The economics of labour managed firms
This thesis argues that Western theories of labour-management, which are predominantly neoclassical, do not capture the major economic forces operating at both firm and macro levels. Consequently the conclusions derived from the theory are often incorrect and also lead to erroneous policy prescriptions, both for the cooperative working within capitalism, and for the labour-managed economy. The thesis opens with a summary of neoclassical theories of the labour-managed firm, and theories of cooperative failure. The validity of these theories are tested using evidence drawn from the C.P.F. cooperatives and a sample of similar capitalist firms over the period 1950-79. The evidence lends very little support to the theories. The following chapters describe the actual experience of the cooperatives and capitalist firms over the thirty years, and concludes that the major differences between the C.P.F. cooperatives and capitalist firms are missing from neoclassical models. The final section of the thesis considers macro economic theories of the Labour=managed economy. It is argued that the failure of neoclassical analysists to present convincing macro economic theories of labour management is because of the rift between conventional micro and macro economics. The introduction of labour management is a change at the firm level, i.e. micro economic level which, using conventional economic theory, cannot be traced through to the macro economic level. As an alternative, Sraffa's analysis of a capitalist economy is adapted to labour management. This allows an analysis of how changes at the firm level effect macro economic conditions. The results derived from the application of a Neo-Ricardian model are found to be very different from those produced by neoclassical analysis. In the final chapter it is noted that existing empirical studies of Yugoslavia which claim to provide evidence of the behaviour predicted by neoclassical models do not provide conclusive evidence. The conclusion contrasts the policy prescriptions derived from neoclassical analysis of labour management, with recommendations derived from the alternative analysis presented in this thesis.