Looking Forward: Participatory Economics for the Twenty-First Century by Michael Albert and Robin Hahnel. South End Press, 153 pp., $10.00.; The Political Economy of Participatory Economicsby Michael Albert and Robin Hahnel. Princeton Univer
March 1, 1992        

The responsibility of intellectuals includes not only “a ruthless criticism of all things existing” (Marx), which is what most people on the left are usually occupied with, but also the imagination of alternatives. For if certain institutions or social relations, however apparently undesirable, are necessities of nature, then there is not much point in criticizing them, whether ruthlessly or ruefully. If no plausible alternative can be imagined, then all criticism can do is to show that some practice (for example, competitive market relations) is incompatible with traditions worth conserving (e.g., wilderness) or values worth realizing (e.g., solidarity). This is an important thing to show, but it can lead only to reasoned acquiescence and unreasoning hope, not to action.

Not many writers have made lasting contributions to this task: Edward Bellamy, William Morris, H.G. Wells, Ernest Callenbach, a few others, depending on one’s taste in utopias. Actually, it’s rare these days to have any taste at all in, or for, utopias. On the contrary, most political intellectuals profess a definite distaste for utopian or visionary speculation. After a century of political atrocities, utopians are almost universally assumed to be either naifs or proto-totalitarians.

For more than a decade and through a half-dozen books, Michael Albert and Robin Hahnel have blithely, or doggedly, disregarded this assumption. Virtually alone among contemporary American political writers, they have conceived and elaborated in detail a vision of social organization that is radically new yet does not, or so they argue, require an instantaneous and miraculous transformation of human nature. Lately they have even persuaded a respectable university press to publish a version of their argument. By now these two have become like theoretical mosquitoes in the darkened room of the American left. Only the most slumbrous or strong-willed can ignore their buzzing and get to sleep; the rest of us will have to turn on the light and chase them around for a while.

Most economists believe that a modern economy can only function through one of two mechanisms: market exchange, though perhaps with some degree of regulation, or central planning by a state bureaucracy. Since the collapse of the Soviet empire, and long before, the inferiority of central planning has been obvious. The desirability of markets, within whatever limits, is now an article of faith among political and economic writers, the premise even of democratic socialists, perhaps most notably and influentially Robert Heilbroner and Alec Nove, and including recent writers on market socialism in Dissent.

Albert and Hahnel reject this premise. Though they emphatically repudiate central planning, their criticism of markets is no less uncompromising. They propose a set of criteria for judging economic institutions: efficiency, equity, self-management, solidarity, and variety; and they offer mathematical proof of the inability of markets, compared with cooperative, participatory economic institutions, to satisfy these criteria. (To be precise, in the books under review they mostly offer simplified or summary proofs, referring the reader to their previous volume, Quiet Revolution in Welfare Economics (Princeton, 1990) for a full-scale treatment.)

Of course they rehearse the usual informal arguments as well, which are a quite sufficient indictment of capitalism. But the main novelty and interest of these two books-- The Political Economy of Participatory Economics is addressed to professional economists, Looking Forward to the general reader-- lies on the constructive rather than the critical side, in their detailed institutional specification of an egalitarian, self-managed society.

In such a society, the enormous differences of work-related status, authority, pleasure, and self-respect-- quite apart from income-- that currently prevail could not exist. Regardless of income distribution, one cannot have a society of equals if a great many people do work that most others do not fundamentally respect, admire, enjoy, or need. For that matter, an egalitarian income distribution will itself be unstable in such circumstances, since the fortunate minority (or majority) who do more valuable work will sooner or later yield to the temptation to exploit their unequal social power.

The solution-- there is no blinking it-- is to allow everyone to do useful and fulfilling work. The means? “Balanced job complexes” for all, roughly equal in difficulty, satisfaction, and importance. These are designed by the employees in each workplace, assisted and overseen by industry-wide and economy-wide Facilitation Boards. The latter compile and disseminate information, both quantitative and qualitative, about working conditions and productivity, among other things. Workers use this information to modify their job description from year to year, as well as to change jobs. Obviously, precise equality among job complexes is impossible; the important thing is that everyone have enough of both conceptual and rote work to feel like everyone else’s social and political equal.

To take one of Albert and Hahnel’s examples: everyone in a publishing house does some editorial work, some business/production work, and some clerical/maintenance work. Individual taste and aptitude determine exactly who does what, as long as everyone does enough of each to satisfy his or her co-workers’ sense (supplemented by quantitative ratings of various tasks by the Facilitation Boards) of fairness. A company-wide council makes decisions about matters that affect the enterprise as a whole; smaller decisions are made by smaller councils. Albert and Hahnel emphasize (hallelujah!) that not all decisions need be made collectively. “Participatory organization allows democracy without nosiness.”

Balanced job complexes, though a lot to swallow, will probably seem to most readers the least outlandish aspect of Looking Forward. Market socialists and even many non-socialists concede, in principle at any rate, the value of flexible, non-hierarchical relations within enterprises. It is relations among enterprises that allegedly demonstrate the indispensability of the market. Only a market mechanism, in this view, can handle the enormous volume of information necessary to set realistic prices and direct resources efficiently into new investment. How, then, might productive resources be allocated and investment decisions made in a non-market, participatory society?

In pseudo-socialist, authoritarian systems, firms may propose but central planners dispose. In Albert and Hahnel’s model, workers and consumers propose; Facilitation Boards receive, collate, and feed back these proposals; and eventually, after several (theoretically) converging rounds, workers and consumers, or their representatives, dispose. They agree on national, regional, and local plans matching input to output, production to consumption. These plans specify, within limits, the resources available to an industry and its member firms and the output expected of them, as well as the overall menu of goods and services available for consumption, which is an aggregate of the consumption bundles requested by households and neighborhoods.

Before the first round of proposals, Facilitation Boards compute indicative prices and wages, which are based on previous years’ demand and on production requirements, and which represent the average social cost of each class of goods and services and of labor. Consumers take these prices into account when formulating initial requests, and workers adjust their resource requests and proposed schedules to accommodate unsatisfied demand as well as their own convenience and ambitions.

After each round, or iteration, the Facilitation Board sums requests, revises indicative prices and labor costs, and reports the results. At some point in this “bargaining” process, consumers must limit changes in their requests for a good or service to a fixed percentage of the per capita excess supply or demand for that good. Likewise, producers limit changes in requested hours and materials in accordance with excess supply or demand for their labor. Also, at some point individual consumer and producer requests are aggregated by neighborhood or workplace. These provisions insure, or at least promote, eventual convergence toward equilibrium, i.e., the emergence of a feasible plan.

It will also be a flexible plan. Goods and services are aggregated into classes, with demographic data supplying guidelines for size, color, style, and other individual characteristics. If that sounds faintly (and ominously) like bureaucratic-collectivist jargon, it is, on the contrary, Albert and Hahnel claim, exactly what markets do. “The whole idea of averages allowing localized fluctuations with minimal inconvenience to producers works rather similarly in market economies.” So there will be no need to foresee one’s yearly consumption in detail.

There will be no problem, either, with saving, borrowing, earning extra income, working at home, quitting, moving, traveling around the world on a whim, or taking a few years or decades off to create a masterpiece (or clunker). No problem, that is, unique to a participatory economy. It is easy, after all, to overstate the flexibility and responsiveness of markets. And though there are difficulties in financing the arts and sciences through participatory planning, there are, as conglomerate publishing and corporate medicine illustrate, equal or greater dangers in relying on the market. One could wish, though, that Albert and Hahnel had showed some awareness of, and made some room in their argument for, the awkward fact that much of the art that makes life worth living we owe to the whims of the idle rich. The problem of patronage is deep and crucial, and may finally require more for its solution than solidarity plus computers.

After this streamlined account, so many questions about Albert and Hahnel’s scheme undoubtedly remain that it would be impossible to formulate them in the rest of this review, much less answer them.

For simplicity, perhaps they can be divided into questions about technology and about human relations. The most basic is, can the mechanism of decentralized planning through successive iterations really work? Can any conceivable data-processing system handle the required information? Wouldn’t the associated bureaucracy, the Facilitation Boards, be monstrously large?

In reply, Albert and Hahnel point out that numerous databases of the necessary size already exist, notably-- a nice irony-- those of the giant credit bureaus, which may contain up to 50 million credit histories. The only new technical requirement of participatory planning is a widespread—near-universal, really-- ability to access data about consumption and production with a terminal and modem. But there’s nothing utopian about universal computer literacy; it’s already on the horizon. As for the Facilitation Boards, they would indeed be sizable and expensive, but hardly as large or as wasteful as the corollary institutions of a market economy: banks, insurance companies, stock exchanges, credit bureaus, brokerage firms, police forces, private security agencies auditors, the Internal Revenue Service and its state and municipal counterparts, and, of course, the advertising industry. For the rest: one does, admittedly, need some feel for information technology and statistical techniques to judge the practicability of Albert and Hahnel’s scheme with any confidence. But Albert is a former MIT physics student, a science columnist for Z Magazine (which he co-edits), and, to my own knowledge, a computer whiz. These are not fuzzy-minded visionaries, intoxicated with their own rhetoric, gesturing vaguely toward the future and waving off objections impatiently with assurances that computers will somehow take care of all the details.

Assuming Albert and Hahnel’s model of participatory economics is technically feasible, is it humanly feasible. Does it presuppose a degree of solidarity and of indifference to comfort, status, privacy, and mobility that it would be unreasonable to expect? And how many damned meetings would we all have to go to? To take the all-important last question first: the authors estimate the time involved in, say, a seven-round planning process to be roughly equal to the time now spent, on average, in filling out tax returns.

To the former, more complex question, there is no straightforward answer. On the one hand, the classical socialist insight concerning the waste of creativity and dedication entailed by competition, and the corresponding potential for productive gains through cooperation, is as valid as ever. (In fact, it is given a mathematical demonstration in The Political Economy of Participatory Economics. Also-- let it never be forgotten-- the market responds only to effective demand, so there are always quite a lot of people around without much comfort, status, privacy, or mobility to jeopardize.

Still, Albert and Hahnel do seem to underestimate the wide and enduring appeal of traditional American values like individualism, self-reliance, and minding one’s own business. Not all individualism, after all, is possessive individualism. Sometimes-- a lot of the time-- people just want to be left alone. Owning one’s own home and car may be enormously wasteful, and taking one chances in the labor market may be risky, stressful, even soul-destroying. But to the great majority of our fellow citizens, they nonetheless seem natural in a way that shared consumption and collective responsibility do not. A work that proposes a profound change in social organization ought to address, more fully than Albert and Hahnel do, what changes in popular attitudes and moral culture would be necessary and how they might come about.

This is, however, one of the few expository flaws in Looking Backward or The Political Economy of Participatory Economics. Both these books are, in general, well written and rigorously argued. Albert and Hahnel have spent a decade producing a serious work of constructive social theory, which challenges the assumptions, even as it affirms the values, or most others on the democratic left.

All of us who have (not, perhaps, without a frisson of relief) accepted the inevitability of markets and renounced the illusion of a society without alienation owe it to our traditions to engage these two short, powerful volumes.