Participatory Economics - An Introduction

Theory May 10, 2020

The question of constructing a socialist economy can be a heavily contested one. The main two forms at least seem to be central planning and market socialism. However, there is more to it. Many anarchists and libertarian socialists advocate for a more decentralised planning approach. One view of how that would work is what is known as ‘Participatory Economics’, and defined on the website participatoryeconomics.info as: ‘a participatory economy entails social ownership of productive property, self-managed workplaces and neighbourhood councils.’ This model of economy was first proposed in 1991 by Micheal Albert, with its key values defined on the site as: Self-Management, Justice, Solidarity, Diversity, Efficiency, and Sustainability.

This system includes consumer councils and workers councils, which both form federations. Consumer councils are local councils that every household belongs to. The households put in requests on what the household wishes to consume for that cycle (a cycle can be a month, a few months, a year, etc. Whatever is agreed upon). According to the site, ‘consumption rights are constrained based on members’ income’, meaning that families or households that contribute less will have access to less while households that contribute more will have access to more. Workers councils are the highest decision making body in the workplace and every worker gets one equal vote, which could be compared to shareholders meetings. Each council could have different voting methods, such as consensus or the usual majority, depending on the needs and desires of the council. For places with more workers, councils can be divided as seen fit. However, one must apply to join a council, though everyone is free to start a new council if wanted. Each consumer and worker council will elect a representative to form Federations. Workers Councils are organised or federated across industries, such as the restaurant federation or the computer manufacturing federation. Consumer councils are organised by geography and possibly population. An area with a large population might have more councils than a rural area, or the councils themselves might be larger. The consumer federations would vote on public goods corresponding with their ‘level’ (national vs city level). In regards to councils and federations, any representative can be voted out.

As for jobs, a participatory economy claims to organise jobs unlike capitalism. Some jobs have more inherent desire or attraction to more people than others, so the workers councils will organise tasks into jobs that combine aspects of desirability and undesirability. There are two reasons for this: to avoid divisions based on class or fulfilment, and ‘to fairly share the burdens and benefits of labor.’ This does not negate specialisation, as a balanced job will only involve a small number of related tasks, for example, a surgeon will still be a surgeon, but they may also perform smaller menial tasks. Jobs would also be more flexible, with tasks being able to be exchanged or developed over weeks or months. This would allow each workplace to find the most effective and fulfilling task combinations. Workers with more desirable jobs may get less pay or have to also do a bit more undesirable work to obtain balance.

For the allocation of goods under this system a participatory economy uses the councils. Every worker belonging to a council will come to an agreement on what that workplace will produce each cycle, while households submit what they wish to consume each cycle to the consumer councils. These findings will be sent up to the largest level (called the IFB on the website), where the prices of goods and services would be updated from the last cycle. This will enable the worker councils and consumer councils to agree on what to produce and what to consume respectively.

This is a rough outline of an entire economic system. The councils seem very appealing, as it is of course important to keep the political power as close to the people as possible, and councils could even be useful in a transition from capitalism to communism. It could go further though, neighbourhood councils could be dissolved and refer to direct democracy, with decisions going up to a city council or similar democratic body. Workers councils could also adopt a more direct system, and the council positions could also be rotated, to keep from the consolidation of power. Council positions should also not be coveted, and should not confer any benefits or social capital. Another beneficial thing about the consumer councils is that they keep track of what is consumed and put in requests. However, this may also be improved. Data could be tracked from grocery stores and other establishments, with that data being used instead of individuals requests.This works more in favour for those who want a needs based economy rather than a purely market economy, as some socialists claim that markets need to be abolished as quickly as possible, if not at the same time as capitalism.

The biggest issue with this system is the compensation strategy. The method proposed is based on effort. For example, if someone works 40 hours, they receive 400 credits (or whatever is used), if someone works 20 hours, they get 200 credits. A grading scale (average, above average, etc.) is proposed, but not as prominently. Though ‘average’ is very subjective, not to mention that it is near impossible to assess how much physical, mental, emotional effort one person has put in. People are affected differently by different tasks. Some people get extremely tired when they are out with groups, for example, or they have a medical issue that keeps them from working long hours or doing certain tasks. This point is brought up in the FAQ, but it still does not hold up. ‘Who is in a better position to know if someone is only giving the appearance of trying, or engages in “clumsy effort” than the people working with her on the same task? While teachers don’t see students’ preparation, workers do see workmates' work.’ Just seeing someone’s work does not mean that all of the effort is seen. One does not see another’s full life and needs within their work. A reader cannot know the family situation of the writer just by reading their book or article. One does not know the full amount of emotional or mental effort another puts in. One cannot just have their effort defined by a 1-10 scale. If this effort based compensation is still deemed the best way, then necessities must be free at least; housing, water, food, healthcare, electricity, clothing, transportation, electronics like phones, etc…. Then from there credits can be used to say encourage effort so people could get ‘luxury’ items. Another potential problem is the method of determining public goods. The people themselves should vote on what public goods they want, not the council. Those within the council may be too influenced by their own wants to fully represent what everyone needs.

Participatory economics provides a sound and well thought out framework for a possible transition from capitalism to communism. Whilst only a framework, which clearly needs to be paired with other systems, it offers a vision of how power can be dispersed amongst the people and offers a planned economy as an alternative to markets. It can be improved, just as any system can, but still provides a democratic, decentralised method of running an economy that seems at least very promising.

If you would like to read more, consider the following sources:

  1. participatoryeconomics.info
  2. Why Participatory Economics’, Michael Albert
  3. In Defense of Participatory Economics’, Michael Albert and Robin Hahnel

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Robert Henninger

Student at Western Carolina University, majoring in Philosophy and Sociology. Head of the WCU Leftists.