[Quantum]

The existence of market socialism, which is basically policy in some debt-ridden European countries, is a good example of how unworkable socialism really is because market and socialism are opposites.

The system in most European countries is welfare capitalism, not market socialism. There is still private enterprise, markets and a price system set by supply and demand, albeit progressive taxation for social services, which are being dismantled anyway. The differences between Europe and America are exaggerated anyway because apart from more generous social services, the system is largely the same on either side of the pond.

The closest attempt to market socialism is Yugoslavia and might wish to frequent yourself with Kardelj's work for a better insight into the workings of market socialism.

Those debt-ridden countries you speak of (PIIGS) have always been poor relative to Northern Europe for centuries, so the reasons for their failure are historical not ideological.

[SueDeNîmes]

Here is where economics comes in: since marginal cost < marginal revenue, it does make sense to expand.

Right, so when you said "That would suck for A&B, so it's not going to happen," you meant pretty much the opposite?

If C was going to step in as a competitor and make more money there, he would not have applied to A&B in the first place.

Well hang on, I thought A&B weren't even hiring? Make yer mind up..

If you think the situation I described is impossible, then what's the point of trying to prevent things that are impossible? But of course it's quite possible. This is how all companies grow. There are many reasons it often gets you more money to join forces with others rather than roll out another company on your own.

I was using the word "happy" as a metaphor for "everybody increased their incomes", not in the sense of psychology. Quite possible that C is unhappy because he's jealous of A&B's success, and because his wife is cheating on him.

Hiring C contributes exactly $100k, not $200k, towards revenue, because without him the revenue is $500k and with him it's $600k. The pie was already being baked before he joined. Labor is not the only contributing factor.

The concept of marginal cost and revenue was understandably alien to Marx because he wrote before anybody came up with the concept. Today's socialists would know better if they studied economics. And yet they seem to be continuously confused about average vs marginal cost and revenue.

This lot seems largely unrelated to the post you're ostensibly responding to - or insufficiently so for me to respond.

[Coyote]

If we want employee-owned cooperatives, we don't need to change a thing. They are perfectly legal in a capitalist system, and the fact that they are rare speaks to their general inefficiency.

The problem, of course, is humanity. Human nature. Human capability.

We have few geniuses, and many of the mediocre.

How do promotions occur? How are wages set? What about pricing?

I don't know how you make these decisions by consensus.

Is a manager able to properly motivate his workers, if they ultimately decide his fate at the company?

Does the company invest a sufficient amount into R&D, or price their products lower, at the expense of higher wages? Is that option even feasible under this system?

[Coyote]

The system in most European countries is welfare capitalism, not market socialism.

Indeed. Precisely.

Without capitalism, the social welfare programs fall apart.

It is a parasitic relationship. There is nothing "egalitarian" about it.

[AFAIK]

A well designed welfare system is the equivalent of a bankruptcy law. It encourages risk taking by promising to protect people from the consequences of failure (by providing free food and shelter) and by giving them a second chance (free education or training).

[mikema63]

The horor of people having second chances not withstanding, coyote please stop bolding everything you write. Also, co-ops are highly discriminated against by law and regulations and yet can be highly successful and profitable.

There are tons of credit unions in the US and there are plenty of examples of profitable successful co-ops like ace hardware, land O lakes, and mandagoran.

http://en.m.wikipedia.org/wiki/List_of_cooperatives

[Coyote]

The horor of people having second chances not withstanding, coyote please stop bolding everything you write. Also, co-ops are highly discriminated against by law and regulations and yet can be highly successful and profitable.

There are tons of credit unions in the US and there are plenty of examples of profitable successful co-ops like ace hardware, land O lakes, and mandagoran.

http://en.m.wikipedia.org/wiki/List_of_cooperatives

Well, then, what's the problem? We already have "market socialism", don't we?

[mikema63]

If there were a few semi-capitalist companies working under a communist system make it not communist?

The existence of non-profit charities must mean America is socialist!

[AFAIK]

Mike, what do you think about the comment I made earlier about risk? Quoted below;

What about the concept of risk, lucky? If I join an established operation I face a low risk of ruin but if I start a new operation I face higher risk and uncertainty. Shouldn't the founder(s) be remunerated for their initial gamble?

We could ration voting power depending on when someone joined the company.

[mikema63]

No, people would start risky ventures because they wanted to, and risky here wouldn't mean they would be jobless and starving.

People in this system would be voted into management roles, the managers would have power but they would still have an equal share. Besides the guy who starts a business can still only do the work I one man, if there are a hundred others working just as hard why shouldn't they get an equal share.

[Technology]

Also, co-ops are highly discriminated against by law and regulations and yet can be highly successful and profitable.

Although I'm not actually advocating the explicit system I propose in this thread (I more want to discuss it to see if we could force it to work somehow), I am a fan of giving tax cuts to co-operatives, or based on how large the range is in wage differentials in a firm.

The problem with my thread idea seems to be a socialist problem in which equal division means you may not expand quite as much as you would. If you give up on outright socialism and worker ownership, of course, you could find some sort of appropriate range of equality, which allows for strong growth, and do so through taxes so it rewards rather than punishes. Are differences of one thousand times between bosses and the lowest workers really vital for companies to match demand?

[mikema63]

There is nothing that makes it so that workers couldn't vote to use some portion of heir collective income to expand.

[AFAIK]

No, people would start risky ventures because they wanted to, and risky here wouldn't mean they would be jobless and starving.

People in this system would be voted into management roles, the managers would have power but they would still have an equal share. Besides the guy who starts a business can still only do the work I one man, if there are a hundred others working just as hard why shouldn't they get an equal share.

So there's a welfare system that provides a social safety net to all those who fail to find work or succeed in business? Sounds good to me. Bankruptcy law was created to encourage risk taking (or was that an unintended consequence?). Limited liability meant that you wouldn't be sent to debtors prison to work as bonded labour until all your borrowings had been returned.

[lucky]

Also, co-ops are highly discriminated against by law and regulations

Laws such as ...?

[lucky]

lucky: Here is where economics comes in: since marginal cost < marginal revenue, it does make sense to expand.
Right, so when you said "That would suck for A&B, so it's not going to happen," you meant pretty much the opposite?

No, I did not. It makes sense to expand in the sense that an expansion would generate an additional surplus in the economy. It is not going to happen if the incentives are screwed up by the the rules of the system preventing A&B from offering C $90k, in which case the potential win-win-win scenario is not going to happen. It is not going to happen because it's illegal. There is no contradiction.

Well hang on, I thought A&B weren't even hiring? Make yer mind up.

They are hiring at $90k, not at $200k, because they are rational beings. I thought that was pretty clear in my example.

[mikema63]

Bankruptcy laws and corporate welfare. Business regulations as well discriminate against non traditional organizations.

[lucky]

Bankruptcy laws [...] Business regulations [...]

Such as ...?

[mikema63]

Monday, when I have time on a computer not a phone, I'll do a proper job of this.

But off the top of my head it's impossible for them to raise capital on a stock exchange so heir ultimate size can be limited, which comes with a plethora of disadvantages compared to large traditional firms.

They also lobby less, and so are disadvantaged by industry regulations.

[Coyote]

No, people would start risky ventures because they wanted to, and risky here wouldn't mean they would be jobless and starving.

People in this system would be voted into management roles, the managers would have power but they would still have an equal share. Besides the guy who starts a business can still only do the work I one man, if there are a hundred others working just as hard why shouldn't they get an equal share.

Because they are interchangeable with a hundred different people, whereas that one man is essential.

This is elementary...

[lucky]

But off the top of my head it's impossible for them to raise capital on a stock exchange so heir ultimate size can be limited, which comes with a plethora of disadvantages compared to large traditional firms.

A stock exchange is by definition a place where you trade ownership shares of companies for money. Trading shares of an employee-owned company would be a contradiction of terms. An employee-owned company is free to do an IPO, but then it won't be an employee-owned company any more.

You're pointing out an inherent problem with the ownership structure of a worker-owned company, not a "discriminatory law". There is no law against selling shares, it's a self-imposed constraint.