany. And itís what workplaces looked like in the former Yugoslavia.


But didnít Yugoslavia have a different workplace structure than this? That is, didnít Yugoslavia have workplaces that were organized according to something called ďformal worker control?Ē If this is so, and if corporate workplace structure and formal worker control are truly two different modes of organizing production, how could the resultant workplaces end up being so similar?


In Yugoslavia, workers had the formal right to vote on and decide what happened in their workplaces. Yugoslav workers had formal control over what went on in their workplaces. Nowhere in, say, the United States do workers have this. U.S. workers never get to vote on anything in their place of employment. And furthermore, unlike in the U.S., in Yugoslavia no private individuals owned the means of production. That is, unlike in the U.S., in Yugoslavia there were no capitalists. Yet trying to distinguish a U.S. Ford factory from a Yugoslav Yugo plant (or from a Soviet Lada plant, for that matter) would have been virtually impossible for a visitor from Mars -- or for the workers, once language and cultural differences are accounted for.


So why were Yugoslav workplaces so similar to U.S. or Soviet ones? The answer lies in Yugoslaviaís mode of allocation, markets. In a market economy, firms must compete, otherwise they go out of business. If General Motors moves a plant from Michigan to Mexico, why does Ford follow suit? Because if Ford doesnít follow suit, then GM will have a competitive advantage over Ford and there wonít long be a Ford anymore. If Ford doesnít find a way to cut its employeesí wages and benefits like GM, Ford will eventually be out of business.


Thatís the way market economies work. It doesnít matter whether the market is in the United States, Mexico, or Yugoslavia. If Yugoslav firms want to survive, the workers there had better be able to accept wage and benefit cuts, speed-ups, short staff, longer hours, cheaper parts, whatever. Thatís just the logic of any economy with market-based allocation. But cutting oneís own wages and benefits is an unpleasant task. The more successful firms will be those who hire a group of managers to do it for them. The firms who donít will be gone. Soon, every workplace in the economy will have two classes of employees: a large group of working-class people who do the shit work, and a smaller group of managers (or coordinator class) who make the decisions and run the workplaces.


Thus, formal worker control soon turns into de facto corporate workplace structure, thanks to the miracle of market-based allocation. And in a society where there were no capitalists, workers were still not free. Workers still did not control their own economic affairs. Control over production was taken out of their hands and placed in the hands of the coordinator class. All thanks to market-based allocation.


Allocation is a huge question when thinking about economic models. Anytime anyone comes to you with what they propose as a new economic model, one of your earliest questions should be about its proposed mode of allocation. Any economy with allocation by markets is going to one in which workers are dominated by some other class. No market-based economy can facilitate worker control over their own economic affairs, no matter what snake oil someone might try to sell you. Markets are horrible for a bunch of other reasons as well that are beyond the scope of this essay. However, readers who are interested in learning more about the systemic ills of markets are invited to read Robin Hahnel and Michael Albertís Quiet Revolution in Welfare Economics (Princeton University Press, 1990). 


This is not to say that allocation by central planning is much, if any, better than allocation by markets. Also in Quiet Revolution, Hahnel and Albert deal with the ills of central planning. I am not going to deal with the issue here. However, suffice it to say that central planning is highly authoritarian by its very logic, and therefore also leads to class divisions, just as do markets. If our goal is to have an economy that is classless, then neither markets nor central planning should be among the allocation options that we consider. However, if classlessness is not high on oneís list of priorities, then either markets or central planning might be that personís allocation mode of choice.


The natural questions, I think, that arise then are: What does an economic model that features collective ownership, participatory workplace structure, and allocation by participatory planning look like? What exactly is participatory workplace structure? What is allocation by participatory planning? And, if the claim is that such an economy is truly classless (and that is indeed the claim), then how is this possible? Such an economy is called a participatory economy, and it has been written about at length in other places. Perhaps the best book to consult for more information on the model is Michael Albertís Parecon: Life After Capitalism (Verso Press, 2003). 


More about participatory economics, or ďpareconĒ for short, is beyond the scope of this essay. However, the claim is that parecon is classless, that it wonít despoil the environment, and that it wonít work against the efforts of all sorts of activists as market-based economies necessarily do. I canít address these claims here. However, I would encourage anyone who hopes these claims might be true to check out Parecon and decide for herself or himself.


Eric Patton lives and works in Cincinnati, Ohio.  He can be reached via e-mail at: Note: Much of the material in this essay was adapted from work done by Michael Albert in his book Thinking Forward: Learning to Conceptualize Economic Vision (Arbeiter Ring Publishing, 1997).

Other Articles by Eric Patton

* The Coordinator Class
* My Ex-Girlfriend Responds To Robert Jensen
* Thoughts on Sex and Pornography