Thanks to Rohith Jyothish and Anil Srivastava for pointers.
The first paper (Freeman 2018) present three laws of “robo-economics” – and is important to read carefully. The pros and cons of profit sharing with employees is well explored in the second and third papers (Weitzman & Krause 1990; Krause 1986), especially from an incentives for full employment perspective. The fourth paper (actually book) (Pendleton 2002), is also very important to understand trends and challenges in employee ownership, governance, and participation. Finally, the fifth paper (Errasti, Bretos, Nunez 2017) gives an analysis relevant to co-ops. In addition, need some other perspectives… co-ops include a component of profit sharing with customers – so some integration of this may also be worth exploring from a fuller co-creation of value perspective. As we get employees, managers, customers, and capitalists (owners) with large numbers of digital workers (say 100 digital workers per employee based on the number of apps on my smart phone today) and include the households these individuals are part of as well, the nested networked structure of the service system ecology might cause us to expect far more from individuals than we do today – just as we expect far more responsibility-taking from adults than children in society today (and age range of children at home status seems to be increasing today). Worth thinking about at least…
Annotated Bibliography
(Freeman 2018) Freeman RB (2018) Ownership when AI robots do more of the work and earn more of the income. Journal of Participation and Employee Ownership. (2018 Jun 11). 1(1):74-95. “To the extent that who owns the robots rules the world, it argues for a concerted social effort to widen the “who” in ownership from the few to the many. It reviews policies to expand employee ownership of their own firm and of the stream of revenue via profit-sharing and gain-sharing bonuses.” P. 74. “The natural solution to a distribution problem based on the unequal ownership of income earning AI robots and other capital assets is to expand ownership to a larger proportion of the population through increasing employees’ ownership of their firms and workers and citizens’ ownership of capital writ large. By ownership, I mean any of a diverse set of property rights over income-producing assets ranging from ownership of the capital, which gives employees or citizens’ rights to vote on economic and management decisions, to ownership of streams of income from capital, which give persons rights to the stream but not to the capital itself.” P. 83. “The USA has arguably the most extensive system of employee ownership and profit-sharing in the world, which gives the country a good base from which to adopt policies for increasing workers’ ownership as AI robots produce more of GDP.” P. 84. “Workers benefit from ownership by gaining higher incomes via shares or profit-related bonuses and by participating more in workplace decisions. Developing greater trust/loyalty to their firm, workers are more likely to stay with their employer than otherwise comparable workers without such plans and are more likely to monitor co-workers to keep productivity high (see chapters in Kruse et al., 2010). ” P. 85. “Capital income is more unequally distributed than labor income. The top 1 percent wealth holders have 35 percent of total wealth, which is about three times the share of the top 1 percent labor income earners in total labor income. Inequality in capital income has also increased more rapidly than inequality in labor income[42]. To the extent that AI robot automation raises capital’s share of income, it will add to inequality and accelerate the rising trend in inequality.” P. 87. “Sovereign funds – state owned investment vehicles that invest public moneys based largely on taxes and royalties from publicly owned natural resources such as oil and gas in real and financial assets – offer a different mechanism to spread capital wealth.” P. 88.
(Weitzman & Kruse 1990) Weitzman M, Kruse D (1990). Profit sharing and productivity. 95-142. “From many different sources there emerges a moderately consistent pattern of weak support for the proposition that profit sharing improves productivity.” P. 96. “The gains are probably modest, and perhaps it is a difficult change to engineer. A society‘s labor payment system seems to be one of the more likely candidates for historical inertia. institutional rigidities, and imitation effects.” P. 140.
(Weitzman 1986) Weitzman ML. Macroeconomic implications of profit sharing. NBER Macroeconomics Annual. 1986 Jan 1;1:291-335. “What we do not know – and this is the central economic dilemma of our time – is how simultaneously to reconcile full employment with reasonable price stability.” P. 291. “Senior workers who are not unduly at risk of being laid off might resist the plan.” P. 297. ” Here I would like to deal with some of the major objections that have been raised. The most effective way to do this, I believe, is to answer questions the way they are typically posed by astute critics.” P. 304. “In this article I have argued that substantial progress in the struggle for full employment without inflation will have to come largely from basic changes in pay-setting arrangements rather than from better manipulation of financial aggregates.” P. 332.
(Pendleton 2002) Pendleton A. Employee ownership, participation and governance: a study of ESOPs in the UK. (2002 Jan 4). Routledge. “This book has been a long time in the making. I first developed an interest in employee ownership at the beginning of the 1990s. Nick Wilson, then a colleague at Bradford University, was mainly responsible for introducing me to this field. We spent an enjoyable few months travelling the length and breadth of Britain collecting information on the early ESOPs. He was mainly responsible for assembling the questionnaire used to collect data on employee attitudes (see Chapter 8).” P. xi. “Our concern then is with a sub-set of share ownership schemes where employee share ownership is at high levels and where share ownership is intertwined with considerations of governance and participation.” P. 3. “In the main the employee ownership firms we focus on came about in two ways. One was where management and employees mounted buy-outs of public sector firms undergoing privatisation. The second arena for employee ownership conversions was the private company sector where the owner(s) wished to divest or exit.” P. 4. “The contemporary significance of this interpretation resides in the shift that is thought to be occurring in advanced economies towards a ‘knowledge economy’. Increasingly, wealth creation involves the application of human knowledge to the provision of services rather than the production of goods using physical capital. The critical investments therefore are those made in human capital. In these circumstances, the appropriate mode of governance is one involving employees in ownership and control. This line of argument is now filtering through into reformulations of the theory of the firm, and it has been proposed recently that the modern firm should be conceptualised as a ‘nexus of specific investments’ (Rajan and Zingales 1998). The other side of the coin is that firms need to find ways of binding employees with highly developed firm-specific knowledge to the firm so as to protect investments the firm has made in training and development. Employee ownership, both as remuneration and as a governance device, provides a way of doing this.” P. 8. “To these insights were added those of Jensen and Meckling a few years later. They also applied principal–agent theory to the theory of the firm, and analysed the problems of incentives and control based on asymmetrical distribution of information between principals and agents. They emphasised the monitoring costs for principals given that employees have superior information about many aspects of the production process, and the bonding costs to employees arising from the possibility that employers will in the future take most of the gains arising from long-term employment and the development of human capital.” P. 10. “Overall our conclusion is that studies of employee ownership need to pay close attention to the varying circumstances of ownership conversion, and to the objectives and philosophies of those involved in mounting the conversion. Variations in these are likely to be associated with differences in ownership, participation and governance.” P. 18. “Several observations can be made about the pattern of ESOP creation. One, there are virtually no cases where ESOPs have been used by start-up firms. There was just one such firm in our study, and this firm went out of business during the course of the research. ESOPs structures are not well suited to start-ups because they can be administratively onerous (in the view of our respondents) and because the demands of acquiring external finance for physical and working capital are likely to preclude the provision of financial resources to an ESOP.” P. 184. “An influential set of arguments suggests that decisions to become employee-owned may be relatively more likely in contexts where monitoring of worker activities is costly and where employees have transferable skills, knowledge, and reputation (Russell 1985b).” P. 191. [Note JCS: When employees have 100 digital workers working for them, this is very likely to be the case. Consider employees using and contributing to key resources in open source communities and open soure leader boards. Or does monitoring get easier, if privacy is less of a concern?]
(Errasti, Bretos, Nunez 2017) Errasti A, Bretos I, Nunez A (2017) The viability of cooperatives: The fall of the Mondragon cooperative Fagor. (2017 Feb 02). Review of Radical Political Economics. 49(2):181-97. “The viability of workers’ cooperatives as alternative work organizations in capitalist economy has long been a point of debate. Globalization brings new challenges to their survival as businesses and as democratic organizations. This article presents a case study of the rise and fall of the Basque cooperative Fagor Electrodomésticos, one of the largest industrial cooperatives in the world. Fagor, founded more than fifty years ago, played a key role in launching the several cooperatives that led to the creation of the Mondragon Corporation.After years of intense international growth, the local cooperative Fagor had been transformed into a multinational corporation competing in the highly concentrated and increasingly global home appliance market. In 2007 it employed around 11,000 workers inits eighteen production plants distributed across six countries. Then, as a result of a combination of external and internal factors,Fagor facedits most severe crisis, one
that eventually brought about its closure in 2013. Given Fagor’s role as a leading cooperative, the general question of the viability of workers’ cooperatives is also at stake in its failure. Recounting the story of Fagor’s rise and fall and examining its causes is therefore of broad significance.” P.2. “It finally failed in the midst of a very severe economic downturn that also brought down many other Spanish and European companies. Furthermore, most of Fagor’s members have already been relocated to other Mondragon cooperatives, which would be practically in conceivable in capital – owned companies. Fagor’s failure, then, says less about the viability of cooperatives than about the risks inherent in actual market economies: any business may fail, whatever the size, the juridical nature or the corporate and institutional support. There remain over one hundred cooperatives of Mondragon group , continuing to exhibit a strong capacity for growth and long – term survival, contradicting the verdict of the Webbs.” P. 18.
URLS:
(Freeman 2018)
https://www.emeraldinsight.com/doi/full/10.1108/JPEO-04-2018-0015
(Weitzman & Kruse 1990)
http://scholar.harvard.edu/files/weitzman/files/profitsharingproductivity.pdf
(Errasti, Bretos, Nunez 2017)
https://www.researchgate.net/profile/Ignacio_Bretos/publication/313292439_The_Viability_of_Cooperatives_The_Fall_of_the_Mondragon_Cooperative_Fagor/links/5a2027470f7e9bfc48fdfa4e/The-Viability-of-Cooperatives-The-Fall-of-the-Mondragon-Cooperative-Fagor.pdf
