JWALES3@UA1VM.BITNET (Jimbo Wales) (02/07/90)
On Tue, 6 Feb 90 15:06:06 EST Jamie said: > >> It is a gross oversimplification to look at the fact that major >> decisions in business are made by owners, and conclude *instantly* >> that workers have no say-so, or that workers are being exploited. > >I didn't conclude it **instantly** (I used more **, so I win. By the >way, unlike >, * are a renewable resource). And you may SAY it's >a gross oversimplification, but I do not think you have SHOWN it. Theorem One: It is a gross oversimplification to claim that the fact that major business decisions are made by owners and conclude ***instantly*** that workers are getting a raw deal. Proof: In a wide variety of situations, workers will prefer that decisions be made by professional managers. >And, speaking of gross oversimplifications.... > >> The *primary* reason that our businesses are not worker-owned >> cooperatives is that worker-owned cooperatives are less efficient >> and unprofitable than normal businesses. >This is so rife with oversimplifications I don't know where to begin... >First of all, are you taking it as an article of faith that the more >efficient and profitable businesses survive? I imagine this would be >a theorem in the Capitalist Libertarian Calculus... but only in a >pure capitalist society. Right? First, the reason for the * around primary is to emphasize that this reason is not the only reason, but that this reason is the most important. Profound apologies for the oversimplification. Theorem Two: ****Only**** organizations which are able to maintain an inflow of resources greater than or equal to an outflow of resources (resources being broadly defined) can survive in any economic system. Proof: Any theorem with 4 stars must be correct. Actually, this theorem flows directly from the definition of the words involved. Now then, let's be perfectly clear about what I am claiming. I am claiming 5 1/2 things: 1> For the sake of efficiency (efficiency defined as maximizing the utilities of everyone involved) no a priori legal restrictions should be placed on what type of organizational structure people choose to employ in their voluntary associations. Different structures may be more efficient in different circumstances. 2> In a wide variety of cases, problems of co-operative association (agency costs, free riders, and so on) can be solved quite efficiently utiltizing the owner/employee form of organization. 3> Empirically speaking, the owner/employee structure has been tried and proven to be the most efficient in recent history. As Tapio (or someone) noted, though, new technologies may make individually owned businesses more sensible. 4> Capital markets are highly efficient. Innovations in organizational structure are commonplace. New businesses are started, and old businesses reorganize, all with an eye toward greater efficiency. If a democratic form of business organization is more profitable, businesses formed or reorganized accordingly will quickly dominate. 5> ESOP plans have worked in some companies, but have failed miserably in others. It has proven very difficult to make painful but necessary decisions when employees have a large say-so. This is the classic prisoner's dilemma type problem: if we lay off 100 workers, we can save 900 jobs. If we try to limp along with all 1000 workers, the company can not survive. 5 1/2> John Kenneth Galbraith is, IMHO, a blithering idiot with a bombastic, pompously arrogant writing style. He has contibuted nothing of lasting value to economic science. :-) Jimbo p.s. I will post my statistics regarding rent control soon. Very soon.