made).
Production proposals are evaluated by comparing the estimated social benefits of outputs to the estimated social costs of inputs. In any round of the planning procedure the social benefits of a production proposal are calculated simply by multiplying quantities of proposed outputs by their “indicative” prices—including negative prices for proposed emissions of pollutants—and summing. The social costs of a production proposal are calculated by multiplying inputs requested by their “indicative” prices and summing. If the social benefits exceed the social costs—that is, if the social benefit to cost ratio of a production proposal exceeds one— everyone else is presumably made better off by allowing the worker council to do what they have proposed. On the other hand, if the social benefit to cost ratio is less than one, the rest of society would presumably be worse off if the workers go ahead and do what they have proposed, unless there is something “the numbers” fail to capture. Again, the “indicative” prices make it easy to calculate the social benefit to cost ratio for any production proposal, allowing worker councils making proposals to determine if their own proposals are socially responsible, and giving all councils who must vote to approve or disapprove production proposals of others an easy way to assess whether or not those proposals are socially responsible.
This procedure “whittles” overly ambitious proposals submitted by worker and consumer councils about what they would like to do down to a “feasible” plan where everything someone is expecting to be able to use will actually be available. Consumers requesting more than their effort ratings and allowances warrant are forced to either reduce the amounts they request, or shift their requests to less socially costly items if they expect to win the approval of other councils who have no reason to approve consumption requests whose social costs are not justified by the sacrifices of those making them. Similarly, worker councils are forced to either increase their efforts, shift toward producing a more desirable mix of outputs, or shift to a less costly mix of inputs, to win approval for their proposals from other councils who have no reason to approve production proposals whose social costs exceed their social benefits. Efficiency is promoted as consumers and workers attempt to shift their proposals in response to updated information about opportunity and social costs in order to avoid reductions in consumption or increases in work effort. Equity is promoted when further shifting is insufficient to win approval from fellow consumers and workers, which can eventually only be achieved through consumption reduction or greater work effort. As iterations proceed, consumption and production proposals move closer to mutual feasibility, and estimates more closely approximate true opportunity and social costs as the procedure generates equity and efficiency simultaneously.
Because estimates of opportunity and social costs are available to all it is easy for anyone to calculate whether or not a consumption or production proposal is socially responsible. This means there is no need for a central planner to be the final arbiter, approving or disapproving proposals. Councils can vote “yea” or “nay” on other councils’ proposals without time-consuming evaluations or contentious meetings, except in occasional cases requiring special review.
There are important technical issues of concern to economists. In this regard it has been demonstrated that the participatory procedure outlined above will eventually reach a feasible plan that is a Pareto optimum under less restrictive assumptions about technologies and preferences than those necessary to prove that the general equilibrium of a private enterprise, market economy will do so. In particular, participatory planning accommodates externalities and public goods efficiently, and generates reasonably accurate estimates of damages from pollution whereas market economies do not.7 But this is what it boils down to:
When worker councils make proposals they are asking permission to use particular parts of the productive resources that belong to everyone. In effect, their proposals say: “If the rest of you, with whom we are engaged in a cooperative division of labor, agree to allow us to use productive resources belonging to all of us as inputs, then we promise to deliver the following goods and services as outputs for others to use.” When consumer councils make proposals, they are asking permission to consume goods and services whose production entails social costs. In effect, their proposals say: “We believe the effort ratings we received from co-workers indicate that we deserve the right to consume goods and services whose production entails an equivalent level of social costs.”
The planning procedure is designed to make it clear when a worker council production proposal is inefficient and when a consumption council proposal is unfair, and allows other worker and consumer councils to deny approval for proposals when they seem to be inefficient or unfair. But initial self-activity proposals, and all revisions of proposals, are entirely up to each worker and consumer council itself. In other words, if a worker council production proposal or neighborhood council consumption proposal is not approved, the council that made the proposal—nobody else—can revise its proposal for resubmission in the next round of the planning procedure. This aspect of the participatory planning procedure distinguishes it from all other planning models, which advocates believe is crucial if workers and consumers are to enjoy meaningful self-management.
Participatory Economics: A Sympathetic Critique
Let me begin, like Robin did in his opening contribution to this dialogue, by affirming a very broad range of issues on which we are in deep agreement:1
Strong egalitarianism is a core value. We both adopt a radical egalitarian understanding of social justice, although we use slightly different language to express our views. A just system of economic distribution is one that combines an unconditional guarantee of income, sufficient to provide for (generously interpreted) basic needs, with additional income that is proportionate to some broadly understood notion of effort or sacrifice. Robin refers to the first of these conditions as a condition for a humane economy, not a just economy, and treats only the second condition as a matter of justice, whereas I feel it is unjust to deny people equal access to the material means necessary to live a flourishing life. But this makes no practical difference in our views about what constitutes a desirable system of distribution.2 We both reject inequalities in material conditions of life that are the result of talents or contributions or brute luck and certainly of power.
The quality of work, not just the material rewards from work, is an issue in justice. Robin expresses this concern in his principle of “balancing jobs”—the idea that all jobs, to the extent possible, should contain the same mix of tedious and enjoyable tasks, pleasant and unpleasant activities, routine and “empowered” responsibilities. As an ideal, all jobs should be equally desirable from the point of view of whatever qualities people value within work. This is a complex regulative ideal, and while in practice it will never be fully realized, deviations are a matter of injustice. People in jobs that, for pragmatic reasons, have more burdens in this sense (i.e. a less desirable balance of tasks) should thus be compensated with greater income or more leisure or in some other appropriate way.
Radical, substantively meaningful democracy. Democracy, if taken seriously, means that people should be able to meaningfully participate in making decisions over things that affect their lives. Robin correctly argues that the full realization of that principle means that the weight of individuals’ preferences in decisions should be roughly proportional to how much any given decision affects them. This is obviously a very complex idea to put into practice in a fine-grained way, and any practical implementation will at best be a rough approximation of the ideal itself. This conception of democracy provides grounding for the kind of nested system of participatory decision-making bodies that is at the heart of the institutional design of Robin’s model.
Capitalism
