ParEcon Questions & Answers
Is participatory planning just markets by another name?
This question has been raised as well by a couple of economists, three or four years ago, if I remember right, in Socialist Review magazine. It only happened once because most economists are so horrified by what we propose that they would never see it this way, or because they perceive just how different it is – I don’t know which. Anyhow, we replied at some length, and I am looking for that to give you a reference.
Your comments are quite sensible – though, ultimately, I do think they misperceive the system in critical ways.
You (and those two economists) look at participatory planning and see:
Well, it all depends on what we mean by “a market system.” If we mean a system in which there are some kind of prices and supply and demand come into accord, then, yes, you would be right. But then all non-trivial allocation systems would be “some kind of market system” (including central planning) and instead of markets being a kind of allocation mechanism, the word market would be a synonym for allocation and we would need a new word for what economists more typically call a market system...
And when you use the term markets in that very encompassing way, which many people do, there is a big problem. It makes folks think that what we have is essentially inevitable. Suppose you looked at the Soviet Union some time back. You would see the same thing as what has caused you to identify parecon as some type of market system. Everything had a price. Supply and demand came into proximity or a mesh, and it happened via a process that in large part took note of responses of actors to prices. Indeed, any economy beyond direct personal barter includes some kind of mechanism for people to make comparisons among options (some kind of prices perhaps accompanied, as in our parecon case, by qualitative information of a certain sort as well – and even capitalism has ads along with prices) and if it isn’t horribly wasteful, any such system also involves supply and demand coming into proximity of one another, as did the Soviet economy. But no one would mistake the old Soviet economy for a market economy, nonetheless.
Well, because the institutional framework and its components, and in particular the roles for each actor in allocation established by these institutions, were quite different than those that define what we call market exchange. In the SU the prices were ultimately set by planners (who did, however, consult people’s reactions to those prices). The workers had only to respond regarding their ability to fulfill instructions and to convey information about available resources, etc., as well as to obey instructions; the planners had only to calculate and set prices and issue marching orders; managers had to administer as well as obey; and consumers had to go to the store and pick what they wanted to consume, paying the established price and keeping within their budget – seemingly quite like at Stop and Shop). And so on.
My point is that, yes, parecon has, among other features, a kind of prices, a kind of budgeting, a meshing of supply and demand. But, nonetheless, it is not a market system because it not only doesn’t have the basic defining features of markets (buyers and sellers each motivated to maximize their own advantage at the cost of the other; competitively determined prices; profit or surplus maximization; remuneration to labor according to its bargaining power or its output) but because it has other features that are entirely contrary to these.
We can try to go through the differences in some degree of detail, depending on your interest, but it would entail, I think, trying to get a bit clearer on what markets are, and then on what participatory planning is. In a sense, to do it comprehensively requires reproducing the content of the vision here...it would be easier to take on smaller issues, I think, here, and read about the whole vision in the presentations of it, online or in print.
How does participatory planning take place accurately and without inefficiency?
It is an iterative (round by round) process in which what consumers want to receive matches up to what producers are ready to offer and each side steadily expands or diminishes its preferences until there is a mesh. The interchange is facilitated by comprehensive information concerning social costs and benefits of all production and consumption, both in text form (qualitative) and in what are called indicative prices (for calculation purposes). There are also various facilitating institutions that capsulate and relay information, etc. As to its efficiency properties (does it waste anything people value) no economist has challenged these, perhaps because of the proofs we offer in the Princeton volume.
Individuals partake as well as other size units, but not monthly. It is done for a year, and, as you imagine, it is largely based on past years, and on projections for changes in overall output and in each individual’s share for the year, etc.
Any system that has any connection to actual humans must, of course, respond to human’s choices. Markets do this day by day, week by week... Parecon shuffles totals that way, so to speak, but gets an indication of totals, a good one, during the yearly planning period. There are many many reasons for this. Suppose you are in a local community which could, for example, as a collective buy a new park, or new joint music equipment or large computers for a kids center, or whatever. Such collective consumption is charged against the incomes of all the members of the community, of course. So more means less individual consumption, and less means more individual consumption. So, one reason is to decide on this ratio. Another issue is changes in output, and thus income... Another is changes in taste, particularly for new outputs. And so on.
How transparent is the whole consumption and facilitation process. Is individual privacy maintained?
All the calculations and sorting, etc., done by such boards would be on record and easy to check–not simply the data sorted and summarized information plugged back into the planning process. This isn’t very important, I think, as a guard against ill-doing, not only because parecon would have gentle people, but because in a parecon it is virtually impossible even for someone intent on it and with no qualms about it to misuse their role at a facilitation board. What the availability of facilitation boards work would be useful for, however, is learning about past algorithms to make improvements in the future...
Personal consumption requests, however, are presumably private, for example, though the requests can be accessed without the accompanying names. (This choice of privacy, like many other choices one might make about a parecon, isn’t somehow intrinsic to being a parecon, though – at least in my thinking. That is, I think one could have a parecon that had all requests publicly accessible, or not, with no effect on the defining economy and basic institutions per se. But I think privacy is preferable.)
People, except for unusual instances, can’t say this year I want such and such health care. It is not something which is planned on the basis of preferences espoused by individuals in the way that books are. Rather, the “demand side” is essentially a calculation for society. We know from past history, and trends, and so on, roughly how much health care will accomplish what in a coming year. So depending on what we want to accomplish, weighed against the cost in resources and effort and so on for doing it, we settle on a plan for health care. While health care goes to individuals, mostly, it is, nonetheless, we can see, a social and completely public good re the demand side.
It is paid for by everyone – in the form of a reduction of available goods precisely equal to what is allotted to health care. It goes to those who need it, however.
I don’t think it raises any problems for parecon, that I can see... Health producers propose supply, citizens organized at the societal level request what they want – these come into balance, as with other products and industries.
Of course, the providers all do their health work in balanced job complexes, like everyone.
Under the model, would participatory economics allow for small-time marketing?
If you mean would there be smaller production units and larger ones, sure... There is no marketing in the sense it exists now, however. That is, no sales aimed at volume/profits rather than fulfillment/use. No one has any interest whatever in having someone consume something they produce other than if the consumer benefits thereby.
There are a lot of things that could never be bargained or planned for on a yearly basis. Wouldn’t some kind of market system work to distribute those items?
If you mean one can’t know in advance know that one will want a product that only arrives as an option six months later – say a book not yet published, for example – sure. But you can know that last year you got x books and your prediction, flexible and updateable as the year proceeds, is that this year you will want y more or less than last. And similarly for other choices; sometimes precise, sometimes general. Individuals don’t know the clothes they will want (new designs, etc.) but can say, pretty closely (with up and down fluctuations across many people averaging to near zero change for the total request) what overall clothes expenditures they anticipate making.
All this kind of thing is dealt with in detail, considerable detail, in the books on the model, of course.
Of course one doesn’t plan for the personal purchase, during the year, of items that are whim-like, or just not known about in advance (say responses to illness, for example), for that matter. But one can in broad terms indicate the parts of one’s income that will go to this and that area – sometimes only broadly, sometimes in detail (as wanting a new vehicle or other large items). When averaged over communities and societies, this data becomes powerful information that translates into requests for products that exists alongside offers of production from the workplaces, which then must be brought into alignment by a back and forth modifying of desires in light of continually updated information.
Could one person sell (which means, essentially, trade) items to another? Sure. But that is just barter, not for-profit production and sale and is effectively outside the planning process, anyhow.
Suppose we have the equivalent of Mozart in our community. Can she sit in her abode and write music and then go outside and auction it off to the highest bidder?
No. And the same holds, and more relevantly I guess, for if we had a Picasso. He can’t make paintings and then sell them off privately, becoming fantastically wealthy. This is not an option....
These individuals get the benefit of society’s roads, infrastructure, and so on and so forth. They abide its role offerings like other folks. They work and get income like others. Parecon is not anything goes...
Remuneration is not according to the social value of one’s product/contribution (in which case this contemporary Picasso or Mozart would grow rich) but according to the effort and sacrifice expended in producing valued product/contributions. And folks must also work at balanced job complexes (so even the contemporary art or other genius has to do their fair share of different tasks in their job complex) because those are the only kinds of jobs available, the only ones that exist within the economy.
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