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

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Jaroslav Vanek 21 There is another well-known example of participation which would at first sight appear as optimal, with D1 and the intensities of involvement ‘d’ respected. It has to do with common stock ownership and voting in capitalist corporations. But there is a fundamental problem which illustrates the need for, and helps us to define what we call, the second fundamental law of optimal participation. In the opinion of this writer – to be judged by the reader as we go along – this second law is of tremendous importance, and if applied, promises a major step in the direction of a more just and happy society and the elimination of a lot of human misery. Obviously, in the practice of large capitalist corporations the postulates of the first law are not fully respected, with large stockholders typically having disproportionately strong power, and vice versa for the small stockholders. But it is not this flaw that we speak about here. What concerns us is that there is a category of people, the workers, who, while significantly involved, do not participate at all in the decisions of the corporations, save sometimes indirectly, via labour unions. Thus, on our terms, D is significantly below unity and the degree/ intensity of involvement ‘d’ is not respected in determining participation in decisions. This is a highly imperfect, suboptimal, solution indeed. Some would suggest that the solution should be sought in various forms of co-determination, such as that practiced in the German economy. While probably a step in the right direction, this is not an optimal solution and may even imply a dead-end street. Co-determination in general terms postulates that capital and labour produce jointly. Thus it should be treated along the lines of the first law with the ‘d’ intensities somehow determined numerically, perhaps as proportions of value added by the various factors and their suppliers. The suboptimality of co-determination can be argued on both practical and theoretical levels. The economic performance of such solutions is good but certainly not the best: 2 in theory, because the primary objectives of capital is profit maximization, and of labour, maximization of income or wages. The situation is likely to become unstable, depending on who holds the majority, and the incentives structure especially can be quite flawed. But we do not have to spend much time on this subject, because our principal purpose is to move our analysis towards the determination of true optimal solutions. The key to the road of optimality is, in addition to intensity of involvement, the consideration of the nature or quality of involvement. We have here at least three major historical analogies or antecedents. (1) The nature and quality of involvement of the owner in his slaves
22 Individual Initiative, Entry and Economic Democracy is inferior/subordinated to the involvement of habeas corpus of the slaves themselves. We have abolished slavery, and no one today would question this comparative judgment – on the contrary most of us would attach to it a certain moral or philosophical notion of justice. (2) Similarly, decolonization was based on the now unquestioned and unquestionable notion that the members of a certain nation (former colony) are differently and far more deeply involved in their society than some colonial external power, or even an external owner, such as, the king of Belgium in the case of Belgian Congo. Finally (3) in the domain of political democracy and self-determination, we have the qualitative ‘jump’ from poll taxes or right to vote, conditioned by land ownership or wealth, to pure personal rights of all members of society, with equal vote for all, or D1 rather than D1 of the former situations. In these and all other situations (to which we will turn later) the qualification of quality or nature of involvement becomes somehow understandable or ‘natural’ upon critical reflection. Also, the critical reflection usually leads to a conclusion as to how the quality/nature of involvement should impact the form or nature of participation for full optimality. The second law of optimal participation can thus be stated as: To attain optimum, participation by those involved in a given domain should also depend on the nature and quality of that involvement. Whereas the first law can be thought of as uni-dimensional, as measured or reflected by intensity (d or D) – very often a dimensionality reducible to dollars or material values – the second one brings us to a world which is multi-dimensional, recognizing, in addition to intensity, the dimensions of justice, love, faith, human life and many others. The world based on both the first and second law of participation is definitely a better and happier one. Among the many solutions offered by the two laws, we also find the analytical justification for the claim contained in the title of this paper. To this analysis I now turn in the remaining section. It may be useful to complete the diagram-set shown for the first law in Figure 2.1 above. Recalling that increasing the degree of optimality (or social desirability) corresponds to movement from the periphery towards the center of the elliptical set, it can be claimed that the fulfilling of the second law corresponds to a quantum leap in desirability, coinciding with the very centre of the total set. However, because we progress here from the unidimensionality of intensity to the multidimensionality of nature/quality of involvement which must determine true optimum, we must move to a higher dimension. Limited by
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Equality, Participation, Transition
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First published in Great Britain 20
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vi Contents 9 Self-Management, Empl
Page 9 and 10: List of Figures 02.1 First Law of O
Page 11 and 12: x Foreword institution most dear to
Page 13 and 14: Notes on the Contributors Ivo Bića
Page 15 and 16: xiv Notes on the Contributors membe
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Page 21 and 22: Introduction: Branko Horvat - Beyon
Page 23 and 24: xxii Introduction Dame (1978), Univ
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Page 29 and 30: xxviii Introduction The second pape
Page 31 and 32: xxx Introduction disciplines such a
Page 33 and 34: Branko Horvat: Select Bibliography
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Page 41 and 42: 2 Horvat’s Contributions to Econo
Page 49 and 50: 10 Horvat’s Contributions to Econ
Page 55 and 56: 2 Individual Initiative, Entry and
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Page 67 and 68: 28 Egalitarianism On Its Own Thomas
Page 69 and 70: 30 Egalitarianism On Its Own projec
Page 71 and 72: 32 Egalitarianism On Its Own absenc
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Page 77 and 78: 38 Egalitarianism On Its Own 100% 9
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Page 85 and 86: 46 Egalitarianism On Its Own Eckel,
Page 87 and 88: 4 Determinants of Cross-Country Inc
Page 89 and 90: 50 Determinants of Income Inequalit
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72 Determinants of Income Inequalit
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5 Illyrian Theories of Cooperative
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92 Employee Participation in Enterp
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EMPLOYEE RETURN ONLY PROFIT PROFIT
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100 Employee Participation in Enter
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7 Employee Involvement and the Mode
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104 Employee Involvement and the Mo
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8 Uneasy Symbiosis of a Market Econ
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120 Market Socialism in Yugoslavia
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146 Self-Management, Employee Owner
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Table 9.1 Methods of privatization
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10 Privatization and Enterprise Per
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164 Privatization: Evidence from Es
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11 Growth Theory and Transition Eco
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186 Growth Theory and Transition Ec
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202 Index economic growth - continu
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204 Index Horvat, Branko - continue
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206 Index neoclassical economics -
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208 Index ‘third way’, 88, 104
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Equality, Participation, Transition: Essays in Honour of Branko Horvat

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