I want to see if the "hype" is true.
A while ago someone here posted a youtube video about some business in Brazil that was worker managed (it wasn't actually a coop though). It was pretty interesting and I've been trying to find that video again, but I can't.
Political Atheists Blog
The workmen desire to get as much, the master to give as little as possible...It is not difficult to foresee which of the two parties must force the other into a compliance with their terms. -Adam Smith
Leviathan:Which "hype"? If you're referring to information about the labor cooperative being a more efficient/productive form of organization than the orthodox hierarchical capitalist firm, consistent with the fact that some degree of horizontal management is necessary to yield Pareto optimality and the centralized firm is subject to the same distributed and tacit knowledge problems that Hayek identified, the empirical literature on the topic virtually provides a consensus...just start typing into Google Scholar, honestly.
What does it mean to be "more efficient" or "more productive"?
To paraphrase Marc Faber: We're all doomed, but that doesn't mean that we can't make money in the process. Rabbi Lapin: "Let's make bricks!" Stephan Kinsella: "Say you and I both want to make a German chocolate cake."
If worker coops were as amazingly productive and efficient as you claim them to be, one would expect them to be the prevalent form of economic organization in this country. That's the real empirical evidence.
Daniel Muffinburg:What does it mean to be "more efficient" or "more productive"?
krazy kaju:If worker coops were as amazingly productive and efficient as you claim them to be, one would expect them to be the prevalent form of economic organization in this country. That's the real empirical evidence.
Leviathan: Daniel Muffinburg:What does it mean to be "more efficient" or "more productive"? Agrarian farmer A produces 25 units of edible staples with 10 units of grain. Agrarian farmer B produces 50 units of edible staples with 10 units of grain. I'll prefer the former.
Really? You prefer 25 units over 50 units?
krazy kaju: If worker coops were as amazingly productive and efficient as you claim them to be, one would expect them to be the prevalent form of economic organization in this country. That's the real empirical evidence.
They are. My family are farmers in Spain, and we use "cooperatives" for most of our production. The problem is the way that people believe they are set up. For all intents and purposes, they are private enterprises. I'll use our wine cooperative as an example. The cooperative is set up by a number of farmers willing to set up the firm. Other farmers can then become members, whereas they exclusively sell their grapes to that cooperative to make their wine. It is a private company.
Leviathan:Well, no...the market utopianist would.
No, someone with an understanding of economics would.
Leviathan:The person who realizes the concentrative effects of market power would realize the shallow nature of such a claim, as I explored in my first post on the forum.
Your argument is basically "competition begets oligopoly." This is simply a logical fallacy. The fact remains that the vast majority of businesses in the United States are small businesses and it follows that if so many businesses somehow can resist your imaginary "market concentration," then small worker cooperatives should be able to do the same.
Leviathan:It's curious, because I've become quite accustomed to the junior Misesians across the Net rejecting every single study in existence because of their insistence that the inability of social science to completely isolate all variables renders them all useless. It's certainly a shift to find someone claiming that raw data without any controls whatsoever proves anything, though if it lines up with your preconceived ideological biases, I can see why it would be tempting.
I'm actually only arguing you on your own terms. Of course, you cannot draw any conclusions from empirical data without tainting those conclusions with your own theories.
Jonathan M. F. Catalán: krazy kaju: If worker coops were as amazingly productive and efficient as you claim them to be, one would expect them to be the prevalent form of economic organization in this country. That's the real empirical evidence. They are. My family are farmers in Spain, and we use "cooperatives" for most of our production. The problem is the way that people believe they are set up. For all intents and purposes, they are private enterprises. I'll use our wine cooperative as an example. The cooperative is set up by a number of farmers willing to set up the firm. Other farmers can then become members, whereas they exclusively sell their grapes to that cooperative to make their wine. It is a private company.
They might be the prevalent form of economic organization in rural Spain, but they definitely aren't the prevelant form of economic organization in most of the capitalist world.
In any case, I have nothing against worker coops as long as they are voluntary. If they are profitable in a certain segment of the market, they will become the norm in that market. Ultimately, however, coops will never become the prevalent form of economic organization in all of society because of the key role of entrepreneurs in the market process. Entrepreneurs take risks for profits, whereas most workers are comfortable in taking a non-risky source of income called wages.
I came to know about cooperatives in a debate with socialists a few weeks ago, I must admit I wasn't too impressed with the concept, my first reaction was "if its voluntary its fine by me" but they argued that cooperatives supposedly are "non-profit" organizations.
Is that true? Can a non-profit organization be successful in a free market?
Organizations termed "non-profits" by the US tax code still seek to earn a profit, otherwise, they would go bankrupt. Any organization which does not take in more revenue than it spends would go bankrupt.
krazy kaju:No, someone with an understanding of economics would.
I strongly doubt it, but at any rate, let's focus on you.
krazy kaju:Your argument is basically "competition begets oligopoly." This is simply a logical fallacy. The fact remains that the vast majority of businesses in the United States are small businesses and it follows that if so many businesses somehow can resist your imaginary "market concentration," then small worker cooperatives should be able to do the same.
That's quite correct. It's also the case that small businesses (proprietorships, partnerships, smaller corporations) control a far lower market share than established large corporations, which proves my point quite effectively. Never heard of the Herfindahl Index? Or the Statistical Abstract of the United States?
krazy kaju:I'm actually only arguing you on your own terms.
You're not, actually. I would never make any claim so fallacious as an assertion that the nonexistence of workers' ownership and management as the dominant form of firm organization illustrated its inefficiency without considering a single other factor and denying basic economic realities.
krazy kaju:They might be the prevalent form of economic organization in rural Spain, but they definitely aren't the prevelant form of economic organization in most of the capitalist world.
Neither is the "free market." Come to think of it, the laissez-faire free market isn't an existent form of economic organization in any part of the capitalist world. What would that illustrate, if we were consistent?
krazy kaju:Ultimately, however, coops will never become the prevalent form of economic organization in all of society because of the key role of entrepreneurs in the market process. Entrepreneurs take risks for profits, whereas most workers are comfortable in taking a non-risky source of income called wages.
That sounds interestingly familiar. Been reading a little Caplan?
Left-anarchists have argued that if workers had the genuine option to work for a capitalist employer, or else work for themselves in a worker cooperative, virtually all workers would choose the latter. Moreover, workers in a worker-managed firm would have higher morale and greater incentive to work hard compared with workers who just worked for the benefit of their employer. Hence, capitalists would be unable to pay their workers wages competitive with the wages of the labor-managed firm, and by force of competition would gradually vanish. Anarcho-capitalists find that the argument works in precisely the opposite direction. For what is a worker-owned firm if not a firm in which the workers jointly hold all of the stock? Now this is a peculiarly irrational portfolio to hold, because it means that workers would, in effect, put all their eggs in one basket; if their firm does well, they grow rich, but if their firm goes bankrupt, they lose everything.
Anarcho-capitalists find that the argument works in precisely the opposite direction. For what is a worker-owned firm if not a firm in which the workers jointly hold all of the stock? Now this is a peculiarly irrational portfolio to hold, because it means that workers would, in effect, put all their eggs in one basket; if their firm does well, they grow rich, but if their firm goes bankrupt, they lose everything.
Perhaps you and he haven't considered the fact that more equitable distribution of firm ownership provides similarly equitable incentives for ensuring firm success, since it's employees' own financial investment that is at stake? Perhaps you and he haven't considered the fact that the horizontal nature of the labor cooperative eliminates the distributed and tacit knowledge problems created by the hierarchy of the orthodox capitalist firm? Perhaps you and he haven't considered the fact that the combination of ownership and management in the hands of workers eliminates principal-agent problems, since the interests of "owners" and "managers" are one and the same?
Mises wrote a harshly critical piece on cooperatives, emphasizing the special legal and political protection they enjoy in many countries: http://mises.org/mmmp/mmmp18.asp
On the purely economic issues, see the links and discussion here: http://organizationsandmarkets.com/2007/04/04/vaguely-defined-property-rights/
And for good, clean fun you might look at some of the exchanges between Roderick Long and me, which involve (among other things) the economic attributes of cooperatives: http://organizationsandmarkets.com/2008/12/01/government-and-the-corporation/