The Labor-Managed Firm: Permanent or Start-Up Subsidies?

Loek Groot and Daan van der Linde

Journal of Economic Issues, 2017, vol. 51, issue 4, 1074-1093

Abstract: We explore a new argument that seeks to explain the near absence of the labor-managed firm or cooperative, despite a range of inefficiencies attributed to the present-day capitalist firm. We derive the crucial condition for the emergence of labor-managed firms and show that it is unduly restrictive from an efficiency point of view. The policy implication is that public intervention to promote labor-managed firms should primarily be in the form of start-up subsidies rather than in providing permanent tax subsidies.

Date: 2017
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DOI: 10.1080/00213624.2017.1391592

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