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ON SOME RECENT EXPLANATIONS OF WHY CAPITAL HIRES LABOR
Author(s) -
PUTTERMAN LOUIS
Publication year - 1984
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1984.tb00677.x
Subject(s) - economics , dominance (genetics) , argument (complex analysis) , neoclassical economics , capital (architecture) , microeconomics , production (economics) , history , biochemistry , chemistry , archaeology , gene
Conventional microeconomics contains no explanation of why capital hires labor (and not the reverse). In view of some surprisingly positive results in the theoretical analysis of worker‐run enterprise systems, recent contributions to the theory of the firm have attempted to explain the dominance of capitalist production relations in efficiency terms. The present paper critically reviews works in this area by Alchian and Demsetz (1972), Williamson (1975, 1980), and Jensen and Meckling (1979), and contends that a convincing efficiency argument for the general superiority of capital owners' over workers' control of enterprises still is lacking.