The Samovar

Fairness and equality

There has been a lot of discussion of a new report by the Joseph Rowntree Foundation on attitudes towards tackling economic inequality (at Directionless Bones, Left Luggage, Sunder Katwala on CiF, Don Paskini at Liberal Conspiracy, and David Osler). Quoting Alderson at Directionless Bones, one of the key findings of the report is:

People didn’t seem to endorse the idea of ‘equality’ as a general principle as much as they endorsed ‘fairness’.

This is a point that several of the posts linked to above considered, and there has been a feeling that the left needs to find a new way to promote their view of the world to people (which traditionally is based on equality).

I find this interesting because for the last few years I’ve been coming to the view that the case for a left-wing politics should be based rather on the principles of fairness and freedom than on equality. Equality is important and essential, but I think it’s a consequence of fairness and freedom. I’ve argued this in much more detail in an earlier entry on capitalism. Essentially, a very unequal society will, in practice, also be necessarily an unfair one.

The report has caused quite a lot of distress because it showed that people are not against what they term ‘fair inequality’ – but I don’t think the left should be dispairing over this. The report also clearly showed that people think there are substantial levels of unfair inequality, and that this is a bad thing. This suggests to me that most people basically get and agree with the final point of the previous paragraph – high levels of inequality lead to an unfair society.

I suggest then that what the left needs to do is to push this analysis further and address the misconceptions that the JRF report showed that people have. Most people substantially underestimate the level of inequality that actually exists and overestimate the level of social mobility. Changing perceptions of these is difficult, but could make a significant difference.

As a final point, the report appears to be more of a blow to a state-centric form of socialism where equality is considered more important than fairness and freedom, and much less of a blow to an anarchist form of socialism which takes freedom and fairness to be fundamental. This is important and suggests the left should be considering a change of direction towards anarchist conceptions – and thankfully much of the left does, slowly, seem to be doing this (even if they don’t call it anarchism). In particular, the point about support for ‘fair inequality’ is very interesting with respect to the remuneration mechanism of parecon (which I written a few things about on this blog). Parecon allows for a certain amount of precisely ‘fair inequality’ – that is, inequality that comes from a choice to work harder or at more onerous labour. It is fair because anyone can make that choice (whereas not everyone can choose to be a doctor, banker, etc.). On the other hand, it absolutely rejects unfair inequality. As such, it seems that many people’s fundamental views of what society should be like resonate more with a pareconish or anarchist conception than a state-centric socialist one.


Since the earliest entries on this blog, I’ve had in mind to write something about why I’m an anti-capitalist, and in what sense. I’ve written before several times about aspects of my opposition to capitalism (here, here, and here amongst other places, and also about parecon, an alternative to capitalism), but never attempted to do it comprehensively. Incidentally, that word “comprehensively” should be a sort of warning – this entry is long.

Defining capitalism is tricky because it is a very general concept, and means very different things in different places and at different times. So this entry will be necessarily somewhat nebulous, as it attempts to address the concept of capitalism without defining a specific conception of it. So it won’t be a strict argument against capitalism, but rather some ideas which might be useful in thinking about it, and also a guide to criticising me (being as it is, a summary of my own reasons motivating my opposition to capitalism).

In the broadest possible terms, I have two fundamental problems with capitalism: it creates inequality, and it forces us to pursue ends that are other than the ends we would choose of our own free wills. The relevant underlying principles are fairness and freedom. Although I state these two problems separately, they are really quite intertwined.


Before I go on it might be worth saying  a few general things about fairness and freedom since they are key to my criticisms of capitalism. If you’re happy with these principles, you might want to skip this section and the next as I ended up going on and on for longer than I intended.

It might be objected that fairness is not important, that in the face of the enormous positive benefits that capitalism has brought the world, the fact that some groups consistently do better out of it than others is of marginal significance. I would agree that fairness as a principle doesn’t have the same level of support as freedom, for example. And I can understand why. Although freedom can be (in my view somewhat crudely) defined simply as the lack of explicit interference in ones affairs, fairness involves a comparison of the lot of one individual with the lot of all the others. On the basis of an individualistic view of the world, how better or worse of others are shouldn’t really effect anything. Supposing there are aliens on another world that are all living incomparably wealthy lives in comparison to ours, we shouldn’t feel hard done by. Similarly, it seems we shouldn’t feel badly done by if our neighbour is doing better than us through no merit of his or her own, the only difference being that we see the neighbour every day but we never see the incomparably wealthy alien.

So I can understand doubts about fairness as a principle, it doesn’t have the same uncomplicated status as the simple notion of freedom as lack of interference, but in my view it is still significant. I might go into why in more depth in another entry, but for the moment I’ll just make a couple of observations. First of all, things do change depending on what we know about. If the aliens landed on Earth and started visibly enjoying their wealth, even if they weren’t harming us by so doing, I think we would be within our rights to want part of that. Of course we couldn’t demand it in any incontestable way, after all we did nothing to deserve it – they developed the technology, found the resources, etc. But then, probably most of those aliens did nothing to deserve it either, most likely they just made small improvements on what their ancestors had done (and not even that in many cases). The application of this line of thought to the purely human situation should be obvious.

This leads me to my second observation, that criticisms that amount to criticisms of fairness as a principle come down to saying that there is no incontestable reason to choose the principle of fairness, it is not a “natural” and unavoidable principle and indeed in a “state of nature” there is very little of it. I would agree, but you could say the same about any principle, they are all matters of choice (see my earlier entry on arationality). It comes down to deciding what sort of world we want to live in, not what sort of world we ought to live in. Ultimately then, I choose to value fairness, and I would hope that others would choose likewise.


Next I want to say something about freedom. It is often characterised “negatively”, particularly by right wing thinkers, as freedom from explicit constraints. And there are good reasons to be dubious about the “positive” version of liberty, because it seems to imply duties on someone to provide these liberties, in an unspecified way that can be taken to suggest the necessity of a strong central authority whose duty this would be. The philosophical debate about this is ongoing and complex (see the Stanford Encyclopedia of Philosophy entry on it). I tend more towards the “positive” version, but not straightforwardly.

We live in modern states whose functioning in practice cannot be ignored. Thousands of years ago, when someone who didn’t like the way his society was organised could leave, find some unused land, and set up his own, a purely negative conception of liberty would have made more sense than it does now. Nowadays, we’re not faced with the choice of whether or not to live in the society we find ourselves born into, we must live within the institutions that actually exist, and these inevitably circumscribe our liberty. This is a particular issue when these states have enormously extensive conceptions of property that include property in land as well as property in objects, and even go so far as to extend into property in ideas. Property is enforced by the state, and assuming that this is being done, the state already has power over an enormous part of our liberty. It is worth noting that some right wing thinkers would like the function of the state to be only one of protecting property rights. Despite their being apparently motivated by liberty, they fail to give due consideration to the extent to which liberty is circumscribed by the institution of property.

So although we can talk about simple negative liberties, any choice of institutional arrangement of society also defines, by the way in which it circumscribes our liberty, a positive conception of liberty as well. We can choose not to talk about that bit, but the choice of institutions and the functioning in practice of those institutions makes a choice whether we recognise it or not. Given that, I prefer to be explicit about the positive components of liberty as well as the negative ones. In particular, I want to draw attention to how a capitalist state, through its support of property, provides more positive liberties to some groups rather than others. In a nutshell: in building good roads, a state provides freedom to travel faster and more safely, but only to those who can afford a car and fuel to run it. In providing a police force that enforces property, it stops people from having the fruits of their labour taken away, but this service is enormously more valuable to those who have wealth to be stolen than those living from day to day on what they can earn.


My first objection to capitalism was that it creates inequality. The questions are: why? and what of it? I’ll start with the second question first. A society of unequal wealth is first of all unfair. We all rely on the correct functioning of the state for the vast proportion of what we have. I don’t just mean that we’re paid by the state, although many are, but that if the state didn’t exist the circumstances in which we work wouldn’t be able to exist either. We need the rule of law, enforcement of contracts, property, etc. (I don’t say we need all of these in an absolute sense, but that we have them and if we couldn’t rely on them in this particular society we wouldn’t be able to profit from our work in the way we do.) If someone like me, tinkering around with equations in a comfortable situation, can earn hundreds of times what someone doing really demanding and unpleasant work can earn, then something is wrong (for what it’s worth, I don’t earn hundreds of times what anyone else earns, but as someone with a mathematical background I probably could if I chose to, or at least I could have if I had chosen to at the appropriate point in my life).

One criticism of this viewpoint is that capitalism does not make value judgements about the importance of the work that people do, the prices for different sorts of labour are set by the market. Strictly speaking that’s true, and it is indeed a good thing that there isn’t some governing body that decides the value of different types of work, but if the mechanism (the market) produces outcomes that are obviously crazy and in no sense fair then it can be criticised. We don’t need absolute inequality, we don’t have to have a principle that says that all sorts of labour are equally valuable, but we should use our common sense and point out that it is in no sense fair that people doing work that they enjoy in comfortable circumstances should be enjoying wealth that is hundreds of times that of people who are doing unpleasant work in difficult circumstances. Again, this comes down to a matter of choice, but it is emphatically not the case that capitalism represents a lack of choice or a natural choice. The state is making all of this wealth possible, and so if it makes more wealth possible for some and less for others, that too is a choice. We can’t look at inequality and shrug our shoulders and say “that’s the way it goes” – that’s not the way it goes that’s the way we make it go, and we could choose to do otherwise.

There are more reasons to be dubious about inequality than just the unfairness of it. For example, inequalities of wealth tend to produce political inequalities too. In a democratic capitalist society, political parties need funds to operate and they have to get these from somewhere. Wealthy individuals have more to give and so have more power than the poor. This is a problem that could be solved if there were political will to do so, which is not entirely impossible although the current system mitigates against it happening. There is a second mechanism by which economic inequality creates political inequality. When an individual or group of individuals can affect the entire economy by their own private economic decisions, everyone, including the government, must act in such a way as to stop them from making decisions which would hurt the economy generally speaking. In a society in which there were not huge concentrations of wealth, this wouldn’t be so significant (but then, the dynamic of capitalism is to increase inequality so to some extent this seems inevitable). This problem is aggravated by globalisation and hyper-mobility of capital, a point I’ll return to later. The result can be clearly seen today, all successful political parties are largely funded by the wealthy and work largely in the interests of the wealthy, and they cannot do otherwise. The only difference is the extent to which they are in favour of policies which mitigate the worst excesses of capitalism, and this is something which they have increasingly little control over (which again, I’ll return to later).

Now on the first question, which is why does capitalism cause inequality and is this inevitable? My answer is that the basic dynamics of capitalism tend to increase inequality but that these can be mitigated to some extent (by for example, social welfare programmes). First of all, the existence of wealth tends to create inequality in it. If there is any disparity at all, then those who have more are in an advantageous position, all other things being equal, to those who have left. The most obvious application of this is borrowing and lending. The wealthy lend money to the poor (indirectly through the institution of banks), and the poor then have to pay back the money loaned at interest. When an economy is growing, everyone can profit by this in absolute terms, but the wealthy profit by it hugely disproportionately to the poor, so inequality increases (or at least, never decreases). But there are other mechanisms too. For example, the wealthy can afford private education which gives them a competitive advantage even when employers make purely meritocratic decisions. Also, those with (possibly inherited) wealth have more freedom to choose between jobs because they can survive for a period without a job, whereas those who have nothing must take a job immediately, forcing them to take worse jobs where their prospects will not improve. (This is the aspect that can be mitigated by a social welfare programme.)

Those are some specific mechanisms by which capitalism causes inequality, but there is an overriding meta-reason too. Basically, in a competitive system some will get more than others, and all things being equal having more to start with must be an advantage. Assuming the advantage grows with the amount of extra wealth, over time the effects of these advantages must produce even larger disparities, and so on. This could probably be mathematically formalised, I expect someone has done it.


My second objection to capitalism is that it makes us pursue ends other than the ones we would choose to pursue. To some extent, this is inevitable. If I want to pursue a career in interpretative dance like Marty in The Big Lebowski, then I need to either find enough people who feel this is worth it, or pursue some other career which isn’t the one I would choose. Proponents of capitalism would say that this all there is to it, that although you may not like the collective choices we as a society make through our individual purchasing decisions, they more accurately reflect people’s real wishes than the prejudices of socialists and academics. Although I like the unsentimentality of the argument, and there is probably some truth in the attack on prejudiced ideas about what people really want, I think it rests on the unfounded and inaccurate notions that people can express their wishes through purchasing decisions, and that the mechanisms of capitalism aggregate these individual decisions into collective ones in a satisfactory way.

We clearly cannot express all our wishes through our purchasing decisions. For a start, there are many things that cannot be bought such as clean air, beautiful countryside or parks to walk in, etc. Economists recognise this problem of “externalities” (factors which are external to the market mechanism), but the capitalist way of dealing with the problem is to bring everything into the market and create new forms of (private) property. This is summed up in the classic economists’ treatment of the problem of the tragedy of the commons. But it exacerbates the problems of inequality mentioned above (imagine if clean air was something to be purchased, as in Ben Elton’s play “Gasping”).

More than our individual desires though, we cannot express our desires about the sort of world we want to live in through our economic decisions. We can express them through our political choices (who to vote for), but in politics, economics trumps everything else. The reason for this is that in a capitalist society, all aspects of the economy, and by extension all aspects of life because everything relies on a reasonably functional economy, are redirected towards the production of short-term profit. Capitalist society makes it much more difficult to implement a policy or take an action that favours a long term goal or the improvement of our lives through an “externality” in preference to short term profit.

Suppose a government wanted to increase taxation to spend on doing many things that people desired, such as better parks, health care, education, and so forth. The most logical way to do this would be to increase taxation on the largest concentrations of wealth, the companies and the rich. A government that chose to do this though, would risk a capital flight – the sudden movement of capital out of one country (where there is a perceived economic risk) to another which offers safer or better investment prospects. As the case of the Labour government from 1974-1979 shows, capital flight can be truly devastating to the whole economy (there’s an interesting analysis of this on the Anarchist FAQ). In other words, under capitalism we cannot choose to live in a society that doesn’t give priority to the interests of the largest concentrations of wealth without undermining our whole economy.

This sort of phenomenon is endemic to capitalism at every level – the interests of wealth, and in particular short term profit, are always absolutely prioritised over everything else. In a global capitalist system, different countries compete against each other to provide the most congenial environment for investors. This means that low taxation is forced, and consequently low state expenditure. This in turn means that public goods will be undervalued, and because social welfare programmes are so expensive they would also have to be limited in scope, and therefore inequality gets worse. As capitalism becomes more globalised, and wealth can be transferred even more quickly at lower cost, this effect is getting stronger and stronger, so that previously successful mixed economies are now struggling too, and are being forced to respond to the needs of capital and reduce taxation and spending.

The same mechanism of competition between countries, or even between different cities or regions means that regulation of companies tends to reduce. If one country offers its workers legal rights to compensation if they are injured at work, and another country doesn’t, all things being equal in a global economy the company will set up business in the country with less regulation. This works at every level, and the effect is that regulation of economic activity for reasons that serve human interests must inevitably decrease over time. This is bad for individuals, but it is also potentially unstable because regulation of economic activity can be good for the economy as a whole. For example, monopolies and oligopolies stop free markets from working correctly, but regulation is very weak. This may well be because big businesses who might be in danger of anti-monopolistic actions would move their capital out of a country that proposed stronger anti-monopoly laws.

At a smaller level, the same phenomenon can be seen in individual companies. In order to be successful, they must pursue short term profit over anything else (even their own long term profit). If they don’t, then another company will, and investors will move their money to the other one, destroying the one with a longer term plan before it could come to fruition. Recently this has been demonstrated with the subprime mortgage crisis. Here we had a situation in which all the people involved knew that it couldn’t work in the long term, but that because it was so profitable in the short term they had to keep doing it to keep up with their competitors.

There are certainly situations in which the pursuit of (short term) profit leads to beneficial effects. For example, the refinement of already existing products and technologies which capitalism excels at. However, because of the emphasis on short-term profit to the exclusion of all other things, the “invisible hand” of the market does not work towards the ends that we would choose, andis even self-destructive (perhaps a Marxist analysis could kick off here… another time).

To a certain extent, the same logic even applies to individuals although we are at slightly more liberty to choose our own paths (for example, we can choose to “buy” more leisure time by working at less high profile jobs). Nonetheless, in a world where the pursuit of profit, and more particularly short term profit, is fundamental in all organised economic activity, that must affect the way we see the world. More straightforwardly, if the whole economy is geared towards short term profit, then we are not free to pursue activities that are not also geared towards this. The problem therefore goes beyond that addressed by the hypothetical critic earlier in this section, it is more than just that we must do work that is valued by someone, we must do work that produces short term profit.

You’re almost at the end

I wanted to explain why I think capitalism is a bad idea, and hopefully the reasons above do that. I’ve mostly focused on the present, but perhaps a word or two on the past and on the future. After all this criticism of capitalism, it would seem reasonable to respond that capitalism has done a great deal of good too. As Adam Smith says in the first chapter of Wealth of Nations, capitalism has allowed everyone to live better than kings of the past did (I’m paraphrasing here). I think that’s true. One might question whether or not that could have been achieved more expeditiously, but it’s in the past and the question is whether or not we can do better in the future. The Marxist (and some anarchists) would say that how you should organise society depends very much on the level of wealth. A rich society can in principle choose to organise itself in a much more egalitarian way than a poor one can. As our basic needs are provided for to a greater extent, we can stop worrying about living from moment to moment, and focus our attention on reorganising society to be more like how we wish it would be.

Experiments with Communism in the past largely failed for political reasons (democracy is essential), but also because countries that tried it hadn’t reached the point where basic needs were met, and because central planning was an inefficient mechanism (the planners didn’t understand the effects of their actions well enough, nor what was needed). I believe that the time may have come, or at least will quite soon come, when we will have the necessary means (basic needs satisfied, better understanding of economics, decentralised planning mechanisms such as those of parecon or otherwise) to do better than capitalism.

Monbiot on human nature

George Monbiot is a writer for whom I have an awful lot of respect. In his latest article (via ukwatch), there is lots to agree with. But, assuming he means what he says, he has some fundamental views that I find quite odd.

Like Dr Ridley, I am a biological determinist: I believe that much of our behaviour is governed by our evolutionary history. I accept the evidence he puts forward, but draw completely different conclusions. Ridley believes that modern humans are destined to behave well if left to their own devices; I believe that they are likely to behave badly. If you belong to a small group of intelligent hominids, all of whom are well-known to each other, you will be rewarded for cooperation and generosity within the group. (Though this does not stop your group from attacking or exploiting another). If, on the other hand, you can switch communities at will, travel freely, buy in one country and sell in another, hire strangers then fire them, you will gain more from acting only in your own interest. You’ll have an even stronger incentive to act against the common good if you run a bank whose lending and borrowing are so complex that hardly anyone can understand what is happening.

Dr Ridley and I have the same view of human nature: we are inherently selfish. But the question is whether or not this nature is subject to the conditions that prevailed during our evolutionary history. I believe that they have changed: we can no longer be scrutinised and held to account by a small community. We need governments to fill the regulatory role vacated when our tiny clans dissolved.

Wherever modern humans, living outside the narrow social mores of the clan, are allowed to pursue their genetic interests without constraint, they will hurt other people. They will grab other people’s resources, they will dump their waste in other people’s habitats, they will cheat, lie, steal and kill. And if they have power and weapons, no one will be able to stop them except those with more power and better weapons. Our genetic inheritance makes us smart enough to see that when the old society breaks down, we should appease those who are more powerful than ourselves, and exploit those who are less powerful. The survival strategies which once ensured cooperation among equals now ensure subservience to those who have broken the social contract.

The democratic challenge, which becomes ever more complex as the scale of human interactions increases, is to mimic the governance system of the small hominid troop. We need a state that rewards us for cooperating and punishes us for cheating and stealing. At the same time we must ensure that the state is also treated like a member of the hominid clan and punished when it acts against the common good. Human welfare, just as it was a million years ago, is guaranteed only by mutual scrutiny and regulation.

First of all, the idea of the evolutionary psychology of the “small hominid troop” is a scientific paradigm for which there is scant evidence. Basing fundamental political ideas on such a weak hypothesis is surely not sensible. Fortunately, I don’t think his ideas really do depend on this apparent justification.

The more significant point is his view of the role of the state.  Monbiot believes that “modern humans … if left to their own devices … are likely to behave badly” and therefore “We need a state that rewards us for cooperating and punishes us for cheating and stealing.” This view would seem to rule out the possibility of an anarchist sort of socialism, and mandates a more authoritarian, traditional big-state socialism. For this reason, I think it’s worth looking at an alternative explanation of the observed bad behaviour that Monbiot wants to eliminate, and an alternative remedy.

My view is that most people are mostly good. In order to believe things that are unpleasant, or behave in vile ways towards each other, people have to be pushed into it by social pressures. The reason that people do believe unpleasant things and do behave in vile ways towards each other in great numbers is that there are social pressures pushing them towards it.

One of the things about modern capitalist societies is the way they systematically hide information about the external costs of our actions. An example: it is very difficult to purchase ethical or green products. Information about the exploitation involved in producing products, or the amount of carbon emitted in the production of products, is enormously difficult to estimate. Modern capitalism hides all information except for one thing: the price. Not knowing anything else about the products, of course consumers will just buy the cheapest thing available. This has knock on effects that are very damaging. But the problem here is not that people are mean and don’t care about those knock on effects, but that they don’t have reliable information about them.

That’s one way that a capitalist society creates an apparently callous and uncaring world, and it exemplifies many of the others. For example, a company is owned by shareholders, separate from its management. The management of the company reasons thus: if the shareholders all sell their shares, the company will collapse and I’ll be out of a job, therefore I must do all I can to make the profits of the company as large as possible. The shareholders meanwhile have a choice of companies to invest their money in. Since their individual actions typically won’t affect the fortunes of a whole company, the only question that concerns them is where to put their money to maximise profitability. Note that they can’t even choose to put money into a slightly less profitable but more ethical venture, they have to go for one that pursues profit above all else. If they invest in a company that doesn’t do so, they have to assume that the other shareholders probably won’t, the share price will plummet anyway, the company will go bust, and by doggedly keeping shares in it they’ve neither saved the company nor made any money. (This is just The Prisoner’s Dilemma.) The structural arrangement of the system causes all the individuals involved to behave in seemingly cold and callous ways by separating individuals and groups, and making price and profit the only signal they communicate with.

Those are two key mechanisms of capitalism which contribute to this sort of behaviour, but they also have knock on effects. Those people who are better at having this sort of cold, callous view of the world will do better in a capitalist society than those who don’t. Because of the structural requirements of capitalist companies, these psycopathic / sociopathic individuals will tend to be promoted to the top jobs. Again, this is not because we like this sort of person, or that we want them to be our bosses or leaders, but that the way our society is structured, hiding all information other than price information, pushes them towards the top.

I could continue documenting this sort of thing at enormous length, but the key point is that the structural pressures in a capitalist society all emphasise price and profit, and de-emphasise everything else in life. With all these different sorts of pressures, all reinforcing themselves and feeding back on themselves, of course we end up with a society that seems cold and callous. But, returning to Monbiot, this is not because people are cold and callous.

So, if I’m right about human nature and Monbiot is wrong, an equal and free society is possible. If we can build a society in which the pressures are social rather than financial, we wouldn’t need state coercion to make people behave well. The anarchist ideal is to build such a society, but not by the right-wing libertarian or free-marketeer route of just doing away with government regulation. That government regulation grew along with capitalism as a way of mitigating its most antisocial effects, and getting rid of it without addressing the basic structure of society would make things considerably worse. The anarchist route is a change in the form of society, away from capitalism, either gradually or through a revolution, and an eventual end to state power (or at least, a minimisation of it).

Michael Albert’s participatory economics describes an alternative way to organise a society along these lines. It’s not the only one possible, but it is interesting and important because it incorporates an analysis along similar lines in a fundamental way.

Postscript: While I’m at it, the Marxist notion of the ‘withering away of the state’ is in fact an anarchist one, first posed by William Godwin in his Enquiry Concerning Political Justice (1793, 25 years before Marx was born, available in full online here and here), my emphasis:

In proportion as weakness and ignorance shall diminish, the basis of government will also decay. This however is an event which ought not to be contemplated with alarm. A catastrophe of this description would be the true euthanasia of government. If the annihilation of blind confidence and implicit opinion can at any time be effected, there will necessarily succeed in their place an unforced concurrence of all in promoting the general welfare. But, whatever may be the event in this respect, and the future history of political societies, we shall do well to remember this characteristic of government, and apply it as the universal touchstone of the institution itself. As in the commencement of the present Book we found government indebted for its existence to the errors and perverseness of a few, so it now appears that it can no otherwise be perpetuated than by the infantine and uninstructed confidence of the many. It may be to a certain degree doubtful whether the human species will ever be emancipated from their present subjection and pupillage, but let it not be forgotten that this is their condition. The recollection will be salutary to individuals, and may ultimately be productive of benefit to all.

After Capitalism
June 12, 2007, 2:11 am
Filed under: Capitalism, Economics, Parecon, Politics

I’ve just finished reading David Schweickart’s book “After Capitalism”, in which he describes his alternative to capitalism, called Economic Democracy. I wasn’t particularly expecting to like this book after reading the debate between him and Michael Albert on the subject of participatory economics (parecon, which I wrote about recently), in which I don’t think he acquitted himself well. It was better than I thought.

Economic Democracy (ED) is a form of market socialism, and so is automatically subject to the problems that markets introduce. There were a couple of other concerns I had. Bear in mind that this is only based on one reading of “After Capitalism”, which is a less rigorous book than his earlier “Against Capitalism” (which I haven’t read).

  •  ED still allows for a great deal of inequality. Schweickart talks about, for example, ranges for income between $20,000 and $200,000. This still spans the range poor to rich, even if it’s not very poor to very rich. Pragmatically speaking though, the question for me is: does the relative difficulty in achieving ED compared to a more egalitarian revolutionary idea justify this inequality? ED would require a revolutionary change in society, so would it be that much easier to achieve than, say, parecon, for it to be worth considering given the outcome is still quite unequal?
  • Schweickart – although he is a Marxist – doesn’t appear to take class into account. A socially stratified society is not impossible in ED and the level above suggests it is likely. To be fair, to make this criticism of ED rigorous, you would need to demonstrate afresh that class based stratification would occur in ED, because the mechanisms by which it would occur would be somewhat different to those in a capitalist society. Once you have class, is a stable egalitarian society possible? I would argue not. Along these lines, see also my comments on a very different book, Robert Nozick’s “Anarchy, State and Utopia”.
  • Schweickart suggests a scenario in which the transition to ED might be made in the USA if an economic crisis happened. Given that a socialist revolution is unlikely to occur in the USA any time soon, it might be worthwhile to consider how it could come about in poorer countries where there were strong (capitalist) outside influences.
  • Finally, although he outlines a possible transition from economic crisis to ED assuming that there was a will to implement ED, he doesn’t talk about how you could build a political movement and party that would do so.

The last two criticisms above apply to almost all socialist or anarchist schemes for a better world, but the first two I think are serious and specific to ED.

That all said, I do think this book is well worth a read. Economic Democracy would be undoubtedly be a better system than capitalism, and it’s possible that it would be easier to achieve than more radical schemes like parecon. My fear is that it isn’t radical enough – if we fought for it and achieved it, it might not be a lasting solution and may well share many of capitalism’s problems.

June 4, 2007, 11:08 pm
Filed under: Anarchism, Manifesto, Parecon, Politics

I wrote the following article for the H2G2 website. Unfortunately, I couldn’t get the footnote links to work in WordPress.

I believe that participatory economics (parecon) is a specific political conception of the type that modern anarchist thought ought to strive for. Although I’m not 100% convinced that the exact system as described below would work, something very much like it must surely be the best hope we have. At the very least, anyone who is interested in knowing about alternatives to capitalism should know about parecon.

Churchill is often misquoted as having said that democracy is the worst form of government except for all the others. [1] A similar sentiment is sometimes expressed about capitalism[2]: “Socialism was tried in Russia and look what happened there.” It is no longer acceptable to make idealistic utopian claims about how wonderful life would be without capitalism. Anyone proposing an alternative now must say why their idea would work, and address legitimate fears about totalitarianism.

Participatory Economics (parecon) is one such alternative (invented by Michael Albert and Robin Hahnel around 1990[3]). As well as proving mathematically that parecon is efficient, they gave good reasons why Russian communism failed and why parecon would not.

This article is too short to cover every aspect of parecon, in particular all of the common objections. At the bottom of this entry is a section on further reading if you want to know more.[4]

So what is Parecon?

Parecon is motivated by four key values: solidary, diversity, equity and self-management. Solidarity means encouraging people to work for the benefit of others as well as yourself. Diversity means giving people more options, for how they work and what they consume. It’s difficult to say what equity means in one sentence, but roughly speaking it’s about fairness and equality of outcomes. Nobody should have substantially more wealth or power than anyone else. Self-management means what it sounds like: everyone has a say in decisions which affect them. Specifically, in parecon this means that everyone should influence decisions in proportion to how much they are affected by them.

It’s not possible to predict how things would actually turn out in an actual parecon, but here are some aspects of what an ideal parecon would be like:

Equality – nobody would be much richer than anyone else. In a parecon equality is not perfect, but there are no groups of people who are systematically poorer than other groups, and differences in income are based on personal choice. You might choose, for example, to work much harder than normal for a few months if you had some particular big thing you wanted to purchase. It would be rare, though, to see one person earning more than twice as much as another.

Classlessness – a parecon society wouldn’t have social classes. It’s not possible for everyone to have equal status – not everyone can be the person who discovers a cure for cancer for example – but there wouldn’t be systematic differences that last through generations. There would be an equality of opportunity.

Work – there would be no bosses. That’s not to say that all organisation would be left to chance, that there’d be no consequences for not working or working badly, etc. The difference would be that everyone would have a say in how their workplace was run, and you would never be entirely subordinate to someone else. There would still be administration and duties, and expertise would play a role, but it wouldn’t be authoritarian.

Planning – a parecon is a planned economy. People would need to engage in planning processes, which would involve meetings and time spent thinking about what you might want to buy in the future (so that it can be produced).

In practice, things never work out like you might hope, and so there’d still be a role for politics in a parecon.

There are three main features of parecon – described below – production, consumption and planning. Production means how people would work and how things would actually get made. Consumption means how people decide what they want and how the things that are produced get divided up. Planning means how we decide what to produce given what people want and how much things cost to produce. It is helpful to have in mind how a capitalist economy arranges things in these respects: most people work in jobs over which they have fairly limited control, typically doing a very specific and often repetitive task; individuals consume what they can afford to buy; there is no overall planning procedure, profitable companies succeed and unprofitable ones go out of business.


In a parecon, every individual is a member of a workers’ council. These can be freely formed by anyone. Roughly speaking, these are the equivalent of companies in a capitalist economy. Within a workers’ council, individuals do a range of tasks as they would in a capitalist company. Where parecon really differs from capitalism in this respect is that everyone works in what are called balanced job complexes (BJCs). What this means is that the range of tasks they do are balanced for desirability, participation and empowerment.

Every BJC should be, on average, equally desirable overall (or equally onerous to put it more pessimistically). Everyone should also have a roughly equal degree of participation in the overall management of their council. Finally, everyone should find their BJC equally empowering overall, which might need some explanation. Some jobs, although they are very hard work and possibly unpleasant in some respects, give the person doing them more control over their lives and more understanding of the institutions and circumstances affecting them. This greater control and knowledge gives them power over others whose work doesn’t ’empower’ them in this way.


In addition to being workers, everyone is also a consumer, and so everyone belongs to a consumers’ council. An individual or family belongs to a neighbourhood council, which in turn belongs to a federation of neighbourhood councils, which in turn, etc., right up to a national consumption council. This hierarchy of consumption exists because there are different types of consumption which affect different numbers of people. Apples and oranges are consumed at an individual level, but when we ‘consume’ education we typically do it along with lots of others[5].

The amount that an individual can consume is related to their work. In a capitalist system, you work for wages or you accumulate money through ownership, and then you spend that money. Parecon has something similar to wages, but the idea is that you are paid according to the effort and sacrifice you make. So for example, cleaning toilets, it is usually agreed, is more effort and more unpleasant than writing restaurant reviews, and would therefore be paid better in a parecon[6]. In a parecon though, there would not be jobs which are just toilet cleaner and just restaurant critic, because jobs have to be balanced.

There are a few reasons for paying people according to the effort they have put in and sacrifices they have made. The first is a moral one. The effort people make is the only thing they personally have any control over. They can’t control who their parents are, how strong, creative or intelligent they are, but they can choose to work more or less hard. The second is a pragmatic one. There’s no point rewarding people for things about themselves they can’t change, because that doesn’t provide people with any incentives. There is a third reason, to do with class, explained in the section ‘What about Russia?’ below.

Participatory Planning

Planning in a parecon works through an iterative (repeated) process. Essentially, it starts with everyone giving a rough idea of what they would like to make or consume, and then trying to fit these together. It takes a few ’rounds’ of planning to match the two, and each round gets closer to a perfect match.

The Iteration Facilitation Board (IFB) announces ‘indicative prices’ (basically guesses) at the cost of producing various goods. These guesses might come from how much it cost to produce things last year for example. The consumers’ councils then submit requests for what they would like based on these estimates of the prices. Next, the workers’ councils submit proposals for things to make, including lists of what they would need to use to make them. The IFB takes all this into account, and calculates excess supply or demand, and uses this to recalculate the indicative prices. The consumers’ councils and workers’ councils then revise and resubmit their proposals based on these new prices, and the process repeats until a viable plan is settled on.

But does it work?

It’s difficult to say what it means for an economy to ‘work’. Some ways of organising an economy will be better in some ways and worse in others. But consider this: suppose you could reorganise things so that everyone was better off afterwards, or at least not worse off. If it’s possible to reorganise things like this, then obviously the economy is not efficient. If it’s not possible to do this, then the economy is called Pareto efficient after the Italian economist Vilfredo Pareto.

Pareto effiency is a minimum standard because obviously any economy that wasn’t Pareto efficient could be improved in an uncontroversial way that made everyone better off. But, it’s not the only important standard for judging how good an economy is. It might be that an economy where one person owned 90% of the wealth and everyone else owned a tiny amount in comparison was Pareto efficient, because any way of increasing the wealth of everyone else would have to take away some of the wealth of that one individual. Still, most people wouldn’t say that such an economy was a good one. In a nutshell – a Pareto efficient economy isn’t necessarily a good one, but an economy that isn’t Pareto efficient is certainly a bad one.

An important result in economic theory is that a ‘perfect’ free market is Pareto efficient.[7] Using the same mathematical theory, Albert and Hahnel have proved that a parecon is also Pareto efficient. So in this sense at least, parecon ‘works’.

One of the critiques of socialism[8] is that if you centralise the economic decision making, you’re giving those decision makers a task that is too difficult for them, and so the result will be inefficient. In free market capitalism, in principle there are no decision makers burdened with such enormously complex decisions.[9] Parecon shares this virtue with free market capitalism. Plans are settled on by the repeated interaction of the producers’ and workers’ councils through the IFB, and this effectively distributes the decision making to everyone (as in capitalism).

A whole economy has never been run along parecon lines, so it’s difficult to say whether or not it would work in practice, even if we know it would work in theory. There are some small companies that run according to the principles of parecon[10], but the largest employs less than 20 people. There isn’t space here to say anything about the large issue of how a transition to a participatory economy might be made, but because it’s never been tried before, it’s possible that a society that had made that decision might well want to do so gradually, experimenting with these ideas rather than rushing in and attempting to change everything overnight.

What about Russia?

Soviet Russia came into existence through a violent revolution, and fought to stay in existence through an incredibly brutal civil war. The violence continued with the secret police and Gulags. Communism in Russia was born in violence, and its leaders acquired authoritarian habits.[11] Obviously, avoiding violence and emphasising democracy would be of the utmost importance in creating a parecon, and this itself would avoid many of the problems of Russian Communism.

One of the key concepts of Marxism is the notion of class. The bourgeoisie own the means of production (factories, land, etc.), and the proletariat do the actual work. Simplistically, Communism was supposed to create a classless society by getting rid of ownership, and therefore the owning class. Albert and Hahnel argue[12] that this misses out a crucial third class, which they call the coordinator class. These are the people who do not own the means of production, but through their superior knowledge and their place in the workplace exert more control over the economy than the workers.[13] The theory says that whenever you give one group of people jobs that are systematically more empowering than others, where they get more say over the conditions of their work, make important decisions, learn new things and don’t just do rote labour, then this group will become a coordinator class. Once they become a class they have class interests, and they will reorganise the economy in those interests. This creates inequality which undermines the whole point of socialism. There is also the possibility that this class will become a ruling class which is what happened in the USSR.

Parecon strives to be a classless society which avoids coordinatorism by emphasising balanced job complexes, and everyone having a say in decisions to the extent that they are affected by them. Since parecon emphasises participatory, democratic decision making, and prevents the formation of class interests which go against the ideal of equality, Albert and Hahnel argue that it wouldn’t become authoritarian.

Further reading

[1] What he actually said was “… it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time” (my emphasis). The difference is subtle but important. The full quote comes from a speech he made to the House of Commons arguing against a bill to reduce the time the Lords could delay a bill from two years to one: “We accept in the fullest sense of the word the settled and persistent will of the people. All this idea of a group of supermen and super-planners, such as we see before us, “playing the angel,” as the French call it, and making the masses of the people do what they think is good for them, without any check or correction, is a violation of democracy. Many forms of government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time; but there is the broad feeling in our country that the people should rule, continuously rule, and that public opinion, expressed by all constitutional means, should shape, guide, and control the actions of ministers who are their servants and not their masters.”[2] Most forcibly by Margeret Thatcher: “There Is No Alternative.”

[3] Their book A Quiet Revolution in Welfare Economics was published in 1990, but the ideas were around before then. In particular, South End Press was founded in 1977 based on many of the principles underlying parecon.

[4] It is worth highlighting, though, that parecon is a system of economics not politics. It could be combined with various different sorts of political systems, although the most appropriate would perhaps be some form of participatory democracy.

[5] This is sometimes called ‘social consumption’ and it is something that capitalism has difficulty with.

[6] Which is the opposite of how it works in a capitalist economy.

[7] A ‘perfect’ free market is one where there are no monopolies, everyone knows everything about the economy, etc. More recent work has shown that an imperfect market (one with monopolies or oligopolies for example, or one where the consumer has less information than the producer) is not Pareto efficient.

[8] Not really socialism, but centrally planned economies.

[9] In practice it’s not so simple, as many large corporations such as General Motors have an economic importance as large as the entire economy of some countries.

[10] The first was South End Press founded in 1977, which publishes radical politics books by people like Noam Chomsky. There are also some coffee shops, bookshops, a newspaper and an internet hosting company. See the parecon website referenced in the main text.

[11] Some would argue that the Leninist concept of the vanguard made this inevitable.

[12] Lovers of obscure details might be interested to know that Michael Albert wrote a critique of Marxism entitled What is to be undone?, a reference to Lenin’s pamphlet What is to be done? inspired by Nikolai Chernyshevsky’s novel of the same name.

[13] This is not quite the same as the petite-bourgeoisie in Marxist theory. It’s closer to what is called the ‘middle classes’, but again not exactly the same.