The labor-managed firm, Oliver Williamson, and me

More than 30 years ago, I engaged in a debate with Oliver Williamson over the theoretical structure of transaction cost economics (TCE). This debate had its origins in our conflicting views of the labor-managed firm (LMF). Williamson believed that such firms were rare due to their inefficiency while I believed they might be rare due to market failures. Here I clarify my criticisms of TCE and contrast Williamson's view of the LMF with my own approach. I discuss empirical evidence that can distinguish between these two approaches and take up Williamson's challenge to identify policy interventions that could yield net social gains.

Automated summary

More than 30 years ago, the author engaged in a debate with Oliver Williams over the theoretical structure of transaction cost economics. This article clarifies the author's criticisms of TCE, discusses empirical evidence, and addresses policy interventions related to labor-managed firms.