The Reason Foundation
Parecon lost: disorganizing the world
By Ronald Bailey
LOS ANGELES -- "If we can't organize a conference of 100,000 people, what about a world of 6 billion?" asks activist and writer Barbara Ehrenreich in this month's The Progressive.
Ehrenreich was despairing about the chaos that she experienced as a "delegate" to the World Social Forum's annual meeting this past January in Porto Alegre, Brazil. Around 100,000 activists from 51 countries showed up to the conference wistfully entitled "Another World is Possible."
This year's WSF attracted a hodge-podge of living wage campaigners, affordable housing activists, anti-war organizations, trade unionists, indigenous people in their native outfits, Argentine militants, feminists, peasants, water rights activists and students.
"One aim of the forum was to provide the space for imagining a post-capitalist or at least post-neo-liberal world," Ehrenreich said. Other WSF participants describe it as "part of the world mobilization against neo-liberal globalization that emerged in Seattle in 1999 against the WTO, and has since traveled through Prague, Quebec and Genoa to Porto Alegre."
Organizers designed it as a response to the World Economic Forum meeting in which leading businessmen and politicians from around the world gather annually in Davos, Switzerland. The WSF is supposed to offer "a variety of alternatives against the elite globalization that is being imposed by corporations and their state affiliates."
What alternatives? One alternative cited by Ehrenreich cites is "Parecon," an acronym for "participatory economics" described by Znet founder and activist Michael Albert in his book of the same title. Parecon is nothing more than a fanciful reworking of the usual left wing economic daydreams that have beguiled would-be egalitarians for the past two centuries.
Parecon is based on four values. The first is solidarity, which Albert declares would "propel even antisocial people into having to address others' well being." Of course, the capitalism he loathes does just that, as Adam Smith pointed out more than 200 years ago.
"It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love," explained Smith in the Wealth of Nations.
Markets allow people who desperately disagree, for example abortion-rights activists and anti-abortion protesters, to truck and trade peaceably together. In fact, markets are the most pro-social institutions ever devised by humanity. They even allow people who hate them to sell their books.
The second value is diversity. "Capitalist markets homogenize options," claims Albert. On its face, this is an absurd claim. Before capitalism, most people had one option; they had to spend all their time raising food. In advanced market economies the ways of making a living are fantastically diverse today. With regard to products, one need only walk down the aisles of any grocery store to see how wildly off the mark Albert is.
The third value is equity. Under Parecon people will evidently be rewarded based only on their physical effort. The notion of human capital, someone training herself to do very complicated or refined work, is thrown completely out the window. This is sweat equity with a vengeance and is related to Albert's fourth value, self-management.
Self management destroys the notion of the division of labor, which has done so much to propel humanity from its natural state of poverty to a non-zero sum world in which more and more people can participate in the fruits of economic growth. Everybody who is affected by a decision gets to vote. He limits voting to the workplace, but why not include other "social" decisions, such as who people get to marry and how many kids they can have? After all, those decisions have "social consequences," too.
And who decides how hard someone has worked? Albert's solution is to make everyone's mix of tasks equally hard in some sense as decided by worker's councils. According to Albert, "A Parecon doesn't have someone who does only surgery, but instead has people who do some surgery, and some cleaning of the hospital, and some other tasks -- such that the sum of all that they do incorporates a fair mix of tasks."
I suspect patients would prefer to go under the knives of surgeons who spend all their time honing their skills instead of learning how to run floor-waxing machines.
Clearly, parecon is a deeply confused version of primitive communism that is appealing to deeply ingrained instincts for tribal forms of egalitarianism. Ehrenreich herself notes that Albert has merely "offered familiar left versions of 'another world.'"
Although her ideology will not allow Ehrenreich to dismiss Parecon as silly, she proves it by citing the case of Porto Alegre where the Worker's Party tried a version of participatory democracy in devising its budget. The process involved hundreds of citizens meeting repeatedly over the course of a year to devise the city's budget. She then cites Brazilian economist Paul Singer's observation that "if it took hundreds of people to plan 50 percent of the budget for one medium-sized city, the process of planning for a nation could be cumbersome beyond imagining."
Finally and strangely, Ehrenreich claims, "No one yet knows how to make collective decisions on a national or global scale, and to do it in a way that is both flexible and inclusive of the illiterate street vendors and laborers of the world."
No one? How about we start with the 86 electoral democracies that Freedom House identified in 2001 as "free?"
Ronald Bailey is Reason magazine's science correspondent.
By Jeff A. Taylor
LOS ANGELES -- The shooting in Iraq is probably just weeks away, and when it starts, private contractors will be helping it make it happen. This is both good and bad.
It is a positive development that so many defense functions have been contracted out to the private sector. This is cheaper and more efficient, and it frees up the uniformed services to do the truly nasty stuff. The "back office" support functions can also stay up-to-date with civilian technologies and procedures rather than be relegated to some government manual for decades at a time.
The downside is that modern war -- especially with a non-conventional foe -- already makes little distinction between civilians and combatants. Using contractors in nearly frontline conditions blurs that boundary even more.
Right now, there is no clear understanding of how close contractors should get to the fighting. A hard and fast bright line may be impossible to find, but erring on caution should be the rule. There should be no question that the uniformed military is actually fighting the war.
Civilian support for that fighting will be direct enough in terms of repairing systems that blow things up or direct fire onto targets. If there is need for any more direct civilian involvement in combat, the United States might need to consider some sort of foreign legion and place contractors in the role of mercenaries. They wouldn't exactly be within the traditional command structure, but they wouldn't be civilians any longer either.
In the meantime, one sure growth area for contractors is the new Homeland Security department. The operation is short of help to run the infrastructure protection unit. The job transferred over from the FBI. The staff didn't.
North American deregulation working in wholesale markets, but weak at retail level
LOS ANGELES -While confidence in the prospects for deregulation among energy executives has fallen in the last 12 months, U.S. and Canadian companies indicate that some progress is being made toward standardizing wholesale electricity markets, though events in California and Ontario have slowed momentum on retail competition at the residential level.
Those are among findings for the North American portion of a the Cap Gemini Ernst & Young study released in February titled "Delivering Value Through Competition."
More than 130 global utility executives from 18 countries participated in this second annual study conducted in the fall of 2002, including 30 executives from 18 companies based in the United States and Canada. Major headlines from the global findings include:
-- 90 percent of respondents feel retail competition at the large commercial and industrial customer level is "very important" or "important" to creating value;
-- Only 55 percent thought retail residential competition had the potential to be "very important" or "important" to the value of deregulated markets, because of the extremely negative responses on the current effectiveness of retail competition (only 33 percent of U.S. and 10 percent of Canadian respondents rated it "good" or "neutral" today);
-- In terms of wholesale markets, 55 percent of US and 50 percent of Canadian respondents have concerns about supply margins and their ability to balance their portfolio within the next three to five years;
-- The three most significant issues facing companies with regard to trading and risk management after Enron are 1) changes to risk framework; 2) designing and building of new systems, and 3) increases of credit;
-- European regulatory focus is on the EU-wide extension of full retail competition by 2007, while the U.S. Federal Energy Regulatory Commission's proposed Standard Market Design, or SMD, focuses exclusively on wholesale market standardization over a five-year period.
"The North American responses to this year's study were reflective of the challenging economic environment and the aftershocks of California and Enron," said Bill Hunter, vice president and utility restructuring co-leader with Cap Gemini Ernst & Young.
"Executives are concerned about finding ways to create a more liquid market for wholesale electricity and still supporting energy trading as long as the industry has strong risk management tools in place," he said. "However, executives remain cautious as a result of the potential for political and regulatory intervention in the markets. Regulatory uncertainty is always detrimental to investment and action."
Most U.S. utility companies endured a brutal 2002, with their accounting policies, credit ratings, and growth strategies under fire. Not surprisingly, their survey responses were focused on the FERC's Standard Market Design proposal for wholesale markets and the future of trading and risk management after Enron.
"After California, it was widely recognized that the availability of generation and transmission capacity is a major issue in the United States, and that fact is a major driver behind the FERC's proposed SMD," said Steve Behrens, vice president and utility restructuring co-leader for the Americas at Cap Gemini Ernst & Young. "However, the survey respondents are warning us that the markets cannot afford to wait until SMD is implemented to reward the capacity and connectivity investments that need to be made now."
All U.S. respondents agree that "pure-play" trading models will not be viable for the foreseeable future, and that asset-backed trading is the foundation of proper energy trading and risk management portfolio management. However, there is no agreement on who will play the "market maker" role that Enron held for a decade, to stimulate the development of markets and liquidity.
The industry realizes that, in the words of one respondent, "the S in 'SMD' stands for similar not standard ... FERC is quite happy to avoid problems by accommodating regional variations."
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