employee ownership

September 16, 2009 4:44 AM

Reinventing the Firm - "drawing on Ronald Coase, a firm is a political response to an economic problem: managerial power and hierarchy is one efficient way of dealing with the uncertainties attached to the employment relationship. But this doesn't prevent us from considering alternative political settlements, that are potentially more democratic and more productive." also see: Clay Shirky, Ronald Coase and, err, me (previously 1|2|3 via mm & ev)

Why the corporation?

Charles Perrow's Organizing America: Wealth, Power, and the Origins of Corporate Capitalism (2002) offers an historical account of... how the American economy came to feature the large corporation as its central business organization... Here's his summary statement:

Our economic organizations -- business and industry -- concentrate wealth and power; socialize employees and customers alike to meet their needs; and pass off to the rest of society the cost of their pollution, crowding, accidents, and encouragement of destructive life styles. In the vaunted "free market" economy of the United States, regulation of business and industry to prevent or mitigate this market failure is relatively ineffective, as compared to that enacted by other industrialized countries. (1-2)

...Perrow argues that in the United States the national political economy was led to create a system that gave enormous and very lightly regulated power to large organizations and corporations; that, once established, these organizations were very capable of defending their rights and freedom of action; and that the corporations exercise power at every level in American society. Corporations and large organizations wield micro-power over the tens of millions of Americans who work within them, meso-power over the environmental status of communities and regions and the consumption patterns of individuals, and macro-power over the direction that legislation and policy takes. And this degree of power is now deeply entrenched:

Belatedly, the Progressive movement of the early twentieth century sought to redress the power imbalances and the costly externalities for workers and communities. But the organizational infrastructure of the nation was not to be seriously disturbed or even ideologically challenged, up to the present. A society with small- and modest-sized firms, regional rather than national markets, and with civic welfare provisions that are a right of citizenship rather than a benefit of employment -- a society with wealth and power distributed widely -- is now out of the question. Large bureaucratic organizations, public and private, will be our fate for the foreseeable future. It might have been otherwise. (228)

And finally, Perrow argues that this system was not economically or technologically inevitable. Networks of smaller firms and organizations could satisfy the needs for efficient production and innovation that a robust and dynamic economy presents. And a substantially less centralized political economy would be favorable to democracy and modern quality of life.

notably, sarkozy is echoing and espousing these sentiments exactly: "We're living in one of those epochs where certitudes have vanished... We have to reinvent, to reconstruct everything. The central issue is (to pick) the way of development, the model of society, the civilization we want to live in."

so, at his behest, stiglitz, sen & giovannini were tasked with framing out the issues towards a better measure of well-being. [1,2] as stiglitz sez: "GDP statistics were originally introduced to measure market economic activity. But they are increasingly thought of as a measure of societal well-being, which they are not... Our economy is supposed to increase our well being; it is not an end in itself."

meanwhile, obama exhorts: "Normalcy cannot lead to complacency."

cuz, at the end of the day, we're all in it together :P

cheers!

posted by kliuless (6 comments total)

dammit kenny your posts are way better than mine :)
posted by efalk at 4:55 AM on September 16, 2009

I disagree with one of those links.
posted by twoleftfeet at 5:07 AM on September 16, 2009

Harley Davidson only really took off when the workers bought the company... and Southwest is similarly worker-owned, and generally rocking the socks off the airline industry.
posted by Slap*Happy at 5:41 AM on September 16, 2009 [1 favorite]

Nitpicky aside: the name of Will Davies' blog, potlatch, is something I have puzzled at. So many socialists and spokespeople for more ethical ways of running society seem fond of potlatch.

The potlatch festival was a way of establishing intra-tribal hierarchy. The potlatch festival included the ritual murdering of slaves and burning of goods so that they would be accessible to your rival's ancestors in the afterlife. A gift economy is an inspiring concept surely, but do we need to whitewash human sacrifice and conspicuous consumption?
posted by idiopath at 6:46 AM on September 16, 2009

well huh. that is one hell of a post there. I'm still reading it, but I just wanted to chime in here and say "good work, you! gold star!"
posted by shmegegge at 8:51 AM on September 16, 2009

Thanks. Downloaded the book and am reading it now.
posted by wuwei at 3:38 PM on September 17, 2009