Collective ownership of the means of production (2)

First insertion on Heterodox Gazette Sam de Wolff: 25 oktober 2017

E.A. Bakkum is a blogger for the Sociaal Consultatiekantoor. He loves to reflect on the labour movement.

It turns out that property rights of the production factors affect the incentives to produce. This column analyzes the incentives of the direction in the non-profit organization, the state bureaucracy, and the state enterprise. Also the social ownership in the Leninist paradigm is studied again. The Leninist principles are compared with those of the modern institutionalism. It turns out that in all these cases group morals are a decisive factor.

In a previous column it has been concluded, that the form of ownership affects the effectiveness of economic actions. This is caused among others by the claim on the residue (profit), which the owner has, when his property is used productively. Thanks to the residue the owner has an incentive to organize the production in an effective manner. Therefore the institutionalism develops theories of property rights.

These theories suggest, that an enterprise must preferably be owned by the workers themselves. The mentioned column indeed analyzes the production cooperation. Unfortunately here the problem is, that workers are commonly risk averse. They experience the fluctuating residue as an unattractive source of income. A second problem of the cooperation is, that the shares of the enterprise can not be traded freely. Therefore the value of the shares and of the enterprise remain unknown. Thus an essential external indicator of the functioning of the enterprise is absent1.

The present column will study a number of ownership forms, including constructions, where the enterprise waves the appropriation of a residue. Especially the incentives will be studied, which the workers derive from the construction. Notably the contents of the book The economics of business enterprise by M. Ricketts (in short EBE) has been consulted2.

Non-profit organizations

When an organization trades in some way without the objective of profit, then it belongs to the non-profit sector (see chapter 11 in EBE). Examples are cooperative savings-banks, hospitals, universities, art groups and associations. The non-profit organization (in short NPO) can receive incomes from its costumers. Often such incomes will not cover all costs, and the deficits are compensated by means of donations. The donor is often motivated to give by his personal morals and empathy3. The NPO does not have a clear owner. There is a general board, which supervises the ongoing affairs. The donations do not give property rights. The donor sometimes does get the right of say about the composition of the general board. The law imposes certain obligations, which must be satisfied by the board of an NPO. The daily management is done by the direction.

Photo of Coop pin
Figure 1: Coop pin

The NPO has the problem, that the ownership and the payment of profits are absent as incentives for an effective management. In this respect the situation is even more unfavourable than the situation in the mentioned production cooperations. Thus the question is, how notably the direction, as the first responsible body for the daily decisions, can be motivated to perform well. Even more than in the production cooperation the incentives must come from the bonding and the morals within the organization. Note that these phenomena can only occur in rather small organizations (p.386). Thanks to bonding there grows a mutual trust and reciprocal obligations. This is a valuable social capital, which the group members receive as a quasi-rent (p.399). The workers of the NPO are indeed often satisfied with a relatively low monetary reward. Thanks to this modesty the production costs are curbed.

Thanks to the bonding and coherence the personnel engages in mutual supervision and group pressure, perhaps reinforced by active volunteers and the donors (p.389, 399). This can be called an economy of honour, where the direction participates in an immaterial tournament and values a good reputation4. Furthermore, the performance of the direction can be measured by her capability to acquire funds and donations (p.387). Nevertheless, the autonomy of the direction in the NPO is large to such an extent, that it is really an autocracy5. At first sight, the bonding is a sympathetic incentive. But the reader may remember the column about social capital, which points to the disadvantages of especially the bonding (closed, strong) relations. In particular, unsound group morals can be repressive. This becomes very clear in the paragraph about the Leninist paradigm, at the end of the present column.

So in general the commercial enterprise with a profit motive must be preferred above the NPO. Yet the NPO has certain advantages, notably when the consumers and costumers are not able to judge the offered product, for instance in its quality (p.388)6. A commercial enterprise could exploit the ignorance of the buyers in order to increase its profit. On the other hand, the high morals of the NPO make it likely, that it will supply a usable product, with a good quality. Note that here the NPO is a solution for the principal-agent problem, with the costumer in the role of principal. Another advantage of the NPO becomes apparent in situations, where the state supplies insufficient public services. Then the NPO can increase the production up to the desired level (p.390). Here the nature of public services makes a commercial enterprise less appropriate.

A mathematical model (not from EBE) can perhaps clarify the problems of the NPO7. Consider an NPO, which offers a quantity Q of its product for a product price p (per piece). Suppose that this production requires production factors L and K, with factor prices pL and pK. Suppose that N production techniques are available, with production functions Q = fn(L, K), where n=1, ..., N. Suppose that the direction receives a wage w, and disposes of a budget B. According to the neoclassical paradigm the optimization problem of the direction is given by

(1a)     maximize for all possible n the utility:  U = u(L, K, w)
(1b)     under the conditions of budget:  B = pL×L + pK×K + w,
(1c)          and productivity:  Q = fn(L, K)

Note that by definition the NPO receives donations D, so that one has B = p×Q + D. The general board of the NPO imposes the parameters w, D, p, and Q (and therefore also B) to the direction. So the product price p does not clear the market, but expresses the morals of the board and the donors. Besides, the factor prices are imposed by the factor markets. The set 1a-c must be understood in such a way, that the direction has a different preference for the factors L and K, which implies a choice of technique. The preference could for instance base on considerations of status, or on personal morals. Then the appreciation of the direction for these two factor does not coincide with their market prices. Suppose for instance that ∂u/∂L > 0 and ∂u/∂K < 0 hold. The direction aims at maximizing L, within the imposed conditions 1b-c. Furthermore one obviously has ∂u/∂w > 0.

Here the reader sees the dilemma of the general board. It would like to trust the direction. However, when the direction itself can determine the quantity of Q, then it will choose a technique n, which is not efficient. It prefers to produce Q with only L, even when pK would be much smaller than pL. Then, due to the decreasing marginal product one has p × ∂Q/∂L < pL, and that is sub-optimal. This forces the board to define the target for Q in such a manner, that it has the maximal feasible level. Unfortunately the board can not judge the feasibility, because it has less information than the direction. Sometimes the yardstick approach is possible, where the board derives its target from excellent NPO's with a similar product. Furthermore, the limiting condition 1b shows, that the direction will always insist with the board on a larger budget B.

Here the direction does clearly not have an incentive to be efficient. It must be enforced by the board. But the board also does not have a strong incentive to strictly supervise the direction. It is for instance conceivable, that the board prefers a well-known name of the NPO over efficiency8. Perhaps this will indeed increase the donations D, but then the waste continues. Other incentives from the private sector, such as a hostile take-over, are also absent. There is a real chance, that the policy of the direction will be economically unsound. Sometimes the supervision must come from outside of the NPO, for instance from consumers or the media. When the general board must fear to get a bad external reputiation, then it has an incentive to supervise more strictly9.

The state bureaucracy

For several centuries the state has controlled its officials by means of the hierarchical model of the bureaucracy. At the beginning of the twentieth century the sociologist Max Weber has praised the bureaucracy for its effectiveness (p.425 in EBE). Later the public choice theory has stated, that the bureaucracy gives the highest priority to its own interests10. This means that the politicians must supervise the bureaucracy in order to serve the general interest (at least as far as the politicians themselves do not also defend their own interest). The model of Niskanen assumes, that this supervision fails completely. In this case the bureaucracy will maximize its utility. Here the consequences will be described in a simple model11. Suppose that the direction of the bureaucracy uses the production Q and its own budget excess π as the control variables. Then its utility function is u(Q, π), with ∂u/∂Q > 0 and ∂u/∂π > 0.

Suppose that the production costs per piece equal p (the make-price), including the transaction costs for supplying the product to the consumers (citizens). However, the supply by means of the market is unsuited for public goods, because they are non-exclusive. In such a situation free riding is threatened. Therefore the politicians must raise a tax per capita τ(Q) in order to finance the public good. In fact they estimate the product demand of the citizens. The citizens attach a piece value of w(q) to the public good, where the marginal value decreases with the supply q (that is to say, ∂w/∂q < 0). The figure 2 depicts the marginal costs and the marginal value, as a function of q. The total value of the public good is TW = ∫0Q w(q) dq for the citizens. When there are N citizens, then the yield of the taxes is N×τ, which must equal the total value. The direction has an "excess" π = N×τ − p×Q, and takes care that this will never be a loss.

Graph of production sales
Figure 2: Production sales

Now the optimization problem of the directie is given by

(2a)     maximize for all possible Q the utility:  U = u(Q, π(Q))
(2b)     under the condition of a non-negative budget surplus:  π = N×τ(Q) − p×Q ≥ 0

This problem is solved here for two extreme cases. First, suppose that U = u(π). The direction ignores the size of the production, and maximizes its own surplus. The optimization requires w(q) = p 12. The optimal point is Q1, and the surplus π is the yellow area in the figure 2. The costs p nowhere exceed the marginal value, so that the allocation of the used means of production is efficient. But the citizens pay too much, because the supply is not at cost-price13. The budgeted sum is not expended completely, and π remains. The direction has undoubtedly a solution for this. In fact the politicians want to return π to the citizens. However, they do not know the cost structure, and therefore can not supervise adequately.

In the second case one has U = u(Q). The direction maximizes the size of the production. The budgeted sum is expended completely on production, so that π=0 holds. The optimum is Q2. The surplus in the production until Q1 is used to compensate the deficit in the production between Q1 and Q2. In the figure 2 the surface of the yellow area is equal to the orange area. The citizens get value for their tax money. However, in this sitation there is over-production, because the make-price exceeds the value w(q) of the last supplied product units.

In reality. without supervision the supply will lie somewhere between Q1 and Q2, because the direction values both Q and π. It is difficult to introduce positive incentives in the bureaucracy (p.402 and further in EBE). It does not make a profit, such as commercial enterprises, and also does not have personal morals, such as the NPO. Only supervision will work. The politicians must measure the production of the bureaucracy by means of indicators. But indicators simplify reality, and will never measure all aspects of the production. The consequence is, that the bureaucracy will neglect the unobservable aspects of the production. Thus the general interest is yet again undermined.

The state enterprise

The state enterprise is capable of executing many different tasks, varying from policy development to -execution. The state enterprise is a particular case of the state bureaucracy, because it generates a concretely defined product. Now the state must make two choices. First, it must decide, whether the supply (the quantity Q of products) can be regulated by means of the market equilibrium. This is only possible for the case of exclusiveness. Here the state must also consider, whether the production can lead to negative external effects. State intervention is partly a choice of morals. Suppose that the state wants to determine the supply Q by itself. Then, the next decision is, whether it will realize the production by itself. For, some of these products can also be produced by a commercial enterprise. This is called a decision by the state of make-or-buy.

During the period 1945-1980 the production by the state itself was popular, because then the production can take into account the general interest. This is an advantage with respect to the commercial enterprise, which is purely profit-driven14. The choice for state production is called the public interest approach (p.433 and further in EBE). The underlying idea is, that the state as a benevolent dictator can objectively determine the general interest. Leninism has indeed imposed such a dictature in a consequent manner. See further in this column. As long as the democratic institutions function reasonably well, an equilibrium of power will form, which is at least a rough approximation of the general interest. However, even in the west this sometimes fails, such as during the seventies of the last century15.

Notably the natural monopolies are candidates for nationalization (p.486). A monopoly is natural, when the marginal production costs MC fall, according as more is produced (∂MC/∂Q < 0). She has an advantage of scale. Many branches, such as the public utilities, transport, telecommunication and the mining of raw materials were acquired by the state (p.453). Such an economy is called mixed (p.454). The public interest also includes the coordination and mutual attuning of the economical activities (p.425). It was hoped that central planning would reduce the total production costs (p.454). Moreover, during the seventies the state was prepated to reorganize the big industries in the private sector, if necessary. The public interest approach was the basis for the Dutch attempts to establish public branch organizations.

According to the public interest approach, the state enterprise must equilibrate demand and supply for its product. This means that the marginal production costs MC must equal the marginal social value MW of the product. However, this theory ignores various disturbing factors, such as the principal-agent problem, incomplete information, and the transaction costs. The direction of the state enterprise is in a comfortable position, because she disposes of more information (p.458). Supervising the direction is difficult, because the production process is complex. There is rarely a clearly observable relation between the production costs and the supplied products. Then the politicians must evaluate the result by means of deficient indicators, which can be a moral hazard for the direction. Moreover, the freedom of the direction must not be curbed too much (p.458)16.

Therefore the politicians are well advised to appoint a competent direction (p.440). But the direction members in the public sector can hardly build up a good reputation, because their tasks are so complicated. In the private sector, the direction can simply prove its quality by making huge profits (p.465). Thus the public sector must select its directions by means of political and bureaucratic procedures, which offer little guarantee for an effective operational management (p.441). Such a direction does not need to fear, that it will be punished by the share-holders. Her enterprise can not even fail. Besides, even a competent direction is not able to serve the public interest. The equality MC=MW can not be realized, because the social value W is too vague as a concept (p.438, 442). Therefore directions were in practice rarely able to apply the rule MC=MW (p.442).

After 1980 the public interest approach becomes controversial. The experiences with the state enterprises are unsatisfactory, and credible theories have been proposed for explaining this. For instance, the fear for natural monopolies has decreased. For, thanks to the economical dynamics there are continuously new products and production methods, which are a threat for the existing monopolies (p.487). This counteracts the concentration of power. A private monopoly, which raises its product prices too much, must fear that a competitor will enter his market17.

Since central planning has failed, the politicians again see the advantages of free markets, notably as an instrument to stimulate the directions of the enterprises. The state can supply public services by concluding contracts with enterprises. In the decades after 1980 many state enterprises are (again) privatized. Scientific studies show, that privatizations can indeed be an improvement, with regard to effectiveness, profit, paid dividends, and sales (p.482)18.

The Leninist paradigm

The Gazette has regularly paid attention to various Leninist economists, in order to understand this curious ideology. Here this will happen once more, because the Leninist paradigm (in short LP) is in essence a theory of property rights. Thus it is a variant of institutionalism. Moreover, the LP has been tried amply in practice. A warning in advance is justified. All those economists carefully conform to the party line, albeit sometimes reluctantly. That was better for their health. The Leninist paradigm is more a credence than a logical model, and assumes an absolute truth. Therefore the economists argue like priests. The debate must be limited to niggling. That is not a pleasure to read. And since the credence is unsound in its core, the focus on details makes no sense.

Nevertheless, the LP has apparent similarities with modern economics, especially with new institutional economics (in short NIE). The present paragraph sums up the similarities and analyzes the deviations. The hallmark of the LP and the NIE is the study of institutions. Here the NIE places the height of the transaction costs at the centre of the analysis. Although the transaction costs are also important for the LP, it notably focuses on the social exploitation. In this respect it is related to the theory of social capital. The NIE consists roughly of two currents. The first one, which is attached to the name of Oliver Williamson, analyzes contracts. The starting point is the subjective optimization of the individual utility. The second, which is attached to Douglas North, analyzes the social evolution. This is called the radical approach19. The LP belongs to the second category.

Photo of GDR company glass
Figure 3: GDR company glass

The radical approach places the institutions in a historical context, for instance primitive tribes, feudalism, capitalism, or socialism (or Leninism). The LP calls this historical materialism. The social dynamics is emphasized, more than in the contract-directed approach. Groups and organizations are necessary in order to survive under the continuous change20. So the radical approach studies the evolution of institutions. The hallmark of the LP is the huge importance, that is attributed to the institutional form of property rights, notably with respect to the means of production. Capitalism is based on private property. In socialism all means of production become the property of the state. This is called social ownership. The LP assumes, that the form of ownership fundamentally affects the social relations.

For, the control of the means of production gives the right to appropriate the residue (the surplus value) in the production process. Thus the LP is materialistic. For this reason it presents itself as an objective theory. The society obeys objective laws21. Besides, materialism implies that the individual is mentally programmed by his own circles22. In this respect the LP is unmistakably communitarian. Phenomena are studied at the macro level. There are just two types of consciousness, namely of the owners and of the dispossessed. The class is the individual point of reference. The LP defends the controversial hypothesis, that the class of the dispossessed workers is exploited23. This notion slowly penetrates into its conscience. Therefore the LP is a conflict theory. Since the dispossessed form an overwhelming majority, their class morals must become leading in the social reforms.

On the other hand, in the NIE the morals affect the development independently, also in the radical approach of North. The morals do not originate naturally from matter. The individuals maximize their own utility, and this can be realized in an immaterial manner, when desired. The NIE is based on the methodological individualism and is subjective. It commonly interprets society as a system in dynamic equilibrium, where the conflicts are at the micro level. Individuals and groups can survive by imitating each others' behaviour. Circles develop routines, norms and roles. Individuals refer to their own circle, and can change it by means of innovative actions24. See the learning model of Kolb. The different view on the freedom of the will has important consequences. For instance, the LP couples crime to the form of ownership, and thus belittles the personal responsibility25. The NIE couples crime to circles, and perhaps to genetics.

According to the NIE and the LP, the social evolution can lead to a historical selection of the most efficient economic systems. They will oust the less productive systems. In this sense the NIE and the LP both contain an element of determinism. Incidentally, North believes, that this tendency is often thwarted by incidents26. The LP states, that socialism creates the best conceivable conditions for the production, and therefore it will surpass capitalism, and succeed it. The LP justifies this claim with another hypothesis of the NIE, namely the principal-agent model. Such models search for incentives, which increase the effort of the agent, and thus merge the interests of the agent and the principal. According to the LP state ownership is such an incentive. Thanks to state ownership, the worker is no longer exploited, like in capitalism. Under the socialist regime the interests of the worker and society coincide27.

For, the worker emancipates in and by the society. The social development can take its natural course, because the people choose their own future in the plan. Thanks to the organization the dynamics can be controlled. Therefore the LP is primarily a theory of existential security. The evolution pushes in the direction of cooperation. Remember, that Leninism has been formulated in a time, when the famous sociologist Max Weber still praised the bureaucracy28. The transition to state property is radical to such an extent, that it must be realized by force. The reader will probably find this a risky experiment, because the predicted harmony is merely a hypothesis. After the transition there is perhaps no longer a way back. North calls this an accidental factor: a coup d'état can lead the evolution into a blind alley29. It is better to reform stepwise.

In the LP the predicted high productivity of state property is more an extra than a goal. Thanks to the social capital the transaction costs will fall. This is attributed to the cooperation in the economic planning, which can eliminate various economic abuses. Therefore the LP predicts an accelerated growth. Besides, the state, or actually the central planing agency, designs the plan in such a manner, that the free unfolding of all workers is insured30. The reader may think that this is a contradiction. For, when the planning agency fixed the free space of the individual worker in advance, then there can be no longer an autonomous and free individual unfolding. The relation between the state and the individual is actually paternalistic. Anyway, in fact there are two hypotheses: (a) the social ownership eliminates the exploitation, and (b) in this way the individual productivity will unfold fully.

Conformable to the principal-agent model, the LP assumes two types of incentives, material and moral ones. The moral incentives are by far the most important. Since the class as a whole experiences the moral incentives, they are also material, albeit indirectly31. The moral incentives are internalized. In socialism they stimulate a voluntary effort, because there labour is a pleasure and a joy. This is naturally merely a hypothesis and a belief, but in the LP it becomes the absolute truth. Such an optimism is present in all socialist movements. The loyal reader will undoubtedly remember the scheme of the Flemish social-democrat H. de Man, who analyzes the causes of job pleasure and discontent. According to him the causes are in the task itself, in the organization and in society. The modern theory points to immaterial motives of workers, such as the performance and the mutual contact, but rejects social motives.

In the scheme of the LP, the social system determines all causes of job pleasure and discontent, at least in the last resort32. Thanks to socialism, the agents are incited positively. Only the social production is objective. The difficult search of the NIE to invent self-enforcing contracts and clever ways of supervision are unnecessary, and also useless, because the capitalist exploitation will stifle all enthusiasm. In other words, it is true that there are functional and organizational causes of pleasure in capitalism, but they are distorted by the capitalist system. The Leninist state reinforces the moral incentives by means of an energetic and encompassing guidance (propaganda). The LP is convinced, that thanks to its economic order the human behaviour will improve. There will even emerge a Leninist man, the socialist personality33.

Doubt has just been expressed concerning the hypothesis of the LP, that exploitation is absent in the socialist form of ownership. The Leninist economists expect that their command-economy will not be thwarted, although here yet the workers are pressurized to do their plan-task. Even the company managers themselves can not act freely. The LP trusts, that the workers will serve the general interest, if necessary incited by means of propaganda34. The coercion is somewhat moderated by giving a say to the workers, at least to the Leninist trade unions. Besides, there are investments in the working conditions and in the atmosphere in the workplace.

During the sixties of the last century, the Leninist states began to realize, that material incentives are indispensable for making the production effective35. Now, socialism by nature indeed gives a material incentive, because it (supposedly) increases the production. However, the contribution of the individual worker to this success is minimal. Therefore the worker is tempted to be idle, and to free ride on the efforts of others, as it were. Therefore, also Leninism must use concrete monetary incentives, such as the salary and performance-related premiums. The organization creates tournaments, as it were. Competition is important, although it is sometimes moderated by means of collective premiums instead of individual ones. Also, the material incentives are always combined with moral ones, wherever possible, such as the presentation of deeds, or an honourable mention in the company paper.

Thus one could hope, that the workers are compensated materially by the command economy. However, the LP introduces yet a second source of exploitation, namely the so-called dictature of the proletariat. The advantages of the social production become only clear, when the majority of the workers have changed into socialist personalities. During the transition time to this new type of consciousness the state must rule as a benevolent dictator. The LP assumes, that the workers will support the dictature. The dictate is directed against other groups, such as the owners, farmers, shopkeepers and small entrepreneurs, intellectuals etcetera. Thanks to the dictature a new order will develop, which offers the proletariat and the other groups optimal opportunities for unfolding. The false consciousness of the owners dies. This is the Leninist dream36.

Picture card of VEB Riesa
Figure 4: GDR matches

Since the dictature infringes on the human rights, it is worth analyzing its justification in the LP. A good source of information is Einführung in die Marxistisch-Leninistische Staats- und Rechtslehre (in short SR)37. The socialist dictature is justified by its elimination of the exploitation, which supposedly occurs in capitalism (p.59 in SR). The LP believes that it has been proved, that socialism is the guarantee for human dignity (p.62). Henceforth the society will be harmonious, both nationally and internationally. Socialist states do not mutually make war (p.61). It is acknowledged, that the proletariat is not yet completely converted to the LP. Therefore a dictator is needed, namely the Leninist party (in te GDR this is the SED) (p.62-63, 101). The party is the avant-garde of the working class. The LP is paternalistic, and believes that a pastoral guidance is unavoidable38.

The LP explicitely rejects political pluralism (p.83). The Leninist party has shown, that it supports the LP and propagates it energetically. Therefore it has the best ideological ideas of all parties39. It is the only servant of the general interest. A multi-party system could contain parties, which reject Leninism. Such parties thwart the general emancipation of the population, and therefore are undesirable (p.81). There is even the danger, that they become a mouth-piece of the monopoly-capital40. It is also undesirable to have various Leninist parties. For, such a division will weaken the organization of the workers. This principle is called democratic centralism. Politics, the government and the economy must all be led by a single central actor. Thanks to the party as the dictator, the people act as a unity (p.106, 110, 114).

The political consequence is, that all social groups are subjected to the Leninist party41. This also holds for the trade union federation FDGB, for instance (p.60,64). The civil society as a social capital is put in an ideological strait-jacket. The state must be the instrument for the dictature (p.87, 103). It is the executive apparatus of the policy of the Leninist party (p.88). The party leaders also occupy several essential functions in the state and the council of ministers. The consciousness of the population can be controlled by means of the constitutional law (p.96). A neutral legal system is rejected, because it would protect the private property of the monopoly capital. The socialist state represents the popular will, precisely because it controls the consciousness (p.98). This hypothesis is also the justification for the economic plan targets (p.109).

In short, the reader may observe, that the Leninist paradigm expresses a sectarian political belief. It promotes a regime, which despises opponents, and justifies their brutal repression. The implacability of K. Marx is merged with the mass terror of V.I. Ulianov (alias Lenin). It defends a perverse abuse of power, which stifles the evolution of institutions. Or, if preferred: the LP is indeed the institutionalism of the dictature. Nevertheless, even without the revolutionary component the LP looks primitive. It is hardly credible, that the evolution is completely determined by the material conditions of the production. For, the social morals are an independent factor. Just consider the religion and the regional culture42.

It is also not realistic to reduce the society to two classes, owners and dispossessed. And practical experience has shown, that state ownership eliminates all kinds of productive incentives. And central planning stifles the initiatives and innovations of private individuals and circles. People can not be forced at will into an ideological mould. In practice, the population has experienced the Leninist dictature as a repression and exploitation. Besides, it has turned out that the Leninist system is less productive than the capitalist system. Your columnist concludes, that the LP, and incidentally also many hypotheses of marxism, can easily be discarded. Naturally the practical experiences do remain valuable as a source of information for the analysis of economic incentives (including ownership).

  1. The realized residue (the profit) is naturally also an indicator for the functioning. However, the value of the enterprise is also determined by the future expected profits. The quotation of the shares expresses, how investors value the expected results of the enterprise. (back)
  2. See The economics of business enterprise (2002, Edward Elgar Publishing, Inc.) by M. Ricketts. (back)
  3. On p.390 in The economics of business enterprise the interesting observation is made, that donations are the negation of free riding. Apparently, individuals are subjected to sometimes opposing incentives. On p.396 it is mentioned, that donors, who also use the services of the nonprofit organization, actually apply price discrimination. They voluntarily accept a price markup. (back)
  4. This subject is also studied by sociology. See for instance chapter 12 in Traité de sociologie économique (2013, Presses Universitaires de France), edited by P. Steiner and F. Vatin. On p.453 the importance of the morals for the NPO are stressed. This book is a volume, containing various sociological essays. The well-known sociologist J.S. Coleman also points to moral group pressure in the NPO on p.601 in Foundations of social theory (1990, Harvard University Press). On p.658 he values bonding positively, because it forms social capital. (back)
  5. On p.51 in Graaiers of redders? (2011, Uitgeverij Atlas) by W. Dicke, B. Steenhuisen and W. Veeneman it is stated, that the medical specialists in the Netherlands have extremely large incomes. On p.52-53 the authors add: "The performance of the specialists are not at all transparant. Even when these performances are known, for instance among colleague-specialists, then neither the patients or the insurance knows this. Even the directors of the hospitals can not systematically reward good specialists and criticize the bad ones for their poor performance".On p.449 in Traité de sociologie économique it is noted, that sometimes the donor of an NPO does not himself consume the supplied product. Here it can occur, that the actual consumers do not pay an individual monetary contribution. In such a situation it is extremely difficult for the donors to collect reliable information. The same problem occurs in the state bureaucracy, where the state is de facto the donor. (back)
  6. Here the services in the hospital are an obvious example. (back)
  7. See p.359-365 in Institutions and economic theory (2000, The University of Michigan Press) by E.G. Furubotn and R. Richter. (back)
  8. See p.364 in Institutions and economic theory. (back)
  9. See p.365 in Institutions and economic theory. Chapter 4 in Graaiers of redders? discusses the expansion of free markets in health care. On p.82 it says: "During the past years a lot of progress has been made in the development of indicators. (...) Also the top 100-lists play a role in the improvement of performances. Nobody wants to be the worst hospital".
    On p.397 in Institutions and economic theory a special NPO is discussed, namely the association or club. It is true that it produces a public good, but this is exclusively available for the members. The members will try to determine the optimal number N of members. For, on the one hand an increasing N will allow to reduce the supscription rate. On the other hand, there is a certain rivalry among the members in the consumption of the public good. On p.393 in Political economy in macroeconomics (2000, Princeton paperbacks) by A. Drazen the optimalization problem of the associations is explained with a mathematical model. (back)
  10. For a discussion of the bureaucracy theory of Weber, see also p.613 in Foundations of social theory. On p.660 Coleman criticizes this theory. (back)
  11. The model is described on p.400-401 in Institutions and economic theory. However, p.376-381 in Neue Institutionen-ökonomik (2007, Schäffer-Poeschel Verlag) by M. Erlei, M. Leschke and D. Sauerland gives a more detailed explanation, and is therefore the main source here. (back)
  12. For, ∂u/∂π > 0. The formula 2b shows, that π yet depends on Q. One has ∂π/∂Q = ∂(TW)/∂Q − p = w(Q) − p. Now it is assumed that one has ∂w/∂Q < 0, so that w(Q) falls with Q. See the figure 2. The direction expands Q until the point Q1, where the marginal profit turns into a loss. This point is given by w=p. (back)
  13. On p.400 in Institutions and economic theory it is stated, that the bureaucracy uses a perfect price discrimination. Your columnist believes that this is odd, because many public goods are non-exclusive, and not subject to rivalry. The use is collective, and nobody can exclude another from its use. See paragraph 6.1.1 in Neue Institutionen-ökonomik. The public good is not the property of an individual citizen. The curve w in the figure 2 represents the demand of the N citizens together. (back)
  14. On p.31 in Graaiers of redders? it is stated, that a public good must be accessible, reliable, solidary and durable. This is right, but the choice for a certain level is subjective. The criterion of effectiveness is so fruitful, precisely because it is objective. Free markets have the advantage, that the consumer can choose and apply his own criteria. The authors als include the employment in the public sector as a general interest (p.31). And sometimes it is argued, that in state enterprises the participation of the citizens is guaranteed (p.167, 173). However, it is doubtful, that the consumer of the product wants to pay for employment and political participation. (back)
  15. During the seventies the social-democracy and the labour union movement go astray in utopian ideologies. This is called the New Left. The media get carried along by this radical movement, and therefore neglect to check their news. This period has been described in two columns about the Dutch trade unions. Apparently morals can derail. In this respect, your columnist believes that the development of the protestant morals is instructive. Around 1910 the protestant leader Slotemaker de Bruine still propagates sound principles within the trade unions and politics. More than half a century later, Van Zuthem is a leader of the CNV, being the rector of its cadre school. He is a radical advocate of the humanization of labour. In Arbeid en arbeidsbeleid in de onderneming (1972, Van Gorcum & Comp. B.V.) he rejects the idea, that economic motives must be leading in the enterprise (p.18). They further egocentric materialism (p.36). The workers are the servants of the machine (p.67). He prefers new morals, which give a central place to social responsibility (p.5, 81). This includes the human unfolding, participation (p.19), a profit share (p.30), collective ownership (p.84), and democratization (p.35, 71), but also social wellbeing in a wide sense (p.34). Central planning is desirable (p.121), and will eliminate the task of the entrepreneur (p.135). Labour must develop the society (p.74). The trade unions, churches, education and consumers must be involved in the management of the enterprise (p.22, 39, 89, 101, 112). Van Zuthem acknowledges, that in pluralism the collective morals are vague. Therefore he propagates formation by the top. The Gazette has shown here and there, why the antrophology of Van Zuthem is not tenable. The aspiration after the public branch organizations is another example of unrealistic morals. (back)
  16. On p.99 in Graaiers of redders? it is stated: "As generous donors the aldermen and the ministers do expect that their contribution to the enterprises pays off. They impose their demands om the transporters. Then the monopolies reply that the realization of these demands is complicated, expensive, and takes a long time. This is often the end". On the same page it is mentioned, that the director of a municipal enterprise wants to combat sick leave by employing more people. (back)
  17. On p.435-442 in Neue Institutionen-ökonomik it is stated, that sometimes the nationalization is not possible, because the natural monopoly is active in various states. Incidentally, the book uses the example of the municipality as the administrative unit. The municipality must choose between buying on the market or supplying by means of its own service. The municipality must take into account the product-price and the costs of delivery, by means of organization or contracts on the market. A natural monopoly can produce efficiently thanks to its size. Often the municipality will be too small to have an efficient own production. The municipality will expand its options by cooperating with other municipalities. Your columnist believes, that similar arguments hold at the level of states. Consider for instance the oligopolies for civil aviation or complex weapon systems. The United Nations Organization is a cooperation, which hires among others supra-national enterprises (non-governmental organisations, NGO). (back)
  18. Chapter 13 in Political economy in macroeconomics is devoted to economic reforms, such as privatizations. Drazen analyzes this by means of mathematical models. An evaluation of the experiences with the Dutch privatizations can be found in Graaiers of redders?. It concludes, that privatization leads to more information and a larger transparency with regard to the offered products (p.13, 193). The customers can often make their own choices, and can change their supplier, if desired (p.198). The reader must not think, that this matter is just dry theory. A decade ago your columnist was himself confronted with these problems, when in his home town Utrecht the municipal transporter and the provincial water company were disposed. (back)
  19. See chapter 12 in The economics of business enterprise. On p.24 and further in Rational choice theory and organizational theory (1998, Sage Publications, Inc.) M. Zey states, that in dynamical situations it is almost impossible for individuals to rationally optimize their own utility. She prefers the radical movement, and calls it organization theory. (back)
  20. This statement also originates from chapter 12 in The economics of business enterprise. In Rational choice theory and organizational theory Zey criticizes the rational choice theory, and prefers the organization theory, including marxism. Social influences determine the individual choices (p.41), and group power dictates the evolution (p.49 and further). Decisions are made by groups. Therefore one must study structures and collectives (p.103). Apparently she is influenced by the Norwegian thinker John Elster. (back)
  21. See for instance p.50 and further or p.87 and further in Ökonomische Interessen im Sozialismus (1974, Verlag Die Wirtschaft) by V.V. Radayev (in the German language W.W. Radajew). The development of the productive forces would coerce the people into a certain behaviour. Therefore they are placed in certain mutual relations. Each system has its own institutions. For instance, in capitalism the entrepreneurs must accumulate their profits, in order to continue the competitive struggle. Greed originates from the system, not from human nature (p.83, 113). Therefore the institutions must be brought in harmony with human nature. The collective ownership in the form of state ownership would lead to economic equality, cooperation and help (p.124). Everybody becomes an owner, although the property right is social (p.131). On p.154 one reads: "Die historischen Formen des Umgangs der Menschen miteinander werden durch den Charakter der Produktionsverhältnisse bestimmt, in erster Linie durch den Charakter des Eigentums an den Produktionsmitteln". This book analyzes the property, but in a philosophical way, which creates doubts about its degree of reality. The book is an acquisition from the cellars of the second-hand bookshop Helle Panke in Berlin. The same shop supplied Motivation, Motivforschung, Motivtheorien (1985, VEB Deutscher Verlag der Wissenschaften) by the GDR-sociologist T. Hahn. On p.8 he states: "Die Abtrennung der Motive vom materiellen Lebensprozeß der Menschen (...) und das Unvermögen, die eigentliche Quelle von Zwecken außerhalb des Geistigen (...) zu sehen, müssen zwangsläufig zur Fehlinterpretation ihrer Funktion führen". This statement is an unacceptable simplification. Your columnist will also protest in the following footnotes, for the benefit of possible credulous readers. It must be remembered, that these books have been published in and by a dictature, including censorship.
    A variant of this view can be found in Rational choice theory and organizational theory. On p.106 it is stated, that the structure and culture of the organization determine its decisions. However, Zey is wise enough to ignore the influence of the structure of property. (back)
  22. See p.67 and further and p.103 in Ökonomische Interessen im Sozialismus. Needs would be mainly materially. On p.69 it is assumed, that new needs only form, after the production has created a supply. The needs are dictated by history. In a previous column also Val'tuck propagates this view. This can be interpreted as a preference drift. On p.9 in Motivation, Motivforschung, Motivtheorien one reads: "[Die Tätigkeit] ist als zweckbewußtes Verhalten durch die vorgefundenen materiellen (und ideellen) gesellschaftlichen Verhältnisse (...) und deren innere Gesetze bestimmt". In a footnote on p.11 K. Marx is cited as the ultimate authority: "Unsere Bedürfnisse und Genüsse entspringen aus der Gesellschaft". On p.17 it says: "Bedürfnisse sind historisch-konkrete Phänomene, die (...) die Wechselwirkung zwischen objektiven Erfordernissen der individuellen Existenz und den jeweiligen gesellschaftlichen (...) Bedingungen zum Ausdruck bringen". (back)
  23. In fact the surplus value is naturally necessary in order to pay production factors such as capital goods, land and the spirit of enterprise. Following the political economist K.H. Marx, the Leninist paradigm assumes, that the owners have once acquired their property by means of unfair manipulations. Therefore they do not have a rightful claim on their interest or rent. Marxism interprets the spirit of enterprise as simply labour, and sometimes as malversations. Furthermore, capitalism increasingly creates contradictions, because the capital would more and more concentrate in the hands of a shrinking elite. The number of workers per entrepreneur rises. According to the LP, this is an objective law. Thus the production process becomes "social", whereas the ownership is concentrated in the mentioned elite. On p.77 in Motivation, Motivforschung, Motivtheorien it is stated: "Die allgemeine objektieve Klassenlage [der Arbeiterklasse schließt] eine im eigentlichen, vollen Sinne bürgerliche subjektive Antriebslage (Profitorientiertheit) aus". The mainstream of modern science rejects this class model, and therefore criticizes marxism in its core. (back)
  24. See p.412 in The economics of business enterprise. In the Leninist paradigm the personal class is the dominating individual circle. On p.31 in Motivation, Motivforschung, Motivtheorien the NIE models are criticized: "Da er aber (...) die objektive Situation (...) im Rahmen seines ahistorischen, undialektischen Ausgehensvom gegebenen sozialen System deutet, landet er schließlich selbst im Positivismus". The class struggle is ignored. According to Hahn, innovation is simply the historical development of the conscience. One must "historisch herangehen an die Arbeitsmotivation", because: "Daß dieser gesetzmäßige Vorgang selbst keine spontane, sondern eine bewußte gesellschaftliche Lenkung und Organisation verlangende Entwicklung ist, versteht sich von selbst" (p.49). The management and change do not originate from the free entrepreneur, but from the party. Nevertheless, the party consists of members, which individually develop their own subjective motives. On p.102 there is again a citation of Ulianov: "Auf diese Weise motiviert wird er entweder als Revolutionär wirken, einfach als Sklave leben oder ein Knecht sein". Then the class takes care, that the individual peculiarities compensate each other and create an average man. (back)
  25. In the Leninist states the probation system was generous. See for instance on p.51-52 in Modell DDR (1977, Carl Hanser Verlag) by R. Thomas: "Ein differenziertes Instrumentarium von Strafarten und Zusatzstrafen [ist] entwickelt worden, das weitgehend den Erziehungs- und Resozialisationsgedanken in den Vordergrund rückt. (...) Um die Wiedereingliederung entlassener Strafgefangener zu erleichtern, sind die staatlichen Organe verpflichtet, für die Bereitstellung von Arbeitsplatz und Wohnraum Sorge zu tragen". In the GDR TV-series Einzug ins Paradies such a case is elaborated in a dramatic way. A Russian film about the theme is Kalina Krassnaja. Incidentally, one also reads in Modell DDR: "Im politischen Strafrecht, das unter dem Aspekt der Auseinandersetzung mit dem Klassenfeind gesehen wird, sind die Strafandrohungen unter Einschluß der Todesstrafe hoch". One may remember the repression of emigration, which was made illegal by law. The exit option has been eliminated. (back)
  26. See p.417 in The economics of business enterprise. Radayev does not deny this chance, but believes that progress can not be stopped. On p.102 in Ökonomische Interessen im Sozialismus one reads: "Da im Interessenkampf [EB: between workers and owners] letztlich die fortschreitende Entwicklung der Produktivkräfte ihren Ausdruck findet, spiegeln in diesem Kampf die einen Interessen [EB: of workers and Leninists] die Richtung dieses Fortschritts wider, während andere [EB: of the owners] ihm notwendigerweise widersprechen und ihn hemmen". The Leninist party has the task to prevent, that opportunists seize power. (back)
  27. This statement is typical for the whole Leninist literature. See for instance p.104 and 108 in Ökonomische Interessen im Sozialismus: "Nach der sozialistischen Revolution und der Beseitigung des Klassenantagonismus gibt es auch für einen Interessenantagonismus keinen Platz mehr". On p.116: "Das grundlegende Produktionsverhältnis ist somit das bestimmende ökonomische Kriterium für die Aufdeckung des Interessensystems jeder Gesellschaft". In the last resort, the form of ownership would dominate over various other conflicts of interests. In socialism the conflicts between various professional groups and regions are solved in harmony. Religious and cultural differences would become unimportant, once a certain existential security has been realized. Within the GDR, even an empirical researcher such as R. Stollberg stubbornly sticks to this doctrine. Furthermore, note that Radayev gives the interests a central place in his argument. The Leninist paradigm constructs the causal chain "need → interest → motive". See the column of four years ago about economic power. Apparently a motive is identical to a behavioural incentive or an observed preference. Thus Hahn analyzes in Motivation, Motivforschung, Motivtheorien the motives and not the interests. Nevertheless, he completely follows Radayev in his discussion of the social consequences. (back)
  28. According to p.71 in Rational choice theory and organizational theory the bureaucracy values a structural (functional) rationality, where the individual rationality is irrelevant. (back)
  29. Sometimes the disadvantages of an innovation become only apparent, after its social establishment. See p.417 in The economics of business enterprise. See furthermore p.96 in Individuals, institutions and markets (2001, Cambridge University Press) by C. Mantzavinos. There it is noted, that according to North the institutions can change due to new ideologies and the power of the rulers. When this version of the NIE is followed, than the future is almost unpredictable. For, changes of power are accidental and often coupled to incidents. But Radayev believes on p.102 in Ökonomische Interessen im Sozialismus: "Marx bewies unwiderlegbar den historisch vergänglichen Charakter des Kapitalismus und seine Triebkräfte". That is a big comfort! All in all, Coleman is positive about the capitalist development, but on p.610 and 650 in Foundations of social theory he yet calls the capitalist entrepreneurial production artificial, and unnatural. (back)
  30. See p.90 and further, 131 and 134 in Ökonomische Interessen im Sozialismus. On p.93 V.I. Uljanov is cited again: "[Mit solcher Bedingungen ist es möglich,] die Mehrheit der Werktätigen wirklich auf ein Tätigkeitsfeld zu führen, auf dem sie (...) ihre Fähigkeit entfalten und Talente offenbaren können". And on p.128 it says: "Nachdem die materiellen Voraussetzungen des Sozialismus geschaffen wurden, macht die kapitalistische Produktionsweise einer höheren, progressiveren Formation Platz, die eine schnellere Entwicklung der Produktivkräfte gewährleistet". And again on p.147: "In der Einheit der materiellen Interessiertheit aller Agenten der sozialistischen Produktionsverhältnisse liegt ein charakteristischer Zug (...), der im Vergleich zu den vorangehenden Gesellschaftsformationen das höchste Entwicklungstempo der gesellschaftlichen Produktion sichert". This statement is obviously controversial, and since then has been refuted in practice. Yet after the Leninist coup d'état this ineffective regime could rule for a long time. Here North is indeed right: chance rules! (back)
  31. On p.36 in Motivation, Motivforschung, Motivtheorien one reads: "[Der Marxismus wies] die Objektivität und Konkretheit des an der Durchsetzung jeweiligen gesellschaftlicher (Klassen-) Interessen zu messenden Moralkriteriums nach". This is indeed a statement of marxism, but this does not make it right. On p.93 several phenomena are described, which are caused by the bourgeois ideology: "Drückbergerei, Schmarotzertum, Korruption, Spekulantentum, Egoismus, Raffgier, Gleichgültigkeit für die Sorgen des Volkes". And here your columnist omits a few abuses. (back)
  32. The LP does not deny the influence of the organization and of the contents of the task. But these influences would in the last resort also be determined by the social system. Socialism pays attention to a richer language, and guarantees the harmony within organizations! (back)
  33. On p.155 in Ökonomische Interessen im Sozialismus one reads: "Der Kapitalismus [stumpft die moralischen Anreize bei den Werktätigen] ab, entstellt sie und schließt die Möglichkeit ihrer Entwicklung aus". And on p.132: "Die Tätigkeit eines beliebigen Werktätigen [ist] im Sozialismus von der objektiven Notwendigkeit durchdrungen, die Bedürfnisse der Gesellschaft zu befriedigen". This follows from communitarianism. See also p.159. And on p.160: "Die neuen moralischen Anreize treten (...) im Arbeitsheroismus der Werktätigen zutage". On p.57 in Motivation, Motivforschung, Motivtheorien it is stated: "Die Beseitigung von Ausbeutung und Existenzunsicherheit im Sozialismus prägt (...) sehr wesentlich das Profil der Arbeitseinstellung". The expected effectiveness of central planning is reinforced by the moral enthusiasm. The coercion in the command economy is wisely ignored. In a previous column Stollberg measures the socialist personality by means of the attitude towards labour Ψ, and discovers with disappointment, that it is fairly constant in time. Note once again, that the human pliability is a creed, which is indeed propagated energetically, like a determinism, as it were, but has not become reality. In Leninism there was more alienation than in capitalism. Judged by present-day norms, the Leninist view is not credible. It is impossible to program people in an arbitrary manner. However, the reader may consider, that Leninism has been invented in a time, when the populations was still uneducated and meekly followed their religious leaders.
    On the other hand, Zey stresses on p.82 in Rational choice theory and organizational theory, that behaviour is learned within society (learning model of Kolb). And Coleman states on p.633 in Foundations of social theory: "Corporate actors are the parasites, and natural persons are the hosts. (...) Since corporate actors control the system, the state of the other parties, the natural persons, is such as to maximize the corporate actors' utility, rather than maximizing their own utility. They become, in effect, slaves"! Once your columnist believed that Coleman was a sharp-witted thinker, and now he is yet confronted with agitation. (back)
  34. Note that the social-democracy suffers from the same naive conviction. The democratic socialism and Leninism share a similar image of man. On p.79 in Motivation, Motivforschung, Motivtheorien one reads: "Hier macht sich zum einen die relativ selbständige Rolle gesellschaftlicher Ideologie und der ideologischen gesellschaftlichen Verhätnisse geltend. (...) Zum anderen ist es insbesondere die Teilnahme am organisierten politischen Klassenkampf unter Führung einer Marxistisch-Leninistischen Partei, die spezifische (...) Erkentnisse (...) vermittelt". On p.105: "Sozialistischer Alltag - das ist auch die Allgegenwart des gesellschaftlich organisierten politischen und ideologischen Lebens". The reader may recognize here the limiting "bonding" relations. (back)
  35. On p.149 in Ökonomische Interessen im Sozialismus it says: "[Dem neuen Herangehen] liegt die Notwendigkeit einer vollständigen und tieferen Kenntnis der ökonomischen Gesetze des Sozialismus zugrunde". According to Radayev the objective laws remain valid. They merely have to be interpreted more accurately! (back)
  36. On p.74 in Einführung in die Marxistisch-Leninistische Staats- und Rechtslehre (1979, Dietz Verlag), edited by R. Rost, H.D. Moschütz and M. Hartung it says: "Die weitere Gestaltung der entwickelten sozialistischen Gesellschaft bietet der sozialistischen Intelligenz alle Möglichkeiten, ihr Schöpfertum ungehindert im Interesse des gesellschaftlichen Fortschritt zu entfalten und ihre Persönlichkeit zu entwickeln". This statement is rather bizarre, because the GDR obstinately opposed the reading of western books. It was supposed that such books disturb the personal development! The Leninist doctrine had to be imposed, at the cost of free thought. When one is convinced that one knows it all, then any scientific research indeed loses its purpose. The loyal reader may recognize this reflection from a Gazette of four years back, when your columnist was not yet familiar with the NIE. The Leninist dream has been inculcated on the population by means of education and propaganda, such as the Aufbau films of studio DEFA. Various films describe the forced collectivization of agriculture. The elimination of private enterprise is described in for instance the TV series Die lange Straße. This is a family chronicle, which tries to illustrate the birth of socialist man. (back)
  37. See Einführung in die Marxistisch-Leninistische Staats- und Rechtslehre. It concerns an introductory textbook, although the type of education is unclear. It dates from 1979, so before the Andropov-Gorbachev period. (back)
  38. The typical formulation can be found, among others, on p.67 of Einführung in die Marxistisch-Leninistische Staats- und Rechtslehre: "Die marxistisch-leninistische Partei als bewußter Vortrupp der Arbeiterklasse und höchste politische Organisation der Gesellschaft verkörpert und realisiert deren Führung". (back)
  39. As a support for this claim, Einführung in die Marxistisch-Leninistische Staats- und Rechtslehre on p.67 even refers to Het communistisch manifest (1979, Uitgeverij Pegasus) by K.H. Marx and F. Engels. On p.56 it says: "So the communists are the most resolute, always pushing part of the labour parties of all nations; theoretically, they excel with regard to the mass of the proletariat, because they understand the conditions, the course and the general results of the proletarian movement". At the time, the SED believed this as a scientific fact. On p.79 in SR it is stated, that especially the Leninist party has resisted Nazism. The other parties would have resisted less. Those who want, can also point to the military successes of the Red Army under Stalin. Perhaps the most important basis for the claim is the successful coup d'état of the Russian Leninists since 1917. This obviously gives a one-sided picture of the historical reality. The bourgeois subjectivism (political rights) would ignore the objective laws, and therefore is not scientific (p.84). The pluralism is a "bourgeois" theory, which serves as a weapon against the LP. (back)
  40. A hallmark of the LP is the assumption, that monopolies have formed in all sectors of the industries. For a long time, many democratic socialists have also cherished the same illusion. See the column about the supposed industrial concentration. (back)
  41. The SED had chosen to keep among others the christian CDU and a liberal party in parliament. See p.80 in Einführung in die Marxistisch-Leninistische Staats- und Rechtslehre. However, such parties are radically pacified. They are obliged to support the SED unconditionally. The distribution of the parliamentary seats is fixed, so that the "bourgeois" parties are a minority. During elections the SED has the privilege to approve of all candidates on the lists. There is just a single ideological program, of all parties together! The parliamentary construction is a peculiarity of the GDR. On p.113 in Motivation, Motivforschung, Motivtheorien it is mentioned: "Unter dem Einfluß (...) praktischer politischer Aktivitäten des Klassengegners [können sich] auch (...) antisozialistische Ziele entwickeln. (...) Ihnen ist durch den sozialistischen Staat gezielt zu begegnen". Note that this book has been published in 1985, so uin the period when Gorbachev rose to power. (back)
  42. Hahn recognizes on p.89 in Motivation, Motivforschung, Motivtheorien, that motives differentiate, dependent on for instance the generation or the regional traditions. On p.91: "Gesellschaftliche und individuelle Ideologiebildungsprozesse unterliegen im Rahmen der letztlichen Bestimmtheit durch das materielle gesellschftliche Sein relativ selbständigen Gesetzen". So all in all, the class structure is yet decisive. Originally, the Dutch social-democracy had the same ideas. The book De Nieuwe Tijd (2003, Aksant) by H. Buiting describes among others marxist publications in the magazine De Nieuwe Tijd about Dutch history. See paragraph 2.3.3 and 3.3.3 there. Various authors try to attribute the rebellion against the Spanish occupier to the productive relations. It does not really improve the understanding of history, and is even rather far-fetched. (back)