Public Service Systems and Collective Consumption

April 28, 2023

The provision of collective services differs from the production of individually consumed goods and services in many aspects. In this article I discuss these differences as I see them and my thoughts on the organisation of collective consumption in a Participatory Economy.

What are public goods?

Public goods are goods and services that are available to, and consumed by, all members in a group or a society on equal terms. Collectively provided services include many important and indispensable services and utilities, the provision of which often requires a high degree of collective coordination and long-term planning.

Their provision often requires large initial investments and often displays economies of scale and natural monopolies. It includes essential services and utilities that society, a council, or a federation wants to make sure are available to all members or citizens on equal terms, regardless of where they live.

Examples of public goods are healthcare, education, infrastructure and transportation systems, distribution networks for individually consumed goods, electricity grids and electricity production, water distribution, garbage collection, postal services, internet and telephone networks. But it could certainly also include non-essential goods and services such as entertainment parks and playgrounds.

Public Service Systems

A large part of the collective services provided and consumed in a Participatory Economy will, presumably, be organised and produced through national or regional public service systems. Public service systems are planned and funded through decisions in the political sphere, which facilitates long-term and stable relations, notably, as today, judiciary, police, customs, and defence services, but also many other important utilities and services, i.e., health care and education. 

Decision-making and funding of collective consumption in annual Participatory Planning

It is the members in society, the consumer councils and federations that in the end decide which goods and services should be collectively provided and how they should be funded. Different consumer councils and federations may have different routines for data collection, preparatory meetings, public debates, etc., all of which can take place throughout and at any time during the year. But it is in the annual planning iterations that resources and services, both individual and collective, are requested, allocated and priced, and consumption is approved by other councils.

The costs that a society, a neighbourhood consumer council, or a federation incur for the provision of collective public services can be allocated to all citizens or members through equally sized shares and be free of charge at the time of use, or through a calculated user fee that is charged to individual users at the time of use, or a combination of the two.

The social benefit of rendered collective services is equal to the social cost of providing them and is not decided separately in the annual planning. Thus, the social benefit, or price, credited to a workplace that provides a collective service will match the expensed social cost of the provision of the service. The production proposals, or in this case the cost proposals, for the provision of different collectively consumed services, will guide the consumers’ priorities and decisions in their consumer councils and federations, on how to allocate their income between different public and private goods and services during the annual planning.

In each iteration during the annual planning, higher federation levels need to prepare and communicate their planned collective consumption before lower levels and individual consumers plan their consumption since the lower levels and the individual consumers need to know which public goods will be available at higher levels before deciding on their own consumption. This is a corrective for the bias against collective consumption from centuries of living in market economies.

Individual consumers also need to know their own and the other council members’ shares of higher levels’ costs for collective goods, services and utilities, and thus how much of their income remains for individual consumption in order to judge whether their total consumption is fair. Collectively funded consumption means less room for individual consumption and vice versa. 

Provision of collectively consumed services

When examining the provision of collectively consumed services, it becomes clear that the distinction between the processes of defining categorisation criteria, design and production are very blurred. It is, in practice, often almost impossible to separate these decisions from each other. 

The activity of providing individually consumed services is different from the production of goods in several important aspects; services cannot be stored and delivered at a later point in time, they are often labour intensive, and they often tend to be linked to a geographical area. Services that are collectively consumed usually display a few additional circumstances that differ. Primarily, collectively consumed services are often: 

(1) Produced by workplaces that have only one requesting customer, which can be a consumer council or federation, municipality, or government agency. Sometimes, these workplaces can even in some respects be considered a part of, or very closely connected to, the customer, e.g., workplaces providing public utilities in a municipality.

(2) Intimately linked to the recipients of the service, or clients, in a more profound and long-term way than the production of other goods and services, for example, when providing health, child and elderly care, schooling and education. Therefore, long term and stable relationships and trust between those who provide the services and those who use them are often of great importance.

(3) Linked to specific facilities, buildings, and equipment (e.g., long-term consumer assets such as hospitals, schools, theatres, libraries, museums, sport arenas, public swimming pools) that are requested by a consumer council, federation or government agency through which members have a direct influence over the use, design, and supply of these assets.

This, in turn, means that: 

a) Decisions about collectively consumed services will cover and affect a significantly  longer period than decisions about individually consumed items and a stable level of service between years will create trust and provide a sense of security. They will need to be discussed on an ongoing basis in the community and prepared and decided on well before the start of the annual planning.

Potential effects from any considered changes in service levels will have been closely evaluated and assessed before decisions are made. Thus, at the start of annual planning, most of the proposals for collective consumption will already have been extensively discussed and prepared. Adjustments of the initial proposals during annual planning due to price changes of needed resources will be relatively small and will be kept within limits discussed and accepted by both requesting and supplying parties. 

b) It is often difficult or impossible to clearly distinguish between the production and the consumption of many collectively consumed services and, thus, to separate the decisions about categorisation criteria, design, and production. 


Let’s look at a few examples.

Members of a workplace that is part of a public service system such as a public healthcare or education system will have to adhere and adjust to several production decisions that have been made externally, outside the direct control of the workplace and in the interest of the consumers and the community. These decisions will apply to every workplace included in the system, for instance, regarding curricula and class sizes in the education system.

Public service systems can be organised as a national public good, or as a local public good. In a local educational system things like class sizes may vary between areas based on different choices about how much to prioritise education compared to private goods and other local public goods. And the same is true for healthcare. Healthcare might be treated as a national public good, or it may be a local public good, with local differences in the quantity and quality of healthcare services available. But even if education or healthcare were treated as a local public good, presumably, there would be national minimal standards. 

In public transportation systems, which may include bus, train, subway, boat, and ferry services and possibly part of air travels, consumers, through their councils, federations, or government agencies, will want to be involved in the planning of routes and schedules, i.e., where, when, and how often the buses, trains, ferries, and airplanes will run.

Further Considerations

Having influence over many aspects of the planning and implementation of collective service provision also mean that consumer councils, federations and government agencies need separate administration structures under their direction that will collect and prepare information for a smooth decision-making process before and during annual planning and facilitate implementation and monitoring during the year.

To sum up, when consumer councils, federations and government agencies prepare and define their proposals for collectively requested utilities, services, and public service systems in preparation of the next annual planning they, by necessity, make decisions that simultaneously affect the categorisation, design, and production process of service provisions. The producing worker councils and workplaces must adjust and adhere to these “external” decisions when preparing their detailed production proposals in preparation for, and during, the annual planning and when providing the services during the year. 

This does not necessarily mean that representatives from consumer councils, federations or public service systems will sit on the board of individual worker councils taking part in decisions about production or participating in preparations of production proposals, though joint boards with representatives from a number of councils may possibly, in some cases, be an option to consider. The requesting consumer council or federation will definitely have an influence and be consulted when necessary.

Most importantly, when the workers plan and prepare their work and their proposals for public service production some decisions regarding the production processes and routines, the location and design of production units and what capital assets to use have already been made “externally” by the requesting party outside of the workplace, i.e., the affected customers in their councils or political departments who “design” the services that they will request. 

Of course, the degree to which such external decisions will affect and have an impact on the design of the provided service and the production process will differ between different types of public services. For instance, many services in the culture sphere and media will presumably to a lesser degree be designed and influenced by external decisions in customer federations or political agencies as compared to services in transportation, health care and education.

Notable Replies

  1. I should say that an economist would probably not necessarily agree 100% with the way I refer to “public goods” in the article. I basically talk about collectively requested and provided goods in the article, including goods and services that are funded by a calculated user fee at the time of use.

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