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Forum Post: Can there be a right balance between workplace democracy & incentives?

Posted 8 years ago on July 1, 2012, 2:04 p.m. EST by francismjenkins (3713)
This content is user submitted and not an official statement

I think many of us here support the idea of worker cooperatives, and studies have shown that employee companies (and cooperatives) tend to be more productive, survive longer, provide better benefits, etc. (compared to their conventional counterparts) However, a common (and I would opine valid) critique of this idea is that there's no mechanism inducing innovation. In other words, without a profit incentive, why would we seek to innovate? We might say competition between cooperatives could have this effect, but would competition in itself be a sufficient mechanism for inducing innovation. Won't the individual inventor lose the incentive to innovate, and while we might think that scientific progress doesn't require this sort of incentive (since breakthrough science tends to happen in places like university laboratories), it's the every day inventions that also add to our quality of life, and make life more interesting and enjoyable. It's the guy who has an idea for a new head shaver, and as mundane as it may sound, it has improved the lives of thousands of men in at least a tiny way (not me personally, but thousands of my peers love the thing, and of course this is merely one of millions of examples of things and gadgets that wouldn't exist but for some inventor motivated by money).

So maybe the "creative sector" should be viewed distinctly from the productive & service sectors. If the creative sector were still very competitive and profit driven, everything else could be a cooperative (or similar structure), and we get the best of both worlds?



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[-] 2 points by MattLHolck (16833) from San Diego, CA 8 years ago

inventors tinker for the exploration

motivation for profit may get the product of the market

but that is often not the inventor that is so motivated

inventors like to create more than profit

[-] 1 points by francismjenkins (3713) 8 years ago

Yeah, especially scientists & very technical people, but the guy with an idea for a new hand grip for a sponge--sort of thing (where you don't need a scientific or technical background) is the type of stuff invented by people looking to make a buck. Plus, many companies are already divided along the lines of the creative (and management) functions, and production (e.g. look at Apple, the creativity and management is in California, while production is in China).

Decades ago, increases in worker productivity generally translated into higher wages (and the two lines on the graph were almost on top of each other), but over the last few decades, we see a growing divergence between increased productivity and average wages. The difference in the area under these two lines on the graph, represents profit and executive compensation.

The point is, is it possible that by removing profit from the equation on the production side, the United States can both compete and pay workers good wages? However, it's possible (maybe probable) that this won't be enough. Consider the following:

It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products . . .

The article is loaded with anecdotes and some of the most surprising tidbits are about contract manufacturer Foxconn Technology which makes most of Apple’s hardware these days. It’s referred to in the article as Foxconn City because it employees more than 230,000 — many working six days a week, 12 hours per day, for less than $17 a day.


Also, these Chinese workers live in company dormitories, a practice all but outlawed in the United States. Effectively, our iphones and ipads are built in sweat shops. What Apple describes as "good workers" are really good because they're willing to work as quasi-slaves.

[-] 1 points by MattLHolck (16833) from San Diego, CA 8 years ago

company dormitories sounds efficient

any job I have had involves an hour commute or more

[-] 1 points by francismjenkins (3713) 8 years ago

you could join the military (we had company dormitories) :)

[-] -2 points by vvv0630 (-63) 8 years ago

You are methodically dumbing down this forum and thereby any respect others might give it, MattLHolck. If you are being paid to do so, you will no doubt continue. If you are not, please post your moronic one-liners elsewhere. Thanks.

[-] 1 points by hchc (3297) from Tampa, FL 8 years ago

When the gov gets involved in stuff, it doesnt allow for stuff like this

[-] 1 points by francismjenkins (3713) 8 years ago

Indeed ...

[-] 1 points by JadedCitizen (4277) 8 years ago

Necessity is the mother of invention - not profit.

[-] 1 points by atki4564 (1259) from Lake Placid, FL 8 years ago

If you can't beat em, join em.

Starting a bank sounds like an impossible Gilded Age enterprise; more befitting of a Rockefeller than today's small business owner. But it's not as impossible as one might think -- or as risky.

According to Smart Money.com, "the three-year failure rate for new banks is less than one in 1,000," which, compared with a "60 percent failure rate for new restaurants," is not so horrible. The profits are not too shabby either. The site reports: "6,770 community banks earned $67 billion over the past five years."

In a recent Wall Street Journal interview, even Former Federal Reserve Chairman Alan Greenspan says that he would start a bank -- if he were 50 years younger.

So help start a direct democracy bank, as follows: https://docs.google.com/a/strategicinternationalsystems.com/document/pub?id=1mKKLMTIyvRCLK2ppPj_GDjdieCvJnATaZaCmlajubWU

In particular, read step 7 of 12 in the Detailed Operations Forecast where in an X-Prize Exchange will award millions of mini-nobel-prizes for experiments, and related innovations, resulting in an 800% increase in technology investment. How much in prizes for this 800% increase in technology investment? That would be 25% of national income (or $4+ trillion annually) as 25% Dividend Income from the X-Prize Exchange.

[-] 1 points by brightonsage (4494) 8 years ago

It isn't essential that everyone derive the same compensation from a cooperatively owned venture. Anyone who has started a company has dealt with these issues/opportunities. I have done this several times. In some circumstances it may seem reasonable and fair to establish equal ownership and equal pay for the founders and different levels for those who come in the second phase, through n. Or it is common to recognize the contribution of an invention created by one or more founders as deserving extra ownership or pay. I can't imagine any hard -fast rules for this. It usually involves a negotiation among the parties. There are no sectors there are only people. They are all individuals and must be treated that way, individually. It is the attempt to treat them as interchangiblle units that creates unworkable systems. Rights are the only "things" that should be the same for everyone. In addition to starting companies and managing them, I have also been an inventor. So, I don't speak from theory.

[-] 1 points by francismjenkins (3713) 8 years ago

Right, and I'm certainly not proposing a new and more rigid form of division of labor, but rather another way of thinking about this issue (and categorizing things is one tool to help us understand things, especially abstract and untested ideas).

[-] 1 points by brightonsage (4494) 8 years ago

OK But all abstract ideas only have value reduce to reality.

[-] 1 points by LeoYo (5909) 8 years ago

The desire to invent or to simply make things better is one of personal achievement. I don't know if there are people whose creativity is only motivated by the prospect of profit. Are there any studies or statistics on this?

[-] 1 points by francismjenkins (3713) 8 years ago

Using the guy who invented the head razor as an example, you might think as a guy who wanted a better way to shave his head, he would have thought of the idea regardless of the profit motive. But what induces people to commercialize these ideas, obviously profit. Is there another way to make this happen? Sure, open source does it, and it can happen in other ways, but I think our economy would benefit from a greater presence of worker cooperatives (and like models), but I wouldn't want to see innovation suffer, or individuals not have opportunities to innovate and reap rewards from that innovation. So I think all these different ideas can compliment each other.

[-] 1 points by LeoYo (5909) 8 years ago

Commercializing for profit does not affect the erge to invent. It's only natural to want to profit from your own labors on something you feel to be of value. Unless there is some study to show otherwise, I would say that an inventor's erge to invent is primary and that the desire to profit from inventing is secondary unless a person has been hired to invent something specific for a company. I would say the same goes for general improvement in that in a positive work environment, innovation will not suffer, but in a negative or restrictive work environment in which a person doesn't feel positive about their work, innovation will suffer.

[-] 1 points by francismjenkins (3713) 8 years ago

I mean, the demand for a study here is a little dubious. The simple fact is, most modern inventors who invent great things, do make money (and they had to know they were going to make money if successful). What will we study? Will it be a post hoc survey, did you do it for the money? If they say they did it for some other reason, why would we believe them (and not think they're just trying to put a better spin on their motives)? So I'd think if there were any studies out there (even if it supported my point), they wouldn't be worth very much.

We could look at socialist societies where the profit incentive was removed and see how they fared? Look at the old Soviet Union, they did an okay job when it came to military research, but what about inventing stuff people need, want, and use?

Put it this way, I could be wrong (so much I'm willing to admit), but, I'm not sure how we put together a meaningful study on this. We could look at it retrospectively in terms of how things have been working, and we've had a profit incentive in place for our entire history. Then, maybe we could do a comparative study (comparing US economic performance to societies where the profit incentive was removed). Frankly, I don't think we need a study for this, we know how they performed, they no longer exist (or they're in very bad economic shape).

I'm interested in reducing wealth disparity and economic democracy, but that doesn't mean I'm willing to support ideas that appear to be problematic (like the labor theory of value, or the idea that profit is bad in all cases). I do think profit is bad in many cases, but perhaps not all cases.

[-] 2 points by LeoYo (5909) 8 years ago

Why would we not believe an inventor who claimed other than money as motivation? Are creative people creative because they're inspired by profit? Do poets cease to write for lack of profit? If a poet gets rich, do we see their wealth as the motivation behind their poetry?

What about ourselves? Are we here spending our time because of an expected profit? Is there no innate desire within us to make a difference without any profit? But if we could profit from an opportunity to make a difference, would we reject it?

Is a lack of innovation in countries without a profit incentive due to the lack of profit incentive or a lack of adequate funding due to a strained economy?

There are factors that a good study will have considered that a general person not really concerned for such a study may have overlooked while peer review can determine the worth of such studies. Studies on things, especially psychological and sociological studies, tend to produce evidence of human nature that is contrary to general expectation.

[-] 1 points by francismjenkins (3713) 8 years ago

I see your point Leo & I agree insofar as creative inventors are involved (in this context, scientists), but the garden variety invention is not invented by people like this. Put it this way, I'm working towards a grad degree in biology, I'd love to make a contribution to science (maybe some little discovery that helps the fight against cancer, even it just rules something out, and no one besides family and friends ever knows my name), and I'm not motivated my money (if I can afford rent, food, some minor recreation ... and I don't have any expensive bad habits, I'm a happy guy, and most scientists I've had the pleasure of meeting are the most non-megalomaniac(ic), non-narcissistic people, perhaps on earth.

But I'm talking about the little nick nack stuff. The new variation of sponge, a new idea for a towel rack, simply shit, but the sort of shit that does make life a little easier (not the result of extensive laboratory work by grad students or professors with years of advanced mathematics, insanely rigorous science coursework, etc. under their belt).

[-] 1 points by LeoYo (5909) 8 years ago

I have and have had such nick nack ideas. The only thing that has prevented me from pursuing them is a lack of commitment to the time and money involved as life forces one to make choices in one's priorities.

[-] 1 points by MattLHolck (16833) from San Diego, CA 8 years ago

profit may hinder expensive exploration

[-] -1 points by vvv0630 (-63) 8 years ago

You are methodically dumbing down this forum and thereby any respect others might give it, MattLHolck. If you are being paid to do so, you will no doubt continue. If you are not, please post your moronic one-liners elsewhere. Thanks.