{"id":6079,"date":"2022-02-10T01:28:06","date_gmt":"2022-02-09T23:28:06","guid":{"rendered":"https:\/\/metacpc.org\/?p=6079"},"modified":"2022-09-27T16:14:29","modified_gmt":"2022-09-27T13:14:29","slug":"hahnel-interview1b","status":"publish","type":"post","link":"https:\/\/metacpc.org\/en\/hahnel-interview1b\/","title":{"rendered":"[cont.] Robin Hahnel Interview on Participatory Economics \u2013 Part 1B \u2013 Consumption, Consumerism, Advertising [video+transcript]"},"content":{"rendered":"\n<p><strong>[After the Oligarchy] Hello everybody, this is&nbsp;<a href=\"https:\/\/aftertheoligarchy.wordpress.com\/2022\/02\/09\/robin-hahnel-interview-on-participatory-economics-part-1b-consumption\/\" target=\"_blank\" rel=\"noopener\">After the Oligarchy<\/a>. Today I\u2019m speaking with Professor Robin Hahnel.<\/strong><\/p>\n\n\n\n<p><strong>Robin Hahnel is a professor of economics in the United States, co-founder with Michael Albert of the post-capitalist model known as Participatory Economics (Parecon), and author of many books.<\/strong><\/p>\n\n\n\n<p><strong>Today\u2019s conversation is in association with\u00a0<a href=\"https:\/\/metacpc.org\/en\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>\u00a0<a href=\"https:\/\/metacpc.org\/en\/\" target=\"_blank\" rel=\"noreferrer noopener\">m\u03adta, the Centre for Postcapitalist Civilisation<\/a><\/strong><\/a>. This is Part B of the first in a series of interviews with Professor Robin Hahnel [link to <strong><a href=\"https:\/\/metacpc.org\/en\/hahnel-interview\/\">the previous part of this interview, 1A<\/a><\/strong>]<\/strong> <strong>about participatory economics, and in particular his latest book\u00a0<em><a href=\"https:\/\/www.routledge.com\/Democratic-Economic-Planning\/Hahnel\/p\/book\/9781032003320\" target=\"_blank\" rel=\"noreferrer noopener\">Democratic Economic Planning<\/a><\/em>\u00a0published in 2021. It\u2019s an advanced discussion of the model proposed in that book, so I recommend you familiarize yourself with participatory economics to understand what we\u2019re talking about.<\/strong><\/p>\n\n\n\n<p><\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Participatory Economics (PT 1B) - Consumption, Consumerism, Advertising w\/ Prof. Robin Hahnel\" width=\"580\" height=\"326\" src=\"https:\/\/www.youtube.com\/embed\/YbkUSpP0Tgs?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<p>T<strong>he discussion will also continue on the forum of&nbsp;<a href=\"http:\/\/participatoryeconomy.org\/\" target=\"_blank\" rel=\"noopener\">participatoryeconomy.org<\/a>.<\/strong><\/p>\n\n\n\n<p><strong>Okay so the next question, staying on consumption, is about excessive consumption and the possibilities of this in participatory economy. So, firstly on the side of consumer councils, since consumer federations organize consumption \u2013 for example through shopping centres and online shops \u2013 consumer federations will decide how to present and, in general, \u2018market\u2019 goods and services. Will there be any incentive to oversell? For example, to convince people to buy things they don\u2019t need or want.<\/strong><\/p>\n\n\n\n<p>[Robin Hahnel] Okay so I warned you before that you had picked the two things that I am the least \u2026 well, are my least favourite subjects.<\/p>\n\n\n\n<p><strong>[AO] Well your intellectual honesty is always appreciated \u2013 that\u2019s how we like to do things here. But just whatever comes to mind is good enough.<\/strong><\/p>\n\n\n\n<p>I\u2019ll give you my best answer, but I\u2019ll preface it by saying that I don\u2019t shop right. I don\u2019t go shopping, I hate shopping. I have always found somebody else who will do the shopping for me. The only thing I enjoy shopping for is \u2026 I cook and I go into stores and I shop for food. [But not] clothes, [nor] anything else. There was a time when I would go into bookstores but now we don\u2019t read books anymore, they\u2019re all online. So I am not a shopper.<\/p>\n\n\n\n<p>And at one point, there were three female students in one of my classes and we had done a little section on participatory economics. And they came in during office hours, three of them together it was like a delegation, and they came in and they said \u2018well, Professor Hahnel, there are a lot of things we really do like about what you\u2019re proposing here. But there\u2019s one thing we just don\u2019t like: you don\u2019t seem to understand the pleasures of malling it.\u2019 And at first I didn\u2019t even understand what the word [was], I didn\u2019t know what they were what they meant when they said \u2018mall\u2019. And they meant going to a mall and seeing and being seen, and spending four hours, you know, after school or after work at the mall. And that they were basically telling me some of us really like that, and we just want to know whether we\u2019re going to be able to do that in a participatory economy.<\/p>\n\n\n\n<p>And I had to say \u2018well your dream is my nightmare\u2019. I mean the fact that I would be trapped in a mall for five hours is sort of the worst thing that could ever happen to me. And so I\u2019m going to admit to you that anybody who enjoys the pleasure of shopping, at least&nbsp;<em>this<\/em>&nbsp;person who designed this economy did not have you in mind. Because it\u2019s the farthest thing from my mind.<\/p>\n\n\n\n<p>But I do just think that structurally, almost by accident, I was concerned with the perverse incentive for sellers to lie to people about how good their products are. And that\u2019s a huge feature of capitalism. I thought well, why don\u2019t we reverse who is in charge of explaining to people what the properties of different options are? Why don\u2019t we put the consumer federations, why don\u2019t we assign them that role? Rather than put producers in the situation where they\u2019re constantly trying to convince somebody to buy something, [where] they\u2019re over-selling the value to the consumer. Let\u2019s get the incentives right.<\/p>\n\n\n\n<p>So the proposal was \u2026 I mean, people do need to find out about products. Now, at this point I don\u2019t know how they do it because now everybody\u2019s buying online. Nobody goes to the malls anymore. But at the time we were originally writing this, we said well we can still have malls. I mean, I was trying to get my poor students, I was trying to convince them to support participatory economics, it was shameless. That\u2019s what I was trying to tell them. You can still go to the mall, but the mall is going to be run by your consumer federation. And they\u2019re going to have all sorts of things that are new things on display there. And maybe you can impulse buy, if you want to impulse buy. Or you can just go and see it.<\/p>\n\n\n\n<p>I know that in Cuba they did set up \u2026 they weren\u2019t shopping malls, but they would periodically put on sort of a big show where they would display items that were going to be new items that were going to become available. And they would put them on show, and people would visit, and that\u2019s how they would become aware of what was going to soon become available, if they wanted to find out what was coming.<\/p>\n\n\n\n<p>So our suggestion has been that that should be the approach. And then the question is well if it\u2019s the consumer federations that are in charge of \u2026 first of all, the consumer federations are going to have their own research and development units that are responsible to them for doing research into new consumer products. Why don\u2019t we want the consumers to be in charge of looking into new consumer products instead of having the producers be the ones that are doing all that research? So we essentially said let\u2019s reverse who\u2019s in charge of that research. Let\u2019s reverse the whole question of who is in charge of presenting and showing people what is available, A.K.A. advertising.<\/p>\n\n\n\n<p>My father was a miserable employee in the advertising industry, so I grew up very aware that there are two supposed purposes of advertising: one is a legitimate public service, which is making accurate information about product availabilities and capabilities available to the public; and the other is tricking them into buying things they really don\u2019t want. So the goal here is \u2026 we do have a legitimate service that needs to be provided, and that is information. But we want to do it in a way that we don\u2019t have a terribly perverse incentive about who\u2019s in charge of it and what their motivations will inevitably be.<\/p>\n\n\n\n<p><strong>[AO] It is a very interesting move, and I think very sensible to try to eliminate that perverse incentive by an institutional measure rather than the classic \u2018well, workers in the future won\u2019t use pernicious advertising tactics because they\u2019ll be lovely future socialist workers acting in solidarity\u2019. And that the consumer federations would be in charge of that, I think is a very good idea.<\/strong><\/p>\n\n\n\n<p><strong>And, in general, I imagine that it would eliminate the worst excesses. I\u2019m just wondering within that context would there be any incentive for consumer federations to oversell. I mean, I suppose the thing that first enters my mind is that you\u2019d say \u2018oversell to whom?\u2019. Because they would really, for the most part, be overselling to themselves in a way.<\/strong><\/p>\n\n\n\n<p>[RH] Right. That\u2019s why I don\u2019t think you\u2019re wrong to worry about whether there\u2019s still going to be some perverse [incentive]. What I would claim is I think this proposal about switching who\u2019s in charge of this over to the consumers federation from the producers, that should take care of the bulk of the perverse incentive. I don\u2019t want to claim that there might not still be some, but I think that takes care of the bulk of it.<\/p>\n\n\n\n<p>But I completely agree with your sentiment that what socialists have done in the past is whenever we get into a situation where some somebody says \u2018well, won\u2019t this bad thing happen?\u2019 our answer is \u2018no, it\u2019s only capitalists who do bad things\u2019. And once it\u2019s the workers who are in charge they won\u2019t want to do these bad things. Well yeah, but I think it is reasonable to \u2026 in a participatory economy anything that increases the social benefit to social cost ratio in one way or another makes life more pleasant or better for the workers\u2019 council. So I think it\u2019s a very reasonable question to keep asking whether or not we have created an incentive for them to do something that would have that effect. Anything that would have that effect it\u2019s very important to worry about, and I don\u2019t want to dismiss it on the grounds that \u2018oh, but these are workers, they\u2019re not capitalists, they wouldn\u2019t do that\u2019. And I think that\u2019s a fundamental methodological difference between how I and some of us have gone about you know trying to design a better system from the way that a lot of people who say \u2018I really like socialism\u2019 have gone about it.<\/p>\n\n\n\n<p><strong>[AO] Yes, absolutely. I mean, the way I think about it is that it\u2019s all about institutions. There are nuances, but really taking the long view of human society it\u2019s almost like institutions are a glass and humans are the water. We\u2019re quite malleable. We see that in capitalism where so many of us \u2013 for example as consumers \u2013 we don\u2019t want to participate in all sorts of destructive activities. But because the personal narrow institutional interest is misaligned with our personal preferences these toxic behaviours happen anyway. Because we\u2019re trying to go against the grain of the institutions, as it were, and there\u2019s no reason to imagine that that won\u2019t also happen in a future society.<\/strong><\/p>\n\n\n\n<p><strong>There\u2019s another question about this issue. It\u2019s about the worker council side. So worker councils will have a strong incentive to convince consumers to purchase their products, because this contributes to their social benefit score. What scope is there for worker councils to use behaviour modification techniques, A.K.A. advertising, to this end? Even though consumer federations sell products to consumers and provide consumers product information, could worker councils still have a significant effect?<\/strong><\/p>\n\n\n\n<p>[RH] I\u2019m thinking out loud here a little bit. Sometimes worker councils are selling to others worker councils, and sometimes worker councils are selling to actual consumers. And here\u2019s where I\u2019m thinking out loud: very few people worry about whether one business is hoodwinking another business.<\/p>\n\n\n\n<p><strong>[AO] Yes.<\/strong><\/p>\n\n\n\n<p>[RH] And I wonder \u2026 I mean, I don\u2019t know enough about the advertising industry to know. You would get the impression, the popular impression if you take the popular mindset on this, you would assume that 80 to 90 percent of advertising budgets are ones where it\u2019s a capitalist company that\u2019s selling to consumers, and that\u2019s where all their advertising is going. On the other hand, if what they\u2019re doing is selling to other businesses they don\u2019t bother advertising because they just can\u2019t hoodwink them. I don\u2019t know if that\u2019s true or not, but we do tend to think of the consumer as being uniquely manipulable, uniquely the actor who can be potentially manipulated. So, the thinking out loud part of this is: is this a problem that\u2019s really unique to protecting consumers from this kind of predatory advertising? Or is it a general problem of anybody selling to anybody, even if one business is selling to another business. In our case, one worker council do another worker council.<\/p>\n\n\n\n<p><strong>[AO] Can I intervene just for momentarily? Yeah, actually that\u2019s a very good point, I didn\u2019t even think about that. I think there definitely is advertising directed at other businesses. I imagine that this is very much the case. It doesn\u2019t necessarily take the same form, although sometimes it does. I mean, I know I switch on the radio and there are always advertisements saying \u2018if you want to improve this or that in your business, go with this insurer, this IT system, or this security system or this \u2026\u2019<\/strong><\/p>\n\n\n\n<p>[RH] That\u2019s true.<\/p>\n\n\n\n<p><strong>[AO] And there is, I imagine, a huge amount of money [in it] because of the nature of businesses. You know, when businesses tend to buy things they tend to buy big. But then it probably also happens in other ways which consumers aren\u2019t exposed to. It\u2019s a very good point, I suppose you\u2019d say that it\u2019s almost up to the worker federations to protect themselves from that. I\u2019m not sure actually, but if you want to jump in \u2026<\/strong><\/p>\n\n\n\n<p>[RH] Yeah I\u2019m not sure either. I mean, I\u2019m trying to recall what we said about advertising.<\/p>\n\n\n\n<p><strong>[AO] I mean I suppose to begin with, if we split this into the production and the consumption side, the question to ask \u2026 I mean, I\u2019m trying to play devil\u2019s advocate and ask these difficult questions, but really the question to ask is when consumer federations are providing information directly to consumers \u2013 you could imagine something like Amazon, for example, being run by consumer federations.<\/strong><\/p>\n\n\n\n<p>[RH] There should be no conflict of interest there. Because the consumer federation is basically governed by the consumers who it represents. And we can actually generalize that. If the information about quality and characteristics of products is being provided by whoever the people who are the users or consumers of that are, then you\u2019ve eliminated the perverse incentive for the producers to oversell. And I was thinking entirely in terms of \u2018oh the buyers are always consumer federations\u2019, and that\u2019s why I wanted to empower the consumer federations as the ones that are providing that information. We\u2019re not going to leave that to the producers to do that. But there is a similar situation that you have, you have situations where some producers are buying from other producers. I mean the analogy would be if you have automobile making companies buying steel from steel making companies, you want the automobile making companies to be providing information about the quality of the steel and the nature of the steel products to the automobile companies. You don\u2019t want the steel companies to be doing that.<\/p>\n\n\n\n<p><strong>[AO] To move the consumption side out of the way, what I was getting at is one would ask why if there were this high quality information being provided \u2013 and to be more concrete, we could imagine that there would be something like an Amazon, for example, provided by consumer federations, where consumers would be provided with high quality information; in the book you talk about Consumer Report and Nader\u2019s Raiders; there would be people whose job it would be to test products to see how the reality measures up to whatever the producer councils have told them \u2013 so the question would be then, even if worker councils wanted to over-hype their products and tell consumers lies, why would consumers want to or be inclined to listen to them in the first place?<\/strong><\/p>\n\n\n\n<p>[RH] Why don\u2019t we disempower the workers\u2019 councils from being able to directly \u2026 they\u2019re not the ones that should be providing information about their products. I think the proposal amounts to that we want to institutionally protect the users from manipulation.<\/p>\n\n\n\n<p>So, we have a workers\u2019 council making steel and they say \u2018but we really do have this interesting steel product, and it\u2019s innovative, it\u2019s a little different from the others, our steel is a little different than the steel that you\u2019re getting from these other steel-making workers\u2019 councils\u2019. Well, they would basically have to make that case. Instead of going out and advertising in \u2026 I suppose there are going to be journals that are read by car-making companies, about whether we should be buying this kind of steel or that kind of steel. Instead of that allowing them to be their self-advertisers, I think the idea is you want them to provide their information to an agency that represents the interests of all who might be using it, rather than they just simply try to directly access those people themselves.<\/p>\n\n\n\n<p>It\u2019s the direct access to the buyer of your product that I think we want to substitute a different process for. We want to substitute a filter. We\u2019ve got to provide a means by which workers\u2019 councils can describe their products, and the advantage of their products to somebody. But I think we want to basically have this intermediary, so that we eliminate what is the manipulative part of advertising from the \u2018it\u2019s really just information\u2019 part. So then we empower the intermediary to hear the case from the workers\u2019 council and then write up the description in Amazon, or provide the information in some sort of malls and displays, run the malls and displays where this stuff gets [sold].<\/p>\n\n\n\n<p>As I said in the beginning, I only go food shopping and I really am only interested in the meat section and I actually don\u2019t pay for high quality meat because I can find meat I really like and I love getting it at low prices. So I am just not the person who ever thinks of any of these things.<\/p>\n\n\n\n<p><strong>[AO] No, it\u2019s good, it\u2019s interesting. And what you said there is a very interesting, concise way, to summarize the issue. The problem being that direct connection between the producer and the consumer, whether that consumer is another workers\u2019 council or that consumer is an actual consumer.<\/strong><\/p>\n\n\n\n<p>[RH] In this regard, there\u2019s one thing that I did think was a very helpful suggestion that we made. Which is that right now if you buy something from a capitalist firm and it\u2019s not up to snuff, it\u2019s not what it was supposed to be, then you an individual consumer have to battle with that company about taking it back, reimbursing you. I mean and then we get into some companies who will advertise themselves as great companies by saying \u2018oh, if the consumer isn\u2019t satisfied we always take it back\u2019 which usually turns out to be actually a misrepresentation. They just say they do that, but in fact they don\u2019t.<\/p>\n\n\n\n<p>One of the things we suggested that\u2019s a structural change in this dynamic \u2013 because there the problem is it\u2019s a very unequal power dynamic, you have an individual consumer who\u2019s not satisfied, they\u2019d have to personally take the time and energy to go and hassle with the company to take it back, give them a rebate, replace it, etc. I like the idea that consumers can just turn all of that over to their federation. So anybody that gets delivery of something that they\u2019re not satisfied with, they just give it back to the federation and then the consumer federation on a more equal power footing argues with the producers federation about whether this was below standard, this was not what it was supposed to be.<\/p>\n\n\n\n<p>So I like the idea that in any disputes over whether or not something was, in truth, what it was supposed to be, I like to have that settled between roughly equally powerful groups. And as a person, I would love to be able to turn all of that over to my consumer federation. I\u2019m not happy with this, I just hand it to them and a week later they tell me what the resolution is. I would trust them to do a better job of representing my interest than my own, and then I don\u2019t have to take the time to do it. So one of the functions of these federations is to relieve individuals in particular unequal power situations from the inevitable hassles of something wasn\u2019t what somebody thought it was going to be.<\/p>\n\n\n\n<p><strong>[AO] Absolutely, I mean there\u2019s one word which illustrates this in the society that we live in and that\u2019s \u2018Apple\u2019. I just think it\u2019s funny that we say that we live in a consumerist society, but it\u2019s also a society where consumers have very little power. So we as consumers run around buying huge quantities of goods and services, but when it comes down to it we actually don\u2019t have much power at all.<\/strong><\/p>\n\n\n\n<p><strong>I mentioned Apple because you know they\u2019re notorious for being one of the wealthiest companies, and in many ways producing great products, but also in other ways really screwing over consumers. You can\u2019t replace the battery, you can\u2019t replace the screen, you know nothing, you can\u2019t see the source code for anything, everything\u2019s proprietary, they have their own cable for everything.<\/strong><\/p>\n\n\n\n<p><strong>And as consumers we\u2019re faced with a kind of game theoretic nightmare. I mean, you go into those kind of dynamics in great detail when you\u2019re discussing the Pollution Demand Revealing Mechanism (PDRM), but it\u2019s the same kind of situation where nobody wants to be the first person to go after Apple and try to do something about it. So essentially it doesn\u2019t happen.<\/strong><\/p>\n\n\n\n<p>[RH] That\u2019s right. Whoever puts in the time and energy to call them out is doing a tremendous service to everybody else, but there\u2019s a perverse incentive not to do that. I mean, I think at some point \u2013 I\u2019m not sure it got into the book or not \u2013 but I always was impressed with \u2018every company mouths the slogan \u201cthe consumer is always correct\u201d with equal insincerity\u2019.<\/p>\n\n\n\n<p><strong>[AO] Yeah absolutely, so true. So, some more questions about consumerism. Parecon involves the buying and selling of consumer goods and services, albeit in a very different context. To what extent do you think that conspicuous consumption will persist?<\/strong><\/p>\n\n\n\n<p>[RH] Yeah, we can throw the degrowth movement in here too.<\/p>\n\n\n\n<p><strong>[AO] And the other question, we can put the two of them together: to what extent do you think that habits of just throwing goods away and buying a new one will persist? How can Parecon counter these tendencies? And maybe if you could explain what conspicuous consumption is for people who haven\u2019t encountered that phrase.<\/strong><\/p>\n\n\n\n<p>[RH] Well \u2018conspicuous consumption\u2019 was a phrase that&nbsp;<a href=\"https:\/\/en.wikipedia.org\/wiki\/Thorstein_Veblen\" target=\"_blank\" rel=\"noreferrer noopener\">Thorstein Veblen<\/a>&nbsp;came up with. And he is definitely one of my favourite economists of all time. The reason he is one of my favourite economists is he was very sensitive to how it was that what people wanted and didn\u2019t want was very influenced by the institutions in which you \u2026 When you put people down in one set of institutions, they want and don\u2019t want certain kinds of things; you put them down in a different set of institutions, and you\u2019d be very, very, surprised at just how different people\u2019s preferences are. So, the whole idea that institutions can bias and warp the kinds of preferences that people come to have \u2013 which has been an important part of my theoretical economics work dating back to my graduate school days \u2013 it really just comes from an insight our of Thorstein Veblen.<\/p>\n\n\n\n<p>But he got very concrete about it. He was writing in the in the robber baron era of American capitalism, and what he realized was that many people were just consuming things to demonstrate, to achieve, status in society. That it was almost better to overpay for something, because if you overpaid for it you had demonstrated your status in society as a higher wealth, higher income, person. So it wasn\u2019t really that you wanted that good. It\u2019s that buying that good was a way of \u2026 So that\u2019s what he meant by \u2018conspicuous consumption\u2019. You weren\u2019t consuming the thing because it had any real use value for you, or utility for you. The utility it had for you was it conferred status on you compared to other people.<\/p>\n\n\n\n<p>Now, I think that\u2019s a very important concept. I think that\u2019s a very important. So the real question reduces to, in a participatory, in a healthy society, how would people go about achieving status in the eyes of others. Well, certainly in a socialist society, our vision isn\u2019t that you would achieve status as being a higher income person or a person with greater wealth. So, part of what we\u2019re proposing is changing society from the way that you impress other people with yourself as a human being because you\u2019re wealthier and you can consume more. That was a crazy, terrible, way that people achieved this goal under capitalism. And we\u2019re going to eliminate that. We\u2019re not going to have these huge differences in income and wealth.<\/p>\n\n\n\n<p>So then, I think in part what the socialist vision is \u2013 and this is&nbsp;<em>vision<\/em>&nbsp;\u2013 are people going to really not care what other people think of them anymore? No, I don\u2019t think that\u2019s true. I mean, I don\u2019t think that\u2019s in the human gene, you know that\u2019s not in our DNA. So people are going to care. But then the question is, well, how would you go about trying to win esteem? And our goal as socialists we want to create a society in which the way you try to earn the respect and the esteem of others is that you\u2019ve done things that are socially valuable. In essence it\u2019s sort of substituting one whole way for humans to earn the respect of others for what was really a kind of \u2026 What was brilliant about Veblen was he managed to write about it to make you understand what a sick, absurd, way it was that people were going about trying to win the respect and esteem of other human beings.<\/p>\n\n\n\n<p>And that\u2019s that that comes into play when we\u2019re talking about incentives to innovate. And we can come back to this in terms of, well, there are no patents anymore so why would anybody try to innovate? Well but innovators are doing something that\u2019s socially valuable. So if you have a society that has moved away from I\u2019m going to be respected by others because of my conspicuous consumption, instead, to a society where if I want to be respected by others one way I could do it is if I happen to come up with a new innovation that\u2019s socially valuable, then people will know that and that\u2019s how it will get respect. So, I think that\u2019s part of what we\u2019re imagining here.<\/p>\n\n\n\n<p>And that also to the extent that that has happened, that has implications, for instance, whether are we going to have to reward people beyond their sacrifices and efforts if they happen to come up with innovations. Well if what people are getting respect from others for is the innovations they come up with, then you don\u2019t have to give them extra consumption for that. On the other hand, if that\u2019s not sufficient, if we haven\u2019t achieved in the evolution of the socialist economy enough of that to satisfy people, and we\u2019re not getting enough innovation, well then what I argue is you may discover that you would have to resort to what I would argue is an unfair system of material rewards for innovators. Because we haven\u2019t achieved the point where simply recognition for having come up with a social[ly valuable innovation] is the direct reward of esteem and respect. We still have to substitute this material reward in order to induce enough innovation.<\/p>\n\n\n\n<p>And there has been so much concern with how the old cloggy centrally planned socialist economies failed in terms of stimulating innovation, that I know this is a huge concern that a lot of people have. Is what you\u2019re proposing something that would be sufficiently innovative, Or would we once again lapse into just very low rates of innovation? And that\u2019s what I\u2019ve said, the hope is that we now have gotten out of the crazy Veblen situation, that he just did such a brilliant job of making fun of, and we\u2019ve moved on to a system where direct respect and esteem and appreciation for innovation \u2026 But if we haven\u2019t, there is a fallback. But I just think that fallback is something that should be decided through a democratic political process, How much of that do we still have to do? The whole question of do we have to do it at all I think should be part of a democratic debate. If people are feeling like maybe we need to do a little bit of it, then that\u2019s the way it should be handled. But the goal should always be that we\u2019re moving away from that.<\/p>\n\n\n\n<p><strong>[AO] Definitely. I intend to get into innovation in detail. But before we do that, it is very interesting to think about what the material basis of conspicuous consumption is, as we know it. I\u2019m sure there will be some kind of conspicuous consumption forever, so to speak, I mean even in hunter-gatherer societies there\u2019s always some element of this. But it\u2019s of a completely different character. And it\u2019s interesting to wonder how much conspicuous consumption is even possible in a society where incomes and wealth are radically egalitarian. Can that even be sustained? And particularly in a culture where you don\u2019t have a mass brainwashing by producers to create preferences and personalities which pursue that. I guess I\u2019m thinking about how conspicuous consumption arises in that context, and I\u2019m not sure where it can actually get a foothold.<\/strong><\/p>\n\n\n\n<p>[RH] If income and wealth is very egalitarian, I think that\u2019s the major institutional barrier to the growth of the actually psychologically sick behaviour of conspicuous consumption. That\u2019s the big institutional barrier. And the predictable degree of income and wealth inequality in a participatory economy has got to be lower than any other model of socialism that I\u2019m aware of. So, I think that, in some sense, if there\u2019s any economic proposal that is immune to this problem, this would be the most likely. What you\u2019re saying is well being the most immune doesn\u2019t mean you\u2019re entirely immune and I wouldn\u2019t dispute that.<\/p>\n\n\n\n<p><strong>[AO] Well, look, bringing this back to engineering, in engineering there\u2019s no such thing as zero. Don\u2019t know what that is. It\u2019s always 0.000 or something, so I\u2019m not interested in zero, I\u2019m not interested in perfection, it\u2019s about dealing with the largest problems and then you can make the refinements once you are lucky enough to get there.<\/strong><\/p>\n\n\n\n<p><strong>What about the matter of a disposable culture, a throwaway culture? You know, fast fashion. And it doesn\u2019t matter if I don\u2019t get this repaired. People don\u2019t repair things anymore, because why bother getting repaired because that costs as much as it does to get a brand new version.<\/strong><\/p>\n\n\n\n<p>[RH] My answer to that is if we incorporate all the externalities \u2013 which is a huge, huge, part of what we\u2019ve proposed, and proposed very concrete mechanisms for how to estimate their magnitude and how to get them included into the social costs that everybody has to take into account \u2013 that\u2019s essentially my answer to that. That\u2019s incredibly inefficient because somebody has not incorporated the costs of the throwaway and the cleanup. And I think if you take care of the externalities that basically is the solution to that.<\/p>\n\n\n\n<p>At some point we should take the conversation in the direction of \u2026 Because over-consumption and the degrowth phenomenon, they are related to one another, as is the throwaway stuff.<\/p>\n\n\n\n<p><strong>[AO] There\u2019s a question about that. I\u2019ve broken them into sections. If you want to make some preliminary comments that\u2019s fine, but there\u2019s an ecology section and there\u2019s a whole part about how can a participatory economy facilitate a zero growth or a degrowth economy versus, say, a market which has a growth imperative. But I just wanted to say don\u2019t worry, we will absolutely get there.<\/strong><\/p>\n\n\n\n<p>[RH] Then good, proceed along your agenda and we\u2019ll get to it. That\u2019s fine.<\/p>\n\n\n\n<p>Here\u2019s the thing I\u2019ll throw in. I envision that in a participatory economy material standards of living will continue to rise at a healthy rate forever for the human beings living in this. And there\u2019s a certain interpretation and presentation of degrowth that assumes that is environmentally impossible, and I think they are absolutely crazy, they are absolutely wrong, there is no reason that we \u2026 I do not believe we have to preach to the world you are just going to have to accept no significant rise in material standards of living for humanity, because unless you accept that the environment will be destroyed.<\/p>\n\n\n\n<p>I\u2019m just going to throw out there that I am proposing that if we have a participatory economy, people will enjoy a nice healthy rise in the average material standard of living for human beings. And because the income distribution will be more egalitarian than ever, that rise will be something that everybody enjoys. That we do not have to accept the fact that our living state, our economic living standards, will no longer continue to increase. But anyway we will can come back to that<\/p>\n\n\n\n<p><strong>[AO] That\u2019s a very enticing assertion, and that\u2019s an incentive for viewers to hang on until we get to that and discuss and reveal the arguments for that.<\/strong><\/p>\n\n\n\n<p>[RH] That\u2019s right. It doesn\u2019t have to be doom. I am not preaching doom and gloom.&nbsp; Only if we don\u2019t wake up and do something sensible. But not because it\u2019s inevitable we\u2019ll have to accept it. Go ahead.<\/p>\n\n\n\n<p><strong>[AO] There\u2019s another question about consumption, and that is about consumer federations competing with each other. The question is: is there competition between consumer federations? Hoarding information, for example, or trying to attract members with higher effort ratings. And if consumer federations are pushing to sell all their merchandise, does that mean that, say, shopping centres will be competing for customers or online shops will be competing for customers<\/strong>?<\/p>\n\n\n\n<p>[RH] I honestly don\u2019t see a problem here. Let\u2019s just go back through them one by one.<\/p>\n\n\n\n<p><strong>[AO] Is there competition between consumer federations, so for example \u2026<\/strong><\/p>\n\n\n\n<p>[RH] To get members with higher effort ratings.<\/p>\n\n\n\n<p><strong>[AO] Yes, that was one.<\/strong><\/p>\n\n\n\n<p>[RH] Okay, well the consumer federations are geographically based. So a consumer federation would be, what, maybe 10,000 people, maybe 3,000 families. And they are in a geographical area. So they don\u2019t compete for members, their members are fixed by the fact that they live in that neighbourhood.<\/p>\n\n\n\n<p>I also don\u2019t know what advantage it would be to a consumer federation to have people with higher effort ratings, to the federation itself. I think there will be differences in the average effort rating of different consumer federations, and that does in fact mean that all the residents of that consumer \u2026 Suppose you\u2019re in a consumer federation where the average effort rating is five percent lower than the national average. Well, then the social value of the goods that everybody in that neighbourhood is going to be consuming is going to be five percent less than the national average. Now, supposedly that\u2019s fair because their effort ratings were five percent less and they basically made the choice that they wanted to be more leisurely about things and cared less about what they had to consume. But that\u2019s the way it works, and so I don\u2019t see a real problem there.<\/p>\n\n\n\n<p>I can\u2019t see what the advantage to a consumer federation would be of recruiting high effort members. I guess you could say, well, a high effort member might have a nicer house on the block and then the whole neighbourhood and the whole street is a little nicer. But differences in effort ratings and income are going to be small enough so we\u2019re really not worried about is my neighbourhood a ghetto versus walled estates. There aren\u2019t going to be neighbourhoods with walled estates and neighbourhoods with ghettos. So, I honestly don\u2019t think that\u2019s a problem<\/p>\n\n\n\n<p><strong>[AO] Yeah, if the variations in effort ratings are relatively small then there isn\u2019t much of an issue there.<\/strong><\/p>\n\n\n\n<p>If you have if you have 10,000 people living in a neighbourhood council, and maybe half of them have jobs, those 5,000 people are working in different workers\u2019 councils. So it\u2019s not like we\u2019ll have a workers\u2019 council with a low effort rating and everybody in the neighbourhood works there. So if people in one consumer council ended up with an average effort rating five percent below some other neighbourhood consumption council, that would have been the outcome of people in both places working in hundreds of different worker councils and it just turned out that in the neighbourhood there was a five percent difference in the average effort rating. Everybody is working in very different workplaces.<\/p>\n\n\n\n<p><strong>[AO] Okay, really that issue is more of an issue about the effort rating income calculation distribution process.<\/strong><\/p>\n\n\n\n<p>[RH] Yeah. Between worker councils and within worker councils<strong>,&nbsp;<\/strong>exactly. That\u2019s where there really is a serious issue. I mean, that\u2019s where the discussion needs to be because that issue does require attention.<\/p>\n\n\n\n<p><strong>[AO] Yes and we\u2019ll get there. And then also statistical effects, that will deal with a lot of the issue there when you\u2019re looking at significant populations.<\/strong><\/p>\n\n\n\n<p><strong>And just on that last point of, for example, shopping centres competing with one another. They all want to clear their products, their goods and services, so would there be competition between different consumer federations running, say, shopping centres in different areas of a city, or so anything like that?<\/strong><\/p>\n\n\n\n<p>[RH] I mean, quite honestly I just never shop<\/p>\n\n\n\n<p><strong>[AO] I didn\u2019t think you\u2019re going to say that.<\/strong><\/p>\n\n\n\n<p>[RH] I don\u2019t even shop online. I don\u2019t even I don\u2019t even shop on Amazon. I mean, I have six children and three grandchildren, when birthdays come around then I have to have somebody show me how to go on Amazon and get something shipped someplace.<\/p>\n\n\n\n<p>Look what I always imagined was that there\u2019s all these goods that the people in a neighbourhood consumption council have put in our proposals that have been approved. We\u2019re going to be consuming these things during the year. Well, there has to be a distribution centre. I always imagine there\u2019ll be a distribution centre some place in the neighbourhood or close to the neighbourhood where all this stuff gets sent when they go to pick it up.<\/p>\n\n\n\n<p><strong>[AO] Can I intervene on that for clarification? So, would you say then that \u2013 because this this was a question I was going to ask, but I thought maybe it\u2019s not worth asking \u2013 that most consumption at the household level would occur locally?<\/strong><\/p>\n\n\n\n<p>[RH] Why would you want to go to a distribution centre that is a 40-mile drive instead of the one that\u2019s closest to you. We might have some items where the distribution centre is covering five neighbourhood councils \u2013 the warehouse and the place you go to pick them up. I mean, think of it now, we have grocery stores, and then we have corner markets, and then we have malls. And you go to those different places to get different categories of goods. So in that sense, I think we would still have different sizes for different categories of goods\u2019 actual physical distribution centres. But I always imagine those as being run by the consumer councils.<\/p>\n\n\n\n<p><strong>[AO] If I understand it correctly, the annual plan establishes more or less the consumption schedule for the year but \u2026<\/strong><\/p>\n\n\n\n<p>[RH] The annual plan doesn\u2019t say how the goods that are produced actually get to the people who end up using them during the year. So what we\u2019re talking about is \u2018but then how does that happen?\u2019, and my honest answer is I don\u2019t give a shit. That was my honest answer but it\u2019s a reasonable question to ask. And so my second honest answer is well ask somebody else, that can\u2019t be that hard to work out. So now you\u2019ve asked me well could that work out, and I\u2019m just sort of thinking out loud. But yeah they go to distribution centres and people go to pick them up.<\/p>\n\n\n\n<p>The more complicated thing is in my mind is what if people during the year start to pick up different amounts of things than what they were pre-approved for? And then how do you make those adjustments? Now, that I took upon myself as a serious question that somebody\u2019s got to try to provide a serious answer to. But the short answer always was I just imagine that the consumer councils and their federations are managing what I just think of as distribution centres, where different things are sent and the people who\u2019ve been authorized to consume that stuff are going and picking it up as conveniently as possible.<\/p>\n\n\n\n<p>All this was written before [COVID] \u2026 Everybody is so afraid, you can\u2019t go into a store, and Uber is dropping off your food, and if Uber won\u2019t do it, Safeway will do it for you for a small charge. I mean, we\u2019re living in a whole new world about how people are picking things up, and, I don\u2019t know, maybe it\u2019s a better world, maybe it\u2019s a worse world, but I\u2019m the person that never shopped, I don\u2019t know.<\/p>\n\n\n\n<p><strong>[AO] So can I just clarify for my own benefit, it was my understanding that consumers would, at the point of actually obtaining the good or the service that they had put in their request for, when they actually come to realize that request, they would need to pay for that on the spot out of their income.<\/strong><\/p>\n\n\n\n<p>[RH] Right.<\/p>\n\n\n\n<p><strong>[AO] So I\u2019m just asking, you don\u2019t think then<\/strong>&nbsp;<strong>that there will be much price competition between, for example \u2026 I might have put in a request during the year to my consumer council, but then I see that maybe on the other side of the city, or something like that, the thing that I wanted is being sold there at maybe a slightly lower price. Because they\u2019re trying to clear things, and you know it\u2019s an imperfect<\/strong>&nbsp;\u2026<\/p>\n\n\n\n<p>[RH] I don\u2019t think that\u2019s the problem. You\u2019re not going to find a better price at a different location.<\/p>\n\n\n\n<p>But this is a situation that that will arise. I put in my consumption request and it was approved, but during the year I end up doing something different. And that means that for some items, when I go in and I get them and they charge me on my swipe card, I pick up more of some items than I was approved for and I pick up less of other items than I was approved for. So there is a real question of how do we adjust for that. And the really big question is do we adjust the prices in that case or not? And if so, why and how? And I actually do write a decent amount about that in&nbsp;<em>Democratic Economic Planning<\/em>.<\/p>\n\n\n\n<p>In the best of all worlds, when you pick up less of an item and I pick up more of an item from our own distribution centre they cancel each other out. We\u2019ll be charged different amounts [than planned in our proposals]. And that will basically mean that in your bank account you have maybe overspent what you were allocated, you\u2019ve either done a little borrowing. Or you\u2019ve actually saved some.<\/p>\n\n\n\n<p>And I do talk about the borrowing and the saving. And the saving is easy. Anytime somebody\u2019s purchases end up being well wait a minute you didn\u2019t buy everything you were you were authorized for, then you\u2019ve saved and it just goes into an account.<\/p>\n\n\n\n<p>On the other hand, the borrowing isn\u2019t a problem unless it gets to the point where there\u2019s no credible way you are actually going to pay back all that borrowing by consuming less in the future than you\u2019re authorized for during that year, than your income. And then we have to talk about well what banks \u2013 although, in our case I think it\u2019s more like credit unions \u2013 their real job is to basically just monitor, and see whether or not somebody who is spending more than their allocated income year after year after year, and it\u2019s gotten to the point where it\u2019s very obvious that this is not something they\u2019re going to be able to repay, then what do you do about that? And that\u2019s where I think credit unions with their standard monitoring of that kind of behaviour have to come in.<\/p>\n\n\n\n<p>But basically the system is certainly flexible enough so that: people will change their minds during the year, when they do change their minds then basically that will amount to they will either borrow or save as compared to using exactly their income for the year. That\u2019s okay, we can take care of what I would call bad faith borrowing. In any system that allows borrowing, you have to have some mechanism or institution that is take that is monitoring borrowing to see whether it\u2019s bad faith or good faith borrowing. And then there has to be somebody that steps in and does something about it, and brings it to a halt. But I don\u2019t think that\u2019s rocket science.<\/p>\n\n\n\n<p>And the tricky part is in the end we have to have the actual matching of the supply and the demand. And do we use price adjustments to do that? Here\u2019s the other thing that I think is a policy issue that would have to be discussed and debated, if we run into a situation where on average people have picked up during the year more than the collective order was. Well, then we\u2019re going to have an aggregate shortage of the thing, and should people who have ordered a certain amount get priority over people who are just coming in and now saying I want more of that than I actually had in my proposal? And essentially you can use price adjustments to take care of this or you can use well but they put in the proposal, so if we\u2019re going to run out of shoes then they get the shoes, and you have to wait because you actually didn\u2019t put in a proposal for that many shoes. So there\u2019s sort of two different ways of taking care of it and there are pros and cons to both I suppose.<\/p>\n\n\n\n<p><strong>[AO] There are. I mean we will go into that at another time, but I think there is certainly one advantage. Effectively one is a rationing \u2026 well, I suppose it\u2019s all rationing really, but one is a typical what\u2019s called \u2018rationing\u2019 system<\/strong>.<\/p>\n\n\n\n<p>[RH] Right, one is rationing, and the other is you make the price adjustments and we traditionally don\u2019t call that \u2018rationing\u2019.<\/p>\n\n\n\n<p><strong>[AO] Yeah, which is funny. It is this funny thing of, well, what do you think rationing is? Rationing is when there\u2019s a certain amount and you have a way to decide who gets it and who doesn\u2019t get it. Which is the hilarious thing, that people think that in a market society or in capitalism, there\u2019s no rationing. But of course<\/strong>,&nbsp;<strong>that\u2019s what money is.<\/strong><\/p>\n\n\n\n<p>[RH] Right. When you put a price on something that I can\u2019t afford, guess what? You\u2019ve just rationed me out of it.<\/p>\n\n\n\n<p><strong>[AO] This is a complete aside but, when people foam at the mouth about the \u2018social credit\u2019 system in China \u2026 now, I\u2019m not an uncritical defender of China, that\u2019s not what I\u2019m getting at. But people talk about how the social credit system is so dystopian, and you\u2019re not allowed to do certain things depending on the way you behave or what you think. And I just think, hmm, there\u2019s a \u2018social credit\u2019 system\u2026 there\u2019s some kind of score attributed to you depending on the way that you behave which determines what you\u2019re allowed to do and not allowed to do.<\/strong><\/p>\n\n\n\n<p>[RH] Oh right, I know what you\u2019re talking about now, yes.<\/p>\n\n\n\n<p><strong>[AO] Yeah, money. Yes, we have a social credit system.<\/strong><\/p>\n\n\n\n<p><strong>But that point you\u2019re making, though, about underwriting. I mean, from what I read about finance, it seems that like you said it\u2019s not rocket science. It seems to be that the hardest part is actually making sure that it is done and that it\u2019s not a situation where criminals take over and make sure that there\u2019s no underwriting at all, and turn finance into a total scam. But the principles of underwriting, the way to do it is not that complicated. When you\u2019re talking about good and bad faith borrowing.<\/strong><\/p>\n\n\n\n<p>[RH] Right, so good and bad faith borrowing. One of my daughters works for a credit union, and she\u2019s worked in the collections department, and she\u2019s worked in the loans department. And there are members of the credit union that are extended credit and then it turns out well they just can\u2019t pay it. And sometimes it\u2019s an accident, and sometimes there\u2019s an easy way to fix it in terms of oh well you\u2019re going to pay it back but it\u2019s going to be over a longer period of time, we\u2019re going to give you an extension of time.<\/p>\n\n\n\n<p>The first step that has to be taken is well we\u2019re not going to let you do that again next year. When you defaulted on a car loan from your credit union, then you don\u2019t get to do it again the next year. And it isn\u2019t rocket science to have people in the credit union to figure that one out, and know who we have to stop from continuing this. Basically a dishonest representation of their intentions or a totally unrealistic ability for them to assess their own situation. It can be malevolent or it can just be irresponsible, but we have systems where people, actual employees of a workplace, know how to go about this.<\/p>\n\n\n\n<p><strong>[AO] Yes absolutely. I mean life and finance are lot simpler when it is not just a giant scam.<\/strong><\/p>\n\n\n\n<p>[RH] I really don\u2019t think that if Donald Trump had had to apply to participatory economy credit unions for the kind of credit that he has accumulated, I do not think he would have gotten away with all of the shenanigans he has through his entire business life.<\/p>\n\n\n\n<p><strong>[AO] Indeed. I just want to say one thing I meant to say about the rationing. I think one argument in favour of that, where people who had entered a certain good or service into their consumption proposal in advance, is that it would encourage people to be more accurate in their proposal<\/strong>.<\/p>\n\n\n\n<p>[RH] Yes. If the solution was that people who had it in the proposal get priority over people who didn\u2019t, yeah that that would provide an incentive for trying to be more careful about your actual proposal. It would also disadvantage me because I know that I would be very lackadaisical about putting my proposal in. And when I got there and they said \u2018but you didn\u2019t actually ask for this and this person did and therefore you\u2019re going to have to wait\u2019, I would be the first one to be told I\u2019d have to wait. And I would decide that\u2019s okay because I just don\u2019t want to take the time to think too much about my annual consumption proposal anyway. Take last year and add five percent for everything because I think I\u2019m going to have a higher effort rating \u2013 that would be the way I\u2019d do it.<\/p>\n\n\n\n<p><strong>[AO] Your distaste for shopping and consumption would persist even in \u2026<\/strong><\/p>\n\n\n\n<p>[RH] \u2026 even that context, yes.<\/p>\n\n\n\n<p><strong>[AO] Okay, so we can leave the questions there. You\u2019ll be happy to know that there\u2019s only one question left about shopping, so the torture will end after that. You\u2019ve given me so much of your time, so I\u2019m really grateful. It\u2019s been a wonderful discussion, and we will continue this.<\/strong><\/p>\n\n\n\n<p>[RH] Sounds good to me. Alrighty, have a good evening.<\/p>\n\n\n\n<p><strong>[AO] That\u2019s the end of Part B of my first interview with Professor Robin Hahnel about participatory economics and his latest book&nbsp;<em>Democratic Economic Planning<\/em>. Stay tuned for our upcoming second interview.<\/strong><\/p>\n\n\n\n<p><strong>And as always I want to hear your thoughts in the comment section below.<\/strong><\/p>\n\n\n\n<p><strong>That\u2019s all for now. 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