Learning from the Yugoslav 'worker-self-managed corporations' experience, interest groups within the board of directors will find some matters much more vital than others, and all will not want to or be capable of participatory management of all aspects of firm affairs, especially the everyday and short-term-planning aspects. That doesn't mean they should not be included in the firm's commanding heights (the board of directors). Again based on the Yugoslav experience, no one should expect most workers to be interested in long-range corporate strategy, or marketing strategy, or a firm's financial or operational details. But workers damn well will be interested in everyone's salaries and compensation, and in whether a firm will hire new workers or offer more overtime (workers tending to strongly prefer the latter, to the detriment of employment rates). Political representatives also shouldn't be expected to be interested in, and you wouldn't want them to be, in the details of operations or finance (except perhaps wanting banking to be local), but they'd want the firm to increase employment, and work productively with local high schools and training institutes. What would happen is horse-trading, and exchange for rubber-stamping some decisions by the experts (which is what an efficient society would want), political and worker representatives, and creditors, would get concessions on matters that matter a great deal to them. And all groups will be keenly involved/interested when a new CEO is being selected. Anyway, that's how I would picture the operations of a new corproate brain.
The above at least seems roughly how it worked in Yugoslavia's simpler version thereof: the managers were given sway to 'do their thing', but the workers retained power, and used that on matters that were vital to them. The problem in Yugoslavia is that that became disfunctional, since workers severely restricted the firm's capacity to generate new employment, a vital function of any economic system. The solution is to balance the wider community's needs against the workers' needs: that's why community/political representatives are necessary. But expect them to take a back seat to the experts most of the time. fairleft
The corporation should plan going forward with the intertion of paying off its debts.
Yes. If you do not believe that they are already doing this, then you should not lend to them in the first place. In fact, this is another excellent reason to not include creditors on the board: Inclusion of creditors would give them an incentive to attempt to persuade corporations to not retire their debts.
The problem in Yugoslavia is that that became disfunctional, since workers severely restricted the firm's capacity to generate new employment,
But maintaining full employment is not the purpose or responsibility of individual firms. The sovereign is the only planning unit that has sufficient scope, information and power to reliably serve as employer of last resort.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
But maintaining full employment is not the purpose or responsibility of individual firms.
The democratic society reforming firm 'desires' in socially productive directions is the essence of what I'm talking about, but that doesn't mean giving 'responsibility' for social goals over to the firm, and it doesn't mean firm purpose would be 'full employment', since 'firm purpose' is always very complex. Corporations should be, or can be, one of the tools society uses to satisfy social needs.
What you want is for firms to decide 'naturally' in favor of expanding employment when that makes sense for the society at large. Firms' decision-making was skewed against that in a socially counterproductive way in Yugoslavia in the worker-self-managed firms. Not that that's the only thing that matters to a society, but it is a vital matter. And not that worker-self-managed firms were not a good thing in other ways. fairleft
I disagree! Some companies can very well be run at a high rate of indebtness (leverage), given that its earning stream is very stable, and the owners are well capitalised (so they can step up in case of a rights issue brought on by a crisis). Examples of companies like this are real estate and tobacco companies.
Again based on the Yugoslav experience
Yeah, and the economy of Yugoslavia was a shining beacon to the rest of the world, wasn't it?
I think our current model works well. The owners name the members of the board, and then there's a union representative. What we should change is make board members far more personally legally resonsible in case of fraud or mismanagement of the company, ie big fines and long prison terms. Peak oil is not an energy crisis. It is a liquid fuel crisis.
Fraud/mismanagement liability for board members, who represent shareholders, besides boosting board member liability insurance sales, further increases the weight of shareholder interests in firm decision-making. And, of course, I think society might want more 'mismanagement from the shareholder perspective' not less. Anyway, the external 'stick' of legal action is clumsy and easily corrupted into being ineffectual, compared to changing internal motivations. fairleft
