Participatory economics, often abbreviatedÂ parecon, is a proposedÂ economic systemÂ that usesÂ participatory decision makingÂ as anÂ economic mechanismÂ to guide the production,Â consumptionÂ and allocation ofÂ resourcesÂ in a givenÂ society. Proposed as an alternative to contemporaryÂ capitalistmarket economiesÂ and also an alternative toÂ centrally plannedÂ socialismÂ orÂ coordinatorism, it is described as “an anarchistic economic vision”,Â and it could be considered a form of socialism as under parecon, the means of production are owned by the workers. It emerged from the work ofÂ activistÂ andpolitical theoristÂ Michael AlbertÂ and of radicalÂ economistÂ Robin Hahnel, beginning in the 1980s and 1990s.
The underlying values that parecon seeks to implement areÂ equity,Â solidarity, diversity,Â workers’ self-managementÂ and efficiency. (Efficiency here means accomplishing goals without wasting valued assets.) It proposes to attain these ends mainly through the following principles and institutions:
- workers’Â and consumers’ councils utilizing self-managerial methods for decision making,
- balanced job complexes,
- remunerationÂ according to effort and sacrifice, and
- participatory planning.
One of the primary propositions of parecon is that all persons should have a say in each decision proportionate to the degree to which they are affected by it. This decision-making principle is often referred to as self-management. In parecon, it constitutes a replacement for the economic concept ofÂ economic freedom. The authors[who?]argue its very vagueness has allowed it to be abused by capitalist ideologues.
Consumers’ and producers’ councils
To implement the decision making principle, a parecon would be organized inÂ consumers‘ andÂ producers‘ councils. Many individuals would participate in both types of councils. These would be the respective equivalent ofÂ workers’ councils.
Geographically, these councils would probably be nested withÂ neighborhoodÂ councils, ward councils,Â cityÂ or regional councils and a country council. Decisions would be achieved either throughÂ consensus decision-making, majority votes or through other means compatible with the principle. The most appropriate method would be decided on by each council.
Local decisions like theÂ constructionÂ of aÂ playgroundÂ might be made in the ward or city consumers’ council, probably interacting with both city and countrywide producers’ councils. Countrywide decisions, like the construction of a high-speedÂ mass transportationÂ system, would be discussed by the country consumers’ council, possibly interacting with a city producers’ council in the city where the materials are produced, or countrywide or international producers’ councils.
The producers’ councils would probably correspond to workplace councils in each workplace and similar workplaces would group into nested councils on successively largerÂ geographicalandÂ linguisticÂ scales.
Remuneration for effort and sacrifice
Promoters of participatory economics argue that it is inequitable and ineffective to remunerate people on the basis of their birth orÂ heredity, theirÂ property, or their innateÂ intelligence. Therefore, the primary principle of participatory economics is to reward for effort and sacrifice. For example,Â miningÂ work â€” which isÂ dangerous, uncomfortable, and confers no power on the worker â€” would be more highly paid thanÂ officeÂ work for the same amount of time, thus allowing the miner to work fewer hours for the same pay, and the burden of highly dangerous and strenuous jobs to be shared among the populace.
Additionally, participatory economics recognizes a certain leeway for exemptions from the remuneration for effort principle. It is suggested that people withÂ disabilitiesÂ who are unable to work,Â children, theÂ elderly, the infirm and workers who are legitimately in transitional circumstances, can be remunerated according to need. However, everyÂ ableÂ adult has the obligation to perform some socially useful work as a requirement for receiving reward, albeit in the context of a society providing freeÂ health care,Â education, skills training, and the freedom to choose between various democratically structured workplaces with jobs balanced for desirability and empowerment.
The starting point for the income of all workers in participatory economics is an equal share of the social product in the form of equal consumption rights forÂ privateÂ andÂ public goodsÂ andservices. From this point, incomes for privateÂ expendituresÂ and consumption rights for public goods can be expected to diverge by small degrees reflecting the choices that individual workers make in striking a balance between work andÂ leisureÂ time, and reflecting effort ratings assigned by their immediate peers.
Money in a Participatory Economy
The function of money in a participatory economy would be akin to a bookkeeping system more than anything else. Electronic “credits” would be awarded to workers for their work, as a means of saying that this worker benefited society with their work. The more effort and sacrifice, the more credits are awarded. Credits would then be used to buy goods and services. Once used to purchase something, a credit disappears. It is deducted from the consumer’s total, to get more a consumer must work more. Supposing that a person had 100 credits and bought a plant for 2 credits, the person now has 98 credits. The store gets nothing. The credits do not go into a till or a bank, there is no flow of money.
Credits could not be given to someone else in exchange for anything. They would only be redeemable at a parecon store or other sort of vendor. This makes it impossible to bribe or even beg for money. People would still be free to barter their individual goods with each other, i.e. exchange a couch for a stereo, but any attempt to create an exchangeable currency would be discouraged, as this might lead to attempts to reinstate capitalism. Credits might be shareable amongst family members, depending on how the parecon is set up. A lost or stolen card that identified how many credits a worker might have would not be usable by another person, presumably there would be means to verify the identity of a citizen at shopping centers.
It is not clear how a currency of this form would be used in international trading with non-parecon countries. Perhaps a second currency for international trading would be needed.
Economic planning â€” feedbacks and successive iterations
Every planning period would begin with the Iteration Facilitation Board (IFB), using last year’s results as a guide, announcing “indicative prices” representing the estimated marginal socialopportunity costÂ for all final goods and services, capital goods, natural resources, and categories of labor. Using these prices as a guide, citizens would respond with their private consumption proposals, and participate in the formulation of collective consumption proposals at the neighborhood, ward, municipal, and federation levels. At the same time, worker’s councils, industry councils and production federations would respond with production proposals outlining the outputs they propose to produce and the inputs they believe are required to produce them.
Facilitation boards would then calculate excess supply and demand based on the proposals, adjusting the indicative price for each final good or service, capital good, natural resource, or category of labour accordingly. Using the new indicative prices, consumer and workers’ councils and federations would revise and resubmit their proposals. Individual worker and consumer councils would continue to revise proposals until they submit one that is accepted by the other councils.
IterationsÂ would continue according to some predefined method which is likely toÂ convergeÂ within an acceptable time delay. A feasible plan for the economy is attained when there is no longer excess demand for any goods, any categories of labor, any primary inputs, or any capital stocks.
The facilitation boards should function according to a maximum level ofÂ radical transparencyÂ and only have very limited powers of mediation, subject to the discretion of the participating councils. The real decisions regarding the formulation and implementation of the plan are to be made in the consumers’ and producers’ councils.