Income in a Post-Capitalist Society: Who Decides?

The question of income in a socialist society has been debated for a long time, going all the way back to Marx’s famous slogan “From each according to his ability, to each according to his needs”, published in his Critique of the Gotha Programme in 1875.

What anti-capitalists all agree on is the need to replace private ownership of capital with democratic worker control over society’s productive resources. In such a society, income would no longer be possible from rent, dividends or by capital gains. This leaves the distribution of income available to individuals in two possible forms: via a) income for work, and b) income for needs.

The model of a Participatory Economy, proposes the following regarding remuneration for work:

“Differences in income for work are based on differences in effort or sacrifice, as judged by one’s co-workers” (bolded mine).”

From my experience advocating for the model over the years, the dislike of remuneration for effort or sacrifice has been the most common critique of the model, often leading to a rejection of the entire model outright. However, in this article, I would like to address the second part of the maxim, the “…as judged by one’s co-workers” part, which is often ignored, and make the argument that this is the more important part.

The more valuable activity in visioning post-capitalism is not on forming a fixed position on work or needs income now, but instead designing the institutional framework and processes which create the necessary conditions for citizens of the society to be able to make decisions on the distribution of income democratically, timely and efficiently themselves, and to be able to do so without coming into conflict with other important goals. The more important question is: who decides?

Conditions for democratic income

Information

One of the few statements Marx made about his vision for a communist society includes the aspiration for a moneyless society. However, there remains the question of who should get what. Any proposal for a post-capitalist system will need to explain how decisions are made which maximise popular participation but without economic life turning into endless laborious meetings over decisions about what should be produced and who should get what.

Any economy will need an accounting system to generate and record necessary information to enable workers and consumers to make fair, efficient and quick decisions over resource allocation and income. The Participatory Economy model achieves this through having a currency (which can only be used to consume goods and services – not buy shares) and prices (which represent full social costs and benefits and are generated via a social cooperative planning process). Each citizen has a personal account which is credited with income and debited for expenditure.

Accounting is an often ignored or under-appreciated aspect of political economy and post-capitalist economics. To understand the flow of transactions and information in a Participatory Economy, I would point readers towards the work by Anders Sandstrom who has designed a comprehensive accounting system compatible with a Participatory Economy.

Free from market pressures

In a Participatory Economy there are no markets. Salaries are not determined by market rates or through bargaining power. Income is also not paid out of a workplace’s revenues. This is an essential feature which enables income for work to be decoupled from a workplace’s labour costs. That means that while a workplace is charged their opportunity cost of a category of labour needed for efficient resource allocation and pricing, this does not influence the income a worker receives. This essentially allows the question of income to be made as a moral one, a political one. Note that there is no way a market economy can achieve this. If one attempted to equalise wages in a market, it would lead to inefficiency in allocation of resources. Ferdia O’Driscoll has written in-depth about this in a recent article: Explaining Communal Income and why it is essential to Socialism, Ferdia  O’Driscoll.

Power via Democratic Councils

Finally, citizens need to have appropriate power to make decisions. Decision-making in a Participatory Economy happens in deliberative bodies where each member has equal power, called democratic councils (or assemblies) where people work (workers’ councils) and where people live (neighbourhood consumers’ councils), and via delegates in higher levels of nested federations of councils. Rules for income, just like all other economic decisions, would be a decision that happens within these democratic councils.

Deciding income for work

Various practical suggestions have been made on what form remunerating for effort or sacrifice could take, including a universal flat hourly payment, a higher hourly payment for certain categories of work which are more unhealthy, dangerous or unpleasant, or even co-workers providing ratings of each other’s efforts. 

It will be for co-workers to decide themselves which option to choose via their workers’ council and capture it in their workplace constitution. If I were in a democratic workplace, in my workers’ council, I’d favour a simple flat hourly payment for all and to share out any work, like cleaning, as part of the balanced job recommendation. However, there is another decision-making possibility that I’d also like to consider here. It could be argued that because income is a question which impacts everyone in society, it should be made at the society level. I’ll address each option below and consider their pros and cons.

Deciding within the workplace

In effect, each workplace in a Participatory Economy receives an income “pie”, which they are then free to divide between themselves. The pie serves as a total salary cap and is calculated by the total hours worked by all workers multiplied by society’s base hourly income. For example, 1,000 hours worked per month x £50 per hour = a £50,000 per month budget. As long as total salaries for all workers sum to this, workplaces are free to allocate between themselves as they see fit. The workplace sends their payroll in (including any adjustments) and this is paid directly to workers from the society account (please see the accounting system for more detail).

Arguments in favour of deciding income for work within the workplace are:

• Workers have direct control over influencing income decisions where they work.
• Peers are in the best position to know how others are working.

Arguments against this are:

• Dangerous, unhealthy and unpleasant work are not evenly distributed throughout society. This would therefore disadvantage those working in workplaces with more burdensome work than average.
• Giving one person more means someone else accepting to receive less than the social average. For example, in a hospital, if those working night-shifts received more, those working day shifts at the hospital would receive less than the social average, even if their work is a greater sacrifice than the social average.

Deciding at the society level

In this scenario, rules for income would be decided by society as a whole. This could be coordinated by the national federation workers council using a participatory decision-making process, such as deliberation by all primary level workers councils, feeding in input, options formulated by the national council and voting done by the primary level councils.

For example, a decision could be made that there is a universal flat hourly income for everyone in the economy. Or there could be a decision to adjust certain categories for labour up to apply universally across the whole economy. An obvious contender for higher payment would be working night shifts, work which is known to have detrimental health effects. 

Arguments in favour of deciding income for work at the society level are:

• Income equity is an issue that affects everyone in society, so it should be decided at a national society wide level.
• Income would be distributed more fairly as higher income for burdensome work would be applied universally across all workers in the economy, not just relative to other work categories within a single workplace.

Arguments against this are:

• A reduction in workplace autonomy.

Deciding income for needs

There are different practical forms income for needs can take: free at the point of use public goods, or via direct payments.

Public goods are a form of consumption which is funded collectively by a community. This could be by a local neighbourhood, a city, a region or the national level and they can be designed to be free for any individual at the point of use. Education is a typical public good which many countries provide, and public goods could be extended to further services, including transport, housing, and so on, which could form the basis of a Universal Basic Services to cover most of our basic needs. The more a society chooses to use for public goods, the less available for individual consumption and vice versa. A trade-off.

Direct payments made from society into an individual’s personal account are a direct form of distributing income to individuals based on their needs. Examples include payments to those who are unable to work or too old to work. Direct payments could be increased and extended to any groups in society, or even further towards a universal basic income payment.

All these decisions around how much to allocate to public goods consumption, what types of public goods and direct payments, would happen at different levels within the nested federation council structure.

Deciding within consumers’ councils

Every household is a member of their neighbourhood consumers’ council. Similar to the way participatory budgeting projects work in many places around the world today, within these councils, citizens would formulate ideas, deliberate and decide on how they wish their budget for public goods where they live. The proposals are entered by the neighbourhood consumer council into the national annual participatory planning procedure.

Rotated delegates are sent to higher level consumers’ councils. City-wide public goods would be decided by the city consumers council and national-wide public goods would be decided by the national consumers council. Delegates could gather inputs and formulate budget proposals that could be sent to all members below for ratification.

Deciding at the society level

Decisions around direct payments would happen at the society wide level. This could be via the national consumer council federation or via the political system. They could set up an independent body or citizens’ assembly could be formed to gather information about jobs and make a recommendation to be ratified by society. One area for further work is on the integration of the political system with the participatory economy.

Putting income to the back of our minds

In a post-capitalist society where workers have taken democratic control and ownership over resources, where consumption is distributed according to people’s efforts and needs, there exist a variety of practical forms which this could take and different societies will likely choose and experiment with a different composition of income going to work and needs, universal basic services versus universal basic income, a universal hourly wage and higher income for certain types of work. There is little value in needing to reach agreement on the composition of these forms now. The more important question is to evaluate how these decisions would be made and to design a setting in which citizens have access to the right information, have appropriate power to influence these decisions, and can do so free from structural biases.

In the Participatory Model, the combination of nested federations of self-governing workers’ and consumers’ councils, who participate in participatory planning procedures using information generated via the rules in its accounting system, aims to create an institutional framework for decisions, including the allocation of income, to be made in a timely, efficient and fair manner, and designed to avoid a form of democracy that is over burdened from having frequent big long arduous meetings.

How do we know if a society has achieved an optimum income arrangement? This will happen when income goes to the back of people’s minds, when it is perceived as being fair and compassionate, and we can all get on with our lives without thinking too much about it. Drawing from leading researchers on human behaviour and self-determination theory, such as Alfie Kohn, we want to create an institutional setting that moves us away from income as a reward and instead towards establishing educational, political, economic and cultural conditions that maximise intrinsic motivation and which give people opportunities for autonomy, forming meaningful connections with others and improving our skills and inherent capabilities. Self-governing councils and democratic planning forms a foundation for citizens to make income decisions, while also providing the setting for maximising autonomous motivation and well-being.