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March 01, 2010



Well, there is, as I am sure you know, an extensive research literature in this field. Just google 'Corporate Governance'. The bottom line is that there is no one best ownership structure of all firms. In some industries we see customer owned firms (eg mutual banks), some have supplier owned firms (eg mutual dairies), employee owned firms (eg lawyers, accountants), government owned (eg schools) and capitalist firms. They all have pros and cons, but they all work under the right circumstances. As for football clubs, I am not convinced the mutual bank model is necessary the best.

(Your comparison to Sainsbury limps - the relevant metric would be how much each customer would have to cough up)


Yes, Morten - of course you're right. My point, however, is that difficulties of transitioning from one structure to another cause a bias towards capitalist-style structures. Maybe some of these are "efficient" in the sense that the cost of changing is high, rather than they would out-perform co-ops over the long-run.

Miguel Madeira

"* Why don’t local residents buy out libraries, or even schools or swimming pools?"

I think that some "recreative societies" are basically that.


In response to your specific question, I presume if you're aware of it, you'll be looking out for its results: Lambeth Borough Council is going to spin out council services as co-op -run business:



This point has always seemed fairly clear to me. There are huge collective action problems in trying to organise worker takeover of firms, but that's not the only way co-ops have the odds stacked against them. Co-ops are also less likely to externalise costs, making them less competitive even though they're increasing economy wide efficiency. To get round the lack of capital problem, workers could always just occupy and try and take it forcefully: but this also faces collective action problems, and the fact that the capitalists could call on state violence to defend their property 'rights'.


That said, collective problems are sometimes exaggerated. They're based on silly 'rational actor' models in which the utility boost of peer approval is not considered (and the painful effects of peer sanctioning faced by free riders). Collective action organisers might not benefit any more than everyone else in immediate material terms, but they will enjoy enhanced social prestige and possibly enjoy material gains in the long terms.


What is the advantage of 'the public' owning local libraries over council ownership? In neither case can everybody get the book they want because there are so many published and so few bought in comparison.

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I have this dream of one day running my family like a well-organized, stimulating boarding school. Each night after the kids go to bed, I'll lay out the fun and educational activities for the next day, prepare healthy meals and then have time for five miles on the treadmill, a bubble bath and an Ogilvie Home Perm.

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