Efficient Production without Domination: The Case of Labor-Managed Firms

Labor-managed firms, whether in the form of worker cooperatives, codetermination, or broad-based employee ownership, have recently prompted substantial public debate, to which political theorists have contributed with normative analyses that are seriously deficient insofar as they have neglected considerations of productive efficiency. I offer a normative view of labor-managed firms that leans squarely on efficiency considerations. I first argue that the value of productive efficiency is grounded not only on the interests of capital suppliers and society at large, but also on workers’ interest in avoiding domination by their bosses, and examine how efficiency may serve and set back this interest. I next argue that some variants of labor-managed firms can secure efficient production while protecting workers’ interest in nondomination more robustly than capital-controlled firms. Finally, I compare labor-managed firms to alternatives to achieve these aims, including self-employment, workplace regulation, unionization, and labor market policies to enhance workers’ exit options.