Skip to main content
SpringerLink
Log in

The Economics of Workers’ Enterprises

  • Chapter
Economics in a Changing World

Part of the book series: International Economic Association Series ((IEA))

  • 37 Accesses

Abstract

The economics of labour management and producer cooperatives began in earnest with Ward’s celebrated paper in 1958 (Ward, 1958). The Wardian theory of the labour-managed firm (LMF) was extended in the early contributions of Domar (1966), Vanek (1970) and Meade (1972) to a general theory of labour-managed industries and economies. A basic characteristic of this literature was the maintained assumption that workers in the LMF would maximize dividend per worker-member, defined as the value added per worker. Thus, the LMF chooses inputs in the long and short run so as to maximize

$$v = \frac{V}{L} = \frac{{pY - rK}}{L} = \frac{{pF(K,L) - rK}}{L}$$
(1)

where V is value added, L is labour, K is capital and p is the market price for the firm’s output Y = F(K, L), r is the rental price of capital, and F is the firm’s production function which is assumed to exhibit positive and decreasing marginal products of capital (∂F/∂K) and labour (∂F/∂L)

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • Blinder, A.S. (1990) Paying for Productivity: A Look at the Evidence, (Washington, DC: Brookings Institution).

    Google Scholar 

  • Bonin, J.P., Jones, D.C. and Putterman, L. (1992) ‘Theoretical and Empirical Studies of Producer Cooperatives: Will Ever the Twain Meet?’, working paper, Wesleyan University, Middletown, Conn., July.

    Google Scholar 

  • Bonin, J.P. and Putterman, L. (1987) Economics of Cooperation and the Labour-Managed Economy, Fundamentals of Pure and Applied Economics, No. 14 (London: Harwood Academic Publishers).

    Google Scholar 

  • Bös, D. and Peters, W. (1991) ‘When Employees Free Ride: A Theory of Inefficiency’, Discussion Paper A-327, SFB 303, Rheinische FriedrichWilhelms-Universität, Bonn, May.

    Google Scholar 

  • Bradley, K. and Gelb, A. (1987) ‘Cooperative Labour Relations: Mondragon’s Response to Recession’, British Journal of Industrial Relations, vol. 25, no. 1, pp. 77–99.

    Article  Google Scholar 

  • Chiarella, C. (1989) ‘The Dynamic Behavior of Workers’ Enterprises’, European Journal of Political Economy, vol. 5, pp. 317–31.

    Article  Google Scholar 

  • Defoumey, J., Estrin, S. and Jones, D.C. (1985) ‘The Effects of Workers’ Participation on Enterprise Performance’, International Journal of Industrial Organization, vol. 3, pp. 197–217.

    Article  Google Scholar 

  • Domar, E.D. (1966) ‘The Soviet Collective Farm as a Producers’ Cooperative’, American Economic Review, vol. 56, no. 4, pp. 734–57.

    Google Scholar 

  • Dow, G.K. (1986) ‘Control Rights, Competitive Markets, and the Labor Management Debate’, Journal of Comparative Economics, vol. 10, pp. 48–61.

    Article  Google Scholar 

  • Dow, G.K. (1993) ‘Democracy versus Appropriability: Can Labour-Managed Firms Flourish in a Capitalist World?’, in Bowles, S., Gintis, H. and Gustafsson, B. (eds) Democracy and Markets — Problems of Participation, Accountability and Efficiency (Cambridge: Cambridge University Press).

    Google Scholar 

  • Drèze, J.H. (1989) Labour Management, Contracts and Capital Markets — A General Equilibrium Approach (Oxford: Basil Blackwell).

    Google Scholar 

  • Estrin, S., Jones, D.C. and Svejnar, J. (1987) ‘The Productivity Effects of Worker Participation: Producer Cooperatives in Western Economies’, Journal of Comparative Economics, vol. 11, pp. 40–61.

    Article  Google Scholar 

  • Fehr, E. (1993a) ‘Labour-Management’, in Dueller, E. (ed.) International Handbook of Co-operative Organizations (Goettingen: Vandenhoeck and Ruprecht).

    Google Scholar 

  • Fehr, E.S. (1993b) ‘The Simple Analytics of a Membership Market in a Labour-Managed Economy’, in Bowles, S., Gintis, H. and Gustafsson, B. (eds) Democracy and Markets — Problems of Participation, Accountability and Efficiency (Cambridge: Cambridge University Press).

    Google Scholar 

  • Fehr, E. and Sertel, M.R. (1991) ‘Two Forms of Workers’ Enterprises Facing Imperfect Labor Markets’, working paper, Bogaziçi University, Istanbul and (1993) Economics Letters.

    Google Scholar 

  • Fitzroy, F.R. and Kraft, K. (1987) ‘Co-operation, Productivity and Profit Sharing’, Quarterly Journal of Economics, vol. 102, pp. 23–36.

    Article  Google Scholar 

  • Fitzroy, F.R. and Kraft, K. (1991) ‘On the Choice of Incentives in Firms’, Discussion Paper No. 9106, Department of Economics, University of St Andrews, Scotland.

    Google Scholar 

  • Furubotn, E.G. (1976) ‘The Long-run Analysis of the Labor-Managed Firm: An Alternative Interpretation’, American Economic Review, vol. 66, no. 1, pp. 104–24.

    Google Scholar 

  • Gintis, H. (1989) ‘Financial Markets and the Political Structure of the Enterprise’, Journal of Economic Behavior and Organization, vol. 11, pp. 311–22.

    Article  Google Scholar 

  • Hill, M. and Waterson, M. (1983) ‘Labor-Managed Cournot Oligopoly and Industry Output’, Journal of Comparative Economics, vol. 7, pp. 43–51.

    Article  Google Scholar 

  • Holmstrom, B. (1982) ‘Moral Hazard in Teams’, Bell Journal of Economics, vol. 13, pp. 324–40.

    Article  Google Scholar 

  • Ireland, N.J. and Law, P.J. (1982) The Economics of Labor-Managed Enterprises, (New York: St Martin’s Press).

    Google Scholar 

  • Jensen, M. and Meckling, W. (1979) ‘Rights and Production Functions: An Application to Labor-Managed Firms and Codetermination’, Journal of Business, vol. 52, pp. 469–506.

    Article  Google Scholar 

  • Kleindorfer, P.R., Kunreuther, H.C. and Schoemaker, P.S. (1993) Decision Sciences: An Integrative Perspective (Cambridge: Cambridge University Press).

    Book  Google Scholar 

  • Kleindorfer, P.R. and Sertel, M.R. (1982) ‘Value-Added Sharing Enterprises’, in Sertel (1982), ch. 9.

    Google Scholar 

  • Laffont, J.-J. and Moreaux, M. (1983) ‘The Nonexistence of a Free Entry Cournot Equilibrium in Labor-Managed Economies’, Econometrica, vol. 51, pp. 455–62.

    Article  Google Scholar 

  • Meade, J.E. (1972) ‘The Theory of Labour-Managed Firms and of Profit Sharing’, Economic Journal, vol. 82, March (Supplement), pp. 402–28. Meade, J.E. (1986) Alternative Systems of Business Organization and of Workers’ Remuneration ( London: Allen and Unwin).

    Google Scholar 

  • Neary, H.M. (1984) ‘Labor-Managed Cournot Oligopoly and Industry Output: A Comment’, Journal of Comparative Economics, vol. 8, pp. 322–7.

    Article  Google Scholar 

  • Okuguchi, K. (1992a) ‘Labor-Managed Cournot Oligopoly with Product Differentiation’, mimeo., Department of Economics, Tokyo Metropolitan University and Journal of Economics, vol. 56, pp. 197–210.

    Google Scholar 

  • Okuguchi, K. (1992b) ‘Comparative Statics for Profit-Maximizing and Labor-Managed Cournot Oligopolies’, mimeo, Department of Economics, Tokyo Metropolitan University.

    Google Scholar 

  • Okuguchi, K. (1992c) ‘Oligopoly with Workers’ Enterprises: A Dynamic Analysis’, mimeo., Department of Economics. Tokyo Metropolitan University.

    Google Scholar 

  • Robinson, J. (1967) ‘The Soviet Collective Farm as a Producer Cooperative: Comment’, American Economic Review, vol. 57, pp. 222–3.

    Google Scholar 

  • Sertel, M.R. (1982) Workers and Incentives (Amsterdam: North-Holland).

    Google Scholar 

  • Sertel. M.R. (1987a) ‘Workers’ Enterprises Are Not Perverse’, European Economic Review, vol. 31, pp. 1619–25.

    Article  Google Scholar 

  • Sertel, M.R. (1987b) ‘On Conquering Stagflation’, Economic Analysis and Workers’ Management, vol. 21, pp. 433–41.

    Google Scholar 

  • Sertel, M.R. (1990) ‘Workers’ Enterprises in Price Competition’, Working Paper ISS/EC 90–09, Bogaziçi University, Managerial and Decision Economics. Istanbul; and (1993).

    Google Scholar 

  • Sertel, M.R. (1991) ‘Workers’ Enterprises in Imperfect Competition’, Journal of Comparative Economics, vol. 15, pp. 698–710.

    Article  Google Scholar 

  • Sertel, M.R. (1992) ‘The Nash Bargaining Solution Manipulated by Pre-Donation is Talmudic’, Economics Letters, vol. 40, pp. 45–56.

    Article  Google Scholar 

  • Sertel, M.R. and Steinherr, A. (1984) ‘Information, Incentives, and the Design of Efficient Institutions’, Zeitschrift für die gesamte Staatswissenschaft, vol. 140, pp. 233–48.

    Google Scholar 

  • Steinherr, A. and Thisse, J.-F. (1979) ‘Are Labor-Managers Really Perverse?’, Economics Letters, vol. 2, no. 2, pp. 137–42.

    Article  Google Scholar 

  • Tutuncu, M.M. (1992a) ‘An Infinite-Horizon Workers’ Enterprise with Finitely-Lived Members of Different Ages’, working paper, Pitzer College, Claremont, CA.

    Google Scholar 

  • Tutuncu, M.M. (1992b) ‘An Overlapping Generations Economy with Workers’ Enterprises’, working paper, Pitzer College, Claremont, CA.

    Google Scholar 

  • Vanek, J. (1970) The General Theory of Labor-Managed Economies (Ithaca, NY: Cornell University Press).

    Google Scholar 

  • Ward, B.N. (1958) ‘The Firm in Illyria: Market Syndicalism’, American Economic Review, vol. 48, pp. 566–89.

    Google Scholar 

  • Weitzman, M.L. (1984) The Share Economy (Cambridge, Mass.: Harvard University Press).

    Google Scholar 

  • Williamson, O.E. (1985) The Economic Institutions of Capitalism (New York: Free Press).

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. University of Pennsylvania, USA

    Paul R. Kleindorfer

  2. Boğaziçi University, USA

    Murat R. Sertel

Authors
  1. Paul R. Kleindorfer
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Murat R. Sertel
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. Institute of Economics, University of Bonn, Germany

    Dieter Bös

Copyright information

© 1993 International Economic Association

About this chapter

Cite this chapter

Kleindorfer, P.R., Sertel, M.R. (1993). The Economics of Workers’ Enterprises. In: Bös, D. (eds) Economics in a Changing World. International Economic Association Series. Palgrave, London. https://doi.org/10.1007/978-1-349-22988-8_5

Download citation

Publish with us

Policies and ethics

Search

Navigation