This essay was written for the Next System project, an ambitious multi-year initiative aimed at thinking boldly about what is required to deal with the systemic challenges the United States faces now and in coming decades.

People now fighting economic injustice have no right to decide how future people should live. But we do have a responsibility to provide an institutional setting that facilitates future people deciding for themselves their own conditions of life and work. To this end, participatory economics, or parecon, describes the core institutions required to generate solidarity, equity, self-management, and an ecologically sound and classless economy.

Parecon first advocates self-management by workers’ and consumers’ councils federated by industry and region as society’s primary venues of economic decision making. “Self-management” means people and groups have decision making influence in proportion to the extent to which they are affected by the decision in question.

In the case of issues that affect overwhelmingly just one person, that person should make the decision—albeit in the context of broader guidelines, already in place as a result of collective decision making processes involving a wider range of participants. In the case of issues affecting overwhelmingly a work team, that work team should decide—abiding by broader guidelines such as for the duration of the workday.

Sometimes the best way to get self-management is to seek consensus. At other times, simple “one person, one vote” majority rule may be best. On still other occasions, other methods may make sense. A key insight is that those involved must not only have appropriate say, but also circumstances and information suitable to their developing relevant opinions, engaging in relevant discussions, and setting workable agendas.

The second feature parecon offers is that remuneration should not be determined by power, property, or even personal output. Instead, parecon urges that your share of the social product should in part reflect your special needs. For example, it establishes that those who cannot work have a right to receive the average income and that those with medical needs have a right to treatment. Further, remuneration should reflect how long you work, how hard you work, and the onerousness of the conditions under which you work at socially useful labor.

Pareconish equity therefore means you get more income for working harder, longer, or under worse conditions, as long as you are producing things people want. Imagine two people who do the same job, for the same duration, at the same intensity, under the same conditions, and so have the same income. Now, suppose the former person wants more income to consume more. Parecon recognizes that it is perfectly predictable and reasonable that people should vary in their tastes for consumption goods and services. But, says parecon, what makes the accumulation of more income fair is if the person wanting more income arranges to work longer or harder or under worse conditions. The idea is that the combined impact of work and consumption taken together on “conditions of life” for the two people remains equitable.

On the other hand, suppose, instead, someone doesn’t care nearly so much about consumption goods and services as the average person, but wants more free time. Parecon says that fair compensation practices should allow the person to work fewer hours and take a smaller share of the social product.

Sounds fair, but such a vision has to be able to work with real people in real settings. Consider the surgeon who has to undertake a college education, medical school, and an internship prior to becoming a practicing surgeon earning a surgeon’s pay. The surgeon’s pay needs to be very high, claims the professional economist and journalist and teacher and so on, or the prospective surgeon won’t follow the path. Absent high incentives for being a surgeon, people won’t do it. The same is true for being a doctor, lawyer, accountant, professor, high-level designer, scientist, and so on. Lacking high incentives to attract new members, says the pundit, these professions will die for want of people doing them.

But suppose that instead of simply accepting this familiar claim, we test it. Think of telling a student leaving high school and hoping to be a surgeon that a big change in society has made it the case that surgeon’s salaries: instead of being $600,000 a year, henceforth will be $80,000 a year. Will the student, as a result, reject the idea of going to college, attending medical school, and being an intern before becoming a surgeon because he or she could immediately begin a life-long career working in a coal mine, even supposing coal mining pays $90,000 a year? Try asking some students. None will say they will switch—not one. Incentives are needed precisely when one is being asked to do something more onerous or more time consuming or more intense. But you don’t need added incentive to work shorter hours, at less intensity, or under less onerous conditions.

Because some time, even in a worthy economy, has to go to work that isn’t as intrinsically rewarding as playing, studying, resting, or being with family, and some time even has to go to downright onerous work that is intrinsically unpleasant and unfulfilling, even when we understand and are motived by the benefits it bestows on society, incentives for work matter. But parecon provides them.

An additional information issue, often overlooked, is this. Someone might reply to the above, “no, we don’t need to correlate income and work. We just need people to understand the importance of each role and what the responsible, moral choice to make is, and they will act on that understanding.” The person adds, “I get that parecon has incentives that will yield a wonderful allotment of people’s energies and a distribution of the social output that is just, fair, and rewarding for all. But even so, I believe we can get that same allotment without bribing folks with payment for labor. That is demeaning, so why should we have payments?”

A first answer is that thinking of income rights as bribery is a bit odd, unless we are talking about income as it is in vile economies. But let’s set that aside.

If we disconnect work from income by having people work as they choose (however much and at whatever they want) while also having them consume as they choose (however much and whatever they want) without requiring a connection between the two decisions, we won’t get as good an allotment as with parecon’s approach. People will typically choose to work too little for the social good to be optimally met and will likewise choose to take too much from the system, which will fail to deliver because the available output will fall well short of available demands for income.

This shortfall of work and excess of demand will not occur because people are greedy, lazy, or irresponsible, but because, in this setting, people will have no way to know what is responsible and moral, and they will not and should not wish to mistakenly police themselves into working too much or having too little income.

Moreover, good people in a good economy should in fact prefer to work fewer hours, less intensely, and under less onerous conditions for a given income. And the same people should want to receive more income for a given number of work hours, intensity, and onerousness. Indicating that they want less work and more income is critically important to the economy innovating to make that happen, to the extent that (i) it is possible and desirable to do so and consistent with acceptable social and ecological implications.

No one can know—in the abstract—what is a fair amount to offer to produce, or what is a fair amount to ask to consume, because what is fair depends hugely on the available tools, resources, knowledge, needs, desires, and so on. Fairness is not prescribed on a tablet but instead has to emerge from a discussion of what people want as their income, working conditions, and working hours. By disconnecting production and consumption decisions, we would lose the means of knowing what is responsible, leaving people to curb their own appetites and desires rather than express them. It probably shouldn’t need saying, but for completeness: people being able to receive income from merely doing anything they want is also hugely problematic. I would like to play professional tennis at Wimbledon, but as it would have no social value it should not be remunerated.

Likewise, without indications not just of people wanting x (where x is some good such as a product, some leisure, a type of work, clean air, and so on) but of how much they want x relative to their other preferences, there is no way for producers to know how much x it is appropriate to produce or where to invest.

Something close to self-managing councils and equitable remuneration is very often adopted in real circumstances by at least some real workplaces. Workers co-ops have no owner and typically don’t reward property, power, or output, but they do tend to equalize wages and utilize a workplace council for decisions. So do occupied factories, as in hundreds of instances in Argentina not so long ago, and as currently in Venezuela. In such cases, the owner either leaves or is ejected or didn’t exist from the outset. Salaries are equalized but then typically vary for duration of employment. Councils function democratically and often use the flexible means described above, with teams deciding their own circumstances and using different tallying for different situations.

However, a problem often arises. In time, initial excitement starts to dissipate. Workers start to skip council meetings. A few people wind up determining options. Income differentials enlarge. Alienation ensues. And, finally, participants blame themselves. “This is who we are,” they think. “It must be in our genes to have growing disparities of income, power, and circumstance. We tried. It didn’t work. There really is no alternative.”

To counter this depressing outcome, parecon balances all jobs so they each have roughly the same overall empowerment effect. The challenge is to stave off corporate divisions of labor.

In corporate divisions of labor, about 80 percent of the workforce perform jobs whose component tasks are overwhelmingly disempowering. These jobs tend to fragment workers from each other, separate workers from information about decisions, involve workers in rote and repetitive activity, and in all these ways cause a steady decline in workers’ skills, confidence, knowledge of workplace relations, and familiarity with making choices. The other 20 percent of the workforce performs jobs whose tasks typically enhance ties to others, increase social skills, provide access to decision contexts, enlarge confidence and knowledge of workplace relations, and, in general, empower people to participate in and impact decisions.

Parecon’s claim is that the corporate division of labor creates a class division between those who monopolize empowering work, the “coordinator class,” and those who are left with overwhelmingly disempowering work, the working class. The coordinators’ position in the economy conveys advantages, up to and including ruling class status in “coordinatorism” (often called 20th century socialism).

When adopted in occupied factories like those in Argentina some years back or in Venezuela now or in co-ops all over the world, the corporate division of labor leads to 20 percent of the work force not only setting agendas and choosing actions, but eventually re-imposing inequitable incomes that ultimately lead to ruling class status for themselves. For this reason, in addition to self-managing councils and equitable remuneration, we need a new division of labor called “balanced job complexes” if we are to have real self-management and real classlessness.

The next feature parecon offers has to do with arriving at an optimal level of workplace and consumer inputs and outputs and their distribution throughout the economy. History offers three main choices for such allocation decisions: markets, central planning, and voluntary self-regulation.

Markets intrinsically impose antisocial motivations and inequitable remunerative norms as well as create vast power differentials and ecological suicide. They violate self-management and elevate a coordinator class above workers.

Central planning intrinsically creates that same class division and even more obviously violates self-management. It also tends to violate ecological sustainability and accrues excess wealth for the planners (and whole coordinator class) while promoting obedience and domination that in turn spread to other areas of life.

Voluntary self-regulation is a wonderful sentiment, but as a method for allocation, it typically assumes away important underlying complexities. For people to self-regulate in accord with worthy values and real possibilities requires a means for people to determine what qualifies as worthy choices regarding both work and consumption; a context that makes people’s well-being depend on and enhance the well-being of others; and a process that implements the collective self management norm for all.

The inclusion of corporate divisions of labor subverts the prior attainment of council-based self-management and equitable remuneration by the intrinsic class implications the monopolization of empowering work imposes on all actors. Similarly, choosing markets or central planning subverts the prior attainment of council-based self-management in terms of equitable remuneration plus balanced job complexes as a result of the psychology, operational behaviors, and ensuing class implications these allocation methods impose on all actors.

Thus, parecon needs to propose a self-regulating allocation alternative to both markets and central planning that is compatible with its other three defining features. Good allocation requires wise and informed collective self-regulation to arrive at optimal levels of economic inputs and outputs that meet needs and develops potential while fostering solidarity, enhancing equity, and enacting self-management. It must do so in light of an accurate awareness of the true social and ecological costs and benefits of all of our choices.

This is a big list of virtues, but it is what parecon claims to achieve. Parecon’s alternative to market-based, centrally planned, or purely voluntary resource allocation is called participatory planning, which is built on the idea of viable, collective self-regulation. Workers’ and consumers’ councils present proposals, and they implement collective self-management by interactively and cooperatively refining them by negotiating levels of inputs and outputs that are consistent with and depend on the norms of remuneration and balanced job complexes. That is, they collectively self-regulate.

There is no top or bottom. There is no center. It is not a competitive rat race. Solidarity is literally produced by the requisites of the process, not antisociality. And yet the vision does not assume a population of omniscient and morally saintly people. Instead, simple structures enable, facilitate, and make such results the rational, personal, and community-serving aim of everyone. That is participatory economics.