Markets and Democracy: Participation, Accountability and Efficiency

Samuel Bowles, Herbert Gintis, Bo Gustafsson

Cambridge University Press, Jul 22, 1993 - Business & Economics - 340 pages

The market does not spontaneously generate democratic or participatory economic institutions. This book asks whether a modern, efficient economy can be rendered democratically accountable and, if so, what strategic changes might be required to regulate the market-mediated interaction of economic agents. The contributors bring contemporary microeconomic theory to bear on a range of related issues, including the relationship between democratic firms and efficiency in market economies; incentives and the relative merits of various forms of internal democratic decision-making; and the effects of democratically accountable firms on innovation, saving, investment, and on the informational and disciplinary aspects of markets. Various approaches to the study of economic interaction (game theory, transactions' cost analysis, social choice theory, rent-seeking, etc.) are considered in an attempt to understand the relationship between power and efficiency in market economies.

Contents

• PostWalrasian political economy: 1
• Varieties of postWalrasian economics: 9
• Wage bargaining and the choice of production technique: 13
• The employment relationship and contested exchange: 15
• Market failures arising from contested exchange: 21
• The efficiency of the democratic firm in regulating work: 27
• Conclusion 34: 34
• Alternative employment and payment systems: 40
• Tables: 41
• Toward a framework for analyzing institutions: 51
• Institutions: 58
• Imperfect choice and rulegoverned behavior: 68
• Rulegoverned plus informationignoring behavior: 75
• Rule instability with sufficient intelligence: 82
• A radical inversion of the New Institutional view: 89
• Generalization of the argument drawing an inverted: 103
• Conclusion: 110
• Agency problems and the future of comparative systems theory: 116
• Toward a new paradigm: 123
• problems on the road: 129
• Conceptualizing the transition to democratic enterprises: 131
• labor and product markets: 132
• Finance and property rights in capital: 136
• Participation empowerment and the workplace: 138
• Conclusion: 144
• Unions versus cooperatives: 148
• Competitive capitalist equilibrium: 149
• Competitive equilibrium with workers cooperatives: 150
• Capitalist equilibrium with collective bargaining: 153
• Bargaining rights versus property rights: 155
• Demand variability and work organization: 159
• Literature review: 160
• The model: 162
• Statistical evidence: 167
• Conclusions: 174
• can labormanaged firms flourish in a capitalist world?: 176
• Output choice expected dividends and organizational form: 177
• Investment incentives and organizational form: 182
• Evolutionary outcomes and welfare comparisons: 186
• Failures in the market for LMF membership: 191
• Productivity distribution and power: 197
• Cooperation conflict and control in organizations: 199
• Definitions: 200
• Control as a consequence of incentives for cooperation and conflict: 203
• organizational design: 206
• The allocation of ultimate control in organizations: 210
• Conclusions: 212
• capitalist firms: 217
• Bargaining outcomes and the firms choice of technique: 221
• Discussion: 224
• Conclusions: 227
• Ownership participation and capital markets: 229
• The motivational role of an external agent in the informationallyparticipatory firm: 231
• The value of participatory informationprocessing: 232
• The incentive difficulties of pure workers control: 236
• The Pvalueenhancing role of an external agent: 241
• Institutional remarks: 244
• Unstable ownership: 248
• The model: 249
• Instability: 251
• Restrictions on the trade with shares: 256
• Conclusions: 258
• The simple analytics of a membership market in a labormanaged economy: 260
• A legal structure for labormanaged firms: 261
• Demand and supply for membership rights: 263
• Membership adjustment and the shutdown condition: 264
• LMFmaximand comparative statics and turnover: 267
• Labormarket equilibrium and shock absorption properties: 268
• Membership markets for different types of labor: 271
• Differential income shares for identical workers: 272
• Summary and conclusions: 273

Bibliographic information

• Title: Markets and Democracy: Participation, Accountability and Efficiency
• Editors: Samuel Bowles, Herbert Gintis, Bo Gustafsson
• Edition: illustrated, reprint
• Publisher: Cambridge University Press, 1993
• ISBN: 0521432235, 9780521432238
• Length: 340 pages
• Subjects: Business & Economics / Development / Economic Development; Business & Economics / Economics / Theory; Political Science / Political Economy; Political Science / Public Policy / Economic Policy