Self-managed Firms Research Articles

Political economy of economic policy - the monetary reconstruction program (Serbia 1994) as a case study

The paper deals with initiation and destiny of the unique 1994 Program of combating the extreme Serbian hyperinflation. Despite the originality of the Program and decisiveness with which the related steps had been undertaken, the Program lasted not much more than half a year. It turned out to be unsustainable as it is collided with inefficient institutional framework where contracts and rule of law were not honored, and employees, in self-managed firms, decided on their own remuneration. We show that for lasting stabilization a farreaching institutional reform was needed, and for implementing such reform an equally radical reform of the political system was necessary. However, there was not political will for these reforms, since they would oust the then political and economic elite from the power.

Worker self-management in the Third World, 1952–1979

Worker self-management has proliferated at key historical moments, worldwide, since 1917. In the wake of decolonization and the national liberation movements of the mid-20th century, unprecedented levels were attained across the globe. By examining the major cases of worker self-management that began in 1952–1979 in the periphery and semi-periphery, I highlight the varied historical trajectories leading up to state suppression or absorption of worker self-managed firms. Management literature predicts that all states would respond more favourably to profitable rather than less profitable enterprises; Marxist approaches predict that socialist states would be more likely than capitalist states to favour workers’ control, and world-systems analysts would expect states in the semi-periphery to be more hospitable than states in the periphery to worker self-management. I show that none of these theoretical predictions are empirically sustained. Instead, I employ an inductive historical analysis and find that states are equally likely to terminate profitable and unprofitable enterprises, whether in socialist or capitalist states, and in periphery or semi-periphery. To explain this phenomenon, I propose an alternative theory – focused on social unrest and the balance of class forces – for states in the Third World having by and large called a halt to the experiment of worker self-management.

Alienation and the Self-Managed Firm System

An analysis of Marx’s alienation theory is the starting point for establishing if alienation would actually be cancelled in a system of self-managed firms. As Marx held that alienation comes at various degrees and is strongest in capitalistic systems with hired labor, the author argues that democratic firm management would doubtless reduce alienation in general, but not eliminate those forms that are specifically related to the division of labor, to scarcity, and the resulting need to work for one’s daily bread. The author closes his paper with a criticism of Bigo’s approach to alienation in centrally planned economic systems and an analysis of capitalism as an inversed world.

A system of self-managed firms as a new perspective on Marxism

The starting point for this paper is the finding that references to a system of self-managed firms as the future social order are quite exceptional in the published literature on Marxist thought. Despite ever more marked deviations of leftist political platforms from the centralised model of the URSS, it is clear that self-management has not taken the place of central planning in Marxist plans for the future. In contrast, the author will come up with evidence that an analysis of the self-managed firm system may offer clues for a critical discussion of major points of Marxian theory, including the labour theory of value, alienation, dialectics or the subject–object inversion in capitalism. Accordingly, in the individual sections of this paper each of these central aspects of Marxian theory will be separately addressed in the light of insights flowing from the economic theory of producer cooperatives.

Freedom of Choice in the Production Sphere: The Capitalist and the Self-managed Firm

A formula for measuring freedom of choice in the production sphere is proposed. Then a capitalist firm and a worker self-managed firm are compared in terms of freedom distribution. It is shown that the workers have little freedom, if any at all, in a capitalist firm, whilst the capitalist enjoys a great deal of freedom. In a self-managed firm, on the other hand, the amount of freedom enjoyed by the workers is positive and often even greater than that of the capitalist. The analysis is further developed by the introduction of asymmetric information. It is argued that, based on plausible hypotheses of monitoring costs, the difference between the amount of freedom enjoyed by self-managed workers and that enjoyed by the capitalist increases.

クロアチアにおける自主管理企業の民営化

クロアチアにおける自主管理企業の民営化

Self-managed market socialism with “free mobility of labor”

In 1934 Breit and Lange presented a model of a socialist market economy in which workers had a right to be employed by self-managed firms. The interest of this model lies in particular in the fact that it eliminates two possible flaws of Myrian-type socialism: differentiation in per capita earnings across self-managed firms and involuntary unemployment. Analogous features can be found in Herztka's 19th-century model of market socialism. The purpose of the paper is to analyze an economy with free mobility of labor (Herztka's expression for the right of workers to employment) both from the point of view of X- as well as of allocative efficiency. Finally the possibility of a partial application of the right to employment principle in a capitalist economy is considered.

The Yugoslav Self-managed Firm in Historical Perspective

Any discussion of the Yugoslav self-managed firm must stress the historical changes which it has undergone. It is obvious that the theory of the self-managed firm must take into account real-life experience if it is to provide an explanation for what is happening. This paper will therefore present the main institutional changes in the development of Yugoslav self-management and the main characteristics of self-managed production units in each individual period. The discussion here is organized as follows:1 (1) a discussion of the role that self-managed production units played in particular periods (i.e. the process of decision-making, organization of the enterprise, role of management, relations to the environment); (2) a presentation of some basic characteristics in the development of Yugoslav selfmanagement which might be of importance for the theory of the selfmanaged firm and the possible future direction of Yugoslav selfmanagement as it is practiced.

The Sector and Firm in Self-Management: II. Lessons from the Peruvian and Chilean Experiences

On the basis of evaluations made of the experience with the attempts to develop sectors of worker self-managed firms in Peru and Chile during the past decade, a number of lessons are derived concerning intermediary organizations, training, external integration, the role of managers and technicians, and legal and marketing problems. Unless the lessons learned are applied to the design of future infrastructures for organizational democracy, it is likely that the difficulties encountered in Peru and Chile will be repeated in other Third World countries.

Theory of Legal Structure: Worker Cooperatives

This article is an introduction to a field of political economy that could be called theory of legal structure. The theory will be developed by focusing on a special case, legal structure theory for worker cooperatives, also called self-managed firms. Since the neo-classical marginalist revolution in the latter part of the nineteenth century, political economy has focused narrowly on questions of price and income determination rather than questions about the legal structure of economic enterprises. It is not just that questions of legal structure have not been answered. The problem has been that presentday conventional economic theory does not contain the concepts needed to pose the questions in the first place. Hence the theory of legal structure presented here cannot be developed simply as a series of propositions and results using the orthodox conceptual repertoire. The theoretical development must be punctuated with digressions to produce new concepts that reach beyond the orbit of supply and demand.

The Yugoslav Self-managed Firm and Its Behavior

The Yugoslav Self-managed Firm and Its Behavior

The effects of self‐management on Yugoslav industrial growth

MAJOR reforms in 1965 effectively transformed the Yugoslav economic system from decentralised planning to a regulated market, and increased the decision-making autonomy of enterprises which had been nominally self-managed since 1952. There was a break in the pattern of development around the time of these reforms (see Sapir (1980)), but this has been widely regarded as a consequence of the new market system. The additional implications of effective self-management for resource allocation have not been properly considered. This paper will examine whether the observed changes in the pattern of Yugoslav growth after 1965 are consistent with hypotheses which can be developed from the economic theory of self-managed firms. The hypotheses about how self-management could be expected to influence resource allocation in the post-reform Yugoslav environment are developed in the following section. They are based on the theory of self-managed firms (see Ward (1958), Domar (1966), Vanek (1970), Meade (1972)), which suggests that a competitive labour-managed economy will be distinguished from its free-market counterpart by imperfections in the labour market which will prevent market clearing. Co-operative members have the capacity to increase wages above their scarcity value, which will distort the choice of technique towards more capital-intensive and labour-productive methods. The empirical work in the third section examines whether one can observe these phenomena in post-reform Yugoslavia and offers evidence on the choice of technique, labour market clearing and relative input costs. In addition to a deceleration in the trend rate of output growth after 1965, which can be attributed to the introduction of markets, the predicted labour market imperfections do emerge to some extent. However, the approach is empirical, so consistency between hypotheses and observations does not establish the independent influence of self-management on resource allocation. The findings could be explained by alternative hypotheses, a number of which are considered in the final section of the paper. The fact that none provide an entirely satisfactory explanation of our

A Growth Model for a Tenured-Labor-Managed Firm

The theory of the labor-managed firm is a recent addition to the economic literature on organization. Analyses of the behavior of workers' self-managed firms have produced two versions of the theory. The present paper is primarily concerned with the employment decisions of labor-managed firms, which are analyzed within the framework of a new model drawing upon both versions of the existing theory. We present a growth model for a firm characterized by the division of labor between tenured and nontenured workers, whose aim is the intertemporal maximization of the net income per tenured worker. Using Pontryagin's Maximum Principle, we obtain the optimality conditions, the transition path, and the steady state for the model. We also analyze a series of policy alternatives. Some references are made to the Yugoslav economy.

A Permanent Income Hypothesis for the Yugoslav Firm

Theory suggests that enterprise savings rates are likely to be low or even zero in an economy of self-managed firms where enterprise capital is socially owned and where external sources of investment finance are available. Surprisingly, these predictions are not supported by available evidence about the savings behaviour of Yugoslav firms during the 1965-1971 period when the economy operated with a virtual absence of government control over enterprise savings decisions and when the legal and institutional structure approximated that of an idealized labour-managed system. The apparent contradiction between theory and reality serves as a starting point for the analysis presented in this paper. An attempt is made to model a simple theory of enterprise savings, based on the permanent income hypothesis applied to the enterprise, which explains the actual savings behaviour of Yugoslav industry during the 1965-1974 period. Section I presents a brief discussion of the prevailing theory of the savings-investment behaviour of the self-managed firm. In Section II, empirical evidence about the magnitude of the important variables identified by this theory is considered for the Yugoslav case, and several arguments are offered to explain the persistence of high savings rates in the Yugoslav economy. Section III develops a simple permanent income hypothesis of the Yugoslav firm which relates target earnings and savings rates out of enterprise income to permanent income prospects and to past earnings rates. A single-equation model based on this hypothesis is then applied to data for 16 industrial sectors and the results are presented and discussed in Section IV. In 11 of the 16 sectors the model provides reasonable, statistically significant results; in eight of these sectors equilibrium or target savings rates were positive during the period of observation. Finally, in Section V some indirect empirical evidence supporting the permanent income hypothesis is examined, and avenues for further research are suggested.