Discover How a Participatory Economy Safeguards Our Planet: Unveiling Environmental Benefits!

Market economies and command-planning economies have struggled with environmental protection. They often view nature as an “externality,” which means they overlook it. This neglect is becoming a major problem as we face climate change and other environmental crises.

A participatory economy (MPE) offers a different approach. But how can it protect our environment better than previous economic systems?

Initially, MPE did not focus on environmental issues. The early creators acknowledge this gap, as environmental protection wasn’t a priority. However, newer versions of MPE are now working to fix this problem. Unlike traditional economists who ignore environmental impacts, MPE can incorporate effective strategies for environmental protection.

There’s much to explore in this field, as theories and practices are actively evolving. Here’s a snapshot of how MPE addresses environmental concerns.

In Robin Hahnel’s book, Democratic Economic Planning, he discusses pollution in chapter 7, outlining how participatory annual planning can manage environmental issues. He also presents ideas for long-term planning in chapter 14.

Indicative Prices

In MPE, “indicative prices” reflect environmental and social costs. While market economies ignore these costs, indicative prices help worker and consumer councils understand the environmental impact of their choices. This leads to more responsible decision-making.

Additionally, pollutants can be priced. In a fair economy, the goal is to keep the demand for pollution low since no one wants to live in a polluted environment. High prices for pollutants encourage less pollution.

Generational Equity Constraint

A recent concept in MPE is the “generational equity constraint.” This rule ensures that the consumption choices of today consider the needs of future generations. Specifically, it limits consumption growth between consecutive years to a certain percentage.

Communities of Affected Parties

Another innovation is the creation of “communities of affected parties” (CAPs). These are groups directly impacted by pollutants. They participate in planning along with worker and consumer councils. If a CAP decides to allow pollutants, they receive compensation in the form of extra consumption credits. This helps to address the inconveniences caused by pollution.

While it might seem grim to think of pollution allowances, this approach has benefits. It encourages economic actors to prioritize environmental issues and provides a way for them to work towards reducing pollution, potentially even to zero.

Role Reversal of Consumers and Producers

Typically, in a participatory economy, worker councils offer goods, while consumer councils express demand. However, for pollutants, this dynamic is reversed. Consumer councils and CAPs supply pollutant permissions, and worker councils express their demand for them.

The participatory planning process still runs smoothly. Worker councils indicate what they want to produce and how much pollution they can permit. Consumer councils show what goods they want to consume and how they can manage pollutants. CAPs also provide their pollutant permissions. All parties use indicative prices to guide their choices while considering generational equity.

Computer Simulations

For years, I’ve been involved in creating computer simulations of MPE. These simulations show that participatory planning can be practical, requiring just a few iterations to create a feasible plan. Recently, I’ve been collaborating with Robin Hahnel to include pollution in these simulations. We’re developing software that categorizes pollutants, assigns indicative prices, and integrates this into the planning process.

While we’re just beginning this work, the initial results are promising. Seeing a computerized economy tackle environmental issues is inspiring. I expect to continue refining this code and conducting more simulations through 2025.

Conclusion

Despite its slow start, MPE has made strides to address environmental concerns. Tools like indicative prices work alongside new ideas like the generational equity constraint and CAPs to minimize pollution. In MPE, worker councils demand pollutant permissions from consumer councils and CAPs. Early research into this planning method is encouraging and suggests a positive future for democratically planned economies, especially MPE. Everyone should recognize the potential of a participatory economy to protect our planet.