Do the basic institutions of a participatory economy – democratic worker and consumer councils and federations, remuneration according to effort and need, jobs balanced for empowerment and desirability, and participatory planning – create an institutional setting and incentives that promote judicious relations with our natural environment? As long as producers and consumers are not forced to bear the costs of the pollution that results from their decisions, they will continue to pollute too much. How does a participatory economy solve this?
In each iteration in the annual planning procedure the Iteration facilitation Board (IFB) quotes the current estimate of the damage caused by releasing a unit of each pollutant. Enterprises proposing to emit the pollutant and the community of parties affected by the release of this pollutant respond to this signal. Since consumers affected by a pollutant will not always correspond to consumers living within the boundaries of a geographical consumer council or federation, a participatory economy will presumably create “communities of affected parties” for specific pollutants regardless of which geographical consumer council people belong to (CAP= Community of affected parties regardless of geographical boundaries). Enterprises propose how much of the pollutant they want to emit, knowing they will be charged for those emissions an amount equal to the current estimate of the damages per unit times the number of units they propose to emit. The damage from emissions thereby becomes part of production costs. The community of affected parties (CAP) proposes how many units of the pollutant it is willing to allow to be released, taking into account that the CAP will be compensated by an amount equal to the current estimate of the damages per unit times the total number of units the CAP allows to be released. The CAP can, of course, decide they do not wish to permit any emissions at all, but if the CAP decides to allow X units of a pollutant to be emitted, members of the CAP will receive “credit” for damages suffered for the level of emissions they authorize. This “sacrifice” from exposure to pollution is added to whatever “sacrifices” CAP members made as workers when calculating how much consumption it is fair for them to enjoy. The IFB will change the estimated damage caused by the pollutant in response to the difference between the proposals from the CAPs to allow the pollutant, and the workers councils’ proposals to emit the pollutant. What is a pollutant and what is not is decided by the CAP, who is advised by scientists employed in R&D operations run by the CAP. There are good reasons to believe that unlike market economies which predictably lead to over pollution, this procedure will settle on efficient levels of emissions, i.e. emissions will only be permitted if the social benefits from the increased production the emissions allow exceed the damages the emissions cause.
In a participatory economy there is a strong incentive to apply for membership in a CAP since victims receive compensation. This means that there is a perverse incentive to falsely claim damage, and therefore membership. There is no easy solution to this problem and it becomes clear that procedures for establishing membership are crucial, and this is where time and resources should be spent.
On the production side, however, it is no longer possible to externalise costs of pollution, as is the case in a market economy. Therefore, it is fair to expect that a participatory economy will allocate more resources than a capitalist market economy to research that aims to reduce pollution. Furthermore, it is also fair to expect that people in a participatory economy will value leisure time more than in a capitalist market economy since there is no inherent growth imperative in a participatory economy that needs to be fulfilled.
The procedure in the annual planning process protects the environment only if present residents in the CAPs are the only ones who suffer negative consequences. Often the negative effects of pollution today persist over long periods of time and affects future generations as well as the present generation. The interests of future generations must be handled in the long-run planning procedure by means of restraints that the present generation places on itself in democratic deliberations concerning long-run plans. Major changes in the energy, transportation, and housing sectors, as well as conversions from polluting to “green” technologies and products are all determined by the long-run planning process.
In the end, there is no way to guarantee that members of the present generations will consider the interests of future generations or choose wisely for them. And this is true for any economic system. We can only hope that people living in a society based on values such as economic democracy and justice, solidarity, diversity will be inclined to do so.