Well, they’ve been partnerships. Might be worth making a distinction between that and true employee ownership. A law firm has non-owner employees; John Lewis, which is owned by all its employees, does not.

I think dsquared had a piece on this (now locked) pointing out which sectors in the UK are still dominated by partnerships – anything involving not much capital and a lot of reputation. The best example was undertakers.

You are right in one aspect – socialism opposes the capitalist identification of profit recipients and socialism is not restricted to countering some vague ” subordination of social life to the logic of profit maximization”.

However what is done with “power” is just as important as the distribution of power.

Your point that:

If firms are controlled by the workers, and they choose to maximize profit, I am okay with that

needs to be assessed based on the nature of that profit. Anyone can profit from their own labour, but there is no right to profit by expropriating income from others. This is the differentia specifica of capitalism w.r.t. socialism.

Umm… if Walmart increased its U.S. workers wages by $5000 per capita, then that would cost it $7 billion, compared to $15.7 billion in net profit. If rather than foregoing profits, it would raise prices, then assuming 70% of revenues are U.S.-derived, that would require about a 2.2% across-the-board rise in prices. That’s hardly a revolutionary proposition, but it also wouldn’t amount to competing retailers eating Walmart’s lunch. More like blunting Walmart’s capacity to eat its competitors’ lunch. (Just another proleptic remark about economists abstraction from the actual specific details of business practices, let alone ignoring the specific mechanisms of rent-extraction).

More generally, measures of productive surpluses are still required, if profits are to be replaced as a prima facie measure of productive efficiencies, as too distortive and exploitative. The real distributable surplus product is the total product minus that portion of it that is used up in the process of its production, and under capitalism, it is divided up in inverse proportion between profits and wages. (Of course, that abstracts from the role of money and finance, which one can’t quite do, and there are other payment streams such as interest, taxes, rents, etc. though those could simply be put down on the side of profits. And the conceptual reduction is still too static). But it is only a small further tweak of abstraction/reduction to say that the surplus product, whatever the procedures and criteria for investment and distribution, must be divided in inverse proportion between that part that goes for current consumption, “wages”, and that part which goes to the replacement or improvement of the technical means-of-production, “capital”, for future production. And needless to say, the problems of the realization of long-run productive investment and of inter-sectorally balanced re-production remain, together with cyclical dynamics, in any advanced “mode of production” involving an extensive division of labor and technical specialization, with the productive efficiencies and thus “standards of living” that they afford, (as well as, more roust and flexible sustainability and the realization of human potentials and responsibilities). But there is no prior reason why the exercise of institutional and policy imagination can’t arrive at plausible proposals. (I might add as a task the development of multiple indexes of resource utilization, human and natural, beyond strictly monetary measures, to get at questions of “value”, as opposed to nominal prices, which mainstream economists through mathematical abstraction attribute entirely to the “magic” of markets).

It might be nice work, if you can get it.

Not for me. For me, economic socialism = worker control. Whether that is combined with democracy or dictatorship, a planned or a market economy, etc., is important questions but orthogonal to the capitalism/socialism dimension. If firms are controlled by the workers, and they choose to maximize profit, I am okay with that – but of course they wouldn’t, unless profit max = utility max, which never applies.

And simply being part of a group that together make the important decisions concerning the place where you spend most of your life will probably change people in very significant ways as well.

Right. As Ajay sort of points out, for most of their history investment banks (like law firms, advertising agencies, architecture firms, and many other thoroughly capitalist enterprises) *have* been employee-owned.

One of the main problems with market socialist schemes like Seth’s is that they assume that the things that are objectionable about capitalism happen because the bosses are evil or stupid. It’s not really consistent to say, as Seth does, that when “firms buy and sell in the market, their performance can be rationally judged,” and then to suggest that a worker-owned firm operating in the same market could be run on much more egalitarian lines. Wages, working conditions, etc., are one of the things — one of the main things!– that the market is “rationally judging”. If tomorrow the Waltons got together and decided to turn ownership of Walmart over to its employees, they could not simply turn all Walmart jobs into good living-wage jobs with benefits, job security, advancement options, etc. — or if they did the “rational judgement of the market” would be swift and negative, as some other big-box store ate Wal-Mart’s lunch.

The problem is applying the logic of markets to all of human life, not the exact people who exercise ownership claims. I mean, what’s the Jacobin piece have to say to the Chicago teachers, or the public employees in Wisconsin? Their enterprises already are publicly owned. Does that mean that socialists have no interest in their fights for more autonomy and security in their jobs?

No; but that’s answering a very different question.

*If* we start from the existing capitalist economy, and ask whether state ownership of financial assets should be added to the tools the state has to exercise claims on the private economy, then sure, there are contexts where that might make sense. For instance, if private demand is such that the economy is at full employment with a balanced budget, but financial stability would benefit from increasing the share of public debt on private balance sheets, then having the state issue new debt in order to buy private assets could make sense. (Think of this as precautionary QE.) I don’t think it’s a big addition to the existing tax and regulatory options, but it’s worth exploring.

But if you are starting from where Seth is, and asking whether the goals of socialism could be substantially achieved by transferring ownership of financial assets to the state (or quasi-state entities like public banks) while otherwise preserving the private economy as it currently exists, then the answer is clearly No. It’s the subordination of social life to the logic of profit maximization that defines capitalism, and that socialism opposes, not the particular identity of the profit recipients.

This reminds me of the debate around moving IBs from partnerships to listed companies, which was widely thought (at the time and subsequently) to have been a Bad Thing for risk policy reasons.

I didn’t read Ackerman as proposing this. He wants public ownership, and his implicit argument is that the publicly owned banks should operate much as private banks do now, but with the public getting the profit.

In any case, I don’t think worker ownership would help a lot for institutions like investment banks. If an investment bank contracted out all its HR and similar functions, it could easily consist almost exclusively of workers on 100k+, whose interests would not be aligned with those of the public in general.

And yet companies have no trouble laying off office workers in gigantic numbers, and telling the remaining employees to work harder to pick up the slack. Somehow lump-of-labor is only a fallacy when it goes the other way.

Would you object to Wren-Lewis negative debt target as well?

Wouldn’t it be better to be constructive rather than critical? Your objections seem to be rather trivial.
1: do not nationalize. Buy as things are sold at a pace that seem appropriate. Sweden had such a policy proposal once, but the social democrats lost the vote.
2: Once again, don’t nationalize. If people don’t want to sell, or think that they can create a bigger payoff by keeping the ownership private, let them. Buy when they want to sell.
3: Giving the CEO the same salary as they presently have would be one of many options for a company where the workers owned the equity – but I do not think it would be the outcome. And if it was – well – it would be because the workers now realized that the CEO in fact did a amazing job.

PS: Wren-Lewis at “Manly macro” recently had a post on market socialism – even if he never used that term:
http://mainlymacro.blogspot.se/2013/01/the-long-run-government-debt-target.html

The way it works these days: maybe you don’t need a full-time accountant or email admin, so you outsource these jobs to service providers who hires 10 of them to take care of 50 clients. And at this point, whether your service provider has 10 them working 40 hrs/week, or 14 working 30 hrs/week, it doesn’t really matter.