Post-capitalism

I reckon Kevin Carson at Mutualist is one of the most under-rated bloggers around. This post in particular is just fantastic.
Can I add, in a spirit of co-operation, two things?
First, one institution that would help accelerate the development of a co-operative counter-capitalist economy would be a citizens' basic income. In giving people an outside option, this would reduce their depedendence upon the capitalist economy, and help encourage self-employment and local exchange trading schemes. This is in contrast to tax credits, which are designed to increase the labour supply to capitalist firms.
Secondly, it could be that technical change is moving in favour of co-operative enterprises and against hierarchic capitalist ones.
The big change here is the rising importance of human capital relative to physical capital. It's a basic principle of the economic analysis of property rights that, when it's impossible to write complete contracts (as it usually is), assets should be owned by the people who have greatest control over their value. As Oliver Hart said in Firms, Contracts and Financial Structure: "A party with an important investment or important human capital should have ownership rights."
The reason for this is straightforward. If you (as supplier of capital or labour)  make the most difference to the company, it's important that you make a lot of effort. But you won't do this if other people can rip you off. The way to stop that is for you to own the firm.
So, when a firm's most valuable asset is a factory, it should be owned by the suppliers of capital. But when its critical asset is people, it should be owned by workers. This is why car firms and oil refineries are owned by shareholders, and have hierarchical management, whilst vetinary and law practices are partnerships which (in their purest forms) are non-hierarchic.
Every time a boss says that "people are our greatest asset" he is, therefore, destroying the case for capitalist ownership.
If this cliche is right - say because Danny Quah's idea of a "weightless economy" is increasing the importance of skilled workers - companies should be owned and controlled by workers, not capitalists.
For more on this - from a neoclassical perspective, try the works of Luigi Zingales, such as "In search of new foundations" and "The influence of the financial revolution."
Of course, all this raises countless questions. Here's some for further thought:
1. What exactly is the evidence that physical capital is declining in importance relative to human capital? Why should this continue?
2. What are the mechanisms through which inefficient capitalist firms are replaced by co-operative ones? What - if anything - should be done to accelerate the transformation?
3. To what extent is critical human capital owned by managers, in which case human capital-intensive firms might be hierarchical? (My view here is that the notion that management is a crucial skill is in fact an idelogical illusion.)
4. How desirable would be an economy based on co-operatives? Mightn't it lead to huge wage  inequalities as co-ops bid up the wages of skilled workers?

Comments

[dearieme]

1) "a citizens' basic income": every time one extends a welfare state, one makes it more likely that it will be found desirable to restrict immigration - do you ever aim for consistency?
2) "A party with an important investment or important human capital should have ownership rights": 'should' in what sense exactly? In the sense of 'desirable to all the interested parties': then it will surely evolve naturally unless government/law gets in the way? In the sense of 'govt ought to make it compulsory'?: oh well then, back to discussions of actual existing socialism, is it?

[dearieme]

And while we're at it: "Mightn't it lead to huge wage inequalities as co-ops bid up the wages of skilled workers?" What, the sort of inequalities that would simultaneously encourage the particularly efficient deployment of those skilled workers while rewarding other workers starting to master those skills and motivating the search for substitutes for those skills? Perish the thought.

[Paddy Carter]

i wonder how fundamental the differences are between the employee owned economy you seem to envisage, and a shareholder capitalist one. Is it a difference of degree or of type? If it is anything more radical than an increase in the level of ownership participation, I have trouble seeing how it could be made to work in practice.

And I still can't get my head round your basic income idea. Are you so sure the incentive effect would be to increase entrepreneurship? I reckon if half my cost of living was given to me on a plate by the state, obligation free, I'd work part time somewhere and spend the rest of my time sitting on the sofa in my underpants watching Trisha

How does it differ from a straight hand out? If it isn't enough to live on then workers are still in hock to the capitalistpigs, and if it is enough to live on then vast swathes of the population will chose not to work, whereby of course the rest of the economy will have to support them, productivty plummets and before you know it Rome will be overun with Visigoths.

[Kevin Carson]

Thanks much for the kind words.

IMO, formal firm ownership is all that important, if the bargaining power of labor is increased by the various means I mentioned in my post. As Gary Elkin wrote elsewhere in his article, increased bargaining power of labor will result in many firms functioning as de facto worker co-ops, even though they're formally owned by capitalists.

As for the guaranteed income, I'm not very enthusiastic about it. But after seeing some Geolib arguments for a citizen's dividend from socially collected rent, I'm a lot less prone to dismiss it automatically. Certainly the Geolib idea of land as common property is a legitimate and internally consistent one; so if you start off with the premise that land is community property, the distribution of surplus rent on a per capita basis makes sense. In a way, I'd be more open to the idea of redistributing ALL rent via a dividend, and funding all public services by user fees instead. Fewer market distortions that way.

I'm not as convinced by the social crediters' arguments for a dividend, though. The maldistribution of purchasing power that social credit is supposed to alleviate could be solved more simply and directly by eliminating the kinds of privilege that enable the propertied classes to draw monopoly returns in the first place.

[jamie]

ref, question 4: "How desirable would be an economy based on co-operatives? Mightn't it lead to huge wage inequalities as co-ops bid up the wages of skilled workers?"

I worked for a co-op for a number of years. There's nothing like having the right of access to the accounts to underline the old Thatcherite saw about pricing yourself into a job.