On Thursday 13th October (19:00 ET) I joined Prof. Robin Hahnel to discuss his latest book A Participatory Economy, released 4th October 2022. Democratic Economic Planning (2021) is an excellent book and a milestone in the post-capitalism literature, but too technical for some readers. This new book – A Participatory Economy – is an accessible overview of Participatory Economics up-to-date for 2022.
Firestorm is a cooperatively owned libertarian bookshop in North Carolina, USA. I commend them for having the wisdom to engage with the details of post-capitalist vision, a topic sorely neglected by socialists (and, a fortiori, everybody else).
Editor’s Note: discussion topics include monopoly & oligopoly, how to regulate monopoly in capitalism, how to regulate monopoly in parecon, how to organise strategic & essential sectors (like health) in parecon.
[After The Oligarchy] Hello fellow democrats, futurists, and problem solvers, this is After The Oligarchy. Today I’m speaking with Professor Robin Hahnel.
Robin Hahnel is a professor of economics in the United States, and author of many books, but today I’m interviewing him as co-originator with Michael Albert of the post-capitalist model known as Participatory Economics (or Parecon).
Today’s conversation is in association with meta: the Centre for Post-capitalist Civilization. This is the third in a series of interviews with Professor Hahnel about participatory economics, and in particular his latest bookDemocratic Economic Planning published in 2021. If you haven’t watched the first two interviews check them out here.
It’s an advanced discussion of the model proposed in that book so I recommend that you familiarize yourself with participatory economics to understand what we’re talking about. You can do that by visiting participatoryeconomy.org. You can also read Of the People, By the People (2012) for a concise introduction to parecon. And Professor Hahnel has a new book coming out in a few months called A Participatory Economy (2022).
Robin Hahnel, thank you for joining me again.
[Robin Hahnel] Great to be with you again.
[ATO] The next question is a bit different, it’s about monopoly and strategic sectors. For example, what about natural monopolies in parecon? These would be things like electricity, [methane] gas, water, sewage, transport, communications, health, mining, etc. These are sectors of the economy, these are production processes, where … electricity production and distribution is a classic example; it doesn’t make sense for there to be three companies with three different electrical grids, for example. And which are also of strategic, vital, importance. That society be provided with a reliable supply of electricity, where there aren’t blackouts, where it has an appropriate cost, and so forth. So, there are sectors like this which are natural monopolies, and either you end up with a situation – where you have a market system – private monopolies, or a situation where the solution is for the state to take control of these and nationalize them.
So, is there any opportunity in parecon to charge monopoly rents? And what if natural monopoly worker councils don’t treat indicative prices parametrically? Let’s deal with the first question then come back to the second. And if you could just explain what a monopoly rent is to people.
[RH] We have an answer. Every economist knows that only if you have competitive market structures could you make any case that you’re going to get efficient outcomes. As soon as you have a market structure that’s not competitive in a capitalist economy, what will happen is in the most extreme cases a monopoly, and a natural monopoly is sort of the most likely real world example to end up with, one company is the only company that’s producing this product.
As soon as you have that, there is a perverse incentive for that company to produce less than the socially optimal outcome, and therefore to drive its price up. So, two things happen. It reduces the amount that it supplies. That also means it reduces the number of units it’s going to sell, so that’s a negative effect on revenues. On the other hand, every unit it does sell is going to sell at a higher price, and that’s a positive effect on revenues. And the problem is the positive effect is larger than the negative effect leading to a predictable sub-optimal level of output.
Now there are two solutions to this in a capitalist economy. One is to nationalize the natural monopoly and not have it maximize profits but to maximize net social benefits, that is produce the amount that actually is the efficient amount. And the other solution is to regulate the monopoly and say well there’s only one of you but we’re going to set up a regulatory agency. And the regulatory agency’s job … Most people think the regulatory agency’s job is to keep them from price gouging but what economists understand is, no, the regulatory agency’s job is not really to keep them from price gouging, it’s to force them to produce more than they would otherwise be willing to produce if they weren’t regulated. And then the price will take care of itself.
That’s how it works, and one of the problems that defenders of modern market capitalist economies are faced with is in theory they know their economy is only efficient if all industries are competitive. But in reality, what has happened over time is the number of non-competitive industries, and it’s usually not a monopoly, a natural monopoly, it’s an oligopoly. But the same logic applies to oligopolies and economists all know this. So, on the one hand in the real world markets become less and less competitive, and yet defenders of market capitalist economies continue to insist that these are the most efficient economies.
We have a solution in a participatory economy. And the solution takes a very simple form, which is any worker council in our economy is supposed to take the indicative prices as givens.
[ATO] Can you just explain to people briefly what the indicative price is?
[RH] Right, so for instance if you have a natural monopoly let’s choose electricity. During the planning procedure that natural monopoly is quoted a price per watt of electricity and then responds with its output proposals.
[Editor’s Note: During annual planning, worker councils and consumer councils make production and consumption proposals for the year. These proposals are aggregated by the Iteration Facilitation Board (IFB) which feeds back new ‘indicative prices’ to producers and consumers according to a rule chosen to encourage the balancing of supply and demand. This continues for a number of rounds (iterations) until a feasible plan is reached.]
Now, the thing that a monopoly does that’s inefficient is it doesn’t look at market price and take it as a given. Instead, what it does is it asks well wait a minute I’m looking at the entire demand curve. I’m not going to take the price I’m quoted as a given because I can see that if I reduced my supply I could drive that price higher. So, in effect what monopolies are doing is they are not taking prices as givens. They are recognizing that their monopoly status permits them to affect what the price is going to end up being.
These are worker councils in a participatory economy, and there just happens to be one that’s producing electricity in a given region. They don’t have stockholders that are telling them to maximize profits, instead they are certainly supposed to be obeying the rules of the system and one of the rules is when you make your proposals you respond to indicative prices as the given price. You do not calculate ‘but I could affect that price by my response in this round’. Aha, what would prevent one from doing it?
Editor’s Note: Discussion includes optimal and efficient production plans in Parecon, accounting of benefits and costs, enterprise incentives, worker control, and satisfying consumers.
[After The Oligarchy] Hello fellow democrats, futurists, and problem solvers, this is After The Oligarchy. Today I’m speaking with Professor Robin Hahnel.
Robin Hahnel is a professor of economics in the United States, and author of many books, but today I’m interviewing him as co-originator with Michael Albert of the post-capitalist model known as Participatory Economics (or Parecon).
Today’s conversation is in association with meta: the Centre for Post-capitalist Civilization. This is the third in a series of interviews with Professor Hahnel about participatory economics, and in particular his latest bookDemocratic Economic Planning published in 2021. If you haven’t watched the first two interviews check them out here.
It’s an advanced discussion of the model proposed in that book so I recommend that you familiarize yourself with participatory economics to understand what we’re talking about. You can do that by visiting participatoryeconomy.org. You can also read Of the People, By the People (2012) for a concise introduction to parecon. And Professor Hahnel has a new book coming out in a few months called A Participatory Economy (2022).
Robin Hahnel, thank you for joining me again.
[Robin Hahnel] Great to be with you again.
[ATO] Last time we were talking about production units and we’re going to continue talking about production units, as in worker councils, as in enterprises. And the first question is a follow-up to part of our discussion last time, and we were talking about social costs and social benefits, and the incentives of worker councils in parecon.
So let me frame the matter by presenting my understanding of our last interview. This is going to be a bit technical for viewers but we will break it down and it will be understandable. So I asked you, essentially, ‘wouldn’t we want worker councils to strive for a social benefit much greater than a social cost rather than merely the social cost equalling the social benefit – or having a social benefit to cost ratio of one? Because that means producing the greatest net social benefit. And, if so, what will make worker councils do that?’
‘Social Benefit’ is Revenue. ‘Social Cost’ is Cost.Net Social Benefit: Revenue – Cost.‘Social responsibility’ constraint is breaking even. Revenue ≥ Cost.
And you replied, basically, ‘no, we want worker councils to produce up until the marginal social benefit is equal to the marginal social cost. Because if the social benefit is greater than the social cost then there is still some net social benefit to squeeze out by producing another unit (like producing another chair). And this terminates when the marginal social benefit is equal to the marginal social cost, which is when the social benefit the social cost ratio equals one (SB/SC = 1).’
That’s a mouthful. So, this is my understanding of what was said at the time. Please correct me if I misinterpreted what you said during that interview because it seems to me that maybe there was a miscommunication. Because it seems to me that if you keep producing chairs up until the marginal social benefit of that chair is equal to the marginal social cost, that’s the point at which social benefits minus social costs is the greatest. But that’s not going to be the same as the social benefits divided by the social cost equal to one, that there is parity between social costs and social benefits. So could you just clarify or respond to that please?
‘Marginal’ refers to the last chair produced, the last tomato, the last dental filling.Total Net Benefits are maximised when Marginal Benefit equals Marginal Cost.The quantity output when Total Benefit = Total Cost is different to when Marginal Benefit = Marginal Cost.
[RH] First of all, I want to thank you for asking the question and probing on this. Because it is a little complicated and it forced me to go back and rethink through. So let me just see if I can lay it out there on in a straightforward way. What I’m going to lay out there is standard and then I’m going to explain why the way we model something is different from standard. And that’s I believe where the sort of miscommunication comes in.
So you’re absolutely right that the general efficiency criterion is you want total social benefits minus total social costs to be as large as possible. You want to maximize, as you’re saying, the difference between total social benefits and total social costs. I mean this principle is we call it the ‘efficiency criterion’ and applies to anything. Anything you’re doing, you want to do it so as to maximize the benefits to any and all people over all time periods minus the cost to any and all people of overall time periods.
Now, mathematically what that is equivalent to is you want to keep doing something up to the point where the last little unit of whatever you did generated exactly the same amount of social benefits as it did increase social costs. So saying you want to maximize the difference between total social benefits and total social costs is the same as saying you want to keep doing something up to the point where the marginal social benefit of the last little bit of it you did is exactly as big as the marginal social cost of the last little bit you did. That’s just mathematics.
Here’s where things get a little complicated. When we’re talking about social benefits, then the context in which I’m always talking about it is I’m thinking of a particular worker council or a particular consumer council. Then you have to ask well the social benefits in the mathematical pure sense includes everybody, which means it includes the council that we’re considering. So social benefits are usually thought of as being social benefits for others, for everybody else other than the worker council; and social costs are usually thought of as being only the social cost to those who aren’t in the council.
I mean one thing that’s always a little bit delicate or complicating is these social costs that we’re thinking of cost a society something that a worker council does. That includes the opportunity cost – traditionally, as everybody does it – of using scarce labour in that worker council. If you have you have a certain amount of engineers and carpenters in an economy, any time one worker council uses them they can’t be used in another worker council. And that we traditionally call an ‘opportunity cost’. So standard treatments will include the opportunity cost of using engineers or carpenters in any workplace, in any worker council. It doesn’t usually include something that mainstream economists call the ‘disutility of labour’. So there’s a scarcity cost to using labour but in addition – for labour, unlike other inputs – there’s also not just an opportunity cost, performing the activity might be more or less pleasurable, or more or less unpleasurable.
Usually, traditionally, when we’re talking about social costs for a workplace we include the opportunity costs of using these different categories of labour but we don’t really include the disutility. Or at least it’s possible not to include that part. Now, for two particular reasons, that I’m going to come to in a minute, we chose to model worker council and consumer councils in a particular way.
Toy example illustrating Marginal Benefit and Marginal Cost. Here Net Total Benefit is maximum when Marginal Benefit = Marginal Cost.
For consumer councils it’s very straightforward and easy to understand. A consumer council should maximize what economists call their utility, their well-being, their satisfaction from the activities they engage in. And for a consumer council we usually think of the activities of people are engaging in as what are called consumption activities. So the whole idea is you want your consumer council to maximize the well-being they get out of their consumption activities. Oh, but it’s subject to a constraint. And I’m going to use this phrase to describe the constraint: broadly speaking I would say as long as what they’re consuming is socially responsible. And in the case of a consumer council what social responsibility amounts to is well it would be irresponsible if the social cost to society of their consumption activity was larger than what we consider to be their fair income. So for a consumer council we basically have this set up where what we want them to do is to maximize their well-being as long as they’re being socially responsible. As long as the social cost of society of their consumption activity is what I would call justified or warranted by the income that they fairly have. And for us that income for some of them it’s their income from work, and for some of them it’s their social security payment or their childcare allowance or whatever it is.
We wanted to model worker councils exactly in the same way. We wanted to say, hey, these are people, these are humans engaged in a human activity. It happens to be an activity we think of as work or production rather than consumption. But the worker council is a bunch of people engaged in an activity and we want them to maximize the satisfaction or utility they get from engaging in their activity as long as their activity is socially responsible. So, we modelled worker councils as maximizing … Now, in their case it may be maximizing the satisfaction you get from the work process that you engage in. What it may amount to is minimizing the disutility of your labour. But still, it’s the same sort of … I mean where we had reasons, basically underlying methodological reasons, for wanting to view the entire thing in this way, sort of very symmetrical to what it is that consumers are doing.
So for a worker council what we said is we’re going to assume that what they’re going to try to do is to maximize their utility subject to the social responsibility constraint. Now, for us the social responsibility constraint is: nobody should object to them doing what they want to do as long as what they’re doing is not making anybody else worse off. So we model their social responsibility constraint as: worker council do whatever you want, as long as the social benefits – and now these would be the social benefits to any and all other people – are at least as great as the social cost to any and all other people. And that’s the way we set up our procedure. That’s the way we set up our model.
And when we say that the annual participatory planning procedure will achieve an efficient outcome, or in economist language a Pareto optimal outcome under certain assumptions, what we mean is if worker councils do this and if consumer councils do this, we can prove that the outcome will be socially efficient. It will be a Pareto optimum. Now you might ask well why did we want to model things this way? And this is where I thank you for forcing me to think back why decades ago we did this.
It was for two reasons. We actually believe in self-management. I think there’s long been a divide between anti-capitalists, between the anarchists and the socialists, or on the question of socialism how libertarian a socialist are you. And I think we’re firmly in the camp of feeling that there is a very important, great, value put on doing things in a way that provides workers and consumers with self-management. So if you’re thinking in terms of self-management, then the idea that we want people, we want workers and consumers to be doing whatever they want as long, as they’re behaving in socially responsible ways is in our mind the right way to look at it.
Editor’s note: discussion topics include how to decide which workers are members of a particular worker council in Participatory Economics (parecon), whether this threatens wage labour exploitation through the back door in market socialism or parecon, balancing jobs and reproductive labour in parecon, and outsourcing in capitalism.
[After the Oligarchy] Hello everybody, this is After the Oligarchy. Today I’m speaking with Professor Robin Hahnel.
Robin Hahnel is a professor of economics in the United States, co-founder with Michael Albert of the post-capitalist model known as Participatory Economics (Parecon), and author of many books.
Today’s conversation is in association with meta: the Centre for Post-capitalist Civilization. This is the first in a series of interviews with Professor Hahnel about Participatory Economics, and in particular his latest book Democratic Economic Planningpublished in 2021.If you haven’t watched the first interview check out Part A and Part B here.
It’s an advanced discussion of the model proposed in that book so I recommend you familiarize yourself with participatory economics to understand what we’re talking about. You can do that by visiting participatoryeconomy.org. You can also read Of the People, By the People for a concise introduction to parecon.
[ATO] So, the question is about how to decide who is a worker council member and who isn’t. In parecon, how does a worker council decide who is a member who isn’t?
For consumer councils the answer is a simple matter of geography, if you live in a certain area you’re part of that consumer council. That’s easy.
However for worker council it’s more complicated. A worker council will use many labour inputs, but some of them will be considered internal inputs of labour from the worker council members and some will be considered external inputs of labour from non-members. How is this distinction made in practice? And how is this distinction made such that wage labour isn’t introduced through the back door by excluding certain workers from membership? For example, just to illustrate that, again coming back to our furniture factory, let’s say you have a handful of cleaners who come in and they clean the offices every day. You could imagine that those cleaners would be part of the furniture factory worker council. You could also imagine that there’s almost a subcontracting situation where the worker council hires the cleaners as external labour and then pays them differently.
But then again, maybe I’m thinking of this just in terms of a market. But please, anyway, just come in.
[RH] There are no external workers.
I mean, first let’s just deal with the basics. So, how do you become a member of a worker council? You go to their personnel department and you apply. So for existing worker councils you’re free to quit the one you’re in and apply to work in any other one.
There’s a more complicated issue about how do new workers councils come into being, particularly because as soon as we have a worker council they get to participate during the annual planning process and they could be allocated social resources. So there’s a question of do you have to establish some sort of credentials and credibility before we have you participating in the planning process.
But you’re not you’re not concerned with that.
[ATO] No.
[RH] You’re concerned with an issue that basically comes down to how integrated is an industry. So you could have a single company that makes its own steel and then makes its own automobiles. On the other hand, you could have two companies, one that makes the steel and sells the steel to the automobile company, and the automobile company buys the steel and then goes ahead and makes the automobile out of the steel.
[ATO] Yes. But do you mind if I just make the question a bit more pointed? So, I think probably in the context of parecon the question might be a confusion. But I’m thinking about it because this is a concern that I have about market socialism. And, for example, let’s look at Google under capitalism, then consider it under market socialism, say, and this will explain where I’m coming from.
So, Google today has wonderful conditions, like many such workplaces with highly skilled labour, where you can get your food there, and relax on bean bags, and blah, blah, blah. However, if you clean the offices where the software engineers work, you have no labour rights, you’re considered self-employed, you’re paid very little, and you’re just treated like human waste essentially. Okay, that’s capitalism.
Now let’s look at market socialism. I have concerns that even in a market socialist society that that worker council which operates Google could have an incentive to treat the cleaners in a similar way. That the cleaners would not be part of that worker council, they wouldn’t get the profit divided by number of members, because there is an incentive to have as few members as possible and it’s still a competitive market situation. So you can reduce costs by paying these cleaners less. And, of course, there’s a whole coordinator class element there, where there’s an issue of bargaining power, and that’s why I picked the cleaners because they have less bargaining power.
So that’s in a market economy. But is that even a question in parecon?
[RH] First of all, this is not an issue that I have thought about so I’m thinking out loud here.
You have a place like Google, and one of the things that has to happen at that place is offices have to be cleaned and the cafeteria has to be [served]. I can tell you that back 30 years ago, thinking about this, the way I would have thought about it would have been well those are some unpleasant tasks and we have to be sure that when we create jobs we have to be sure that everybody is going to have to do some of those unpleasant tasks along with those more pleasant tasks. So I would have viewed this as an issue of how do you balance jobs for both empowerment and desirability. And if you don’t balance them for desirability, how do you compensate that in terms of greater sacrifices and therefore effort ratings.
And I think those are perfectly good answers, but what you’ve introduced is a is a second possibility which is, well, wait a minute, you’ve imagined the more integrated production process where a single worker council is both producing software and also cleaning offices. What if we have a whole separate workers council that is cleaning offices? Now the place that that that I’ve actually done some thinking about this is in the chapter on reproductive labour. And there it’s not a question of a workplace, it’s a question of are there going to be households that hire people to [do reproductive labour]? Are you going to be able to [hire someone to do] gardening for you and they’re going to be all male? And are you going to be able to hire people to come and make your beds, and do your laundry, and do a deep cleaning on your house, and those people in that workers council are going to be all female? It was that sort of problem and issue that we were trying to address. But it introduces the same issue which is if we have this place that says ‘we don’t want to clean our offices at all, we want to hire another worker’s council to come and do this’ …
Editor’s note: discussion topics include what production targets for individual production units benefit society as a whole the most in a Participatory Economy (parecon), how to calculate the cost of labour in parecon, how to determine pay for workers in parecon, the role of automation in parecon, unemployment in planned economies vs. market economies, and whether parecon is incentive compatible with efficient use of automation.
[After the Oligarchy] Hello everybody, this is After the Oligarchy. Today I’m speaking with Professor Robin Hahnel.
Robin Hahnel is a professor of economics in the United States, co-founder with Michael Albert of the post-capitalist model known as Participatory Economics (Parecon), and author of many books.
Today’s conversation is in association with meta: the Centre for Post-capitalist Civilization. This is the first in a series of interviews with Professor Hahnel about Participatory Economics, and in particular his latest book Democratic Economic Planningpublished in 2021.If you haven’t watched the first interview check out Part A and Part B here.
It’s an advanced discussion of the model proposed in that book so I recommend you familiarize yourself with participatory economics to understand what we’re talking about. You can do that by visiting participatoryeconomy.org. You can also read Of the People, By the People for a concise introduction to parecon.
[ATO] We were talking about worker self-management there at length, and there’s been a lot of talk of social cost and social benefit, and production proposals, and how the social interest is factored into the formulation and revision of production of proposals through this calculation of social benefit and social cost.
So, let’s dive into that with this question, and the question is: you made the point that if a workers council makes a proposal, as long as the social benefit that is produced by that proposal, and calculated, is at least equal to the social cost of that proposal – for the labour, the different resources, the capital goods, the pollution it generates, and so on – if those are at least equal, at parity, then at least people are no worse off because of it, right? And so the question is: are worker councils always aiming for social benefit divided by social costs is equal to one (SB/SC = 1)? Surely there is no progress unless the social benefit is greater than the social cost, in the long run, say. Would it not be desirable if the aim was for the social benefit to be much greater than the social cost? Representing getting much more out of much less. And if so, what will drive worker councils to achieve this? So it’s two questions there.
[RH] My answer is going to be very economics-y, okay?
[ATO] Sure.
[RH] And when you sent me these questions in advance, and when I looked at this series of questions, I realized ‘oh my god’.
When we teach economics classes and we teach ‘well, how would a profit-maximizing firm decide whether to use more of some input?’, what we say is, well, if when we use more of the input the increase in revenues is higher than the increase in costs, then the firm will keep doing it. And we come up with this rule which basically says a profit-maximizing firm is going to keep using every input right up to the point where the last unit that it used generated an increase in revenue that was exactly equal to the increase in cost.
And then the students will eventually ask me – some bright student in the class at some point will raise their hand and say – ‘well then why did the firm use that last unit?’. And my answer is we don’t really care if it used the last unit. It’s just a little thought experiment so that we can show that it wants to use every unit that generates a little more in revenues than it does in cost. It doesn’t want to use any units that would increase cost more than revenues.
And what you’re asking me is: that marginal unit should I use it or not? And what I’m saying is that’s not the point. So, part of my answer to your question is: when we say that we want workers councils to keep doing what they’re doing right up to the point where the social benefits equal to social costs, it is the same kind of reasoning. What if the social benefits were still greater than the social costs of doing something? Well then we should want that council to keep doing more of it. Whether it does the last little bit isn’t really the point.
Now here’s the second place where things are going to get a little economics-y. One of my criticisms of the usual teaching of microeconomic theory about capitalism is that that’s actually not what profit-maximizing firms do.
[ATO] Yes, yes, yes, yes.
[RH] And they don’t do that because if you keep buying units all the way up to the point where the increase in revenues that comes from it is no bigger than the increase in cost, you haven’t earned any profit on that last unit. And what profit-maximizing firms actually do is they basically have an expected rate of profit. So they’re not going to keep using inputs unless … They’re going to stop whenever the increase in revenues is not only as large as the increase in cost but it’s a little bit more. That gives them that standard rate of profit that they’re insisting on.
And this has been one of the things I’ve always loved about Sraffian economic theory compared to mainstream neoclassical economic theory. Sraffian economic theory basically says: look, in economies there’s a going rate of profit, and that’s rather arbitrary; when the workers’ bargaining power is high, the standard rate of profit will be low; when capitalist bargaining power is high, the standard rate of profit will be high; but there will be some standard rate of profit and firms take that into account.
And so, in a sense, you’re also asking me that. And the answer is again going to be a little economics-y and complicated.
Editor’s note: discussion topics include defining worker self-management, the scope for worker self-management in central planning (and Towards a New Socialism in particular), and the scope for worker self-management in Participatory Economics.
Robin Hahnel is a professor of economics in the United States, co-founder with Michael Albert of the post-capitalist model known as Participatory Economics (Parecon), and author of many books.
It’s an advanced discussion of the model proposed in that book so I recommend you familiarize yourself with participatory economics to understand what we’re talking about. You can do that by visiting participatoryeconomy.org. You can also read Of the People, By the People for a concise introduction to parecon.
The discussion will also continue on the forum of participatoryeconomy.org.
Robin Hahnel thank you very much for joining me.
[Robin Hahnel] Great to be with you.
[ATO] So you said actually that there was another book which will be published by AK Press in a few months called A Participatory Economy. Did you write that or was that written by somebody else?
[RH] No, I wrote that. What I realized was that Democratic Economic Planning, that book, can be a real challenge. Parts of that book would be a real challenge for people who do not have extensive background in economics, who haven’t studied economics, who didn’t major in economics, who aren’t professional economists. And yet obviously there are more people interested in post-capitalist economic models who are not economists than who are economists. So, the second book. And it’s published by an appropriate publisher. AK Press is a press that basically is for that audience, for libertarian minded people interested in post-capitalist visions.
So that second book is an attempt to present essentially the same ideas but not require the reader to have any extensive economic background. There are no proofs of theorems in that book, so that that’s the difference. And that that’s coming out, I think, sometime in June (2022). Both books are my attempt to get everybody up to date with what we now, after all these decades, have managed to come up with. So, they’re the most recent version of everything we have to say in response to all sorts of criticisms and questions people have raised over the years. But one book is more appropriate for one audience and the other for a different audience.
[ATO] Well Democratic Economic Planning, for what it is – as I said last time – is outstanding for people who really want something rigorous and detailed. And I will certainly read A Participatory Economy when that comes out in summer of 2022. I’m sure that it’ll be a good read as well.
So, let us begin with the questions. Our discussion today has a central theme. Last time we talked about housing and we talked about consumption, so this time I would like to talk about production units broadly, worker councils and so forth. And the first question is about worker self-management.
I have been having some discussions with Dr. Paul Cockshott about Towards a New Socialism and the model that he and Alan Cottrell put forward in that book and subsequently. And I quoted from Democratic Economic Planning a passage that you wrote about that model, and central planning more generally, which critiqued it on the basis of it inhibiting worker self-management. And so Paul Cockshott had a response, and I’d like to just put that to you and we can have a discussion.
And just before we proceed I just saw some [YouTube] comments when Paul Cockshott reposted that video on his own YouTube channel. Maybe some people seemed to misunderstand. When we’re having this discussion it’s really about two people who respect each other, who actually agree far more than they disagree, and are just having a civil, constructive, discussion about some disagreements about post-capitalist models. Some people seemed to think that it was some kind of polemic struggle. So, I just want to put that out there before beginning, so that people understand this in the right light.
So, the quote, to repeat it from page 314 of Democratic Economic Planning, was ‘as a consumer and voter, every person has as much say over what any particular group of workers produces and what inputs they will be allocated to produce it as those workers have themselves … [and thus workers] do not get to exercise meaningful self-management. [Hence] we believe it would predictably lead to the kind of worker apathy that plagued centrally planned economies in the 20th century’. I put this to Paul Cockshott, we discussed it briefly, we’re going to discuss it again subsequently. And Cockshott responded by questioning the assertion that there was worker apathy, and asked ‘what is the measuring bar that he’s using?’, and ‘where is the evidence?’. So what do you mean by apathy, by worker apathy? What is your measuring bar? And what is the evidence of work apathy in the centrally planned, socialist, states in the 20th century? And, lastly, similarly, if we can talk about what is worker self-management in concrete terms, what does it mean to possess or enact workplace self-management? It’s a big topic.
[RH] It is a big topic. First of all, I completely endorse when we have discussions about things like this they can either become sort of sectarian screaming matches and point scoring or they can be conducted more along the lines serious inquiry and probing. And this is a problem that has plagued the left from time immemorial: that too often our discussions about serious problems where people have somewhat different ideas about what the solutions are descend into scoring points and name-calling. And I always think that doesn’t serve any of us well, and I appreciate that Paul approaches these things in a better way, and I seek to do that as well. And there certainly are many, many, points of agreement between myself and Paul, and people who support his post-capitalist vision and people who support the post-capitalist vision known as participatory economics.
But there is I think a very serious difference of opinion and it’s been there for a very, very, long time. And, in some ways, the position that I endorse has long been the one associated with people who one way or another think of themselves as libertarian socialists, and who feel like that the essence of the socialist vision is one where workers finally get to manage themselves rather than be bossed around by other people. And I do sincerely believe that the essential pitfall, the essential mistake, that the Soviet Union made, and the Soviet model of socialism made … Now, I’m not talking about the political sphere, and we can really leave that aside, whether a single party state governed by a communist party whose internal rules are the ones called democratic centralism, whether that is profoundly anti-democratic and a poor way to organize political life. We can leave that aside for the moment, and we can just talk about the economic model, the economic system itself.
But I think that the economic system that the Soviet Union adopted was one where the real Achilles’ heel was it did not provide workers with the opportunity to manage their own productive activity themselves. And my sincere my most basic disagreement with Professor Cockshott, and his collaborator Alan Cottrell, is that – I think they would wish that in socialism we had full-blown and vibrant worker self-management – I think they don’t realize that the model they’ve proposed for decision-making would not provide that. And I was rather surprised, I mean I had not heard this from him but his response which was ‘well, Professor Hahnel where do you think there’s evidence that there was worker apathy in the Soviet economies?’. No, I haven’t done an exhaustive study but I do believe that there is ample evidence that over time what workers in the Soviet economies came to understand was that what went on in their workplace was they had basically no particular influence over that. They were just people who showed up and did what they were told, and what they were told to do was something that had been calculated through a planning procedure, and that planning procedure had provided them no more ability to influence what they produced and how they produced it than anybody else in the economy. Even if the entire planning procedure was incredibly democratic.
Editor’s note: discussion topics include whether consumer councils in Participatory Economics (parecon) are incentivized to oversell, whether worker councils in parecon can oversell, conspicuous consumption, whether parecon would reproduce a ‘throwaway society’, whether consumer federations in parecon would compete, plan adjustments during the year, and the scope for rising living standards within ecological limits.
[After the Oligarchy] Hello everybody, this is After the Oligarchy. Today I’m speaking with Professor Robin Hahnel.
Robin Hahnel is a professor of economics in the United States, co-founder with Michael Albert of the post-capitalist model known as Participatory Economics (Parecon), and author of many books.
Today’s conversation is in association with meta: the Centre for Post-capitalist Civilization. This is Part B of the first in a series of interviews with Professor Robin Hahnel about participatory economics, and in particular his latest book Democratic Economic Planning published in 2021. It’s an advanced discussion of the model proposed in that book, so I recommend you familiarize yourself with participatory economics to understand what we’re talking about.
Okay so the next question, staying on consumption, is about excessive consumption and the possibilities of this in participatory economy. So, firstly on the side of consumer councils, since consumer federations organize consumption – for example through shopping centres and online shops – consumer federations will decide how to present and, in general, ‘market’ goods and services. Will there be any incentive to oversell? For example, to convince people to buy things they don’t need or want.
[Robin Hahnel] Okay so I warned you before that you had picked the two things that I am the least … well, are my least favourite subjects.
[AO] Well your intellectual honesty is always appreciated – that’s how we like to do things here. But just whatever comes to mind is good enough.
I’ll give you my best answer, but I’ll preface it by saying that I don’t shop right. I don’t go shopping, I hate shopping. I have always found somebody else who will do the shopping for me. The only thing I enjoy shopping for is … I cook and I go into stores and I shop for food. [But not] clothes, [nor] anything else. There was a time when I would go into bookstores but now we don’t read books anymore, they’re all online. So I am not a shopper.
And at one point, there were three female students in one of my classes and we had done a little section on participatory economics. And they came in during office hours, three of them together it was like a delegation, and they came in and they said ‘well, Professor Hahnel, there are a lot of things we really do like about what you’re proposing here. But there’s one thing we just don’t like: you don’t seem to understand the pleasures of malling it.’ And at first I didn’t even understand what the word [was], I didn’t know what they were what they meant when they said ‘mall’. And they meant going to a mall and seeing and being seen, and spending four hours, you know, after school or after work at the mall. And that they were basically telling me some of us really like that, and we just want to know whether we’re going to be able to do that in a participatory economy.
And I had to say ‘well your dream is my nightmare’. I mean the fact that I would be trapped in a mall for five hours is sort of the worst thing that could ever happen to me. And so I’m going to admit to you that anybody who enjoys the pleasure of shopping, at least this person who designed this economy did not have you in mind. Because it’s the farthest thing from my mind.
But I do just think that structurally, almost by accident, I was concerned with the perverse incentive for sellers to lie to people about how good their products are. And that’s a huge feature of capitalism. I thought well, why don’t we reverse who is in charge of explaining to people what the properties of different options are? Why don’t we put the consumer federations, why don’t we assign them that role? Rather than put producers in the situation where they’re constantly trying to convince somebody to buy something, [where] they’re over-selling the value to the consumer. Let’s get the incentives right.
So the proposal was … I mean, people do need to find out about products. Now, at this point I don’t know how they do it because now everybody’s buying online. Nobody goes to the malls anymore. But at the time we were originally writing this, we said well we can still have malls. I mean, I was trying to get my poor students, I was trying to convince them to support participatory economics, it was shameless. That’s what I was trying to tell them. You can still go to the mall, but the mall is going to be run by your consumer federation. And they’re going to have all sorts of things that are new things on display there. And maybe you can impulse buy, if you want to impulse buy. Or you can just go and see it.
I know that in Cuba they did set up … they weren’t shopping malls, but they would periodically put on sort of a big show where they would display items that were going to be new items that were going to become available. And they would put them on show, and people would visit, and that’s how they would become aware of what was going to soon become available, if they wanted to find out what was coming.
So our suggestion has been that that should be the approach. And then the question is well if it’s the consumer federations that are in charge of … first of all, the consumer federations are going to have their own research and development units that are responsible to them for doing research into new consumer products. Why don’t we want the consumers to be in charge of looking into new consumer products instead of having the producers be the ones that are doing all that research? So we essentially said let’s reverse who’s in charge of that research. Let’s reverse the whole question of who is in charge of presenting and showing people what is available, A.K.A. advertising.
My father was a miserable employee in the advertising industry, so I grew up very aware that there are two supposed purposes of advertising: one is a legitimate public service, which is making accurate information about product availabilities and capabilities available to the public; and the other is tricking them into buying things they really don’t want. So the goal here is … we do have a legitimate service that needs to be provided, and that is information. But we want to do it in a way that we don’t have a terribly perverse incentive about who’s in charge of it and what their motivations will inevitably be.
Editor’s note: discussions topics include how housing is built, distributed, and managed, in Participatory Economics (parecon), the distribution of land in a socialist economy, and economic rent.
[After The Oligarchy] Hello everybody, this is After The Oligarchy. Today I’m speaking with Professor Robin Hahnel. Robin Hahnel is a professor of economics in the United States, co-founder with Michael Albert of the post-capitalist model known as Participatory Economics, and author of many books.
Today’s conversation is in association with meta: the Centre for Post-capitalist Civilization. This is the first in a series of interviews with Professor Hahnel about Participatory Economics, and in particular his latest book Democratic Economic Planningpublished in 2021. It’s an advanced discussion of the model proposed in that book, so I recommend you familiarize yourself with Participatory Economics to understand what we’re talking about.
[AO] I finished reading Democratic Economic Planning recently – here it is for viewers – and it’s an outstanding contribution I think. It’s very technical, which for me is a good thing. I really feel that I needed that book, I felt like I was waiting for that book to be published and it came along at exactly the right time. So I’d say if any viewers are similarly inclined, buy the book Democratic Economic Planning,read it. If viewers want a more straightforward and accessible introduction to Participatory Economics, then Of the People, By the People is very good; short, clear, and accessible.
So without further ado, there are something like 60 questions to discuss in total but we won’t go through all of those today, of course. Today, I just want to begin with some questions about consumption in a participatory economy.
[RH] Before you ask me a question, let me congratulate you for actually reading that book. I don’t know how many people have actually managed to do it yet. You are in very select company I can promise you. And it’s because, I mean, it’s long and there are sections that are that are very technical. And I wish there were more people who had managed to take the time and energy to wade through it. I may have to reassess my opinion of economists versus engineers. I understand that you have an engineering background?
[AO] Yes.
[RH] What I thought was, well, economists can read this book but I’m worried about my fellow political activists, where it’s kind of difficult. And actually AK Press is going to come out with a book sometime in about three or four months called A Participatory Economy, and that book is intended for the for the activist audience, you don’t have to be an economist. But I’m going to revise my strategy to think that, well I can address economists and expect them to actually read things carefully. Maybe I should shift over to the engineers and make you my target audience from now on, because at least you’ve demonstrated a willingness to put in the work.
[AO] Yes well I will add one thing, which is that I’ve got a very intense interest in political economy and I’m kind of pursuing an autodidactic course in economics to prepare myself to become an economist. So I’m in a bit of an odd position. However, I will say that in our post-capitalism discussion group in DiEM25 – so I’m a member of the Democracy in Europe Movement 2025 – there are quite a few engineers, it’s something that tends to crop up. What I will say about engineering and politics is that something I think about is – it has shaped my view a lot – I think one benefit is that you have a technical and numerical, mathematical, training but you’re not necessarily indoctrinated into the same presuppositions about economics. So there’s a potential there to engage with political economy that maybe those who were trained in orthodox economics don’t experience.
[RH] I can tell that engineers are more inclined to matter-of-fact thinking and therefore less interested in ideology. And I think that’s a huge barrier in thinking about alternatives to capitalism, you know, if you’re so wrapped up in the ideology. Because I think a lot of what we have to do in the aftermath of the failures of attempts to build socialist economies in the past is, I mean we have to engage in really some very concrete thinking about procedures and, you know, what the implications of deciding things this way or that way are. Less political grandstanding and more matter-of-fact thinking would stand us all in good stead. I think the answer is we need to recruit some more engineers.
[AO] Well engineers are not I completely agree with you. That’s the whole premise of this channel, the more concrete the better. And I’m completely on your side in terms of the necessity of vision, in that, it’s kind of common sense: whenever we want to do anything in life we really need to think about what exactly we’re trying to do. And there’s no reason that that would be less true in politics or economics than in any other field of life. But a lot of us on the left have managed to convince ourselves that there’s something wrong with this.
The first question is about housing. There are a few questions about this, and I will throw a few of them at you and we’ll move through them and maybe come back. How is housing organized in a participatory economy? Because obviously housing is a very important sector, it has distinct characteristics in terms of houses being assets, they’re durable, they’re large purchases, and so forth. If there’s no private ownership of housing and all housing is socially owned, then what are the rights of use? How does society decide who gets to live where, and for how long? And then, is housing rented? If so, how’s the rent calculated? And so on, but we’ll come to that.
[RH] Actually before starting, let me say that when I looked at your questions the first five are the ones that I am least suitable to answering as fully as we’re going to try and do now.
[AO] Yeah that’s all right.
[RH] Actually as you just mentioned, housing poses some particular problems. But I think what I’ll explain is not really from the production side, that’s not where it’s peculiar, it’s different. It’s from the using and consumption side, because it is such a major … I mean a house in terms of an asset or purchase, if you purchased it, dwarfs everything else you buy. And the other problem is that on a regular income you can’t actually pay for the entire thing, and that’s why we have mortgages. So here’s something that we somehow have to figure out: a way for people with sensible incomes to manage to pay sensible amounts as they go.
Now renting is kind of easy, and so my answer could be well ‘what if we just don’t’? What if all housing units are rentals? Then they would be produced by … if you take a look on the production side, compared to a lot of really, really, large firms, contractors who build housing, these aren’t multinational firms. They’re large, many of them are large companies, many of them actually aren’t. So the idea that you can have worker councils, with carpenters, and electricians, and all of the kinds of people that actually work to build housing, including the engineers that design them – well that could be a workers council and that’s the product that they are selling.
That’s sort of straightforward and easy, but it’s the financing and purchasing of it. and when you’re living in it how do you pay for and what are your rights, etc, that that do pose some special difficulties. And I’m just going to say that this is a subject that one of my collaborators … I accuse him of obsessing over it. This is Anders.
[AO] Ah yes.
[RH] Anders who is a member of the collective in … he’s Swedish and he lives in Stockholm.
[AO] That’s Anders Sandström, is it?
[RH] Yes, it’s Anders Sandström. And he’s published a book called Anarchist Accounting, which I think has the most brilliant title of any book I’ve ever heard. Because who would be the least likely people to have anything to do with each other? It would be anarchists and accountants. And here it is. So I’ve declared him to be the most famous anarchist accountant in the history of the world.
And he also obsesses on matters do come into play particularly heavily in trying to deal with a situation like this. I mean it’s amortization and how do you cost all that out. So I’m just going to say that I’m going to give you my answer, but he took up that challenge in his book Anarchist Accounting in more detail and more seriously than I have in anything I’ve published.
Here would be the short side of it. I think if we just had housing always rented, there’d be a fairly straightforward explanation. And the rent would be, people will be charged the social cost of providing the housing. Whether or not they are paying that to the construction workers council that built it, or whether there’s actually an intermediate workers council which is … I mean usually the builders aren’t the ones that are then managing the property, or the sale of the property, or if it’s rental taking care of the rental. Then there’s another workers council that basically is managing that.
But I think that that people sometimes have a legitimate interest in not just being a renter, where, you know, they might be thrown out at any point. And there I think the idea that comes to mind is well there’s a difference between a lease and being a renter. It’s sort of a halfway ground between ‘I’m the owner of the property’ and ‘I’m merely a renter’, and maybe I sign a one-year contract but basically I’m paying rent month-to-month and the rate can be varied as we’re going along. So as far as I’m concerned, I don’t see any reason that we couldn’t be leasing for people who wanted the lease, and that gives you a long-term contract.
And now you’re thinking ‘okay, we have people who still probably are working on family farms’. And so here’s a family farm and the parents die, and should there be some sort of arrangement? Or just if you grew up in a house, and your parents have been there all that time, you’d grown up, and now you want to stay there. I don’t know why we couldn’t write in something like a first right of [refusal]…
