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Interviews Post-Capitalist Vision

Philipp Dapprich Interview on Democratic Central Planning Part 2 – Simulations, Opportunity Cost, Environment, Multiple Techniques, Computation

Editors note: Discussion includes using choice of production technique in central planning, opportunity cost, labour cost, calculating environmental costs (such as GHG emissions), agent-based modelling, consumer modelling, simulation results, computational complexity, research to be done.

[After The Oligarchy] Hello fellow democrats, futurists, and problem solvers, this is After The Oligarchy. Today I’m speaking with Dr. Philipp Dapprich.

Philipp Dapprich is a political economist and philosopher working at the Free University Berlin. His PhD was entitled Rationality and Distribution in the Socialist Economy (2020), , and he is also co-author of a forthcoming (2022) book entitled Economic Planning in an Age of Environmental Crisis. Today we’ll be discussing his work on refining the model of economic planning first proposed by Cockshott and Cottrell in Towards a New Socialism (1993).

Today’s conversation is in association with meta: the Centre for Post-capitalist Civilization if you’re not familiar with Towards a New Socialism you can buy the book or find a free PDF online you can also find interviews with Paul Cockshott on this channel and I’ll put links in the description to Philipp Dapprich’s doctoral thesis as well as a relevant paper.

Philipp Dapprich, thank you very much for joining me.

[Philipp Dapprich] Thank you for having me again.

[ATO] The first thing I’m going to say is I really recommend the viewers watch the previous interview, because they’re not standalone interviews. We covered a lot of important stuff last time about opportunity costs, the motivations for your work, and really if viewers want to understand what we’re talking about now they should watch that. So, I’m just going to say that once.

Today there are two main things that we want to talk about. The first is we want to get into the details of the simulations that you ran to investigate your new techniques of opportunity cost valuations in the Towards a New Socialism model.

The other thing is we want to talk about a fundamental question, a fundamental problem, in economic planning and central planning about choice of production technologies. Can you introduce the problem and how you approached it?

[PD] One approach to planning has long been to use so-called input-output tables. And input-output tables – they are commonly published even by western capitalist countries – show you which industries use inputs from which other industries, and which output, how much output, they produce with this.

And the problem with that is that these tables are generally very aggregated. So, you have entire industries, you might have something like Forestry and Agriculture, all bunched together into one column of the table. And it doesn’t differentiate between various different kinds of products within those industries. It won’t differentiate between different kinds of agricultural products, lumber, and so on. That’s the first problem: they’re way too aggregated. And what you’d have to do is to have a much more disaggregated table which differentiates between different kinds of products.

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Interviews Post-Capitalist Vision

Philipp Dapprich Interview on Democratic Central Planning – Part 1 – Opportunity Cost, Environment, Capital Goods

Editor’s Note: In this interview, Dr. Philipp Dapprich talks to After the Oligarchy about his work on refining the model of economic planning first proposed by Cockshott and Cottrell in Towards a New Socialism (1993). Discussion includes opportunity cost, labour cost, calculating opportunity cost in central planning, calculating environmental costs (such as GHG emissions), calculating opportunity cost of capital goods.

[After The Oligarchy] Hello fellow democrats, futurists, and problem solvers, this is After The Oligarchy. Today I’m speaking with Dr. Philipp Dapprich.

Philipp Dapprich is a political economist and philosopher working at the Free University Berlin. His PhD was entitled Rationality and Distribution in the Socialist Economy (2020), and today we’ll be discussing his work on refining the model of economic planning first proposed by Cockshott and Cottrell in Towards a New Socialism (1993).

Today’s conversation is in association with meta: the Centre for Post-capitalist Civilization if you’re not familiar with Towards a New Socialism you can buy the book or find a free PDF online you can also find interviews with Paul Cockshott on this channel and I’ll put links in the description to Philipp Dapprich’s doctoral thesis as well as a relevant paper.

Philipp Dapprich, thank you very much for joining me.

[Philipp Dapprich] Thank you very much for this conversation.

[ATO] Before we begin with the questions, I was talking to Paul Cockshott yesterday and he mentioned that actually you, Paul Cockshott, and Allin Cottrell, have finished a book, a new book, on economic planning called Economic Planning in an Age of Environmental Crisis. And that’s just with the publishers now, and it’s going to come out sometime this year [2022]. So, do you want to say few words about that?

[PD]Yeah. So, what we’re trying to do in in this book is two things.

First of all, we want to demonstrate that you need some kind of economic planning in order to tackle the huge task of transforming the economy away from fossil fuels. Paul Cockshott actually did a calculation, for the book, of the investment that would be necessary in the UK, as an example country, to completely transform the energy system. And the amount of investment that is needed actually exceeds the annual total private investment in the UK. So, if that’s correct then there’s no way that private investment alone will be able to tackle this, and you need the state to step in and take a significant role in this.

The second thing that we’re doing is showing how economic planning techniques can be applied precisely to this problem of transforming an economy towards a completely different energy source. So, one of the things that we’ve looked at is how you can do long-term plans that gradually transform the economy or the basis of the economy. And the other thing, which is something that I worked on in my PhD thesis as well, is to look at how we can consider environmental constraints in planning and also in valuation of goods.

[ATO] Just one more thing on that. It’s a book primarily about long-term planning and about applying that to the environment, or will there be material about relating a long-term plan to, say, a yearly plan?

[PD]The techniques we describe are, of course, generally applicable for long-term planning and they could be applied to any kind of long-term objective that you might have. But what we’re arguing in the book is that this would be particularly relevant when you’re trying to drastically change the way that the economy is structured, and especially the way the production of electricity and energy is done.

[ATO] Well, it sounds like it’ll be very interesting, and I’ll make sure to get a copy when that is released.

But our conversation today is about something else. It’s about your work on introducing opportunity cost valuations into the Towards a New Socialism model. But before we get into what new techniques and methods you introduced, I’d like to situate that in the history of this problem, and also talk a bit about Towards A New Socialism. So, to give the background to viewers, can you frame the issue of economic calculation so viewers can understand why the issue of opportunity cost is important? And we can go on from there.

[PD]Generally speaking in a socialist economy, a similar problem applies as in any other economy, which is how to apportion resources, labour, the means of production, towards various uses. How much labour are we going to use to produce food versus energy, versus other things? And you want to do that in a way that is in some sense efficient.

And there are techniques to do that. There are optimal planning techniques that that can be used to do that, but what they can’t necessarily tell you is which kinds of products are needed. Do we need more food, do we need more laptops, do we need more smartphones? They can’t really tell you that.

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Interviews Post-Capitalist Vision

Robin Hahnel Interview on Participatory Economics – Part 6 – Monopoly & Essential Sectors

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 book Democratic 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?

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Interviews Post-Capitalist Vision

Robin Hahnel Interview on Participatory Economics – Part 5 – Optimal Plan, Enterprise Incentives, Worker Control, Consumer Satisfaction

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 book Democratic 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.

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Interviews Post-Capitalist Vision

Paul Cockshott Interview on Towards a New Socialism – Part 4 – Worker Self-Management in Central Planning

Editor’s note: discussion topics include what worker self-management is, the division of labour, how to overcome rule by the professional-managerial class, whether the Towards a New Socialism model (TNS) can fulfil aspirations for worker self-management, innovation and product development, the managerial structure of a project in TNS, hiring and firing in TNS, employment, and strategic planning.

[After The Oligarchy] Hello fellow democrats, futurists, and problem-solvers, this is After The Oligarchy. Today I’m speaking with Dr. Paul Cockshott again.

Paul Cockshott is a computer engineer, Marxist economist, and author of several books, but today I’m interviewing him as co-originator with Allin Cottrell of the post-capitalist model first presented in the book Towards a New Socialism published in 1993.

Today’s conversation is in association with meta: the Centre for Post-capitalist Civilization.

This is the fourth in a series of interviews with Dr. Cockshott about Towards a New Socialism, make sure to watch the other interviews. Today we’ll be discussing some more advanced questions about Towards a New Socialism, so I recommend you read the book to understand what we’re talking about. It’s still in print and there’s free PDF available online which I’ll put in the description.

So, Paul Cockshott thank you very much for joining me again.

[Paul Cockshott] Hi.

[ATO] Today we’re going to talk about worker self-management. We’re going to talk about the relation between the centre and the periphery, or projects, in central planning and in socialism in general.

And how this started was – for viewers, to give context – is that I put a quote to Paul Cockshott from a book that was published by Robin Hahnel, who is co-originator of Participatory Economics and wrote a book called Democratic Economic Planning recently. And I read a quote which was making some criticisms of central planning on the basis that it was incompatible with worker self-management. And then we talked about that briefly, but we didn’t get a chance to go into it fully so that’s what we’re going to do now. So, since then I’ve had an interview with Robin Hahnel about this topic and Dr. Cockshott has seen that as well.

I made the same kind of preamble when talking to Robin Hahnel, just for viewers, that I’m just going to ask you to approach this with an attitude of curiosity and problem solving. That this isn’t about clinging to whatever political identities which we’ve decided that we have and trying to win a debate or score points. It’s about trying to create a better world, and in doing that to honestly look at these problems. I know that that’s how Robin Hahnel approaches this, I know that is how Paul Cockshott approaches this, and I’m just asking you, the audience, to approach it like that as well.

So, before I ask you specific questions are there any initial remarks you’d like to make in response to that interview that I did with Robin Hahnel?

[PC] I think it’ll all come up in the questions you ask.

[ATO] Okay I’d like to begin with a framing question, a general question, which is what in your view is worker self-management? Why is it important? And how is it achieved, how can it be achieved in a society?

[PC] Well it’s fundamentally a question of overcoming the division between mental and manual labour, between those who tell people what to do and those who actually do it. And that is an old basis of class hierarchy going back to the early stages of class society. And in a modern society it takes the form of less educated people being told what to do by more educated people generally. Or in some cases there may be no difference in educational level but people have a managerial authority which enables them to say what’s going to be done.

And this has the disadvantage that the ideas and initiative of people who don’t have the mark of authority and which could improve the operation of systems, whether it’s healthcare systems or industrial production systems, and their knowledge is disregarded or down-valued compared to the knowledge of those who are put in authority.

Overcoming this requires the sorts of struggles that were partially worked out during the cultural revolution in China. They didn’t end up with forms of organization that were stable to deal with that. But the issues that were being raised were relevant, and these will certainly still be a big issue in any society where you’re having radical socialist change. The issue of how do you get people who are initially educated members of the upper middle class, the professional managerial class, who have certain skills which are necessary for society but they have their own class interest. They have their interest in maintaining a higher social status, and a higher income and authority over other people. So, it’s the issue of how do you get people who are both read an expert and how do you ensure that those who may not initially ideologically support socialism will still work for the common good.

Now to the extent over time where there’s a radical improvement in educational levels and equalization of educational opportunity, that kind of issue may become less important to some extent. But given that in a market economy those with qualifications tend systematically to have a higher income and towards the upper end of that there are people who aren’t actually exploited, they’re either receiving something roughly equivalent to the labour they put in, or actually receiving part of the labour that others put in. This means that what is in the West the professional managerial class, there’s an interest in becoming a professional managerial class in a socialist economy. And they will push for the increase in their power and their authority. So, it’s basically a question of class interest. Class interest mediated through educational privilege.

[ATO] Okay let’s go into this further by moving into the next question. This is about specifically now Towards a New Socialism. In Towards a New Socialism, there’s a comprehensive plan for the production of the entire economy. And this plan is set by a planning bureau, which is overseen politically by a randomly selected body from the general population. And production is accomplished by projects, which we might think of as enterprises but they’re not exactly the same. And the projects implement the plan.
So, what decisions do workers in a project have control over? And what decisions do workers in a project not have control over?

[PC] Well, let’s take an example where these social relations to an extent already exist, in terms of the production not being enterprise-based in like in the British National Health Service. In that case a hospital is equivalent to a project. Now, over time from the 1980s onwards running of hospitals was increasingly professionalized and handed over to a professional managerial elite, who are distinct from the medical staff and ancillary workers who actually provide the care.

And there was a scandal recently. You’re in Ireland, you may not have seen it. There was a scandal associated with Shrewsbury Maternity Hospital, where there was a very large number of excess neonatal deaths – or babies delivered with brain damage and other injuries. Now, in pursuing what caused that, the inquiry found that it was a managerial policy to set a target to reduce the number of caesarean sections. This was not something that was arrived at by the obstetricians or the midwives, it was a target set by professional managers. By having it set by professional managers they were overriding the clinical judgment of the medical professionals and the result was clearly proven to be deleterious for the mothers and the babies.

If the management of hospitals was made up, or policy was set, by a committee drawn from the different sections of the medical and ancillary staff that worked there, that kind of policy would not have been arrived at. Now, exactly how the supervisory board would be formed, there’s room for discussion on that. Whether it be elected, chosen by a lot, by quotas, or what. Had it been based on the people who actually were delivering the care, the policies would have been different. And these are policies related to how to treat the patients. What practices should be pursued.

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Interviews Post-Capitalist Vision

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’ …

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Interviews Post-Capitalist Vision

Robin Hahnel Interview on Participatory Economics – Part 3 – Worker Councils, Efficiency, Labour Cost, Automation

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 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. [Music]

[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.

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Interviews Post-Capitalist Vision

Robin Hahnel Interview on Participatory Economics – Part 2 – Worker Self-Management & Central Planning

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.

[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 Postcapitalist Civilisation. This is the second 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 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.

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Interviews Post-Capitalist Vision

Yanis Varoufakis Interview on Another Now – Part 2 – Housing, Taxation, Inequality, Monopoly, Workplace Democracy

Editor’s note: discussion topics include security in commercial housing in the Another Now model (AN), taxation in AN, income and wealth inequality in AN, inheritance in AN, time-limited or depreciating money, whether divergent incomes combined with compound interest can lead to class divisions in AN, firm size in AN, monopoly in AN, workplace management structures in AN, and the argument for equal decision-making rights within enterprises.

[After the Oligarchy] Hello everybody, this is After the Oligarchy. Today I’m speaking with Professor Yanis Varoufakis.

Yanis Varoufakis is the former Greek Finance Minister, a professor of economics, co-founder of DiEM25 and the Progressive International, leader of MERA25, and a member of Greek parliament. This is the second in a series of interviews with Professor Varoufakis, if you haven’t watched the first check that out.

Today’s conversation is in association with mέta: the Centre for PostCapitalist Civilization. And the topic is Yanis’s latest book Another Now, published in 2020, which presents a vision of a post-capitalist society. It’s an advanced discussion of the model proposed in that book. If you want an introduction, I wrote an essay and made a 40-minute video doing just that. Though I do recommend that you read the book.

Yanis Varoufakis, thank you very much for joining me.

[Yanis Varoufakis] Well thank you very much for having me on After the Oligarchy. We are living under the oligarchy, but anyway let’s imagine, let’s imagine.

[ATO] Exactly.

So again I have a lot of questions for you. We’ll begin with a question about housing, because after I posted the first interview and also the model summary something that kept coming up again and again from commenters was that they were worried about security in the commercial housing sector. The problem raised was basically that you’re saying that every year, or every period of time, I have to keep bidding to retain access to my house. And if somebody comes along who has more money than me then then I get kicked out.

And, of course, I certainly appreciate the ingenuity of the mechanism, to try to constantly reveal the opportunity cost of the land and the housing for society to be able to get that back so that there isn’t a rentier dynamic in housing.

How would you respond to that question of security?

[YV] Well, firstly, remember that this is about the commercial zone. In in my blueprint, every county – think of it as counties – chooses to create a space that’s not … I mean, it’s democratically determined how large this commercial zone will be. The purpose of this commercial zone is for it to be run commercially by the many, for the many, in order to extract rents from those who want to operate in the commercial zone; rents with which to build social housing, social zoning, social entrepreneurial activities, common spaces, the commons. So it is a good feature, a well-designed feature of the commercial zone, that anybody who wants to operate in it has to live in fear. If you wanted to live in a house that that you paid for, not in a social house, not in a unit within social housing, then yeah I mean live in fear.

Remember, it’s not just that once a year you bid for it, but it’s something like a perpetual auction whereby anybody can actually outbid you and throw you out. Which is great because the commercial zone is there to make money for the many, for every citizen who lives in the social zone and whose activities – whether they’re poetry readings, or paintings, or producing social goods – are being funded by the commercial enterprises within the commercial zone. So it’s okay if you if you live in fear. And the whole point of this permanent auction is to ensure that there is complete incentive compatibility. In other words, that when you declare to the authorities what you value that building or piece of land as that you’re truthful. And you will only be truthful if … you can undervalue it if you want, but then somebody can come and outbid you and throw you out. So I have no defence to those who say that ‘oh, the people who live there in commercial zone will live in fear’. We want them to live in fear.

And, you know, it’s a game for them. The crucial point here is that you don’t have to live in the commercial zone. I would live in the social zone. But if you want a fancy house, a much fancier house than you deserve, or you want to create an enterprise in a place that society does not deem that you should have it, then yes you pay for it. And if you make the money for it, yeah good it all goes back to social housing and the social zone.

[ATO] Okay, so it’s really that that the priority is being put on the redistributive function of the commercial housing zone.

To move on to something else, I’ve a series of questions about income and wealth inequality. This is also a concern for some people, it’s a concern for me as well and any kind of market system … so, for example let’s talk about taxation. In Another Now there are two taxes. I mean, maybe there could be a carbon tax but let’s not go into that. There is a corporation tax, which is a tax on the revenue of all firms, and then there’s a land tax and we were talking about that there.

[YV] Land tax only in the commercial zone, only the commercial.

[ATO] Yes exactly, on the commercial zone. One might say ‘well, are you serious? There’s no income tax?’

[YV] Yeah! There’s no income tax.

[ATO] Because there could be seriously divergent incomes, because different firms could have much different rates of profitability or revenue streams, so it’s likely, one might say, that there is a lot of inequality generated. But there’s no progressive income tax.

[YV] I’m not convinced. I don’t believe there will be. If you look at the capitalist system, or techno-feudal system, in which to live today, inequality – mind numbing and soul-crushing inequality – is the result of two things. Firstly, the private ownership of firms, of the means of production, shares, share markets. That’s one, and finance is the second one. That’s where the huge inequality that is destroying our spirit comes from. Not to mention our planet.

In Another Now there would be neither. Because shares are distributed on the basis of one employee, one member, one share, one vote. And there is no financial sector, the financial sector has been taken over by a distributed ledger of the central bank. And therefore this highly problematic toxic duet – duetto in Italian – between the banker and the mogul, the banker creating, printing, money out of thin air, lending to the mogul, who uses the printing presses of the private bank in order to corner the market in the share market and effectively own everything. And then the wealth begets wealth.

Now why is Zuckerberg so much wealthier today than he was at the beginning of the pandemic. Nothing to do with the profitability of Facebook. It’s got to do with the fact that there is this combination of financial capital – the printing presses of the central bank working for Zuckerberg, not for the people, not for the many unlike in Another Now – and ownership of Facebook. And if you break down ownership of Facebook, and Facebook is equally owned by everybody who works in Facebook, and if you end the printing presses both of the state and the private sector banks operating at full throttle on behalf of the very, very, few, then the inequality that you and I are used to goes.

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Interviews Post-Capitalist Vision

Robin Hahnel Interview on Participatory Economics – Part 1B – Consumption, Consumerism, Advertising

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.

The discussion will also continue on the forum of participatoryeconomy.org.

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.