Could a cooperative market economy, in which firms are owned and controlled by their workers, be a viable and efficient alternative to capitalism? Most Western societies are proud of being political democracies, but democracy rarely operates within the firm. Democratic governments, in principle, can be criticised freely and are answerable to those they seek to govern. By contrast, managers are not, in general, answerable to those they seek to manage, and the mildest criticism can be dangerous.
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The central questions of this course are:
- What would happen if workers ran their own firms?
- Would worker-managed firms take the same decisions as their capitalist counterparts?
- Could such an economy be efficient?
- What policies could be deployed to promote a cooperative sector?
The internal impact of employee ownership: productivity, governance and management. The external impact of employee ownership: spillovers for health, democracy, and the local economy. Simple economic theory of the labour managed firm. The “Pangloss Theorem” (if cooperatives are so wonderful, why aren’t there more of them?) Internal versus external financing. Performance bonds and wage-earner investment funds. Degeneration thesis and policies to counter it. Kibbutzim, Pacific plywood cooperatives, Mondragon. Cooperativism in the finance sector (with a comparative international focus): building societies, credit unions, etc. Community renewables: economic democracy in action.
There is widespread interest around the world in cooperatives as an alternative to the capitalist corporation, particularly since the financial crash of 2008. Economics and other social sciences can focus and sharpen the debate on cooperatives. Having taken the course, students will be better placed to participate in public discussion on cooperatives, or to join a cooperative or even start a new one.
What you'll learn:
- Basic economics of firms owned or controlled by their workers
- The main issues relating to the long-term viability of cooperatives
- Policies to promote a cooperative sector in a market economy
Syllabus
"The form of association ... which if mankind continue to improve, must be expected in the end to predominate, is not that which can exist with capitalist as chief, and workpeople without a voice in the management, but the association of the labourers themselves on terms of equality, collectively owning the capital with which they carry on their operations, and working under managers elected and removable by themselves.”
- John Stuart Mill, Principles of Political Economy, 1848
- Block 1. The internal impact of employee ownership: productivity, governance and management.
- Block 2. The external impact of employee ownership: spillovers for health, democracy, and the local economy.
- Block 3. Simple economic theory of the labour-managed firm. The “Pangloss Theorem” (if cooperatives are so wonderful, why aren’t there more of them?). Internal v. external financing.
- Block 4. Long-term viability. Degeneration thesis and policies to counter it. Kibbutzim, Pacific plywood cooperatives, Mondragon. Performance bonds and wage-earner investment funds.
- Block 5. Cooperativism in the finance sector (with a comparative international focus): building societies, credit unions, etc.
- Block 6. Community renewables: economic democracy in action.
