Tuesday, March 18, 2008

So much for employee ownership

I used to think that employees owning the corporations they worked for was the potential solution to the problems of modern capitalism. This solution fails though when employee-owned (or partially-owned) companies go bankrupt, like Enron, or nearly bankrupt, like Bear Stearns, and the inevitable layoffs mean the employees lose both their assets and their income stream. Solving the Marxist problem of alienation between labor and capital isn't a feature, it's a bug.

The one exception might be when employees buy their company to keep it from going under. In this case the employees' capital is different from everyone else's, in that their investment can keep them employed. On the other hand, they may still lose their jobs in the end while also losing all the assets they plowed into a dying enterprise. So I'm not sure whether even this exception is a good idea.

Anyway, I'm watching the capital market implosion pretty closely. It's not looking good when the lefty economic blogs I read argue that it might not be possible to punish corporate managers who kill their financial enterprises because our financial system is so fragile right now.

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