On 2011-12-30, at 11:12 AM, Wojtek S wrote:
> Bill: "This is all so elementary, I am unable to fathom how you could
> possibly believe such nonsense?"
> Woj: ...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.
>
> […]
>
> 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.
Large firms have more discretion over prices and wages because of their scale. The big multinationals have provided the subject matter for theorists of monopoly and managerial capitalism, not small or medium sized enterprises. What makes you think the Retail, Wholesale, and Department Store Union, for example, would be able to fund an enterprise remotely able to compete with the Walmarts and Costcos and to command the market as they do?
> 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.
Not so. When management pursues anti-labour policies, it is precisely because the labour market dictates what they will need to pay to recruit and retain the personnel they need. Even the very largest firms operate within these parameters, irrespective of whether their CEO's are more or less friendly to labour. Like any market (call the reference to markets "neoliberal mythology" if you like) when labour is in surplus, the price goes down; when the labour market for a particular skill is tight, the price goes up. A militant union prepared to fight can push wages above the average in a large, profitable enterprise, but otherwise labour organizations are also affected by the level of employment and can move the market price of labour only at the margin. You have very strong opinions but, I suspect, limited experience in trade unions or collective bargaining, and it shows here.
> 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.
Union leaders acting as employers in relation to their own staffs are often notoriously anti-union. Way back, when I was an organizer for the SEIU, and the staff was threatening to organize because of rather extraordinary demands and abuse being heaped on them - and these were for the most part dedicated people willing to work long hours for little pay because they were committed to a cause - the then head of the Toronto local threatened to lock them out if they followed through. They capitulated. I later heard similar stories from office staff in other unions trying to negotiate improved conditions from union officials whose own pay was many multiples of what they were receiving and, more important, of the pay of the most skilled workers in the bargaining units which the union represented.
So I have little confidence in your assurance that the power of union leaders who act as employers will be curtailed by their members they represent, or that they will choose to behave differently towards the workers they employ than those CEO's "taught in business schools and cultivated in the corporate environment" by virtue of their union background. What you ignore is that the corporate culture turns on cutting costs in order to maximize profits (pay and benefits comprising for by far the highest percentage), and there is no reason to suppose union leaders acting as heads of corporations will be any more immune to these pressures, especially when the union's precarious investment in the firm is at stake.
> 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.
> 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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