me:
> 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.
David Shemano wrote:
> Why would a non-profit entity engaged in production not have same incentive
> as a profit-seeking entity with respect to externalities?<
We can't automatically assume that the leaders of a not-for-profit
would automatically be altruistic.[*] This is especially true if it's
in a capitalist society like ours, which discourages altruism in most
walks of life. (One exception is where an employee feels altruistic
toward the employer.) This is backed up by a lot of evidence I've
seen of the executives of not-for-profits who act like they're trying
to emulate greedy for-profit suits.
Not-for-profit organizations have to be a complementary part of a
larger system. I agree with Karl Polanyi that one of the problems with
capitalism of the laissez-faire and neoliberal eras is the illusion
that the Invisible Hand will steer individuals to serve the public
interest (whether they want to do so or not), with no societal context
needed. A system of accreditation, regulation, etc. is needed. An
example of one that works pretty well in Los Angeles County (except
where local "entrepreneurs" are able to lobby local governments to
block its implementation) is the A/B/C grading system of health
inspection. Next, the regulatory/accreditation system itself has to be
subject to democratic (one person/one vote) rule.
Even though not-for-profit executives can be greedy (creating in
effect a for-profit organization), there is usually an important
difference from a capitalist organization: while a not-for-profit's
leaders can pile up a lot of cash (as with Cal State presidents),
there's much less scope for the capitalist accumulation of money, for
what Hobbes called the accumulation of power after power. A
not-for-profit foundation -- e.g., the Cancer Society, where my wife
used to work -- is dependent on charitable contributions -- while it's
impossible to imagine it swallowing up other foundations the way
capitalist corporations swallow up other firms. It also can't deviate
too much from its mission statement, while the capitalist mission
statement ("accumulate profits") allows for world-girdling expansion.
--
Jim Devine / "In an ugly and unhappy world the richest man can
purchase nothing but ugliness and unhappiness." -- George Bernard Shaw
[*] Some of the anarchist persuasion believe that not-for-profit
cooperatives are naturally altruistic. This seems to be a mirror-image
of the right-wing money libertarians, who think that markets are
naturally beneficial.
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