How is income distributed?

Hello, everyone. I recently discovered Parecon, so sorry if these questions have already been answered, but I couldn’t find the answers anywhere.

The FAQ states the following:

An important difference to a capitalist economy is that income is distributed fairly in a participatory economy and capital is socially owned. Therefore differences in people’s incomes across society would be small compared to today. The only way to receive income is from work, from needs based allowances or for compensation from pollution.

How exactly is income distributed fairly? Who decides and how is it decided what the income of an individual will be?

Hi cyew. Did you read Hanhel’s Democratic Economic Planning? That book states it.

Hi there. Have you looked at ‘The model’ and ‘FAQs’ pages of the website? There should be answers to your questions there. If not, let me know. If you are looking to get a good understanding of the model, I’d recommend reading the book 'A Participatory Economy’ which is the most up to date one: A Participatory Economy - Participatory Economy

Hi, folks. Thanks for the book recommendations, I might take a look at them, I’m just trying to understand the basics before spending more time on the specifics.

Ok, so I found the answer I was looking for on he FAQs:

Self-managed worker councils have autonomy over how they go about distributing income between themselves. The only restriction placed on them is that the income each workers’ council receives is capped.

So it seems each workplace would decide internally who gets paid what. Sounds good. But the question is how much they have to distribute. The options given on that same FAQ page are:

This could be done by either giving the same cap to all workplaces

It doesn’t seem fair that a workplace that works harder and because of that has a SB/SC of X has the same cap as a workplace that works less and because of that has 0.3X.

If that were the case, personally, I would just join the workplace that produces less, after all, I will work less and my income will be similar.

Am I missing something here?

or by basing it on the SB/SC ratio of the workplace.

This makes a lot more sense to me. By producing more, workers can increase the SB/SC ratio and have more income available to distribute.

If a good is scarcer and has a high demand, its price will go up. A shirt that costs 10 has a higher Social Benefit than a shirt that costs 5, after all, if it costs more, it means society wants more of that good. Right?

So the workplace that produces the first shirt will have more income available to distribute, since it has a higher SB/SC ratio than the workplace that produces the second shirt.

If income is derived from SB/SC ratio, the incentive is for coops to compete amongst themselves, and in order to do that, they would compete for scarcer, specialized workers, by giving them higher wages.

Isn’t this an indirect way of transferring currency? It seems to me that buyers are essentially transferring their income to the producers.

My impression so far is that this is very similar to market socialism but more rigid and with extra steps. Market socialism here meaning a market economy formed of democratic coops, and taxes to fund welfare programs and punish undesired effects like pollution. I’ve seen the comparison table, but it only compares Parecon to Capitalism, why not compare it to market socialism?

One of the biggest differences: there is no participatory planning in market socialism, that is, cooperation is limited to the workplace, there is no systematic cooperation between enterprises, and consumers cannot directly express their will, which means that market socialism still tends to be disorderly and excessively competitive, just as we have experienced in the capitalist market economy