After Marx, dissenting economics almost always used 'the labour theory' as a theory of value. This paper develops a modern treatment of the alternative labour theory of property that is essentially the property theoretic application of the juridical principle of responsibility: impute legal responsibility in accordance with who was in fact responsible. To understand descriptively how assets and liabilities are appropriated in normal production, a 'fundamental myth' needs to be cleared away, and then the market mechanism of appropriation can be (...) understood. On the normative side, neoclassical theory represents marginal productivity theory as showing that (a metaphorical version of) the imputation principle is satisfied ('people get what they produce') in competitive enterprises. Since that shows the moral commitment of neoclassical economics to the imputation principle, the labour theory of property is presented here as the actual non-metaphorical application of the imputation principle to property appropriation. The property-theoretic analysis at the firm level shows how the neoclassical (and much heterodox) analysis in terms of 'distributive shares' wholly misframed the basic questions. Finally, the paper shows how the imputation principle (modernised labour theory of property) is systematically violated in the present wage labour system of renting persons. The paper can be seen as taking up the recent challenge posed by Donald Katzner for a dialogue between neoclassical and heterodox microeconomics. (shrink)

Liberal thought (in the sense of classical liberalism) is based on the juxtaposition of consent to coercion. Autocracy and slavery were seen as based on coercion whereas today's political democracy and economic 'employment system' are based on consent to voluntary contracts. This paper retrieves an almost forgotten dark side of contractarian thought that based autocracy and slavery on explicit or implicit voluntary contracts. To answer these 'best case' arguments for slavery and autocracy, the democratic and abolitionist movements forged arguments not (...) simply in favour of consent, but arguments that voluntary contracts to legally alienate aspects of personhood were invalid 'even with consent' – which made the underlying rights inherently inalienable. Once understood, those arguments have the perhaps 'unintended consequence' of making the neo-abolitionist case for ruling out today's self-rental contract, the employer-employee contract. The paper has to also retrieve these inalienable rights arguments since they have been largely lost on the Left, not to mention in liberal thought. (shrink)

When this book was first published in 1990, there were massive economic changes in the East and significant economic challenges to the West. This critical analysis of democratic theory discusses the principles and forces that push both socialist and capitalist economies toward a common ground of workplace democratization. This book is a comprehensive approach to the theory and practice of the "Democratic firm" – from philosophical first principles to legal theory and finally to some of the details of financial structure. (...) The argument for economic democracy supports private property, free markets and entrepreneurship for instance, but fundamentally it replaces the employer/employee relationship with democratic membership in the firm. For students, teachers, policy makers and others interested in the application of democracy to the workplace, this book will serve as a manifesto and a standard reference on the topic. (shrink)

This paper shows that implicit assumptions about the numeraire good in the Kaldor-Hicks efficiency-equity analysis involve a "same-yardstick" fallacy (a fallacy pointed out by Paul Samuelson in another context). These results have negative implications for cost-benefit analysis, the wealth-maximization approach to law and economics, and other parts of applied welfare economics--as well as for the whole vision of economics based on the "production and distribution of social wealth.".

A theory of property needs to give an account of the whole life-cycle of a property right: how it is initiated, transferred, and terminated. Economics has focused on the transfers in the market and has almost completely neglected the question of the initiation and termination of property in normal production and consumption (not in some original state or in the transition from common to private property). The institutional mechanism for the normal initiation and termination of property is an invisible-hand function (...) of the market, the market mechanism of appropriation. Does this mechanism satisfy an appropriate normative principle? The standard normative juridical principle is to assign or impute legal responsibility according to de facto responsibility. It is given a historical tag of being "Lockean" but the basis is contemporary jurisprudence, not historical exegesis. Then the fundamental theorem of the property mechanism is proven which shows that if "Hume's conditions" (no transfers without consent and all contracts fulfilled) are satisfied, then the market automatically satisfies the Lockean responsibility principle, i.e., "Hume implies Locke." As a major application, the results in their contrapositive form, "Not Locke implies Not Hume," are applied to a market economy based on the employment contract. It is shown the production based on the employment contract violates the Lockean principle (all who work in an employment enterprise are de facto responsible for the positive and negative results) and thus Hume's conditions must also be violated in the marketplace (de facto responsible human action cannot be transferred from one person to another—as is readily recognized when and employer and employee together commit a crime). (shrink)

Classical liberalism is skeptical about governmental organizations "doing good" for people. Instead governments should create the conditions so that people individually (Adam Smith) and in associations (Tocqueville) are empowered to do good for themselves. The market implications of classical liberalism are well-known, but the implications for organizations are controversial. We will take James Buchanan as our guide (with assists from Mill and Dewey). Unpacking the implications of classical liberalism for the "science of associations" (Tocqueville) requires a tour through the intellectual (...) history of the voluntary slavery contract and the voluntary non-democratic constitution. The argument concludes that the classical liberal endorsement of sovereign individuals acting in the marketplace generalizes to the joint action of individuals as the principals in their own organizations and associations. (shrink)

In her recent book Private Government, Elizabeth Anderson makes a powerful but pragmatic case against the abuses experienced by employees in conventional corporations. The purpose of this review-essay is to contrast Anderson’s pragmatic critique of many abuses in the employment relation with a principled critique of the employment relationship itself. This principled critique is based on the theory of inalienable rights that descends from the Reformation doctrine of the inalienability of conscience down through the Enlightenment in the abolitionist, democratic, and (...) feminist movements. That theory was the basis for the abolition of the voluntary slavery or self-sale contract, the voluntary non-democratic constitution (pactum subjectionis), and the voluntary coverture marriage contract in today’s democratic countries. When understood in modern terms, that same theory applies as well against the voluntary self-rental or employment contract that is the basis for our current economic system. (shrink)

Contemporary workplaces are mostly hierarchical. Intrinsic and extrinsic bads of workplace hierarchies have been widely discussed in the literature on workplace democracy and workplace republicanis...

According to Palazzo and Scherer, the changing role of business corporations in society requires that we take new measures to integrate these organizations into society-wide processes of democratic governance. We argue that their model of integration has a fundamental problem. Instead of treating business corporations as agents that must be held accountable to the democratic reasoning of affected parties, it treats corporations as agents who can hold others accountable. In our terminology, it treats business corporations as “supervising authorities” rather than (...) “functionaries.” The result is that Palazzo and Scherer’s model does not actually address the democratic deficit that it is meant to solve. In order to fix the problem, we advocate removing business corporations from any policymaking role in political CSR and limiting participation to political NGOs and other groups that meet the standards we set out for a politically representative organization (PRO). (shrink)

This paper compares and contrasts the basic income proposal with the alternative policy proposal of the state acting as employer of last resort. Two versions of the UBI proposal are distinguished: one is hard to differentiate from expanded welfare state provision. Van Parijs’s proposal is radical enough to qualify as major egalitarian revision to capitalism. However, while it removes from a capitalist class the power to determine the terms on which others labour, it leaves this class in place and able (...) to exert other powers that distort the macro-economy. These include pecuniary emulation, demand pull inflation, and political resistance to full employment so that the rentier class does not have to contend with entrepreneurs *and* the working class over the distribution of the productive surplus. The state as employer of last resort proposal addresses these deeper issues while also claiming that inflationary pressure will undermine the UBI alternative. (shrink)

Is it a requirement of justice to democratize private companies? This question has received renewed attention in the wake of the financial crisis, as part of a larger debate about the role of companies in society. In this article, we discuss three principled arguments for workplace democracy and show that these arguments fail to establish that all workplaces ought to be democratized. We do, however, argue that republican-minded workers must have a fair opportunity to work in a democratic company. Under (...) current conditions, this means that a liberal order must actively promote workplace democracy. (shrink)

Jamie Morgan's commentary (Morgan, 2016) on my paper 'The Labour Theory of Property and Marginal Productivity Theory' (Ellerman, 2016) and Ted Burczak's later comments (Burczak, 2016) raise a number of issues that surely will occur to other readers and that need to be addressed. I take the occasion to expand upon the arguments and to explore some related issues. In the narrative that unfolds, Frank H. Knight plays the role of the sophisticated defender of the system of renting, hiring and (...) employing human beings. He was quite clear that the social role of economics is to develop an idealised model, the competitive free enterprise model, and then to frame the normative discussion in terms of that model. Knight would agree with the whole thread of heterodox 'criticism' that the actual economy falls far short of the ideal – which is why I largely eschewed the descriptive shortcomings of ideal model as a purported model of the actual economy. Instead my paper focused on developing a critique of the key part of the idealised model, the marginal productivity theory of distribution under competitive conditions. That critique is based on the usual juridical principle of imputing legal responsibility in accordance with factual responsibility – the principle whose property-theoretic application is the modern treatment of the labour theory of property. Historically, heterodox economics faced a fork in the road in the 19th century: whether to criticise 'the system' by developing the inchoate 'labour theory' as a theory of value or a theory of property. Marx and much of left-wing economics took the labour-theory-of-value road, whereas my paper is part of a modern attempt – Thomas Hodgskin (1832) being an earlier attempt – to take the labour-theory-of-property road. As we will see, much of the debate still revolves around these two roads. Read David Ellerman's original paper "The Labour Theory of Property and Marginal Productivity Theory" › Read Jamie Morgan's commentary on David Ellerman's paper ›. (shrink)

Many arguments have been advanced in favor of employee participation in firm decision-making. Two of the most influential are the "interest protection argument" and the "autonomy argument." I argue that the case for granting participation rights to some other stakeholders, such as suppliers and community members, is at least as strong, according to the reasons given in these arguments, as the case for granting them to certain employees. I then consider how proponents of these arguments might modify their arguments, or (...) views, in response to this conclusion. (shrink)

This paper presents an argument for the democratic (or 'labor-managed') firm based on ordinary jurisprudence. The standard principle of responsibility in jurisprudence ('Assign legal responsibility in accordance with de facto responsibility') implies that the people working in a firm should legally appropriate the assets and liabilities produced in the firm (the positive and negative fruits of their labor). This appropriation is normally violated due to the employment or self-rental contract. However, we present an inalienable rights argument that descends from the (...) Reformation and Enlightenment which argues that the self-rental contract, like the self-sale or voluntary slavery contract, is inherently invalid. The key intuition of the inalienable rights theory is that one cannot in fact voluntarily transfer de facto responsibility for one's actions to another person. One can only voluntarily co-operate with another person, but then one is de facto jointly responsible for the results. Just as the legal authorities legally reconstruct the criminous employer and employee as a partnership with shared responsibility, so justice demands that every firm be legally reconstructed as a partnership of all who work (working employers and employees) in the enterprise, i.e., as a democratic firm. (shrink)

Dramatic changes or revolutions in a field of science are often made by outsiders or 'trespassers,' who are not limited by the established, 'expert' approaches. Each essay in this diverse collection shows the fruits of intellectual trespassing and poaching among fields such as economics, Kantian ethics, Platonic philosophy, category theory, double-entry accounting, arbitrage, algebraic logic, series-parallel duality, and financial arithmetic.

Andrew Sayer and Dave Elder-Vass are both advocates of ‘moral economy’. To this end, Elder-Vass offers a theory of appropriative practices that enables us to evaluate the enormous variety of forms...

Is there a link between how a firm manages its internal and external stakeholders? More specifically, are firms that give employees stock ownership and more say in running the enterprise more likely to engage with external stakeholders? This study seeks to answer these questions by elaborating on mechanisms that link employees to external stakeholders, such as the community, suppliers, and the environment. It tests these relationships using a sample of 347 private, mostly small-to-medium size firms, which completed a stakeholder impact (...) assessment organized by the non-profit B Lab. The results support the hypotheses that both employee ownership and employee involvement are positively associated with external stakeholder engagement. Further, we found that certification plays a role, as employee ownership contributes to external stakeholder engagement only in certified B Corporations, and not in firms that merely completed the B Lab Impact assessment. Our findings have import for stakeholder engagement frameworks, as we show that there is interplay between internal employee stakeholders and external stakeholders that may be important to overall firm–stakeholder management. (shrink)

A theory of property needs to give an account of the whole life-cycle of a property right: how it is initiated, transferred, and terminated. Economics has focused on the transfers in the market and has almost completely neglected the question of the initiation and termination of property in normal production and consumption. Yet the market also provides a laissez-faire mechanism: when the legal authorities do not intervene, then the initial right is, in effect, assigned to the first seller and the (...) terminal liability to the last buyer. But does this mechanism satisfy the juridical principle of responsibility: assign de jure responsibility in accordance with de facto responsibility? The fundamental theorem states that if all transfers are covered by voluntary contracts and all contracts are fulfilled, then the laissez-faire mechanism satisfies the responsibility principle.Une théorie de la propriété se doit d’expliquer entièrement le cycle de vie du droit de propriété: les conditions de son émergence, de son transfert et de sa résiliation. La théorie économique s’est focalisée sur les mécanismes de transferts sur le marché et a presque totalement négligé la question de l’émergence et de la réalisation de la propriété dans les phénomènes de production et de consommation. Pourtant, le marché fournit également un mécanisme de laissez-faire: lorsque les autorités légales s’abstiennent d’intervenir, le droit initial est affecté au premier vendeur et la responsabilité terminale au dernier acheteur. Néanmoins, ce mécanisme satisfait-il le principe juridique de responsabilité? A savoir, assigner une responsabilité de jure en accord avec le principe de responsabilité de facto? En effet, le théorème fondamental exprime qui si tous les transferts s’effectuent par des contrats volontaires, et que tous les contrats sont remplis, alors le principe du laissez-faire satisfait le principe de responsabilité. (shrink)