political economy of parecon - HELP!!

Do you understand this bit? Anyway, it's set notation as per...

http://en.wikipedia.org/wiki/Set_notation

The "pi" symbol is conventionally used as a product function, here it doesn't mean 3.14159265...

Regardless, it's all bullshit anyway. PARECON attempts to defy the logic of collective action, so modelling a PARECON economy is a bit of a waste of time.

He means that neoclassical economic "theory" is bullshit, i.e. it's a pseudo-science. It's basic assumptions are falsified by actual reality. But i'm sure it's true that the equations were done up only for purposes of credibility in academic circles.

Schweickart is basically classist. He has no answer to the question of how to eliminate the power of the coordinator class over the working class. He argues from the inevitable need for specialization to the idea that there will be a hierarchy in which some people manage others. This is a fallacious argument used all the time by mainsteam economic pundits. They confuse specialized knowledge with the practice of separting it off into the hands of a few, as in taylorism, which expresses the logic of capitalist development. His argument about how some people are better at certain things than others almost hints at the class system being the result of genetics...an example of how classism gets close to racism.

Schweickart is also a market socialist. He thinks the market is fine. He has no real answer to the critique of the market that Hahnel especially has articulated.

Anarcho:

Hard to see why this would be the case. What is required is that people -- individuals, communities, regional federations -- specify what they want produced. And production groups specify their proposals for production. Why would this information not be necesary for a self-managed economy?

They require that there be a worker organization, a kind of coordinating council, to facilitate negotiation between worker organizations and the population who are affected in terms of their consumption of the products, whether public goods for communities, whole regions, or individual consumption. To do this, the coordinating organization collects all the proposals and does some number crunching to work out what the totals are, to detemine if there is a match between consumption requests and worker proposals for production.

Various simple rules would be used by a price system that reflects relative importance to groups in regard to their proposals for particular products. Such as: If projected demand for X increases above proposed supply by 10% raise the projected price of X by 10%. Prices reflect both projected scarcity and the relative importance to people of various inputs and outputs.

A request/response system seems the logical way to replace the market in a decentralized, self-managing economy. Given an absence of coordination, there is no reason to suppose that proposals for production will match requests for products.

And if someone proposes one big meeting of everyone throughout society, that's not going to work either. For one thing, it could only deal with a few policy issues. if it was supposed to create a plan for the economy, you'd end up delegating this to some planning bureaucracy which would be inconsistent with self-management.

and trying to reduce everything to autarkic self-sufficient communities is entirely arbitrary, and creates inequality since some areas have better resources. it could easily lead to the re-emergence of market relations thru trading.

So a different form of coordination, not the one big meeting idea, is needed. that's the point to participatory planning.

market socialism atomizes the working class, people are forced into competition with each other. given the massive level of solidarity that the working class would have to achieve to overthrow capitalism, it's not a likely outcome. and overcoming all the evils of the market require a state and state intervention, in Scheickart's scheme. you also can't deal with pollution and the pervasive effects of negative externalities. trying to deal with these via government regulation -- Schweickart's solution -- doesn't work now and is no more likely to work under "market socialism."

A number of these things are dealt with rather well in Robin Hahnel's "Economic Justice and Democracy."

You've not dealt with the division of labor. You'd have no way to dissolve the hierarchical division of labor. the reason for this is that it is supported by market forces. people who acquire various important pieces of expertise -- and we'd be starting off with a huge concentration of expertise into the hands of the existing professional/managerial class -- would be able put isolated collectives over the barrel and insist on privileges for themselves, or go to a competing collective.

in short a situation where important expertise and experience at management is concentrated into a relative monopolization by a particular class will tend to be not only preserved by the system you're talking about but actually strengthened due to the absence of the capitalists, who exert a downward control on this class in capitalism. this is exactly what happened in both the Mondragon coops and under market self-management in Yugoslavia.

to get over this would require an organized workers movement across the divides of different workplaces throughout the society. the power of worker solidarity on a large scale would have to deployed to develop a systematic program for redesigning jobs, stripping the old professional/managerial strata of their class monopoly, and systematically educating workers to develop their skills. This would require a society-wide vigilence that would have to be institutionalized in some way. This could be through a workers organization within the industrial federations, which would manage an entire industry on a kind of sub-contract from the society as a whole.

Ownership by society over means of production has to be something other than a "rent" being paid. It has to deal with the actual determination of what is to be produced. Leaving things to the market means you have no way to deal effectively with the pervasive influence of negative externaliities. Firms will tend to pollute since they can gain by doing so, since they shift the costs onto others.

so you've not dealt with major defects of a market system: externalities, failure to develop public goods, and allowing people with concentrated monopolies of expertise to effectively dominate workers.

Sam, have you read Capital vol. 1 yet?

I've read Albert's other books, but this one goes over my head. I admit i'm not a math buff so even simple algebra looks like physics formulas to me!

sam:

no. Mondragon had a 3-to-1 rule. It's now dead. Coordinator class (professionals and managers) accumulated enough power to kill it. And that's what will happen in your market socialism. Environmental "rules" can't substitute for an effective way of pricing pollution appropriatedly. You would have no way of doing that. to do that, the community has to have power over the use of the land and the environment -- air, water -- and can control the amount of pollution it will allow. under participatory economics, an area that allows a pollutant is compensated in its consumption for the cost of that pollution, so it has an incentive to allow some. on the other hand, it has the power to prevent it, since no production group can pollute without the permission of the regional federation that controls the air, water, land. the price for the pollutant can be calculated from the cost of removing or preventing as much pollution as the region wants removed. in other words, if the region wants a 25% reduction in some pollutant such as nitrogen monoxide in atmoshere, accomplishing this has a price. so that then tells us what the value to that population is of eliminating each unit of that pollutant.

capricorn:

there's no competition in participatory economics. it's a planned economy. there can't be capitalism without capitalists. requiring that workers achieve a socially average level of productivity doesn't require them to "slave drive" themselves. if production facilities are socially owned, there needs to be some way they are held accountable to society, or else it's words without substance. the idea is that if their level of benefit per unit of cost falls significantly below average, it would be up to them to make a case for why the plug shouldn't be pulled on their operation. it would seem the resources could be used more effectively elsewhnere. if you don't like this proposal, you will need to answer the question: How is the production group using allegedly "socially owned" means of production, held accountable? Why should they be allowed to earn consumption entitlement that way, or control that workplace, if they fall way below the productivity of everyone else? how do we ensure that the social economy is effective for the population? rhetorical hand-waving doesn't qualify as a plausible answer.

before you try to critique an idea, you should at least understand it.

Market socialism deals with externalities pretty much exactly in the same way as parecon, but instead of a cooperative's 'consumption entitlement' (read: share of social production) being reduced, 'wages' (read: share of the particular enterprise's production) are reduced through increased taxation (think of a 'green tax' on firms).

Remember, these are socially owned enterprises--the firm's workers simply take on extra responsibility (self-management and its added risk) in exchange for increased autonomy and rights to share in the product. So really we are dealing with joint worker-community owned firms which is not at all like a capitalist firm.

Also, the democratic investment mechanism that Schweikhart proposes is rather similar to parecon's method of ensuring efficient production of allocated resources...the firm is inefficient and closes down either way, unless relevent democratic institutions can be persuaded that the importance of the enterprise warrants its continued support.

This also goes for the externalities argument: communities would democratically decide to invest in less environmentally-destructive, more socially-beneficial areas and methods of production. They would also divest from areas and methods of production that proved to be relatively less beneficial or more destructive. Seems pretty kickass to me.

Of course, Schweikhart's proposals for how to organize larger firms (with government approved and trained managers acting as 'socialist CEOs'--his actual words if I remember correctly) should be a bit offputting for libertarian socialists of every stripe. Still, it isn't hard to imagine, as sam sanchez points out, a more directly democratic method for administering a market socialist economy. Besides, Schweikhart's books (Against Capitalism, After Capitalism--the latter I've read more than once and highly recommend to folks of all political backgrounds) aren't written to convince Anarchistoid activist types of an method for administering libertarian socialism like Albert's seem to be...but rather to convert academics and laypeople that there can be any alternative to capitalism at all! He isn't arguing for the most libertarian of all possible societies but rather for the most feasable of all possible socialisms!

No, there is nothing at all like the participatory econmics method fo dealing with externalities in Schweickart's scheme. The problem with having the government simply set a price for the pollutant -- a tax -- is that it's completely arbitrary. You have no idea whatsoever of whether this is the efficient price.

this is discussed in detail by Robin Hahnel in "Economic Justice and Democracy."

To know what the efficient price is, you have to have a way of measuring how strongly people want the pollutant reduced, where this is informed of what the costs are of reducing it. Merely holding community meetings doesn't get this information. simply banning all pollutants isn't the solution because our productive activities are likely to generate some amount of pollution and the benefits in some cases may be greater than the harm from the pollution. but how to determine what the level should be? here is how Hahnel describes the participatory economic process for determining efficient price:

The efficient price for a pollutant (the price paid by the polluter) is the price at which the last unit of pollution causes damages equal to its benefits. What if the council that publishes data during planning publishes a projected price "for the pollutant that is less than the efficient price. In this case case pollution victims, represented by their [regional or local] federation, will not find it in their interests to permit as much pollution as polluters would like, in which case their will be excess demand for permission to pollute, and the IFB [council that publishes data during planning] will increase the [projected] price of the pollutant in the next round of planning. if the IFB quotes a price that is higher than the efficient price, the federation representing the victims will offer to permit more pollution than polluters want to emit and there will be excess supply of permission to pollute, and the IFB will decreate the [projected] price in the next round. ...Consequently, when the IFB adjusts the indicative [i.e. projected] prices for pollutants until requests to pollute equal permissions to pollute, the efficient level of pollution is reached." The incentive that a federation has to allow pollution is that it receives an increase in its budget equal to the cost of the pollutants polluting production groups have gained permission to emit.

It's all well and good to say that Schweickart wasn't interested in specifying the most libertarian conception of socialism. but the problem is, he doesn't recognize the existence of the coordinator class, has no program for getting rid of its power, and thus can't ensure that the working class would be liberated from the class system under his proposal. It isn't really a feasible socialism because it would empower the coordinator class, and as the examples of Russia, Yugoslavia and China show, this class has a tendency to work to evolve society towards capitalism.

Yugoslavia maintained the world's highest growth rate for 2 decades with a sort of market socialism under Tito. What it really amounted to, however, is allowing the workers at the time of privitization become the new bosses, complete with the ability to hire wage labor (new employees were not granted ownership rights).

Even under capitalism, 'green taxes' are meant to cover the costs of offsetting the environmental destruction being addressed. Parecon offers nothing new in this regard, aside from the procedure and the graduated disinsentive from polluting, and I see no reason why market socialism...or even capitalism...couldn't address things according to the same principles.

Well, seeing as the ostensibly democratic state can impose disinsentives from environmental destruction through targeted forms of taxation, I'd say that the ecosystem is effectively jointly owned by private firms/capitalists and the ostensibly democratic state.

Well, seeing as the relevent state or federated community institutions can impose disinsentives from environmental destruction through targeted forms of taxation, I'd say that the ecosystem would be effectively jointly owned (along with the firm itself) by the 'private' workers cooperative and the relevant state or federated community institution.

Oh...so I guess they don't have the ability to democratically influence the activities of the firm in question? How do you figure? How do you understand ownership to work? Can ownership in real life ever be purely collective or private? I certainly don't think so! At least not in any of the instances we are discussing (parecon, market socialism, even capitalism as it actually functions...otherwise it would destroy the natural environment rather quickly and no capitalist wants that)!

Which I've already argued is completely compatible with market socialism, something you've done nothing to refute other than simple denials.

Semantics. Once again, real life ownership is neither purely collective nor purely private, in any case...the very act of creating the categories that separate the firm from the collectivity allows for the possibility of calculating externalities.

Just assuming that there's one firm (society) in which all economic activity is 'internalized' doesn't change the reality of the situation, it does nothing to reduce the need for collective action to limit activities of particular economic activity...it simply shuffles words around.

The parecon solution can be seen as dealing with externalities just like any other scheme under any other system. Calling it an directly democratic method for dealing with 'internalized' environmental costs effectively makes it no different than calling it a directly democratic method for dealing with 'externalized' environmental costs...as could easily exist under market socialism or even capitalism!

He actually argues for democratically elected workplace management, which is a feature of most forms of socialism -- including Parecon.

True, but irrelevant to his critique. And just because I agree with his critique of Parecon it does not mean I also agree with his solution to the social question.

The problem is collating and processing this information. Above small groups, the numbers involved (and their interdependence) becomes staggering. 1 million people consuming, say, 10,000 products which, in turn, are dependent on each other, would be a staggering amount of information to collect and process. Nevermind coordinating it all and generating balanced work complexes as well.

Sorry, did not not say you were againt the creation of a co-ordinator class? Oh, I forget, these co-ordination tasks will also be rotated and added to the job complex balancing...

But it is funny to hear opponents of a co-ordinator class stressing the need for a complex organisation of co-ordinators to gather, collate and process information...

And these is no reason to suppose that this could work on a large-scale, given the amount of information required.

You clearly have not understood Schweickart's argument -- and he even gives examples of how difficult it would be!

Parecon's 'request/response' system sounds a bit like a market to me, actually, only less decentralized and self-managing. I've always gotten the impression that parecon is just a couple guys who are dogmatically anti-market trying to design a market economy, with predictably convoluted results.

No reason...other than the central mechanism of a market system: supply and demand. It is just like 'request/response' except scarcity is on ability and willingness to pay...something that in the context of massive inequality (capitalism) leans toward ability to pay. But given relative equality (as under market socialism), the mechanism fundamentally mediates scarcity through willingness to pay--the weighing of priorities. (opportunity cost and all that jazz.)