Robin Hahnel - A Participatory Economy

[Capitalism] is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuousand it doesnt deliver the goods. In short, we dislike it, and we are beginning to despise it. But when we wonder what to put in its place, we are extremely perplexed.

John Maynard Keynes (1933)

Keynes penned these prophetic words when capitalism had descended into what would become the worst crisis in its history, and when Stalins socialist alternative had already become a totalitarian nightmare of show trials and purges with a prison gulag soon to be populated by tens of millions of the workers and peasants who had supposedly become the masters of their destinies.

The question Keynes posedIf not capitalism, then what?still requires an answer. It still requires more than criticism of all that is wrong in todays economies. It still requires more than vague generalities about what twenty-first-century anticapitalists propose instead. It still requires matter-of-fact, concrete answers to how all the different kinds of economic decisions that must be made in any economy might be made, and why outcomes from these procedures would be desirable. The model of a participatory economy presented in this bookwhich has been described and refined in a number of books, journal articles, websites, and countless presentations at conferences over the past half centuryis our answer to those who, like Keynes, increasingly dislike capitalism, but are perplexed by what to replace it with and are not easily persuaded by sweeping generalities.

But lets be clear about the spirit in which the model of a participatory economy is proposed. Twenty-first-century socialists owe concrete answers to those who ask what we would replace capitalism with. We need to spell out how all the different decisions that must be made might be made. We need to be clear about the ways that what we now propose differs from what some flying the banner of socialism stood for in the twentieth century, and what we have learned from previous failures. In short: platitudes, wishes, and unbridled optimism will no longer suffice.

However, we do not seek to dictate to anyone. When and where they have the opportunity to do so, future socialist movements will design, launch, and tinker with the new economic system as they see fit. We offer our proposals with sincere humility. We do not assume we are correct, nor that our critics are wrong. But for discussion and debate to be productive there must be concrete proposals for all to consider . It is in this spirit that we offer the model that has come to be known as a participatory economy.

Origins of Participatory Economics

Michael Albert and I came of political age together in the late 1960s in Students for a Democratic Society (SDS) chapters where we attended college at MIT and Harvard, respectively, and while working in several antiVietnam War organizations in Boston. Based on the Port Huron Statement and SDSs commitment to grassroots democracy, we came to embrace what we only later came to understand was the libertarian socialist alternative to both capitalism and Communism. For several years while doing antiwar organizing in Boston, the two of us earned enough to live by painting houses, where we occupied our minds by discussing how a truly desirable economy might function. We discussed the pros and cons of different institutions and procedures to give workers and consumers decision-making power in proportion to the degree they are affected, reward workers according to their efforts and sacrifices, and put scarce productive resources to their best use.

We began talking about all this before we became familiar with many of the classic treatises on libertarian socialism, and when we finally did discover this literature we became further convinced that this was the kind of economy to which humans should aspire. However, we were surprised at how little attention famous advocates for libertarian socialism devoted to specific proposals for making economic choices and how often they seemed to assume what should be done would become obvious when the time arrived. In short, on scaffolding while painting houses in Boston, Michael and I began to discuss how to make a libertarian socialist vision more concrete and comprehensive.

At the time, the two premier graduate programs in political economy in the United States were at the American University in Washington, DC, and the University of Massachusetts at Amherst. After I studied for a few years at AU and Michael studied at UMass, we had developed a sufficiently coherent proposal to join the debate with other political economists over models of socialism. Over the ensuing decades, Michael and I elaborated further on why we think people should not resign themselves to a market system, we refined our early proposal for how a participatory economy might function, we made concrete suggestions for how to handle important issues we had not addressed initially, and finally, we responded at length to criticisms of different aspects of our proposals.

Some who participate in debates over alternatives to capitalism are professional economists whose tool set allows them to engage in formal modelingbut are often less familiar with the debates that have raged among socialists for going on two centuries about how a socialist economy should be organized. Others are political activists who are more familiar with historic debates among anarchists, Marxists, and various socialist leaders and schools of thoughtbut have little or no economic training, and do not take to formal economic modeling. We have always tried to engage both these groups on their own terms, and while economists were the primary audience for Democratic Economic Planning ,