[WS:] I am really surprised that you believer that. I think that the myth of market competition and profit maximization in the world dominated by corporations have been effectively debunked some 50 years ago by the guys like March, Simon, Galbraith, or even Williamson. So it is really discouraging to see that people who ostensibly are against capital subscribe to the founding myth of capitalist hegemony - that of market determining behavior of people.
I cannot give justice to the arguments advanced by these guys, but I do recommend that you re-read, or perhaps read for the first time Galbraith - he is an excellent writer able to explain complex issues in a very clear plain English prose (for a starter try http://www.amazon.com/Essential-Galbraith-John-Kenneth/dp/0618119639/ref=sr_1_3?ie=UTF8&qid=1325259018&sr=8-3 ). In essence, their argue that corporations developed effective planning mechanisms that allowed to them to insulate themselves from the markets and to a large extent control it. There in essence two versions of this argument: institutionalist (March, Simon, Galbraith) that use the notion of power that large organizations wield, and transaction cost (Williamson) that rely on the concept of transaction cost saving that give corporations economic advantage over market players.
The bottom line is that whatever the reason, corporations retain considerable control over the environment in which they do business (aka "market") and thus have considerable discretion over broad aspects of their business, including pricing, employee compensation, the use of the surplus, etc.
It is difficult to discuss your argument in abstract, because a lot depends on the particularities of a given market. Generally speaking, however, production cost is a rather small fraction of the final market price, so there is ample room for adjustment including price without sacrificing quantity. But even within the existing corporate structure there is enough price differentiation for comparable products to show that your argument is wrong. People are willing to pay premium for what they perceive as difference in quality or level of service - the electronics market is a prime example. Ditto for retail - many people prefer "quality" retail establishments (such as the Whole Paycheck in the US) over discount outlets even if the former have considerably higher prices. Catering is yet another example - many people are willing to pay higher prices in fancy restaurants even though they have a choice of less expensive fast food (some of which can be really good.) If your argument were correct, none of these more expensive options should exist, the market would equalize everything, just as Milton Friedman wanted us to believe.
So where I am standing, large organizations do have considerable discretion over prices, level of compensation, amount of surplus and uses of that surplus. Obviously that does not mean that they can do as they please - there are constrains on what they can do imposed by external conditions - but that side they have considerable discretion.
If they pursue anti-labor policy it is not because the market made them so - as the neoliberal mythology wants us to believe - but because their management chose to do so. One may wonder why they made that choice - I think that corporate culture taught in business schools and cultivated in corporate environment has something to do with it - but the reasons why are tangential here. What matters is that if the anti-labor behavior of corporations resulted from the choice made by corporate bosses with power to do so, it can be reversed if the power of corporate bosses is curtailed and the choices they made are reversed. Again - there are limits, but there is also considerable room for maneuver.
This is the premise of my proposition that the key to improving the position of labor is the development of business forms that re labor-friendly.
Wojtek
On Thu, Dec 29, 2011 at 6:52 PM, Bill Bartlett <billbartlett at aapt.net.au> wrote:
> At 12:20 PM -0500 29/12/11, Wojtek S wrote:
>
>> Re: "cooperatives facing insolvency or seeking to maximize profits
>> will, like any capitalist firm, necessarily seek to cut wages,
>> benefits, and work rules "
>>
>> [WS:] And what is exactly forcing them to "maximize profits"? In a
>> capitalist corporation it is stockholders who seek maximum returns to
>> their investment and are dumping stock of less maximizing corporations
>> for that of more maximizing ones - at least according to the
>> necolassical economic theory. But coops do not have stock holders, in
>> fact many of them are registered as non-stock corporations? So why
>> would they want to "maximize profits" instead of simply remaining
>> solvent i.e. covering their operating costs? So unless we assume the
>> existence of an invisible hand that makes them maximize, your argument
>> is a nonsequitur.
>
>
> Assuming a co-operative is not a monopoly, its costs must be around the same
> as its competitors and obviously it cannot demand higher prices than them.
> So if the for-profit firm is able to drive down wages, the co-operative
> competitor must do likewise, or lose market share.
>
> The only leeway either has is the profit margin, perhaps the co-operative
> has a slight advantage in that it does not have to return a dividend to
> shareholders. But it does still need to have the capacity to invest
> surpluses to retain competitiveness. The choice is to borrow (thus requiring
> future surpluses be created to meet interest costs) or make enough of a
> profit to have the capacity to invest without borrowing.
>
>
>> Of course, if you take Galbraith seriously (as I do) you do not buy
>> all that market determinism at all.
>
>
> If you want to dismiss the simple reality I have just outlined as some kind
> of preposterous theory of "market determinism", then you just go ahead. But
> facts are stubborn things and hence it will remain reality whether you
> prefer to believe it or not.
>
>
>> Instead you would believe that
>> corporations have a considerable level of independence form the market
>> as long as they cover their costs and return some profit - but beuind
>> that they have considerable choice.
>
>
> If they are monopolies, then they have considerable choice. But if you sell
> a something for $10 kilo and the bloke down the street starts selling the
> identical item for $8, then we'll see just how far your belief that you have
> considerable independence gets you.
>
> Not very far at all. The market will determine that you either compete, or
> go broke. End of.
>
>
>> They can pursue labor cost
>> cutting policy as a matter of managerial choice rather than market
>> necessity.
>
>
> Until they deplete their capital. Then they go bankrupt. End of.
>
>
>> They may also pursue more labor friendly policies if they
>> chose so.
>
>
> Sure. They can run their business with higher costs than their competitors.
> of course that means they either have to charge a higher price for their
> product, Or sell it at the market price, as determined by the lower price
> the labour unfriendly business is able to sustain, thus losing money until
> they go broke, or they keep charging a higher price. Until they go broke.
>
> This is all so elementary, I am unable to fathom how you could possibly
> believe such nonsense?
>
> Bill Bartlett
> Bracknell Tas
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