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Risk Financing in Labour Managed Economics: The Commitment Problem

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  • Schlicht, Ekkehart
  • Weizsäcker, Carl Christian von

Abstract

Labour managed firms face some serious problems with regard to the provision of capital, especially of risk-bearing capital. These difficulties are discussed in the first part of the paper. Subsequently it is argued that these problems are rooted in the fact that the workers are insufficiently committed to the long run well-being of the labour managed firm, i.e. in the lacking of a sufficient commitment mechanism. An interchange of the roles which capital and labour play under capitalism would require tradable job rights, an arrangement which is not feasible. It is concluded therefrom that any workable labour managed economy needs a special commitment mechanism. A high rate of unemployment might serve for this purpose, or, more attractively, a reduction of labour mobility through appropriate incentives like seniority-dependent remuneration schemes.

Suggested Citation

  • Schlicht, Ekkehart & Weizsäcker, Carl Christian von, 1977. "Risk Financing in Labour Managed Economics: The Commitment Problem," Munich Reprints in Economics 3148, University of Munich, Department of Economics.
  • Handle: RePEc:lmu:muenar:3148
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    File URL: https://epub.ub.uni-muenchen.de/3148/1/3148.pdf
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    Citations

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    Cited by:

    1. Schlicht, Ekkehart, 1980. "Commitment and the Time-Span of Discretion: A Note on Elliot Jaques' Sociological Theory of Wage Differentials," Munich Reprints in Economics 3378, University of Munich, Department of Economics.
    2. Laura Abrardi & Luca Colombo & Pier Angelo Mori, 2016. "Customer Ownership And Quality Provision In Public Services Under Asymmetric Information," Economic Inquiry, Western Economic Association International, vol. 54(3), pages 1499-1518, July.
    3. Schlicht, Ekkehart, 1981. "Training Costs and Wage Differentials in the Theory of Job Competition," Munich Reprints in Economics 1347, University of Munich, Department of Economics.
    4. Zamagni, Stefano, 2005. "Per una teoria economico-civile dell'impresa cooperativa," AICCON Working Papers 10-2005, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    5. Schlicht, Ekkehart, . "Job Rents in a Stylized Labor Market," Chapters in Economics, University of Munich, Department of Economics.
    6. Francesca Gagliardi, 2009. "Financial development and the growth of cooperative firms," Small Business Economics, Springer, vol. 32(4), pages 439-464, April.

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