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Monday, November 10, 2014

'Honest Abe Was a Co-op Dude: How the G.O.P. Can Save Us from Despotism'

Stephen Ziliak emails:

Dear Mark:
I thought you and readers of Economist's View would like to know about an essay, "Honest Abe Was a Co-op Dude: How the G.O.P. Can Save Us from Despotism", hot off the press. Here is the abstract:
Abstract: Abraham Lincoln was a co-op dude. He had a hip neck beard, sure. Everyone knows that. But few have bothered to notice that the first Republican President of the United States was an economic democrat who put labor above capital. Labor is prior to and independent of capital, Lincoln believed, and “deserves much the higher consideration”, he told Congress in his first annual address of 1861. Capital despotism is on the rise again, threatening the stability of the economy and union. The biggest problem of democracy now is not the failure to fully extend political rights, however important. The bigger problem is economic in nature. The threat today is from a lack of economic democracy—a lack of ownership, of self-reliance, of autonomy, and of justice in the distribution of rewards and punishments at work. From the appropriation of company revenue to lack of protection against pension raids, capital despotism is rife. “The road to serfdom” has many paths to choose from, Hayek warned in his important book of 1944. But too many Americans—including economists and policymakers—are neglecting the economic path, the road to serfdom caused by a lack of economic democracy. Cooperative banks and firms can help.
And here are a few excerpts:
“Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”
—Abraham Lincoln
"Economists in the know have acknowledged that the worker owned cooperative firm is the most perfect model of economic democracy and rational business organization dreamed up so far. That is true around the world, from Springfield all the way back to Shelbyville, economists who’ve examined such co-ops agree. Co-ops are more productive. And every worker is an owner."
"From the Dutch blossoming of commerce in the 1600s to the Asian Spring of the 2000s, socialists and capitalists alike have not produced, it seems, a better, more efficient and democratic form of economic production and distribution. Co-ops win. Not everyone is convinced."
"If co-ops are so great, why don’t they dominate the economy? Negligence and ignorance, more than any other possible cause, it would seem.
 For example, the infamous “socialist calculation debate” in economics dragged on for two decades before a single word was said by either side, from Lange and Lerner to von Mises and Hayek, about the nature of the firm. Nary a peep from economists about how or even why firms choose to organize into production units of a certain scale, large or small. Ronald Coase’s article on “The Nature of the Firm” (1937) was good enough to fetch him a Nobel Prize. But Coase did not bring as much clarity to the debate as most economists believe.
 Coase was vague and conventional to point of embarrassment. He made straw man assumptions about the firm being a hierarchical-capitalistic entity. Coase’s firm, though more “tractable” and “realistic” than previous notions, is assumed to be run by a “master” or masters, by capitalists who seek to maximize profit by bossing around “servants”—that is, wage earners possessing little autonomy, little or no ownership, and no voting rights on capital, their sole purpose being assumed to serve the “masters” of capital.
 Said Coase, “If a workman moves from department Y to department X, he does not go because of a change in relative prices, but because he is ordered to do so.” But if Coase (himself a lovely man in person) would have taken a closer look at the real world, he could have found cooperative firms succeeding in stark contrast to the anti-democratic firms of his imagination."
Stephen T. Ziliak

    Posted by on Monday, November 10, 2014 at 09:50 AM in Academic Papers, Economics | Permalink  Comments (12)


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