You didn't really answer the question, which is why do you believe there are different incentives regarding externalities between a profit and a non-profit when both are engaged in production.
You assume a greedy person is more likely to ignore externalities than an altruistic person, and you appear to assume a greedy person is more likely to work for a profit than a non-profit (and vice-versa for an altruistic person), which are nice assumptions to make and it is always nice to assume away the problem, but is that where you want to leave it? That the answer is personality predispositions? I instead am trying to imagine a decision maker faced with a choice regarding allocation of resources, and I will assume such decision maker is neither unusually greedy nor unusually altruistic. The decision maker is instead primarily motivated to accomplish the purpose of the entity engaged in production. Why would such decision maker have a different incentive regarding externalities if the entity is a profit as opposed to a non-profit? David Shemano -----Original Message----- From: [email protected] [mailto:[email protected]] On Behalf Of Jim Devine Sent: Monday, December 19, 2011 11:23 AM To: Progressive Economics Subject: Re: [Pen-l] Worker-owned companies? 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. _______________________________________________ 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
