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Democratic Economic Planning for the Real World

Adding realism to the Participatory Economy Model

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My background

Accounting

Degree in accounting from Uppsala University 1990
KPMG 1990 – 1993
Various enterprises 1993 – 1999

Sabbatical 1999 – 2000 Greece/Political turnaround
Anarchist Accounting: Accounting Principles for a Democratic Economy (2021)
The Participatory Economy Project: www.participatoryeconomy.org

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The Participatory Economy Model and the Shortcomings of Economic Models

The Participatory Economy Model is one of the most detailed and well-thought-out models of a post capitalist economy that has been presented.
Just like any other economic model, it rests on numerous abstractions and generalisations that removes it from reality
Many are sceptical towards alternative non-market economic visions and models

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Areas in need of elaboration

The handling and pricing, both during annual planning and when implementing a plan, of the enormous number of different goods and services that are produced and used in the economy. I will suggest one way to address this challenge.
The contextualisation of annual planning in a complex real-world economy. I will give a few examples of important coordination activities in the economy besides of annual planning and hint at how they can be organised.

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The handling of goods and services: Product Categorisation and Price formation�

In markets, prices and volumes for any good or service are conveniently negotiated, ad hoc, between individual buyers and sellers, regardless of the effects on third-parties
In contrast, an efficient annual planning procedure requires a form of comprehensive product catalogue at the start of annual planning listing all product categories to be included in the consumption and production proposals

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The handling of goods and services: Product Categorisation and Price formation

Coarse product categories

For practical reasons, only relatively few, generically defined and coarse main product categories should be processed and priced in the actual annual planning procedure
Coarse product categories should be based on the products’ general functionality and purpose

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The handling of goods and services: Product Categorisation and Price formation

Product subcategories

To achieve accurate pricing, more specified and detailed product subcategories should be defined if and when there are major differences in cost aggregation and production costs
If this is done, subcategory unit prices can be derived from coarse main product prices announced in annual planning, based on average production costs

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The handling of goods and services: Product Categorisation and Price formation

The annual planning product catalogue

The product categorisation criteria and the definitions of main and subcategories, their “coarseness”, will be affected by whether products are

consumer, intermediate or capital goods, or services
durables with long lifespans or products consumed immediately
requested individually or collectively by federations
standardised and mass-produced or custom-made/bespoke

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The handling of goods and services: Product Categorisation and Price formation

Example of categorisation challenges: Capital goods

Different kinds of capital goods:

Complex construction projects involving many different suppliers during a long time
Customised and bespoke installations, machines and equipment
Standardised mass-produced machines and equipment
Fixed assets, e.g. buildings/Moveable equipment
Different economic life spans: long standing buildings - short lived computers

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The contextualisation of annual planning

The formal annual planning procedures represent merely a small, albeit crucial and recurring, part of all the planning, coordination, and decision making necessary for the economy to function efficiently and democratically.

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The contextualisation of annual planning

The need for federation support units

The main decision-making actors – self-managed worker and consumer councils and their federations – will need help and support when discussing, preparing and implementing their plans and decisions since they will not have the time nor the expertise to perform all necessary information gathering tasks and evaluations

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The contextualisation of annual planning

Examples of support unit tasks

Research and Development (R&D)

Production technology and product development
Standardisation of products, spare parts etc.
Categorisation and design of goods and services*

Accounting, Audit & administration units

Gathering, sorting and distributing information (accounting rules etc.)
Support and facilitate individual and collective consumption planning*
Monitoring implementations

Production planning and coordination units

Coordination of complex production and projects (Construction)
Implementations of investment decisions

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The contextualisation of annual planning

Examples of support unit tasks: Consumption planning

The individual consumption planning process should be facilitated as much as possible

Preparation of first draft consumption proposal based on historic consumption patterns
Different consumer profiles based on age, location etc.
Other tools for facilitating the preparation of consumption proposals, think Amazon

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The contextualisation of annual planning

Federation support units introduce a real risk of a new coordinator class. Therefore,

Collective support units must be set up, controlled and funded by federations
No main decision-making power
Revocable job assignments
Time limits on job assignments

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The contextualisation of annual planning

Collective coordination tasks outside annual planning

1. Logistics and distribution

An annual plan does not include a detailed distribution plan
Collectively organised and planned distribution networks
Different network systems for different kinds of products – consumer, intermediate and capital goods
Collective funding through agreed mark-ups on products

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The contextualisation of annual planning

Collective coordination tasks outside annual planning

2. Mediation agencies for labour and housing

An annual plan does not specify labour allocation
Labour Exchange agencies for the intermediation of labour
An annual plan does not specify the exact allocation of housing units
Housing Exchange agencies for the intermediation of housing

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The contextualisation of annual planning

Collective coordination tasks outside annual planning

3. Post plan adjustments during the year

As soon as the year starts, circumstances will begin to change
Changes in consumer preferences may cancel out at the aggregate level and only require changes in distribution plans
Many changes in supply, e.g., bad harvests, are more difficult to handle
Negotiated plan updates (Federations)

Production adjustments with or without price changes
Rationing consumption
New comprehensive but simplified planning procedure

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The contextualisation of annual planning

Collective coordination tasks outside annual planning

4. Start-ups and shut-downs of worker councils

Start-up programmes:

Industry federations may offer multi year start-up programmes, including assistance and training, that aspiring and new worker councils can join.

Shut-down programmes:

There should also be planned shutdown programmes with defined steps, minimising negative consequences for communities, especially for worker councils with a large memberships.

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Conclusion

The Participatory Economy Model is one of the most detailed and well-thought-out models of a post capitalist economy that has been presented.
Just like any other economic model, it rests on abstractions and exhibits gaps that need to be filled, especially when attention is directed to the implementation of the model in a real-world economy
Presentations of the model should be elaborated to be more realistic and convincing, at least when presented to non-economists