Abstract
Believing in a model such as the Illyrian firm, which generates absurd results, is not a matter of economic analysis but of the sociology of knowledge. Following the same principles, a model with equally absurd consequences is constructed for the capitalist firm. Analytically the mistake consists in applying the timeless static analysis to decision making in the real world where the flow of time is of fundamental importance. In the last part of the paper it is shown that a worker-managed firm must solve a specific dynamic program in order to maximize per worker income.
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