Anarchist Planning For Twenty-First Century Economies: A Proposal by Robin Hahnel

From ZNet

For the Conference Celebrating the One-Hundredth Anniversary of the Founding of the Centro Nacional de Trabajadores (CNT) in Barcelona, Spain, April 10, 2010.

Introduction

I cannot think of any conference, anywhere in the world, I would be more honoured and excited to attend than this conference celebrating the 100th anniversary of the founding of the CNT, the greatest worker organization the world has ever seen, here in Barcelona, the Mecca all libertarian socialists should visit before we die.

Mostly I am here to listen and learn more about the history of the CNT. But I have been asked to share some thoughts on a subject I have spent more time thinking about over the past forty years than any other: How can workers and consumers best go about planning their own, interrelated economic activities themselves?

Like many of you, I’m sure, I am often asked why I believe this is possible. In light of the resilience of global capitalism, in light of the failure of all twentieth century economies that were called “socialist” to implement anything remotely resembling worker self-management, why do I continue to believe there is an alternative to the market system and elite planning? Libertarian socialists answer this question in different ways: (1) Some point out that the impulse for self-management has manifested itself in every revolutionary upsurge and invariably has had to be repressed through violence. While true, I hesitate to rest my case on this argument because even if there is invariably an impulse for self-management when authoritarian economic regimes crumble this does not prove that the impulse is sustainable even absent repression – which, in effect, is our interlocutor’s point. Besides, debates over the strength of the impulse to self-manage and the force of the repression in particular historical junctures quickly reduces to debates over the credentials of different historians. (2) Others emphasize that the capacity and desire for economic self-management is one component of a more general human striving for freedom for which there is ample evidence throughout human history. As someone who often leads with this argument, I follow up by pointing out that the contrary view -- that we humans are so hopelessly socially challenged that we are incapable of consciously coordinating our own economic affairs efficiently and fairly – would be a convenient myth for elites who seek to rule us to propagate. (3) Finally, many who move beyond their gut feelings about human potentials and become more familiar with the actual history of libertarian socialism argue that it is possible because it once happened. It happened in Spain when powerful libertarian socialist organizations, the CNT being the most important, gave birth to a worker-managed economy that performed quite well under the circumstances from 1936 to 1939 when it was militarily crushed by the onslaught of European Fascism.

From ZNet

For the Conference Celebrating the One-Hundredth Anniversary of the Founding of the Centro Nacional de Trabajadores (CNT) in Barcelona, Spain, April 10, 2010.

[A Spanish version of this talk is beneath this one.]

Introduction

I cannot think of any conference, anywhere in the world, I would be more honoured and excited to attend than this conference celebrating the 100th anniversary of the founding of the CNT, the greatest worker organization the world has ever seen, here in Barcelona, the Mecca all libertarian socialists should visit before we die.

Mostly I am here to listen and learn more about the history of the CNT. But I have been asked to share some thoughts on a subject I have spent more time thinking about over the past forty years than any other: How can workers and consumers best go about planning their own, interrelated economic activities themselves?

Like many of you, I’m sure, I am often asked why I believe this is possible. In light of the resilience of global capitalism, in light of the failure of all twentieth century economies that were called “socialist” to implement anything remotely resembling worker self-management, why do I continue to believe there is an alternative to the market system and elite planning? Libertarian socialists answer this question in different ways: (1) Some point out that the impulse for self-management has manifested itself in every revolutionary upsurge and invariably has had to be repressed through violence. While true, I hesitate to rest my case on this argument because even if there is invariably an impulse for self-management when authoritarian economic regimes crumble this does not prove that the impulse is sustainable even absent repression – which, in effect, is our interlocutor’s point. Besides, debates over the strength of the impulse to self-manage and the force of the repression in particular historical junctures quickly reduces to debates over the credentials of different historians. (2) Others emphasize that the capacity and desire for economic self-management is one component of a more general human striving for freedom for which there is ample evidence throughout human history. As someone who often leads with this argument, I follow up by pointing out that the contrary view -- that we humans are so hopelessly socially challenged that we are incapable of consciously coordinating our own economic affairs efficiently and fairly – would be a convenient myth for elites who seek to rule us to propagate. (3) Finally, many who move beyond their gut feelings about human potentials and become more familiar with the actual history of libertarian socialism argue that it is possible because it once happened. It happened in Spain when powerful libertarian socialist organizations, the CNT being the most important, gave birth to a worker-managed economy that performed quite well under the circumstances from 1936 to 1939 when it was militarily crushed by the onslaught of European Fascism.

From ZNet

For the Conference Celebrating the One-Hundredth Anniversary of the Founding of the Centro Nacional de Trabajadores (CNT) in Barcelona, Spain, April 10, 2010.

[A Spanish version of this talk is beneath this one.]

Introduction

I cannot think of any conference, anywhere in the world, I would be more honoured and excited to attend than this conference celebrating the 100th anniversary of the founding of the CNT, the greatest worker organization the world has ever seen, here in Barcelona, the Mecca all libertarian socialists should visit before we die.

Mostly I am here to listen and learn more about the history of the CNT. But I have been asked to share some thoughts on a subject I have spent more time thinking about over the past forty years than any other: How can workers and consumers best go about planning their own, interrelated economic activities themselves?

Like many of you, I’m sure, I am often asked why I believe this is possible. In light of the resilience of global capitalism, in light of the failure of all twentieth century economies that were called “socialist” to implement anything remotely resembling worker self-management, why do I continue to believe there is an alternative to the market system and elite planning? Libertarian socialists answer this question in different ways: (1) Some point out that the impulse for self-management has manifested itself in every revolutionary upsurge and invariably has had to be repressed through violence. While true, I hesitate to rest my case on this argument because even if there is invariably an impulse for self-management when authoritarian economic regimes crumble this does not prove that the impulse is sustainable even absent repression – which, in effect, is our interlocutor’s point. Besides, debates over the strength of the impulse to self-manage and the force of the repression in particular historical junctures quickly reduces to debates over the credentials of different historians. (2) Others emphasize that the capacity and desire for economic self-management is one component of a more general human striving for freedom for which there is ample evidence throughout human history. As someone who often leads with this argument, I follow up by pointing out that the contrary view -- that we humans are so hopelessly socially challenged that we are incapable of consciously coordinating our own economic affairs efficiently and fairly – would be a convenient myth for elites who seek to rule us to propagate. (3) Finally, many who move beyond their gut feelings about human potentials and become more familiar with the actual history of libertarian socialism argue that it is possible because it once happened. It happened in Spain when powerful libertarian socialist organizations, the CNT being the most important, gave birth to a worker-managed economy that performed quite well under the circumstances from 1936 to 1939 when it was militarily crushed by the onslaught of European Fascism.

This last argument holds great weight in discussions with those who are less sanguine about human potentials and reluctant to believe anything is possible unless it has actually happened before. Since many who ask me the question fall into this category, over the years I have gathered a great deal of information about the Spanish Revolution (for an amateur) so I can deploy this argument with good effect. But here, among friends with far more historical knowledge than I, might I dare express some slight misgivings.

The early years of any revolution are both special and difficult. Optimism and enthusiasm are unusually high, by definition. Palpable dangers and difficulties, which elicit above average outpourings of solidarity even in non-revolutionary situations like the recent tragedy in Haiti, are usually present. And I think one can make a compelling case that all these factors were particularly strong in Spain during those brief three years. Would the economy have continued to function as well as it did from 1936-1939 had Franco been defeated? During the war years were there fairly simple and obvious economic objectives? Supply the troops with weapons, ammunition, and clothing. Supply communes with the intermediate inputs needed to grow crops. Get food to the neighborhoods in cities. In other words, with simple priorities, coordination among different producers and consumers is easier to sort out and in times of war sacrifices are more readily accepted. But would the procedures used to plan the relations among the different factories, peasant communes, and urban neighborhoods during the war years have continued to serve well once goals and priorities became more complex and less obvious, and after revolutionary fervor died down? In other words, is it really true that all the essential components of how to plan a self-managed economy are to be found in the practices of these historic Revolutionary comrades? Or were there important missing components that libertarian socialists would do well to continue to explore?

Of course there would have been more learning from doing had the Spanish Revolution not been suppressed. And perhaps there are better ways to formulate my question: Is there anything we have learned since 1939 about running an economy that our revolutionary comrades in the CNT would embrace as an aid to solving problems they had not yet solved in a sustainable way? Or, how would our CNT comrades go about planning the Spanish economy today if they had the chance?

In my opinion it is far from obvious how comprehensive, democratic, economic planning should be organized. As a matter of fact, I think many today who champion democratic planning by workers and consumers are blissfully unaware that many of their ideas about how to go about it are flawed. I think this intellectual failing stems from two blind spots in traditional Left thinking about democratic planning. The traditional socialist vision of democratic planning remains blind to the need to provide workers in enterprises and consumers in neighborhoods with a considerable degree of autonomy over their own behaviour. On the other hand, anarchist visions are blind to the need for carefully designed procedures to help producers and consumers, who should be autonomous in some regards but not in others, plan activities that are highly interrelated and do so in ways that are both equitable and efficient. Unfortunately as a professional economist I have to say I find much of the debate on the Left about how to actually organize a worker managed economy.... how shall I put this without being rude? ... to be naive and ill-informed, strong on stubborn faith but weak on concrete solutions to real problems.

The Challenge

The challenge is how to empower worker councils and consumer councils while protecting the interests of others in the economy who are affected by what these councils do. The challenge is how to give groups of workers user rights over parts of society’s productive resources -- which include what economists call people’s “human capital” -- without allowing them to benefit unfairly from productive resources that belong to and should benefit everyone.

What socialists have long understood is that what any one group in an economy does will inevitably affect many others. The conclusion many socialists have drawn from this fact is that democratic planning must allow all to have a voice and say regarding all economic decisions. This, of course, is correct as far as it goes. But different decisions do not usually affect everyone to the same extent. One might call this the fundamental dilemma faced by those of us who want to organize a system of economic decision making that gives people decision making power they are affected by different economic decisions: Most economic decisions do affect many people, but to differing degrees. The challenge is how to give workers and consumers in their own councils a degree of autonomy over what they do that is appropriate.

Encouraging popular participation in economic decision making is hard. After all, those who actually do the work have been discouraged from participating in economic decision making ever since humans “ascended” from hunting and gathering societies to class systems with ruling elites. And for the past 300 years workers have been taught they are incompetent to make important economic decisions, and to thank their lucky stars they have capitalist employers and managers to do their thinking for them. Developing a participatory culture that encourages those who have always been a silenced majority inside their workplaces to actively participate in deciding what they will produce and how they will produce it is difficult enough, even though these decisions have immediate and palpable impacts on workers’ daily lives. Encouraging popular participation in coordinating the interrelated activities of millions of different workplaces and neighborhoods, and in investment and long-run strategic planning, where the relevance to one’s personal life is more attenuated and less obvious, is even more difficult. Yet this is the historical legacy of capitalist alienation that socialism must overcome. Moreover, the price of failure is monstrous. Biologists teach us that nature abhors an ecological vacuum, by which they mean that in complex ecological systems any empty niche will quickly be filled by some organism or another. If there is a single lesson we should learn from human history it is that society abhors a power vacuum. If people do not control their own lives then someone else will. If there is a single lesson we should learn from the history of twentieth century socialism it is that if workers and consumers do not run the economy themselves, then some economic elite will do it for them.

A Solution: Participatory Planning

How can we give workers and consumers in their councils the autonomy necessary to stimulate them to become and remain active participants in economic decision making while ensuring that worker and consumer councils do not make choices that are socially irresponsible? How is it possible to grant small groups of workers and consumers enough autonomy to encourage them to put time and effort into participating without disenfranchising others who are affected by the decisions they make, even though it be to a lesser extent? How can we grant groups of workers the right to use some of society’s productive resources as they would like without allowing them to benefit unfairly from doing so? How can we convince ordinary workers and consumers who have been discouraged in every conceivable way from trying to participate in economic decision making that things will now be different, and participation will finally be worthwhile? The participatory planning procedure that is part of the model known as a "participatory economy" was designed to solve these problems.

The participants in the participatory planning procedure are worker councils and federations, consumer councils and federations, and an Iteration Facilitation Board (IFB). Conceptually, the planning procedure is quite simple: (1) The IFB announces current estimates of the opportunity costs of using all resources, categories of labor, and capital stocks as well as current estimates of the social costs of producing all goods and services. (2) Consumer councils and federations respond with consumption proposals. Worker councils and federations respond with production proposals listing the outputs they propose to make and the inputs they need to make them. (3) The IFB calculates the excess demand or supply for each final good and service, capital good, natural resource, and category of labor, and adjusts the estimate of the opportunity cost or social cost for the good up or down in proportion to the degree of excess demand or supply for the good. (4) Using the new estimates of opportunity costs and social costs, consumer and worker councils and federations revise and resubmit their proposals. Individual worker and consumer councils must continue to revise their proposals until they submit a proposal that other councils vote to accept. The planning process continues until there are no longer excess demands for any goods, any categories of labor, any primary inputs, or any capital stocks -- in other words, until a feasible plan is reached.

Members of worker councils will have to meet to discuss and decide what they want to propose to produce and what inputs they want to request. Members of neighborhood consumption councils will have to meet to discuss what neighborhood public goods they want to ask for. And representatives from councils that comprise a federation of consumer councils will have to meet to discuss what public goods larger groups of consumers want to request. However, these are all meetings within worker and consumer councils and within federations, not meetings between councils and federations. Moreover, these meetings are only concerned with what the councils or federations want to do themselves. The discussion is not about what people think the overall, comprehensive plan for the economy should be. Instead, discussions are about what we might call “self-activity” proposals.

When worker councils make proposals they are asking permission to use particular parts of the productive resources that belong to everyone. In effect their proposals say: “If the rest of you -- with whom we are engaged in a cooperative division of labor -- agree to allow us to use productive resources belonging to all of us as inputs, then we promise to deliver the following goods and services as outputs for others to use.” When consumer councils make proposals they are asking permission to consume goods and services whose production entails social costs. In effect their proposals say: “We believe the effort ratings we received from our co-workers together with allowances members of households have been granted indicate that we deserve the right to consume goods and services whose production entails an equivalent level of social costs.”

The planning procedure is designed to make it clear when a worker council production proposal is inefficient and when a neighborhood consumption council proposal is unfair, and allows other worker and consumer councils to deny approval for proposals when they seem to be inefficient or unfair. But initial self-activity proposals and all revisions of proposals are entirely up to each worker and consumer council itself. In other words, if a worker council production proposal or neighborhood council consumption proposal is disapproved the council that made the proposal revises its own proposal for submission in the next round of the planning procedure. This aspect of the participatory planning procedure distinguishes it from all other planning models and is crucial if workers and consumers are going to enjoy meaningful self-management.

While verifying that a planning procedure will promote efficient use of productive resources is of great concern to economists – and we have demonstrated that our procedure will do this under less restrictive assumptions than those necessary to prove that a market economy will achieve a socially efficient outcome -- socialists should be more concerned with whether or not a planning procedure promotes popular participation in economic decision making. It is my conviction that this is where participatory annual planning most outshines other versions of democratic planning.

Of course a participatory economy cannot give every person decision making authority exactly to the degree they are affected in every decision that is made. Instead the idea is to devise procedures that approximate this goal. How does participatory planning do this? (1) Every worker has one vote in his or her worker council. (2) In larger worker councils sub-units govern their own internal affairs via one worker one vote. (3) Consumers are free to consume whatever kinds of goods and services they prefer as long as their effort rating is sufficient to cover the overall cost to society of producing the goods and services they request. (4) Consumers each have one vote in his or her neighborhood consumption council regarding the level and composition of neighborhood public good consumption. (5) Federations responsible for different levels of collective consumption and limiting pollution levels are also governed by democratic decision making procedures where each council in the federation sends representatives to the federation in proportion to the size of its membership. (6) But most importantly, worker and consumer councils and federations not only propose what they, themselves, will do in the initial round of the participatory planning procedure, they alone make all revisions regarding their own activity during subsequent rounds.

Who decides if proposals from worker and consumer councils and federations are acceptable? In central planning this decision ultimately resides with the central planning authority. The justification given for this is that only a central planning authority can gather the necessary information and wield sufficient computational power to determine if proposals would use scarce productive resources efficiently and distribute economic burdens and benefits fairly. In other words, it is presumed that a central planning authority, and only a central authority, can protect the social interest. But leaving aside the more general question of whether or not any authority can be trusted to protect any interest other than its own, it turns out on careful examination that both parts of the traditional rationale for giving central planners power to approve or disapprove work and consumption proposals are false. A central planning authority cannot gather the necessary information to make competent decisions, while it is possible to provide ordinary workers and consumers in their councils with the necessary information for them to do so by using the participatory planning procedure.

Because a great deal of information about what different worker councils can and cannot do resides with those who work there, and because under central planning there are perverse incentives that lead workplaces to mislead central planners about their true capabilities, it turns out there is no way for a central planning authority to acquire accurate information needed to make informed judgments. This problem, long familiar to anarchists, has now become known as the “tacit knowledge” critique of central planning and is widely acknowledged. What is not generally understood is that a different kind of planning procedure can eliminate these and other perverse incentives and thereby provide everyone with accurate information necessary to make informed judgments.

In the participatory planning procedure outlined above worker councils would only harm themselves by failing to make proposals that accurately reveal their true capabilities since underestimating their capabilities lowers the likelihood of being allocated the productive resources they want. The participatory planning procedure also eliminates perverse incentives regarding pollution and public goods that are endemic to market systems. Under participatory planning it is in the best interests of pollution victims to reveal how much they are truly affected by pollution, and these negative effects are fully accounted for in the social costs of producing different goods and services. Neither is true in market systems. In the participatory planning procedure requests for different levels of public goods are treated simultaneously and in the same way as requests for private goods and services, whereas markets create a bias in favor of individual consumption requests at the expense of collective consumption.

By eliminating perverse incentives endemic to central planning and market systems the participatory planning procedure is able to generate estimates of the opportunity costs of scarce productive resources, the social costs of harmful emissions, and the social costs of producing goods and services that are as accurate as can be hoped for. But this means participatory planning generates the necessary information to make informed judgments about work and consumption proposals. Everyone has the information necessary to calculate the social benefit to social cost ratios of every worker council proposal, and everyone has the information necessary to compare the social cost of every consumer council to the average effort rating of its members.

Allowing councils to vote “yea” or “nay” on the proposals of other councils does not mean they must engage in a time consuming evaluation of those proposals. All they have to do is look at the social benefit to cost ratio for proposals from worker councils. When the ratio of social benefits to social costs of a worker council proposal is below average they are probably using resources inefficiently or not working as hard as others. When the social cost per member of a consumer council proposal is higher than the average effort rating of its members they are probably being too greedy and unfair to others. But otherwise, everyone else is better off approving a proposal from a worker council, and otherwise a proposal from a consumer council is perfectly fair. Of course there will be exceptions to these rules and it is important to design appeals procedures to handle unusual cases where “the numbers lie.” But most proposals can be voted up or down very quickly because the participatory planning procedure makes it possible for each council to judge whether or not the proposals of other councils are socially responsible without wasting their time and creates incentives to approve socially responsible proposals and only disapprove proposals that are inefficient or unfair.

In sum, while it is impossible for a central authority to gather accurate information about the true capabilities of different workplaces necessary to protect the public interest, the participatory planning process provides each and every council with the information and incentives needed to make informed judgments about the proposals of others quickly.

Does all this guarantee that if a decision affects me 1.24 times as much as it affects someone else, I will have exactly 1.24 more say than they do? Of course not. But I will get to decide what kinds of private goods I consume, my neighbors and I will get to decide what local public goods we consume, and all who use larger level public goods will get to decide what those will be, as long as our work efforts and sacrifices warrant the social expense of providing us with what we want. And my co-workers and I will get to decide what we produce and how we produce it -- as long as we propose to use society’s scarce productive resources efficiently.

Dangers to Avoid in Democratic Planning

Authoritarian planning discourages worker and consumer participation because it disenfranchises them. While those who advocate democratic planning do so to give people more control over economic decisions that affect them, badly designed systems of democratic planning might continue to discourage worker and consumer participation in a different way. If worker and consumer councils have no autonomous area of action regarding their own work and consumption activities, but must submit to seemingly endless discussion, debate, and negotiations about what they want to do together with many others, in many different planning bodies, ordinary workers and consumers may well lapse back into apathy even if there is no authoritarian planning procedure to disenfranchise them.

There is a serious danger that some forms of democratic planning can discourage participation on the part of ordinary workers and consumers by requiring them to engage in too much negotiation with others, especially if most of these negotiations are conducted by representatives. In this case, ordinary workers and consumers would no longer be disenfranchised as they are under authoritarian planning, but if procedures for involving all who are affected are cumbersome and clumsy, and if those procedures rely primarily on representatives they may become a practical barrier to participation that only the most dedicated and determined workers and consumers will be willing to fight through. In other words, when poorly organized, democratic planning can become just another bureaucratic maze from the perspective of ordinary workers and consumers leading to what Nancy Folbre warned could become a “dictatorship of the sociable.”

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