Since September 2015, I’ve been working as a Research and Teaching Faculty member of Leiden University (the Netherlands) and as part of my role, I’ve been reading a wide variety of academic papers.
I thought I would post some of the articles I’ve read, and found particularly interesting, through this post. Maybe you will enjoy reading them to.
I will briefly comment on the aspects of the paper that I found to be interesting. Obviously, for intellectual property considerations, I’ll only provide links to the full text of articles that are already available in the public domain. (Usually this is done through university repositories and SSRN]
- Feldman, Eric and Stein, Alison I., “Assuming the Risk: Tort Law, Policy, and Politics on the Slippery Slopes“ (2010). Faculty Scholarship. Paper 296. [Also published in Feldman, Eric and Stein, Alison I., “Assuming the Risk: Tort Law, Policy, and Politics on the Slippery Slopes”, DePaul Law Review, Volume 59, 2010, pp. 259-303]This was part of our required reading for International Tort Law during my LLM (Adv.) programme in International Civil and Commercial Law at Leiden University. I will be honest- aside from a few perilous journeys down a ski slope, I was largely unfamiliar with the ski industry before reading this article. Not only did I learn about how the ‘assumption of risk’ doctrine (a.k.a. volenti non fit injuria) historically developed in the USA, but I also became informed of how the ski industry works in Vermont and Colorado and how a nexus of factors influence the debate on assumption of risk in an inherently ‘risky’ activity: inter (and intra) state politics, the clout of large ski slopes, the leverage of insurance companies and, of course, landmark tort litigation. The article serves as a reminder of how strong the law and economics scholarship is in the US!
- GM Gulati, TMT Isaac and WA Klein, ‘When a Workers’ Cooperative Works: The Case of Kerala Dinesh Beedi‘, UCLA Law Review, Vol. 49, 2002, pp. 1417-1454.This is an article I just finished reading (04.02.2016) as part of my research into the internal administration of worker cooperatives. A lot of the literature (in English) on this topic concentrate on cooperatives in the Global North (i.e. Spain, USA, Italy, UK) with a relatively small number of academics studying those that exist in the Global South. In some ways, the latter group should be the locus of a rich vein of research. On the one hand, cooperatives in developing countries have suffered from endemic government interference, corruption, dearth of necessary cooperative education and training as well as the degenerative tendencies of many cooperatives: lack of a long-term orientation, intra-member conflicts over residual profit distribution, managerial impotence and shirking being just some of the observed problems. On the other hand, examples like the Kerala Dinesh Beedi cooperative(s) is a heartening example of how worker-controlled and managed firms can flourish in a capitalist economy.Let me first explain why it is so remarkable. Several cooperatives in India, and in the state of Kerala in particular, have failed due to government interference. Beedi, the product manufactured by these workers, is a cheap cigarette and the return per pack of Beedi is infinitesimally small. As a result, wages and working conditions in the industry are correspondingly abysmal, with regular media exposés of child labour being used. In such an industry, it is remarkable that the workers of such an industry were able to buy-out a Beedi manufacturer and establish a firm that has been a market leader in the production of Beedi since the mid-1960s, employs tens of thousands of heterogeneous member-workers, pays well above the industry standard (3 times in 2002) and has now diversified into other products. They were able to survive, even when their annual turnover was reduced by two-thirds!What the article reveals is the confluence of factors that allowed such a cooperative to survive the vicissitudes of competition, recession and falling demand for tobacco. By fleshing out the internal workings of the cooperative, from the shop floor worker to the central cooperative board of directors, we see that having ideologically dedicated and hard working directors and professional management, a slim management structure, mutual monitoring by workers, high product quality standards and high worker satisfaction can collectively contribute to a successful and long-lasting worker cooperative. The article is easy-to-read (I read a lot of it on the train between Leiden and Den Haag) and it provides delightful observations, like the practice of supervisors reading newspapers and stories to the shop floor workers as entertainment.
- The Straddler, David Ellerman in conversation with the Straddler, ‘Against the Renting of Persons’, Winter 2017, available online at: <http://www.thestraddler.com/201715/piece2.php> In this illuminating interview, Ellerman’s main argument is that we have moved from a system where people can be bought and sold to one where their hours can be rented. This commodification of people conflates rational man with things.He draws a comparison between employment contracts and voluntary contracts of slavery, as existed in the past, primarily as they both constitute contracts of alienation rather than delegation. In other words, these contracts apportion key decision making powers completely to employers/owners rather than being delegated selectively and conditionally. (Doesn’t matter if this is done voluntarily or not, so moving beyond discussion on coercion and consent) The basis of this factual and moral view of inalienability stems from the inalienability of conscience – that you cannot become less of a person even if you contract to do so. By extension, logically, you can’t fully alienate from yourself key decision making powers and responsibilities though the law previously enabled this in the context of slavery, marriage and employment and now does so only in the latter. This also entails the employer expropriating the lion’s share off the fruits of an employee’s labour (while also treating them as a distinct individual in the event that the employee becomes implicated in a crime or wrong doing!) Instead there should be a shift in the discourse towards a more democratic approach where these non absolute, selective powers are delegated conditionally within employee employer relations.This has to be done within member owned firms rather than as formally self employed persons as the latter will merely erode their hard fought protections with little or no benefit.
- Marleen A. O’Connor, ‘Promoting Economic Justice in Plant Closings: Exploring the Fiduciary/Contract Law Distinction to Enforce Implicit Employment Agreements’, in Lawrence E. Mitchell (ed.) Progressive Corporate Law, Westview Press: Colorado, 1995, pp. 219-245.
The thrust of O’Connor’s argument in this article is that director’s fiduciary duties should be read expansively not only to include the interests of shareholders, but also to encompass non-shareholder constituencies such as workers. This is especially in situations of seismic corporate change, such as plant closings and redundancies. Her reasoning is that workers have ‘implicit’ employment agreements with their employers, that in exchange for accepting lower pay at the start of their careers, they will enjoy secure tenure. The workers receive the training they need and the employer’s have a ‘safety valve’ in the form of being able to let inadequate workers go without incurring too significant an expense. These important motivational aspects are left unsaid from formal documents as they are not easily reducible to written terms, yet they merit serious consideration in the wake of mass redundancies as they risk the considerable labor investment made by employees with no possibility of future return. The fiduciary approach is superior to a contractual approach as it relies on trust stemming from property rights rather than contractual promise. As such it doesn’t require express terms and in fact can override contractual provisions that are contrary to it.The author has a skeptical view on the efficacy of stakeholder (a.k.a. constituency) statutes in holding directors to account for failing to uphold workers’ interests, despite their widespread adoption in US states. However, she concedes that famous cases like LOCAL 1330, UNITED STEEL WKRS. v. U. S. STEEL – which found that courts cannot reverse a plant shutdown decision made by a Board of Directors on the basis of un-profitability and that there is no property right to employment – may have been decided differently if a stakeholder statute had been in force at the time of the decision. [Contrast this with the Kamani Tubes Worker Cooperative discussed in an earlier blog post or the Bangladeshi worker recuperated factory that I will discuss in a future post]
I particularly liked the farsightedness of this statement, made in the first footnote of the article: “…networks constitute the most efficient form of organization for today’s economic circumstances because they maximize both the flexibility of market transactions and the control associated with hierarchical organization. Fiduciary law’s moral mandate to act in the parties’joint interests may facilitate evolving business practices.” (p. 236). This feeds into her critique of conventional transaction cost economics that views networks to be between “markets and hierarchies” (p. 223ff). She contends that economic transactions do not only turn on promises and exchange and the transaction costs inherent in this but also on trust that is built overtime. The importance of networked organizations seems to be a theme in the literature I’ve been reading recently, including in this essay on the Greek recuperated, self-managed soap factory Vio.me: https://roarmag.org/essays/worker-control-viome-greece/
To establish whether an unconventional fiduciary relationship exists, the author’s review of state-level jurisprudence suggests that three trends emerge: “whether the interaction involves a high degree of trust, whether the relationship has continued for a long period, and whether one party is vulnerable because it relies on the other’s decisionmaking [sic] discretion” (p. 225). In essence, the third characteristic means that the features of arms-length, equal bargaining are absent and a considerable degree of control is vested in the stronger party. The weaker party relies on the stronger party’s expertise, with the hope that the latter will uphold the latter’s dignity and be compensated by the former’s improved performance.
O’Connor concludes by positing that the US corporate governance paradigm needs to be reformed so as to incorporate employee participation committees modeled on works councils in Europe and directors’ fiduciary duties extending to employees. (On the neutral referee model briefly mentioned in this article, also see O’Connor’s ‘The Human Capital Era: Reconceptualizing Corporate Law to Facilitate Labor-Management Cooperation’, 78 Cornell Law Review 899 (1993) and Mashiko Aoki, ‘Toward an Economic Model of the Japanese Firm’, 28 Journal of Economic Literature 1 (1990).)
- David Ellerman, ‘On Property Theory‘, Journal of Economic Issues, Vol. 48, No. 3, 2014, pp. 601-624.
Labor produces Labor’s product (Q,–K,0), which is the sum of the de facto responsible actions conceived as a “commodity” (0,0,L), plus the whole product (Q,–K,–L). But Labor only appropriates (as first seller) the “labor commodity,” while the employer appropriates the whole product. (p. 621)
Why do legal authorities (passively) enable employers to (mis)appropriate the responsibilities and liabilities of employees actions and thereby appropriate the whole product resulting from said actions? This is the core question Ellerman seeks to explore. He argues that in reality employees only agree to cooperate with employers in certain activities but by dint of doing so, do not automatically assign to the employer responsibility (and liability) for their joint activities (p. 617) nor enjoyment of the whole product. However, legal authorities read this ‘transfer’ of responsibility and entitlement to the whole product into employment contracts and legitimize the status quo through their non-action in rectifying this appropriation. In a manner of speaking it is an example of the invisible (judge’s) hand at work. In contrast, if the employer-employee were participants in a joint criminal enterprise and the law became ‘visible’, they would both have been legally responsible and liable individually. They would bear the fruits and consequences of their own actions. On a philosophical level, the mis-imputation of responsibility in the employment contract is in violation of ‘Hume’s conditions’ that transfers can only happen by consent and that promises [contracts] must be performed, as well as the basic Lockean principle that legal responsibility follows de facto responsibility. What is interesting though is that even if there is purported consent, Ellerman argues elsewhere that certain transactions and relationships cannot be consented to because, among other things, the inalienability of conscience. As a consequence, Ellerman argues for the abolition of the conventional employment relationship altogether and its substitution with a system where “production could only be organized on the basis of the people working in production (jointly) hiring or already owning the capital and other inputs they use in production” (p. 619). In other words, responsibility, as with membership, would solely rest on those who work in the firm.