Models of a democratic planned economy

Participatory Economy (Hahnel/Albert)

A Participatory Economy (also known as Parecon) is a model for a post-capitalist economy rooted in libertarian socialism. It was first developed by Michael Albert and Robin Hahnel. In a Participatory Economy, productive resources are socially owned. Every workplace is self-managed by its workers, where every worker has one vote in their workers council, the highest decision-making body of the workplace. Worker councils are members of federations in their industry. In the workplace constitution, co-workers decide on how they wish to: a) allocate income between themselves, taking into account any differences in efforts or sacrifices, and b) combine tasks into jobs with a fair balance of empowering and fulfilling work so that everyone has the confidence and knowledge needed to participate in workplace self-governance.

Every household is a member of their neighbourhood consumer council for decisions around collective consumption where they live and where each member has one vote. Neighbourhood consumer councils are members of larger geographical regional federations where they send rotated and recallable delegates to make decisions around consumption which affect larger groups of the population.

Every year, these worker and neighbourhood councils, and their federations, take part in a decentralised annual planning procedure. Each worker and consumer council submits and refines their own self-activity proposals of what they intend to produce or consume for the year ahead. This happens in an iterative process where prices are updated over a series of rounds until a democratically accepted plan is reached to start the year. The plan is adjusted during the year. Longer-term participatory investment and development plans also take place, which more prominently feature the national industry and consumer federations.

For further reading:
[en] Albert/Hahnel (2002): In Defense of Participatory Economics
[en] Future Histories Podcast (2022): S02E21 - Robin Hahnel on Parecon (Part 1)

Cybersocialism (Cockshott/Cottrell)

Cybersocialism aims to enable democratic central planning through the extensive use of modern information technology. Cockshott/Cottrell argue that thanks to modern computing power and interconnected networks, highly centralized planning can be much more detailed, efficient and comprehensive compared to historical attempts, such as in the Soviet Union. In addition, elements such as labor time calculation, pseudo-markets for consumer goods and the implementation of direct democratic principles are introduced.

For further reading:
[en] Cockshott/Cottrell (1997): Value, Markets and Socialism

Amazon Socialism (Saros)

Saros' model, which has been called “Amazon Socialism”, is based on the Parecon model, but with some important changes and a greater use of modern information technology. Self-managed companies publish their products on a digital platform, the 'General Catalogue'. In the planning phase before production, consumers indicate what they want to consume and how much of it. Based on the declared demand, the self-managed enterprises are allocated “points” with which they purchase the necessary means of production, workers and resources. This cycle is repeated and adjusted. A committee of experts regulates the inclusion of ecological limits.

For further reading:
[en] Saros (2014): Information Technology and Socialist Construction, page 173-187
[en] Future Histories Podcast (2020): S01E31 - Daniel E Saros on Digital Socialism & the Abolition of Capital (Part 1)

Negotiated Coordination (Devine)

Devine's model originates from the reform socialist tradition and, in contrast to Soviet top-down planning, aims to achieve a balance between the central and decentral levels. At the central level, society weights different, general goals (consumption, investment, direction of development, etc.) in the form of general plans. Implementation is decentralized, so the enterprises act relatively autonomously. They decide how they produce, which primary products they buy and set the prices for their products - apart from some centrally set prices. In this way, horizontal market relations are maintained, the enterprises compete for sales markets and use their local, tacit knowledge. However, the unconscious domination of “market forces” is overcome, as the investment function is socialized and planned on several levels in a participatory manner. It is not success in competition that decides which enterprises grow and which shrink, but 'Negotiated Coordination Bodies' distribute investment funds. In these bodies, direct negotiations and coordination take place with the participation of representatives of all those affected by investment decisions (e.g. workers, consumers, suppliers, local communities, etc.). These committees assess the performance figures of the enterprises, their innovation plans, their ecological and social performance, etc. and decide on the allocation of funds.

For further reading:
[en] Pat Devine (2002): Participatory Planning Through Negotiated Coordination
[en] Future Histories Podacst (2022): S02E33 - Pat Devine on Negotiated Coordination

Multilevel Democratic Iterative Coordination (Laibman)

Laibman's approach is based on the reform socialist tradition. It emphasizes a balance between central and local decision-making and aims to give local enterprises enough autonomy to avoid the problems of top-down planning that occurred in the Soviet system. A key objective is the integration of local, tacit knowledge into the planning system. Using modern information technology, it provides for a “democratic, iterative multi-level coordination process”. This involves constant communication, adaptation and convergence between central and local planning.

At the central level, unlike Devine, Laibman's model relies on more technical means rather than direct negotiation, such as centralized pricing that takes externalities into account - unlike Devine, companies are not allowed to set their prices. There are also incentives for companies that reward realistic and ambitious planning. Enterprises formulate plans, pass them upwards and are coordinated with the plans of society as a whole - in contrast to Cockshott/Cottrell, it is not output targets that are set centrally, but above all prices. The enterprises sell their products and buy means of production again. The aim of an effective planning center and central pricing is to provide local enterprises with a stable macro framework for effective planning, which takes into account both macro plans and specific local conditions. The central planning authority in turn benefits from accurate information, as local enterprises have an interest in passing on reliable information to them and planning and producing efficiently. This should ensure a beneficial relationship between local enterprises and the central planning authority.

For further reading:
[en] David Laibman (2002): Democratic Coordination: Towards a Working Socialism For the New Century
[en] Future Histories Podcast (2022): S02E19 - David Laibman on Multilevel Democratic Iterative Coordination | Future Histories S02E19

Half-Earth Socialism (Vettese/Pendergrass)

Vettese/Pendergrass have developed a model that takes the climate crisis and ecological issues such as biodiversity as its starting point. Their model could be described as eco-socialist central cybernetic planning. At a central level - in their case a world parliament - basic targets in kind regarding emissions, energy mix, energy use and land use are set democratically with regard to societal needs and planetary boundaries. (Here, Vettese/Pendergrass also draw on Neurath's arguments against a universal unit of account, which aims to bring diverse, actually non-comparable options to 'one denominator', such as labor time or money, when making decisions.)

The central specifications result in energy and emission rations for individuals and regions, for example. Lower levels, i.e. regional parliaments and local enterprises, plan on the basis of these central, but broken down physical targets for regions and sectors. They have sufficient decision-making powers to ensure that local and domain-specific knowledge is also integrated. Vettese/Pendergrass also refer to modern information technology and the earth system modeling, which are useful for a 'cybernetic planned economy' in which there is implemented a great deal of local autonomy. Half Earth Socialism is the name of the model, as half of the Earth should be left to nature for truly sustainable species protection.

For further reading:
[en] Troy Vettese (2023): Ready Planner One
[en] Future Histories Podcast (2023): S02E18 - Troy Vettese and Drew Pendergrass

Commonism (Sutterlütti/Meretz)

Meretz and Sutterlütti developed this model on the basis of commons research. The abolition of all compulsory labor and distribution “according to need” is central to this model; only in this way, the authors claim, could the problems of ‘actually existing socialism’ be avoided. In terms of coordination, the approach is very decentralized, there is no central authority and the enterprises organize themselves autonomously. Various committees and locations work out solutions to conflicts, but no institution has the power to enforce them; instead, the enterprises and associations decide on solutions. Furthermore, there is no central calculation parameter, but a multitude of indicators (required work/products, labor hours, ecology, job satisfaction, etc.) allow the enterprises to operate coherently.

Labor time calculation (Group of International Communists)

The Group of International Communists (GIC) stands in the tradition of council communism and derives its model from classical Marxist texts. It emphasizes decentralization and the autonomy of enterprises against Leninist central planning. Instead of a monetary unit of account, they want to plan with labor time, whereby every hour is worth the same, regardless of whether it is spent by a cleaner or a manager. Products then cost their labor time, e.g. an apple 10 minutes or a machine 400 hours. This labor time calculation is intended to demystify the relationship between producer and product and make it transparent. The enterprises propose plans from below and sector councils or central councils compare and approve these plans. In addition, all enterprises disclose their planning in a “public accounting system” and can thus be monitored and evaluated.