A brief sketch of three models of democratic economic planning

#1

Here is an interesting research paper from Canada which I stumbled upon, a summary of participatory economy included!

A brief sketch of three models of democratic economic planning

“Between 1988 and 1993 three models of democratic economic planning were designed by Pat Devine (joined later by Fikret Adaman), Michael Albert & Robin Hahnel and Paul Cockshott & Allin Cottrell. These three models are called negotiated coordination, participatory economics and computerized central planning. They are still at the center of the discussion about what a postcapitalist economy should look like. The goal of this research note is to give a short but clear presentation of their main institution and their functioning. A diagram of each model’s annual planning and a detailed glossary divided by model accompanies the presentation to make the argument clearer. We abstained to relay or formulate any criticism of the models and only tried to present them as clearly as possible. To our knowledge, this is the first publication presenting the three models’ side by side.”

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#2

On a closer read this seems to unfortunately suffer from various problems, especially in how it basically only refers to very old writing’s about participatory economy that suffer from many problems in presenting the model in a needlessly complex and also rigid way.

#3

Page 10:

“[Hahnel] 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 in the indicative prices of goods in the form of a Pigouvian tax”

I thought the point is to not have Pigouvian tax especially when you add the CAPs. Why do they say this? Could someone clarify?

#4

To clarify: A Pigovian tax on pollutants is a tax equal to the dollar magnitude of the damage caused by the last unit of the pollutant emitted. The problem in market economies is that there is no reliable way to estimate how high or low this Pigovian tax should be. It is possible to do studies to try to estimate the damage caused by pollutants – indeed a majority of people who are professional environmental economists spend their time trying to do just that. But all of the methods for doing this are notoriously unreliable and subject to challenge.

So… the idea was to incorporate what economists call a “mechanism” within the annual participatory planning procedure that would generate reasonably accurate estimates of the damages caused by different pollutants. When explaining what our “Pollution Demand Revealing Mechanism” PDRM accomplishes to an economist, the easy way to explain it is that ONCE THIS PDRM IS INCORPORATED INTO THE ANNUAL PARTICIPATORY PLANNING MECHANISM, THE ANNUAL PLANNING PROCEDURE WILL GENERATE REASONABLY ACCURATE ESTIMATES OF HOW HIGH, OR LOW, THE PIGOVIAN TAX SHOULD BE… something that market systems are ill-suited to do.

A crucial part of creating the PDRM is to create “Communities of Affected Parties,” or CAPs, which are comprised of all those who are physically damaged by a particular pollutant. When CAPs participate along with worker and consumer councils during annual participatory planning by announcing how much of the pollutant that adversely affects them they are willing to allow to be emitted, we have proved there are three important results: (1) the efficient amount of pollutants will be emitted… neither more nor less. (2) Worker councils emitting pollutants will be charged for the damage those pollutants inflict on victims, and therefore will take that “cost” into account when deciding what and how to produce. And (3) those damaged by the emissions, i.e. the members of the CAPs, will be compensated for the damages they incur.

If I am talking with an economist the easiest way for me to explain what the PDRM in the annual participatory planning procedure DOES is that it generates reasonably accurate estimates of what the Pigovian taxes should be – i.e. it solves the previously unsolved problem with Pigovian taxes, how high or low they should be, by replacing unreliable studies. And as far as I know there is no other economic system… not market capitalism, not market socialism, not centrally planned socialism, not community based economics… which can claim to accomplish this increasingly important task.

There are two publications which explain all this in detail, and “prove” under what assumptions the PDRM will accomplish what I just explained:

Pages 138 - 149 in chapter 7 of Democratic Economic Planning (Routledge, 2021).

“Wanted: A Pollution Damage Revealing Mechanism,” *Review of Radical Political Economics (49, 2), 2017: 233-246.

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#5

Thank you for the clarification. I get it now. I’ll re-read chapter 7 in DEP at some point too. Thanks.