Participatory economics

Balanced job complexes

A balanced job complex is a collection of tasks within a given workplace that is balanced for its equity and empowerment implications against all other job complexes in that workplace.^[4]

Compensation for effort and sacrifice (principle for distribution)

Albert and Hahnel argue that it is inequitable and ineffective to compensate people on the basis of luck (e.g. skills or talents that owe to their birth or heredity), or by virtue of workers' productivity (as measured by the value of the goods they produce). Therefore, the primary principle of participatory economics is to reward workers for their effort and sacrifice.^[5] Additionally, participatory economics would provide exemptions from the compensation for effort principle.^[5]

The starting point for the income of all workers in a participatory economy is an equal share of the social product. From this point, incomes for personal expenditures and consumption rights for public goods can be expected to diverge by small degrees, reflecting the choices that individuals make in between work and leisure time, and the level of danger and difficulty of a job as judged by their immediate workplace peers.^[5]

Facilitation boards

In a proposed participatory economy, key information relevant to converging on an economic plan would be made available by Iteration Facilitation Boards (IFBs), which, based on proposals from worker/consumer councils and economic data, present indicative prices and economic projections at each round of the planning process.^[8]

The IFB has no decision-making authority. In theory, the IFB's activity can consist mainly of computers performing the (agreed upon) algorithms for adjusting prices and forecasts, with little human involvement.^[9]

Critique of markets

Mainstream economists largely acknowledge the problem of externalities but believe they can be addressed either through Coasian bargaining or the use of Pigovian taxes—corrective taxes on goods that produce negative externalities.^[13] While Hahnel (and Albert) favour the use of Pigovian taxes as solutions to environmental problems within market economies (over alternatives such as the issuance of marketable permits), he is critical about the regressive incidence of such taxes. Firms in a market economy will seek to shift the costs of taxation onto their consumers. While this might be considered a positive development in terms of incentives—since it penalizes consumers for "dirty" consumption—it fails to achieve the polluter pays principle and would instead aggravate "economic injustice."^[14] Hahnel, therefore, recommends that pollution taxes be linked to cuts in regressive taxes such as social security taxes.

Hahnel is also critical of the mainstream assumption that externalities are anomalous and, on the whole, insignificant to market efficiency; he asserts instead that externalities are prevalent—the rule rather than the exception—and substantial.^[15]

Ultimately, Hahnel argues that Pigovian taxes, along with associated corrective measures advanced by market economists, fall far short of adequately or fairly addressing externalities. He argues such methods are incapable of attaining accurate assessments of social costs:

Markets corrected by pollution taxes only lead to the efficient amount of pollution and satisfy the polluter pays principle if the taxes are set equal to the magnitude of the damage victims suffer. But because markets are not incentive compatible for polluters and pollution victims, markets provide no reliable way to estimate the magnitudes of efficient taxes for pollutants. Ambiguity over who has the property right, polluters or pollution victims, free rider problems among multiple victims, and the transaction costs of forming and maintaining an effective coalition of pollution victims, each of whom is affected to a small but unequal degree, all combine to render market systems incapable of eliciting accurate information from pollution victims about the damages they suffer, or acting upon that information even if it were known.^[16]

Class and hierarchy

Although parecon falls under left-wing political tradition, it is designed to avoid the creation of powerful intellectual elites or the rule of a bureaucracy, which is perceived as the major problem of the economies of the communist states of the 20th century.^[17] In their book Looking Forward Albert and Hanhel termed this situation 'coordinatorism'.^{[18]: 4–8} Parecon advocates recognize that monopolization of empowering labor, in addition to private ownership, can be a source of class division. Thus, a three-class view of the economy (capitalists, coordinators, and workers) is stressed, in contrast to the traditional two-class view of Marxism. The coordinator class, emphasized in parecon, refers to those who have a monopoly on empowering skills and knowledge, and corresponds to the doctors, lawyers, managers, engineers, and other professionals in present economies. Parecon advocates argue that, historically, Marxism ignored the ability of coordinators to become a new ruling class in a post-capitalist society.^[17]

Innovation

Hahnel has also written a detailed discussion of parecon's desirability compared to capitalism with respect to incentives to innovate.^[19] In capitalism, patent laws, intellectual property rights and barriers to market entry are institutional features that reward individual innovators while limiting the use of new technologies. Hahnel notes that, in contrast, "in a participatory economy all innovations will immediately be made available to all enterprises, so there will never be any loss of static efficiency.".^[20]

Planning

Participatory economics would create a large amount of administrative work for individual workers, who would have to plan their consumption in advance, and a new bureaucratic class. Proponents of parecon argue that capitalist economies are hardly free of bureaucracy or meetings, and a parecon would eliminate banks, advertising, stock market, tax returns and long-term financial planning. Albert and Hahnel claim that it is probable that a similar number of workers will be involved in a parecon bureaucracy as in a capitalist bureaucracy,^[24] with much of the voting achieved by computer rather than meeting, and those who are not interested in the collective consumption proposals not required to attend.^[25]

Critics suggest that proposals require consideration of an unfeasibly large set of policy choices,^[21] and that lessons from planned societies show that peoples' daily needs cannot be established well in advance simply by asking people what they want.^[26] Albert and Hahnel note that markets themselves hardly adjust prices instantaneously,^[27] and suggest that in a participatory economy facilitation boards could modify prices on a regular basis. According to Hahnel these act according to democratically decided guidelines, can be composed of members from other regions and are impossible to bribe due to parecon's non-transferable currency.^[28] However, Takis Fotopoulos argues that "no kind of economic organisation based on planning alone, however democratic and decentralized it is, can secure real self-management and freedom of choice."^[26]