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Artificial market

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Artificial market
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An artificial market is an economic institution proposed mainly by libertarian socialists (WP) as a replacement for currently existing markets based on money and private ownership and control of an economy's means of production (WP). The concept of the artificial market has been articulated in detail by political scientist Takis Fotopoulos (WP) within the framework of his Inclusive democracy (WP) project; although the concept itself precedes it.

Proposed within heterodox economics as a solution to the problem of maintaining freedom of choice for the consumer within a marketless and moneyless economy, an artificial market operates in much the same way as traditional markets, but uses Wikipedia:labour vouchers or personal credit in place of traditional money. Because of the use of a labour voucher system in consumption of goods and services, an economy using an artificial market would have no actual flow of money and thus the only kind of market that could exist would be a market for commercial goods and services; eliminating capital markets and labour markets.

According to Takis Fotopoulos, an artificial market "secures real freedom of choice, without incurring the adverse effects associated with real markets".[1]- p. 255

The idea of an artificial market was first proposed by the anarchist (WP) theorists Pierre-Joseph Proudhon (WP) and Mikhail Bakunin (WP) with their respective systems of Mutualism (WP) and collectivist anarchism (WP). who suggested replacing traditional currency with a system of "labour-cheques" while still retaining basic market relations for goods and services.

The artificial market however is rarely advocated as the only element for the allocation of goods and services by its proponents, as most also support a form of directly democratic planning for non-commercial goods and vital resources, and in some cases regulation of the artificial market through planning also.

According to Fotopoulos; "the allocation of economic resources is made first, on the basis of the citizens' collective decisions, as expressed through the community and confederal plans, and second, on the basis of the citizens' individual choices, as expressed through a voucher system".[1]- p. 256

The proposed system of the artificial market aims at

  • (A) meeting the basic needs of all citizens, and
  • (B) securing freedom of choice in a marketless, moneyless and stateless ‘scarcity–society’ which has not yet achieved universal autarky (WP) (self-sufficiency (WP)).[1]- p. 255

The former requires that basic macro–economic decisions have to be taken democratically, whereas the latter requires the individual to take important decisions affecting his/her own life (what work to do, what to consume, etc.). Both the macro–economic decisions and the individual citizens’ decisions are envisaged as being implemented through a combination of democratic planning and an artificial market. But, while in the ‘macro’ decisions the emphasis will be on planning, the opposite will be true as regards the individual decisions, where the emphasis will be on the artificial market.[2]

Most artificial market proponents reject the traditional socialist (WP) adoption of the labour theory of value (WP) as they believe it cannot be used as the basis for allocating scarce resources. The reason given is that even if the labour theory of value can give a (partial) indication of availability of resources, it certainly cannot be used as a means to express consumers’ preferences. Thus they feel that the labour theory of value cannot serve as the basis for an allocative system that aims at both meeting needs and, at the same time, securing consumer sovereignty and freedom of choice. Instead, the model proposed here is, in fact, a system of rationing, which is based on the revealed consumers’ preferences on the one hand, and resource availability on the other.[1]- p. 261

Advocates of Participism (WP) and parecon (WP) in particular reject markets in all forms in favour of democratic participatory planning. While parecon also uses Labour vouchers (WP) or personal credits in place of money, prices are set according to the direct requests of consumers in democratic "consumer councils" whose demands are relayed to economic facilitation boards who determine and set final prices based on a combination of Wikipedia:marginal utility and Wikipedia:opportunity cost. Fotopoulos argues against this[3]

See also[edit]

References[edit]

  1. ↑ 1.0 1.1 1.2 1.3 Takis Fotopoulos, Towards an Inclusive Democracy: the crisis of the growth economy and the need for a new liberatory project, (London & NY: Cassell, 1997)
  2. ↑ Takis Fotopoulos, Outline of an Economic Model for an Inclusive Democracy, Democracy & Nature, Vol.3, No.3, (1997), pp.27-38.
  3. ↑ Steven Best, Ed.,"Recent Theoretical Developments on the Inclusive Democracy Project" in "Global Capitalism and the Demise of the Left:Renewing Radicalism Through Inclusive Democracy," The International Journal of Inclusive Democracy, Vol. 5, No. 1, special issue (winter 2009), p. 302. "no kind of economic organisation based on planning alone, however democratic and decentralized it is, can secure real self-management and freedom of choice."

Further reading[edit]

External links and sources[edit]

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