Participatory planning allows participants to exercise direct democracy and allows ordinary citizens to control their own lives. Citizens of a post-revolutionary society will be organized into federations of workers and consumer councils. Workers in worker councils need to articulate proposals on what and how much they want to produce, as well as the resources needed for production. Consumers, on the other hand, will need to express through proposals what and how much they intend to consume. Both production and consumption proposals will be sent to the facilitation board where through a system of proposals, amendments, and rejections, a social plan articulated to cover the entire economy is hashed out.
Let's be like Frank Lucas in American Gangster and cut out all the middle men.
The institutions of a participatory economy embody the values of efficiency and effectiveness that we seek. The institutions of a centrally planned economy however, no matter how valiant our efforts, no matter how beautiful are rhetoric, negate and hamper the realization of these values to take form.
Let's take a look at how central planning can be inefficient and ineffective. All which can be viewed in the history of China and Russia's usage of it.
But, first we must realize that a nation's(or regions') economy is an integrated affair. Therefore, any decisions about production in one industry will have ripple effects elsewhere. This is due to the simple fact that the output of one industry can serve as an input towards another , and thereby makes one industry dependent on another. This integration of industries can be represented through the usage of an input-output matrix.
|Metal||0||.4 tons |
|Coal||2 tons||0 |
Suppose through a democratic and participatory process of proposals, requests, rejections, and amendments, a social plan articulated to cover the entire economy is hashed out. One in which it articulates the need for the Coal industry to produce a net output of 200,000 tons of coal and the Metal industry to produce a net output of 50,000 tons. Suppose, coal is required to produce metal and some amount of metal in the form of tools is required to produce coal. To produce 50,000 tons of Metal requires 2(50,000)=100,000 tons of coal. Likewise the production of 200,000 tons of coal requires (0.4)(200,000)=80,000 tons of metal.
Your factory makes cars. There is a demand nationally for the cars you produce. This is known due to the fact of people putting in requests for cars through participatory consumption planning. Yet, we know that the requests and the production of cars has ripple effects. There is a finite amount of resources available to us to produce cars, as well as other products that rely on the same resources. However many cars we make, we can't use the steel and other material for other products. This also extends to human resources as well. The people assembling the cars won't be available to do other work.
There's a finite amount of resources, that goes for labor, time, natural resources, etc. What we had in Russia and China was resources being over committed. Central planners were committing more resources than were available, so there were persistent shortages. And these shortages weren't prone to one industry, but because an economy is integrated it affected other production units.
But that can be avoided with participatory planning and the elimination of the roles of central planners. People express their priorities through the usage of workers and consumer councils, and federations of these. This prevents overproduction and potentially useful products being wasted. Participatory planning is the more efficient in gauging the priorities and needs of the people, than central planning could.
Moreover, the government(centrally planned) established fixed prices for all inputs and outputs based on the role of the product in the plan and on other noneconomic criteria. The prices did not reflect the supply and demand or relative scarcity of the product. Shortages occurred and prices were established too low which resulted in allocation inefficiency and ineffectiveness. So, what we had was some outputs being cheaper than the inputs used to produce it! For example, bread was cheaper than the wheat needed for its production!
Yet, that can be avoided with participatory planning and the elimination of the roles of central planners. People express their priorities through the usage of workers and consumer councils, and federations of these. This prevents inefficient allocation and goods being over or undervalued which can cause scarcity or overproduction. Participatory planning is the more efficient in gauging the priorities and needs of the people, than central planning could.
In central planned economies, managers were rewarded for meeting assigned goals. Can you see the problem here? In Russia and China, managers manipulated and lied about reaching production goals in order not to be reprimanded and to live the good petite-bourgeois lifestyle. But, remember, economies are integrated. Looking at the input output table i have above, if managers in the coal industry are lying about reaching their output goals or manipulating data, this effects the steel industry, who uses that input to produce steel. This decreases the steel intended target, which affects bike makers, car makers and all other industries that use steel as an input.
Not very efficient or effective, huh?
But that can be avoided with participatory planning and the elimination of the roles of central planners. People express their priorities through the usage of workers and consumer councils, and federations of these. Worker's self-manage these work units, information is democratized the decision making process is democratized with each actor influencing decisions in proportion in which they are affected by them.This prevents inefficient allocation and goods being over or undervalued which can cause scarcity or overproduction by managers manipulating data. It would be more beneficial to the workers of the work unit and society as a whole to report accurate data. Again, participatory planning is the more efficient in gauging the priorities and needs of the people, than central planning ever could.