My issue with this line of reasoning is that it largely ignores risk. The risk an employee takes is the risk of missing future wages if the venture fails, but they have no risk of losing past wages. The risk an employer takes is loss of invested capital and thus loss of past wages and the ability to continue the venture.
The problem, IMO, is that we’ve overly protected the employer so their risk is mitigated, but we have done little to protect the employee. Likewise, wages can become uncompetitive because our legal system tends to benefit larger companies over smaller companies, so it becomes incredibly difficult to unseat a dominant company, even if your product is better (large company can waste smaller companies’ capital with frivolous lawsuits and unnecessary red tape).
That said, if employees want to take on the risk an employer takes on, they can either become an employer themselves (i.e. start a business) or form a co-op with other workers. However, many are uncomfortable with taking on that risk, so they apply for jobs instead of creating their own.
If we go with a socialist system, we’ll still have employers and employees, but we’ll just socialize the risk and dilute the profit motive, which I think will stifle productivity. Why work hard if the potential upside to you for outperformance is small? Let’s say you’re in a co-op with 9 other people with equal split of profits and you’re twice as productive, you’ll only see 1/10 of that come back to you. Why do that when you could be the employer and see a much larger share of the profits?
The issue here isn’t with capitalism as an idea, but that we’ve allowed such a disparity between productive work and profits, and I think the reason for that is government protectionism, not capitalism.
Today’s system requires you to have lobbyists
Exactly, the problem isn’t capitalism, but government. If we swap capitalism for socialism but leave the government structure in place, we’ll have the same problem. If you think shareholders are bad, you won’t want to see what happens when politicians run businesses…
Creating or joining a worker coop is a much more actionable political step that someone could take then completely transforming the government. If the worker coop movement grows big enough, it could acquire the economic power to purchase it own lobbyists to influence the political process to hopefully pass those reforms
It is irrelevant that some workers don’t want to be held responsible for the positive and negative results of their actions (the whole result of production). Responsibility can’t be transferred even with consent. If an employer-employee cooperate to commit a crime, both are responsible. This argument is establishes an inalienable right i.e. a right that can’t be given up or transferred even with consent like political voting rights today
If an employer-employee cooperate to commit a crime, both are responsible
Sure, if they’re both aware of and complicit in committing the crime. But in most cases, the employee is unaware of the crime, or commits it under duress. If the employer orders the employee to commit the crime as part of their job, the employer should take the larger (if not total) share of the consequences due to the power dynamic.
A huge part of prosecuting a crime is establishing motive, and duress should move most, if not all, of the guilt onto the employer.
A group of people is de facto responsible for a result if it is a purposeful result of their intentional joint actions. The pure application of the norm that legal and de facto responsibility match is to deliberate actions. The workers joint actions that use up inputs to produce outputs are planned and deliberate. They meet the criteria for being premeditated. The workers are not under duress in normal work, and consent to the employer-employee contract.
If a worker voluntarily commits a crime for their employer, that is still inalienably their decision. Yes, the employer told them to do it, and that gave them a reason to do it, but having a reason doesn’t absolve them of guilt or responsibility for their actions
3/5
The idea that the employer is production’s whole result’s just appropriator due to the risk they bear is tautological and circular reasoning. Risk, in this case, refers to bearing the liabilities for used-up inputs, which is production’s whole result’s negative component. It ignores the joint de facto responsibility of workers in the firm for using up inputs to produce. By the norm of legal and de facto responsibility matching, workers should get the whole result of production
The empirical evidence I have seen on worker coops and employee-owned companies seems to suggest that worker-run companies are slightly more productive.
I oppose socialism as I think markets are useful. I advocate economic democracy
In an economic democracy, the employer-employee contract is abolished, so workers automatically legally get voting rights over management upon joining a firm.
There seems to be a slight increase in productivity from large percentage ESOPs at not-so-numerous employee firms (NSNE firms). Smaller ESOPs increase productivity more at NSNE firms. A hypothesis worth testing would be whether unequally allocated non-voting preferred stock options improve this. Overall worker compensation increases from an ESOP
For numerous employee firms, a larger ESOP seems to help mitigate the free rider effect associated with larger firms, but it isn’t conclusive because evidence is from a limited and unique sample. The free rider effect can potentially be overcome through peer pressure and co-monitoring. There are some cases where the benefits of these productivity gains of worker ownership don’t trickle up to voting shareholders
When worker coops fail, it is from institutional design flaws not inherent to cooperatives such as
- excessive direct democracy
- insufficient emphasis on representative democracy and delegation
- lack of independent board members
Worker coops can have managers. Managers’ interests can be aligned with the long term interests of the firm by giving them non-voting preferred shares as part of their compensation. Managers will make sure workers they are managing perform. The difference is that these managers are ultimately accountable to the entire body of workers and are thus their delegates.
Profits/wages don’t have to be divided equally among workers.
I’m going to use multiple toots since I’m on Mastodon
Managers’ interests can be aligned with the long term interests of the firm by giving them non-voting preferred shares as part of their compensation.
It really depends on the specific form of socialism. If we look at the most influential forms (say, USSR or China), the decision makers are politicians, so they’re more motivated by power and influence than the good of the whole.
IMO, socialism can work if it’s practiced by smaller orgs and not as a government structure. So unions and co-ops, not planned economies.
I’m not a socialist because I think markets are useful and haven’t seen a planned economy proposal that seemed plausible. Worker co-ops and unions aren’t socialism in 20th century sense because they are technically compatible with markets and private property.
An economic democracy is a market economy where all firms are worker co-ops, so I was speaking about managers in a worker co-op
My issue with this line of reasoning is that it largely ignores risk. The risk an employee takes is the risk of missing future wages if the venture fails, but they have no risk of losing past wages. The risk an employer takes is loss of invested capital and thus loss of past wages and the ability to continue the venture.
The problem, IMO, is that we’ve overly protected the employer so their risk is mitigated, but we have done little to protect the employee. Likewise, wages can become uncompetitive because our legal system tends to benefit larger companies over smaller companies, so it becomes incredibly difficult to unseat a dominant company, even if your product is better (large company can waste smaller companies’ capital with frivolous lawsuits and unnecessary red tape).
That said, if employees want to take on the risk an employer takes on, they can either become an employer themselves (i.e. start a business) or form a co-op with other workers. However, many are uncomfortable with taking on that risk, so they apply for jobs instead of creating their own.
If we go with a socialist system, we’ll still have employers and employees, but we’ll just socialize the risk and dilute the profit motive, which I think will stifle productivity. Why work hard if the potential upside to you for outperformance is small? Let’s say you’re in a co-op with 9 other people with equal split of profits and you’re twice as productive, you’ll only see 1/10 of that come back to you. Why do that when you could be the employer and see a much larger share of the profits?
The issue here isn’t with capitalism as an idea, but that we’ve allowed such a disparity between productive work and profits, and I think the reason for that is government protectionism, not capitalism.
Exactly, the problem isn’t capitalism, but government. If we swap capitalism for socialism but leave the government structure in place, we’ll have the same problem. If you think shareholders are bad, you won’t want to see what happens when politicians run businesses…
5/5
Creating or joining a worker coop is a much more actionable political step that someone could take then completely transforming the government. If the worker coop movement grows big enough, it could acquire the economic power to purchase it own lobbyists to influence the political process to hopefully pass those reforms
4/5
It is irrelevant that some workers don’t want to be held responsible for the positive and negative results of their actions (the whole result of production). Responsibility can’t be transferred even with consent. If an employer-employee cooperate to commit a crime, both are responsible. This argument is establishes an inalienable right i.e. a right that can’t be given up or transferred even with consent like political voting rights today
Sure, if they’re both aware of and complicit in committing the crime. But in most cases, the employee is unaware of the crime, or commits it under duress. If the employer orders the employee to commit the crime as part of their job, the employer should take the larger (if not total) share of the consequences due to the power dynamic.
A huge part of prosecuting a crime is establishing motive, and duress should move most, if not all, of the guilt onto the employer.
1/2
A group of people is de facto responsible for a result if it is a purposeful result of their intentional joint actions. The pure application of the norm that legal and de facto responsibility match is to deliberate actions. The workers joint actions that use up inputs to produce outputs are planned and deliberate. They meet the criteria for being premeditated. The workers are not under duress in normal work, and consent to the employer-employee contract.
@technology
2/2
If a worker voluntarily commits a crime for their employer, that is still inalienably their decision. Yes, the employer told them to do it, and that gave them a reason to do it, but having a reason doesn’t absolve them of guilt or responsibility for their actions
@technology
3/5
The idea that the employer is production’s whole result’s just appropriator due to the risk they bear is tautological and circular reasoning. Risk, in this case, refers to bearing the liabilities for used-up inputs, which is production’s whole result’s negative component. It ignores the joint de facto responsibility of workers in the firm for using up inputs to produce. By the norm of legal and de facto responsibility matching, workers should get the whole result of production
2/5
The empirical evidence I have seen on worker coops and employee-owned companies seems to suggest that worker-run companies are slightly more productive.
I oppose socialism as I think markets are useful. I advocate economic democracy
In an economic democracy, the employer-employee contract is abolished, so workers automatically legally get voting rights over management upon joining a firm.
My understanding is that companies run by their founders are the most productive. Once that’s handed off, motives change.
I’d like to see the research you’ve found though.
I’ll also have to read more about economic democracy, because I’m not familiar with it.
1/4
Broad-Based Employee Stock Ownership: Motives and Outcomes
https://onlinelibrary.wiley.com/doi/10.1111/jofi.12150
There seems to be a slight increase in productivity from large percentage ESOPs at not-so-numerous employee firms (NSNE firms). Smaller ESOPs increase productivity more at NSNE firms. A hypothesis worth testing would be whether unequally allocated non-voting preferred stock options improve this. Overall worker compensation increases from an ESOP
2/4
For numerous employee firms, a larger ESOP seems to help mitigate the free rider effect associated with larger firms, but it isn’t conclusive because evidence is from a limited and unique sample. The free rider effect can potentially be overcome through peer pressure and co-monitoring. There are some cases where the benefits of these productivity gains of worker ownership don’t trickle up to voting shareholders
4/4
- non-democratic practices like non-member employees and unrepresented worker constituencies
https://journals.sagepub.com/doi/10.1177/0143831X19899474
David Ellerman is the best advocate for the economic democracy position.
Here’s a short introduction to his arguments and inalienable rights theory more broadly to those coming from a classical liberal background: https://www.ellerman.org/wp-content/uploads/2018/12/Classical-Liberal-JurisprudenceJune2018.pdf
3/4
A hypothesis worth testing is whether unions as a sort of legitimate opposition help avoid free riding on management accountability.
Having a voice in your group: Increasing productivity through group participation
https://osf.io/preprints/psyarxiv/vm4hu
When worker coops fail, it is from institutional design flaws not inherent to cooperatives such as
- excessive direct democracy
- insufficient emphasis on representative democracy and delegation
- lack of independent board members
1/5
Worker coops can have managers. Managers’ interests can be aligned with the long term interests of the firm by giving them non-voting preferred shares as part of their compensation. Managers will make sure workers they are managing perform. The difference is that these managers are ultimately accountable to the entire body of workers and are thus their delegates.
Profits/wages don’t have to be divided equally among workers.
I’m going to use multiple toots since I’m on Mastodon
It really depends on the specific form of socialism. If we look at the most influential forms (say, USSR or China), the decision makers are politicians, so they’re more motivated by power and influence than the good of the whole.
IMO, socialism can work if it’s practiced by smaller orgs and not as a government structure. So unions and co-ops, not planned economies.
I’m not a socialist because I think markets are useful and haven’t seen a planned economy proposal that seemed plausible. Worker co-ops and unions aren’t socialism in 20th century sense because they are technically compatible with markets and private property.
An economic democracy is a market economy where all firms are worker co-ops, so I was speaking about managers in a worker co-op
@technology