5 of 10: Is a Participatory Economy a practical possibility?

This is the fifth part of ten extracts from the book Democratic Economic Planning (2021, Routledge) by Robin HahneI.

Would participatory planning work in the real-world? How many iterations would participatory planning take? This is the conclusion of chapter 9 on the results of a computer simulation of participatory planning, which explores how practical and robust a real-world version of annual participatory planning procedure is likely to be.

Conclusion: a practical possibility?

Market systems do not have to prove that they are a practical possibility [18]. Unfortunately, however, as the 21st century is poised to enter its second quarter, we cannot point to any example where something resembling the kind of participatory annual planning we have proposed has ever had a chance to prove its viability in a real-world setting. This is not to say that libertarian socialism has never risen beyond the status of a proposal or protest movement. I discuss notable historical examples of where libertarian socialists were able to briefly put their ideas into practice in chapter 6 of Economic Justice and Democracy, “Libertarian Socialism: What Went Wrong” – for which Noam Chomsky wrote a postscript titled: “In Defense of Libertarian Socialism.” Nonetheless, it is not possible to point to any example where something like the participatory planning system we espouse ever functioned long enough so that its “practicality” cannot be questioned.

The Soviet experience demonstrated that a different kind of comprehensive economic planning – an authoritarian system of central planning – was indeed a practical possibility whatever its deficiencies might be [19]. Centrally planned economies functioned for many decades in the 20th century before being abandoned almost everywhere. And in some respects they were even “real world” success stories. No country had ever overcome underdevelopment and industrialized as rapidly as the centrally planned Soviet economy did during the 1930s. This by no means justifies the human suffering inflicted during Stalin’s reign. Nonetheless, had the Soviet Union not industrialized at an unprecedented rate, it is hard to imagine it would have been able to break the back of the Nazi war machine during WWII, in which case the remainder of the 20th century might have looked very different indeed [20].

But our point is simply this: No . . . we cannot “prove” that participatory planning is a practical possibility by pointing to some real-world example, as one can in the case of market and centrally planned economies. Nor has any government yet been willing to test its practicality by simulating the participatory planning procedure as a real-world laboratory experiment to see what would happen. So until such time as the practicality of annual participatory planning can be tested in one of these ways, what we are left with are computer simulation experiments like those reported on in this chapter. We have acknowledged the limitations of what computer simulations of worker and consumer councils can tell us. And we have also acknowledged that there is much more simulation work to be done, so any conclusions here are provisional. But do the results presented here suggest that annual participatory planning is a “practical possibility?” Or do they instead lend credence to the opinions of skeptics that this much popular participation by workers and consumers in formulating annual plans is overly ambitious from a purely practical point of view and, therefore, simply “a bridge too far?”

The purpose of the experiments whose results are reported in the tables in this chapter was to shed light on the practicality and robustness of our annual participatory planning procedure. “Practicality” meaning how many iterations we might expect to have to do each year. “Robustness” meaning that when different properties of production and utility functions in our simulations are relaxed or violated, we can no longer be assured that our procedure will converge. However, that does not mean our procedure might not converge, nonetheless, if violations are small and few enough.

No doubt, people will read our results differently. There will always be pessimists as well as optimists, and there will be evidence for both to point to. However, to be frank, we were pleasantly surprised by our results. We did not expect our computer simulations to suggest that our annual participatory planning procedure was as practical, and perhaps as robust as our reading of the preliminary evidence presented here suggests it may be. In particular:

• We did not expect to find a price adjustment rule as efficient as the one we have already found. We assumed the traditional price adjustment rule used in theoretical work where the only concern is proving eventual convergence was not particularly efficient. But we did not expect to improve as dramatically on a price adjustment rule as it appears we have with very little effort.

• When we simulated technological change by making random additions to the exponents in our WCs’ Cobb-Douglas production functions, we were pleased to discover that additions to exponents that correspond to annual increases in real GDP that are, if anything, greater than historical increases on average due to technical change, only required a number of iterations to reach a feasible plan for the new year, which seem quite “practical.” And we were also pleasantly surprised that when we began from an arbitrary initial price vector, the number of additional iterations required to move from excess demands in excess of 10% to excess demands less than 5%, which is also more in line with what would be required in the real world, yielded results very consistent with those findings.

• Because our early work was done in Netlogo, which greatly limits the size of the economy one can study, we were uncertain how “scaling up” the size and complexity of the economy would affect convergence. Increasing the number of worker and consumer councils is easily done in Clojure, as is increasing the number of different goods produced, inputs from nature, and categories of labor. But while it is easy to increase the number of goods any CC consumes, increasing the number of goods in any single WC production function is not easily done. For WCs solving the optimization problems in specialized mathematical processing software for much larger numbers of variables is problematic, and that task will have to be left to future research. However, we were pleased to discover that increasing the number of WCs to 30,000, the number of CCs to 30,000, and the number of goods, inputs from nature, and kinds of labor to 100 did not appear to render participatory annual planning any less practical. Assuming 1,000 people in a consumer council, 30,000 CCs represents a population of 30 million people – which is three times larger than the populations of Sweden, Austria, Portugal, or Cuba; approximately the same size as the populations of Venezuela, Peru, Poland, Canada, or Australia; and roughly half the population of the United Kingdom, France, Italy, or Thailand.

• Testing for robustness is clearly where further research is most needed. However, even in that regard, we found the preliminary results of relaxing the assumption of decreasing returns to scale to be quite promising.

In sum, until there is further evidence, until there is a real-world example of comprehensive participatory planning permitted to function for a number of years, in normal conditions and not under extreme duress, until there is a government willing to sanction a test run with real people in WCs and CCs, or until there is further evidence from more computer simulation experiments, based on the work reported in this chapter, we believe our annual participatory planning procedure cannot be summarily dismissed as a practical impossibility – a “bridge too far” – as some have done. Moreover, we remind readers that all results reported here assume no intervention by personnel in the IFB, who presumably might further reduce the need for iterations, or at least iterations that require all councils and federations to participate.

Notes

18.  As hard as it is for us to imagine today, this was not always the case. One of Adam Smith’s goals in The Wealth of Nations was to convince an audience that was still skeptical in 1776 that the spread of markets to govern ever greater domains of human interaction would not lead to chaos or disaster, but instead be reasonably stable and beneficial.

19.  Hopefully, readers realize by now that the authors of this book do not approve of central planning and do not mourn its demise!

20.  It is commonly assumed that during the 1970s and 1980s the Soviet economy stopped growing and became a kind of “zombie” economy, while Western capitalist economies continued to grow. After growing faster than any economy in the world during the 1930s and faster than the US economy for two decades after WWII, the best evidence shows that, while the Soviet economy did grow more slowly after 1975 and began to fall behind the US growth rate, it continued to grow every year until 1990 when political changes led to the beginning of the dismantling of central planning. See Kotz and Weir, 1997.