Governing the Firm: Workers' Control in Theory and Practice

by Gregory K. Dow

Most large firms are controlled by shareholders, who choose the board of directors and can replace the firms management. In rare instances, however, control over the firm rests with the workforce. Many explanations for the rarity of workers' control have been offered, but there have been few attempts to assess these hypotheses in a systematic way. This book draws upon economic theory, statistical evidence, and case studies to frame an explanation. The fundamental idea is that labor is inalienable, while capital can be freely transferred from one person to another. This implies that worker controlled firms typically face financing problems, encounter collective choice dilemmas, and have difficulty creating markets for control positions within the firm. Together these factors can account for much of what is known about the incidence, behavior, and design of worker- controlled firms. A policy proposal to encourage employee buyouts is developed in the concluding chapter. Gregory L. Dow is Professor and Chair of the Department of Economics at Simon Fraser University, British Columbia, Canada. He previously taught at the University of Alberta and Yale University, and has served as a visiting professor at the University of New South Wales, the Erasmus Institute for Philosophy and Economics, and the Swedish Collegium for Advanced Studies in the Social Sciences. Professor Dow is Associate Editor on the Journal of Economic Behavior and Organization and has published numerous articles on labor-managed firms and other topics in economic theory in leading journals such as the American Economic Review and the Journal of Political Economy.

Genres: Economics, Politics

342 pages, Paperback

First published April 16, 1999

Reviews

[Knick Laux · Rating 4 out of 5]

Hard to know how to rate an informational book like this. I feel that it accomplished most of what it set out to do including surveying the various theories for the rarity of worker-controlled firms. I learned a lot about prominent examples of coops and the differences in their structure. I’m glad that Dr. Naidu recommended this one.

[David · Rating 5 out of 5]

If you want a book on workplace democracy from a non-dogmatic, empirically sensitive economists perspective, this is your book. It provides a fairly nuanced account of the strengths and weaknesses of such firms relative to others on empirical grounds, but Dow isn't afraid to dip his toe into normative political philosophy to make his case for his vision; defending the kind of workplace democracy most likely to satisfy normative and practical concerns. There's a lot here to argue with but this is a remarkable useful and well done book; if the subject is new to you I can't imagine there are many better places to start.