Anders Sandstrom interviews Robin Hahnel about Democratic Economic Planning

October 29, 2021

This interview was first published in Swedish in the magazine Arbetaren and translated into English below.

Anders: With so many problems that need to be addressed with great urgency – climate change, the rise of right wing authoritarianism, racism and sexism, escalating economic inequality, dangerous great power rivalries – why spend time discussing how a truly desirable economic system might function?

Robin: One should never discount the possibility that somewhere in the world a popular progressive movement may suddenly find themselves in a situation where they can try to launch an ambitious, democratic, equitable new economic system. This happened a number of times in the 20th century – in Russia in 1917, in Spain in 1936, in China in 1949, in Hungary in 1956, in Cuba in 1961, in Chile in 1972, and in Venezuela in 1999 to name some of the most notable. And even as the reign of neoliberal capitalism extended through the first two decades of the 21st century, there have continued to been opportunities — in several Northern African countries during the brief “Arab Spring,” under Evo Morales in Bolivia, during the Syriza government in Greece, under Rafael Correa in Ecuador, and most recently in tiny Rojava. In all these “historic moments” more creative and concrete “pre-thinking” about how to organize a desirable alternative to capitalism would surely have been helpful. 

Nonetheless, your question makes a good point: In most places we are many years away from a political moment when launching a new economic system is imminent. And nobody should underestimate how desperate the fights we must wage against all the dangers you mentioned are, which means that regrettably our attention must be focused first and foremost on responding to these crises rather than on how to build a truly desirable economic system. But there are good reasons to continue to work on concrete proposals for how best to organize our economic activities as we work on other projects and campaigns as well.

  • Any socialist who believes we have conveyed a coherent proposal for what kind of economic system we want in place of capitalism is sorely mistaken! Most people everywhere think socialism proved to be a failure. We must explain how and why what we champion in the 21st century would be qualitatively different and better than what went under the name of socialism during the 20th century. We must convince a public with every right to be skeptical that socialists have truly learned important lessons, and we now have our act together. Rosy rhetoric and generalities will no longer suffice.
  • This means we need to improve the quality of debate over what lessons we have learned and what kind of system we now propose. The anti-capitalist movement can no longer simply further elaborate our critique of capitalism while peddling socialism as a faith-based initiative.
  • And finally: Without a vision of something worth fighting for we cannot expect people to take the risks necessary to change things. Without a clear idea of where we want to go we cannot forge a strategy for how to get from here to there. In sum, we need a coherent and compelling vision of what kind of economic system we want because you can’t beat something with nothing!

Anders: Doesn’t the sad history of twentieth century socialism teach us that an altogether different kind of economic system – one without markets and private enterprise — is an idealist pipe dream? Isn’t a return to, and expansion of the kind of social democratic reforms that reached their apogee in Sweden in the mid-1970s the best that can be hoped for?

Robin: In the 1960s and 1970s Sweden took social democratic capitalism farther than anyone else ever has. AND IT WAS GOOD! It was far better than neoliberal capitalism. Unlike twentieth century Communism, in Sweden social democratic capitalism co-existed with political democracy. And Swedish social democratic capitalism could also have been further improved, for example by implementing the Meidner plan to transform private ownership into employee ownership. But social democratic capitalism is incapable of fully achieving economic democracy, economic justice, and environmental sustainability for reasons I explain at length in chapter 2 of Democratic Economic Planning. Social democracy restrains the most destructive elements of the economics of competition and greed, but leaves in place institutions based on competition and greed – private enterprise and markets. And therefore social democracy can always regress back toward more neoliberal capitalism, as indeed happened in Sweden over the past three decades. But let me be clear: I do not underestimate how much better social democratic capitalism is than neoliberal capitalism. Moreover, I believe that particularly in the “developed economies,” social democratic reforms will in all likelihood play an important role in the transition to a truly desirable economic system. 

Anders: Where does the “model” of a participatory economy fit in the post-Soviet debate about alternatives to capitalism?

Robin: We must acknowledge that in our confusion there are now very different ideas about what 21st century socialism should be. There are not only proposals for how to make centrally planned socialism more democratic and efficient, there are also different models of market socialism, different visions of community based economics, and different proposals for how to conduct comprehensive, democratic planning. Therefore, we have no choice but to engage in a full throated debate, and subject various proposals circulating today to careful scrutiny to sort out the wheat from the chaff. Of course I believe the model of a participatory economy we have worked out over the past forty years is what socialists should propose as our answer to the question: If not capitalism, then what? And I am pleased that our proposal has now received as much attention as it has. But I am under no illusion that the debate is over, much less that the model of a participatory economy has emerged as the consensus answer to “beyond capitalism.”

Anders: What are the major and unique features of the model of a participatory economy?

Robin: Democratic Economic Planning takes 374 pages to answer this question, although chapter 5 contains an overview of our proposal that is only ten pages long. But here are the major takeaways:

  • The major institutions are (a) social ownership of productive assets, (b) self-governing worker councils and neighborhood consumer councils, and (c) participatory planning procedures in place of market coordination.
  • We propose that work be reorganized so all jobs contain tasks that help prepare workers to participate more effectively in workplace decision making, and less desirable tasks be shared more fairly.
  • We propose that income be based on effort, sacrifice, and need, and that every worker council design its own procedures for awarding one another what we call effort ratings.
  • Our participatory planning procedures are unique in the planning literature. During annual planning worker and consumer councils make “self-activity” proposals and approve or disapprove one another’s proposals based on simple metrics which make clear when proposals are inefficient or unfair to others. There are no markets, and there is no central planning agency.

Anders: You have been writing about a participatory economy for over thirty years. What is new and different in this new book, Democratic Economic Planning?

Robin: In this book we respond at length to criticisms others have made of our proposals over the past three decades, and based on those criticisms change what we now suggest in some areas. But in Democratic Economic Planning we also address a number of important issues we never tackled before. For the first time:

  • We explain in detail how we propose externalities and public goods of different kinds be handled during annual planning.
  • We make concrete proposals regarding reproductive labor to eliminate sexual discrimination in workplaces and discourage it in households as well.
  • We report on encouraging results of simulation experiments designed to test the practicality and robustness of the annual participatory planning procedure. It is one thing to prove that our iterative planning procedure will eventually reach a plan that is both feasible and efficient, which we had done in previous publications. It is another thing to present evidence that the number of iterations, or rounds of self-activity proposals from councils, will be few enough to be practical, and that when standard assumptions economists make are violated in the real world that the procedure will be sufficiently robust not to break down.
  • For the first time we make concrete proposals for how to generate investment and long-run development plans. When making annual plans workers know what technologies are available to them, and consumers know what their preferences are, so the “trick” if you will is to design procedures to induce workers and consumers to truthfully reveal knowledge they have, or as economists put it, we need “mechanisms” which are “incentive compatible.” But nobody knows for sure what new technologies will become available in the future, or what new preferences consumers will develop, and unfortunately optimal investment and development plans depend on what those changes turn out to be. Moreover, future generations cannot participate when investment and development plans must be agreed on.  Who will speak for future generations when these plans are being drawn up? For the first time we propose how to formulate investment and development plans, integrate plans covering different time periods, and how to use information from subsequent annual plans to identify errors in longer term plans so they can be modified to mitigate welfare losses.
  • Finally, it is likely that the first few countries to adopt anything like a participatory economy will do so in a world where many other countries continue to have capitalist economies, and where the level of economic development among countries will still differ greatly. In Democratic Economic Planning for the first time we propose how a country with a participatory economy can benefit from participating in international trade and international financial investment without violating its commitment to economic democracy and economic justice, and thereby witlessly undermining its own core principles.

Start the discussion at