David Ellerman

Property and Contract in Economics: The Case for Economic Democracy.

Introduction Part I: Property 1. The Fundamental Myth of Capitalist Property Rights 2. The Appropriation of Property Rights 3. The Labor Theory of Property 4. Labor Theory of Property: Intellectual History 5. Misinterpretations of the Labor Theory of Property Part II: Contract 6. The Employer-Employee Relationship 7. Non-Democratic Liberalism: The Hidden Intellectual History of Capitalism 8. Contracts and Inalienable Rights 9. An Intellectual History of Inalienable Rights Theory 10. Misinterpretations of the De Facto Theory of Inalienable Rights Part III: Property and Contract in Economics 11. Property Fallacies in Economics 12. Marginal Productivity Theory 13. Marxian Value Theory, MP Theory, and the Labor Theory of Property 14. Fundamental Theorem of Property Theory 15. Conclusions Bibliography.

Entrepreneurship in the Mondragon Cooperatives

Today there are over 85 industrial cooperatives in the Mondragon Cooperative Movement with around 20,000 worker-members. The industrial cooperatives are the core of the Mondragon group, but other cooperative forms have also been developed. There are: ? 85 industrial cooperatives, ? 5 agricultural cooperatives, ? 2 service cooperatives, ? 43 cooperative schools using the Basque language, ? 14 housing cooperatives, and ? 1 large consumer/worker cooperative with over forty stores. There are also the second tier or super-structural cooperatives with both cooperative and individual-worker members such as: ? Caja Laboral Popular (CLP), with the Banking Division of 141 branch offices and the Empresarial Division, ? Ikerlan, a technological research institute, ? League of Education and Culture (which includes not only a Poly technical College but a business school and a professional college), and ? Lagun-Aro, a social security and medical cooperative. All these cooperatives of the Mondragon Cooperative Movement (located throughout the Basque region of northern Spain ? with a few now being started in the Basque part of France) are associated by a Contract of Association with the Caja Laboral Popular as the center or hub of the cooperative group. [For more description, see Part I of Ellerman, 1982.]

Counting Distinctions: On the Conceptual Foundations of Shannon's Information Theory

Categorical logic has shown that modern logic is essentially the logic of subsets (or “subobjects”). In “subset logic,” predicates are modeled as subsets of a universe and a predicate applies to an individual if the individual is in the subset. Partitions are dual to subsets so there is a dual logic of partitions where a “distinction” [an ordered pair of distinct elements (u, u′) from the universe U] is dual to an “element”. A predicate modeled by a partition π on U would apply to a distinction if the pair of elements was distinguished by the partition π, i.e., if u and u′ were in different blocks of π. Subset logic leads to finite probability theory by taking the (Laplacian) probability as the normalized size of each subset-event of a finite universe. The analogous step in the logic of partitions is to assign to a partition the number of distinctions made by a partition normalized by the total number of ordered |U|2 pairs from the finite universe. That yields a notion of “logical entropy” for partitions and a “logical information theory.” The logical theory directly counts the (normalized) number of distinctions in a partition while Shannon’s theory gives the average number of binary partitions needed to make those same distinctions. Thus the logical theory is seen as providing a conceptual underpinning for Shannon’s theory based on the logical notion of “distinctions.”

Labour migration: A developmental path or a low-level trap?

This article focuses on the debate about the developmental impact of migration on the sending countries. Throughout the post-Second World War period, temporary labour migration has been promoted as a path to development. Remittances have grown to rival or surpass official development assistance and have increased living standards in the sending countries. However, the evidence over time is that the remittances do not lead to development or even to higher incomes that are sustainable without further migration. Some determinedly temporary labour migration schemes offer promise. But where the pattern of migration and remittances locks into a semi-permanent arrangement (the standard line is ‘Theres nothing more permanent than “temporary” migration’), then this may be a developmental trap for the South whereby, in a semi-permanent ‘3 Ds Deal’, the South forgoes self-development in favour of being a long-range bedroom community to supply the labour for dirty, dangerous, and difficult jobs in the North.

Autonomy-Respecting Assistance: Toward An Alternative Theory of Development Assistance

The purpose of this paper is outline an alternative theory of development assistance by analyzing the old strategies for technical cooperation, capacity-building and, in broader terms, development assistance in a way that will point to new strategies. The perspective is the very old idea that the best form of assistance is to help people help themselves. The problem is how can the helpers supply help that actually furthers rather than overrides or undercuts the goal of the doers helping themselves? This problem of supplying help to self-help, “assisted self-reliance” or assisted autonomy, is the fundamental conundrum of development assistance. The forms of help that override or undercut peoples capacity to help themselves will be called “unhelpful help.” These two overriding and undercutting forms of unhelpful help are analyzed and strategies for autonomy-respecting help are presented. Moreover the volitional and cognitive sides of development assistance are given separate but parallel treatment.

Lessons from Eastern Europe's Voucher Privatization

Several years have passed since the failure of shock therapy to create a vibrant market economy in Russia. Some of the architects of the original plans have admitted that their strategies were naive, incomplete, or excessively ambitious. Others still insist there were no viable alternatives. In this thorough piece, a World Bank economist assesses why voucher privatization in particular was such a popular reformist tool and why it was doomed from the beginning.

On the Role of Capital in “Capitalist” and in Labor-Managed Firms

This article outlines the “fundamental myth” about the structure of property rights in a capitalist economy, namely the idea that being the residual claimant in a productive opportunity is part of a bundle of property rights known as the “ownership of the firm.” Residual claimancy is contractually determined so there is no such “ownership.” The fundamental myth exposes a basic fallacy in capital theory that has hitherto escaped attention in the capital theory debates.

Horizon problems and property rights in labor-managed firms

Abstract The Furubotn-Pejovich horizon problem arises from the lack of any recoupable claim on the equity in Yugoslav-type social-property LMFs. This problem has been solved by the system of internal capital accounts of the Mondragon-type individual-equity LMFs. The workers profit rights are contingent on working in a LMF, so a Jensen-Meckling-type residual horizon problem might remain even in an individual-equity LMF. But property-theoretic analysis shows that the basic difference with a capitalist firm lies in contractual opportunities, not property rights. Capitalist owners may hire future workers; members of a LMF may not.

Parallel Experimentation: A Basic Scheme for Dynamic Efficiency

Evolutionary economics often focuses on the comparison between economic competition and the process of natural selection to select the fitter members of a given population. But that neglects the other “half” of an evolutionary process, the mechanism for the generation of new possibilities that is key to dynamic efficiency. My topic is the process of parallel experimentation which I take to be a process of multiple experiments running concurrently with some form of common goal, with some semi-isolation between the experiments, with benchmarking comparisons made between the experiments, and with the “migration” of discoveries between experiments wherever possible to ratchet up the performance of the group. The thesis is that parallel experimentation is a fundamental dynamic efficiency scheme to enhance and accelerate variation, innovation, and learning in contexts of genuine uncertainty or known ignorance. Within evolutionary biology, this type of parallel experimentation scheme was developed in Sewall Wright’s shifting balance theory of evolution. It addressed the rather neglected topic of how a population on a low fitness peak might eventually be able to go “downhill” against selective pressures, traverse a valley of low fitness, and then ascend a higher fitness peak. The theme of parallel experimentation is used to recast and pull together dynamic and pluralistic theories in economics, political theory, philosophy of science, and social learning. Copyright Springer Science+Business Media New York 2014

Translatio versus Concessio

Liberalism is based on the juxtaposition of consent to coercion. Autocracy and slavery were based on coercion whereas today’s political democracy and economic “employment system” are based on consent to voluntary contracts. This article retrieves an almost forgotten dark side of contractarian thought that based autocracy and slavery on explicit or implicit voluntary contracts. The democratic and antislavery movements forged arguments not simply in favor of consent but arguments that voluntary contracts to alienate (translatio) aspects of personhood were invalid—which made the underlying rights inalienable. Once understood, those arguments apply as well to today’s self-rental contract, the employer-employee contract.