I don’t know how I didn’t see this forum before. I recently created a forum to discuss post plan adjustments but since this one is already here we can just continue the conversation here. Below is what I posted in the other forum.
Michael, my post is largely in response to what you have outlined in your original message in this forum. It’s also in response to some things Robin has said in his books.
This is my take on answering the questions you raise:
I have noticed that some people propose that adjustments to the annual participatory plan to balance supply and demand will in some ways have to be negotiated between councils. For example, in Democratic Economic Planning Robin provides an example of adjustments in the shoe industry and says these negotiations would have to be “between the shoe industry federation and the national consumer federation.”
In addition, I have noticed some people think that prices should not be adjusted much throughout the year, and that price adjustments should be a last resort.
I am not sure why negotiations would need to take place or why price adjustments should be a last resort. I think price adjustments would have to change a ton throughout the year, and maybe even be updated every week or so. This is because the annual plan gives extremely rough estimates of true costs and benefits of goods and services. If we want parecon to come anywhere close to making these accurate it seems prices would have to change based on supply and demand frequently.
The thing is, if this is true, then requiring all price adjustments to be negotiated seems like it could be approaching central planning. Especially if all negotiations on the consumption side have to happen via the national consumer federation.
However, I don’t think all of this is necessary. What if adjustments happened like this:
Prices throughout the year adjust based on supply and demand frequently, say every week. If a resource from the commons that a workplace has a user permit for is in excess supply (because less people end up buying the workplace’s products that use the commons resource than was predicted by the annual plan), the solution could be: after the resource, say a plot of land used to produce lumber for a workplace that produces chairs, has sat idle long enough, say one month to keep things simple, the workplace must put it back into the commons so others can use it if needed.
Now other workplaces that need the lumber, say a workplace that produces wooden cabinets, could get a user permit for the land. This is assuming they are experiencing more demand for their cabinets than was predicted during the annual plan.
The following question arises: would the workplace that produces cabinets need to “pay” for the user permit for the plot of land in the sense that their is a price for the user permit that gets added to their social cost? I think the answer is yes, so how do you arrive at this price?
I think that instead of having negotiations or having ad hoc instances of planning where all councils that are affected have to submit proposals (which is something I have heard suggested before), you could have the following system to achieve prices that accurately reflect the social cost of the land:
When the chair maker puts the land back into the commons a “bidding period” takes place. In this period that lasts say two weeks for all resources to keep things simple, all workplaces that want access to the land submit bids to get it. To get a clearer picture of how this could work: resources that are available in the commons could be listed on a site like Ebay. Producers would place bids and whoever wins at the end of the bidding period would get access to the resource for the final bid price. (And note that they would get the resource until the end of the year because at that time all resources are available to all workplaces in annual planning). Now, the winning workplace does not pay for the resource with their income; the price just gets added to their social cost.
Another question arises: Does the chair maker get back any of the social cost (SC) that they paid to get access to the plot of land at the beginning of the year (in other words, does their SC decrease since they gave up the resource)? Yes, it could work in the following way: say the cost, in terms of SC, was 100 at the beginning of the year to get access to the land, and the chair-maker put the resource back in the commons at the end of March. There are twelve months in a year, and March is the third month, so the chair maker would have a social cost for the plot of land for the year of 3/12 X 100 = 25. In other words, they would only “pay” the social cost of the resource for the time period in which they had access to it. (Note that I am simplifying, the society would likely want to make the calculations more specific by performing them in terms of days, say 90 days/365 X 100, rather than in terms of months).
I have been explaining how price adjustments could be made when their is excess supply, but by doing so I inadvertently explained what would happen in the case of excess demand, which is the case for the cabinet maker. The cabinet maker would place bids for the plot of land hoping to get it as to increase production. And if they cannot get access to any land to increase production that is okay. This is because if there is not lumber producing land available to them it means that other workplaces are using this type of land for socially beneficial purposes – because if these other workplaces weren’t using the land for social beneficial purposes (i.e., having their products that use the wood actually sell), then they would have been required to put the land back into the commons after a month (just like the chair maker had to). Robin suggests this in Democratic Economic Planning when he says, “The case of excess demand is more complicated. To raise shoe production, more resources will have to be drawn away from industries experiencing excess supply.” This implies that if workplaces are not experiencing excess supply to give to other workplaces, then the former must be using the resources in a socially beneficial way.
Another issue I want to address is the idea I have heard from people suggesting that adjusting the annual plan might be unfair to consumers in some cases. For example, if I put in my consumption proposal that I wanted 8 shirts throughout the year at 10 credits apiece, and then demand for the shirts goes far beyond what was in the plan making the shirts 20 credits, I am now sort of screwed over. Afterall, it isn’t my fault that demand for shirts went up so much.
I don’t think this is a serious issue. To me, the annual plan is something everyone does as their social responsibility to get the year started off on the right foot. It is not a promise that they will get all the goods and services they requested at the prices that the plan settled on. If they wanted it to be a promise then they would need to support making all consumers buy exactly what they put into their consumption proposals with no variation.
So, since the economy would be self-managed, you allow them to make this decision in a fair way. If they decide they don’t want this, and instead decide they want people to have the freedom to change their minds about consumption preferences throughout the year, then they have just agreed to the condition that they may not get everything they wanted in the consumption proposal at the prices settled on during the plan. In other words, the society has agreed, in a self-managed way, that they prefer efficiency over certainty.
They are therefore responsible for that choice and it is not unfair if demand goes up and they have to pay more than they wanted for something they had in their proposal, even though their demand (e.g., the amount of shirts they were going to buy) did not increase.
I want to also just note that it seems to me that adjusting the annual plan is just as important, if not more important, than the plan itself. If adjustments to prices and quantities of various things are occurring a lot, as it seems to me they would have to be, then adjusting plays a huge role in parecon.
Because of this, I think that it is important when explaining the system that we explain how adjustments would be made. The criticism I have noticed that some leftists have of parecon is that they don’t believe doing one plan at the beginning of the year could be detailed enough. This is based on a misunderstanding of parecon though as adjustments would be made throughout the year to refine the plan.
Explaining these adjustments to these leftists could get them to support it I think. Additionally, it is a good way to explain it to leftists who are sympathetic to some form of market socialism as the adjustment procedure is more “market-y” than annual planning.
In fact, I think we should develop a way to explain parecon by explaining it first in terms of adjustments. We would explain the system in terms of how it would be functioning throughout the year, and then after doing that add on that there would also be a annual participatory planning procedure that would help the year get started on the right foot. Having two different types of explanations would allow the message to resonate with a more diverse group of people I think.
