I disagree with the idea that profit-seeking firms are efficient. It doesn't even make sense in NC terms, unless by NC we mean only the "Chicago" school. Profit-seeking companies have an incentive to dump costs on others (externalize internal costs, pollute) and to capture external benefits. A narrow-minded worker co-op (that acts like a fraternity of a craft union -- or in jargon, is economistic) has a similar problem.
On Sat, Dec 17, 2011 at 1:02 AM, Gassler Robert <[email protected]> wrote: > The best I can do is two paragraphs: > > Instead of ad hoc assumptions about what the head of the organization > maximizes, I assume utility maximization throughout. The variables in the > utility function are different for altruistic and selfish entrepreneurs, and > the constraints differ according to whether the organization is a > profit-seeking firm, cooperative, bureau, or nonprofit organization. > Profit-seeking firms run by selfish entrepreneurs are efficient in the > purchase of inputs. So are cooperatives, and nonprofit organizations run by > altruistic entrepreneurs. OTOH, profit-seeking firms run by altruists or > entrepreneurs interested in quality are inefficient, as are nonprofit > organizations run by selfish entrepreneurs. This result is what most people > expect, but it gives the lie to the neoclassical view that only > profit-seeking firms are efficient. > > >>Gassler Robert wrote: >>> In an almost completely obscure article, I turned neoclassical theory on >>> its head and showed that cooperatives were at least as efficient as >>> profit-seeking firms, nonprofit organizations, and government bureaus. >>> >>> The reference is: "The Economics of the Nonprofit Motive: A Suggested >>> Formulation of Objectives and Constraints for Firms and Nonprofit >>> Enterprises," Journal of Interdisciplinary Economics, Volume 8, Number 4, >>> 1997, pp.265-280. >> >>the word "Interdisciplinary" is enough to turn the vast majority of >>(orthodox) economists off. >> >>Robert, can you give a two-sentence summary? thanks. >>-- >>Jim Devine / "In an ugly and unhappy world the richest man can >>purchase nothing but ugliness and unhappiness." -- George Bernard Shaw >>_______________________________________________ >>pen-l mailing list >>[email protected] >>https://lists.csuchico.edu/mailman/listinfo/pen-l >> >> > > > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l -- Jim Devine / "In an ugly and unhappy world the richest man can purchase nothing but ugliness and unhappiness." -- George Bernard Shaw _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
