[lbo-talk] Coops [was: Economics drivel]

Bill Bartlett billbartlett at enterprize.net.au
Wed Jun 11 16:34:05 PDT 2003


At 2:03 PM -0400 11/6/03, Wojtek Sokolowski wrote:


>That is quite common in coops and community organizations. Few do the
>work and take any responsibility, but but eberyone expects services to
>be delivered. That is a well know phenomenon of "free rider"
>prominently featuring in the rat choice model. The argument is that
>thetransaction of cost of participation in managing collective goods is
>relatively high, but benefits acrue to all members of the collectivity,
>so a rat choice actor has an incentive not to participate and reap the
>benefets anyway.

The costs aren't theoretically all that high, trouble is that in practise they are extremely high if you are operating in a climate of political decision-making, where it is also the case that economic benefits accrue mainly, or only, to those who have the political numbers, so the benefits of participation are quite negligible for everyone else.

The solution is consensus decision making, as I mentioned in an earlier discussion on that topic. Actual political intrigue, getting the numbers, then requires getting everyone to go along with any decision, so the so called "transaction cost" of participation is reduced and the benefits increase. You don't have to lobby and you know for sure you will actually be able to do something about stopping a proposal, so it becomes more worthwhile to take the trouble to follow what's going on and form your own opinion.

That often isn't the case under majority decision making, your opinion doesn't count much if a leader with an automatic majority of blind supporters has put their stamp of approval on a proposal.


>Of course, if we intriduce cognitive aspect tro this approach we can
>easily see that the "free-rider" argument hinges on the cognitive
>ability to "filter out" the long term consequences of nonparticipation
>from the equation. That is to say, the argument works only if we assume
>a frame of reference that considers only short term gains/costs. If,
>otoh, we assume a farme of reference that includes long term losses and
>benefits (i.e. if I get involved now, it may require some sacrifices,
>but I will benefit in a long run) - the free rider argument is a
>nonsequitur.

Yes, that makes sense if we take as our premise that the benefits really are there. The dilemma is that the benefits aren't there, if they aren't there. If people are competing for privilege, trying to do one another over, then there is no benefit to genuine co-operative participation in management. Those who fail to fall into line with a faction which can prevail and deliver the goods stand no chance of getting any benefit. They are, in some ways, wasting their time carefully considering the issues, since either way they cannot influence the outcome.

It requires a systematic solution.


> The key question is thus which frame of reference, short
>or long term, and individual will use to process all potentially
>available information into cons and pros to be legitimately considerd in
>making a decision (which almost invariably involved disregarding some of
>that potentially relevant information). I would argue, that a
>particular frane of reference is adopeted as a result of social
>interaction (i.e. how the issue id framed by others, what is the status
>of others, what legitimating mechanisms are used by others, etc.).
>[shameless self-promotion: I wrote about in my book _Civil Society and
>the Professions in Eastern Europe_ where I discuss the role of
>theprofessions and organizational forms in innovation dissemination].
>
>It seems that in many cooperative housing establishments, the culture of
>poverty prevails and sets the frame for interaction among residents - or
>at least that has been my own experience.

I think its more the culture of powerlessness that is at work, it isn't (always) precisely the same thing.

However, as I have pointed out, it is a self-perpetuating dilemma. Being powerless, people adopt patterns of behaviour and thought which make them unsuitable for exercising responsibility. To put it simply, there is no power without responsibility, but it is hard to sustain the culture of responsibility in people who are powerless.

Bill Bartlett Bracknell Tas



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