Abstract
The supposedly inefficient use of resources in producer cooperatives has been the object of eager debate among theorists for decades. This debate originated from the fact that Ward and Vanek, whose model had long been rated as a blueprint for the working of cooperatives, had reached the conclusion that their short-run behaviour was not Pareto-optimal. Their finding is highlighted by a downward sloping supply curve. The first solution suggested by Meade was differentiating the pay rates of workers assigned to the same jobs, in terms of fixing the incomes of new entrants at levels not exceeding the value generated by their work inputs. The Inegalitarian Cooperative does solve short-term problems, but fails to remove the odds faced by cooperatives when it comes to financing their investments and working capital. In later years, Meade proposes a new business form in order to deal with the last mentioned drawbacks. The business form concerned is the Discriminating Labour-Capital Partnership , whose microeconomic characteristics will be analysed in this paper. The issue discussed by Meade has great importance with regard to the current debate on social welfare because it provides a comprehensive reform of the fiscal and social policy by introducing, inter alia, a generalized and unconditional social dividend. The critical analysis of his works shows some weaknesses.
Highlights
The supposedly inefficient use of resources in producer cooperatives has been the object of eager debate among theorists for decades
This paper considers the first part of Meade’s proposal, which is essentially microeconomic in nature and tends to overcome the difficulties in the relationship between labor and capital
Since the scant risk propensity of workers can be traced to their fear to lose their jobs and jeopardise their own and their families’ survival, some personal property or a supplementary source of income would ensure minimal means of subsistence even when their incomes from work or their jobs are at risk
Summary
The supposedly inefficient use of resources in producer cooperatives has been the object of eager debate among theorists for decades This debate originated from the fact that Ward and Vanek, whose model had long been rated as a blueprint for the working of cooperatives, had reached the conclusion that these firms were unable to allocate resources efficiently in the short run or, in rigorous terms, that their short-run behaviour was not Pareto-optimal. Meade realizes that the new kind of business enterprise he proposes may be the instrument for a comprehensive economic and social reform if its introduction is supported by appropriate macroeconomic measures This leads to the provision of a universal and unconditional social dividend not funded by traditional measures of fiscal policy, but mainly by the proceeds of the capital accumulated by the State in the form of non-controlling interests in private companies. In a book which was first published in 1989 (Meade 1989) and revised and re-printed (Meade 1993), Meade made a number of microeconomic recommendations designed to induce modern Western economies to introduce
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