Branko Horvat

The theory of the worker-managed firm revisited

Abstract Believing in a model such as the Illyrian firm, which generates absurd results, is not a matter of economic analysis but of the sociology of knowledge. Following the same principles, a model with equally absurd consequences is constructed for the capitalist firm. Analytically the mistake consists in applying the timeless static analysis to decision making in the real world where the flow of time is of fundamental importance. In the last part of the paper it is shown that a worker-managed firm must solve a specific dynamic program in order to maximize per worker income.

Welfare of the common man in various countries

Abstract If a consumer is to be able to consume ordinary goods and services, he must first be supplied with three basic goods. These are: life, education and health. They represent the basic welfare of a society. A special rank analysis is designed to measure basic welfare. It is found that the level of basic welfare is markedly correlated with the socioeconomic systems in the following sequence: etatist countries (highest welfare), welfare states, traditional capitalist countries (lowest welfare). Also a strong positive correlation was found between high levels of basic welfare and high rates of growth.

The Yugoslav economic system : the first labor-managed economy in the making

Born in 1897, Milly Bennett lived an extraordinary life that led from her native San Francisco, to Honolulu, to China for the revolution, to the Soviet Union on the eve of World War II, to the Spanish Civil War, and home again, a journey punctuated with many love affairs, triumphs, and disappointments. This memoir of Millys early years through her extended stay in China, places the current political turmoil there into a broader historical perspective. Nominally an autobiography of a remarkable woman and her brief time in China, it goes beyond the narration of an individual life by contributing details of a period of great instability, as well as exploring the sensitive topic of the involvement of foreigners in the internal politics of China.

The pure labour theory of prices and interest: Basic principles

Abstract It is generally believed that labour theory of value cannot explain prices and neither can it provide a rational allocation of resources. That is correct as far as classical Ricardo-Marx theory is concerned. Yet if classical intuition is retained, while methodological deficiencies are eliminated, one can formulate a surprisingly fertile theory. It proves to be a new theoretical paradigm which is free from neoclassical paradoxes. The basic ingredients of the new theory are two principles (duality and synchrony principles) and two dynamic effects (replacement and employment effects).

Ethical Foundations of Self-Govemment

The idea of a good society is obviously historically determined. Different communities will have different ideas of how society ought to be organized. Basically, two approaches are possible: (I) One or more supreme goods are postulated. The aim is to maximize these goods. Whatever helps in achieving this aim is desirable. (2) Appropriate behaviour is postulated. Then any, aim compatible with the rules of accepted behaviour is good or at least not evil. The distinction is the familiar one between teleological and deontological ethical theory. In the former, good is defined independently and what is right is derived from the aim of maximizing good. In the latter, right is defined and good is derived (but not in a deterministic fashion).’ Thus, right and good are two fundamental ethical concepts. It is obvious that a teleological ethic will have a great appeal in a bourgeois society. Born in the battles against religious mysticism and the ascribed privileges of the feudal order, the bourgeois society emphasizes achievement and rationality. Rationality implies a minimization of sacrifices in achieving a given objective or a maximization of desirable effects within the constraints of available resources. The acceptance of rationality as an important value leads to scientific discoveries and rapid economic development. Economics, after all, is nothing else but a maximization of gains and a minimization of costs. Maximization of gains extended to ethics leads to teleological ethics.

The Economic System and Stabilization

The editors of this symposium planned a constructive lecture: they told me that we already know what is wrong with Yugoslavia, or at least sense what is wrong, but we do not know what should be done about it. This is what will be discussed here. I would like to begin with a catalog of the problematical situations in which we find ourselves, without explanation. I shall pose the questions: Did we know that we would fall into this situation? and What is the diagnosis of this situation? Then I shall present a conception of the solution to the situation. (This is obviously a deviant situation which cannot be associated with the development of socialism, because socialism is not a system that falls into crises. As soon as you have a crisis with socialism, it is obvious that something is not right. Therefore, the solution to the crisis means returning to the main road which leads to a socialist society; for me, these are identical.) Where do we find ourselves today, that is, the last three years and the next three years, however our state administration imagines it? The first thing we notice is a stagnant economy whose rate of growth has fallen by a third. Then we observe massive

Labour-Managed Economies

Labour management may be understood as a generic concept for all cases when enterprises are managed by those working in them. Institutional forms of such enterprises differ and also the degree of self-management varies. It may be expected that labour-managed firms and economies will behave differently from those run by capitalist or state managers.

Real fixed capital costs under steady growth

Abstract From the standpoint of national economic planning real capital cost represents the investment necessary to maintain output capacity intact within the unit period of time. This definition avoids Cambridge objections to capital cost measurement. So defined capital cost is a rapidly decreasing function of the rate of growth even with unchanged technology. Different life profiles of capital goods imply different capital cost functions, but numerical results for the relevant ranges of parameters do not vary much. Three time profiles are examined, each with the finite and infinite life spans: constant output capacity, linear decay and proportional decay of fixed assets.

The Theory of Value, Capital and Interest: A New Approach.

Part 1 Introduction: methodological considerations the model stationary economy. Part 2 Changing economy I - the growth or decline of labour force: two dynamic effects quantity and price equations. Part 3 Changing economy II - technological progress: once-and-for-all technological change continuous unembodied technological progress embodied technological progress evaluation of investment projects. Part 4 The choice of techniques: price-quantity duality technological frontier. Part 5 Extensions: joint production rent equations. Part 6 Generalizations: many consumer goods many capital goods the general case - many consumer and producer goods.

Workers’ Management and the Market

If the firm is maximising an objective function, its behaviour will depend on the type of that objective function. Basically, we can distinguish three simple cases which, of course, can be further elaborated. The firm maximises either a residual, usually called profit, or one or two ratios, namely, income per worker or profit per unit of capital. I shall denote the three cases as: the entrepreneurial firm, the Worker-Managed (or Illyrian) firm and the capitalist firm. In order to simplify the analysis, only two factors of production are assumed (labour and capital), and joint products are absent.