final consumption items around which producers make decisions about how much to produce. Since it is beyond the ability of people to meaningfully specify such an inventory a year in advance, the solution, of course, is for households to simply use the list of specific items they actually consumed from the previous year. This seems to be what Robin suggests that he, and probably most people, would do: “I would simply allow my neighborhood council to re-enter what their records show I actually ended up consuming last year as my pre-order again for this year.” (p. 86) If overwhelmingly this is what people would do, then there is actually no real need for them to submit pre-ordered consumption “proposals” at all since the total consumption of specific items from the previous year is already known to producers—this equals the total of all the goods and services produced that were acquired by consumers. The plans for production for the future, then, in effect would be done pretty much as they are done now: producers would examine the sales7 and trends of sales in the recent past, and make their best estimate of what to produce for the next year on that basis. Indeed, since producers and their sector federations can continually and efficiently monitor these trends, they are in a position to make updates to plans in an ongoing way on the basis of the actual behavior of consumers, rather than mainly organize their planning activities around annual plans animated by uninformative household pre-orders.
There is a certain irony here. Robin argues in favor of pre-ordering by saying:
A participatory economy is a planned economy. This means we must have some idea what people want to consume in order to formulate a plan for how to produce it. In market economies consumers do not “pre-order,” and instead producers are left to guess what consumers will eventually demand … the convenience for consumers of never having to pre-order in market economies is actually bought at the expense of a significant amount of economic inefficiency as resources are wasted producing more of some goods and less of others than it turns out people want. (p. 84)
But if pre-ordering is really a fiction since most people will behave as Robin predicts that he will behave, then it will still be the case that “producers are left to guess what consumers will eventually demand.” Of course, in a participatory economy where there is little competition among producers and they are organized into federations of worker councils, it will be easier for them to get full and detailed ongoing data on consumer choices relevant to their ongoing plans, so their guesses are likely to be more accurate than in capitalism. But what is gained by having households submit a formal pre-order of a year’s worth of consumption, given how they are likely to behave, instead of having the producers simply use all of the relevant data from actual patterns of consumption in their sectors as the basis for estimating what will be consumed in the next year?
There is one other secondary issue I’d like to raise about household consumption planning and neighborhood consumer councils. I understand—and support—the role of neighborhood councils in planning neighborhood public goods. I don’t understand why my personal consumption should be the business of a neighborhood council, even apart from the problem already discussed of the usefulness of the procedures involved. The general principle underlying participatory planning is that people should be involved in decisions to the extent it affects them. But why does my personal consumption have any effect whatsoever on my immediate neighbors any more than it does on anyone else? They are affected by the division of consumption between public goods and private consumption, but not by the content of what I consume, so why should they have any role in that at all? The same goes for my requests for loans or credit: why is this the business of my neighbors?
How Marketish Are “Adjustments”?
In his opening piece in this dialogue, Robin only sketches part of the planning process—the annual plan as generated by worker and consumer councils. However, in his book he acknowledges that the initial annual plans will only be approximations and that throughout the year adjustments will have to be made. With respect to household consumption, Robin affirms the value of consumers being able to consume what they want in a participatory economy: “There is complete freedom of choice in a participatory economy regarding what one wishes to consume” (p.80). This means that the pre-ordered household consumption plans will result in lots of deviations, and accordingly, lots of adjustments. Here is how Robin foresees these adjustments taking place:
One of the functions of consumer councils and federations is to coordinate changes in consumption among themselves. If another consumer wants more of an item I pre-ordered but no longer want, there is no need to change the amount the agreed upon production plan called for. Whenever consumer councils and federations (which will function like clearing houses for adjustments) discover that changes do not cancel out, the national consumer federation will have to discuss adjustments with industry federations of worker councils. Computerized inventory management systems and “real time” supply chains are already fixtures in the global economy, which makes adjustments much smoother than they would have been only a few decades ago. (p. 85)
The actual process by which these adjustments will occur is not very clear to me, but even with the best inventory management systems one can imagine, there will still be excess inventory of some goods in the system and shortfalls in others. The most obvious way that excess inventory will be dealt with is by allowing people to acquire these things less expensively. To use conventional language, where there is excess supply, prices will be reduced, whether on an erratic basis or as “end of season sales.” To be sure, this means that the prices of these goods will be not reflect the opportunity costs of their initial production or the positive and negative externalities that were taken into consideration in determining their initial “price.” But it will reflect the opportunity costs consumers face in deciding to acquire one good or another.
There will also be shortages in goods. In some specific situations, this is inherent in the nature of the goods. For a theater performance there is a difference between the best seats and the worst seats in the house, although the production costs of the “seat” in terms of material inputs, and positive and negative externalities, don’t differ across seats. For other goods, especially some novel good, there will be shortages just because of the time it takes to produce as much as people want. One way of dealing with shortages in the supply of something is rationing, for example through a lottery. People could buy a theater ticket and be randomly assigned a seat. Or they could order a new product and the length of time they had to wait until they received it could be randomized. That is one perfectly good solution and satisfies a certain interpretation of equality. Or access could be based on a first-come-first-served basis, with the accompanying night-long vigils to get tickets when a box office opens. But one could also charge people more for the items that are in short supply. If this occurs in a social context of effort rating–based income—that is, a system in which everyone has the same choice of how much income they want to earn by simply deciding how much effort they want to expend—then charging more for goods in short supply simply means that those people who really want the good more will be able to choose to consume it sooner. In Robin’s model, the extra income generated by these higher-than-cost-of-production prices would not go into the pockets of the producers. Their incomes would continue to be based on their own effort expenditure. All that would change is that consumers would be able to decide whether it was sufficiently important for them to have the good in question sooner that they would be willing to consume less of something else or work harder for some period of time.
This description of how adjustments to annual consumption plans would work looks a lot like certain critical aspects of markets: prices adjust to disequilibria of supply and demand. This, of course, does not render the economy overall a “free market economy”. The fact that the costs of externalities, positive and negative, are built into the base price of goods, is not something that happens in market systems, and certainly the fact that purchasing power is based on effort-expenditures is not derived from a market mechanism. Yet, allowing the actual prices consumers face to be systematically affected by supply and demand is a market process. And depending upon the actual, practical degree of adjustment needed in the system, this could generate significant variation in prices. My prediction
