what is participatory economics?

On-the-wrong-side-of-capitalismRecently I had the pleasure of sitting in on one of Michael Albert’s highly entertaining public lectures held at the University of Queensland. Before I get into the guts of it, I’’d like to congratulate Albert for what must have been a gruelling day, talking for a least seven hours solid, so soon after the Brisbane Social Forum. He spoke on independent media and globalisation earlier in the day and then his model of participatory economics for two and a half hours in the evening.

So, Albert asks us, why fight against capitalism? Why fight against something that is ‘inevitable’? The answer lies not so much in pointing out what is wrong with capitalism, but in articulating what we want, what we value, what kind of positive vision we have for the world – what kind of world we want to live in. Soon we see that capitalism is not inevitable and begin to wonder why we subscribe to a system so contrary to the values we all have.

Albert’s model describes five core values that, as he says himself, very few people would find problematic. The first social value that Albert’s economic vision entails is unity, co-operation or ‘solidarity’. The economy affects how we regard one another, and on the whole most people would prefer a world where other people are empathic and not constantly anti-social. In fact, the way that society operates outside of the economy already demonstrates this in what is called the ‘gift’ economy – people volunteer, they help each other to achieve common goods. The current economic system encourages the opposite. It rewards competition, creates hostility, encourages the treatment of others as instruments to our own ends, and devalues the co-operative non-profit work of that is the basis of caring for one another. Rather than pulling people together to achieve common goods, it drives them apart.

The second social value Albert identifies is that of diversity. We value diversity because it makes life more interesting, it encourages creativity and it makes room for personal fulfilment. A capitalist economy doesn’t want diversity – it wants the homogenisation of social values in order to sell more products. It represents not more choice, but less, for it restricts our choices to only that which is profitable, therefore our options are limited by it.

Thirdly, we value equity. Economies effect the distribution of circumstances and stuff. How? By renumerating those activities that it values. So what do we renumerate? Capitalism renumerates the ownership of property, capitalism rewards the ownership of property. It also renumerates those with power. In a market economy you take what you can get, and use your bargaining power to do so. This doesn’t create equity, but rather drives rich and poor further apart, the rich getting more access to good opportunities, more money and more power.

So if remuneration for property and power don’t work to make a more equitable society, what will? Albert suggests ‘effort’ – you only get back what you put in and your income is pegged to your output. But is measuring effort enough? Some people, through genetic advantage, may be faster, more efficient at what they do it takes them a great deal less effort to win than others. Is it fair to renumerate them for doing with ease what someone else may have to actually work damn hard to get and make considerable sacrifice in the process? Should we be rewarding the fastest runner just because he or she wins, despite the fact that all the others have worked just as hard yet were gypped in the genetics department? To be equitable we can’t reward people based on something they cannot change. They can work harder and sacrifice their social lives to be good runners, but they can’t change the genetic make up that gave them shorter legs! It makes more sense to reward effort in conjunction with sacrifice, because if it’s only about winning, and you have a clear advantage, there is no incentive for improvement. Productivity is only enough incentive to outperform another, not to be your most productive, you personal best or your most efficient.

So who makes the decisions about how things are done? Clearly the decision about when you got to the toilet should be your own, but at school and at many workplaces it is not. So, because most of us resent having to be dictated to as to when we are allowed to relieve ourselves (not to mention the inconvenience) we must value self-management. After all, it makes sense that we should make the decisions about what affects us, as we are the most qualified to know what we want. To extrapolate this to the extra-personal, as a society, we should be able to make decisions about all things that affect us, from city planning to the use lead paint to avoid illness if we don’t know it’s dangerous. Therefore we also need information from experts to realise our latent interests. Clearly we can still choose to use the lead paint, or to smoke cigarettes, or to take a flight in a plane, but we need to be made aware of what our interests are in those issues. In a capitalist economy it is not in the interests of producers to tell us the entire facts about the effects of their products, because they wouldn’t sell as many and make as much profit.

The fifth core social value Albert identifies is efficiency. “Does that word make some of you vaguely nauseous?” Albert quips. If it does, it’s because under a capitalist system of economics, it is often efficient to waste, to pollute and to harm. It is efficient to throw away paper plates, to fill the mines under Kingston with toxic sludge and to pack hens into tiny little battery cages so long as it makes a profit. The more profit it makes, the more admissible these things are. Yet this misconstrues the word ‘efficiency’. If we mean by efficient achieving ones ends without wasting something that we care about, then it’s a whole different ball game.

So if we agree that we value these five things – solidarity, diversity, equity, effort/sacrifice and self-management then we need to assess if our current economic institutions are achieving these ends.

Is private property achieving these ends? Private property is making some people very well off indeed. But what is it doing for the homeless? It is excluding them, – so it destroys solidarity; it is giving them no advantage, so it destroys equity; and it is taking away their personal power to act, so it is contrary to the concept of self-management. And far from protecting public assets like clean water, whales and trees, it gives owners a license to destroy as they please (so long as it is profitable), so it decreases efficiency.

Is corporate organisation achieving these ends? Corporate organisation, CEO’s, boards of directors, right down the hierarchy to janitors, structures decision making in corporations and institutions. Jobs are apportioned by similarity to each other. The shit kicking jobs (so called unskilled jobs) are all packaged together, and the cushy desk jobs (so called professional jobs) similarly. Strangely enough, the cushy, comfortable pleasant jobs are then paid ludicrously out of proportion to the effort entailed in doing them. Meanwhile the disempowering, deflating, boring and onerous jobs are scantily paid for equally mysterious reasons. Of course the argument was made that it takes a great deal of effort and sacrifice to become, say, a doctor, while a coal miner gets a few weeks on the job training. Eight years of training, and the more cynical amongst us might say, 30 years for playing golf (for clearly it would be insane to expect a surgeon to work a full 40 hours a week, it would simply be physically impossible and dangerous to do so). Yet the coal miner is trained for a mere two weeks, say, but continues to risk his life mining coal for the next forty years and to do so at far less profit than that apportioned the doctor. Who would give up their cushy air-con job to mine coal?

Obviously this back-to-front manner of apportioning jobs destroys solidarity. Workers hate their bosses, they hate professionals who work so little or in such luxurious conditions that seem out of proportion to what they do. Yet they aspire to be them, to experience the benefits of advantage. What is more ludicrous, the decisions about who, where, when and how the coal is mined are made by these people – people who are not directly affected by their decisions. What of self-management? The coal miners have no equity with their bosses because of this, they have no money, nor power (except that of their withheld labour) with which to bargain, or hire lawyers to do it for them. It is only efficient for the profits of the company insofar as the workers are doing their best, and with little incentive to do so, ‘sickies’ and ‘slacking off’ are rampant. And who can blame them?

What about the market? Does the market encourage our five core values? Markets consist of buyers and sellers, both want to maximise their personal gain and minimise their personal cost. This encourages individualistic, competitive greed and hence dishonesty. It only considers the whims of the two interacting parties, and does not reflect the true cost to the wider society of the exchange. Albert gives the example of gasoline, currently about $1 per gallon in the US. Full cost pricing, which tries to account for all the externalities of gasoline production including mining, transport, use, pollution, health effects and disposal of waste products, would see it at about $15 per gallon! Equally, by internalising the external costs, it costs more money to grow beef cattle for meat than it creates in profits to the farmer given the soil degradation, deforestation, pollution of waterways, growth and transport of feed, transport to the slaughterhouse costs in fossil fuels and materials, and health effects.

Hmmmm. Looks a bit like our current economic institutions are not reflecting the values we profess to want for an ideal society. So what do we do?

The Parecon theory has suggestions as to how structures may be changed to produce those desirable values in our society.

Decision making

Firstly we deal with the decision making structure – replacing the corporate structure with council democracy. Workers councils, precinct councils etc. Actions are taken by collective decision, participation governed by the degree to which each individual is affected by the decision. Some things will be individual choices, some will affect a large range of people, perhaps even globally, and require a more broad range of participants.

Participatory planning will replace the market model of capitalism and the planned economy model of socialism to reflect the true desires of the participants. Producers and consumers will negotiate about what is to be produced and how and thus define what total output will be. Hence the prices of things will be indicative of their true value including the external effects not reflected in current pricing regimes. Decision-making about what to produce will be an iterative process, rather than a top-down process as it is now and would be in a centrally planned economy. – this is why it is not socialism. Producing more than is needed, or by wasteful methods will be recognised for what it is, because nobody likes to waste their time and effort producing what will be thrown away. There is no productive pleasure in that, it’s role is only to make profits for the owner and decision-maker in capitalist society, or simply to force full employment under a socialist model. In addition, a centrally planned economy run by ‘experts’ will result in the very same sector of society that is hated by workers, professionals and administrators, becoming the coordinators and decision makers, still interested in maintaining their privilege. Of course the socialist societies we know of did reflect this.

It was of interest to me that at this point Albert did not discuss the existence of anarchist model societies like the Mondragon collectives in Spain. Mondragon has existed since WW2 largely because the state abandoned them to their own devices. They make an interesting case study of how a transition to a participatory economy might work, acting collectively, yet still trading and interacting with the capitalist world in which they exist.


The hierarchy of corporate style decision making will have to go. So too will the hierarchy of job classifications that lump all the onerous tasks together and all the skilled and economically rewarded ones together. Doctors will do less hours of surgery, spend more time tending to patients, more nurses will be able to train as doctors and the cult of secrecy that preserves the mystique and privilege of the medical profession will disappear. Albert calls the rearrangement of work the ‘balanced job complex’. Each job will now entail a mixture of tasks of varying skill and boredom quotients. Solidarity will increase as a result, the diversity of each person’s experience will increase making for more interesting jobs, equity will increase. There will be no need for competition because everyone will be as interested in improving the lives of others, as it improves their own. This is problematic for me. In terms of efficiency, it seems ludicrous to suggest we can all be surgeons. But that is not what Albert is suggesting. What he is proposing is that we will perform more varied work, as we are capable of and inclined to do by collective and individual decision making. No one forces us to do what we do not desire to do.

A few of us had difficulty visualising this kind of work world. In a society that suffers from racism, sexism and homophobia to name just a few biases, it is hard to see how this kind of cordial relationship without power struggles would occur. I think this is a flaw in Alberts scheme insofar as it requires socialisation for people to value a non-discriminatory society. But perhaps this will also naturally flow from the loss of resentment between workers generated by privilege.

What constitutes a ‘balanced job complex’ is obviously a matter of negotiation. In that case, I can see some immediate problems. Even if we could eliminate those prejudices mentioned above, we would still have the problem of inclusiveness. Inclusiveness requires vigilance of the members of a group to ensure that everyone has a say in articulating their interests. It is often the case that one doesn’t know what one’s interests are until it is too late, but perhaps in this system it is never too late and always open to negotiation. I certainly hope so.


Is there any latitude for improvement in this system? Does total equity mean mediocrity? It need not be so. The impetus to improve oneself, made more possible by the variety of one’s work, will be facilitated by the good for all – if one adheres to the 5 core values, it can only be so. Yet even the selfish could get ahead in this system, Albert claims, they simply are required to consider the benefits of others to do so. And don’t we do this already? Many philosophers argue that altruism doesn’t exist and that for many people their are actual returns that make selfless acts in some ways self interested. Being kind to one another makes them well disposed towards oneself and being the social animals that we are, being well liked is desirable thing.

There are probably plenty of issues i have missed in this, my own introductory experience of Parecon. I would certainly be interested to have anyone clarify what they think are the pros ad cons of the model. It is certainly one I find very appealing, embodying those values of fairness and sharing instilled in all of us as children only to be taken away in the ‘real’ world. Let’s make this the real world!

Kim Stewart

March, 2002


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