Equality, Participation, Transition: Essays in Honour of Branko Horvat

100 Employee Participation in Enterprise Control and Returns
policy support for participation schemes. The signs of productivity
effects, expected of the various types of employee participation in control
and returns regrouped according to Figure 6.1, instead of Table 6.1,
form a smaller matrix than for Table 6.1, of the type:
0
0 /
0 /
It does not justify public encouragement for moving in a top left/bottom
right direction – lest enterprises are pushed into inferior areas in
which employee control and return rights become too much of a good
thing. The bottom line of this alternative approach is that the discovery
and implementation of positive effects of participation on productivity
and other aspects of economic performance is best left to
spontaneous market forces: ‘se son rose, fioriranno’. 5
Notes
1 For instance, if total earnings of risk-averse employees remained unchanged
and a part of them was now volatile (though even that may be at least partly
offset by a higher probability of continued employment).
2 This distinction is recognized, but not used, by Ben-Ner and Jones (1995).
3 Participation in profits includes deferred distribution of profits accumulated
over time as in Mondragon cooperatives. The distinction between return as
net profits and as capital gains escapes Ben-Ner and Jones because they do
not include among ownership rights the right to transfer; they talk of temporary
or contingent property rights – in which case, of course, temporary or
contingent owners cannot cash in any of the increment in enterprise value.
But this is wrong both in law and economic conceptualization: there is simply
no such thing as a temporary or a contingent property right. Usufruct is
a part of a property right, not a temporary property right.
4 Jones (1996) suggests that ‘in transition economies privatisation does not
produce fundamental changes in inherited patterns of corporate governance
but rather has served to strengthen managerial control. There is no strong
evidence that the key obstacle to enhanced performance is employee ownership’.
At the same time, it seems premature to dismiss dominant employee
ownership as a major factor explaining the low degree of capacity and
employment restructuring in the Russian economy to date.
5 ‘If they are flowers, they will blossom’ (Italian proverb).
References
Ben-Ner, A. and Jones, D. C. (1995) ‘Employee Participation, Ownership, and
Productivity: a Theoretical Framework’, Industrial Relations, 34(4): 532–44.