Participatory Planning Through Negotiated Coordinationgesd.free.fr/devine.pdf · 72 SCIENCE && SOCIETY V Science Society, Vol. 66, No. 1, Spring 2002, 72±85 72 Participatory Planning

72 SCIENCE amp SOCIETY

V

Science amp Society Vol 66 No 1 Spring 2002 72plusmn 85

72

Participatory PlanningThrough Negotiated Coordination

PAT DEVINE

1 Principles

THIS CONTRIBUTION TO Science amp Societyrsquo s special issue onsocialist economic organization brings together the basicmodel proposed in Devine (1988) and subsequent work de-

veloping and elaborating that model (Adaman and Devine 19941996 1997 forthcoming Devine 1992 1997 2002) It is part of aproject that is designed to assist in the revival of the movement forsocialism by developing a well-defined model of participatory demo-cratic planning The aim is to take seriously both the negative expe-rience of the Soviet model of administrative command planning andthe positive insights of the Austrian schoolrsquos recent reworking of thesocialist calculation debate

The principal objective of the model of participatory planningthrough negotiated coordination is to outline a possible architecturefor the institutions and processes through which a self-governingsociety might operate I understand a self-governing society to be onein which the diverse voluntary associations constituting civil societyexercise control over both the state and the economy In relation tothe economy this means that the freely associated citizens not justproducers decide on the use to be made of societyrsquos productive po-tential rather than this being determined by the coercion of the stateor the coercion of market forces

A self-governing society is one in which those who are affectedby an activity participate equally in the decision making relating to

PLANNING THROUGH NEGOTIATED COORDINATION 73

that activity in proportion to the extent to which they are affectedby it For this to be real rather than just formal requires equal ac-cess to the resources needed for effective participation In additionto the abolition of the class division between those who own the meansof production and those who donrsquot and of the exploitation and op-pression arising from that relationship the abolition of the socialdivision of labor ordfthe antithesis between intellectual and physicallabourordm (Marx 1974 347) is also necessary

Generalizing from Marxrsquos distinction we can classify activitiesor labor into different categories I have suggested five administer-ing directing and planning creative activity caring and nurturingskilled activity unskilled and repetitive activity (Devine 1988 1997)Within each category there is a wide variety of different functionalactivities The first four categories freed from the relationships ofdomination and subordination arising from the hierarchy of socialpower are in different ways psychologically productive and contrib-ute to the realization of human potentiality The fifth category is ingeneral psychologically unproductive and an important social objec-tive should be to reduce the amount of such activity that has to beundertaken

Abolition of the social division of labor means ending the socialstratification that arises when people spend their lives performing pri-marily just one category of activity when they are defined by their jobsas skilled or unskilled workers creative or caring workers or are mem-bers of the establishment who direct and run society in all its aspectsIt does not mean ending the functional division of labor Rather therewould be an expectation that over their lives people would specializein functional activities within each category performing their share ofthe labor that is socially necessary within each category1

Socialism then may be thought of as the social transformationsthat are needed if people are to gain control over their lives to beable to make informed and effective decisions about how they wantto live Self-determination has both an objective and a subjective as-pect to it or perhaps more accurately an external and an internalaspect It involves the ability to make effective decisions about the

1 The abolition of the social division of labor is in many ways akin to Albert and Hahnelrsquos(1991) proposal for the creation of ordfbalanced job complexesordm although they envisagethis occurring within the workplace over a short time horizon rather than in the courseof a lifetime


external framework within which we live It also involves our beingaware of the determinants of our internal lives our subjectivity sothat we can collectively and individually shape the external frame-work in ways that enable us to develop our human potentialities tothe full

A socialist society needs an economic system that promotes the self-activation and self-development of its citizens The model of participa-tory democratic planning outlined below is consistent with this objec-tive It is constructed around the concept of negotiated coordinationUnlike coordination through the coercion of either market forces orstate direction negotiated coordination requires people to engageconsciously with their interdependence with the consequences of theiractions for others It encourages people to transcend their sectionalor partial interests and take account of the situation of others It alsoI believe incorporates a dynamic that goes with the grain of abolish-ing the social division of labor Indeed its successful operation prob-ably depends on this

2 Basic Concepts

Any discussion of socialist economic organization today must takeaccount of the theoretical work on the nature of knowledge associ-ated with the revival of the socialist calculation debate The essentialpoint here is not only that key knowledge relevant to economic deci-sion making is distributed in a manner ordfspecific to time and placeordm(Hayek 1945) but also that it is to a large extent tacit acquiredthrough learning-by-doing by the individual or group This meansthat much relevant knowledge cannot be codified and transmittedbut must be acted on by those who possess it2

This then reinforces the case for social ownership I define so-cial ownership as ownership by those who are affected by ETH who havean interest in ETH the use of the assets involved Social ownership isnot only in my view a fundamental socialist principle it is also moreefficient than private state or workforce ownership This is because

2 It follows from this that models of direct planning based on the electronic transmissionof ordfdataordm to a central agency which then calculates ordfoptimalordm prices or output targets areat best confined to static contexts and have difficulty in dealing with change and uncer-tainty An important area in need of clarification is the extent to which the models of Albertand Hahnel (1991) Cottrell and Cockshot (1993) and Laibman (2002) fall within thiscategory as prima facie they appear to do


it enables the tacit knowledge of all those affected to be drawn uponin the process of negotiating what should be done to further the so-cial interest in any particular context3

Given this definition it follows that the social owners will differaccording to the scope the reach of the activity or decision involvedThus the principle of subsidiarity applies social ownership shouldbe defined and decisions should be made at the most local decen-tralized level that is consistent with all and only those who are af-fected by the use of the assets involved participating in the decision-making process with respect to those assets This means that a processof negotiated coordination would take place at all levels from thelocal to the global according to the characteristics of the activity inquestion4

Economies that are based on a functional division of labor andare not static ie all modern and foreseeable future economies re-quire coordination Change in the size and structure of productivecapacity involves investment and disinvestment A central distinguish-ing feature of models of socialist economic organization is the wayin which the coordination of interdependent investment and disin-vestment decisions occurs In market socialist models as in capital-ism such decisions are made atomistically and are coordinated ex postby the operation of market forces by Smithrsquos invisible hand whichMarx called the anarchy of production

Until recently socialists believed that in a socialist economy in-terdependent investments would be coordinated ex ante ie plannedas an integrated whole in advance of being implemented This it wasargued would remove the uncertainty that exists when investment isundertaken in ignorance of other simultaneously undertaken invest-ment that affects the outcome The structure of productive activitywould be planned to satisfy social need rather than being the un-planned outcome that no one willed of atomistic decisions under-taken in the pursuit of private profit

3 A major weakness in the modern Austrian Schoolrsquos emphasis on the need for tacit knowl-edge to be socially mobilized by entrepreneurs participating in the market process is thatparticipation is restricted to those with access to capital thus ignoring the tacit knowl-edge of the majority of people

4 This may be thought of in terms of internalizing ordfexternalitiesordm If an activity undertakenin one locality has significant effects on other localities then the other localities shouldbe represented in the decision-making process


However the historical experience of Soviet-style command cen-tral planning together with theoretical developments in our under-standing of the importance of tacit knowledge and the centrality ofuncertainty are widely assumed to have discredited economic plan-ning interpreted as ex ante coordination The dominant view today isthat the market is the only effective form of economic coordinationThus the overwhelming majority of socialists working on models ofsocialist economy now advocate some form of market socialism5

By contrast my model of participatory planning is specificallydesigned to enable the ex ante coordination of investment to take placethrough negotiation It is based on a distinction between marketexchange and market forces Market exchange involves the salepurchase of the output of existing productive capacity The opera-tion of market forces is the process through which changes in thestructure of productive capacity brought about by investment anddisinvestment are coordinated in capitalism (and market socialism)The model outlined below retains market exchange but replacesmarket forces by negotiated coordination

3 The Model

The model assumes a democratic political and economic systembased on a combination of direct and representative democracy Theabolition of private ownership of the means of production and thesocial division of labor would create the conditions for generalizedparticipation in both types of democratic decision-making Contraryto what has sometimes been suggested (Blackburn 1991 Hodgson1998) this would not mean that everyone would be involved in everydecision leaving no time for anything else It would mean that overthe life cycle people would take their turn at being involved in directdemocratic decision making and in acting as representatives in theprocess of representative decision making

Through the political process making use of alternative economy-wide plan variants people would decide on the societyrsquos priorities forthe next planning period These would cover issues such as the bal-ance between social and economic investment and social and per-sonal consumption major structural developments in the cultural

5 For a discussion of the socialist case against market socialism see Devine 1992


environmental urban and transport infrastructure the geographi-cal distribution of economic activity priorities for the use of the re-sources allocated to RampD and innovation and so on The outcomeof such strategic decisions would feed into the distribution of pur-chasing power and expenditure in the economy

Enterprises would be socially owned by those affected by theiractivities The owners would include the enterprisersquos workers otherenterprises in the same line of production major suppliers and users(directly or through their trade or consumer associations) the locali-ties and regions in which the enterprise is based and single issuegroups with an interest in eg the environmental or equal opportu-nities impact of the enterprise These social owners would be repre-sented on the Board of Directors of the enterprise negotiate overstrategic policy decisions and monitor the activities of the internallyself-managed workforce

There is of course the question of how the groups with a legiti-mate interest in an enterprisersquos activities the social owners wouldbe identified and how the weight that each group should have in thedecision-making process would be determined However these issuesare not specific to the model of negotiated coordination but arise inrelation to any attempt to devise institutions in which stakeholdersare represented The advantage of social ownership compared toworker-owned enterprises operating within a legislative frameworkdesigned to safeguard the interests of other groups is that it enablesthe tacit knowledge of all the affected groups to be drawn on in thecourse of negotiating enterprise policy and practice

Enterprises engage in market exchange making use of theirexisting capacity and in general compete with other enterprises Thedegree of capacity utilization they achieve provides information onthe extent to which the resources incorporated in them are beingproductively used to meet social need Undercapacity utilization in-dicates either that users prefer the output of other enterprises or thatthere is excess capacity in that line of production or both Full ca-pacity working plus growing order books indicate the opposite Thisinformation is then available to inform decisions on changes in ca-pacity on investment and disinvestment

However unlike in capitalism or market socialism such decisionsare not made at the level of the enterprise since they affect a wider setof individuals and groups ie the social owners at the level of interde-


pendent investments are different from those at the level of the use ofexisting capacity Instead investment decisions are made by what I havecalled negotiated coordination bodies on which are represented theinterests affected by the interdependent set of investment decisionsunder consideration The social owners at this level include all theenterprises in the industry or sector the localities in which they arebased and regional national or international planning commissionsdepending on the character of the activity involved together with anyother groups with a legitimate interest in the outcome

Negotiated coordination bodies have two sorts of information todraw on when negotiating their investment decisions First there isquantitative information on a) the performance of the differententerprises b) any planned major new developments arising fromthe priorities incorporated in the economy-wide plan and c) estimatesof the impact of significant new technical developments or culturaltrends This enables them to decide whether any enterprises appearto be making inefficient use of the assets incorporated in themwhether aggregate capacity needs to be expanded or contractedand whether the product specification of the industry or sector needsto be significantly modified

Second the representatives of the social owners participating inthe negotiating process are able to draw on their tacit knowledgein arguing their case as to why enterprise performance may appearinefficient what they judge to be possible and how the social own-ers they represent would be affected by the alternative distributionsof investment and disinvestment under consideration Thus enter-prise representatives might argue that temporary or special circum-stances had resulted in their apparently poor performance while localor regional representatives might argue that employment opportu-nities in their areas were less favorable than elsewhere

The process of negotiated coordination is a process in whichthose participating have to convince their peers all of whom havean interest in the outcome and many of whom have specialist knowl-edge of the activities involved Thus the danger of successful specialpleading would be minimized It involves give and take and promotesunderstanding of the legitimate interests of others It is not a proce-dure for aggregating pre-existing preferences but rather a trans-formatory process in the course of which perceptions and preferenceschange It is a continuous process of negotiating what is to be defined


as the social interest by those whose interest it is in the light of theoutcome of past decisions and best estimates of future possibilitiesin an uncertain and changing world

4 Issues

Three issues that have been raised as criticisms of the model oras requiring further development need to be briefly discussed

a Prices wages profits and natural resource rentals Prices would beset by enterprises equal to the social cost of production At the levelof the economy as a whole the cost of production is the cost of theprimary inputs used ETH labor capital and natural resources At the levelof the enterprise costs include these primary costs but also the costof bought-in intermediate inputs Primary input prices need to bedecided at the level of the economy as a whole since they influencethe use made of societyrsquos productive potential through their impacton the decisions of enterprises negotiated coordination bodies andconsumers and also on the distribution of income

The social priorities decided on through the process outlined atthe beginning of Section 3 would indicate the scope for any increasein the average real wage The money wage increase correspondingto this given the prevailing price level together with any changes inany wage differentials attaching to different functional occupationswould be negotiated by representatives of those affected eg govern-ment trade unions enterprises negotiated coordination bodies Ifit were not possible to reach agreement claims on resources wouldexceed availability which would mean that agreed priorities couldnot be fully implemented

The capital charge or desired rate of return on the use of societyrsquosstock of fixed assets would also reflect the overall priorities agreedChanges in the desired rate of return would reflect the need to gener-ate a surplus equal to the planned allocation of output for social ex-penditure and economic investment after making an allowance forestimated personal saving and revenue raised from natural resourceuse rental The rental for the use of natural resources over and abovethe cost of producing or making use of them would reflect the sociallydetermined evaluation of their relative scarcity with respect to poten-tial current use and in the case of non-renewable resources desiredrates of depletion


Enterprises would then set prices equal to long-run cost of pro-duction based on primary input prices including the economy-widecapital charge or desired rate of return and the prices of bought-inproduced inputs Prices thus calculated might well differ betweenenterprises in the same industry or sector either because of differ-ent product specifications or because of different efficiency levelswhether due to objective differences or different internal workingpractices Customers would then choose their preferred priceprod-uct characteristic combination and enterprises would find themselvesoperating at or below full-capacity working

The rate of return that enterprises actually obtain would there-fore either equal or fall short of the desired rate of return that hadbeen incorporated in their prices This information generated bymarket exchange would then be available to negotiated coordina-tion bodies when planning the allocation of major investment asoutlined in Section 3 Relative prices determined as set out abovewould of course exist for intermediate inputs as well as for consumergoods They would therefore together with qualitative considerationssuch as the character of the work experience involved influencechoice of technique as well as consumer choice6

b Entrepreneurship and innovation A recurring criticism of social-ism as an alternative to capitalism has been its alleged lack of dyna-mism It is argued that innovation cannot be planned but requiresdecentralized decision-making enabling entrepreneurs to act on thebasis of their tacit knowledge in order to discover what is and what isnot possible Since the outcome of innovative activity is inherentlyuncertain emphasis is increasingly placed on the innovation processthrough which a variety of innovations is generated and then sub-jected to a selection process which in capitalism occurs through theoperation of market forces7

Although in capitalist economies many of the ideas and proto-types for innovation originate outside the large corporations theyare almost invariably developed by large corporations or by small firmsthat become large corporations Firms develop social tacit knowledgeor know-how that enables them to identify promising new possibili-ties outside the firm andor to generate them internally They have

6 For a more extensive discussion of prices and related matters see Devine 1988 chs 83and 102

7 For further discussion see Adaman and Devine forthcoming Devine 2002


the capacity and resources to then develop some of these possibili-ties into new products discarding most of them as unviable in theprocess Since not all ideas and prototypes can be developed thereis necessarily an internal selection process through which those pro-jects thought most likely to be profitable are chosen

The innovations thus generated are then launched on the mar-ket and subjected to the competitive process with market forces al-locating increasing resources to the firms whose products are profit-able and driving out the unsuccessful firms Thus both within thecapitalist firm and through the operation of market forces the crite-rion for selecting across the variety of potential and actual innova-tions is profitability expected and eventually realized The outcomeis that while some innovation in capitalist economies is socially use-ful much is socially useless or harmful

The model of negotiated coordination incorporates the possi-bility of both the generation of variety within and between enter-prises and selection across that variety However the criteria for se-lection would be wider than just expected or actual profitabilityIndividuals research institutions and small firms would offer ideasor prototypes to enterprises to negotiated coordination bodies toplanning commissions at all levels Enterprises would also developtheir own ideas and prototypes internally Planning commissions areable to establish new negotiated coordination bodies Negotiatedcoordination bodies can offer ideas to existing enterprises or estab-lish new ones

Enterprises then select which projects they want to develop inthe light of what the social owners judge to be the social interest Thiswill of course include a judgement as to whether if the product wereoffered for sale enough would be bought for the enterprises to beable to cover the capital charge incurred in its production to realizethe socially desired rate of return If the innovation is incrementalthey then proceed with it If it requires major new investment theytry to convince their own or another negotiated coordination bodyto finance it It would also probably be a good idea to establish socialventure capital funds to which individuals groups or enterprises couldapply for the finance needed to pursue their ideas

The process of market exchange then allows users to select whichinnovations they buy This affects the extent to which the sociallydesired rate of return is in fact realized and this information is then


available to the negotiated coordination bodies when reviewing pastdecisions and deciding on future investment Thus both in the de-velopment stage and in the market exchange stage a wider set ofcriteria is used in making decisions on innovation than the narrowprivate profit criterion of capitalism

The model of negotiated coordination therefore offers scope forentrepreneurial initiative and promotes the generation of variety Itenables the choice of innovative possibilities for development to bemade on the basis of socially determined criteria recognizes the in-herent uncertainty involved in innovation and provides a mechanismfor feedback revision and learning It is more efficient than capital-ism in that it is able to draw on the tacit knowledge of everyone ratherthan just of the class of entrepreneurs with access to capital It offersthe prospect of social control over the direction of innovative activityin place of the runaway juggernaut to which people increasingly feelthemselves subject under the sway of ever more global capitalism

c Sustainability 8 The future is likely to be fought out over thehistorical concerns of the socialist project social justice and empow-erment thus enabling self-government and more recent ecologicalconcerns focusing on the concept of sustainability (Red Green StudyGroup 1995) Ecological issues involve decisions that have to be madein conditions of uncertainty on how to weigh the imperative of theprecautionary principle against the benefits or disbenefits of devel-opments that are potentially either emancipatory or ecologicallydestructive and therefore inimical to human well-being If such deci-sions are to have legitimacy they must be taken in the light of avail-able scientific knowledge by those who will be affected by whicheveroutcome occurs We may of course make the ordfwrongordm decision butwe can learn from that as we cannot if the decision is imposed bycommand planning or the greater danger today by the WTO mul-tinationals and the coercion of global market forces

The model of negotiated coordination although developedwithout the benefit of the literature on tacit knowledge and beforethe ecological crisis made itself felt so powerfully is neverthelesswell suited to analysis of these issues The basic framework is one inwhich the social owners those who are affected by the decisions

8 This section draws extensively on the work of my MPhil student Begum Ozkaynak(Ozkaynak 2000)


made are those who make the decisions Ecological economistsargue that the way in which decisions are made matters and pro-pose what they call ordfprocedural rationalityordm a process of ordfdiscur-sive democratic deliberationordm (for further discussion see Ozkaynak2000) However they do not discuss the institutional arrangementsthe distribution of property rights and of access to the experiencesneeded for self-development that would make such a process aworking and legitimated reality The model of negotiated coordi-nation based on the abolition of private property and of the socialdivision of labor ie of the institutions of capitalism addresses thesefundamental questions

5 Conclusion

In this paper I have outlined a model of participatory economicplanning based on a process of negotiated coordination The modelwas developed in response to the evident weaknesses of the Sovietmodel of command central planning and the challenge presentedby both capitalist ideologues and market socialists to the very possi-bility of economic planning It was deliberately designed as an alterna-tive to state coercion and the coercion of market forces as a meansof coordinating economic activity in a complex modern economy9

However the model was initially developed without reference to thesocialist calculation debate ecological concerns or the global dimen-sion and with insufficient attention to the importance of uncertaintyinnovation and entrepreneurial activity

Subsequent work has sought to remedy these omissions and theunderlying principles of the model have proved robust when appliedto the issues involved The central insight to have emerged from themodern Austrian schoolrsquos reworking of the socialist calculation de-bate is the importance of tacit knowledge which is also emphasizedin the current literature on innovation The process of negotiatedcoordination based on the principle of generalized participation isa process in which the tacit knowledge of all the social owners con-tributes to the outcome not just that of those with access to capitalas in capitalism Similarly the process of negotiation engaged in by

9 The challenge was succinctly captured by Nove ordfThere are horizontal links (market) thereare vertical links (hierarchy) What other dimension is thereordm (Nove 1983 226)


the social owners at each level is a process of discursive democraticdeliberation as advocated by ecological economists

The distinction between the use of existing capacity and non-incremental changes in capacity institutionalized in the model throughthe distinction between enterprises and negotiated coordination bod-ies provides a framework for decision-making across the localplusmn globalspectrum In accordance with the principle of subsidiarity decisionson the use of existing capacity would be made at the local level bythe social owners of the enterprise whereas decisions on changes incapacity would be made at the lowest level that enabled the effects ofthe decision to be ordfinternalizedordm ie would be made by those affectedby the decision the social owners at that level

Although incomplete and distorted by unequal power relation-ships an analogous structure already exists with respect to politicaldecisions Jurisdictions range from local government through re-gional and national governments to international and global insti-tutions Indeed comparable arrangements also exist to some extentfor economic decision-making at all levels The challenge is to de-mocratize both the polity and the economy at all levels by includingin the decision-making process the rightful social owners those whoare affected by the decisions being made Local movements againstworkplace closures global demonstrations against the World TradeOrganizationrsquos proplusmn multinational corporation proposals need to becomplemented by demands for representation in the decision-mak-ing process and a corresponding redistribution of power

Finally the process of negotiated coordination the distinctionbetween the use of existing capacity and changes in capacity and theconcept of social ownership defined at different levels according tothe characteristics of the activity involved together provide a decen-tralized and pluralistic framework within which individual initiativeand creativity entrepreneurial activity and innovation would flour-ish However the framework also enables a self-governing society toexercise conscious social control over the sorts of innovation it wishesto encourage the direction in which it wants to develop

School of Economic StudiesUniversity of ManchesterManchester M13 9PLUnited Kingdompatdevinemanacuk


REFERENCES

Adaman Fikret and Pat Devine 1994 ordfSocialist Renewal Lessons from the `Cal-culation Debatersquo ordm Studies in Political Economy 43

ETH ETH ETH 1996 ordfThe Economic Calculation Debate Lessons for Socialistsordm CambridgeJournal of Economics 205

ETH ETH ETH 1997 ordfOn the Economic Theory of Socialismordm New Left Review 221ETH ETH ETH 2001 ordfParticipatory Planning as a Deliberative Democratic Process A Re-

sponse to Hodgsonrsquos Critiqueordm Economy and Society 302 (May) 229plusmn 239ETH ETH ETH Forthcoming ordfA Reconsideration of the Theory of Entrepreneurship A

Participatory Approachordm Review of Political EconomyAlbert Michael and Robin Hahnel 1991 The Political Economy of Participatory Eco-

nomics Princeton New Jersey Princeton University PressBlackburn Robin 1991 ordfFin de Siegravecleordm New Left Review 185Cockshott Paul and Allin Cottrell 1993 Towards a New Socialism Nottingham

England Spokesman BooksDevine Pat 1988 Democracy and Economic Planning Cambridge England Polity

Press Boulder Colorado Westview PressETH ETH ETH 1992 ordfMarket Socialism or Participatory Planningordm Review of Radical Politi-

cal Economics 243 amp 4 (Fallplusmn Winter) 67plusmn 89ETH ETH ETH 1997 ordfSocialism as Social Transformationordm In Michele Cangiani ed The

Milano Papers Essays in Societal Alternatives Montreal Canada Black Rose BooksETH ETH ETH 2002 ordfThe Institutional Context of Entrepreneurial Activityordm In Fikret

Adaman and Pat Devine eds Economy and Society Money Capitalism and Tran-sition Montreal Canada Black Rose Books

Hayek Friedrich von 1945 ordfThe Use of Knowledge in Societyordm American EconomicReview 354 (September) 519plusmn 30

Hodgson Geoffrey 1998 ordfSocialism Against Markets A Critique of Two RecentProposalsordm Economy and Society 274

Laibman David 2002 ordfDemocratic Coordination Towards a Working Socialismfor the New Centuryordm Science amp Society 661

Marx Karl 1974 Critique of the Gotha Programme In The First International and AfterHarmondsworth England Penguin in association with New Left Review

Nove Alec 1983 The Economics of Feasible Socialism London Allen amp UnwinOzkaynak Begum 2000 Operationalizing Sustainability Definitions Methodologies and

Outcomes MPhil Thesis University of ManchesterRed Green Study Group 1995 What On Earth Is To Be Done Manchester England

Red Green Study Group


86


COMMENT

Pat Devinersquos conception of negotiated coordination resonates well with thenon-market participatory planning model of Albert and Hahnel (summa-rized and debated elsewhere in this collection) The Austrian-derived con-ception of local and tacit knowledge is important there undoubtedly areaspects of social and economic activity that cannot be previsioned into asingle computable central plan The emphasis on participation is also at theheart of our common enterprise socialism is nothing if not social and eco-nomic democracy the extension beyond formal political democracy to thecore of human life

In Devinersquos model however one central element ETH negotiated coor-dination ETH appears to me to be underdeveloped The procedure as de-scribed seems to involve endless dialog debate negotiation ETH participa-tion perhaps taken to excessive levels In my paper for this issue I raisedthe question is participation something to be maximized or optimized Ibelieve the question is important the ordfnot enough free eveningsordm chargeagainst socialism seems to strike with particular force against a model con-sisting of myriad ordfnegotiated coordination bodiesordm and the task remains forus to find a middle ground between regulation of society by a depoliticizedautomatonic process on one side and a vista of endless and wearying mo-bilization and discussion on the other There is the additional considerationraised in the market socialist literature (drawing upon mainstream free-market ideology) one must wonder how much negotiation and coordina-tion would be necessary to replace the fine structure of detail set in placeby the spontaneous market Any doubts about this will feed immediately intothe position Devine is most resolutely opposing ordfperhaps the market is theonly way to do it after allordm

Looking for a source of the problem I stumble upon this Devine statesrepeatedly that his model represents a third way ordfan alternative to statecoercion and the coercion of market forcesordm The model seeks we are toldto ordftake seriously both the negative experience of the Soviet model of ad-ministrative command planning and the positive insights of the Austrianschoolrsquos recent reworking of the socialist calculation debateordm Austrians toone side for the moment I find this characterization of the Soviet experi-ence (ordfadministrative command planningordm) to be inadequate Devinersquos pro-grammatic opposition to ordfstate coercionordm as well as ordfmarket coercionordm forceshim (and many others who think along similar lines) to ignore the inher-

COMMENT 87

ently political (ie state-al) character of the system of negotiated coordina-tion bodies he is proposing and therefore to undertheorize them

Throughout his discussion Devine recognizes aspects of this enormousproblem there are enterprises and negotiated coordination bodies sincenegotiation must also be taking place among the diverse interests at the levelof the enterprise we have in effect two levels of coordination bodies More-over at one point Devine speaks also of ordfeconomy-wide plan variantsordm sug-gesting that there is in his scheme ETH despite the repeated denunciation ofSoviet ordfcentralordm planning ETH some sort of overall or central body which wouldhave to be constituted either via representative electoral principles or by lot(as in the Cockshottplusmn Cottrell proposal) In short there is a political struc-ture and it is formally hierarchical (to use an out-of-favor word) Were thisnot the case Devinersquos model would look very much like that of Albert andHahnel stressing horizontal iteration among work and consumption col-lectives and problems of atomism cyclical instability social isolation ofcollectives excessively individuated consciousness and endless meetingsetc would re-emerge

We should remember that Marxism became a political force originallyin reaction to the confounding of state and class power in the early work-ing-class movement (Of the two class is by far the more difficult to grasp)Devinersquos model like many other present-day socialist projections collapsesthe long maturation from lower-phase to higher-phase communism ignor-ing the huge literature on the political economy of socialism and the gradualattenuation-via-transformation of state power as objective conditions (yes Iknow another time-worn phrase) make this possible

Undertheorizing the political constitution of the negotiated coordina-tion bodies goes hand-in-hand with insufficient detailing of the economiccoordination problem in the absence of markets Devine emphasizes invest-ment and growth decisions as against production decisions the former aremore agreeable to his vision of social ownership and participation But it ismuch less clear that ordfnegotiated coordinationordm will be able to manage theintricate consistent network of activity levels material flows etc character-istic of a modern economy I think we will need both the Cockshottplusmn Cottrellsupercomputer matrix inversions and Devinersquos attention to tacit and localknowledge The key is to develop and extend multilevel iterative coordinationwhich both entails participatory and partially devolved solution of the equa-tions and derivation of computed prices and incorporates locally specificknowledge and initiative

The problem evidently for many socialists is that the multilevel (orcomprehensive) model (see Laibman 1992 2001) has its roots in Sovietpractice for which some simple ordfcommandplusmn centralordm conception was nolonger relevant by the mid-1960s and completely eclipsed by the early 1980s


(before Gorbachev it should be noted) Failure to incorporate the crucialelement of vertical iteration ETH what Alfred Zauberman (1967) called theordfdecomposition principleordm ETH is keeping my socialism-visualizing comradesfrom finding the most promising way to synthesize participation with rigor-ous calculation and efficiency dynamism and innovation with stability andequality

A final note on ordfabolishing the social division of laborordm Like other ideassuch as abolishing money and replacing it with ordflabor tokensordm (wrongly at-tributed to Marx by the way) or abolishing differentiation of pay scales thisreplaces a long evolution of social conditions and consciousness with an actof voluntaristic fiat enshrined in the word ordfabolitionordm Devine wants eachof us to be a) unskilled (to the extent necessary) b) skilled c) creative d)caring and e) managerial all within the same single lifetime He does notask us whether each of us wants to be all of these things or whether in eachcase this is going to be possible In short he preempts the necessary ongo-ing dialog about creating the material conditions for attenuating and finallyeliminating distinctions among categories of work and between work andordfleisureordm and changing long-ingrained cultural attitudes In relation to thisissue and to the equally important one of the degree of wage equality weshould wait and ask not only what people as individuals will want but for acontinuing collective democratic determination concerning what policieswill actually work best in the long run to promote the development of so-cialist activity and consciousness

David Laibman


COMMENT

1 Knowledge Pat Devinersquos project of developing a socialist alternative tomarket socialism and state planning is one that I share I also share his viewthat one of the major challenges to this project comes from Hayekrsquos episte-mological case against planning That challenge will be my main concernhere Two components of Hayekrsquos argument are of particular relevance a)the distribution throughout society of knowledge particular to time and placeand tacit knowledge embodied in practice which cannot in principle be

COMMENT 89

articulated in a form available for a planning agency b) the unpredictabilityof the future which rules out the possibility of mechanisms that rely on exante planning Can decentralized and participatory models of socialism ofthe kind that Devine offers avoid these objections

a The division of knowledge Hayekrsquos argument from the distribution oflocal and practical knowledge parallels arguments from within the socialisttradition against both the capitalist firm and centralized planning on Fabianor Bolshevik lines The argument appears to be open to reformulation as acase for democratic and decentralized decision making However in con-sidering such a reformulation two distinct claims need to be distinguishedFirst there is the claim that decision making needs to be decentralized sothat it can properly incorporate the local and particular knowledge of eco-nomic actors The point can in principle be assimilated by models of social-ism to the extent they do not rely upon the centralization of informationand the model offered by Devine appears to pass that test Second thereis the claim that the tacit nature of much knowledge entails that economiccoordination cannot rely purely upon knowledge that is articulated inpropositional form of the kind that could to be passed onto a planningagency Hence the market is defended as a mode of coordination that doesnot rely on public conversation and reflection Since decentralized non-market models of socialism rely upon participation and deliberation asmodes of coordination this argument raises greater difficulties If knowl-edge is tacit then there is no more reason to suppose it could be articulatedin a decentralized planning council than it could in a centralized planningbody The point would tell against any view that made deliberation the onlymeans of coordination Any reflective decision-making process works onlyagainst the background of institutions and habitual ways of proceeding manyof which we may not be aware of The common socialist belief that we couldbring all social relations under conscious control should be abandoned Thequestion I simply want to raise here is whether Devinersquos deliberative modelof socialism can avoid that objection

b Unpredictability and uncertainty The other component of Hayekrsquos caseagainst planning concerns the necessary unpredictability of the future Wantschange with the invention and production of new objects for consumptionSince future knowledge is in principle unpredictable ETH if we could predictit we would already have it ETH and since human invention relies on theprogress of knowledge and wants are created by human invention futurehuman wants are also in principle unpredictable Hence at any point in timewe are ignorant about the full range of future human wants The market ispresented as a discovery procedure through which different hypothesesabout the future are embodied in entrepreneurial acts and tested in themarket competition In contrast planning lacks such discovery processes


treating the world of future needs as fully predictable The Austriansrsquo rec-ognition that social choices take place in conditions of uncertainty is im-portant However the point is one that has been made within the socialisttradition against certain technocratic models of socialism The model ofsocialism outlined by Devine does recognize the need for mechanisms forinnovation feedback and iteration that eliminate mistaken hypotheses aboutthe future However some of his formulations of socialist criticism of mar-kets and defenses of socialism retain survivals of the idea that socialismassumes the possibility of anticipating in principle unpredictable events Irefer in particular to the claim that the market is subject to crises because italways blindly responds to demand allocating resources ex post while withinsocialism the problem of economic crises is resolved by replacing ex postregulation with planned regulation of resources ex ante so that productionis able to anticipate demand rather than anarchically respond to it Thecontrast between ex post and ex ante coordination does no critical work oncethe significance of unpredictability is recognized All feasible economiesmust involve both modes of coordination A socialist economy needs someex post economic regulator that will allow the adjustment of plans in the lightof unforeseen economic changes On the other hand it is a myth that in amarket economy actors merely respond ex post to economic changes Withina free market a firm will constantly plan its production to anticipate andshape future demand The market economy is not an economy without plans(Hayek 1944 ch 3) The case against markets has to do with the failures ofcoordination that are consequent on its being an economic order of inde-pendent producers in competition with one another for the sale of goodsThese specific features of decision making in conditions of market compe-tition lead to such failures not the general and unavoidable fact of uncer-tainty about the future

2 Markets This last point raises distinct questions from the directionof more radical forms of non-market socialism about features of markets thatDevinersquos model retains While Devine rejects market socialism his modelretains market exchange His argument runs that while we should reject aneconomy determined by the operation of market forces this need not en-tail the disappearance of market exchange However it is not clear to mejust how the distinction between market exchange and market forces oper-ates in practice To the extent that independent actors engage in marketexchange forces will exist that will tend to determine outcomes Those forcesmay be mitigated by other social constraints introduced by negotiated co-ordination but given generalized market exchange these will be constraintsthat act in opposition to real economic tendencies I am aware that to rejecteven minimal uses of features of market economies runs the danger ofaccusations of utopianism However the distinction between market forces

COMMENT 91

and market exchange doesnrsquot resolve a tension that exists between the de-liberative and market mechanisms Devinersquos model simultaneously involves

John OrsquoNeill


REPLY

David Laibmanrsquos comments for the most part raise issues which were eitherdealt with at length in Democracy and Economic Planning or have been dis-cussed in subsequent papers (see the references to my article for this issue)I shall discuss four issues raised by him and two raised by John OrsquoNeill

1 Laibman is worried that I ignore ordfthe long maturation from lower-phase to higher-phase communismordm particularly in my discussion of theabolition of the social division of labor Like other participants in this sym-posium I offer a model of how a socialist society might organize economicactivity I believe it is important to think about the values institutions andprocesses that might constitute the self-governing society towards which weare working not least to inform discussion of the process of transition andmaturation

2 Laibman suggests that a ordfcommandplusmn centralordm conception of the So-viet system fails to recognize that it incorporated iteration among differentlevels It is true that the Soviet model worked through a process of bargain-ing between different levels of the ruling nomenklatura but in the end theplan was binding leaving enterprises little scope for legitimate decentral-ized decision making He also suggests that my model is undertheorised sinceI ignore the ordfstate-alordm character of the modelrsquos institutions In fact the modelis explicitly based on a theorization of a self-governing society with civilsociety controlling both the state and partly through the state the economy(Devine 1988)

3 Laibman argues that to achieve the ordffine structure of detail theintricate consistent network of activity levels material flows etcordm of a mod-ern economy requires ordfsupercomputer matrix inversions solution of theequations and derivation of computed pricesordm He seems to think this com-patible with attention to tacit knowledge This highlights a fundamentaldifference between my model and those of Albert and Hahnel Cottrell and

REPLY 91


Cockshott and Laibman The latter all involve the central computation ofprices based on iteration which are then fed back to enterprises enterprisesare price takers In my model prices are set by the enterprises enterprisesare price makers All models based on centralized prices are vulnerable tothe Austrian tacit knowledge critique Since in my model enterprises them-selves decide on the use of their existing productive capacity and set theirown prices it is invulnerable to this critique at least at this level

4 Laibman finds one of the central concepts in my model that of ne-gotiated coordination underdeveloped Perhaps I should briefly summarizethe key elements in the model again

The representative assembly chooses from plan variants prepared by the plan-ning commission and thus determines major macro aggregates and strategicpriorities

Based on these the planning board sets primary input prices Enterprises decide what to produce at what prices Market exchange occurs Negotiated coordination bodies decide on major investment drawing on infor-

mation about enterprise performance anticipated cost and demand changesand inputs from their members

Where on the local to global spectrum this takes place depends on the characterof the activity involved with corresponding adaptation of institutional detail

Those affected the social owners are represented on decision-making bodies inproportion to the extent to which they are affected

Given clarity about this structure and the absence of a social divisionof labor Laibmanrsquos concerns about ordfparticipation perhaps taken to exces-sive levelsordm seem to me groundless Enterprises operate on the basis of in-ternal self-management within guidelines set by and accountable to thesocial owners who include the enterprisersquos workers Negotiated coordina-tion bodies made up of the wider set of social owners at that level deal withmajor investment decisions People participate directly in making a limitednumber of decisions and rotate as representatives on more general decision-making bodies

5 OrsquoNeill asks whether tacit knowledge could as I argue be drawn onin models based on participation and deliberation since it cannot be articu-lated in propositional form My colleague and I have discussed this impor-tant question elsewhere (Adaman and Devine 2001) The basic point is thatmuch tacit knowledge is social and generalized participation enables theexperience of everyone not just that of owners and managers of capital tocontribute to the development of the institutions and routines in which socialknowledge is embedded

COMMENT 93

6 Finally OrsquoNeill asks whether the ex anteex post distinction adds any-thing once uncertainty and unpredictability are taken into account arguingthat the critique of the market ordfhas to do with the failures of co-ordinationETH consequent on its being an economic order of independent producersin competition with one anotherordm However it is precisely these failuresarising from an atomistic economic order that ex ante coordination basedon social ownership is able partially to overcome ETH which is not to say thatthey can be fully overcome nor to deny that there are sources of uncertaintyand unpredictability that do not arise directly from an economic order basedon market forces Hence the need for feedback and revision in the continu-ous process of negotiated coordination

Pat Devine

REPLY 93


that activity in proportion to the extent to which they are affectedby it For this to be real rather than just formal requires equal ac-cess to the resources needed for effective participation In additionto the abolition of the class division between those who own the meansof production and those who donrsquot and of the exploitation and op-pression arising from that relationship the abolition of the socialdivision of labor ordfthe antithesis between intellectual and physicallabourordm (Marx 1974 347) is also necessary

Generalizing from Marxrsquos distinction we can classify activitiesor labor into different categories I have suggested five administer-ing directing and planning creative activity caring and nurturingskilled activity unskilled and repetitive activity (Devine 1988 1997)Within each category there is a wide variety of different functionalactivities The first four categories freed from the relationships ofdomination and subordination arising from the hierarchy of socialpower are in different ways psychologically productive and contrib-ute to the realization of human potentiality The fifth category is ingeneral psychologically unproductive and an important social objec-tive should be to reduce the amount of such activity that has to beundertaken

Abolition of the social division of labor means ending the socialstratification that arises when people spend their lives performing pri-marily just one category of activity when they are defined by their jobsas skilled or unskilled workers creative or caring workers or are mem-bers of the establishment who direct and run society in all its aspectsIt does not mean ending the functional division of labor Rather therewould be an expectation that over their lives people would specializein functional activities within each category performing their share ofthe labor that is socially necessary within each category1

Socialism then may be thought of as the social transformationsthat are needed if people are to gain control over their lives to beable to make informed and effective decisions about how they wantto live Self-determination has both an objective and a subjective as-pect to it or perhaps more accurately an external and an internalaspect It involves the ability to make effective decisions about the

1 The abolition of the social division of labor is in many ways akin to Albert and Hahnelrsquos(1991) proposal for the creation of ordfbalanced job complexesordm although they envisagethis occurring within the workplace over a short time horizon rather than in the courseof a lifetime




2 Basic Concepts














3 The Model

















4 Issues


























5 Conclusion












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86


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David Laibman


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John OrsquoNeill


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Pat Devine

REPLY 93




2 Basic Concepts














3 The Model

















4 Issues


























5 Conclusion












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86


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David Laibman


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John OrsquoNeill


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Pat Devine

REPLY 93











3 The Model

















4 Issues


























5 Conclusion












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86


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Pat Devine

REPLY 93




3 The Model

















4 Issues


























5 Conclusion












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86


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David Laibman


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4 Issues


























5 Conclusion












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86


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Pat Devine

REPLY 93








4 Issues


























5 Conclusion












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86


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David Laibman


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John OrsquoNeill


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Pat Devine

REPLY 93



4 Issues


























5 Conclusion












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86


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David Laibman


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John OrsquoNeill


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Pat Devine

REPLY 93






















5 Conclusion












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86


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David Laibman


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John OrsquoNeill


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COMMENT 93


Pat Devine

REPLY 93















5 Conclusion












REFERENCES




















86


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COMMENT 87









David Laibman


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COMMENT 89







COMMENT 91


John OrsquoNeill


REPLY





REPLY 91











COMMENT 93


Pat Devine

REPLY 93









5 Conclusion












REFERENCES




















86


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COMMENT 87









David Laibman


COMMENT


COMMENT 89







COMMENT 91


John OrsquoNeill


REPLY





REPLY 91











COMMENT 93


Pat Devine

REPLY 93



5 Conclusion












REFERENCES




















86


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COMMENT 87









David Laibman


COMMENT


COMMENT 89







COMMENT 91


John OrsquoNeill


REPLY





REPLY 91











COMMENT 93


Pat Devine

REPLY 93








REFERENCES




















86


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COMMENT 87









David Laibman


COMMENT


COMMENT 89







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John OrsquoNeill


REPLY





REPLY 91











COMMENT 93


Pat Devine

REPLY 93


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86


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David Laibman


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COMMENT 89







COMMENT 91


John OrsquoNeill


REPLY





REPLY 91











COMMENT 93


Pat Devine

REPLY 93


86


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COMMENT 87









David Laibman


COMMENT


COMMENT 89







COMMENT 91


John OrsquoNeill


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REPLY 91











COMMENT 93


Pat Devine

REPLY 93

COMMENT 87









David Laibman


COMMENT


COMMENT 89







COMMENT 91


John OrsquoNeill


REPLY





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COMMENT 93


Pat Devine

REPLY 93




David Laibman


COMMENT


COMMENT 89







COMMENT 91


John OrsquoNeill


REPLY





REPLY 91











COMMENT 93


Pat Devine

REPLY 93

COMMENT 89







COMMENT 91


John OrsquoNeill


REPLY





REPLY 91











COMMENT 93


Pat Devine

REPLY 93




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John OrsquoNeill


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REPLY 91











COMMENT 93


Pat Devine

REPLY 93

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John OrsquoNeill


REPLY





REPLY 91











COMMENT 93


Pat Devine

REPLY 93











COMMENT 93


Pat Devine

REPLY 93

COMMENT 93


Pat Devine

REPLY 93

Documents

Participatory Planning Through Negotiated Coordinationgesd.free.fr/devine.pdf · 72 SCIENCE && SOCIETY V Science Society, Vol. 66, No. 1, Spring 2002, 72±85 72 Participatory Planning