David Ellerman´s work

     Certainly the excellence of GEO´s work is beyond any projected limitations on human potential.  The "utopia" of democratic and ethical enterprise through Grassroots Economic Organizing certainly serves as an unstained premise that touches any intention to discuss and engage in participatory and democratic practices.  The descriptions and discussions of practical activity advance and reinforce these often implicit assumptions.

      However, as activists and entrepreneurs firmly committed to practical and egalitarian economics, we are not bereft of theoretical options to engage the lofty and otherwise oppressive discourses.  Robert Owen was an early entrepreneur who turned advocate and de facto theorist in the UK and later the US shortly after the American Revolution and even the writings of the mechanistic Adam Smith.

      Social economics is a discipline well-defined by whole cost accounting perspectives, such as Cobb et al in a 1995 article in The Atlantic, "...GDP´s Up, ... America Down..." following Cobb´s book of the year before, The Green National Product.  Daly and J. Cobb had written their groundbreaking book a few years earlier, For the Common Good.  Feminist Economics, as embodied in the association the IAFFE, also became organized around that time, as did the UNDP´s Human Development Index HDI founded by Mahbub ul Haq.  Mark Lutz updated his 1978 work 21 years later in his work Economics for the Common Good, with his discussions reaching back to Swiss economist Sismondi, and moving forward comprehensively to include John Stuart Mill and arriving at more recent economists Herman Daly and David Ellerman, among others.

      David Ellerman´s arguments have interested me because of his foundations in legal theory, and finally his use of his diverse philosophical and mathematical skills to address the most painful of theoretical practices, neoliberal equilibrium theories of orthodox economics.  Ellerman´s years of thought have identified Kantian ethics, contract theory, and the labor theory of property.  In his brilliant 2007 piece in the Review of Radical Political Economics, "On The Role of Capital in ´Capitalist´ and Labor Managed Firms," he identifies the role of transaction cost barriers and social power relations barriers at the root of the "fundamental myth" of corporate ownership rights in market economies. 

      Dissecting the assumptions, he describes how shareholder ownership in a corporation is distinct from the contractual arrangment between employer and employee.  As a result, the contractual terms establishing residual claimancy of profits are not dependent on any all-encompassing and mythical ownership by a corporation.  Real world transaction costs and social power relations may seem imposing, but they are not insuperable as shown in numerous examples where these barriers have been altered, such as from the US´s Blue Ridge Paper to ACIPCO to SAIC to St Lukes Ad Agency to the Latin American employee ownership movements, and the European Work Councils.  

     The Marxist views are also addressed, and "the ownership of the means of production" concept is addressed to recognize that the issue of the employer-employee contract disperses the overgeneralization and reification of attributing ownership to mythical "capitalists" who can only be overthrown by extreme actions.

      Ellerman develops his discussion by using mathematical discourse, and so the discussion becomes significantly complex for the lay reader to which I am only moderately advanced.  His earlier works and papers might be worth reviewing first, such as his 1999 piece in the Journal of Business Ethics, "The Democratic Firm."  Lutz´s 1999 discussion and William Greider in his 2003 The Soul of Capitalism also make for excellent introductions to Ellerman´s labor theory of property.  See Ellerman´s website for a wide selection of his papers, and selected book versions such as his 1990 book, The Democratic Worker-Owned Firm.