For the purposes of this essay, I begin by arguing for the need to envision a liberating economic system. Then I outline what I believe are the general goals of a desirable alternative to capitalism. Values are established to act as guiding criteria to evaluate numerous proposals and possibilities. Along with these evaluative criteria, I use a radical institutional analysis to help understand the institutional frameworks of these other economic systems and their desirability.

The Necessity of Vision, the Need for Organizing

Some may think that proposing an alternative economic system is authoritarian, so they shy away from theorizing or looking at other alternatives. Others may say that it takes energy and resources away from other important pursuits, say resisting war and other forms of exploitation and oppression. And still others may argue that actually existing socialist societies (AES) throughout the 20th century were a massive failure; people have been burned more than once in the struggle to create a better world – centrally planned economies proved to be a catastrophe so we must make the best of capitalism. However, there are important reasons suggesting we embrace the task of developing economic vision and then take on the task of organizing.

The argument that proposing vision is authoritarian forgets that people will not join our struggle if we cannot answer the hard question of where we want to go. Offering vision is not the same as being vangaurdist. Nor does proposing vision have intrinsic qualities that automatically trump people’s creative pursuits or imagination. Vision is used to guide us and inspire us. Ideas should be proposed, shared, discussed and debated. Calling visionary thinking authoritarian is reactionary and curbs evaluation of past, present and future alternatives to capitalism. In short, it thwarts our activist efforts today and limits our chances for successful social change in the future.

The second line of reasoning, that vision takes time, energy and resources away from other important pursuits, we can counter by analogy. Say there is something that cripples human beings to a point of overwhelming pain and misery that it is virtually unbearable to know of their suffering. Let’s say this something is cocaine or methamphetamines, and we know that it is wrong to let people suffer if they don’t have to. Let’s also imagine that someone proposes a medicine, or vaccination to make people immune to the addictive properties of these substances. Do we shy away from such proposals because doing so means we can put more of our energy into a harm reduction program or another homeless shelter? Or, do we look at the proposal and evaluate it? Sensible people would evaluate it while also committing time, energy and resources to harm reduction, shelters and other necessities. So why not employ the same process of developing a way to remedy the ills of capitalism as we would drugs, or other ills, say cancer. Developing vision does not imply that war, racism, patriarchy and the environment are not important to struggle against. Rather, it says that these things, including vision, are all equally important.

Also, reason number two can be countered by the fact that it is irrational to not know where it is you want to go, to not have vision -- and so yes, a portion of time, energy and resources must be dedicated to vision. Just think how absurd it would be if, when every morning you walked out of your front door you did not know where it is you were going, subjecting yourself to perpetual wandering and episodic directions, never returning home to your door step. Knowing where we want to go, via vision, as social movements, is important because it informs us of our activism and organizing today – it raises our conscience for successful strategy and social change.

The third reason is articulated as “There is no alternative” (TINA). Assume that someone is struggling against global warming and is horrified by the resulting environmental chaos and wants to help change it, but after years of courageous struggle she finally admits defeat and declares that “there is no alternative”. Global warming is an inevitable part of existence, just like the sun or moon, and declares “TINA”. She should not be happy about her declaration, but in fact should be immensely pained to have come to such a conclusion. People, who favor capitalism, as an inevitable economic arrangement, over other economic systems should not be happy about it. People, who have struggled against capitalism throughout the 20th century and come to the same conclusion, should not be happy either. Such declarations should only be made if careful research and analysis has been done to in fact prove that there is no alternative to capitalism; which no one has done. On the contrary, as we’ll see below, there are options to choose from, to look at, compare and analyze. And some are better than others.

General Goals of a Liberating Alternative to Capitalism

"At the risk of seeming ridiculous, let me say that a true revolutionary is guided by great feelings of love." - Che

Those of use who want to replace capitalism for something better have two possible motivations. One is that capitalism causes such human degradation, suffering and misery, it is virtually unbearable and we are compelled to act. The other reason is that for all the human lives which suffer pointlessly due to poverty, war, preventable illnesses, disease, etc., we are losing valuable contributors to the richness and quality of human life; scientists, artists, mothers, fathers, lovers, composers, writers, painters, physicists, poets, mechanics and more, are all left from fulfilling their human potential do to the vile institutional arrangement called capitalism. By struggling for, and achieving a truly classless society we can liberate the rich human potential that lies dormant in ourselves and others. So, yes, a profound dissatisfaction with human misery and suffering is one motivation to want to change the world. But, it must be tempered with a love for humanity that sees what people are capable of, provided there exists an economy with an institutional setting that nourishes, accommodates and compliments human development in all spheres of life – political, cultural, kinship and economic. If the need to explore this human potential is ignored, despite a desire to do away with capitalism, the institutional context which may provide the setting for liberation will be overlooked. With this in mind we can say that the general goal of a liberating alternative to capitalism, or any truly Just Economy, is to provide an institutional setting that provides the basis for exploration, realization and fulfillment of human potential, regardless of imperfect human beings – a love for humanity.

The Values

The values listed here are derived from what I believe to be some of the most libertarian of Classical, New and contemporary Left values: solidarity, autonomy, classlessness or equity, diversity, and self-management. And, in addition to an institutional analysis, I use these as my guiding criteria to judge other economic systems, including alternatives to capitalism.

Solidarity means that we care about and express compassion for one another. Equity means that people are remunerated for effort and sacrifice. Self-management is decision making in proportion to the degree one is affected. Diversity means that we want divers living arrangements to choose from.

So the more solidarity an economy perpetuates, the better it is; the more equity an economy achieves, the better it is; the more self-management an economy fosters, the better it is; the more diversity an economy generates… Even if the whole world pursues a participatory economy, if another proposal is put forward that realizes the above, or better values, even more so than in a parecon, we should all work to implement that proposal. With this attitude we can strive to escape dogma and sectarianism.

An Institutional Analysis

Regarding alternatives to capitalism, I’m not an economist, nor an expert. I’m an activist and organizer who has an interest in replacing capitalism for something better. In fact, one reason for my interest in alternatives to capitalism is also that I’m always on the watch for something better, so I’m always seeking the most libratory system. The way to do this, I think, is through a combination of values as evaluative criteria, as outlined above, and an institutional analysis to see if the institutions within any economic system embody solidarity, self-management, diversity and equity. If they don’t embody those values then what do they propose? Are there any institutional features we want to incorporate into our own vision, or get rid of? How does an institutional analysis help us better understand the economy (or any other sphere of society) that we’re looking at? These are all questions motivated and guided by an institutional analysis.

So, as a set of institutions, an economy is a conglomeration of interrelated roles and relationships. In those relationships are embodied expectations for certain outcomes and activities. An example would be of a factory which has the roles and relationships of assembly line workers, maintenance workers, janitors, union Stewarts, share holders, stock holders, etc. An economy on a grand scale has property relations, remuneration and pricing schemes, allocation mechanisms, and divisions of labor.

All the economic proposals below are covered here in order to compare and evaluate alternatives to capitalism to think about where we want to go.

Comparative Anti-Capitalist Analysis

The Classical Model of Central Planning

The first system is “Central Planning”. When we think of central planning, the model that comes most to mind is the Soviet model of central planning that was prevalent throughout most of the 20th Century. Other countries that adopted variations of that model are North Korea, Cuba, China, as well as Eastern Europe. They all had different variations. But the broad strokes, the broad contours of those economies were essentially the same -- centrally planned economies.

The dominant characteristics of centrally planned economies are state or publicly owned property, with a central planning authority; the economic outcome of society was generated by an economic plan. There were a variety of different economic plans that were used; there were short term plans, annual plans, five year plans, long term plans, etc. However, the key issue here is that implementing a plan was mandatory. That is why this kind of economy is often referred to as “Directive Planning”, “Imperative Planning”, or as a “Command Economy”. The economic process of central planning can be described as a mammoth bureaucracy where hundreds of thousands of functionaries in the Communist Party, the state administration, the firm, and cooperative management, and the mass organizations negotiate, calculate, renegotiate and recalculate before the millions of planning commands emerge at all levels. Basically, planners would call in information about the state of the economy and the state of peoples economic desires within society. They would massage that information and come up with a plan to be implemented. They would decide who was going to do what, what gets produced, how much is produced and where it’s going to go. They would also make decisions about choosing, hiring and firing, appointing, rewarding, and disciplining managers of each firm. Like wise, each manager also had similar control over each individual enterprise that they operated within; as in corporate hierarchies.

The Institutions of Central Planning

The rational behind the system of central planning was that the planners could, using as much information as they could gather, get the best possible economic plan for society. And many people honestly believed that they were in the first stages of socialism; that communism, a future stateless and classless society was to come. They had a grand vision for society and for human beings and therefore had some honorable motivations. However, there were others who were corrupted by bureaucratic power, by filling those institutional roles and relationships within the model of central planning. They had the information. They had power. Their capacity for decision making far surpassed how much they were affected by the outcome of their economic plans. They were the planners and managers, what is called the coordinator class. They accrued material rewards that were associated with the kind of power they held over the economy. Likewise, workers decision making power was token and dwarfed in comparison to that of the coordinators.

There are many reasons and many explanations about why the Soviet model of command planning took the historic course it did; why it took the form of an authoritarian economic model. Basically, there are internal factors and external factors. Internal explanations range from war (“war communism”), civil war, famine, and rapid industrial development of a largely rural country in competition with western capitalist nations. External factors were hostile western nations forcing a Cold War onto the Soviet Union causing the SU to focus primarily on military industrialization. But regardless of any of the above reasons or explanations, even if we were to assume that planners did have perfect information and that they could achieve the best possible economic outcome for society (the analog to assuming perfect competition under capitalism), and assuming both, a complimentary, internal and external environment -- assuming away all the obstacles -- the model of central planning is simply not a desirable model. Because of the institutional roles of central planners and coordinators, society is sent on a trajectory, over long periods of time developing warped human beings, with warped characteristics, generating a warped society; where the planners develop the characteristics of planners and managers and the rest of society develop the characteristics of apathy. Central Planning does not have the institutional arrangement to foster self management and therefore doesn’t foster solidarity; it doesn’t foster equity or diversity and it doesn’t foster efficiency. So, when considering alternatives to capitalism, the Soviet model of central planning is not a desirable model.

Variations of Market Socialism

The next variation of socialism is called “Market Socialism”. There are basically three kinds of market socialism. There is “State Managed Market Socialism”, “Public Enterprise Market Socialism” and there is “Labor Managed Market Socialism”. The term “Market Socialism” originated from a Polish economist named Oscar Lange. He got into a debate called the “Socialist Calculation Debates” which took place in the 1930’s. He debated with a well known Austrian pro-market and pro-capitalist economist named Frederick von Hayek, among others. Out of this debate Lange developed what is known as the Lange model of Market Socialism. It was the very first theoretical model of market socialism. It was a state managed model.

The basic outline of this model is public or state owned property with markets determining the prices for consumer goods and wages. The State Central Planning Bureau adjusted prices for intermediate goods to eliminate excess supply and demand for those goods. All citizens shared equally in the profits of all public enterprises. Lange believed, and perhaps he was right (although it doesn’t really matter as we’ll see below), that his model achieved something closer to “perfect competition” than capitalists could claim under the capitalist system of private ownership of productive property and markets. This is a very brief outline of the Lange model. However, this snap shot of the Lange Model serves our purpose here; the point being that it is a State Managed form of Market Socialism. Despite marginal attempts at minimizing class disparities in wealth, there is no real attempt by Lange to minimize disparities in decision making power; the former contradicts that latter. And so, we can move on...

A more recent model, of Public Enterprise Market Socialism, is John Roemer’s “Coupon Economy” (Roemer, “A Future for Socialism”). Roemer recommends abolition of all ownership of corporations as we know it. Instead, everyone is issued identical portfolios of stocks or coupons, giving each person initially an equal share of ownership in every corporation. Enterprises would compete on the market and shareholders would be free to trade their shares in one company for shares in another; each trying to out do one another so as not to own shares in a failing enterprise. People get different dividends from their different coupon portfolios. Such is the market competitive nature of Roemer’s model.

Roemer also suggests organizing corporations into Japanese style conglomerates, which are also called “Keiretsu”. These would be headed by a major investment bank that would own large blocks of stock in the corporations and loan its corporate clients funds for investment and monitor the performance of corporate management. Roemer does argue that his proposal would be some what more equitable than capitalism and more efficient. However, he also admits that people would have no more control over their work lives in a Coupon Economy than they would in a capitalist economy. Firm managers would be monitored by investment banks and mutual funds would decide what and how much their employees would produce. Again, this is a very brief synopsis of a model of Public Enterprise Market Socialism. But, it is enough to see that

Roemer’s proposal is operating on a trajectory making it, over time, just another form of capitalism, redistributing ownership in the way of stocks or coupons. Eventually, it probably wouldn’t even be worth the name “Public Enterprise Market Socialism”. Also, in addition to the use of markets and competition as its allocation mechanism, it is managed via corporate hierarchies and coordinators. It’s no wonder that those of us on the Libertarian Left would jettison this model. And still yet even more damning of this model, Roemer proposes that progressives aim for over throwing capitalism to replace it with a coupon economy. However, Robin Hahnel makes the point that it would take the same amount of effort to replace capitalism with a coupon economy, as it would to achieve any other type of economy over capitalism; whether a centrally planned economy, a market socialist economy, or a decentralized participatory economy. Hahnel continues, “To put it bluntly, given the strengths and viciousness of the opposition that can reasonably be anticipated from today’s capitalists, a coupon economy is hardly worth risking ones life for.” (Hahnel, Economic Justice and Democracy)

If the two above models of market socialism were alienating and authoritarian then there is another model, the “Employee Managed Model of Market Socialism” of Yugoslavia that is a little more appealing. In addition to being referred to as Employee Managed Market Socialism, it’s also known as “Labor Managed Market Socialism” or “Self-Managed Market Socialism”. Basically, the model that existed in Yugoslavia existed from the 1950’s through the 1980’s. In 1948 Stalin expelled Yugoslavia from the Communist Information Bureau. Four years after the country engaged in a massive experiment in worker owned and operated self-managed enterprises. Markets were embraced as the only other known way, besides central planning, to coordinate economic activity. This system was implemented through wide spread reforms. These reforms sought to free the workers from the dictatorship of the centrally planned economy. What did self management mean in the Yugoslav experiment? Workers could appoint their own managers, although in practice, at different stages in the Yugoslav experience, the state did intervene when appointing managers; and managers, although they couldn’t fire workers without approval from workers committees, could suggest to lay them off. Also, enterprises had to compete on the market, which meant that there were both menial workplaces and more empowering workplaces, exasperating decision making and class disparities. These are just some of the features of Yugoslavian self-management. However, despite the explicate principle of workers self management, which is so desirable, many of the operating institutions did not foster it.

A more modern version of worker self-managed market socialism is David Schweickart’s “Economic Democracy Model”. This model features common characteristics that were prevalent in the Yugoslav model, Japanese style capitalism and the Mondragon Cooperative movement in Spain. Each productive enterprise is managed by its workers, but they are “owned” by society as a whole. Next, the economy is a market economy, where raw materials and goods are bought and sold with prices determined by supply and demand on the market. While Schweickart claims that new investment projects are socially determined and controlled, features of his model, specifically the necessity of enterprise performance in the market, which determines how investment funds are distributed, contradict this.

Market Institutions

Just as with Central Planning, we can also make some hypothetical assumptions about economies that use markets as their allocation mechanism, whether capitalist or market socialist. For markets to work, the theory of capitalism states that all economic actors have perfect information, that there is perfect competition and no externalities. Now, even if we want to make the same assumptions for market socialism (and these assumptions sink like a ton of bricks in the real world), regardless, markets still have the institutional roles of buyer and seller, where there are interrelated relationships and activities for expected outcomes -- the goal is to buy cheap and sell dear, to out do one another. So, there is an inherent competitive relationship within markets.

More, buyers and sellers don’t see anything beyond their immediate transaction. In a market economy, if I go to buy a car at a car dealership, it’s great for me and the car dealer. But as soon as I go out driving my car around emitting carbon dioxide, that has a broader impact on the rest of society that markets do not account for. This is a bad externality that, no matter how many taxes you want to put into place, markets cannot account for the full amount of social and ecological costs and consequences.

By using markets as an allocation mechanism, the outcome is an over all warped human development; where individual and societal development, over long periods of time, is sent on a trajectory, through the institutional roles of buyer and seller. The over all bias is towards private consumption and “snow balling” individualism, rather than public consumption and collective welfare.

Also, by using markets we assume that human nature is greedy, individualist and competitive. I would even argue that this is true for all the above cases of Market Socialism; where people did have some very strong ideals that were honorable, unfortunately, the market institution, and I would say, Market Socialism, makes these assumptions about human nature as well. They don’t try to imagine more liberating institutions or human behavior.

“Community Based” Visions

Others who reject capitalism, central planning and market socialism propose as their alternative, small scale, locally based, self reliant economies. The argument put forward is that only by reducing the scale of economic institutions and increasing the self sufficiency of local communities can we satisfy libertarian goals, reduce alienation and achieve some form of ecological balance and sustainability. By decentralizing large national economies into small, autonomous economic communities they hope to eliminate the need to coordinate economic activity outside of their communities.

Just as there are different forms of central planning, market socialism and democratically planned economies, there is also a wide range of community based economics: Social Ecology, Libertarian Municipalism, bio regionalism, ecological economics, eco-socialism, etc. However, all these proposals suffer the same problem. They are not coherent models. They are not really proposing anything. Unlike most of the models of central planning, democratic planning and market socialism, there is no model of community based economics. Real models specify rules, procedures and institutions for how to make important decisions that must be made in any economy. Namely, workplace, remuneration, individual and community decisions; what gets produced / how much gets produced; what gets consumed / how much gets consumed. For example, key goods that may be desired in any community based economy may be a bicycle or kite. Or maybe there are rocks in a community garden and a shovel is needed to displace the rocks. In any economy we rely on other people to get the inputs necessary to produce simple goods like shovels, bicycles or kites, not to mention grander more complex human needs and desire which we must satisfy. So, “self reliant economies” are really not an option. And the scale of an economy, for the most part, isn’t really an issue. For all these reasons, community based economics are really visions rather than models.

Democratic Planning

Recently, many proposals for democratically planned economies have emerged, and no doubt these ideas will challenge deeply held beliefs that “there is no third way” (TINA). Traditionally it’s been argued that there are either markets or central planning. One of the main proponents of this belief is the late British economist Alec Nove. Nove argued that when allocating goods throughout society there really was no choice other than markets or central planning – that’s it, nothing else. However, Michael Albert challenges Nove’s assertion. Albert says “Nove’s only evidence is to pile up indications of what no one doubts in the first place, that allocation is complex and important. Nove’s presentation argues only from necessity ‘It must be that there is no third way, because it must be that there is no third way’. With this mind set, we would have never advanced beyond the institutions of the pharos Egypt” (ParEcon: Life After Capitalism). Luckily, in contrast to Nove’s position, we do have other options beyond just central planning, market socialism, or capitalism. That is, there are also variations of democratically planned, non-market economies to also choose from and evaluate.

The late 20th and early 21st century has seen these sprouting forms of democratic planning throughout the world. A wide range of regions and environments spanning Africa, Asia, and Latin America, as well as Eastern to Western European countries have been exploring participatory forms of economics. There’s village level public good planning in Kerela, India. There is the well known experiment of participatory budgeting in Porto Allegre, Brazil. However, these are not whole models of democratically planned economies. They are smaller instances that embody participatory procedures and practices. The difference is that they do not provide broader institutional roles for how goods get allocated, for how workplaces are organized, for how decision are made, i.e. what you want to consume / how much you want to consume, for what you want to produce / how much you want to produce. So, these are not models. Instead, they could be viewed as elements and for runners of what could be on a broader and more liberating scale.

General Goals Revisited

So far we have reviewed numerous economic possibilities. Most have been in the form of market socialist or centrally planned economies, and we have only touched briefly on democratic planning. I have tried to outline some of the institutions and procedures impacting class relations within each proposal so that we may make assessments and evaluations about which system best explores and realizes human potential and our values of solidarity, self-management, equity and diversity. At this point it is appropriate to provide a very brief sketch of the economic system I think most suitable to our goals -- a participatory economy.

Participatory Economics

A participatory economy is comprised of social rather than private or state ownership; nested worker and consumer council's and balanced job complexes rather than corporate hierarchy; remuneration for effort and sacrifice rather than for property, power, or output; participatory planning rather than markets or central planning; and self-management rather than class rule.

The balanced job complex is a redefinition of our concept of work. Basically, jobs are organized so that everyone has an equal set of both empowering and un-empowering tasks. Jobs are balanced within each work place and across work places. Balancing jobs within work places is done to prevent the organization and assignment of tasks from preparing some workers better than others to participate in decision-making at the workplace, or what would be the result of our standard work place corporate division of labor. Balancing work across work places is equally necessary so that disempowering and menial work places are not ruled by empowering ones. The outcome of the participatory balanced job complex is that everyone has an equal share of both desirable and undesirable tasks, with comparable empowerment and quality of life circumstances for all.

Another key element is remunerative justice, or pay for effort and sacrifice. This method of pay insures that unequal outcomes are not produced and reproduced, due to ownership of the means of production, bargaining power, output, genetic endowment, talent, skill, better tools, more productive coworkers, environment, inheritance, or luck. Of all these factors people control only their effort. So, effort and sacrifice is the remunerative norm in parecon, tempered by need as appropriate in cases of illness, catastrophe, incapacity, etc.

Participants are organized into federations of workers and consumers councils who negotiate allocation through "decentralized participatory planning". Workers in worker councils propose what they want to produce, how much they want to produce, the inputs needed and the human effects of their production choices. Consumers propose what they want to consume, how much they want to consume and the human effects of their consumption choices. "Iteration Facilitation Boards" (IFB) generate "indicative prices", using both quantitative and qualitative information, which is used by workers and consumers to update their proposals for further rounds of iterations. The IFB whittles proposals down to a workable plan within five to seven iterative rounds. A plan is chosen and implemented for the coming year.

A participatory plan is a feasible and desirable choice distributing the burdens and benefits of social labor fairly. It involves participants’ decision making inputs in proportion to the degree they are affected. Human and natural resources are used efficiently providing a variety of outcomes.

This is only a thumbnail sketch of a participatory economy. Further in depth reading and introductory material can be found at:

Life After Capitalism: http://www.zmag.org/books/pareconv/parefinal.htm

Looking Forward: Participatory Economics for the 21st Century: http://www.parecon.org/lookingforward/toc.htm

The Political Economy of Participatory Economics: http://www.zmag.org/books/polpar.htm

Chris Spannos is currently a sailor in Maine, USA, aboard a 1963 Dutch fishing troller converted to an expedition vessel. He is a volunteer for ZNet where he helps out a little with the ZNet Sustainer System and edits Noam Chomsky’s Blog. Between 2000 and 2005 he was a social worker in Vancouver’s down town east side. He also produced radical current affairs radio with the Redeye Collective at Vancouver’s Coop Radio since 1999. His writings, reviews and interviews have appeared in ZNet, Electronic Iraq, Dollars and Sense, Seven Oaks, The NewStandard, Vancouver Cooperative Radio, the CBC and others. He can be reached at spannos@gmail.com