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

146 Self-Management, Employee Ownership and Transition
Vanek, 1970). In practice, most of the transition economies have introduced
structures in which, while employee ownership is widespread,
it takes the form of individualistic holdings. This raises the key moral
issue at the core of labour-management: that each worker should have
an equal vote rather than operate within an arrangement which yields
one vote to each share. If the moral superiority of the labour-managed
system comes from its democracy, it will not be delivered by individual
ownership.
The second issue concerns the appropriate institutional arrangements
for the labour-management sector. There was much research on this
matter in the 1980s and the 1990s (see, for example, Ben-Ner, 1984;
Estrin and Jones, 1983; Perotin, 1987). These authors were trying to
understand what the legal features were of Mondragon and the French
and Italian producer cooperatives that made these sectors work so well
and survive for so long. There was also a great concern as to whether
these arrangements were replicable (see, for example, Bradley and Gelb,
1981). The answers relate to the potential role of a centralized funding
authority, to ownership-transfer rules and to voting rules. It is not clear
how much of this analysis can be transferred to the transition context.
The third big issue concerns the relationship between a labourmanaged
firm and the capital market. The original work by Ward and
Vanek assumed that capital markets were perfectly competitive and
that the supply of debt was perfectly elastic at an exogenously determined
cost. There was also some work on internally financed labourmanaged
firms (see Stephen, 1980). But, the literature has never
adequately tackled the question of debt versus equity finance and the
moral hazard problems raised by external financing when a factor of
production controlled the surplus. This has left the issue open to discussion
by unsympathetic authors such as Hansmann (1990).
The final topic is the question of what particular advantages and
disadvantages labour-management might bring to the problems of
enterprises in transition. This links to the key issue in the research
agenda of the producer co-operatives literature during the 1980s. The
question we need to consider now is: what are the sectors, the
ownership arrangements and so forth, conducive to the success of
labour-management firms in transition economies. In this chapter I
want primarily to raise the first three points, but to focus in some
detail on the fourth. The structure of the chapter is as follows: in the
following section I summarize the opportunities for labour-management
in transition economies, by providing evidence on the emergence
of the private sector and on the scale of labour-management that