I haven't read any of Michael Alberts books so I can only speculate
on the details of the parecon system therefore the following can
only be viewed as a poorly informed draft discussion document.


The main feature of parecon appears to be that consumer and
workplace councils will set prices or the exchange values of
commodities, which will include the commodity labour power or wages,
and that they will be free to set any prices that are democratically
deemed fit.

Another feature of the system is that remuneration for work will be
equitable or fair with remuneration based on effort or difficulty of
the task or whatever. This second feature is actually the essence of
the system and is what needs focusing on in order to understand how
it might actually work as opposed to how it is intended to work.

With the introduction of equitable remuneration for work, we are not
in fact talking about a new system but in fact a return to a very
old one. This system incidentally led to the introduction of
capitalism in the first place as carefully recorded and explained in
Marx's work Capital. However I shall leave that aside for the moment.

Equitable remuneration for effort, however it is calculated, is
merely a return to the central feature of the "Law of Value" that
set the value, exchange value or in colloquial terms the price of
commodities or goods and services according to the socially
necessary labour time or effort required to produce it.

Far from the parecon position that there will be no market in
parecon world and that councils will democratically set prices, I
contend that market forces will exist, there will be a market for
labour power, and that will ultimately set prices. If the
remuneration for a type of work is set too low the workers, the
labour market, will decline to accept the employment for more
financially rewarding options.

If it is set too high the workers will compete for the work and see
that this work is not equitably remunerated. The natural or true
value of the labour power, wages, will be that value at which the
supply of labour power is balanced by demand.

This is presuming that in parecon world there will not be rationing
and restricted or forced labour and such like, features of the old
soviet economic system.


In order to understand how Parecon would operate we need to break it
down into simple idealized models to give us insight to the dynamics
of what would be a complex system.

We need to take first as a starting point a uniform or homogenous
type of labour that would receive the same remuneration per labour
hour performed. For simplicity sake I will start with unskilled
labour and will deal with relative remuneration for skilled labour
later.


If unskilled labour of a standard intensity of effort, standard
unskilled labour, is to receive one pareconite per hour as a unit of
remuneration we can begin to analyse the price of commodities that
this labour produces.


When one starts this kind of thing one always struggles to find a
beginning in a chicken and egg paradigm, so we often have to have a
premise that we can always start with and check again later after a
bit of analysis. We start with premise that remuneration of labour
power and price of raw materials are set.


If we are to produce a commodity with standard unskilled labour at 1
pareconite per hour the raw material that is used will have a price
or value. The price of this raw material for the moment will be just
given. Set according to the parecon theory by councils although as
we will see later I will dispute that.

If the raw material costs 10 pareconites and 10 hours of standard
unskilled labour hours are used to convert it into another
commodity, 10 pareconites of standard unskilled labour power will
need to be purchased to produce the commodity in addition to the
cost of the raw materials. The "cost of production" of the produced
commodity will be 20 pareconites. Up until this point the council
Pareconists will have no choice about the matter. They do appear
however to have some choice about what they decide to sell the
produced commodity for, or in Marxist terms the "price of
production".

The option of selling or exchanging the product for less that 20
pareconites does not seem to be viable however it is worth
considering. If it is decided to sell the product for 15
pareconites, it will be necessary to pay the workers 5 pareconites
for 10 hours standard unskilled labour time. If the workers are
offering their labour power based on how it is remunerated, selling
their labour power as a commodity on the market, they will withdraw
from this form of remuneration and seek more remunerative
possibilities elsewhere. If they are allowed to that is, unlike the
soviet system.

The alternative freedom that the council Pareconists would have is
to sell the product above the cost of production at lets say 30
pareconites. Where the extra 10 pareconites would go is limited to
several possibilities. The workers could get the extra 10
pareconites but I imagine that this would be unacceptable as it
would mean that they were getting more remuneration for the same
standard unskilled labour than other workers.

Or to put another way one worker would be exchanging the product of
10 hours of their standard unskilled labour for the product of 5
hours of somebody else's.

The other possibility is that the extra or surplus pareconites could
go to the state or a communal fund to pay for social "non
productive" activities like healthcare or education. In this sense
it would be acting like a kind of consumption tax that is levied
today in capitalism. Indeed the Pareconists may well levy this tax,
democratically of course, on harmful products like tobacco and red
wine to save and discourage stupid people like myself from harming
themselves, who knows.

The third possibility is that the enterprise or productive unit may
be allowed to keep the surplus pareconites to re invest to expand
production. In fact there is a perfectly sensible and all too
familiar intrinsic logic to this.


Lets go back to the original situation of raw material costs 10
pareconites and 10 standard unskilled labour hours or 10 pareconites
produce a product with a cost price of 20 pareconites. Lets suppose
that this is a wonderful product much in demand, I will deal with
the opposite later, and our council Pareconists set the selling
price, price of production at the same as the cost of production, 20
pareconites .

Our willing consumers, the market, snap this wonderful product up as
soon as they can get their hands on it, even forming queues in shops
just like under the old soviet system. Some kind of rationing system
could be appropriate here and to be even handed we may have similar
problems in free access socialism.

The sensible solution for the council Pareconists however would be
in fact to raise the price of this "over demanded product"
significantly above its cost price thus limiting and curbing demand
at the elevated price. The surplus pareconites could then be
sensibly used to purchase more means of production and perhaps
slightly increased levels of remuneration for the workers in this
industry to attract more labour in order to expand production and
meet demand. In the same way as it does under capitalism.

As production levels were increased prices could be lowered by the
council Pareconists to re equilibrate supply and demand. However it
would be an illusion that the council pareconists would be setting
the price but the market just like under capitalism.

Eventually the price of production or the selling price of the
commodity would re equilibrate to its natural or market value as
production levels increased, ie supply. The market value being
socially necessary standard unskilled labour time necessary to
produce it (plus the fixed cost of the raw materials whose price or
exchange value would be set by the same process) ie 20 pareconites.


The alternative situation is somewhat unpleasant and involves over
production and sacking parecon workers. If our same workers are
producing a product that needs to sell at 20 pareconites to break
even and the parecon consumers won't purchase all that they produce
at that price all will not be well.

The revenue from sales will not match costs, labour and raw
materials and production will have to be curtailed. The workers
services will no longer be required and they will have to seek
career opportunities elsewhere. They will be sacked. The supply of
the product will be reduced until supply meets demand at the price
of production ie when all the product can be sold. The labour time
that is expended in over production is not socially necessary and
therefore something has to give.


For some of you this may sound vaguely familiar, just like
capitalism. Could it be that it is not the council Paraconists that
are really in control and setting the exchange value of commodities
but the "market" or the law of supply and demand that enforces
Karl's law that the value of a commodity is set by the socially
necessary labour time required to reproduce it , and not by council
Pareconists.

There is the much more difficult question of relative remuneration.
Why is it in capitalism that one workers commodity, their labour
power, is worth more than another's. Why is it that a computer
programmer's commodity, their labour power, is worth more than a
sweat shop labourer in Indonesia and how does this effect parecon
world.

Karl stated on several occasions that his Laws only applied with the
condition of the free movement of labour and capital. I think it is
clearly the case today that we are not in a situation of free
movement of labour or to a lesser extent capital. I think there are
complex reasons for this that benefits the capitalist class.

However we could imagine the impact of the free movement of labour
or in the opposite direction the free movement of capital might have
on the wage levels of unskilled labour in the first world. In fact
we do easily see the impact on the free movement of capital on the
position of first world workers with the "outsourcing" of
manufacturing jobs to places in China and such like.


But back to Parecon land and the relative remuneration of skilled or
specialized and unskilled labour.


Lets suppose that a new product became available that required
specialised skills or training to produce. At first this product
would be much in demand and there would be insufficient workers with
the skills to produce it. How would the council Pareconists set the
price of these workers product?

These workers may well accept any wage that is given to them by the
council Pareconists they may even accept the same rate as the
standard unskilled labourer. However with an insufficient number of
workers with the required skills they will not produce enough
product at that price to meet the demand for their work, as there
are not enough of them.

The council Pareconists will either have to increase the price of
their product to curb demand or introduce rationing. In the case of
increasing the price of the product this will involve paying these
workers more, encouraging other workers to acquire the skills for
this more remunerative work. As goes on under capitalism. The
alternative would be for the enterprise to sell the product at a
price well above its cost and make an excessive surplus value, or
profit or a combination of the two.

The pareconists could argue that these excess profits could be set
aside by the state or even the enterprise itself to retrain workers
and thus increasing the supply of that type of labour power. This
would reduce the effective demand for this type of skilled labour
thus depressing the market price that these workers could demand for
their labour.

It is not hard to find reformist politicians and advocates for the
smooth running of capitalism complaining of skill shortages and
proposing the "social" retraining of workers. Although they fail to
mention that their real motivation is to reduce the wages of the
skilled labour power that is irresponsibly taking advantage of the
capitalists.

It would appear that Deleon had a much more sophisticated and
intelligent understanding of this issue than the pareconists. Deleon
seemed to accept the wage levels or non exchangeable labour voucher
remuneration would be set by the supply and demand of the particular
type of labour required and that would set the price of the
commodity produced by that labour.

As the value of commodities ultimately depends on what is used to
produce them or what they are, human effort, their price will be set
by the socially necessary labour time required to produce it. The
table will be worth the same as 10 pairs of shoes as they both took
an equivalent amount of human effort to produce.

The fundamental problem is, as soon as you accept that labour power
is a commodity, something that is paid for, fit for remuneration or
exchange on a market, then everything else becomes the same. Under
the Law of Value the cost, price or exchange value of everything
depends on the amount of human effort or labour that has "gone into
it" or is embodied or crystallized in it.

The issue of different amounts of capital invested in different
enterprises producing the same product would also raise problems in
parecon world. If one enterprise so happened to have better machines
that enabled 1 unskilled labour hour to produce twice as much as the
same unskilled labour hour in another factory it would be able to
pay its workers twice as much as the other factory with less
capital. Otherwise the factory with the larger amount of capital
could pay its workers the same but it would make more surplus value.

This excess surplus value could be taken from one enterprise and
redistributed to another, in fact it would have to otherwise
something far more insidious might happen, capitalism proper.

The workers council in a factory may well see that by paying
themselves less than they produce, generating surplus value for
their enterprise, they may obtain an advantage over a rival factory.
If they invest the surplus value in labour saving machines, capital,
they will be able to produce more and therefore more revenue for the
same amount of effort.

If they don't and their rival does the opposite will occur and they
will find themselves working harder for less. Thus the workers
parecon councils in each enterprise will be driven by the
competition intrinsic in the remuneration money system to behave
just like the capitalist class. To suck vampire like as much surplus
value out of themselve as possible to serve and expand capital.