Protecting the environment in a participatory economy.

• Author: Hahnel, Robin
• Position: Thinking Economically - Column

Over the course of several decades, Michael Albert and I came to the conclusion that the vision of a desirable economy shared by many council communists, syndicalists, anarchists and guild socialists was essentially sound, but, unfortunately, these economic visionaries had failed to provide a coherent model explaining precisely how their alternative to capitalism could work. In two books published in 1991--The Political Economy of Participatory Economics (Princeton University Press), and Looking Forward: Participatory Economics for the Twenty First Century (South End Press)--we set out to rectify intellectual weaknesses in the case for participatory planning by spelling out precisely how worker and consumer councils and federations could coordinate their joint endeavors themselves--consciously, democratically, equitably, and efficiently. Our model of a participatory economy quickly attracted interest among left greens because it rejected the profit motive, market competition, central planning, consumerism and hierarchical decision making, and promised to take into account external effects that go ignored in market economies. However, in neither book did we explain precisely how a participatory economy would protect the environment. The purpose of this article is to begin to redress this deficiency.

The model of a participatory economy was designed to promote: (a) economic justice, or equity, defined as economic reward commensurate with sacrifice, or effort; (b) economic democracy, or self-management, defined as decision making power in proportion to the degree one is affected by a decision; and (c) solidarity, defined as concern for the well being of others--all to be achieved without sacrificing economic efficiency while promoting a diversity of economic life styles as well. The major institutions used to achieve these goals are: (1) democratic councils of workers and consumers, (2) jobs balanced for empowerment and desirability, (3) remuneration according to effort as judged by one's work mates, and (4) a participatory planning procedure in which councils and federations of workers and consumers propose and revise their own activities under rules designed to guarantee outcomes that are both efficient and equitable. While I leave readers to consult other writings [1] for a comprehensive description and defense of participatory economics, I must provide an abbreviated exposition of participatory planning for readers to understand specific features proposed below to protect the environment.

The participants in the planning procedure are the worker councils and federations, the consumer councils and federations, and an Iteration Facilitation Board (IFB). Conceptually, the planning procedure is quite simple. (1) The IFB announces what we call an "indicative price" for each final good and service, each capital good, each natural resource, and each category of labor. (2) Consumer councils and federations respond with consumption proposals taking the indicative prices of final goods and services as estimates of the social cost of providing them. Worker councils and federations respond with production proposals listing the outputs they propose to make and the inputs they need to make them, again taking the indicative prices as estimates of the social benefits of outputs and social costs of inputs. (3) The IFB then calculates the excess demand or supply for each final good and service, each capital good, each natural resource and each category of labor. The IFB then adjusts the indicative price for an item up or down in light of the excess demand or supply. (4) Using the new indicative prices, consumer and worker councils and federations revise and resubmit their proposals. Individual worker and consumer councils must continue to revise their proposals until they submit one that is accepted by the other councils. The planning process continues until there are no longer excess demands for any final goods or services, any capital goods, any natural resources, or any categories of labor--in other words, until a feasible plan is reached.

The IFB has no discretionary power to determine prices, much less to dictate what workers or consumers can do. The IFB bears no resemblance to GOSPLAN in the former Soviet Union which was a central planning bureaucracy that did have tremendous power over who would produce what and how they would go about it. But in participatory planning worker and consumer councils propose and revise their own activities in a process that reveals the social costs and benefits of their proposals that both they, and others, can take into account. Not only does each worker and consumer council make its own initial proposal, they are entirely responsible for revising their own proposals as they see fit. Other worker and consumer councils can vote to disapprove of proposals they find unfair or inefficient, but revisions are entirely up to individual worker and consumer councils themselves. This aspect of the participatory planning procedure distinguishes it from all other planning models that I know, and is instrumental in providing workers and consumers with the opportunity for self-management.

The planning process whittles overly optimistic, unfeasible proposals down to a feasible plan in two ways: Consumers requesting more than their effort ratings warrant are forced to either reduce their requests or shift their requests to less socially costly items if they expect to win the approval of other consumer 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 or shift toward producing a more desirable mix of outputs or using a less socially costly mix of inputs to win approval for their proposals. By multiplying outputs by their indicative prices and dividing by inputs multiplied by their indicative prices it is possible to calculate the ratio of social benefits to social costs of any worker council proposal. Worker councils whose proposals have lower than average social benefit to social cost ratios will be forced to increase either their efforts or their efficiency to win approval from other worker councils. Efficiency is promoted as consumers and workers attempt to shift their proposals and avoid reductions in consumption or increases in work effort. Equity is promoted when further shifting is no longer possible and approval of fellow consumers and workers can only be achieved through reducing consumption to be commensurate with sacrifices, and by raising work effort to the level of others. Each new round of revised proposals moves the overall plan closer to feasibility, and moves the indicative prices closer to true social opportunity costs. No participant in the planning procedure enjoys any advantage over any other and the...