Towards life after capitalism: an introduction to participatory economics

In October 2004 at the Conference of the Pio Manzu Institute, Michael Albert was awarded the Medal of the President of the Italian Republic for developing and popularizing what the citation described as "a radical economic model known as Participatory Economics, a bold, innovative economic theory aimed at replacing self-serving competition in the economic field with egalitarian co-operation." Albert's address to the conference makes a compelling case for, first of all, the need to talk about what a co-operative economy might look like--and then to work like mad to make it a reality.

WE ADDRESS THE question of an alternative economic vision because, in the words of the great economist John Maynard Keynes, "[Capitalism] is not a success, it is not intelligent, it is not beautiful, it is not just, it is not virtuous--and it doesn't deliver the goods. In short, we dislike it, and we are beginning to despise it. But when we wonder what to put in its place, we are extremely perplexed." We address the question of economic vision to undo that perplexity.

Capitalism is theft.

The harsh and subservient labours of most citizens enrich a few others who don't have to labour at all. In general, those who work longer and harder get less. Those who work less long and less hard get more.

On the upper West Side of New York City, barely a mile apart, exist neighbourhoods in which the average disposable income is, on the poorer side, about $5,000 per year and, on the richer side, about $500,000 per year. This gap is not due to a difference in industriousness or talent. It is due to social relations that force the many to enrich the few.

Capitalism is alienation and anti-sociality.

Under capitalism, the motives guiding decisions are pecuniary, not personal, selfish, not social. We each seek individual advance at the expense of others. The result, unsurprisingly, is an anti-social environment in which nice folks finish last.

Starvation the world over has the same root cause: feeding the poor is not as profitable as overfeeding the rich. What health we attain, what food we eat, what housing we inhabit, comes to us because someone was seeking--not health, sustenance, or shelter for all--but profit for themselves. Economic logic seeks profit, rather than social well being. Benefits for the weak arise (when they arise at all) only as a by-product, not an intention.

As Keynes put it, "Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone."

Capitalism is authoritarian.

Within capitalism's workplaces, those who labour at rote and tedious jobs have nearly zero say over the conditions, output, and purpose of their efforts. Those who own or who monopolize empowering positions have near total say. Not even Stalin controlled when people could rest, eat, or go to the bathroom, but corporate owners routinely exercise such power. Corporations annihilate democracy.

Capitalism is inefficient.

Capitalism squanders the productive capacities of about 80 percent of the population by training them primarily to endure boredom and take orders, not to fulfill their greatest potentials. It wastes inordinate resources on producing sales that aren't beneficial, and on enforcing work assignments that are coerced, and therefore resisted.

Capitalism is racist and sexist.

This is not intrinsic to the relations of production, but occurs because under the pressure of market competition, owners inevitably exploit racial and gender hierarchies produced in other parts of society. When extra-economic factors reduce the bargaining power of some actors and raise the bargaining power of others, capitalists, seeking profit, abide and even exacerbate the injustices.

Capitalism is violent.

The pursuit of capitalist market domination produces nations at odds with other nations. Those with sufficient weaponry exploit the resources and populations of those who lack the means to defend themselves.

Capitalism is unsustainable.

Markets reward short-term calculations and make dumping costly waste on others an easy and unavoidable road to profit. As a result, money-grabbers accumulate and accumulate, ignoring or willfully obscuring the impact of their short-sighted actions not only on workers and consumers, but also on today's environment and tomorrow's resources.

I could continue detailing the morbid failings of capitalism, but I don't think it's necessary. Now only a relatively few people are made so immoral by their advantages, or so profoundly ignorant by their advanced educations, or so confused by the media, that they fail to see that capitalism is now a gigantic holocaust of injustice that is anti-human in virtually every respect.

As John Stuart Mill put it, "I confess that I am not charmed with the ideal of life held out by those who think that the normal state of human beings is that of struggling to get on; that the trampling, crushing, elbowing, and treading on each other's heels, which form the existing type of social life, are the most desirable lot of human beings."

But what do we want instead?

Participatory Economics, or parecon, is built on four institutional commitments. First, in a parecon model, people participate in economic life via workers' and consumers' councils, of the kind that arise whenever people seek to control their own economies (as most recently occurred in Argentina).

The unique feature of a participatory economy's councils, however, is a commitment to self managed decision making--the idea that people should influence decisions to the extent that they are affected by them. Sometimes self-management is best accomplished via one-person-one-vote and majority rule. Sometimes a different tally is needed, or full consensus, or that only some segment of the whole group votes.

Such self-managing workers' and consumers' councils, of course, bear little resemblance to the top-down corporate entities we endure today.

Second, remuneration in a participatory economy would be based on effort and sacrifice, not on output or bargaining power. In a parecon we will earn more if we work longer, if we work harder, or if we work under more harsh or harmful conditions. Parecon rejects someone earning by virtue of having a deed in his or her pocket. Parecon also rejects a thuggish economy in which people get what they can take, as in market exchange.

Third, a participatory economy requires a new division of labour. If a new economy were to remove private profit, utilize self-managing councils, and remunerate effort and sacrifice, but were to simultaneously retain the current corporate division of labour, its commitments would be inconsistent. Having 20 percent of the workforce monopolize the empowering and pleasurable work, and leaving 80 percent with more obedient and onerous work, guarantees that the former group (that I call the coordinator class) will rule over the working class.

Even if there is a formal commitment to self-management, the coordinators, by virtue of the work they do, will enter each decision making discussion with their own agenda, owning the information relevant to the debate, possessing compelling habits of communication, and embodying the confidence and energy required to fully participate. In contrast, having been deadened and exhausted by the work they do, workers will come to decision-making discussions only dis-empowered and exhausted. Coordinators will determine outcomes, including choosing to remunerate themselves more, to streamline meetings and decision-making by excluding those below, and to orient economic decisions to their own interests.

This is about classes, ultimately. By virtue of their deed to property, owners in capitalism preside over the means of production. They hire and fire wage slaves. But eliminating this relation is not the same as attaining classlessness. Another group put in place of owners would still wield virtually complete power, and aggrandize itself above workers. Avoiding the rule of this coordinator class over workers requires that we replace corporate divisions of labour with a new approach.

Parecon calls this third institutional commitment "balanced job complexes." Everyone in any society will, by definition, be doing some range of tasks as his or her job. If the economy employs a corporate division of labour, our tasks will combine into a job that is either largely empowering or that is largely disempowering.

In contrast, a participatory economy will combine a range of tasks into jobs in such a way that the overall empowerment effect of each job is like the overall empowerment effect of every other job. We don't have managers and assemblers, editors and secretaries, surgeons and nurses. The various tasks that constitute these jobs persist in a participatory economy, but the labour is divided up differently.

Of course, some people perform surgery while most don't, but those who take scalpel to brains should also clean bed pans, or sweep floors, or assist with other hospital functions. The total empowerment and pleasure that the surgeon's new job affords is made average by re-dividing tasks. She now has a balanced job complex that conveys the same total empowerment and pleasure as the new job of the person who previously only cleaned up.

The domination of what I call the coordinator class over all other workers is not removed by eliminating empowering tasks or by everyone doing the same things--both of these options are not only irrational but impossible. Nor is coordinator class rule eliminated by just extolling rote work as important, which is possible and has even been tried, but which is structurally vacuous. What eliminates coordinator class rule, rather, is distributing empowering and rote work so that all economic actors are able to participate in self-managed decision-making without undue advantage accruing to some due to their economic roles.

Finally, fourth, what if we have lots of workplaces and communities that are all committed to having workers' and consumers' councils, to using self-managed decision-making procedures, to having balanced job complexes, and to remunerating for effort and sacrifice, but, in addition to these features, we opt for central planning or for markets for allocation? Would this constitute a new and worthy vision?

In a centrally planned economy, the planners are distinguished by the conceptual and design character of their labour, and no doubt also by their academic or other credentials. They will seek to have agents in each workplace with whom they can interact and who will be responsible for enforcing the central plan--people who hold similar credentials to the planners and are vested with similar authoritative rights.

The dynamics of central planning are: down go instructions, up comes information about the possibility of fulfilling them. Down go altered instructions, up comes more information. Down go final instructions, up comes obedience. The command structure is authoritarian, and as we saw in the old Soviet Union, the class implication is to resurrect the coordinator/worker distinction in each workplace and in the whole economy. Central planning undoes our other innovations, and so must be rejected as unfit as a model of allocation.

Markets are similar in their unworthiness, and articulating the case against them is even more important because markets have so much more support around the world--even on the left. First of all, markets destroy equitable remuneration by rewarding output and bargaining power instead of rewarding only effort and sacrifice.

Second, markets force buyers and sellers to try to buy cheap and sell dear, each fleecing the other as much as possible in the name of private advance or even economic survival. Markets subvert solidarity.

Third, markets even produce dissatisfaction as an aim, because only the dissatisfied will buy, and then buy again and again. As Charles Kettering, the general director of General Motors' Research Labs put it, business needs to create a "dissatisfied consumer." Its mission is "the organized creation of dissatisfaction." Following his own advice, Kettering introduced annual model changes for GM cars--planned obsolescence designed to make the consumer discontented with what he or she already had.

Fourth, markets mis-price transactions, taking into account only their impact on immediate buyers and sellers, but not on those affected by pollution or, for that matter, by positive side effects. This means that markets routinely violate ecological balance and sustainability.

Fifth, markets create a competitive context in which workplaces have to cut costs and seek market share regardless of the implications for others. To do what markets force them to, even new workplaces with self-managing councils that favour equitable remuneration and balanced job complexes would have no choice but to maximize revenues to keep up with or outstrip competitors. We would have to dump our costs on others, gain revenues by inducing excessive consumption, and cut production costs at workers' expense.

And since to do these things requires both a managerial surplus-seeking mindset, and also freedom from suffering the pains that the managerial choices induce, we would hire folks with the appropriately callous and calculating minds that business schools produce, and we would give these managers air-conditioned offices and comfortable surroundings, and tell them, okay, cut our costs.

Ironically, due to the pressure of markets, we would impose on ourselves a coordinator class, not via some natural law, and not because we seek to be subservient, but because markets force us to do so to win market share and avoid going out of business. Markets are therefore ruled out for a desirable economy.

So what replaces markets and central planning to round out the defining features of a participatory economy?

Parecon's answer is participatory planning. What we need in place of central planning and competitive market allocation is for informed, self-managed workers and consumers with appropriate training and confidence, and with social motivations, to cooperatively negotiate inputs and outputs, each accessing accurate information and valuations, and each having a say in proportion to the degree the choices impact them.

Using participatory planning, workers' and consumers' councils would propose their work activities and consumption preferences in light of the full social benefits and costs of their choices. Councils would engage in a back-and-forth co-operative communication of mutually informed preferences. Workers and consumers would indicate their personal and also their group preferences. They would learn what others have indicated, and alter their preferences in an effort to move toward both personally fulfilling work and consumption, and a viable overall plan.

At each new step in the negotiation, each actor would seek personal well-being and development, but each could improve their lot only by acting in accord with more general social benefit, rather than by exploiting others. Motives would be simply to meet needs and to develop potentials without wasting assets. We would seek to produce what is socially acceptable and useful, and to fulfill our own, as well as the rest of society's, preferences as the only way to get ahead personally or collectively.

In a summary, such as this, I can't fully describe parecon and all its diverse mechanisms, and show how the model is both viable and worthy. But my claim is that parecon is not only classless and not only propels solidarity, diversity, and equity, but to the extent possible, that parecon apportions to each worker and consumer an appropriate level of self-managing influence about each economic decision.

Parecon doesn't reduce productivity, but instead provides adequate and proper incentives to work at the level people desire to consume. It doesn't bias toward longer hours, but allows free choice of work versus leisure. It doesn't pursue what is most profitable regardless of impact on workers, ecology, and even consumers, but reorients output toward what is truly beneficial, in light of the lull social and environmental costs and benefits.

Parecon doesn't waste the human talents of people now doing surgery, composing music, or otherwise engaging in skilled labour by requiring that they do offsetting less empowering labour as well, but by this requirement unlocks a gargantuan reservoir of previously untapped talents throughout the populace, while apportioning empowering and rote labour not only justly, but in accord with self management and classlessness.

Parecon doesn't assume sociable (much less divine) citizens. Rather, it creates an institutional framework in which, to get ahead in their economic engagements, even people who grow up entirely self-seeking and anti-social must attend to the general social good and the well-being of others.

In capitalism, buyers seek to fleece sellers and vice versa. Capitalism trains people to be anti-social. To get ahead they must learn the lesson well. In parecon, in contrast, solidarity among citizens is produced by the economy, just like vehicles, homes, clothes, and musical instruments are. Due to the logic of remuneration and planning, my gain is built on and derives from your gain, rather than each opposed to each.

Finally, why is it important to theorize and advocate for an alternative economic model?

When Margaret Thatcher said "there is no alternative," she accurately identified a central obstacle to masses of people who are actively seeking a better world. If a person sincerely believes there is no better future, then he or she will understandably react to calls to fight poverty, alienation, and war by replying, "you can't fight war and poverty, that's a fool's errand. It's like fighting gravity."

In that context, parecon is a vision aimed to replace cynicism with hope and reason. It seeks to show that capitalism is not like gravity: we can replace it.

The citation for the Award of the President of the Italian Republic that I was graciously given called parecon "the most powerful and fully articulated challenge to the current models of socio-economic thought." Anyone who believes that about parecon, it seems to me, ought to fight like the dickens not only to ameliorate the current ills produced by capitalism, but to usher in the benefits of this new type of economy.

Michael Albert is the co-founder and co-editor of Z Magazine, and the author of Parecon: Life After Capitalism. Visit www.parecon.org for more information.

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