Oh, dear God, no! Economics is, for me, much like architecture, the moment I try to focus my vast mental resources on the subject, I feel as though I had just snorted a couple of lines of powdered boredom. Spare me, I beg you!
Or course, even if I don’t hound you for cites, likely somebody else will.
I had been thinking that one way to address the danger of our banking system creating a new bubble as they go back to casino gambling with derivatives and such (nothing in the current legislation prevents this, as Congress is just too weak in the face of all that money to do anything) would be for people to form trade associations and lock out Wall Street … buying products for one another. Maybe chartering a bank which would be forbidden by its charter from investing in any activities that are not actually productive in nature … new businesses, additions to existing businesses, that kind of thing, instead of investing in financial instruments that just create wealth for Wall Street financiers. Not sure how feasible it would be, but might actually unite Tea Partiers who want Main Street to rule with leftists who want people to actually benefit from their labor.
Well you are safe for a couple more weeks. Heh. (I really do need to get them out of there soon though.)
Just browsed a publisher’s catalogue of new books for 2010. Man, I wish my reading tastes were just a tad cheaper. Most of the books I want to order average around $100. Thank og for university library cards. Fortunately, the universities in Missouri have a very good library sharing system, and usually someone has the book I want.
All of them? Is it a rule you guys have?
We studied it in business school as part of negotiations, game theory, organizational behavior and stakeholder analysis. The problem is that people often have different goals that are not in alignmentare diamentrically opposed and equally legitimate from their point of view. That’s why the notion of “why can’t everyone just get along and work together” doesn’t often work.
And I’ve worked for a company that were run like Moonie cult. We used to say that everyone there “drank the grape Cool-aid” (a combined reference towards the company’s purple corporate colors and the Jim Jones cult). The theme of cult like companies also features prominantly in James C. Collins’s management books Built to Last and Good to Great.
And you’re right. There is a “force multiplyer” effect. Because the people who work for those companies have no life or interests outside of work (unless they include work people). They work long hours and weekends and are just like everyone else in the company. People who aren’t like everyone else are rapidly ejected from the company. Is that where you want to work?
The problem with many of the communal systems is that they don’t scale and there is a tendency to form “free riders” - people who take from the group more than they put in, especially as the group gets larger.
Shoulda stuck with that MBA program.
Derivatives trading doesn’t really have much to do with asset management, private equity or venture capital. And it used to be up until a few years ago the Glass–Steagall Act kept investment and commercial banking separate so what happened would be less likey to happen.
But all this is just vauge, idle pie in the sky ramblings from angry people who don’t really understand what they are talking about.
Kibbutzim have been mostly abandoned or changed into other things. Not a great example.
But look, there are lots and lots and LOTS of corporations that are owned by the workers. It’s hardly an earth-shaking idea; proposing the idea of worker-owned companies is about as revolutionary as proposing double-entry bookkeeping. And - surprise - they generally act pretty much the same as any other kind of corporation.
The idea that cooperatives are some sort of unspoken secret in school of economics is one I find… um, puzzling, to say the least.
I think if worker-owned firms were as prevalent as double-entry bookkeeping it would be pretty damn earth-shaking. As it is now, they make up less than 1% of the workforce in the US. As far as their actions and performance, the primarily goal is not to outperform other business models. Their purpose concerns equity, not efficiency. And co-operatives have been shown to be more likely than other business models to support sustainable development, fair trade practices and other socially responsible behavior.
I found it puzzling myself. I asked several professors why they were ignored. My business law professor dismissed them as a type of non-profits. (Uh, no.) Some stated they were just another form of corporation. In some states that is true. Several states have specific charters for co-operatives, mostly dating from the Progressive movement in the early 20th century. Org behavior is the only class that spent actual time on the subject and had us review a couple case studies concerning employee-ownership (which is how I discovered Mondragon in Spain.)
So let me ask the direct questions that I have not really seen an answer for - why should commercial enterprises not be democratically owned and managed, especially by their workers who do have the greatest stake in their success? Why should anonymous investors be allowed to buy an ownership stake? If their primary concern is a return on investment, debt instruments can provide that. As far as capital gains, I would say anyone who did not invest directly in the firm (i.e. bought shares directly from the company) is a free rider and that it is unearned income. Why should their rights be greater than the workers?
Yeah, that’s studied all the time. It’s called a “corporation”. Really, what you described is a corporation. People acting together to realize a common goal.
Shared ownership is SOP out here in Silicon Valley. Many companies offer stock options, and many more start-ups offer stock instead of pay.
Well, that’s excellent news, John! It would appear, then, that the radical suggestions I am offering are not so radical, after all! Now, how might we best apply these principles to the coal miners of West Virginia? I’m kinda thinking that if the workers owned their workplace, safety regulations might very well take on a whole new power. Just guessing, of course, but I think that’s pretty reasonable.
Without, of course, impinging on the sacred power of the Free Market. That would be wrong, because, well, its wrong.
The democratic process for ownership already exists. However, that democratic voice isn’t with a corporation that someone else already built – it’s with the government office that allows anyone to create a new corporation. For example, in California, you file the form “Articles of Incorporation” with the Secretary of State for $100. Each of the 50 states have similar filing fees and forms.
Agnostic Pagan and elucidator have particular views on how a corporation should be owned and managed. I think some of your ideas and merit. You 2 guys can file a form to incorporate and put those views into practice. That’s not a snark. You really can do that. The government office will allow you to create a corporation and they won’t stop you because you’re poor, uneducated, or have no family ancestors of nobility. It truly is an open, democratic, and transparent process. Agnostic-Pagan-Elucidator Inc can hire additional employees with the same views. There is not legal or idealogical barrier to prevent this from happening. I have no idea why this was such a puzzling riddle that your professors couldn’t adequately answer it.
If the government office denied your application to form a new company because your last name wasn’t “Vanderbilt/Rockefeller” or you weren’t approved by an existing club of previous owners, then you would have a case that corporate ownership was not democratic.
The owners rights aren’t “greater” than the workers. It’s “different” rights. The shareholders prioritize the tradeoff of unguaranteed profits with higher risk. The laborer/worker prioritizes a recurring paycheck with lower risk.
I don’t understand why you have a distorted view of “ownership”.
Does anyone own a car? Or do the mechanics that works the the cars have a greater interest?
Do you own a home? Or do the guys that mow the lawns have interests? In other words, you can’t just pay them for the weekly landscaping – you also have to cut them a percentage check out of capital gains when you sell the house.
I don’t understand this strange religion that says laborers who come into contact with entities that are owned by others are suddenly entitled to the fruits of that ownership. All of a sudden, my dry cleaners are now demanding royalty payments from my salary because I wore a suit they cleaned & pressed to a job interview!
The beauty of a market economy, as opposed to a state controlled economy, is that you can do exactly that if you wish. If, otoh, you wish to avoid the responsibilities of ownership and just work for a wage, you can do that, too.
Corporations serve two very useful purposes. It serves as a limit on liability and it serves as a method of aggregating capital.
These are good and useful things to our economy.
I have yet to hear the argument that giving these corporations similar rights to living breathing human beings is a good and useful thing.
So the answer to dealing with unaccountable, unresponsive, undemocratic oligarchies is merely to create one of my own. Wow.
Snark aside, no, there are no legal barriers from preventing anyone from starting cooperatives, and their numbers are increasing, but they do have have greatly unequal access to capital markets and other resources. The institutional framework to support them outside of agricultural co-ops in the United States has only matured in the last couple decades, and the general level of ignorance of their availability as an option, of which B-schools do not help with, are part of the reason for their scarcity. The fact they are closed to outside investors also gives less incentive for the media to report on them and increase awareness. The fact that the general commercial environment is dominated by corporations, public and private, who have many reasons (very few good ones in my opinion obviously) for maintaining their dominance does not help the co-operative sector either( or other non-corporate forms of business for that matter.) I do see signs of hope on the horizon though as governance and social responsibility issues gain greater awareness and acceptance, so will the co-operative model. But the deck has been stacked against them for a very long time.
And those NGOs I want to work for are cooperative development agencies, so I do intend to do more than just discuss these issues on a message board, but every bit helps. (And I don’t get on this horse nearly as often as I could or should around here.)
At the end of day, the owners have all the political and legal power over the conduct of a corporation. I call that greater rights, not different.
Well, distorting the difference between suppliers and employees does not help.
I don’t understand the strange religion that says laborers are only entitled to wages and not equity as well. It is not that hard to devise compensation schemes that allow it to occur, but ESOPs have only become common within the last few decades while the joint-stock company is slightly older than that. Nor do I understand the strange religion that states that money is the only quality that should determine ownership.
We have decided that democracy is not just the best form of governance for society, but the only legitimate one as well. The devil is in the details, but I do agree with that principle. But we do not reach the same conclusions for commerce. I have always found that a bizarre form of cognitive dissonance and have yet to hear a valid reason why commerce should not be subject to the same principles we demand for government.
As society does become more truly democratic though - something that has occurred only since the Civil Rights era - I do see those principles spill over into other areas, but commerce claims to be a special case that I just do not see.
Or worse, more rights than living breathing human beings. Under the current system, I think it may simply be a matter of when, not if it has not been achieved already.
Tom Watson was an employee of NCR but the situation didn’t suit his goals so he left and created IBM. Ross Perot was an employee of IBM but left to create EDS. Likewise, some employees left EDS to start whatever corporation(s) that suited their agenda. Perhaps some of those offshoot corporations were cooperatives. I really don’t know. It’s not relevant.
The point is that the “democracy” is already there. It’s just not exactly where you want it. You want the democracy handed to you on a silver platter from an existing corporation. It’s a bummer that the world doesn’t work that way and you have to go and find new ways of solving problems and adding value (such as what Tom Watson and Ross Perot did).
The process for participating in equity is already there.
No they don’t. They have the same access to billions that any other company has. Investors don’t care what ideology the company has. If the company is successful, it will have to beat off the constant hounding of investors trying to give them money.
If you have greater control over anything you “own” such as the clothes you wear than the people that “labored” over sewing it, you have a hope of understanding this.
What does “ownership” mean to you? Can one own anything? Can one own a car? How? Why? Can one even “own” his own internal organs? Or does the heart surgeon he pays to perform a bypass also have future dibs on that body part?
What’s the difference?
If I hire an au pair to help watch my child, does that employee now get a percentage of my house sale capital gains? Does the au pair get a royalty check from my child’s future earnings after he graduates college because the employee changed his diapers? If I write a bestselling novel, does the employee gets a huge chunk of the profits because her babysitting the child freed me to type out the novel?
Why do I bother giving that employee a paycheck at all? The employee has “ownership” rights to everything her “labor” touches, is that right?
They are entitled to equity. As I said before, see the Secretary of State filing forms for incorporation. Boom – instant equity. A company they can call their very own! Or they can buy stock options in the existing company.
Money isn’t always the determinant. Some folks provide sex without expectation of money so this does provide some ammunition for your idea. Parents also transfer ownership of some items (gifts of toys, or a car) to their children. Some friends transfer ownership of various things without consideration of money. What this observation has to do with employees and corporations, I don’t know.
Okay, let me try a different analogy; they’re about as earth-shaking as, say, corporations that start with the letter “Q.”
That simply is not true. They don’t all have the same purpose at all; many, in fact, are largely profit-driven. Many are not. Like anything else, the “purpose” of such organizations varies from case to case. Publix is an employee-owned company that is as competitive and profit-driven as any of its competitors.
Perhaps you did not understand my point; I am puzzled as to why you think the existence of cooperative enterprises is a secret. It quite obviously is not. Such enterprises have been the subject of considerable analysis and study and are hardly some sort of closely guarded state secret. Perhaps you chose the wrong electives, I can’t say for sure, but your not knowing something isn’t evidence that nobody’s studying the issue.
There’s no reason why they shouldn’t. People are free to start employee-owned companies.
If you’re asking why companies that currently aren’t employee-owned shouldn’t suddenly become “Democracies,” they shouldn’t for the same reason that the guy who fixes my furnace doesn’t get a vote in how my house is run.
I find it difficult to believe this is a serious question.
Because it’s a free country.
Because that’s how companies find capital to start operations, create products, employ people, and create wealth. The overwhelming bulk of the evidence suggests that this system works pretty well.
For the same reason a ship or aircraft crew isn’t a democracy. People in an company tend to have specific roles based on technical knowledge, experience and potential impact to the company. It’s not effective to aggregate the uninformed opinions of the masses. Companies need people in specific roles of authority to make decisions and take responsibility for them. For example, the mailroom guy’s opinion on issues not related to the processing and delivery of mail is largely irrelevant since he has neither the knowledge or experience to provide any meaningful input on accounting, marketing, business strategy or any other area of the company. The same generally holds true for most of the other functional areas.
Of course the trick in any well managed company is to provide some sort of mechanism for cross-modjonation of ideas between different departments and groups. But embracing the sharing and exchange of ideas is not the same as any idiot has just as much input into every decision.
I think what you will find is that every company is different and they tend to find methods that work well enough for them.
Because they bought ownership. The same reason I have rights to a house or car I bought from someone other than the manufacturer. Workers are compensated by being provided a wage in exchange for the labor they produce. And sometimes they are given opportunities to buy in. But how much power can anyone exercise with 1/x of a vote in something when x can be in the thousands?
I also thought I should point out that what has brought India and China out of poverty (or at least as much poverty) is not donations from NGOs. It is corporations recognizing value and investing in those countries. I know we’ll here all sorts of cries about outsourcing, but as painful as it may be, do people really believe the USA has some inherent right to have a higher standard of living than the rest of the world?
Indeed, I have heard this many times, that leadership and executive skills are rare and precious, it is the alpha lemming who shows the way…
Well think about how many shitty and mediocre bosses you have had. Now think about how many people you would trust to run a company or department that could successfully keep you employed for a long time.
I just don’t see the controversy here. If democratically owned and run companies are superior, then have at it. Form as many as you want. No one is stopping you.
Unless, of course, you are suggesting that only democratically run and owned companies should be allowed to exist. No one is suggesting that, are they? I mean, I just assume no one would suggest that, but maybe I’m wrong…
It will not be necessary, Comrade John. As Lenin famously remarked, the capitalists will sell us the rope we hang them with. You will sell us the software. Have a nice Trotsky Day!