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Robin Hahnel Interview on Participatory Economics – Part 4 – Outsourcing and ‘Wage Labour Through the Back Door?’

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 Planning published 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.

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, 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’ …

[ATO] Well, can I can I say something which might clarify things a bit? One of the really interesting insights from your work is when you talk about one of the important characteristics of a market system being this relation between buyer-seller pairs and how that’s something that fundamentally distinguishes participatory economics from a market system. It’s that [in parecon] those relations are mediated through much larger groups, through society as a whole, through the planning procedure.

Okay, so why am I bringing this up? I’m bringing this up because I think the problem I’ve raised is definitely an issue in a market socialist system, precisely because you have one entity relating privately to another where, let’s say, Google can be a buyer of labour of, let’s say, some cleaners, whether as individuals or as a cleaning firm. They can relate just completely privately. However, in participatory economics it’s unclear to me that that worker council – let’s say, Google – has a role in determining how much to pay those cleaners in the first place. Because firstly the social cost of the labour is going to be calculated through the planning process.

[RH] Yeah.

[ATO] And then the amount that the cleaners are paid is going to be through the effort rating process, and then that’s more of a general question about the effort ratings. I suppose the question there would be would there be some abuse of – so that would be if the cleaners were part of the workers council – would they be undervalued? And then if they were part of their own worker council which was cleaning, and they were there suppling cleaning labour to a separate worker council, it seems that the planning process wouldn’t allow that kind of exploitative relationship. Precisely because it’s not that there’s one worker council and another and they have this private buying relationship. It’s that Google, as a worker council, would have to go through the entire planning process to interact with this cleaning worker council. Is that accurate?

[RH] I think you’re right about that. That if you deal with it internally, it’s a question of balancing jobs inside Google. If you deal with it externally – and, of course, every workplace deals with some things externally because every workplace buys inputs from other workers councils – in a sense what we have Google is basically buying a cleaning service input from another worker’s council, I think what the argument would be is that that that’s for them to decide. I’m trying to think how capitalist firms decide that. Capitalist firms decide that basically on the basis of profitability – so, is it cheaper for us to go ahead and have employees who are cleaners or is it cheaper for us to hire a cleaning service to come in? Workers councils in a participatory economy are also going to have to make that decision: what do we do internally and what do we buy from others workers councils?

[ATO] I mean, there’s an argument to be made for outsourcing as long as it’s not exploitative. You make this point in the social reproduction [reproductive labour] chapter, about there being, for example, cleaning or gardening or other caring worker councils. It’s that there are economies of scale.

[RH] Right.

[ATO] It’s just that in capitalism, and particularly in the neoliberal period, outsourcing has been used as a method of attack on labour, as a way of undervaluing it and an ability to not give people rights.

[RH] I mean, the classic example is universities. I remember at American University, when I started working there in the 70s, the cleaning staff were employees of American University with benefits. Now they didn’t get paid fairly. First of all their job complexes weren’t fair compared to professors, and second of all their pay rates weren’t fair compared to professors. And the pay rates of professors compared to provosts weren’t fair either. And then one thing that happened during the 30 years I worked there was AU decided that employing those cleaning people as American University employees, and they were unionized and they had AU employee benefit available, and the university decided well it would be cheaper for us just to hire a cleaning service. And that’s exactly the kind of thing that you’re talking about, and it’s of course exactly the kind of thing we don’t want to somehow inadvertently allow to happen.

And I’m trying to think through well what is the mechanism in a participatory economy that prevents that from happening? And I basically think it’s the indicative prices that don’t let that happen.

[ATO] I mean, under capitalism it’s about bargaining power as well, again.

[RH] Because those two units are bargaining with one another. And [in parecon] there’s no two units that are bargaining with one another over those prices.

[ATO] I mean, there’s a question about monopoly and things like that but that I want to put that aside because that’s a more general discussion

Here’s the thing. In a participatory economy ask yourself ‘what’s the average effort rating going to be inside the cleaning worker council compared to the Google worker council?’. And there are three possibilities: one is the average effort rating is going to be the same, in which case there’s no exploitation; if anything, the average effort rating in the cleaning council is going to be higher if the disutility of that labour is on average higher than the disutility of the labour in the Google council. If a participatory Google outsourced the cleaning, the average pay of the cleaners would be higher than the average pay of the Google employees or it would be the same.

[ATO] Let’s look at the reverse just to make this clear. So let’s say that the average effort rating for the cleaners was lower for some reason, just for the sake of illustrating the idea. Let’s just put a number on it so people can picture it: let’s say that’s 0.5 and in Google it’s 1. So that means that the Google workers are making twice as much in their income as the cleaners. I’m not saying that necessarily would happen, I’m just saying in this little thought experiment there would be. So, you’re saying that because these two entities are separated that’s an opportunity for the Google workers to make more income personally because if they were joined it would bring the average effort rating down? Is that what you’re saying?

I’m trying to ask basically what is this relationship between the effort rating – the average effort rating [for a WC] – and exploitation? How do those connect?

[RH] What I’m saying is that your hypo your hypothetical example can’t happen in a participatory economy. The Google worker council isn’t going to have double the effort rating that the cleaning worker council has. Either its going to have the same average effort rating or, if anything, the cleaning council is going to have a higher effort rating because on average they’re making a greater sacrifice.

[ATO] What is the significance of that? What is this relationship between what the relative effort ratings are and either having an equitable relationship or a relationship of exploitation?

[RH] I think you [are correct in] using what happens in capitalism when Google hires a cleaning service company to come in and clean the Google offices, I think you’re correctly characterizing that as a source of exploitation and a kind of exploitation.

And I think what I’m arguing is that fortunately that won’t happen in a participatory economy, even if Google decides we’re not going to have our own worker council members sharing the work of cleaning offices, we’re going to hire a whole office-cleaning worker council to come in and do that. Either choice they make, I think we’ve eliminated the exploitation that that does occur under capitalism for the reasons you and I agree on.

[ATO] We can leave it there. As always thank you very much for offering me your time. It’s been a fascinating discussion. And I looking forward to pursuing some more of those questions.

[RH] I’m hopeful that for the viewing public this is useful. And, you know, it’s also actually personally useful for me. So, in that sense, I am always willing to make more time. For both reasons I’m willing to make more time.

[ATO] It’s precisely my intention that there is a dual function of these interviews, and in general the material that I produce on this channel. Because one goal certainly is educational, it’s to promote these alternative visions and to get people to think about these questions, but it’s also to try to actually do some of the work of refining them.

[RH] Yeah.

[ATO] And, if anything, the latter is actually more of my priority. I try to make a balance. So I’m very pleased that you find it useful in that regard.

[RH] Are you trying to schedule a session with Anders Sandström?

[ATO] It is my intention. I want to finish reading Anarchist Accounting first. But yes.

[RH] Just so you know, he and I have talked about that book from the time he started writing it right through to its publication and everything else. And I have admitted to him a skill that economists are supposed to be able to master is accounting, and I feel like a congenital idiot on the subject of accounting. There’s something about accounting that my brain doesn’t work that way. And so I have tried to help him [inaudible] that there’s something about the way economists think. I mean, I know when my own students, in economics you have to be able to think marginally. And the first thing I have to teach my students is we think marginally. And the students that can’t think marginally, they just never get it. And I feel like there’s something about accounting where, you know, somehow these things always have to match up no matter what, and that makes no sense to me. So hopefully you’ll be a better accounting student than I ever have been.

But I can tell you that Anders [Sandström] has a really good mastery of the economics of participatory economics, and he is the only person amongst us who also has a mastery of accounting. And so I know he’s the right person to sort of bring those two pieces of knowledge together, to try and sort out well how to how do you do accounting in a participatory economy? He’s always asking me questions that arise because he wanted to know how it would work in accounting. And then these aren’t questions that I had ever had to answer before. But he knows they have to be answered from the accountant’s point of view. So we’ve had that kind of relationship over the years now.

[ATO] Well these are the joys of multi-disciplinarity. It’s like, my brother is a lawyer and he watched some of the videos that I made, and we were talking about Yanis [Varoufakis]’s Another Now model. And then he was asking me these questions, like ‘you know, there are all these semi-judicial institutions that he’s proposing’ and he was asking me legal questions about these, and I was thinking ‘oh yeah I didn’t really think about that actually’.

[RH] It’s very possible that Yanis didn’t either.

[ATO] Yeah which is great.

I mean the thing about accounting is, which I find hilarious, is accounting for me was always the kind of epitomé of what I despised, you know, growing up, being a teenager. And I remember, I was walking around town once with a group of friends, and I was going on some rant and I was saying ‘oh, I’d rather hang myself than be an accountant’. And my friend turns around and goes ‘my dad’s an accountant’. And I remember just saying ‘well, I’m not going to lie to you, I’m not going to take it back just because you said that’.

But now I find that after getting into political economy and, particularly, I’m a big fan of Hyman Minsky and I know he was a big fan of – what does he say – ‘disciplining your analysis with balance sheets’. And so now I’ve gotten to appreciate actually this isn’t just this completely irrelevant, boring, thing. It’s actually useful if you use it the right way.

[RH] I’m a big fan of Minsky also, and I’m not surprised that he would have been very, very, good at accounting. That would make sense working on the financial stuff that he worked on, that you would have had to be good at accounting.

Well, my eldest son is a lawyer but the conversation is very short. The first thing he tells me is ‘no dad, I’m not going to defend you when you commit crimes’ and ‘dad, even if you would pay me – which I know you would not – for doing that, I still would not do that. So do not come to me with your legal problems’. So that’s the extent of the conversation I have with the lawyer in my family. He just wants to be sure that I know that he will never defend me.

[ATO] Thank you for watching. If you found this interesting, useful, or thought provoking, then press the Like button, consider Subscribing, and, if you really enjoyed it, sacrifice your first born to Ghislaine Maxwell.

There’s a lot more such material to come. We will keep exploring the intricacies of better futures for humanity until we get there. And as always I want to read your thoughts in the comments section below.

That’s all for now. The only viable future for humanity is one After the Oligarchy.

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