Participatory economics, abbreviated parecon, is an economic theoy that uses participatory decision-making to allocate both resource creation and consumption. It is an alternative to contemporary capitalist market economies and to centrally planned socialism or coordinatorism. Emerging in the 1980s and 1990s, the most recent presentation is contained in Parecon: Life After Capitalism (2003) and Moving Forward: Program for a Participatory Economy (2001) by activist and political theorist Michael Albert. It is also based on the work of radical economist Robin Hahnel, author of The ABC's of Political Economy: A Modern Approach(2003).

The underlying values that parecon seeks to implement are equity, solidarity, diversity, and participatory self-management. It is based on the following principles:

• self-managed worker and consumer councils for decision making,
• balanced job complexes,
• compensation based on effort and sacrifice, and
• participatory planning.

Albert and Hahnel present parecon only as an alternative economic theory that would require additional models from politics and sociology.

In comparing parecon to sociocracy, the differences in method and similarities in aims to sociocracy are striking. The basic principles of sociocracy are simple and align very closely with parecon's values of self-management, job structures that do not create a class system, compensation based on productivity and effort, and participatory planning. The system by which one would accomplish these goals, however, is largely absent in parecon while in sociocracy these very structures are highly developed and based on sophisticated applications of systems theory. Further, sociocracy is a system of governance with an underlying economic value system that be applied to any organization -- corporation, nation, association, etc.

One sociocratic concept, for example, would be very helpful in establishing the kind of production unit that would replace the capitalist corporation: the "free corporation" owned by no one. In a fully developed sociocratic corporation there are no owners. The corporation is composed of its workers and its physical plant; it cannot be bought or sold by anyone. It can merge or join with other sociocratic businesses in strategic alliances but it ceases to exist if its workers leave, quitting production.

Also useful to parecon's advocacy of self-managed worker and consumer councils would be the concept of the circle and how circles function as semi-autonomous, self-governing units of a larger self-governing whole. Sociocracy is based on the standards of transparency, inclusiveness, and accountability that such a system would need.

In addition, by means of integrated education programs, sociocracy builds strong skills in all workers so they learn how to design feedback mechanisms and participate in complex planning. Each worker is expected to participate in management decisions. While the job of the production manager still exists in sociocracy, it is defined by the workers. And the workers choose the manager.