Participatory economics is based on five components.

1. No workplace ownership
2. Workers’ and consumers’ councils
3. Fair jobs
4. Paid only for effort
5. Horizontal planning

Very briefly, let’s look at each of these.

No workplace ownership

Ownership of productive resources confers money and power. In capitalism, the means of production are owned privately. In all forms of socialism, they are owned by the government. In participatory economics, no one owns them.

Workers’ and consumers’ councils

Parecon is a classless economic model, meaning everyone’s a worker like everyone else. Under capitalism and socialism, managers run workplaces (with managers answering to owners under capitalism, and answering to no one under socialism).

Under parecon, though, workers run the workplaces (and even whole industries) themselves through nested councils.

People in the economy are not just workers, though. They are also consumers of what they produce. In their roles as consumers, people coordinate their consumption through nested consumers’ councils. This reflects the fact that some consumption, such as T-shirts, is individual — but some consumption, such as public parks, is collective.

Fair jobs

Every workplace is just a set of tasks, with tasks bundled to create jobs. Corporate-style workplaces are what exist in capitalism and all forms of socialism.

In corporate workplaces, tasks are bundled according to their relative empowerment effects: For example, sweeping floors and emptying trash cans are bundled in the job of “janitor,” while setting leave policies and making hiring decisions is bundled within “director of human resources.”

That tasks are bundled this way is not an act of God, however. Tasks in workplaces can just as easily be bundled to create jobs where everyone does their fair share of unpleasant, rote, or dangerous work — and where no one gets to do more than their fair share of pleasant, empowering, or fulfilling work.

These “fair jobs”¹  are the types of jobs in pareconish workplaces. Everyone in a parecon works a fair job, and no job is unfair. No one in a parecon monopolizes information or decision-making power, though such information and power still exists. And no one in a parecon is permanently relegated to doing “grunt work.” Such work still exists, but it is spread fairly across the workplace (and the entire economy).

Paid only for effort

Under capitalism and all forms of socialism, people who are smart, talented, or well-educated make more money and have greater class privileges. Additionally, under capitalism, people who own productive resources also acquire greater wealth and power.

None of this exists in a participatory economy. In a parecon, the only way to make more money is to work longer or harder. No one in a parecon is paid for anything other than their effort.

Horizontal planning

As systems of allocation, markets and central planning both have their associated ills which are well known: Markets breed anti-social behavior and misstate prices on literally everything due to their inherent inability to account for externalities, and centrally-planned economies are inherently authoritarian. And with or without private ownership, both necessarily give rise to a class of coordinators lording over workers (though for different reasons).

To achieve true classlessness, parecon utilizes a new allocative mechanism called horizontal (or participatory) planning. Under markets, producers and consumers endlessly fight over money. Under central planning, producers and consumers are dictatorially told what to do and what their options are.

Under participatory planning, producers and consumers negotiate with each other to arrive at a joint plan. But in a parecon, as we are all simultaneously workers and consumers, participatory planning allows us to plan our own economic activities. We determine what we produce, what we consume, what the length of the average work week is, and where we direct society’s scarce resources.

Markets and central planning both incentivize all economic actors (producers and consumers) to lie, but participatory planning has the opposite effect: Because everyone works a fair job and is paid only for effort,² that means everyone’s work life is comparable. So for your job to become more pleasant or less onerous, everyone else’s job must become so as well.

You gain nothing by lying in a parecon. Moreover, production units are allocated resources by the economy at the beginning of the planning period. These producers assert that, given these inputs, they will have certain outputs at the end of the year. If workers in a pareconish firm slack off, it is their workmates who will have to pick up the slack — a situation they will presumably find distasteful. And if the entire production unit slack off (attempting to “cheat” the economy), people are going to notice at the end of the year when they don’t have the outputs they were promised.

In a parecon, sloth and deceitfulness are not easily hidden. Workers probably wouldn’t mind picking up the slack for, say, a mother with a sick child at home. And the economy would probably understand if a production unit couldn’t produce promised outputs if, say, the workplace was struck by a hurricane and partially destroyed. But absent good reasons, a parecon has the ability to sanction both lazy workers and inefficient producers.

People in capitalist countries like the United States often wax eloquent about the virtues of hard work, but nobody really takes this seriously. Everyone knows the only way to make any real money under capitalism is to cheat. Parecon, however, really is an economic model where hard work is not only rewarded — it’s mandated. But unlike under capitalism and all forms of socialism, under parecon hard work is distributed fairly among the populace.