Book review: imagining a radically new economic model


There’s an old joke that uses various concepts to illustrate the “oxymoron”. “Military intelligence” is probably the cheapest laugh; “little crowd”, “giant prawns” and “dull roar” are the most hackneyed. That’s not the intention, but Robin Hahnel adds something new to the list: libertarian socialism.

This is the label of the economic system described by Hahnel in A participatory economy. Hahnel is a radical economist who has dedicated his career to thinking about alternatives to capitalism that bring democracy to the systems in which we make our living.

A participatory economy is a model for such an alternative, not only to capitalism, but also to state-centered socialism. It is a response to the challenge launched by the author from the first pages: “The socialists of the 21st century owe concrete answers to those who ask what to replace capitalism with.

Instead of the “global authoritarian planning” that was the central feature of Soviet-style communism, Hahnel’s model proposes a set of democratic councils and federations representing workers and consumers, as well as an “iterative Facilitation Committee” which establishes an annual program based on the availability of natural resources, capital goods and human labor, while providing estimates of the social cost of producing various goods and services.

Consumer councils operating at the neighborhood level make proposals based on what they want, while workers’ councils make production proposals; all of these are assessed in terms of both their social benefits and their costs. The councils collectively evaluate the proposals, in what Hahnel says is a procedure “designed to make it clear when a production council proposal is ineffective and when a consumer council proposal is unfair, and allows other councils to workers and consumers to withhold approval of proposals when they appear ineffective or unfair.

Along the same lines, Hahnel suggests a compensation system set collectively by workers’ councils and based on “effort and sacrifice”, as evaluated by council members for each other. The proposed system provides “benefits” for people with disabilities, parents and guardians responsible for raising children and those who have reached a predetermined retirement age, “to be democratically decided by the political system”. Services such as education and health care are all free.

Mainstream economists have dismissed these ideas, arguing that consumers often don’t know what they want until someone does. Hahnel refutes this argument, noting that “in market economies producers guess what to produce” and then “use advertising to try to influence consumers to buy what they have produced”. In short, producers are still “guessing” in market economies – and if they are wrong, they trick consumers into persuading them that they do indeed need what the producers have made.

Perhaps the most appealing aspect of the conceptual sketch proposed by Hahnel is its consideration of “externalities” – the catch-all term for the costs that economic activity imposes on our environment. The theoretical planning process would take into account the pollution generated by any particular production proposal and include measures to improve it.

This brief tour of the system described by Hahnel barely scratches the surface, but already the objections are predictable, even obvious. Top of the list: how can this even work without getting bogged down in the details?

One place Hahnel does not go is how a libertarian socialist economic system would arise. He is candid about this omission: “This is not a book about strategy for achieving ‘economic system change,’ much less political, gender, or racial system change.” Nonetheless, some thoughts on small-scale, contained, and more easily imaginable models that can sow wider transformation would help readers who are not already deeply steeped in participatory economy discussions to engage with the ideas presented here. .

Erik Gunn

Erik Gunn is a Wisconsin-based journalist who writes about work, faith, land and city, and contributes to The Progressive. He is also associate editor of the Wisconsin Examiner.

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October 7, 2022

1:49 p.m.


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