ParEcon Questions & Answers

Next Entry: Realistic?

Finer points of parecon?

vvCan we explore a few finer points bearing on allocation. How about long term plans, for example?

Should society make a qualitative change in coal mining that drastically improves health and safety? Should it update existing steel plants, build a new high-speed rail line, or transform agriculture to conform to ecological norms? All may be desirable, but presumably, given limited resources, not all can be done at the same time. That is the meaning of long-term investment choice and the problem it poses. Which projects are worth doing and which are not? In what order should they be done? And how fast should we tackle the list—which is to say, how much present consumption are we willing to sacrifice for future benefit?

Long- and short-term investment projects differ in regard to how many years’ resources must be committed for the project to reach fruition. Large- and small-scale investment projects differ also regarding the magnitude of commitments and the breadth of efforts required. One approach to long-term planning would be to handle this issue before yearly planning begins. At this time, all previously agreed to long-term projects could be reviewed and updated so that the commitment of resources necessary for this year could become part of subsequent planning calculations. After national projects are settled, large regions could settle on their new long-term projects, and so on, down to the smallest units. In each case, alternate proposals could be aired, preferences expressed, implications assessed, new alternatives broached, options eliminated and improved, and final decisions made after due deliberation, all by participatory procedures similar to those described in our earlier discussion of county-wide planning.

A procedure that could shorten the process would be to first decide the proportion of economic resources we want to commit to investment. Debate about options could then be made knowing roughly what productive resources were available. Formulation, presentation, and modification of long-term investment options could be made and updated by the investment facilitation boards, who could base their proposals on submissions from units, also as outlined in the earlier county example.

It is important to recognize the advantages of collective, participatory investment planning. In capitalist or market coordinator economies, each unit assesses potential investments according to norms imposed by the market and class system. In the workplace, the decision to switch from one technology to another is made by assessing likely profit/loss and capital/labor or coordinator/labor bargaining implications. But this is most definitely not the same as deciding on the basis of social cost and social benefit. Only the benefit of owners, coordinators, and stockholders is taken into account. Moreover, investment decisions in market economies are not even planned in coordination with one another. For example, the steel plant that decides not to introduce new technology because it appears unprofitable might have decided differently were they better able to foresee how innovations in other industries would dramatically alter the cost of inputs or the demand for steel. Or, since there is a premium on corporate secrecy under capitalism, two firms might make a decision to invest in a new plant when society only needs the output of one.

In participatory planning, on the other hand, coordinated planning in light of social costs and benefits is possible. Each potential investment stands or falls not because of contemporary relationships alone, but because of conditions most likely to prevail once all innovations are available. Whatever criteria society uses to determine whether to enact particular investments, the participatory planning system will produce a more accurate assessment of social costs and benefits than would capitalist or coordinator systems. In addition, in a participatory system judgments will emphasize the impact of choices on the whole economy’s social relations from the point of view of improving the quality of life of all workers and consumers, rather than just the circumstances of elite classes. But what about planning more broadly?

vvHow does anyone prepare date for the first round 

How do iteration facilitation boards estimate overall production and consumption for the coming year? How do they come up with initial indicative prices that economic actors can use, and what exactly do these prices convey? Most important, does proposing likely out- comes and indicative prices make a lie of our claims that no single agent has greater say than others? Can facilitation workers exert undue influence on planning?

Various planning boards begin by reviewing last year’s results, including what inputs generated what outputs in every unit. They know the final indicative prices and therefore can calculate the value of last year’s production. Moreover, qualitative information is included in extensive reports from all units and federations and quantitative information can be accessed using terminals that allow users to see the inputs required for outputs desired.

Facilitation boards modify last year’s data to estimate this year’s likely outcomes based on comprehensive demographic reports regarding likely changes in population by age and gender, the distribution of people between city and country, and so on. They know which investment projects have been completed and how these investments should affect production potentials. As a result, facilitators can make educated guesses about changes in production work levels and indicative prices.

We could provide more detail, but nothing about this type of data manipulation warrants it. The techniques are well known and noncontroversial—tedious, but not difficult. Facilitators are merely taking last year’s data and massaging it in light of projections about investments that have come to fruition, growth of the labor force, and changes in tastes—the latter being estimated from last year’s interchanges and from polls of particular constituencies.

Facilitators could could follow only prescribed steps for massaging their data, or they could take some latitude for discretionary and hopefully creative adjustments. In the former case, facilitators would have no ability to influence outcomes, but might provide less than the best possible guesses. In the latter case, there is greater risk of subjective bias, but also potential for better projections. We will talk more about this trade-off later when we discuss examples, but here we make four preliminary observations:

1    It is hard to see any way facilitation board workers (whom we call facilitators for short) could gain by maliciously biasing data even if they went about their work without supervision.

2    The choice between using more flexible but also more subjective techniques and using less flexible but also less creative techniques lies in the hands of society, not facilitation board workers.

3    There is no reason facilitators’ discretionary calculations could not be checked by anyone who wished to.

4    Facilitators’ projections are, in any case, only guidelines to help economic actors make decisions.

Facilitators themselves don’t make any production or consumption proposals (other than their own), nor do they revise, veto, or approve any proposals (other than their own). Indeed, facilitation could be automated, with computers taking last year’s data and altering it according to rules that tell what changes to make. Facilitators would then only update the program rules as they better understand how variables affect one another. A less formulaic approach would allow facilitators to use their experience to refine automatic projections. But in either case, facilitators make no decisions about what the economy will do. They only provide information whose formulation is open to public scrutiny and which economic decision makers are free to ignore if they mistrust it.

At the outset of planning everyone in society has access to projections for indicative prices and production and consumption at every level, including summaries of related assumptions. Individuals use this information as they please in developing their own plans for the year. It is therefore hard to see how facilitators could bias outcomes even if society chose, as we think wise, to give them leeway in their means of calculation and projection. Of course facilitators, like all other workers have balanced job complexes and are remunerated only for effort and sacrifice.


how is data revised in subsequent iterations 

The tasks of facilitators in subsequent iterations are not particularly complex. After each economic council and federation submits its first proposal, facilitators respond by preparing new data for the coming round. They no longer have to guess based on last year’s results. Once this year’s initial proposals are in, IFBs calculate the excess demand or supply for every good and accordingly adjust the indicative price of each good up or down. There is room for practical experience and artistry in making the indicative price adjustments or, if preferred, the changes could be made according to fixed rules. In either case, not every price must be adjusted by the same function of its excess demand or supply. One possibility is that IFB workers with experience in particular industries or with qualitative information indicating whether proposals are relatively soft or hard could expedite convergence by discretionary, informed adjustments. But in any event, in early rounds, IFBs only summarize qualitative information in data banks for councils to assess, calculate excess supply and demand, adjust indicative prices, and revise projections of predicted final outcomes. The updates of predicted final outcomes are still guesses, but they are based on more information with each new round of planning. Reports of excess demand and supply and qualitative information, however, are a matter of accurate record-keeping.

It is important to note, however, what it is that facilitators would be “updating” in each round. Before planning commences, IFBs use last year’s results, including information about investment projects, polls taken during the year, and various demographic data to project anticipated results for the coming year. Of course actual initial proposals will not be identical to IFB projections. Once the year’s planning begins, IFBs are revising information based on the most recent set of proposals submitted. So at the outset of round two, workers and consumers receive summaries of qualitative information, new indicative prices, the percentage of excess demand and supply for every good, and new projections of what average consumption and the average social benefit to social cost ratio will be for workplaces this year. Workers and consumers use all this data, as we have discussed, to modify their requests in subsequent rounds.

During the planning process, facilitation boards at different levels would regularly communicate with one another and with plant boards regarding logjams, requests that remain unusually far from expected averages, reluctance among producers or consumers to compromise, and especially changing labor requirements that require transfers of workers.

But facilitators carry out only communicative tasks and never make decisions for others. Whether they do their job well affects the final plan, but it is hard to see exactly what motive IFB workers might have to intentionally bias outcomes or even how they could do it, and it is certainly possible to have oversight mechanisms.

In later iterations, in addition to adjusting indicative prices and providing new projections, IFBs could generate alternative feasible plans for councils to assess and vote on. Indeed this is the case in the version of participatory planning we have been describing. This approach would increase the potential for IFBs to influence outcomes since in late iterations they would be actually formulating options. It is conceivable, for example, that IFB workers might present five internally consistent plans but not a possible plan that would actually be most preferred. But notice that the only reason for having IFBs present options for a vote is to reduce the number of iterations required to reach a final plan. It is a matter of practical convenience, and, should councils be suspicious or unsatisfied with what IFBs present, the councils and federations can always choose to continue the iterative process as they had been. In other words, this stage of the planning process can be postponed until the councils feel that the time saved warrants any diminution in the quality of results. Moreover, the idea is that this time-saving part of the procedure would only begin when the major part of the plan has already been settled on. We are talking about final moves after the essential outcome is no longer in doubt. Moreover, councils could always insist that an additional alternative plan be included with those generated by the IFBs to be voted on.

Finally, for those who fear that computers could become the new dictators, the programs are socially evaluated and improved each year. The computer is acting on data emerging directly from the social planning process and the preferences expressed by it participants. The computer uses socially determined data and rules and only carries out data manipulation and calculations. Moreover, all the scenarios we have outlined for producers and consumers to make their choices allow for amendments. Neither consumers nor producers need accept computer projections.

Society could have IFB workers play a substantial role in refining options to embody people’s preferences, but as with other procedural choices, there is no one right way. If a society chooses a more mechanical approach, the need for special oversight to guard against bias is minimized, but planning might take more time. If IFB workers are given more leeway, the possibility of human error or bias is increased and provisions to correct for it become more important (though significant self-interested bias is hard to imagine given that facilitation workers benefit only if average job complexes or overall productivity increase, just like all other workers). But workers and consumers probably save planning time.

Whatever combination of automatic procedures and human discretion is adopted for IFB work, unlike in coordinator and capitalist economies, no aspect of participatory planning is immune to social evaluation. Nor is any part of the plan finalized without being filtered through the social barter process where everyone’s preferences, evaluations, and opinions interact. Nor is any individual in a position to systematically advance personal or group interests against social interests.

The difference between participatory and central planning is that in the latter, “planners” generate the plan, submit it to those who will carry it out, get feedback about whether actors can or cannot accomplish what planners propose for them to do, and then impose a plan. More, they occupy a different class position and enjoy material and job related advantages which can be defended and enlarged via plan choices. In participatory economics “plan workers” only facilitate the process whereby workers and consumers propose, haggle over, and revise their own plan, making their own decisions. And if facilitators formulate any proposals, it is only after all the important decisions have been made. And facilitators are not in a separate class and do not have larger incomes or better work conditions to defend or advance against others’ interests.

What is it like, working at a Facilitation Board 

Working at a facilitation board is not much different than working anywhere else in the economy. Work is partly conceptual and partly executionary, and work complexes are balanced by the usual approach of combining diverse tasks. IFB work may be more desirable and more empowering than average work complexes in the economy as a whole, but, if so, greater than average desirability would be compensated for just as it would in any other workplace— that is, by assignments to less desirable tasks elsewhere. Greater than average empowerment might even require rotating people in and out of IFBs after some time period, in addition to general balancing. Likewise, since working at an IFB is particularly likely to enhance people’s understanding of the interlocking complexities of economic possibilities, it makes sense to rotate this work, taking the efficiency implications of experience and training into account as well. Finally, depending on society’s political structures, a case can be made for working to have IFB staffs be politically balanced across a spectrum of views, avoiding any biases on that score.

How does parecon handle qualitative information? 

Consumers need to be able to assess the implications of their requests for workers. Producers need to know why consumers want what they are working on, not only so they can feel good about their contributions, but also to decide how hard they want to work.

In addition to quantitative estimates of social costs and benefits, average incomes, and average benefit/cost ratios, producers and consumers also need access to qualitative, descriptive information.

Consumer and producer councils can easily write up qualitative summaries of the work they do and the motives for their consumption requests. There is no sense overdoing it. There is no point in everyone saying, “I want milk because it is nourishing.” Producers would provide a general description of the quality of work involved in their workplace as well as the desirable and undesirable traits their particular kind of work tends to generate. Consumers would concentrate on explanations of unusual requests. But people trying to assess their own choices in light of other people’s qualitative descriptions would want access to summary information at the level of producer and consumer federations. So the tasks are:

1    To develop a database system allowing easy access to all this information.

2    To aggregate the information from lower units into federation-level summaries.

Can we imagine an effective way to do this? First, individuals would need “keys” to extract qualitative information. I would go to a console, and say, “Let me see what goes into producing such and such good,” or “What is work like in such and such an industry?” or “What is generating the high consumer demand for refrigerators?” or “Why does a particular neighborhood want so many more bicycles than the national average?” We could also ask, “What are the strengths and weaknesses of such and such a product?”

If we think of all the money spent yearly in the US on advertising —most of which is misinformation—we can see that the information system we need may not be such a burden on time and resources after all. Indeed, it may require significantly less than the total resources and energies currently allotted to less comprehensive and less truthful, though more repetitive and wasteful advertising.

Though the information-handling capabilities of such a system would have to be quite powerful, only the system’s scale distinguishes it from databases already used in offices all over the country. The problem of storing and accessing descriptive information is nothing new for programmers, nor is establishing a system for easily updating or otherwise refining such a database, giving it a simple query system, or having it provide averages. Moreover, even for a large country, the system we need would not require much more memory and handling than systems currently in use by large credit-card companies.

For the most part, IFBs would oversee the qualitative database system. Summarizing large numbers of individual reports would be demanding, but like other tasks it could be organized to minimize the likelihood that IFBs would accidentally much less intentionally bias the information councils use.

Next Entry: Realistic?


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