Introduction
Getting out of capitalism implies finding desirable and functional alternatives to replace it. Although this might seem obvious, only a few proposals have been put forward on how a postcapitalist society could work. Among those proposals, democratic economic planning stands out in its attempts to reconcile the need for broad coordination and preserving local autonomy and self-determination. Our goal in this text is to lay out what we consider the four main models’ functioning to give a quick overview of them to a broader public. Laying out these four models of democratic planning in a concise and structured manner will also allow us to discuss and criticize them in further writing.1
It is no coincidence that three of those models were published at the turn of the 1990s. The era was marked by the collapse of the Soviet regime and the end of the Cold War. Capitalism’s ideological victory took a large part of the legitimacy of the socialist option in the countries of the West. Thus, these models are to be understood as a response to the failure of central planning under ‘really existing socialisms’ and monopolistic market coordination under capitalism.
Let us have a quick look at them.
Devine and Adaman’s coordinated negotiation
In 1988, the English economist Pat Devine published Democracy and Economic Planning, in which he presented his model called ‘negotiated coordination’. Later, he improved and discussed his project in articles written with the
Participation through representation
Negotiated coordination makes participation possible at various levels of society, and significant economic decisions should be taken according to the subsidiarity principle. Subsidiarity enables all the social owners’ knowledge to be used so that those proportionately affected by decisions take them according to their preferences and interests (Devine, 2019, p 58). According to Devine, this principle promotes locally-based economic activity and shorter production circuits, thereby reducing ecological damage (Devine, 2017, p 43).
Devine keeps the idea of a representative government elected by the people and law-making within a representative assembly but with genuinely participatory political parties and a much more democratic electoral system (Devine, 1988, pp 189–190, 212–213). The equivalent of enterprises, what he calls production units, are owned collectively. Representatives from four sectors sit on the decision-making body of each production unit: the general interest (national, regional, and local planning commissions and negotiated coordination bodies); the interest of consumers, users, and suppliers (consumer associations, government and public services, production units that buy from or sell to the production unit and other negotiated coordination bodies related to the production unit); the interest of workers (workers of the production unit itself and their unions); and the interest of the community (interest groups and activist groups) (Devine, 1988, p 226). These representatives then agree on the most appropriate use of productive capacities through negotiation, considering each other’s interests. These governing bodies decide on the general administrative orientation of the production unit, while workers organize the day-to-day operations through self-management (Devine, 1988, pp 227–228).
On economic issues, the representative assembly receives a series of national plans designed by a planning commission. These national plans establish national investment priorities, the resources (including money, goods, and services) offered for free to those who are not working (the young, the sick, the elderly), ‘primary input prices’ (wages, energy, natural resources), means and levels of ‘taxation’ and the public services offered by the ‘social bodies’ of the government directly to households (Devine, 1988, p 193).
A chamber of interests – a group of people representing different sections, causes, and interests of society – first reviews these plans and presents a
Through self-management, workers will have, during their work life, the opportunity to do various tasks that are unskilled and repetitive, skilled, nurturing, creative, and related to organizational planning and management. According to Devine, this repartition will significantly reduce inequality in the social division of labour (Devine, 1988, pp 174–179). A central aspect of democratic economic planning is that workers control their own activity and society’s general direction. In other words, formalizing a task rotation involves a redistribution of decision-making power to the workers, something that was previously captured by the economic and political elite in previous systems, whether capitalist or central planning.
Market exchanges and market forces
Although production units are self-managed, their decisional power is limited to the capacity of their existing infrastructures. They cannot choose to invest in new assets or close facilities by themselves. Here lies the difference between market exchanges and market forces, a central element of the negotiated coordination process. Market exchange gives consumers and entrepreneurs a means of transmitting valuable information (that is, preferences) through selling and buying at given prices. Negotiated coordination includes market exchange, and day-to-day production can adapt to market signals. However, negotiated coordination rejects what Devine calls market forces – making investment choices that follow the logic of value accumulation. In negotiated coordination, the capitalist class does not make investment decisions through an atomistic, ex-post coordinated process that aims for profit maximization. Instead, the social owners (all the affected parties) make investment decisions through an ex-ante negotiated coordination process seeking to fulfill collectively decided social objectives (Devine, 1988, p 236).
Indeed, when collectively owned self-managed production units want to change their productive capacity (like building a new facility or investing in new technology development), a demand must be made for the next planning cycle. In the following plan allocation process, the negotiated coordination body will review and approve them in light of what other production units are doing. Everyone affected by the sector sends a representative to the negotiated coordination body: production units of the industry, obviously,
The way negotiated coordination uses knowledge to involve workers and every other part of society affected by the planning process is essential for Devine and Adaman. It allows them to answer the Austrian argument about tacit knowledge in the socialist calculation debate.2 Tacit knowledge is a form of knowledge that is practical, local, and not transmissible as quantitative information. Simply put, tacit knowledge comes from the fact that ‘we can know more than we can tell’ (Polanyi, 2009, p 4). The Austrian argument (Hayek, 1945) says that those who hold that local knowledge should make the economic decisions and that central planning cannot access this knowledge and, therefore, will always be inefficient. For Devine and Adaman (1996), putting representatives of those affected by the economical choice in the investment (negotiated coordination body) and the day-to-day (governing bodies) decision process puts their tacit knowledge back into the decision process without needing to transform it into quantitative information that is sent to a central planning bureau.
As mentioned earlier, in the negotiated coordination model, the means of production are owned collectively, except for very small-scale initiatives that can be privately owned. However, Devine proposes to collectivize them as soon as they grow (Devine, 1988, pp 112–130). Society, as a whole, therefore, owns the means of production and lends them to production units. The latter must make effective use of those means. Thus, the representative assembly, helped by the planning commission, sets a rate of return that infrastructure use should generate and transfer to the government. Production units should reach the set rate of return or otherwise justify that they should be ‘subsidized’ by the rest of the economy. To prioritize the best use of resources, the rate of return also guides the negotiated coordination bodies when deciding which production unit to invest in. The rate of return can differ from one production unit to another for three reasons: (1) reasons within the control of the production unit (like wage, prices, working conditions and work organization); (2) reasons beyond the control of the production unit (like location and fashion); or (3) reasons related to the macroeconomic situation that concerns a whole branch of production (like the fall or rise of demand for this type product, significant technological or social changes) (Devine, 1988, pp 245–248).
It is by no means certain that the negotiation process at the centre of the model will reach a successful conclusion every time. Pat Devine keeps insisting on this point: in time, people will learn to make sound economic decisions because failure will affect their lives. The repercussions might include inflation, a production unit having to shut down, or the exhaustion of
Recent work from proponents of negotiated coordination focuses on how the model would take care of ecological considerations (Adaman, Devine and Ozkaynak, 2003; Adaman and Devine, 2017; Devine, 2017). For the authors, the institutions of negotiated coordination are re-embedding the economy into society and nature. They are making the economic process more self-conscious and subject to a variety of points of view, including those defending the environment (Adaman, Devine and Ozkaynak, 2003, pp 270–271; Devine, 2017, pp 45–47). Collective ex-ante coordination of major investments would then tie economic activity to human needs instead of profits. From an ecological perspective, here lies the main advantage of a democratically planned economy over capitalism. Since significant investments will be democratically planned, competition and growth incentives will presumably be inoperative; hence, the pressure on workers and ecosystems would be significantly lightened. Therefore, according to Devine and Adaman, negotiated coordination is well suited to respond to today’s ecological concerns without needing critical institutional changes. Devine and Adaman’s model is illustrated in Figure 1.1.
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Devine and Adaman’s negotiated coordination annual planning diagram
Source: Laurin-Lamothe, Legault and Tremblay-Pepin, 2023, translated and modified by the authors.Albert and Hahnel’s participatory economics
Three years after Pat Devine’s book on negotiated coordination, in the United States, activist Michael Albert and economist Robin Hahnel published two books laying out the basic concepts of participatory economics: one for academics (1991a) and another for a wider audience (1991b). While participation through representation is at the centre of Devine and Adaman’s model, Albert and Hahnel’s focus is on a more directly democratic form of economic participation.
Iterative planning process
Participatory economics is also based on consumers’ councils, similarly organized into concentric circles that range from households to large entities such as a country. Peers from other councils review each other’s demands and decide if the lower body is making consumer decisions that affect other councils and, thus, should be treated at a higher level: ‘The colour of my underwear concerns only me and my most intimate acquaintances. The shrubbery on my block concerns all who live on the block … The frequency and punctuality of buses and subways affect all in a city. The disposition of waste affects all States in a major watershed’ (Albert and Hahnel, 1991a, pp 40–41). The idea is simple: those who are affected by a democratic decision should take part in it.
These two sets of councils (workers’ and consumers’) are at the centre of the planning process that Albert and Hahnel call ‘participatory planning’ (Albert and Hahnel, 1991a, pp 57–71; 1992; Albert, 2003, pp 219–227; Hahnel, 2005, pp 193–194; Hahnel, 2012, pp 89–104). Iteration facilitation boards (IFBs) support the councils’ work. These boards are workplaces in charge of producing economic analyses and indicative prices based on workers’ and consumers’ desires, previous years’ results, and the enormous amount of data shared during the planning process. After receiving prices and information from the IFB, each council writes a proposal for consumption or production. Each actor modifies its proposal through iterations before reaching a final proposal without any goods or services in excess demand or supply.
Let us dig deeper into this iterative process. IFBs start the process by releasing information: last year’s production statistics coupled with the current social cost of all goods and services (‘indicative prices’ are similar to the production costs in Devine’s model but directly influenced by supply and demand), labour costs, and qualitative information on goods and services. All actors have access to this information.
The IFBs then send their demographic, technological and economic forecasts. Considering all these factors, each council decides what changes they would like to make to their previous year’s proposals: do they want to produce or consume more or less? Do they want to do it differently? What are the consequences of those changes on their inputs and outputs?
They then send their first proposal to the higher federative level, providing quantitative and qualitative information about their choices. These proposals are broad and do not go into the details of the options; they are general categories (for example, four clothing pieces rather than one pair of blue jeans, two sweaters and one jacket). The statistically predictable personal preferences are left to the care of the councils and federations, helped by the data from IFBs. It is always a committee of peers who approve the proposals
Once every proposal is approved, the IFBs adjust indicative prices according to what goods and services are now in excess supply and demand. A new round starts with this new data: the councils can develop plans to consider these new prices. The iteration continues until no good or service in the economy is in excess supply or excess demand. According to the authors, this process can be greatly simplified by using computers. Albert and Hahnel also contend that this allocation process can lead to a Pareto optimum outcome3 (Albert and Hahnel, 1991a, pp 73–106).
Workers’ compensation
As we saw, the major constraint imposed on consumers’ councils is through workers’ compensation. Consumers can only get the amount of product equivalent to the effort and sacrifice they make through work. Participatory economics offers a decentralized mechanism for compensation based on the principle that payment equals effort and sacrifice. If we apply this ‘distributive maxim’ to today’s world, those with the most taxing and tiring jobs would be entitled to higher remuneration. In contrast, the more exciting and least demanding jobs would receive lower pay. This remuneration scheme is the opposite of what many are experiencing today.
How does this work in participatory economics? Through what the authors call ‘balanced job complexes’. This proposal differs both significantly and very little from the current work organization. It differs a lot because its starting point is that everyone should have a set of tasks with the best possible balance between them. It also varies very little because what we call a ‘job’ is, in fact, a blend of tasks whose aggregate is simply the result of other motives than the balancing of effort and sacrifice. With balanced job complexes, the tasks that best foster the individual’s development will be balanced out by others that promote it less.
Workplaces can distribute tasks as they wish because they are democratic spaces. However, Michael Albert provides a relatively simple way to determine the ‘sacrifice value’ of each task. Each worker could grade each existing task in that environment on a scale of 1 to 20. The workplace council would then assemble all the grades and determine an average for
How is this linked to the planning process? The entire society sets the average sacrifice grade for each industry branch through delegate committees for each industry. It also sets a general average for the whole economy. This general average is the measurement standard for remuneration: giving less effort than average means getting paid less and vice versa. If they are far from the average, workers are encouraged to work in multiple workplaces to reach an equilibrium.
Hence, when workers’ councils decide on their production choices, it directly impacts their compensation and consumption capacity. Likewise, a rise in prices affects the capacity of the consumption councils. By ‘forcing’ actors to find an equilibrium between what they want and what others want (expressed through price and compensation averages), ‘this procedure “whittles down” overly ambitious proposals … about what they would like to do to a “feasible” plan where everything someone is expecting to be able to use will effectively be available’ (Hahnel, 2012, pp 94–95).
In recent years, Robin Hahnel has proposed two evolutions of the model. First, he developed what he calls ‘a pollution damage revealing mechanism’, which gives participatory economics the possibility to evaluate the damage pollution is doing to different communities and integrate this damage into the indicative prices of goods in the form of a Pigouvian tax (Hahnel, 2005, pp 198–203; 2012, pp 123–132; 2017; 2021, pp 138–148). He also worked on investment and development planning to propose how participatory planning would function in the longer term and how these longer-term plans would interact with the annual planning procedure (Hahnel, 2005, pp 203–207; 2012, pp 115–122; 2021, pp 253–282; Hahnel and Kerkhoff, 2020). He also recently worked on organizing and rewarding reproductive labour in a democratically planned economy (Hahnel, 2021, pp 195–207; see also Bohmer, Chowdhury and Hahnel, 2020). Albert and Hahnel’s model is illustrated in Figure 1.2.
Albert and Hahnel’s participatory economics annual planning diagram
Source: Laurin-Lamothe, Legault and Tremblay-Pepin, 2023, translated and modified by the authors.Cockshott and Cottrell’s computerized central planning
In 1993, the economist and computer scientist Paul Cockshott and the economist Allin Cottrell published Towards a New Socialism. This book summarized previous publications they wrote, separately and together, about the effect of the advancement of computer technology on the arguments presented in the socialist calculation debate. Instead of opting for a decentralized form of planning as the two models we just discussed did, they argue that a centralized but computerized form of planning was not only possible but a better option than market or non-market decentralization.
At the heart of Cockshott and Cottrell’s model lies one institution: a centralized planning bureau they often simply call planning. This bureau is responsible for producing various plans of three different sorts: macroeconomic plans, strategic plans and detailed plans (Cockshott and Cottrell, 1993, pp 58–59).
Macroeconomic plans are about balancing broad economic measures: levels of taxation, savings and investments for the whole economy (Cockshott and Cottrell, 1993, pp 89–102). Strategic plans say where the economy should go in the short, medium, and long term: what part of the industrial structure do we want to develop, which one do we want to leave aside, how do we want to adapt to new environmental or, say, demographic realities; by how much do we want to see our labour time increase or decrease (Cockshott and Cottrell, 1993, pp 61–72). The detailed plans make macroeconomic and strategic plans a concrete reality in a given year after considering available resources (Cockshott and Cottrell, 1993, pp 73–88).
Planners use two essential tools to prepare these plans: first, a network of computers with at least one station in every workplace where ‘a local spreadsheet of its production capabilities and raw materials requirements’ (Cockshott and Cottrell, 2008, p 12) is continuously and automatically updated; second, supercomputers that integrate this information into an algorithm designed to allocate raw materials and the labour force according to a set of desired outputs for the whole economy (Cockshott, 1990; Cockshott and Cottrell, 1993, pp 81–86). With these tools, planning can design various macroeconomic, strategic, and detailed plans with different total output results and workload inputs. These plans are then submitted to a political process – to which we will come back – for approval or rejection.
The basic unit of these plans is labour time. Cockshott and Cottrell argue that the labour theory of value is a solid economic proposition upon which to base the planning process (Cockshott and Cottrell, 1989; 1993, pp 41–52; 1997). The authors offered answers to a series of classical objections to labour value theory, for instance the complexity of taking skilled labour into account (Cockshott and Cottrell, 1993, pp 34–36), the integration of the value of time through a discount rate (pp 67–69) or the inclusion of the value of natural resources (pp 64–67). So, the planning bureau has access to a value for each good regarding labour time. To form a market-clearing price for each good, it adds a multiplier based on the ratio between the demand for the good and its value in labour time (Cockshott and Cottrell 1997, pp 347–348).
When adopted, the plans are implemented by ‘projects’ in which people work to create planned goods or services. These projects are not enterprises because they would have the economic right to ‘own’ specific means of production or resources or to ‘pay’ workers to do some work. Instead, they
This central bureau owns all the means of production, and every natural resource integrates all projects ‘as […] a capitalist company [integrates] the individual activities that it may be carrying out […] projects are managerial or administrative rather than legal entities’ (Cockshott and Cottrell, 1993, p 179). The workers are paid in labour tokens directly by planning. These labour tokens equal the labour time a worker has accomplished in a given period. Workers then exchange them for consumer goods. As soon as they do so, the tokens lose their value, like a theatre ticket (Cockshott and Cottrell, 1993, pp 24–25). The trends in token spending will give the central planning bureau the necessary information to establish market-clearing prices.
Innovation could be handled through an ‘innovation budget’ through which individuals and companies could apply for funding for their ideas and projects (Cockshott and Cottrell, 2008, p 90).
Democracy, planning and individual rights
At first sight, the Cockshott and Cottrell model may seem not only centralized but also quite hierarchical, with the central planning bureau commanding from the top and everyone underneath obeying. While they have not developed the political aspect of their model as much as the economic one, in their 1993 book and in a few articles, Cockshott and Cottrell proposed a direct democracy based on sortition, inspired by the Athenian classic democracy (Cockshott and Cottrell, 1993, pp 157–170). Hence, ‘[t]he various organs of public authority would be controlled by citizens’ committees chosen by lot. The media, the health service, the planning and marketing agencies, the various industries would have their juries’ (p 167). These committees could act as regulatory bodies, establishing norms, rules, and regulations, and economic bodies, being allocated production mandates and resources by the central planning bureau and ensuring they are fulfilled. They would be responsible for the day-to-day decision-making at the top of each organization and societal institution. It is noteworthy to mention that local democracy only intervenes ex post in Cockshott and Cottrell’s model. It democratically organizes the decisions taken by the plan, written by the central planning bureau and adopted by referendum.
The macroeconomic plan and some aspects of the strategic plan would be submitted to citizens through annual referenda using electronic procedures (Cockshott and Cottrell, 2008, pp 11–12). The most important aspect of these votes is the level of taxation: the amount of work time that society should invest in goods and services available for free to all
This democratic system also offers rights to individuals: the right to earn a living (even if they are, for some reason, unable to work, in which case they receive essential goods without any obligation on their part) and the right to receive the total value of their labour and to dispose of this value as they see fit (Cockshott and Cottrell, 1993, p 175). ‘In all cases, the people are the ultimate delegators of power. Either they vote to tax themselves and entrust a demarchic council with a budget to produce a free service, or they choose to purchase goods, in which case they are voting labor time to the production of those goods’ (Cockshott and Cottrell, 2008, p 16).
Cockshott and Cottrell (2008) updated their argument in recent years by including the new technologies now available. Their vision has informed many contemporaries by demonstrating that democratically planned economies can take advantage of technological advances, including the ones used by the largest capitalist corporations that are deeply involved in planning massive economic networks (Durand and Keucheyan, 2019; Phillips and Rozworski, 2019). In a recent book Cockshot, Cottrell and Dapprich (2022) deepened the link between their postcapitalist proposal and the fight against climate change, while answering critiques about the tractability of planning and the use value in their model.
Thus, the authors propose a centralized, entirely computerized, and moneyless system that calculates and expresses all goods’ value in working hours. Their contribution is crucial to understanding that democratic economic planning is technically feasible. Cockshott and Cottrell’s model is illustrated in Figure 1.3.
Cockshott and Cottrell’s detailed central planning model
Source: Laurin-Lamothe, Legault and Tremblay-Pepin, 2023, translated and modified by the authors.Laibman’s multilevel democratic iterative coordination
Economist David Laibman is Professor Emeritus at Brooklyn College and the City University of New York. Laibman played a leading role in the direction of the journal Science and Society. Since 1992, this journal helped rekindle the debate on alternative economic models to capitalism as the Soviet Union collapsed. In many contributions (Laibman, 2001; 2011; 2015; 2022) but none taking the form of a book strictly about his model, he presents a model named multilevel democratic iterative coordination (MDIC).
The central contribution of MDIC is to offer an operational model of a socialist economy that combines decentralized and centralized aspects, as well as qualitative and quantitative modes of regulation. In particular, the model focuses on performance measurement for production units, reward mechanisms for ambition around the economic plan, and for its realization.
Having been at the centre of the debate around postcapitalist economics, David Laibman knows well and for a long time the models we have presented earlier in this chapter. He started working on his own proposal to produce a synthesis of those models (and others), arguing that, without that synthesis, they are not integrating in a functional way two fundamental dimensions common to all of them. Those dimensions are spectra, on which Laibman orders the different options for a postcapitalist economy. The first dimension, organization ‘traverses a spectrum running from central to decentral, with highly concentrated decision-making, at one end, and extreme dispersal of decision-making, at the other’ (Laibman, 2022, p 227). The second dimension, regulation, is about the methods used to make decisions, either quantitative (numbers, data) or qualitative (arguments, words). For him, previous models did not productively integrate those two dimensions, often focusing only on one side of the spectra. The continuous interactivity he proposes is one element that gives Laibman’s model its balance on those spectra. Figure 1.4 is a slightly adapted version of a figure produced by Laibman (2015, p 329) that gives a good idea of the usage he makes of those two dimensions and where he locates his models compared to the models presented in this chapter and others.
David Laibman’s taxonomy of post-capitalist models
Source: Laibman, 2015, modified by the authors.What does ‘iterative’ mean?
The noun ‘iterative’ in the name of the model refers to the constant exchange of information between different levels and production units and the balance between local initiative and centralized coordination. These levels include, on the one hand, a central planning authority (also called the ‘centre’) and, on the other, different levels of production units. Production units are sometimes called ‘enterprises’, but they should not be confused with capitalist corporations focused on profit creation and accumulation. Iteration allows production units to retain their autonomy and nurture the creative spirit and innovation that emerge locally while framing them by a centralized coordination mechanism that ensures social optimization (Laibman, 2015, p 312).
Each production unit prepares its own plan, developed from the profile of the local workforce, the physical environment, available materials, and so on. Production is also codetermined within the production unit by a consumer council, ensuring that decisions about the types of goods and services correspond to the community’s needs. The production unit is socialized: it belongs to a community that determines its economic, political, social and environmental impact.
Contracts between production units are always possible, but the centre must be informed. The ‘production units/centre’ iterations balance the inputs and
Think, for example, of limited timber resources that several production units would require in large quantities simultaneously. Without the centre’s intervention, the ecological limits of forest preservation and regeneration could not be ensured. The same applies to highly skilled workers, whom the centre could send to certain localities at critical times to meet more urgent needs before returning to their home localities to perform tasks with longer-term benefits. The development and adjustment of plans are simultaneous and continuous, thanks to a systematized digital data exchange accessible via a computer network. The plan is not imposed from the top down. The planning activity takes place as production units formulate the implementation of their objectives. We can see here how Laibman’s model
Prices and measuring production unit activities
Measuring the activities of production units plays a significant role in the multilevel democratic iterative coordination model. In capitalist economies, this measurement often boils down to one primary indicator, usually the rate of profit. Instead, Laibman proposes an indicator that condenses all quantitative information on production and combines qualitative data on each unit’s objectives. Moreover, the leading indicator of the activities of production units is different from the ‘rate of return on investment’ or the ‘rate of profit’ as calculated in a capitalist economy (Laibman, 2015, pp 317–320) because it does not consider wages as a cost. It measures the income the production unit generates once expenditure on non-human resources (capital) has been disbursed. These resources, internalized in the model, include elements that capitalist companies tend to externalize when calculating their profitability, which are nonetheless essential: the education system, social protection, domestic work, and so on.
Costs are determined by a pricing system that considers available resources and environmental factors, which Laibman calls social reproduction prices (SRP) (Laibman, 1992, pp 316–333). Those prices are profoundly different from prices in a capitalist setting. They ‘generate a uniform social rate of return to all production activities, where this rate measures the value-creating effect of each activity using the entire income stream generated by it […], and by identifying and calculating the entire set of social resource stocks (capital) used by enterprises’ (Laibman, 2022, p 239). It enables broader societal objectives to be attained, unattainable through spontaneous market organization. Those prices account for the social stocks (public buildings, education, health) needed to support and make possible the work of production. In our current economy, these elements are regarded as externalities, but are taken into account when calculating SRPs.
Measuring social indicators: a key factor in evaluating production units
Production units are evaluated using conventional quantitative performance criteria – based on historical data, the average rate of return in the sector, or a combination of the two – and qualitative criteria – a measure of ecological, solidarity, and community objectives that Laibman names a ‘social indicator measure’ (Laibman, 2015, pp 318–320). Suppose a production unit aims to increase the number of its workers from diverse backgrounds, reduce the environmental impact of its activities, or assist another less-favoured region
A committee of representatives from the production unit, industry, trade unions, NGOs, and environmental activists determines the number of objectives, content, and evaluation (Laibman, 2015, p 321) based on the different groups of people affected by the production unit’s activities.
Superior performance enables the production unit to distribute surpluses such as wages, solidarity funds for the community, aid funds for other production units, and so on. On the other hand, if a production unit underperforms, it has severe consequences for its ability to compensate for its monetary and social deficit. Following Laibman’s logic – even though this is never clearly mentioned – such a situation would lead to remedial measures imposed by the centre or the community. Because of how the evaluation of their activities functions, production units have every interest in achieving the goals they have set themselves and broadening the spectrum of their activities to benefit the community as a whole (Laibman, 2015, p 324). This evaluation mode is Laibman’s strategy to balance quantitative measures (rate of return) and qualitative ones (social indicators).
Laibman wanted to address the issues of incentives and motivation that he saw as central to planning models. In his view, the search for best practices and solutions by work units and their communities are powerful tools for achieving high-performance, sophisticated technical and social quality with a level of motivation, freedom and responsibility that is highly rewarding for workers (Laibman, 2001). The ambitious nature of the plan is also part of the performance assessment, leading to a higher reward if it is achieved (Laibman, 2015, p 326). Thus, a production unit has no incentive to propose a lazy or unrealistic plan. In this way, planning relies on individuals’ critical capacity and knowledge, enabling them to develop goals and strategies autonomously and creatively while meeting broader social norms. Participatory coordination thus ensures constant production and allocation of resources, allowing ‘the progressive creation of consensus and shared vision: a sense of intentionality and control over the social process’ (Laibman, 2001, p 90).
Conclusion
These proposals are imperfect and would benefit from further improvement and greater detail. Several nuances and distinctions are absent from this text. Nevertheless, these imperfections should not prevent us from starting to reflect now on the possible configurations of a postcapitalist economy. We also omitted in these brief sketches the critiques formulated by previous readers of these models and the ones we could have proposed. Instead, our goal was to lay out the models’ functioning simply and clearly so that a broader public could discuss and criticise them elsewhere.
Glossary
Devine and Adaman’s coordinated negotiation
Chamber of interests
The chamber of interests is a consultative body representing interest groups and cause groups. There are chambers of interests at the three levels of Devine’s model (national, regional and local). The chamber of interests brings together all interest groups and cause groups representatives to debate and ideally agree on the plan’s content to be adopted. When they have reached an agreement or have decided that such an agreement is not attainable, they then send a report to the representative assembly presenting their agreements and disagreements. Based on this report, the assembly will discuss and adopt the plan (Devine, 1988, p 194).
Functional services or functional activities
Functional services or functional activities are the terms Pat Devine uses to designate the equivalent of today’s public services in most advanced capitalist countries: health, education, environmental protection, etc. Social bodies are tax-funded and offer these services (Devine, 1988, p 213).
Interest groups and cause groups
Interest groups are self-organized citizens interested in a specific question: professional bodies and unions, organizers of recreational activities (cultural, sports, and so on). Cause groups can broadly be understood as social movements. All these groups function through the logic of election and representation. Their representatives meet in the chamber of interest to defend their respective groups’ interests in elaborating the plan (Devine, 1988, p 153).
Market exchange
Market exchange consists of an act of sale/purchase between a production unit and another or between a production unit and an individual as long as the sale does not significantly affect production capacity and requires major
Market forces
Market forces refer to how changes in production capacity (like major investments) occur. Under capitalism, big corporations coordinate these investments ex-post in an atomistic way. Under negotiated coordination, a democratic and negotiated coordination process replaces market forces (Adaman and Devine, 1996, p 534).
Negotiated coordination bodies
The negotiated coordination bodies are responsible for economic coordination within a production sector. These bodies make the major investment decisions regarding an industry. This body comprises elected representatives of the same sector’s production units, main customers, major suppliers, relevant planning commissions and interest groups. The main objective of this institution is to coordinate economic activities in the same sector. Issues relating to the main changes in production capacities, achieving targets and managing production gaps between the same sector’s production units are addressed here (Devine, 1988, p 231).
Planning commissions
The planning commissions have two primary purposes. Its first is to elaborate plans. Based on the negotiated coordination bodies’ economic information, the planning commission members elaborate and submit various plans to the representative assembly, where one plan will be adopted. Planning commissions consist of members of the concerned governments, production units, negotiated coordination bodies, and interest and cause groups. The second purpose of the planning commission is related to the plan’s implementation. They are responsible for economic coordination between the different authorities at a geographic scale (national, regional, and local). After receiving the version of the representative assembly’s plan, planning commissions allocate the principal investments to the various production units through the appropriate negotiated coordination body. There are planning commissions at the local, regional and national levels (Devine, 1988, pp 190, 213).
Prices and wages
The production units determine prices and correspond to the social costs of production. Production costs are divided into two types: primary inputs and
Production units
Production units (roughly equivalent to enterprises) produce goods and services and provide them to consumers. Representatives from four sectors sit on the decision-making body of the production unit: the general interest (through national, regional, and local planning commissions and negotiated coordination body), the interests of consumers, users and suppliers (through consumer associations, government and public services, production units that buy from or sell to the production unit and other industry development councils related to the production unit), the interest of workers (in the form of the workers of the production unit itself and their unions) and the interests of the community (through interest groups and cause groups). These representatives then agree on the most appropriate use of productive capacities through negotiation, considering each other’s interests. They are also responsible for making small local investments. Within this framework, the production unit is self-managed by its workers.
Representative assemblies
Representative assemblies are political decision-making bodies composed of all the people’s representatives elected by universal suffrage. Political parties assemble different representatives on an ideological basis. The party whose representatives form the majority constitutes the executive power, while the legislative power includes opposition parties. Their primary economic purpose is to adopt the plan. Based on the planning commission’s various plans and considering the report from the chamber of interest, the elected members of the representative assembly deliberate and adopt the plan’s final version. This final version will then be sent back to negotiated coordination bodies for implementation. Representative assemblies are at the three levels of the negotiated coordination model: local, regional and national (Devine, 1988, pp 142, 254).
Small-scale activity
Self-employed individuals or small coops carry out what the model calls small-scale activities (repairs, art, personal growth, massage therapy, graphic
Social bodies
Social bodies are the government’s agencies that provide the functional services (the equivalent of public services in this model): health, education, environmental protection, and so on. Social bodies are decentralized, present at the model’s three levels (national, regional and local), and are financed by taxation (Devine, 1988, p 213).
Social ownership
Social property is a dynamic form of ownership of the means of production that is adapted to the needs of the communities that are concerned by a decision. It is not equivalent to state ownership as it means control by society. There are two conditions for social ownership: the people most affected by using specific means of production should take part in decisions concerning them, and these decisions should be coherently integrated into a broader plan decided by society as a whole.
The adequate governing bodies of the production units, planning commissions, and the negotiated coordination bodies coordinate the implementation of this form of ownership (Devine, 1988, p 223).
Subsidiarity
The principle of subsidiarity favours decision-making being done in the utmost decentralized way possible. This principle implies that decisions should be made primarily by those proportionally affected by it (Devine, 2002, p 75).
Taxes
The government collects two kinds of taxes: one on production units and one on wages. The tax on production units equals the renting out resources and the return on assets employed. Depending on the amount produced by this tax on production units, it could be complemented by a wage tax. These taxes are the government’s source of revenue and finance the government’s social bodies providing functional services. Local and regional governments would also collect taxes. The taxes on production units would be set at a
Albert and Hahnel’s participatory economics
Balanced job complex
In participatory economics, jobs would be divided into tasks and reorganized to create a balanced set of tasks. This redistribution aims to equalize desirable and undesirable tasks across workers in the same workplace and workplaces. It involves reviewing the division of labour to balance the work content between planning and execution tasks as much as possible. Participatory economics, therefore, does not seek to ‘abolish’ the division of labour. Instead, it aims to review the division of labour to redistribute burdensome and empowering tasks equitably. It aims to give decision-making time and power back to workers while letting them stay in contact with the production sphere (Hahnel, 2012, pp 55–56).
Complementary holism
Complementary holism is the general theory underpinning participatory economics, which sees society as divided into several spheres containing social institutions responding to human needs and desires. These institutions shape human wants and human needs, just like institutions are shaped in return by those desires and needs. It aims to describe society by integrating and going beyond four social theories described as monistic: nationalism, feminism, Marxism and anarchism. These social theories are monistic as they do not offer a perspective that subtly understands the complexity of society (Albert et al, 1986, p 80).
Consumers’ councils
Consumers’ councils are in charge of consumption in the planning process. Like workers’ councils, consumers’ councils are organized according to the federal principle, but on a geographic basis instead of a sectoral basis. They are nested in each other from the individual household to the national council (Albert, 2003, p 93).
Iteration facilitation board
The primary role of the IFB is to facilitate and coordinate the planning process. This body collects all the proposals for production and consumption, compares them, and sends alternative suggestions back to the various councils. Its function is strictly perfunctory. It is a technical workplace like
Prices
The IFB calculates prices. They are cost-based and influenced by supply and demand. In the iterative planning process, IFBs emit prices that are then affected by supply and demand as expressed by workers’ and consumers’ councils. A new round starts by taking into account these new prices. Prices provide helpful information about the social costs and the social benefits of goods and services (Hahnel, 2012, pp 91–92).
Remuneration
Workers’ councils set remuneration according to effort and determine the level of effort for each task. The objective of linking wages to effort is to ensure that everyone is compensated according to their effort, the only thing that workers have a clear impact on. Remuneration is distributed through consumption credits that customers can use to get consumption goods. Workplaces do not keep these credits after the transaction and are not used in production (Albert, 2003, p 112; Hahnel, 2012, p 59).
Workers’ councils
Workers’ councils are the self-management body of workplaces producing goods and services. Only workers are members of those councils. All workers of a workplace take part in the workers’ council decisions. They do so directly in their local councils. Workers’ councils are in charge of the day-to-day management of their local workplace, are federated by sectors, and manage the entire productive economy through this process. They are nested in each other, from the small working team to the national council. These councils are where workers express how many hours they wish to work, what they wish to produce, how they want to organize their workplace, and so on (Albert, 2003, p 92).
Cockshott and Cottrell’s computerized central planning
Central planning bureau
The central planning bureau is the central institution of Cockshott and Cottrell’s model. It is often simply called ‘planning’ by the authors. It comprises experts (economists, technicians, computer scientists, and engineers). The central planning bureau’s main task is to produce alternative
Citizen’s committees
The state would be maintained, but not as we know it. It would be an ‘acephalous state’ in that it would have no legislative power, and its role would be limited to implementing the decisions made by its constitutive committees. These committees would be composed of citizens chosen by lot from among their users and workers. All public bodies and each industrial sector would be governed this way (health, education, water, electricity, transport, and so on) (Cockshott and Cottrell, 1993, p 167).
Commune
Communes are non-mandatory living spaces that Cockshott and Cottrell think would be more efficient and adapted to their model. They should offer one room per individual within a collective habitat and be designed with an architecture suited for this new domestic lifestyle. Communes would collectively realize four economic activities: housing, childcare, certain leisure activities and assistance to the elderly. The pooling of these activities would allow for significant economies of scale (Cockshott and Cottrell, 1993, p 150).
Detailed plan
The detailed plan contains the concrete allocation of resources within the framework established by the macroeconomic and strategic plans. If the strategic plan invests, for example, a certain amount of national revenue in a specific sector, the detailed plan will specify the concrete amount of resources needed in each project to meet this goal (Cockshott and Cottrell, 1993, p 73).
Macroeconomic plan
The macroeconomic plan establishes general parameters that aim to frame economic development in the long term. It contains investment levels for the economy as a whole, the level of taxation and savings (Cockshott and Cottrell, 1993, p 89).
Prices
The value of goods and services would be expressed in hours of work socially necessary for their production. However, prices would not necessarily
Projects
Projects resemble business in capitalist society and are where production occurs. Projects have no formal legal existence; they are only administrative units that belong to the community through planning. The link between the central planning bureau and projects is similar to the one between a single company’s and its executive’s different divisions. Projects and the central planning bureau mostly communicate through digital data. Each project has a computer dedicated to planning connected to an information network dedicated to this task (Cockshott and Cottrell, 2008, p 9). Each project is self-managed by its workers (Cockshott and Cottrell, 1993, p 179).
Strategic plan
The strategic plan concerns the evolution of the economy’s structure in the short, medium, and long term. The strategic plan presents which sector to develop and which to compress, the economy’s environmental dimension, and the total working time (Cockshott and Cottrell, 1993, p 61).
Taxes
Income tax, land rent, and consumption tax pay for the services offered to the population free of direct charge. Since the income distribution would be roughly equal, there would be no reason to introduce a differentiated tax. The authors propose introducing a ‘flat tax’, the amount of which would be decided annually by democratic means. The second source of government revenue is land rent. Land ownership would be a public monopoly. Like natural resources, land would be safeguarded by an international environmental agency. A national organization would serve as an intermediary to coordinate such an agency’s activities. Thus, when someone buys a house, she owns the materials but rents the land through a rent to the state. A consumption tax would be introduced for socially and ecologically undesirable goods and services. This tax would make it possible to limit the use of these goods and services. For instance, specific taxes could target products such as oil, tobacco, and alcohol to adjust consumer behaviour (Cockshott and Cottrell, 1993, pp 70, 99, 211).
The labour theory of value is the foundation of Cockshott and Cottrell’s model. Hours worked are the basic unit used in the whole model. Hence, wages, prices, and plans are all expressed in work hours equivalent (Cockshott and Cottrell, 1993, p 41).
Wages
Wages are differentiated according to productivity and paid in labour tokens. According to the authors, associating productivity with wages makes it possible to recognize disparities in the effort invested in work and remunerate workers according to their effort, measured in output. The authors suggest three productivity levels: A, B, and C; A being highly productive, and C being less productive. This rating would not be related to the worker’s training or education level but strictly to their productivity. It would be a way of recognizing each worker’s contribution at their actual height. When people contribute more to society, they receive proportionally more, and vice versa. In the case of a labour shortage in a particular sector, Cockshott and Cottrell consider the possibility of increasing wages as an incentive. The central planning bureau pays the wages in labour tokens, not the projects. Those tokens can be used only by the person they were given to. When the tokens are used, they are destroyed, just like theatre tickets (Cockshott and Cottrell, 1993, p 34).
Laibman’s multilevel democratic iterative coordination
Centre
The centre is a decision-making space where democratic economic planning is coordinated at a large level. Enterprises constitute and report to that centre. ‘A visual metaphor might refer to “higher” and “lower” levels, so long as we avoid smuggling in invidious implications (thinking of “higher” as somehow “better” or “privileged”); an alternative might use an inner-outer conception’ (Laibman, 2015, p 309).
Enterprises
Local units of production (Laibman, 2015, p 309).
Iterative
‘Iterative’ refers to repeated, sequential flows of data and proposals between the center and the enterprises, and (where appropriate)
constraining orders from the center to the enterprises. Each enterprise prepares its plan and, in so doing, incorporates specific local knowledge: the peculiarities of its workforce, the physical environment, equipment, history, etc. The ‘upward’ (or ‘inward’) flow of these plans to the center involves aggregation; coordination for consistency of supplies and demands, inputs and outputs; establishing optimal solutions to problems involving choice (where relevant); and vetting the emerging aggregate plan against wider criteria. (Laibman, 2015, p 309)
Measure of enterprise activity
The measure of enterprise activity is a quantitative and qualitative measurement of how production units perform, ‘which is the object of planning, the means of evaluation, and the basis for forming enterprise income’ (Laibman, 2015, p 317). The quantitative aspect is based on a rate of return, and the qualitative one is based on a social indicator measure (see below).
Organization
Organization is a dimension of every postcapitalist model about how centralized or decentralized the decision-making process of this model is. ‘“Organization” traverses a spectrum running from central to decentral, with highly concentrated decision-making, at one end, and extreme dispersal of decision-making, at the other’ (Laibman, 2022, p 227).
Rate of return
In MDIC socialism, we can also envision a single rate of return, which will concentrate all of the quantitative aspects of activity measurement. […] The return can be related to a wider set of assets, including those held outside of the enterprise; meaningful social time horizons can be applied in the evaluation of investment, product design and development; and fully appropriate accounting prices […] can be used for purposes of evaluation. (Laibman, 2015, p 317)
Regulation
Regulation is a dimension of every postcapitalist model about the type of information on which decision-making is based. ‘“Regulation” refers to a different dimension of choice: between quantitative methods at one extreme; and qualitative, or verbal, or political, methods at the other’ (Laibman, 2022, pp 227–228).
The social indicator measure is the qualitative part of the measure of enterprise activity.
From a socialist standpoint, the enterprise’s work is measured not just by the products or services it provides, but by its achievements in a number of social areas. To illustrate, we might posit four areas: ecology, community, solidarity, and industry. ‘Ecology’ is a measure of the enterprise’s contribution toward sustainability, meeting social goals regarding carbon emissions, use of alternative fuels, waste disposal, etc. ‘Community’ refers to its connection to the surrounding community — its work with schools, its help in developing residential sites, providing recreational resources, and so forth. ‘Solidarity’ measures the enterprise’s efforts to address still-existing oppressive divisions within the workforce and the wider working community: racism, sexism, heterosexism and heteronormativity, and national or ethnic exclusion. This category could also include international solidarity work. Finally, ‘industry’ measures the enterprise’s industry-wide relations, perhaps its sharing of resources with less-developed enterprises and participation in industry- or sector-wide planning. […] Teams of evaluators, drawn from ‘stakeholders’ in each area, will develop ratings of the enterprise’s activity, each in the area of its special concern. These are then aggregated, and added to the measure based on the socialist rate of return. (Laibman, 2022, p 243)
Social reproduction prices
[A] set of benchmark prices organized by a core principle for defining and calculating a uniform rate of return, or profit, and a uniquely inclusive method of defining and measuring the relevant resource (‘capital’) stocks involved in each sector of production. These prices are a ‘classical’ price system, along the lines of the Sraffa or other modern linear production-price models, but oriented toward socialist rather than capitalist ownership, in consideration of both what constitutes the ‘income’ or ‘surplus’ accruing from production, and what stocks of social resources are the appropriate base on which to compare that surplus when computing a rate of return. (Laimban, 2015, p 311)
Notes
This chapter was first published in 2021 as a research note of the Research Center on Social Innovations and Transformations (CRITS), but it focused only the three first
The debate was about the technical possibility of planning a complex modern economy. The debate was between two camps. The first, composed of economists from the Austrian school (mainly Friedrich Hayek and Ludwig von Mises), rejected the possibility of rationally calculating economic activity through central planning. The second camp, composed of socialist economists, defended this possibility. See Devine and Adaman (1996) for further readings.
A Pareto optimum outcome is an economic state where it is not possible to improve the situation of one individual without degrading the situation of at least one other.
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