Efficient redistribution: New rules for markets, states, and communities

Politics and Society

Volumn 24, Issue 4, 1996, Pages 307-342

  Bowles, Samuel ^a   Gintis, Herbert ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0030300564     PISSN: 00323292     EISSN: None     Source Type: Journal    
DOI: 10.1177/0032329296024004003     Document Type: Article

References (86)

1. This is not to say that leftist economists have run out of models or have abandoned the construction of alternatives to capitalism, as a reading of Pranab Bardhan and John Roemer, "Market Socialism: A Case for Rejuvenation," Journal of Economic Perspectives 6, no. 3 (Summer 1992): 101-16; John Roemer, A Future for Socialism (Cambridge, MA: Harvard University Press, 1993); and Philippe Van Parijs, Real Freedom for All (Cambridge, UK: Cambridge University Press, 1995), will indicate.
2. This is not to say that leftist economists have run out of models or have abandoned the construction of alternatives to capitalism, as a reading of Pranab Bardhan and John Roemer, "Market Socialism: A Case for Rejuvenation," Journal of Economic Perspectives 6, no. 3 (Summer 1992): 101-16; John Roemer, A Future for Socialism (Cambridge, MA: Harvard University Press, 1993); and Philippe Van Parijs, Real Freedom for All (Cambridge, UK: Cambridge University Press, 1995), will indicate.
3. This is not to say that leftist economists have run out of models or have abandoned the construction of alternatives to capitalism, as a reading of Pranab Bardhan and John Roemer, "Market Socialism: A Case for Rejuvenation," Journal of Economic Perspectives 6, no. 3 (Summer 1992): 101-16; John Roemer, A Future for Socialism (Cambridge, MA: Harvard University Press, 1993); and Philippe Van Parijs, Real Freedom for All (Cambridge, UK: Cambridge University Press, 1995), will indicate.
4. In the United States in 1987, for example, the above categories of "guard labor" constituted over a quarter of the labor force, and the rate of growth of guard labor substantially outstripped the rate of growth of the labor force in the previous two decades. See Samuel Bowles, David M. Gordon, and Thomas E. Weisskopf, After the Waste Land: A Democratic Alternative for the Year 2000 (Armonk, NY: Sharpe, 1990).
5. A tripartite division of governance structures has been proposed by a number of authors. William Ouchi, "Markets Bureaucracies and Clans," Administrative Sciences Quarterly 25 (March 1980): 129-41, refers to these as markets, bureaucracies, and clans, while Elinor Ostrom, Governing the Commons (Cambridge, UK: Cambridge University Press, 1990) analyzes centralized, market decentralized, and decentralized mutual enforcement systems of governance.
6. A tripartite division of governance structures has been proposed by a number of authors. William Ouchi, "Markets Bureaucracies and Clans," Administrative Sciences Quarterly 25 (March 1980): 129-41, refers to these as markets, bureaucracies, and clans, while Elinor Ostrom, Governing the Commons (Cambridge, UK: Cambridge University Press, 1990) analyzes centralized, market decentralized, and decentralized mutual enforcement systems of governance.
7. Kenneth Arrow, "Political and Economic Evaluation of Social Effects and Externalities," in Frontiers of Quantitative Economics, ed. M. D. Intriligator (Amsterdam: North Holland, 1969), 22.
8. A critical example of a coordination failure of this type are strikes. It is perhaps not surprising that in the more advanced welfare states and more egalitarian capitalist economies, Sweden, the Netherlands, Denmark, and Germany, for example, the fraction of workdays lost to strikes in the period 1955-1989 averaged less than a third of the level in countries with less well-developed welfare states, the United States, Canada, Australia, and Italy. See Office of Productivity and Technology, Industrial Disputes Workers Involved and Worktime Lost 15 Countries 1955-1989 (Washington, DC: Office of Productivity and Technology, U.S. Bureau of Labor Statistics, November 1990).
9. Pranab Bardhan, "Analytics of the Institutions of Informal Cooperation in Rural Development," World Development 21, no. 4 (1993): 633-9, and James Boyce, "Technological and Institutional Alternatives in Asian Rice Irrigation," Economic and Political Weekly, 26 March 1988, argue that the many commons-type coordination failures are easier to solve where inequality between participants is limited. Sara Singleton and Michael Taylor, "Common Property Collective Action and Community," Journal of Theoretical Politics 4, no. 3 (1992): 309-24, argue that the inability to solve coordination failures often stems from the lack of community, defined as a set of people with shared beliefs, stable membership, and ongoing, relatively unmediated interaction: "The more a group resembles a community, the lower are the transactions costs which it must meet in order to solve a given collective action problem" (p. 319). Robert Putnam, Making Democracy Work: Civic Traditions in Modern Italy (Princeton, NJ: Princeton University Press, 1993), finds that horizontal networks of civic engagement support forms of cooperation which enhance economic performance while vertical (hierarchical) networks do not.
10. Pranab Bardhan, "Analytics of the Institutions of Informal Cooperation in Rural Development," World Development 21, no. 4 (1993): 633-9, and James Boyce, "Technological and Institutional Alternatives in Asian Rice Irrigation," Economic and Political Weekly, 26 March 1988, argue that the many commons-type coordination failures are easier to solve where inequality between participants is limited. Sara Singleton and Michael Taylor, "Common Property Collective Action and Community," Journal of Theoretical Politics 4, no. 3 (1992): 309-24, argue that the inability to solve coordination failures often stems from the lack of community, defined as a set of people with shared beliefs, stable membership, and ongoing, relatively unmediated interaction: "The more a group resembles a community, the lower are the transactions costs which it must meet in order to solve a given collective action problem" (p. 319). Robert Putnam, Making Democracy Work: Civic Traditions in Modern Italy (Princeton, NJ: Princeton University Press, 1993), finds that horizontal networks of civic engagement support forms of cooperation which enhance economic performance while vertical (hierarchical) networks do not.
11. Pranab Bardhan, "Analytics of the Institutions of Informal Cooperation in Rural Development," World Development 21, no. 4 (1993): 633-9, and James Boyce, "Technological and Institutional Alternatives in Asian Rice Irrigation," Economic and Political Weekly, 26 March 1988, argue that the many commons-type coordination failures are easier to solve where inequality between participants is limited. Sara Singleton and Michael Taylor, "Common Property Collective Action and Community," Journal of Theoretical Politics 4, no. 3 (1992): 309-24, argue that the inability to solve coordination failures often stems from the lack of community, defined as a set of people with shared beliefs, stable membership, and ongoing, relatively unmediated interaction: "The more a group resembles a community, the lower are the transactions costs which it must meet in order to solve a given collective action problem" (p. 319). Robert Putnam, Making Democracy Work: Civic Traditions in Modern Italy (Princeton, NJ: Princeton University Press, 1993), finds that horizontal networks of civic engagement support forms of cooperation which enhance economic performance while vertical (hierarchical) networks do not.
12. Pranab Bardhan, "Analytics of the Institutions of Informal Cooperation in Rural Development," World Development 21, no. 4 (1993): 633-9, and James Boyce, "Technological and Institutional Alternatives in Asian Rice Irrigation," Economic and Political Weekly, 26 March 1988, argue that the many commons-type coordination failures are easier to solve where inequality between participants is limited. Sara Singleton and Michael Taylor, "Common Property Collective Action and Community," Journal of Theoretical Politics 4, no. 3 (1992): 309-24, argue that the inability to solve coordination failures often stems from the lack of community, defined as a set of people with shared beliefs, stable membership, and ongoing, relatively unmediated interaction: "The more a group resembles a community, the lower are the transactions costs which it must meet in order to solve a given collective action problem" (p. 319). Robert Putnam, Making Democracy Work: Civic Traditions in Modern Italy (Princeton, NJ: Princeton University Press, 1993), finds that horizontal networks of civic engagement support forms of cooperation which enhance economic performance while vertical (hierarchical) networks do not.
13. For some recent treatments of the relationship between property rights and efficiency, see Partha Dasgupta and Debraj Ray, "Inequality as a Determinant of Malnutrition and Unemployment," Economic Journal 96 (December 1986): 1011-34. Sanford Grossman and Oliver D. Hart, "The Costs and Benefits of Vertical and Horizontal Integration," Journal of Political Economy 94, no. 4 (August 1986): 691-719; Oliver Hart and John Moore, "Property Rights and the Nature of the Firm," Journal of Political Economy 98, no. 6 (December 1990): 1119-58; Karla Hoff, "The Second Theorem of the Second Best," Journal of Public Economics 25 (1994): 223-42; Karla Hoff and Andrew B. Lyon, "Non-Leaky Buckets: Optimal Redistributive Taxation and Agency Costs," Journal of Public Economics 26 (1995): 365-90; Paul Milgrom, "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy 96, no. 1 (1988): 42-60; Curtis Eaton and William D. White, "The Distribution of Wealth and the Efficiency of Institutions," Economic Inquiry 39, no. 2 (April 1991): 336-50; Karl Ove Moene, "Strong Unions or Worker Control," in Alternatives to Capitalism ed. Jon Elster and Karl Ove Moene (Cambridge, UK: Cambridge University Press, 1989); Joseph Stiglitz, "Rational Peasants, Efficient Institutions, and a Theory of Rural Organization," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989), 10-29; Philippe Aghion and Patrick Bolton, "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies 59 (1992): 473-94; Philippe Aghion and Patrick Bolton, "A Theory of Trickle-down Growth and Development," working paper, 1994; A. Banerjee and Andrew Newman, "Poverty, Incentives, and Development," American Economic Association Papers and Proceedings (May 1994): 211-5; Andrew Newman, "The Capital Market Inequality and the Employment Relation," Columbia University, 1994; Karl Ove Moene, "Poverty and Land Ownership," American Economic Review 81, no. 1 (March 1992): 52-64; Alan Manning, "Imperfect Labour Markets, the Stock Market, and the Inefficiency of Capitalism," Oxford Economic Papers 44 (1992): 257-71; and Dilip Mookherjee, "Informational Rents and Property Rights in Land," in J. Roemer, ed., Property Rights, Incentives, and Welfare (London: Macmillan, forthcoming).
14. For some recent treatments of the relationship between property rights and efficiency, see Partha Dasgupta and Debraj Ray, "Inequality as a Determinant of Malnutrition and Unemployment," Economic Journal 96 (December 1986): 1011-34. Sanford Grossman and Oliver D. Hart, "The Costs and Benefits of Vertical and Horizontal Integration," Journal of Political Economy 94, no. 4 (August 1986): 691-719; Oliver Hart and John Moore, "Property Rights and the Nature of the Firm," Journal of Political Economy 98, no. 6 (December 1990): 1119-58; Karla Hoff, "The Second Theorem of the Second Best," Journal of Public Economics 25 (1994): 223-42; Karla Hoff and Andrew B. Lyon, "Non-Leaky Buckets: Optimal Redistributive Taxation and Agency Costs," Journal of Public Economics 26 (1995): 365-90; Paul Milgrom, "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy 96, no. 1 (1988): 42-60; Curtis Eaton and William D. White, "The Distribution of Wealth and the Efficiency of Institutions," Economic Inquiry 39, no. 2 (April 1991): 336-50; Karl Ove Moene, "Strong Unions or Worker Control," in Alternatives to Capitalism ed. Jon Elster and Karl Ove Moene (Cambridge, UK: Cambridge University Press, 1989); Joseph Stiglitz, "Rational Peasants, Efficient Institutions, and a Theory of Rural Organization," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989), 10-29; Philippe Aghion and Patrick Bolton, "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies 59 (1992): 473-94; Philippe Aghion and Patrick Bolton, "A Theory of Trickle-down Growth and Development," working paper, 1994; A. Banerjee and Andrew Newman, "Poverty, Incentives, and Development," American Economic Association Papers and Proceedings (May 1994): 211-5; Andrew Newman, "The Capital Market Inequality and the Employment Relation," Columbia University, 1994; Karl Ove Moene, "Poverty and Land Ownership," American Economic Review 81, no. 1 (March 1992): 52-64; Alan Manning, "Imperfect Labour Markets, the Stock Market, and the Inefficiency of Capitalism," Oxford Economic Papers 44 (1992): 257-71; and Dilip Mookherjee, "Informational Rents and Property Rights in Land," in J. Roemer, ed., Property Rights, Incentives, and Welfare (London: Macmillan, forthcoming).
15. For some recent treatments of the relationship between property rights and efficiency, see Partha Dasgupta and Debraj Ray, "Inequality as a Determinant of Malnutrition and Unemployment," Economic Journal 96 (December 1986): 1011-34. Sanford Grossman and Oliver D. Hart, "The Costs and Benefits of Vertical and Horizontal Integration," Journal of Political Economy 94, no. 4 (August 1986): 691-719; Oliver Hart and John Moore, "Property Rights and the Nature of the Firm," Journal of Political Economy 98, no. 6 (December 1990): 1119-58; Karla Hoff, "The Second Theorem of the Second Best," Journal of Public Economics 25 (1994): 223-42; Karla Hoff and Andrew B. Lyon, "Non-Leaky Buckets: Optimal Redistributive Taxation and Agency Costs," Journal of Public Economics 26 (1995): 365-90; Paul Milgrom, "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy 96, no. 1 (1988): 42-60; Curtis Eaton and William D. White, "The Distribution of Wealth and the Efficiency of Institutions," Economic Inquiry 39, no. 2 (April 1991): 336-50; Karl Ove Moene, "Strong Unions or Worker Control," in Alternatives to Capitalism ed. Jon Elster and Karl Ove Moene (Cambridge, UK: Cambridge University Press, 1989); Joseph Stiglitz, "Rational Peasants, Efficient Institutions, and a Theory of Rural Organization," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989), 10-29; Philippe Aghion and Patrick Bolton, "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies 59 (1992): 473-94; Philippe Aghion and Patrick Bolton, "A Theory of Trickle-down Growth and Development," working paper, 1994; A. Banerjee and Andrew Newman, "Poverty, Incentives, and Development," American Economic Association Papers and Proceedings (May 1994): 211-5; Andrew Newman, "The Capital Market Inequality and the Employment Relation," Columbia University, 1994; Karl Ove Moene, "Poverty and Land Ownership," American Economic Review 81, no. 1 (March 1992): 52-64; Alan Manning, "Imperfect Labour Markets, the Stock Market, and the Inefficiency of Capitalism," Oxford Economic Papers 44 (1992): 257-71; and Dilip Mookherjee, "Informational Rents and Property Rights in Land," in J. Roemer, ed., Property Rights, Incentives, and Welfare (London: Macmillan, forthcoming).
16. For some recent treatments of the relationship between property rights and efficiency, see Partha Dasgupta and Debraj Ray, "Inequality as a Determinant of Malnutrition and Unemployment," Economic Journal 96 (December 1986): 1011-34. Sanford Grossman and Oliver D. Hart, "The Costs and Benefits of Vertical and Horizontal Integration," Journal of Political Economy 94, no. 4 (August 1986): 691-719; Oliver Hart and John Moore, "Property Rights and the Nature of the Firm," Journal of Political Economy 98, no. 6 (December 1990): 1119-58; Karla Hoff, "The Second Theorem of the Second Best," Journal of Public Economics 25 (1994): 223-42; Karla Hoff and Andrew B. Lyon, "Non-Leaky Buckets: Optimal Redistributive Taxation and Agency Costs," Journal of Public Economics 26 (1995): 365-90; Paul Milgrom, "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy 96, no. 1 (1988): 42-60; Curtis Eaton and William D. White, "The Distribution of Wealth and the Efficiency of Institutions," Economic Inquiry 39, no. 2 (April 1991): 336-50; Karl Ove Moene, "Strong Unions or Worker Control," in Alternatives to Capitalism ed. Jon Elster and Karl Ove Moene (Cambridge, UK: Cambridge University Press, 1989); Joseph Stiglitz, "Rational Peasants, Efficient Institutions, and a Theory of Rural Organization," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989), 10-29; Philippe Aghion and Patrick Bolton, "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies 59 (1992): 473-94; Philippe Aghion and Patrick Bolton, "A Theory of Trickle-down Growth and Development," working paper, 1994; A. Banerjee and Andrew Newman, "Poverty, Incentives, and Development," American Economic Association Papers and Proceedings (May 1994): 211-5; Andrew Newman, "The Capital Market Inequality and the Employment Relation," Columbia University, 1994; Karl Ove Moene, "Poverty and Land Ownership," American Economic Review 81, no. 1 (March 1992): 52-64; Alan Manning, "Imperfect Labour Markets, the Stock Market, and the Inefficiency of Capitalism," Oxford Economic Papers 44 (1992): 257-71; and Dilip Mookherjee, "Informational Rents and Property Rights in Land," in J. Roemer, ed., Property Rights, Incentives, and Welfare (London: Macmillan, forthcoming).
17. For some recent treatments of the relationship between property rights and efficiency, see Partha Dasgupta and Debraj Ray, "Inequality as a Determinant of Malnutrition and Unemployment," Economic Journal 96 (December 1986): 1011-34. Sanford Grossman and Oliver D. Hart, "The Costs and Benefits of Vertical and Horizontal Integration," Journal of Political Economy 94, no. 4 (August 1986): 691-719; Oliver Hart and John Moore, "Property Rights and the Nature of the Firm," Journal of Political Economy 98, no. 6 (December 1990): 1119-58; Karla Hoff, "The Second Theorem of the Second Best," Journal of Public Economics 25 (1994): 223-42; Karla Hoff and Andrew B. Lyon, "Non-Leaky Buckets: Optimal Redistributive Taxation and Agency Costs," Journal of Public Economics 26 (1995): 365-90; Paul Milgrom, "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy 96, no. 1 (1988): 42-60; Curtis Eaton and William D. White, "The Distribution of Wealth and the Efficiency of Institutions," Economic Inquiry 39, no. 2 (April 1991): 336-50; Karl Ove Moene, "Strong Unions or Worker Control," in Alternatives to Capitalism ed. Jon Elster and Karl Ove Moene (Cambridge, UK: Cambridge University Press, 1989); Joseph Stiglitz, "Rational Peasants, Efficient Institutions, and a Theory of Rural Organization," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989), 10-29; Philippe Aghion and Patrick Bolton, "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies 59 (1992): 473-94; Philippe Aghion and Patrick Bolton, "A Theory of Trickle-down Growth and Development," working paper, 1994; A. Banerjee and Andrew Newman, "Poverty, Incentives, and Development," American Economic Association Papers and Proceedings (May 1994): 211-5; Andrew Newman, "The Capital Market Inequality and the Employment Relation," Columbia University, 1994; Karl Ove Moene, "Poverty and Land Ownership," American Economic Review 81, no. 1 (March 1992): 52-64; Alan Manning, "Imperfect Labour Markets, the Stock Market, and the Inefficiency of Capitalism," Oxford Economic Papers 44 (1992): 257-71; and Dilip Mookherjee, "Informational Rents and Property Rights in Land," in J. Roemer, ed., Property Rights, Incentives, and Welfare (London: Macmillan, forthcoming).
18. For some recent treatments of the relationship between property rights and efficiency, see Partha Dasgupta and Debraj Ray, "Inequality as a Determinant of Malnutrition and Unemployment," Economic Journal 96 (December 1986): 1011-34. Sanford Grossman and Oliver D. Hart, "The Costs and Benefits of Vertical and Horizontal Integration," Journal of Political Economy 94, no. 4 (August 1986): 691-719; Oliver Hart and John Moore, "Property Rights and the Nature of the Firm," Journal of Political Economy 98, no. 6 (December 1990): 1119-58; Karla Hoff, "The Second Theorem of the Second Best," Journal of Public Economics 25 (1994): 223-42; Karla Hoff and Andrew B. Lyon, "Non-Leaky Buckets: Optimal Redistributive Taxation and Agency Costs," Journal of Public Economics 26 (1995): 365-90; Paul Milgrom, "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy 96, no. 1 (1988): 42-60; Curtis Eaton and William D. White, "The Distribution of Wealth and the Efficiency of Institutions," Economic Inquiry 39, no. 2 (April 1991): 336-50; Karl Ove Moene, "Strong Unions or Worker Control," in Alternatives to Capitalism ed. Jon Elster and Karl Ove Moene (Cambridge, UK: Cambridge University Press, 1989); Joseph Stiglitz, "Rational Peasants, Efficient Institutions, and a Theory of Rural Organization," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989), 10-29; Philippe Aghion and Patrick Bolton, "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies 59 (1992): 473-94; Philippe Aghion and Patrick Bolton, "A Theory of Trickle-down Growth and Development," working paper, 1994; A. Banerjee and Andrew Newman, "Poverty, Incentives, and Development," American Economic Association Papers and Proceedings (May 1994): 211-5; Andrew Newman, "The Capital Market Inequality and the Employment Relation," Columbia University, 1994; Karl Ove Moene, "Poverty and Land Ownership," American Economic Review 81, no. 1 (March 1992): 52-64; Alan Manning, "Imperfect Labour Markets, the Stock Market, and the Inefficiency of Capitalism," Oxford Economic Papers 44 (1992): 257-71; and Dilip Mookherjee, "Informational Rents and Property Rights in Land," in J. Roemer, ed., Property Rights, Incentives, and Welfare (London: Macmillan, forthcoming).
19. For some recent treatments of the relationship between property rights and efficiency, see Partha Dasgupta and Debraj Ray, "Inequality as a Determinant of Malnutrition and Unemployment," Economic Journal 96 (December 1986): 1011-34. Sanford Grossman and Oliver D. Hart, "The Costs and Benefits of Vertical and Horizontal Integration," Journal of Political Economy 94, no. 4 (August 1986): 691-719; Oliver Hart and John Moore, "Property Rights and the Nature of the Firm," Journal of Political Economy 98, no. 6 (December 1990): 1119-58; Karla Hoff, "The Second Theorem of the Second Best," Journal of Public Economics 25 (1994): 223-42; Karla Hoff and Andrew B. Lyon, "Non-Leaky Buckets: Optimal Redistributive Taxation and Agency Costs," Journal of Public Economics 26 (1995): 365-90; Paul Milgrom, "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy 96, no. 1 (1988): 42-60; Curtis Eaton and William D. White, "The Distribution of Wealth and the Efficiency of Institutions," Economic Inquiry 39, no. 2 (April 1991): 336-50; Karl Ove Moene, "Strong Unions or Worker Control," in Alternatives to Capitalism ed. Jon Elster and Karl Ove Moene (Cambridge, UK: Cambridge University Press, 1989); Joseph Stiglitz, "Rational Peasants, Efficient Institutions, and a Theory of Rural Organization," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989), 10-29; Philippe Aghion and Patrick Bolton, "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies 59 (1992): 473-94; Philippe Aghion and Patrick Bolton, "A Theory of Trickle-down Growth and Development," working paper, 1994; A. Banerjee and Andrew Newman, "Poverty, Incentives, and Development," American Economic Association Papers and Proceedings (May 1994): 211-5; Andrew Newman, "The Capital Market Inequality and the Employment Relation," Columbia University, 1994; Karl Ove Moene, "Poverty and Land Ownership," American Economic Review 81, no. 1 (March 1992): 52-64; Alan Manning, "Imperfect Labour Markets, the Stock Market, and the Inefficiency of Capitalism," Oxford Economic Papers 44 (1992): 257-71; and Dilip Mookherjee, "Informational Rents and Property Rights in Land," in J. Roemer, ed., Property Rights, Incentives, and Welfare (London: Macmillan, forthcoming).
20. For some recent treatments of the relationship between property rights and efficiency, see Partha Dasgupta and Debraj Ray, "Inequality as a Determinant of Malnutrition and Unemployment," Economic Journal 96 (December 1986): 1011-34. Sanford Grossman and Oliver D. Hart, "The Costs and Benefits of Vertical and Horizontal Integration," Journal of Political Economy 94, no. 4 (August 1986): 691-719; Oliver Hart and John Moore, "Property Rights and the Nature of the Firm," Journal of Political Economy 98, no. 6 (December 1990): 1119-58; Karla Hoff, "The Second Theorem of the Second Best," Journal of Public Economics 25 (1994): 223-42; Karla Hoff and Andrew B. Lyon, "Non-Leaky Buckets: Optimal Redistributive Taxation and Agency Costs," Journal of Public Economics 26 (1995): 365-90; Paul Milgrom, "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy 96, no. 1 (1988): 42-60; Curtis Eaton and William D. White, "The Distribution of Wealth and the Efficiency of Institutions," Economic Inquiry 39, no. 2 (April 1991): 336-50; Karl Ove Moene, "Strong Unions or Worker Control," in Alternatives to Capitalism ed. Jon Elster and Karl Ove Moene (Cambridge, UK: Cambridge University Press, 1989); Joseph Stiglitz, "Rational Peasants, Efficient Institutions, and a Theory of Rural Organization," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989), 10-29; Philippe Aghion and Patrick Bolton, "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies 59 (1992): 473-94; Philippe Aghion and Patrick Bolton, "A Theory of Trickle-down Growth and Development," working paper, 1994; A. Banerjee and Andrew Newman, "Poverty, Incentives, and Development," American Economic Association Papers and Proceedings (May 1994): 211-5; Andrew Newman, "The Capital Market Inequality and the Employment Relation," Columbia University, 1994; Karl Ove Moene, "Poverty and Land Ownership," American Economic Review 81, no. 1 (March 1992): 52-64; Alan Manning, "Imperfect Labour Markets, the Stock Market, and the Inefficiency of Capitalism," Oxford Economic Papers 44 (1992): 257-71; and Dilip Mookherjee, "Informational Rents and Property Rights in Land," in J. Roemer, ed., Property Rights, Incentives, and Welfare (London: Macmillan, forthcoming).
21. For some recent treatments of the relationship between property rights and efficiency, see Partha Dasgupta and Debraj Ray, "Inequality as a Determinant of Malnutrition and Unemployment," Economic Journal 96 (December 1986): 1011-34. Sanford Grossman and Oliver D. Hart, "The Costs and Benefits of Vertical and Horizontal Integration," Journal of Political Economy 94, no. 4 (August 1986): 691-719; Oliver Hart and John Moore, "Property Rights and the Nature of the Firm," Journal of Political Economy 98, no. 6 (December 1990): 1119-58; Karla Hoff, "The Second Theorem of the Second Best," Journal of Public Economics 25 (1994): 223-42; Karla Hoff and Andrew B. Lyon, "Non-Leaky Buckets: Optimal Redistributive Taxation and Agency Costs," Journal of Public Economics 26 (1995): 365-90; Paul Milgrom, "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy 96, no. 1 (1988): 42-60; Curtis Eaton and William D. White, "The Distribution of Wealth and the Efficiency of Institutions," Economic Inquiry 39, no. 2 (April 1991): 336-50; Karl Ove Moene, "Strong Unions or Worker Control," in Alternatives to Capitalism ed. Jon Elster and Karl Ove Moene (Cambridge, UK: Cambridge University Press, 1989); Joseph Stiglitz, "Rational Peasants, Efficient Institutions, and a Theory of Rural Organization," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989), 10-29; Philippe Aghion and Patrick Bolton, "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies 59 (1992): 473-94; Philippe Aghion and Patrick Bolton, "A Theory of Trickle-down Growth and Development," working paper, 1994; A. Banerjee and Andrew Newman, "Poverty, Incentives, and Development," American Economic Association Papers and Proceedings (May 1994): 211-5; Andrew Newman, "The Capital Market Inequality and the Employment Relation," Columbia University, 1994; Karl Ove Moene, "Poverty and Land Ownership," American Economic Review 81, no. 1 (March 1992): 52-64; Alan Manning, "Imperfect Labour Markets, the Stock Market, and the Inefficiency of Capitalism," Oxford Economic Papers 44 (1992): 257-71; and Dilip Mookherjee, "Informational Rents and Property Rights in Land," in J. Roemer, ed., Property Rights, Incentives, and Welfare (London: Macmillan, forthcoming).
22. For some recent treatments of the relationship between property rights and efficiency, see Partha Dasgupta and Debraj Ray, "Inequality as a Determinant of Malnutrition and Unemployment," Economic Journal 96 (December 1986): 1011-34. Sanford Grossman and Oliver D. Hart, "The Costs and Benefits of Vertical and Horizontal Integration," Journal of Political Economy 94, no. 4 (August 1986): 691-719; Oliver Hart and John Moore, "Property Rights and the Nature of the Firm," Journal of Political Economy 98, no. 6 (December 1990): 1119-58; Karla Hoff, "The Second Theorem of the Second Best," Journal of Public Economics 25 (1994): 223-42; Karla Hoff and Andrew B. Lyon, "Non-Leaky Buckets: Optimal Redistributive Taxation and Agency Costs," Journal of Public Economics 26 (1995): 365-90; Paul Milgrom, "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy 96, no. 1 (1988): 42-60; Curtis Eaton and William D. White, "The Distribution of Wealth and the Efficiency of Institutions," Economic Inquiry 39, no. 2 (April 1991): 336-50; Karl Ove Moene, "Strong Unions or Worker Control," in Alternatives to Capitalism ed. Jon Elster and Karl Ove Moene (Cambridge, UK: Cambridge University Press, 1989); Joseph Stiglitz, "Rational Peasants, Efficient Institutions, and a Theory of Rural Organization," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989), 10-29; Philippe Aghion and Patrick Bolton, "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies 59 (1992): 473-94; Philippe Aghion and Patrick Bolton, "A Theory of Trickle-down Growth and Development," working paper, 1994; A. Banerjee and Andrew Newman, "Poverty, Incentives, and Development," American Economic Association Papers and Proceedings (May 1994): 211-5; Andrew Newman, "The Capital Market Inequality and the Employment Relation," Columbia University, 1994; Karl Ove Moene, "Poverty and Land Ownership," American Economic Review 81, no. 1 (March 1992): 52-64; Alan Manning, "Imperfect Labour Markets, the Stock Market, and the Inefficiency of Capitalism," Oxford Economic Papers 44 (1992): 257-71; and Dilip Mookherjee, "Informational Rents and Property Rights in Land," in J. Roemer, ed., Property Rights, Incentives, and Welfare (London: Macmillan, forthcoming).
23. For some recent treatments of the relationship between property rights and efficiency, see Partha Dasgupta and Debraj Ray, "Inequality as a Determinant of Malnutrition and Unemployment," Economic Journal 96 (December 1986): 1011-34. Sanford Grossman and Oliver D. Hart, "The Costs and Benefits of Vertical and Horizontal Integration," Journal of Political Economy 94, no. 4 (August 1986): 691-719; Oliver Hart and John Moore, "Property Rights and the Nature of the Firm," Journal of Political Economy 98, no. 6 (December 1990): 1119-58; Karla Hoff, "The Second Theorem of the Second Best," Journal of Public Economics 25 (1994): 223-42; Karla Hoff and Andrew B. Lyon, "Non-Leaky Buckets: Optimal Redistributive Taxation and Agency Costs," Journal of Public Economics 26 (1995): 365-90; Paul Milgrom, "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy 96, no. 1 (1988): 42-60; Curtis Eaton and William D. White, "The Distribution of Wealth and the Efficiency of Institutions," Economic Inquiry 39, no. 2 (April 1991): 336-50; Karl Ove Moene, "Strong Unions or Worker Control," in Alternatives to Capitalism ed. Jon Elster and Karl Ove Moene (Cambridge, UK: Cambridge University Press, 1989); Joseph Stiglitz, "Rational Peasants, Efficient Institutions, and a Theory of Rural Organization," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989), 10-29; Philippe Aghion and Patrick Bolton, "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies 59 (1992): 473-94; Philippe Aghion and Patrick Bolton, "A Theory of Trickle-down Growth and Development," working paper, 1994; A. Banerjee and Andrew Newman, "Poverty, Incentives, and Development," American Economic Association Papers and Proceedings (May 1994): 211-5; Andrew Newman, "The Capital Market Inequality and the Employment Relation," Columbia University, 1994; Karl Ove Moene, "Poverty and Land Ownership," American Economic Review 81, no. 1 (March 1992): 52-64; Alan Manning, "Imperfect Labour Markets, the Stock Market, and the Inefficiency of Capitalism," Oxford Economic Papers 44 (1992): 257-71; and Dilip Mookherjee, "Informational Rents and Property Rights in Land," in J. Roemer, ed., Property Rights, Incentives, and Welfare (London: Macmillan, forthcoming).
24. For some recent treatments of the relationship between property rights and efficiency, see Partha Dasgupta and Debraj Ray, "Inequality as a Determinant of Malnutrition and Unemployment," Economic Journal 96 (December 1986): 1011-34. Sanford Grossman and Oliver D. Hart, "The Costs and Benefits of Vertical and Horizontal Integration," Journal of Political Economy 94, no. 4 (August 1986): 691-719; Oliver Hart and John Moore, "Property Rights and the Nature of the Firm," Journal of Political Economy 98, no. 6 (December 1990): 1119-58; Karla Hoff, "The Second Theorem of the Second Best," Journal of Public Economics 25 (1994): 223-42; Karla Hoff and Andrew B. Lyon, "Non-Leaky Buckets: Optimal Redistributive Taxation and Agency Costs," Journal of Public Economics 26 (1995): 365-90; Paul Milgrom, "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy 96, no. 1 (1988): 42-60; Curtis Eaton and William D. White, "The Distribution of Wealth and the Efficiency of Institutions," Economic Inquiry 39, no. 2 (April 1991): 336-50; Karl Ove Moene, "Strong Unions or Worker Control," in Alternatives to Capitalism ed. Jon Elster and Karl Ove Moene (Cambridge, UK: Cambridge University Press, 1989); Joseph Stiglitz, "Rational Peasants, Efficient Institutions, and a Theory of Rural Organization," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989), 10-29; Philippe Aghion and Patrick Bolton, "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies 59 (1992): 473-94; Philippe Aghion and Patrick Bolton, "A Theory of Trickle-down Growth and Development," working paper, 1994; A. Banerjee and Andrew Newman, "Poverty, Incentives, and Development," American Economic Association Papers and Proceedings (May 1994): 211-5; Andrew Newman, "The Capital Market Inequality and the Employment Relation," Columbia University, 1994; Karl Ove Moene, "Poverty and Land Ownership," American Economic Review 81, no. 1 (March 1992): 52-64; Alan Manning, "Imperfect Labour Markets, the Stock Market, and the Inefficiency of Capitalism," Oxford Economic Papers 44 (1992): 257-71; and Dilip Mookherjee, "Informational Rents and Property Rights in Land," in J. Roemer, ed., Property Rights, Incentives, and Welfare (London: Macmillan, forthcoming).
25. For some recent treatments of the relationship between property rights and efficiency, see Partha Dasgupta and Debraj Ray, "Inequality as a Determinant of Malnutrition and Unemployment," Economic Journal 96 (December 1986): 1011-34. Sanford Grossman and Oliver D. Hart, "The Costs and Benefits of Vertical and Horizontal Integration," Journal of Political Economy 94, no. 4 (August 1986): 691-719; Oliver Hart and John Moore, "Property Rights and the Nature of the Firm," Journal of Political Economy 98, no. 6 (December 1990): 1119-58; Karla Hoff, "The Second Theorem of the Second Best," Journal of Public Economics 25 (1994): 223-42; Karla Hoff and Andrew B. Lyon, "Non-Leaky Buckets: Optimal Redistributive Taxation and Agency Costs," Journal of Public Economics 26 (1995): 365-90; Paul Milgrom, "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy 96, no. 1 (1988): 42-60; Curtis Eaton and William D. White, "The Distribution of Wealth and the Efficiency of Institutions," Economic Inquiry 39, no. 2 (April 1991): 336-50; Karl Ove Moene, "Strong Unions or Worker Control," in Alternatives to Capitalism ed. Jon Elster and Karl Ove Moene (Cambridge, UK: Cambridge University Press, 1989); Joseph Stiglitz, "Rational Peasants, Efficient Institutions, and a Theory of Rural Organization," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989), 10-29; Philippe Aghion and Patrick Bolton, "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies 59 (1992): 473-94; Philippe Aghion and Patrick Bolton, "A Theory of Trickle-down Growth and Development," working paper, 1994; A. Banerjee and Andrew Newman, "Poverty, Incentives, and Development," American Economic Association Papers and Proceedings (May 1994): 211-5; Andrew Newman, "The Capital Market Inequality and the Employment Relation," Columbia University, 1994; Karl Ove Moene, "Poverty and Land Ownership," American Economic Review 81, no. 1 (March 1992): 52-64; Alan Manning, "Imperfect Labour Markets, the Stock Market, and the Inefficiency of Capitalism," Oxford Economic Papers 44 (1992): 257-71; and Dilip Mookherjee, "Informational Rents and Property Rights in Land," in J. Roemer, ed., Property Rights, Incentives, and Welfare (London: Macmillan, forthcoming).
26. For some recent treatments of the relationship between property rights and efficiency, see Partha Dasgupta and Debraj Ray, "Inequality as a Determinant of Malnutrition and Unemployment," Economic Journal 96 (December 1986): 1011-34. Sanford Grossman and Oliver D. Hart, "The Costs and Benefits of Vertical and Horizontal Integration," Journal of Political Economy 94, no. 4 (August 1986): 691-719; Oliver Hart and John Moore, "Property Rights and the Nature of the Firm," Journal of Political Economy 98, no. 6 (December 1990): 1119-58; Karla Hoff, "The Second Theorem of the Second Best," Journal of Public Economics 25 (1994): 223-42; Karla Hoff and Andrew B. Lyon, "Non-Leaky Buckets: Optimal Redistributive Taxation and Agency Costs," Journal of Public Economics 26 (1995): 365-90; Paul Milgrom, "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy 96, no. 1 (1988): 42-60; Curtis Eaton and William D. White, "The Distribution of Wealth and the Efficiency of Institutions," Economic Inquiry 39, no. 2 (April 1991): 336-50; Karl Ove Moene, "Strong Unions or Worker Control," in Alternatives to Capitalism ed. Jon Elster and Karl Ove Moene (Cambridge, UK: Cambridge University Press, 1989); Joseph Stiglitz, "Rational Peasants, Efficient Institutions, and a Theory of Rural Organization," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989), 10-29; Philippe Aghion and Patrick Bolton, "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies 59 (1992): 473-94; Philippe Aghion and Patrick Bolton, "A Theory of Trickle-down Growth and Development," working paper, 1994; A. Banerjee and Andrew Newman, "Poverty, Incentives, and Development," American Economic Association Papers and Proceedings (May 1994): 211-5; Andrew Newman, "The Capital Market Inequality and the Employment Relation," Columbia University, 1994; Karl Ove Moene, "Poverty and Land Ownership," American Economic Review 81, no. 1 (March 1992): 52-64; Alan Manning, "Imperfect Labour Markets, the Stock Market, and the Inefficiency of Capitalism," Oxford Economic Papers 44 (1992): 257-71; and Dilip Mookherjee, "Informational Rents and Property Rights in Land," in J. Roemer, ed., Property Rights, Incentives, and Welfare (London: Macmillan, forthcoming).
27. For some recent treatments of the relationship between property rights and efficiency, see Partha Dasgupta and Debraj Ray, "Inequality as a Determinant of Malnutrition and Unemployment," Economic Journal 96 (December 1986): 1011-34. Sanford Grossman and Oliver D. Hart, "The Costs and Benefits of Vertical and Horizontal Integration," Journal of Political Economy 94, no. 4 (August 1986): 691-719; Oliver Hart and John Moore, "Property Rights and the Nature of the Firm," Journal of Political Economy 98, no. 6 (December 1990): 1119-58; Karla Hoff, "The Second Theorem of the Second Best," Journal of Public Economics 25 (1994): 223-42; Karla Hoff and Andrew B. Lyon, "Non-Leaky Buckets: Optimal Redistributive Taxation and Agency Costs," Journal of Public Economics 26 (1995): 365-90; Paul Milgrom, "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy 96, no. 1 (1988): 42-60; Curtis Eaton and William D. White, "The Distribution of Wealth and the Efficiency of Institutions," Economic Inquiry 39, no. 2 (April 1991): 336-50; Karl Ove Moene, "Strong Unions or Worker Control," in Alternatives to Capitalism ed. Jon Elster and Karl Ove Moene (Cambridge, UK: Cambridge University Press, 1989); Joseph Stiglitz, "Rational Peasants, Efficient Institutions, and a Theory of Rural Organization," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989), 10-29; Philippe Aghion and Patrick Bolton, "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies 59 (1992): 473-94; Philippe Aghion and Patrick Bolton, "A Theory of Trickle-down Growth and Development," working paper, 1994; A. Banerjee and Andrew Newman, "Poverty, Incentives, and Development," American Economic Association Papers and Proceedings (May 1994): 211-5; Andrew Newman, "The Capital Market Inequality and the Employment Relation," Columbia University, 1994; Karl Ove Moene, "Poverty and Land Ownership," American Economic Review 81, no. 1 (March 1992): 52-64; Alan Manning, "Imperfect Labour Markets, the Stock Market, and the Inefficiency of Capitalism," Oxford Economic Papers 44 (1992): 257-71; and Dilip Mookherjee, "Informational Rents and Property Rights in Land," in J. Roemer, ed., Property Rights, Incentives, and Welfare (London: Macmillan, forthcoming).
28. For some recent treatments of the relationship between property rights and efficiency, see Partha Dasgupta and Debraj Ray, "Inequality as a Determinant of Malnutrition and Unemployment," Economic Journal 96 (December 1986): 1011-34. Sanford Grossman and Oliver D. Hart, "The Costs and Benefits of Vertical and Horizontal Integration," Journal of Political Economy 94, no. 4 (August 1986): 691-719; Oliver Hart and John Moore, "Property Rights and the Nature of the Firm," Journal of Political Economy 98, no. 6 (December 1990): 1119-58; Karla Hoff, "The Second Theorem of the Second Best," Journal of Public Economics 25 (1994): 223-42; Karla Hoff and Andrew B. Lyon, "Non-Leaky Buckets: Optimal Redistributive Taxation and Agency Costs," Journal of Public Economics 26 (1995): 365-90; Paul Milgrom, "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy 96, no. 1 (1988): 42-60; Curtis Eaton and William D. White, "The Distribution of Wealth and the Efficiency of Institutions," Economic Inquiry 39, no. 2 (April 1991): 336-50; Karl Ove Moene, "Strong Unions or Worker Control," in Alternatives to Capitalism ed. Jon Elster and Karl Ove Moene (Cambridge, UK: Cambridge University Press, 1989); Joseph Stiglitz, "Rational Peasants, Efficient Institutions, and a Theory of Rural Organization," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989), 10-29; Philippe Aghion and Patrick Bolton, "An Incomplete Contracts Approach to Financial Contracting," Review of Economic Studies 59 (1992): 473-94; Philippe Aghion and Patrick Bolton, "A Theory of Trickle-down Growth and Development," working paper, 1994; A. Banerjee and Andrew Newman, "Poverty, Incentives, and Development," American Economic Association Papers and Proceedings (May 1994): 211-5; Andrew Newman, "The Capital Market Inequality and the Employment Relation," Columbia University, 1994; Karl Ove Moene, "Poverty and Land Ownership," American Economic Review 81, no. 1 (March 1992): 52-64; Alan Manning, "Imperfect Labour Markets, the Stock Market, and the Inefficiency of Capitalism," Oxford Economic Papers 44 (1992): 257-71; and Dilip Mookherjee, "Informational Rents and Property Rights in Land," in J. Roemer, ed., Property Rights, Incentives, and Welfare (London: Macmillan, forthcoming).
29. The "residual claimant" owns whatever remains (the residual) after all fixed claims (in this case the rent paid to the owner) are settled.
30. For examples of wealth inequality inducing economic inefficiency, see Mukesh Eswaran and Ashok Kotwal, "Credit and Agrarian Class Structure," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989); Joseph Stiglitz, "Why Financial Structure Matters," Journal of Economic Perspectives 2, no. 4 (Fall 1988): 121-6; and Samuel Bowles and Herbert Gintis, "The Revenge of Homo Economicus: Contested Exchange and the Revival of Political Economy," Journal of Economic Perspectives (Winter 1993).
31. For examples of wealth inequality inducing economic inefficiency, see Mukesh Eswaran and Ashok Kotwal, "Credit and Agrarian Class Structure," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989); Joseph Stiglitz, "Why Financial Structure Matters," Journal of Economic Perspectives 2, no. 4 (Fall 1988): 121-6; and Samuel Bowles and Herbert Gintis, "The Revenge of Homo Economicus: Contested Exchange and the Revival of Political Economy," Journal of Economic Perspectives (Winter 1993).
32. For examples of wealth inequality inducing economic inefficiency, see Mukesh Eswaran and Ashok Kotwal, "Credit and Agrarian Class Structure," in The Economic Theory of Agrarian Institutions, ed. Pranab Bardhan (Oxford, UK: Oxford University Press, 1989); Joseph Stiglitz, "Why Financial Structure Matters," Journal of Economic Perspectives 2, no. 4 (Fall 1988): 121-6; and Samuel Bowles and Herbert Gintis, "The Revenge of Homo Economicus: Contested Exchange and the Revival of Political Economy," Journal of Economic Perspectives (Winter 1993).
33. We do not specify the metric in which these distributions are measured, for nothing in the following pages hinges on our use of any particular measure of wealth, income, or other attributes of concern to egalitarians.
34. Bowles, Gordon, and Weisskopf, After the Waste Land, find a negative association between income inequality and both the long-term rate of growth of output per employed person and the investment share of output in ten advanced capitalist economies. Torsten Persson and Guido Tabellini, "Is Inequality Harmful for Growth? Theory and Evidence," American Economics Review 48 (1996): 600-21, also find that inequality and growth in gross domestic product are negatively correlated in a cross-section of sixty-seven nations as well as in long-time series for nine advanced capitalist nations. Similarly, Alberto Alesina and Dani Rodrik, "Distributive Politics and Economic Growth," Quarterly Journal of Economics 109 (1994): 465-90, find that a measure of asset (land) inequality is inversely associated with economic growth in a sample of thirty-nine countries. Andrew Glyn, "Stability, Egalitarianism and Dynamism: An Overview of the Advanced Capitalist Countries in the 1980's," in Macroeconomic Policy After the Conservative Era: Research on Investment Savings and Finance, ed. Gerald Epstein and Herbert Gintis (Cambridge, UK: Cambridge University Press, 1995), surveys the impact of the 1980s shift in economic policy in most of the advanced capitalist nations towards less egalitarian objectives. See also Roberto Chang, "Income Inequality and Economic Growth: Evidence and Recent Theories," Economic Review (July-August 1994): 1-10. Federal Reserve Bank of Atlanta.
35. Bowles, Gordon, and Weisskopf, After the Waste Land, find a negative association between income inequality and both the long-term rate of growth of output per employed person and the investment share of output in ten advanced capitalist economies. Torsten Persson and Guido Tabellini, "Is Inequality Harmful for Growth? Theory and Evidence," American Economics Review 48 (1996): 600-21, also find that inequality and growth in gross domestic product are negatively correlated in a cross-section of sixty-seven nations as well as in long-time series for nine advanced capitalist nations. Similarly, Alberto Alesina and Dani Rodrik, "Distributive Politics and Economic Growth," Quarterly Journal of Economics 109 (1994): 465-90, find that a measure of asset (land) inequality is inversely associated with economic growth in a sample of thirty-nine countries. Andrew Glyn, "Stability, Egalitarianism and Dynamism: An Overview of the Advanced Capitalist Countries in the 1980's," in Macroeconomic Policy After the Conservative Era: Research on Investment Savings and Finance, ed. Gerald Epstein and Herbert Gintis (Cambridge, UK: Cambridge University Press, 1995), surveys the impact of the 1980s shift in economic policy in most of the advanced capitalist nations towards less egalitarian objectives. See also Roberto Chang, "Income Inequality and Economic Growth: Evidence and Recent Theories," Economic Review (July-August 1994): 1-10. Federal Reserve Bank of Atlanta.
36. Bowles, Gordon, and Weisskopf, After the Waste Land, find a negative association between income inequality and both the long-term rate of growth of output per employed person and the investment share of output in ten advanced capitalist economies. Torsten Persson and Guido Tabellini, "Is Inequality Harmful for Growth? Theory and Evidence," American Economics Review 48 (1996): 600-21, also find that inequality and growth in gross domestic product are negatively correlated in a cross-section of sixty-seven nations as well as in long-time series for nine advanced capitalist nations. Similarly, Alberto Alesina and Dani Rodrik, "Distributive Politics and Economic Growth," Quarterly Journal of Economics 109 (1994): 465-90, find that a measure of asset (land) inequality is inversely associated with economic growth in a sample of thirty-nine countries. Andrew Glyn, "Stability, Egalitarianism and Dynamism: An Overview of the Advanced Capitalist Countries in the 1980's," in Macroeconomic Policy After the Conservative Era: Research on Investment Savings and Finance, ed. Gerald Epstein and Herbert Gintis (Cambridge, UK: Cambridge University Press, 1995), surveys the impact of the 1980s shift in economic policy in most of the advanced capitalist nations towards less egalitarian objectives. See also Roberto Chang, "Income Inequality and Economic Growth: Evidence and Recent Theories," Economic Review (July-August 1994): 1-10. Federal Reserve Bank of Atlanta.
37. Bowles, Gordon, and Weisskopf, After the Waste Land, find a negative association between income inequality and both the long-term rate of growth of output per employed person and the investment share of output in ten advanced capitalist economies. Torsten Persson and Guido Tabellini, "Is Inequality Harmful for Growth? Theory and Evidence," American Economics Review 48 (1996): 600-21, also find that inequality and growth in gross domestic product are negatively correlated in a cross-section of sixty-seven nations as well as in long-time series for nine advanced capitalist nations. Similarly, Alberto Alesina and Dani Rodrik, "Distributive Politics and Economic Growth," Quarterly Journal of Economics 109 (1994): 465-90, find that a measure of asset (land) inequality is inversely associated with economic growth in a sample of thirty-nine countries. Andrew Glyn, "Stability, Egalitarianism and Dynamism: An Overview of the Advanced Capitalist Countries in the 1980's," in Macroeconomic Policy After the Conservative Era: Research on Investment Savings and Finance, ed. Gerald Epstein and Herbert Gintis (Cambridge, UK: Cambridge University Press, 1995), surveys the impact of the 1980s shift in economic policy in most of the advanced capitalist nations towards less egalitarian objectives. See also Roberto Chang, "Income Inequality and Economic Growth: Evidence and Recent Theories," Economic Review (July-August 1994): 1-10. Federal Reserve Bank of Atlanta.
38. Bowles, Gordon, and Weisskopf, After the Waste Land, find a negative association between income inequality and both the long-term rate of growth of output per employed person and the investment share of output in ten advanced capitalist economies. Torsten Persson and Guido Tabellini, "Is Inequality Harmful for Growth? Theory and Evidence," American Economics Review 48 (1996): 600-21, also find that inequality and growth in gross domestic product are negatively correlated in a cross-section of sixty-seven nations as well as in long-time series for nine advanced capitalist nations. Similarly, Alberto Alesina and Dani Rodrik, "Distributive Politics and Economic Growth," Quarterly Journal of Economics 109 (1994): 465-90, find that a measure of asset (land) inequality is inversely associated with economic growth in a sample of thirty-nine countries. Andrew Glyn, "Stability, Egalitarianism and Dynamism: An Overview of the Advanced Capitalist Countries in the 1980's," in Macroeconomic Policy After the Conservative Era: Research on Investment Savings and Finance, ed. Gerald Epstein and Herbert Gintis (Cambridge, UK: Cambridge University Press, 1995), surveys the impact of the 1980s shift in economic policy in most of the advanced capitalist nations towards less egalitarian objectives. See also Roberto Chang, "Income Inequality and Economic Growth: Evidence and Recent Theories," Economic Review (July-August 1994): 1-10. Federal Reserve Bank of Atlanta.
39. These data are from Andrew Glyn, Alan Hughes, Alain Lipietz, and Ajit Singh, "The Rise and Fall of the Golden Age," in The Golden Age of Capitalism; Reinterpreting the Postwar Experience, ed. Stephen Marglin and Juliet B. Schor (Oxford, UK: Clarendon Press, 1990), 39-125, based on Angus Maddison, Phases of Capitalist Development (Oxford, UK: Oxford University Press, 1982).
40. These data are from Andrew Glyn, Alan Hughes, Alain Lipietz, and Ajit Singh, "The Rise and Fall of the Golden Age," in The Golden Age of Capitalism; Reinterpreting the Postwar Experience, ed. Stephen Marglin and Juliet B. Schor (Oxford, UK: Clarendon Press, 1990), 39-125, based on Angus Maddison, Phases of Capitalist Development (Oxford, UK: Oxford University Press, 1982).
41. See Samuel Bowles and Robert Boyer, "Wages Aggregate Demand and Employment in an Open Economy: A Theoretical and Empirical Investigation," in Macroeconomic Policy After the Conservative Era: Research on Investment Savings and Finance, ed. Geralde Epstein and Herbert Gintis (Cambridge, UK: Cambridge University Press, 1995). A redistribution from profits to wages has predictably positive effects on the demand for consumer goods, but it is offset by the negative impact of wage increases on demand for investment goods and net exports.
42. David Gordon, "Growth, Distribution and the Rules of the Game: Left Structuralist Macro Foundations for a Democratic Economic Policy," in Macroeconomic Policy after the Conservative Era: Research on Investment Savings and Finance, ed. Gerald Epstein and Herbert Gintis (Cambridge, UK: Cambridge University Press, 1995), studying the United States, comes to similar conclusions.
43. This argument has been compellingly made by Karl Ove Moene and Michael Wallerstein, "Egalitarian Wage Policies," University of Oslo, July 1993.
44. The employer may also use the promise of promotion and other incentives, but adding these to our model would not change the argument.
45. e ν = ù(w, e)-ρz/p(e, m) + ρ + z. The quantity (u(w,e) - ρz)/(p(e) + ρ) = ν - z is thus the rent the worker enjoys from the relationship, the threat of withdrawal of which induces a high level of effort. The firm then chooses the wage w and the level of monitoring m to maximize effort per dollar e/(w + m).
46. e ν = ù(w, e)-ρz/p(e, m) + ρ + z. The quantity (u(w,e) - ρz)/(p(e) + ρ) = ν - z is thus the rent the worker enjoys from the relationship, the threat of withdrawal of which induces a high level of effort. The firm then chooses the wage w and the level of monitoring m to maximize effort per dollar e/(w + m).
47. e ν = ù(w, e)-ρz/p(e, m) + ρ + z. The quantity (u(w,e) - ρz)/(p(e) + ρ) = ν - z is thus the rent the worker enjoys from the relationship, the threat of withdrawal of which induces a high level of effort. The firm then chooses the wage w and the level of monitoring m to maximize effort per dollar e/(w + m).
48. e ν = ù(w, e)-ρz/p(e, m) + ρ + z. The quantity (u(w,e) - ρz)/(p(e) + ρ) = ν - z is thus the rent the worker enjoys from the relationship, the threat of withdrawal of which induces a high level of effort. The firm then chooses the wage w and the level of monitoring m to maximize effort per dollar e/(w + m).
49. e ν = ù(w, e)-ρz/p(e, m) + ρ + z. The quantity (u(w,e) - ρz)/(p(e) + ρ) = ν - z is thus the rent the worker enjoys from the relationship, the threat of withdrawal of which induces a high level of effort. The firm then chooses the wage w and the level of monitoring m to maximize effort per dollar e/(w + m).
50. 0. Each team member j then selects ej to maximize νj.
51. 0. Each team member j then selects ej to maximize νj.
52. 0. Each team member j then selects ej to maximize νj.
53. See Benjamin Ward, "The Firm in Illyria: Market Syndicalism," American Economic Review 48 (December 1958): 566-89; Jaroslav Vanek, The General Theory of the Labor-Managed Market (Ithica, NY: Cornell University Press, 1970); Evsey Domar, "The Soviet Collective Farm as a Producer Cooperative," American Economic Review 56 (September 1966): 743-57; James Meade, "The Adjustment Processes of Labour Cooperatives with Constant Returns to Scale and Perfect Competition," Economic Journal 82 (1972): 402-28; Eirik Furubotn and Svetozar Pejovich, The Economics of Property Rights (Cambridge, MA: Ballinger, 1974); and Michael Jensen and William H. Meckling, "Rights and Production Functions: An Application to Labor-Managed Firms and Codetermination," Journal of Business 52 (1979): 469-506. For an insightful review of this literature, see John Bonin and Louis Putterman, Economics of Cooperation and the Labor-Managed Economy (New York: Harwood, 1987).
54. See Benjamin Ward, "The Firm in Illyria: Market Syndicalism," American Economic Review 48 (December 1958): 566-89; Jaroslav Vanek, The General Theory of the Labor-Managed Market (Ithica, NY: Cornell University Press, 1970); Evsey Domar, "The Soviet Collective Farm as a Producer Cooperative," American Economic Review 56 (September 1966): 743-57; James Meade, "The Adjustment Processes of Labour Cooperatives with Constant Returns to Scale and Perfect Competition," Economic Journal 82 (1972): 402-28; Eirik Furubotn and Svetozar Pejovich, The Economics of Property Rights (Cambridge, MA: Ballinger, 1974); and Michael Jensen and William H. Meckling, "Rights and Production Functions: An Application to Labor-Managed Firms and Codetermination," Journal of Business 52 (1979): 469-506. For an insightful review of this literature, see John Bonin and Louis Putterman, Economics of Cooperation and the Labor-Managed Economy (New York: Harwood, 1987).
55. See Benjamin Ward, "The Firm in Illyria: Market Syndicalism," American Economic Review 48 (December 1958): 566-89; Jaroslav Vanek, The General Theory of the Labor-Managed Market (Ithica, NY: Cornell University Press, 1970); Evsey Domar, "The Soviet Collective Farm as a Producer Cooperative," American Economic Review 56 (September 1966): 743-57; James Meade, "The Adjustment Processes of Labour Cooperatives with Constant Returns to Scale and Perfect Competition," Economic Journal 82 (1972): 402-28; Eirik Furubotn and Svetozar Pejovich, The Economics of Property Rights (Cambridge, MA: Ballinger, 1974); and Michael Jensen and William H. Meckling, "Rights and Production Functions: An Application to Labor-Managed Firms and Codetermination," Journal of Business 52 (1979): 469-506. For an insightful review of this literature, see John Bonin and Louis Putterman, Economics of Cooperation and the Labor-Managed Economy (New York: Harwood, 1987).
56. See Benjamin Ward, "The Firm in Illyria: Market Syndicalism," American Economic Review 48 (December 1958): 566-89; Jaroslav Vanek, The General Theory of the Labor-Managed Market (Ithica, NY: Cornell University Press, 1970); Evsey Domar, "The Soviet Collective Farm as a Producer Cooperative," American Economic Review 56 (September 1966): 743-57; James Meade, "The Adjustment Processes of Labour Cooperatives with Constant Returns to Scale and Perfect Competition," Economic Journal 82 (1972): 402-28; Eirik Furubotn and Svetozar Pejovich, The Economics of Property Rights (Cambridge, MA: Ballinger, 1974); and Michael Jensen and William H. Meckling, "Rights and Production Functions: An Application to Labor-Managed Firms and Codetermination," Journal of Business 52 (1979): 469-506. For an insightful review of this literature, see John Bonin and Louis Putterman, Economics of Cooperation and the Labor-Managed Economy (New York: Harwood, 1987).
57. See Benjamin Ward, "The Firm in Illyria: Market Syndicalism," American Economic Review 48 (December 1958): 566-89; Jaroslav Vanek, The General Theory of the Labor-Managed Market (Ithica, NY: Cornell University Press, 1970); Evsey Domar, "The Soviet Collective Farm as a Producer Cooperative," American Economic Review 56 (September 1966): 743-57; James Meade, "The Adjustment Processes of Labour Cooperatives with Constant Returns to Scale and Perfect Competition," Economic Journal 82 (1972): 402-28; Eirik Furubotn and Svetozar Pejovich, The Economics of Property Rights (Cambridge, MA: Ballinger, 1974); and Michael Jensen and William H. Meckling, "Rights and Production Functions: An Application to Labor-Managed Firms and Codetermination," Journal of Business 52 (1979): 469-506. For an insightful review of this literature, see John Bonin and Louis Putterman, Economics of Cooperation and the Labor-Managed Economy (New York: Harwood, 1987).
58. See Benjamin Ward, "The Firm in Illyria: Market Syndicalism," American Economic Review 48 (December 1958): 566-89; Jaroslav Vanek, The General Theory of the Labor-Managed Market (Ithica, NY: Cornell University Press, 1970); Evsey Domar, "The Soviet Collective Farm as a Producer Cooperative," American Economic Review 56 (September 1966): 743-57; James Meade, "The Adjustment Processes of Labour Cooperatives with Constant Returns to Scale and Perfect Competition," Economic Journal 82 (1972): 402-28; Eirik Furubotn and Svetozar Pejovich, The Economics of Property Rights (Cambridge, MA: Ballinger, 1974); and Michael Jensen and William H. Meckling, "Rights and Production Functions: An Application to Labor-Managed Firms and Codetermination," Journal of Business 52 (1979): 469-506. For an insightful review of this literature, see John Bonin and Louis Putterman, Economics of Cooperation and the Labor-Managed Economy (New York: Harwood, 1987).
59. See Benjamin Ward, "The Firm in Illyria: Market Syndicalism," American Economic Review 48 (December 1958): 566-89; Jaroslav Vanek, The General Theory of the Labor-Managed Market (Ithica, NY: Cornell University Press, 1970); Evsey Domar, "The Soviet Collective Farm as a Producer Cooperative," American Economic Review 56 (September 1966): 743-57; James Meade, "The Adjustment Processes of Labour Cooperatives with Constant Returns to Scale and Perfect Competition," Economic Journal 82 (1972): 402-28; Eirik Furubotn and Svetozar Pejovich, The Economics of Property Rights (Cambridge, MA: Ballinger, 1974); and Michael Jensen and William H. Meckling, "Rights and Production Functions: An Application to Labor-Managed Firms and Codetermination," Journal of Business 52 (1979): 469-506. For an insightful review of this literature, see John Bonin and Louis Putterman, Economics of Cooperation and the Labor-Managed Economy (New York: Harwood, 1987).
60. Mutual monitoring is not costless, of course, as it requires a coordinator and may be time consuming in cases where verification of insufficient work by a team member is contested. Where work is highly dispersed, as is sometimes the case in agricultural production, mutual monitoring may be ineffective as workers will lack good information on the work activities of their teammates. For a model of mutual monitoring, see Franz Weissing and Elinor Ostrom, "Irrigation Institutions and the Games Irrigators Play: Rule Enforcement without Guards," in Game Equilibrium Models II: Methods Morals and Markets ed. Reinhard Selten (Berlin: Springer-Verlag, 1991), 188-262.
61. David Levine and Laura d'Andrea Tyson, "Participation Productivity and the Firm's Environment," in Paying for Productivity: A Look at the Evidence, ed. Alan Blinder (Washington, DC: Brookings Institution, 1990), 183-244, for instance, surveyed fourteen studies of worker cooperatives and found positive effects on productivity in thirteen of them, with no negative effects in any. Craig and Pencavel, in "Participation and Productivity," a recent study of worker-owned plywood firms, find that total factory productivity is higher in the co-ops than in classical firms. Martin Weitzman and Douglas Kruse, "Profit Sharing and Productivity," in Paying for Productivity: A Look at the Evidence, ed. Alan Blinder (Washington, DC: Brookings Institution, 1990), 95-142, surveyed sixteen econometric studies of the effects of profit sharing on productivity and found that of the total of 226 estimated regression coefficients for variables measuring profit sharing, 94 percent were positive and 60 percent were twice or more than their standard errors, while no negative coefficient estimates were statistically significant by this standard. For related studies supporting this research, see John Cable and Felix FitzRoy, "Co-operation and Productivity: Some Evidence from West German Experience," Economic Analysis and Worker's Management 14 (1980): 163-80, Avner Ben-Ner, "Comparative Empirical Observations on Worker-Owned and Capitalist Firms," International Journal of Industrial Organization 6 (1988): 7-31, and Michael Conte and Jan Svejnar, "The Performance Effects of Employee Ownership Plans," in Paying for Productivity: A Look at the Evidence, ed. Alan Blinder (Washington, DC: Brookings Institution, 1990), 143-72. Worker participation in decision making and residual claimancy status appear to be complementary in that their joint effects exceed the additive effects of each factor separately.
62. David Levine and Laura d'Andrea Tyson, "Participation Productivity and the Firm's Environment," in Paying for Productivity: A Look at the Evidence, ed. Alan Blinder (Washington, DC: Brookings Institution, 1990), 183-244, for instance, surveyed fourteen studies of worker cooperatives and found positive effects on productivity in thirteen of them, with no negative effects in any. Craig and Pencavel, in "Participation and Productivity," a recent study of worker-owned plywood firms, find that total factory productivity is higher in the co-ops than in classical firms. Martin Weitzman and Douglas Kruse, "Profit Sharing and Productivity," in Paying for Productivity: A Look at the Evidence, ed. Alan Blinder (Washington, DC: Brookings Institution, 1990), 95-142, surveyed sixteen econometric studies of the effects of profit sharing on productivity and found that of the total of 226 estimated regression coefficients for variables measuring profit sharing, 94 percent were positive and 60 percent were twice or more than their standard errors, while no negative coefficient estimates were statistically significant by this standard. For related studies supporting this research, see John Cable and Felix FitzRoy, "Co-operation and Productivity: Some Evidence from West German Experience," Economic Analysis and Worker's Management 14 (1980): 163-80, Avner Ben-Ner, "Comparative Empirical Observations on Worker-Owned and Capitalist Firms," International Journal of Industrial Organization 6 (1988): 7-31, and Michael Conte and Jan Svejnar, "The Performance Effects of Employee Ownership Plans," in Paying for Productivity: A Look at the Evidence, ed. Alan Blinder (Washington, DC: Brookings Institution, 1990), 143-72. Worker participation in decision making and residual claimancy status appear to be complementary in that their joint effects exceed the additive effects of each factor separately.
63. David Levine and Laura d'Andrea Tyson, "Participation Productivity and the Firm's Environment," in Paying for Productivity: A Look at the Evidence, ed. Alan Blinder (Washington, DC: Brookings Institution, 1990), 183-244, for instance, surveyed fourteen studies of worker cooperatives and found positive effects on productivity in thirteen of them, with no negative effects in any. Craig and Pencavel, in "Participation and Productivity," a recent study of worker-owned plywood firms, find that total factory productivity is higher in the co-ops than in classical firms. Martin Weitzman and Douglas Kruse, "Profit Sharing and Productivity," in Paying for Productivity: A Look at the Evidence, ed. Alan Blinder (Washington, DC: Brookings Institution, 1990), 95-142, surveyed sixteen econometric studies of the effects of profit sharing on productivity and found that of the total of 226 estimated regression coefficients for variables measuring profit sharing, 94 percent were positive and 60 percent were twice or more than their standard errors, while no negative coefficient estimates were statistically significant by this standard. For related studies supporting this research, see John Cable and Felix FitzRoy, "Co-operation and Productivity: Some Evidence from West German Experience," Economic Analysis and Worker's Management 14 (1980): 163-80, Avner Ben-Ner, "Comparative Empirical Observations on Worker-Owned and Capitalist Firms," International Journal of Industrial Organization 6 (1988): 7-31, and Michael Conte and Jan Svejnar, "The Performance Effects of Employee Ownership Plans," in Paying for Productivity: A Look at the Evidence, ed. Alan Blinder (Washington, DC: Brookings Institution, 1990), 143-72. Worker participation in decision making and residual claimancy status appear to be complementary in that their joint effects exceed the additive effects of each factor separately.
64. David Levine and Laura d'Andrea Tyson, "Participation Productivity and the Firm's Environment," in Paying for Productivity: A Look at the Evidence, ed. Alan Blinder (Washington, DC: Brookings Institution, 1990), 183-244, for instance, surveyed fourteen studies of worker cooperatives and found positive effects on productivity in thirteen of them, with no negative effects in any. Craig and Pencavel, in "Participation and Productivity," a recent study of worker-owned plywood firms, find that total factory productivity is higher in the co-ops than in classical firms. Martin Weitzman and Douglas Kruse, "Profit Sharing and Productivity," in Paying for Productivity: A Look at the Evidence, ed. Alan Blinder (Washington, DC: Brookings Institution, 1990), 95-142, surveyed sixteen econometric studies of the effects of profit sharing on productivity and found that of the total of 226 estimated regression coefficients for variables measuring profit sharing, 94 percent were positive and 60 percent were twice or more than their standard errors, while no negative coefficient estimates were statistically significant by this standard. For related studies supporting this research, see John Cable and Felix FitzRoy, "Co-operation and Productivity: Some Evidence from West German Experience," Economic Analysis and Worker's Management 14 (1980): 163-80, Avner Ben-Ner, "Comparative Empirical Observations on Worker-Owned and Capitalist Firms," International Journal of Industrial Organization 6 (1988): 7-31, and Michael Conte and Jan Svejnar, "The Performance Effects of Employee Ownership Plans," in Paying for Productivity: A Look at the Evidence, ed. Alan Blinder (Washington, DC: Brookings Institution, 1990), 143-72. Worker participation in decision making and residual claimancy status appear to be complementary in that their joint effects exceed the additive effects of each factor separately.
65. David Levine and Laura d'Andrea Tyson, "Participation Productivity and the Firm's Environment," in Paying for Productivity: A Look at the Evidence, ed. Alan Blinder (Washington, DC: Brookings Institution, 1990), 183-244, for instance, surveyed fourteen studies of worker cooperatives and found positive effects on productivity in thirteen of them, with no negative effects in any. Craig and Pencavel, in "Participation and Productivity," a recent study of worker-owned plywood firms, find that total factory productivity is higher in the co-ops than in classical firms. Martin Weitzman and Douglas Kruse, "Profit Sharing and Productivity," in Paying for Productivity: A Look at the Evidence, ed. Alan Blinder (Washington, DC: Brookings Institution, 1990), 95-142, surveyed sixteen econometric studies of the effects of profit sharing on productivity and found that of the total of 226 estimated regression coefficients for variables measuring profit sharing, 94 percent were positive and 60 percent were twice or more than their standard errors, while no negative coefficient estimates were statistically significant by this standard. For related studies supporting this research, see John Cable and Felix FitzRoy, "Co-operation and Productivity: Some Evidence from West German Experience," Economic Analysis and Worker's Management 14 (1980): 163-80, Avner Ben-Ner, "Comparative Empirical Observations on Worker-Owned and Capitalist Firms," International Journal of Industrial Organization 6 (1988): 7-31, and Michael Conte and Jan Svejnar, "The Performance Effects of Employee Ownership Plans," in Paying for Productivity: A Look at the Evidence, ed. Alan Blinder (Washington, DC: Brookings Institution, 1990), 143-72. Worker participation in decision making and residual claimancy status appear to be complementary in that their joint effects exceed the additive effects of each factor separately.
66. David Levine and Laura d'Andrea Tyson, "Participation Productivity and the Firm's Environment," in Paying for Productivity: A Look at the Evidence, ed. Alan Blinder (Washington, DC: Brookings Institution, 1990), 183-244, for instance, surveyed fourteen studies of worker cooperatives and found positive effects on productivity in thirteen of them, with no negative effects in any. Craig and Pencavel, in "Participation and Productivity," a recent study of worker-owned plywood firms, find that total factory productivity is higher in the co-ops than in classical firms. Martin Weitzman and Douglas Kruse, "Profit Sharing and Productivity," in Paying for Productivity: A Look at the Evidence, ed. Alan Blinder (Washington, DC: Brookings Institution, 1990), 95-142, surveyed sixteen econometric studies of the effects of profit sharing on productivity and found that of the total of 226 estimated regression coefficients for variables measuring profit sharing, 94 percent were positive and 60 percent were twice or more than their standard errors, while no negative coefficient estimates were statistically significant by this standard. For related studies supporting this research, see John Cable and Felix FitzRoy, "Co-operation and Productivity: Some Evidence from West German Experience," Economic Analysis and Worker's Management 14 (1980): 163-80, Avner Ben-Ner, "Comparative Empirical Observations on Worker-Owned and Capitalist Firms," International Journal of Industrial Organization 6 (1988): 7-31, and Michael Conte and Jan Svejnar, "The Performance Effects of Employee Ownership Plans," in Paying for Productivity: A Look at the Evidence, ed. Alan Blinder (Washington, DC: Brookings Institution, 1990), 143-72. Worker participation in decision making and residual claimancy status appear to be complementary in that their joint effects exceed the additive effects of each factor separately.
67. Indeed, the per worker capital stock required to operate most firms is considerably in excess of the total assets of most working families. In the United States, for example, the value of the capital goods used in production per worker employed averages just under $100,000, while the average net assets of the least wealthy 80 percent of families including car and home ownership is $64,000. So most working families, even if they sold their house and car could not finance the capital goods to employ even a single family member.
68. A general subsidy of home ownership, by contrast, serves no productivity-enhancing purpose, as most home owners have sufficient wealth to avoid the market failures associated with tenancy.
69. By contrast, the leadership has every reason to pay careful attention to the directives of the local board, for this is the source of the school funding, including the leadership's salary, tenure, and perks.
70. For an expanded analysis of school choice as part of an educational governance structure, see Herbert Gintis, "The Political Economy of School Choice," Teachers College Record 96, no. 3 (Spring 1995), and Christopher Jencks, Rethinking Social Policy: Race, Poverty and the Underclass (Cambridge, MA: Harvard University Press, 1992).
71. For an expanded analysis of school choice as part of an educational governance structure, see Herbert Gintis, "The Political Economy of School Choice," Teachers College Record 96, no. 3 (Spring 1995), and Christopher Jencks, Rethinking Social Policy: Race, Poverty and the Underclass (Cambridge, MA: Harvard University Press, 1992).
72. If it were deemed desirable to have schools remain part of the state sector on grounds of greater democratic control of educational content and the social relations of schools, the use of vouchers could be restricted to public schools. The important point is that free entry and the competitive delivery of educational services be part of the educational governance structure.
73. In a society composed of an equal number of adult men and women and children in which women receive incomes two thirds that of men and couples pool and share income, there is no income inequality if all are in couples (one child per couple). Yet the Gini coefficient of income inequality would be a substantial 0.27 if all the couples separated and women were responsible for the support of the children, assuming no other changes in the data. This is a greater amount of inequality than is generated by unequal ownership of capital, assuming that the richest 5 percent of income earners own all the capital.
74. The standard child support levels (similar to standard charges for medical procedures in many insurance systems) could be the "default amounts" to be paid. These default amounts could be altered by the courts, or under some conditions, by mutual agreement of the parents.
75. We do not consider reassigning enforceable property rights concerning children to children a retreat from a general social responsibility for the care of children. Rather, it is a social strengthening of the family as a support system for financing and caring for children. Where parents cannot provide adequate financing, or where provisioning children's education, health care, recreation, and other needs are most effectively provided by the public sector, public provisioning remains appropriate.
76. Karl Ove Moene, "Poverty and Land Ownership," makes a compelling case that land redistribution may have these disequalizing consequences.
77. See Appendix C, available from the authors, for a complete description of the underlying model, as well as proofs of the assertions we make here.
78. See Nancy Folbre, Who Pays for the Kids? Gender and the Structures of Constraint (London: Routledge, 1994). Of course "caring labor," like worker effort, managerial effort, borrower prudence, and other actions that are difficult to monitor and hence cannot be effectively specified by contract, should be rewarded in a manner most likely to induce recipients to develop "caring skills" and to elicit a high level of recipient effort. This could entail performance-contingent subsidies rather than flat grants.
79. This ideal is inspired by the basic income grant proposal of Philippe Van Parijs and Robert Van Der Veen, "A Capitalist Road to Communism," Theory and Society 15 (1986): 635-55, though the conditionality of the grant derives from the related proposal of Anthony Atkinson, Public Economics in Action: The Basic Income/Flat Tax Proposal (Oxford, UK: Oxford University Press, 1995). The grants would be financed by the state but distributed by nonprofit organizations, thereby strengthening the role of the community in economic governance. Only those constitutionally incapable of providing useful social functions would be exempt from this requirement, and the determination of what sorts of activities are socially useful would be determined by the nonprofit organizations themselves.
80. This ideal is inspired by the basic income grant proposal of Philippe Van Parijs and Robert Van Der Veen, "A Capitalist Road to Communism," Theory and Society 15 (1986): 635-55, though the conditionality of the grant derives from the related proposal of Anthony Atkinson, Public Economics in Action: The Basic Income/Flat Tax Proposal (Oxford, UK: Oxford University Press, 1995). The grants would be financed by the state but distributed by nonprofit organizations, thereby strengthening the role of the community in economic governance. Only those constitutionally incapable of providing useful social functions would be exempt from this requirement, and the determination of what sorts of activities are socially useful would be determined by the nonprofit organizations themselves.
81. Philippe Schmitter, "The Irony of Modern Democracy and Efforts to Improve Its Practice," Politics and Society 20, no. 4 (December 1992): 507-12, has developed a related proposal designed to support secondary institutions promoting civic engagement.
82. For a critical evaluation of the effects of markets as cultural environments, see Samuel Bowles, "Mandeville's Mistake: Markets and the Evolution of Cooperation," working paper, University of Massachusetts, 1989, and Samuel Bowles, "Markets as Cultural Institutions: Equilibrium Norms in Competitive Economies," University of Massachusetts, 1996.
83. For a critical evaluation of the effects of markets as cultural environments, see Samuel Bowles, "Mandeville's Mistake: Markets and the Evolution of Cooperation," working paper, University of Massachusetts, 1989, and Samuel Bowles, "Markets as Cultural Institutions: Equilibrium Norms in Competitive Economies," University of Massachusetts, 1996.
84. Robert Putnam, Making Democracy Work, 174. Similarly, Kohn's comparative study of work organization (Melvin Kohn et al., "Position in the Class Structure and Psychological Functioning in the U.S., Japan, and Poland," American Journal of Sociology 95, no. 4 [January 1990]: 964-1008) supports a causal link between bureaucratic structures and the evolution of authoritarian personality traits. These studies are hardly decisive, but they serve as a reminder that the cultural consequences of the alternatives to the competition may be far from attractive.
85. Robert Putnam, Making Democracy Work, 174. Similarly, Kohn's comparative study of work organization (Melvin Kohn et al., "Position in the Class Structure and Psychological Functioning in the U.S., Japan, and Poland," American Journal of Sociology 95, no. 4 [January 1990]: 964-1008) supports a causal link between bureaucratic structures and the evolution of authoritarian personality traits. These studies are hardly decisive, but they serve as a reminder that the cultural consequences of the alternatives to the competition may be far from attractive.
86. Trade liberalization might enhance the viability of egalitarian coalitions in other respects. Gerschenkron and Alexander, Bread and Democracy in Germany (Berkeley: University of California Press, 1944), argue that conflicts over tariff policies obstructed a potentially egalitarian farmer-worker alliance in pre-World War I Germany, for example. A general argument might be made that tariff and other policies that politicize the relative prices of commodities tend to favor within-industry alliances seeking to gain income by altering relative goods prices rather than cross-industry coalitions seeking to alter income distribution directly. The latter type of coalition may be more viable as a vehicle for egalitarian policy.