Through the Prism of Hegemony

democracies with equalising tax-transfer mechanisms. Cohen and Rogers argue for associative democracy. Organisations such as encompassing unions could raise cooperation and equality. Moene and Wallerstein point out the reasons why just such a consensus with centralised trade unions has broken down in the social democracies of Norway and Sweden, Dreze makes some suggestions for overcoming incentive problems in worker-managed firms. Workers are risk averse, and find it difficult to fund high capital intensities and to employ outsiders. The traditional theory of the labour managed firm needs to be expanded to take account of funding and employment risk in a world of uncertainty with incomplete insurance markets. A potential solution he outlines is: workers are paid a fixed wage and a fixed share of profits is used to make a contribution for theirsocial security. Worker managed firms tend to make wage reductions more easily, but they compensate for adverse shocks by working longer hours rather than expanding employment. The best way to attain the latter is still expansion of the number of firms.