Looking Forward. By Michael Albert and Robin Hahnel

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  5. Allocation Without Hierarchy

 

 

 

 

Now the problem arises of how to unite freedom and organization; how to combine mastery of the workers over the work with the binding up of all this work in a well-planned social entirety. How to organize production, in every shop as well as over the whole of world economy, in such a way that they themselves as parts of a collaborating community regulate their work.

-Anton Pannekoek

 

 

 



 

 

 

 

The Lord of the Flies hung in space before him. "What are you  doing out here all alone? Aren't you afraid of me?" Simon shook. ... There isn't anyone to help you. Only me. And I'm the beast." Simon's mouth labored, brought forth audible words. "Pig's head on a stick."

 

 -William Goldman

 Lord of the Flies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 ... you need some basis for determin­ing an equitable, an above average, and a below-average allocation of work effort. You need to know the average effort contributed by each worker in your industry and workplace, and in society as a whole."

 



 

Contours of Economic Allocation

 

Participatory Communication

 

It would be utopian to assume that people always knew where "society's interest" lay and could be relied on to advance it. If we assume that everyone always understands and considers "society'sinterest," we will have assumed away all problems even before any human actor has appeared.

 

But having avoided the temptation to solve all problems by assuming all people are omniscient and saintly, we should also avoid assuming that everyone is necessarily myopic and greedy. Taking into account social costs and benefits when reasonable estimates are provided is a far cry from miraculously knowing "society's interest." Moreover, in a context that promotes solidarity, there is every reason to expect that people may come to care about one another.

 

With this established, we can ask what participatory economic actors need to know to make sensible allocation decisions that promote solidarity, variety, and collective self management.

 

A critical insight is that everything has an "opportunity cost." Anything we do will use time, energy, and resources that we cannot use for something else. Proposing x, how can we know that the results will be better than applying the same means to doing y instead? That is, the production of any good entails "social opportunity costs" that are important to know if we are to regulate production and consumption proportionately to its effects on ourselves, our co-workers, and consumers.

 

First, as a participatory worker you need to know how the goods you produce will be used and how much people need them. For example, to decide how hard you want to work and what technologies to use, you need to weigh the relative gains from working less, or from employing technologies that are more fulfilling but less productive, against the needs and desires of people you produce for. Clearly, you can't get this information from knowing only the gross amount of money anonymous consumers of unequal income will pay for your product.

 

Second, you need some basis for determining an equitable, an above-average, and a below-average allocation of work effort. You need to know the average effort contributed by each worker in your industry and workplace, and in society as a whole.

 

Third, as a participatory consumer, to act responsibly you need to know what is a reasonable, greedy, or overly frugal demand, and you have to be able to balance gains to yourself or your family, neighborhood, or region against the costs of providing what you seek. What allocation procedures can provide all this information?

 

Under capitalism, markets reduce information to manipulative advertising and to prices that misrepresent true social costs and benefits. This precludes solidarity and promotes control by experts or capitalists. In centrally-planned economies, there is no democratic circulation of quantitative or qualitative information. Central authorities determine what is to be known and what isn't as well as who is to know and who isn't. Even local council structures won't promote self-management and solidarity if allocation institutions deny council members the means to intelligently express their preferences and weigh them against the preferences of others. Assume, for example, that workers and consumers are organized into councils but that these councils are coordinated by competitive markets. Each council understands only its own situation and the prices for which things can be bought and sold. Since market prices misestimate social costs and benefits (due to ubiquitous "external effects" which impact on people beyond immediate buyers and sellers), the first problem is that market prices do not provide best estimates of the true social costs and benefits to others of the things council members request or supply. The second problem is that even if market prices accurately estimated true social costs and benefits, with no further qualitative information about the conditions that create the human costs and benefits for others, people do not have the necessary information to develop empathy and come to consider others' interests as they do their own. Third, in a competitive market environment workers and consumers councils would have no incentive to consider the interests of others. To survive in a competitive market environment there is only an incentive to take maximum advantage of those from whom one buys and to whom one sells. To behave differently is self defeating.

 

In other words, the information and incentive properties of markets prevent even democratic councils from considering the well-being of others in making decisions. As a result, council members in market systems sensibly leave technical decisions to expert decision makers (what we call the coordinator class), as in Yugoslavia. In contrast, in participatory economies, we need allocation institutions that can successfully communicate socially relevant and accurate information and also make it in the interest of every council to further the interests of others. Then collective self-management will be both possible and sensible.

 

For "participatory accounting" the economy must therefore provide information allowing producers and consumers to reason effectively about their own needs and how they fit with everyone else's. A central task of participatory allocation is therefore to provide information sufficient for self management without rendering decision making excessively time consuming. One tool to this end is to adapt the use of prices and money by altering the definition of each.