Participatory economics, often abbreviated parecon, is an economic system proposed by the 1990s primarily by activist and political theorist Michael Albert and radical economist Robin Hahnel, among others. It uses participatory decision making as an economic mechanism to guide the production, consumption and allocation of resources in a given society.

The underlying values that parecon seeks to implement are equity, solidarity, diversity, workers’ self-management and efficiency. (Efficiency here means accomplishing goals without wasting valued assets.) It proposes to attain these ends mainly through the following principles and institutions:

  • workers’ and consumers’ councils utilizing self-managerial methods for making decisions
  • balanced job complexes
  • remuneration according to effort and sacrifice
  • participatory planning

Albert and Hahnel stress that parecon is only meant to address an alternative economic theory and must be accompanied by equally important alternative visions in the fields of politics, culture and kinship.
Decision-making principle

One of the primary propositions of parecon is that all persons should have a say in decisions proportionate to the degree to which they are affected by them. This decision-making principle is often referred to as self-management. In parecon, it constitutes a replacement for the mainstream economic conception of economic freedom, which Albert and Hahnel argue that by its very vagueness has allowed it to be abused by capitalist ideologues.

Social economy: a third sector in economies

Economies may be considered to have three sectors:

  • the business private sector, which is privately owned and profit motivated;
  • the public sector which is owned by the state on behalf of the people of the state;
  • the social economy, that embraces a wide range of community, voluntary and not-for-profit activities.

Sometimes there is also reference to a fourth sector, the informal sector, where informal exchanges take place between family and friends.

The third sector can be broken down into three sub-sectors; the community sector, the voluntary sector and the social enterprise sector:

The community sector includes those organizations active on a local or community level, usually small, modestly funded and largely dependent on voluntary, rather than paid, effort. Examples include neighborhood watch, small community associations, civic societies, small support groups, etc.

The UK’s National Council for Voluntary Organizations describes the voluntary sector as including those organizations that are: formal (they have a constitution); independent of government and self-governing; not-for-profit and operate with a meaningful degree of volunteer involvement. Examples include housing associations, large charities, large community associations, national campaign organizations, etc.

According to the UK government’s definition, the social enterprise sector includes organizations which “are businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximize profit for shareholders and owners”. Examples include co-operatives, building societies, development trusts and credit unions.

The social economy spans economic activity in the community, voluntary and social enterprise sectors. The economic activity, like any other economic sector, includes: employment, financial transactions, the occupation of property, pensions, trading, etc.

The social economy usually develops because of a need to find new and innovative solutions to issues (whether they are socially, economically or environmentally based) and to satisfy the needs of members and users which have been ignored or inadequately fulfilled by the private or public sectors.

By using solutions to achieve not-for-profit aims, it is generally believed that the social economy has a distinct and valuable role to play in helping create a strong, sustainable, prosperous, and inclusive society.

Successful social economy organizations can play an important role in helping deliver many key governmental policy objectives by:

  • helping to drive up productivity and competitiveness;
  • contributing to socially inclusive wealth creation;
  • enabling individuals and communities to work towards regenerating their local neighborhoods;
  • showing new ways to deliver public services; and
  • helping to develop an inclusive society and active citizenship.
Last edited by Godsil.   Page last modified on November 23, 2012

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