In a society dominated by large publicly owned firms it is possible that small proprietors would be an effective place to steer some of the more exploitative labor. Small sweat shops might effectively operate under the "radar" of yet serve as a dumping ground for "unruly" workers. This would seem quite likely to me since I've seen it firsthand in Czech.
> What would be gained by not having such enterprises run as cooperatives?
>
> Actually, there's a large literature on this in the economics of the
> firm, and its sub-field, the economics of labor-managed firms. As you
> might guess, most writers in the latter subfield tend to be either
> strongly in favor or strongly opposed to labor-managed firms - yet
> both sides largely agree on this point: When entrepreneurs start
> successful capitalist firms, they are able to appropriate large
> entrepreneurial rents. That's the main material motive for starting a
> firm in the first place. But in a cooperative governance structure,
> entrepreneurial rents are likely to be dissipated - i.e., appropriated
> by the other workers in the cooperative. So if entrepreneurs were
> required to adopt a cooperative structure from the start, far fewer
> firms would be created, especially innovative firms.
>
> SA
If one imagines we need more widgets than we currently have this might be a problem. Any important innovations would likely come from Govt. funded research. Certainly I would expect a slowdown in the rate at which innovations become personal goods but this hardly seems a tragedy to me. This gain seems small when compared to the risk I list above but obviously your opinions may vary.
John Thornton