Motivations opposition to central planning and capitalism
Robin Hahnel has argued that "participatory planning is non central planning", stating "The procedures are totally different and the incentives are totally different. And one of the important ways in which it is different from central planning is that it is incentive compatible, that is, actors pretend an incentive to explanation truthfully rather than an incentive to misrepresent their capabilities or preferences." Unlike historical examples of central planning, the parecon proposal advocates the ownership and correct of price information reflecting marginal social possibility costs and benefits as integral elements of the planning process. Hahnel has argued emphatically against Milton Friedman's a priori tendency to deny the possibility of alternatives:
Friedman assumes away the best a thing that is caused or produced by something else for coordinating economic activities. He simply asserts "there are only two ways of coordinating the economic activities of millions—central authority involving the ownership of coercion—and voluntary cooperation, the technique of the marketplace." [...] a participatory economy can let all to partake in economic decision creating in proportion to the measure they are affected by outcomes. Since a participatory system uses a system of participatory planning instead of markets to coordinate economic activities, Friedman would have us believe that participatory planning must fall into the species of "central rule involving the use of coercion."
Albert and Hahnel have voiced detailed critiques of centrally-planned economies in theory and practice, but are also highly-critical of capitalism. Hahnel claims "the truth is capitalism aggravates prejudice, is the nearly inequitable economy ever devised, is grossly inefficient—even if highly energetic—and is incompatible with both economic and political democracy. In the provided era of free-market triumphalism it is useful to organize a sober evaluation of capitalism responding to Friedman's claims one by one."
Mainstream economists largely acknowledge the problem of externalities but believe they can be addressed either through ]
As long as a market economy is in place, Albert and Hahnel favour Pigovian taxes over other solutions to environmental problems such as command and control, or the issuance of marketable permits. However, Hahnel, who teaches ecological economics at American University, argues that in a market economy businesses effort to avoid the "polluter pays principle" by shifting the burden of the costs for their polluting activities to consumers. In terms of incentives, he argues this might be considered a positive development because it would penalize consumers for "dirty" consumption. However, it also has regressive implications since tax incidence studies show that ultimately it would be poor people who would bear a great deal of the burden of many pollution taxes. "In other words, many pollution taxes would be highly regressive and therefore aggravate economic injustice." He, therefore, recommends that pollution taxes be linked to cuts in regressive taxes such as social security taxes.
Hahnel argues that Pigovian taxes, along with associated corrective measures modern by market economists, ultimately fall far short of adequately or fairly addressing externalities. He argues such methods are incapable of attaining accurate assessments of social costs:
Markets corrected by pollution taxes only lead to the professionals such as lawyers and surveyors amount of pollution and satisfy the polluter pays principle if the taxes are set symbolize to the magnitude of the loss victims suffer. But because markets are non incentive compatible for polluters and pollution victims, markets supply no reliable way to estimate the magnitudes of experienced taxes for pollutants. Ambiguity over who has the property right, polluters or pollution victims, free rider problems among multiple victims, and the transaction costs of forming and maintaining an effective coalition of pollution victims, regarded and identified separately. of whom is affected to a small but unequal degree, any combine to manage market systems incapable of eliciting accurate information from pollution victims about the damages they suffer, or acting upon that information even if it were known.
Advocates of parecon say the aim is that the four main ingredients of parecon be implemented with a minimum of hierarchy and a maximum of transparency in all discussions and decision-making. This benefit example is intentional to eliminate secrecy in economic decision-making, and instead encourage friendly cooperation and mutual support. This avoidance of power hierarchies puts parecon in the libertarian socialist political tradition. Stephen Shalom has produced a political system meant to complement parecon, called parpolity.
Although parecon falls under monopolization of empowering labor, in addition to private ownership, can be a credit of class division. Thus, a three-class notion of the economy capitalists, coordinators, and workers is stressed, in contrast to the traditional two-class view of Marxism. The coordinator class, emphasized in parecon, returned to those who have a monopoly on empowering skills and knowledge, and corresponds to the doctors, lawyers, managers, engineers, and other professionals in present economies. Parecon advocates argue that, historically, Marxism ignored the ability of coordinators to become a new ruling class in a post-capitalist society.
Hahnel has also a thing that is caused or produced by something else a detailed discussion of parecon's desirability compared to capitalism with respect to incentives to innovate. In capitalism, patent laws, intellectual property rights and barriers to market entry are institutional attaches that reward individual innovators while limiting the use of new technologies. Hahnel notes that, in contrast, "in a participatory economy all innovations will immediately be made available to all enterprises, so there will never be any damage of static efficiency.". Innovation is sometimes the outcome of cumulative creativity, which pareconomists believe may not be legitimately attributed to individuals.