Mergers and disequilibrium in labour-managed economies

Abstract

Cooperative mergers are both theoretically possible and empirically observable in labour-managed economies. This paper discusses system-specific differences between mergers in a capitalist and in a labour-managed economy. Beside the systemic attraction of conglomerate mergers in labour managed economies for the sake of risk-reduction through diversification, two system-specific types of mergers are considered: i) between capital-hungry and product-hungry cooperatives and ii) between cooperatives at least one of which experiences labour-surplus. The typical short-term inefficiency of labour deployment in labour-managed economies is shown to be reduced by the existence of the first type of merger and the apparent absence of the second type. In particular, the non-fulfilment of conditions for labour-redeployment mergers is used to attribute income inequality in Yugoslavia also to factors other than labour allocation disequilibrium.