ACCUMULATION OF CAPITAL AND DIVISIBLE RESERVES IN LABOUR MANAGED FIRMSDownload This Article
Ermanno C. Tortia
The problem of the accumulation of capital in labour managed firms and worker cooperatives has been attracting considerable attention by past research. The Furubotn-Pejovich effect is considered to be the source undercapitalisation. The paper seeks to show that the presence of undercapitalisation is due to a specific mechanism of reinvestment, i.e. reinvestment of self-financed capital funds in indivisible reserves. The introduction of divisible reserves appropriable by worker members at some point in time would solve the horizon problem. However, it is likely to engender new and unexplored problems connected with the way in which net surpluses are distributed, the reinvestment of individual shares of net surpluses and the reimbursement of individual capital quotas.
Keywords: Labour Managed Firms, Capital, Investments, Undercapitalization
How to cite this paper: Tortia, E. C. (2005). Accumulation of capital and divisible reserves in labour managed firms. Corporate Ownership & Control, 2(3), 19-27. http://doi.org/10.22495/cocv2i3p2