Jim, I find it somewhat ironical that we, who rail against the neoclassical model, accept a neoclassical model to judge the behaviour of co-ops, socially owned firms etc. The Ward-Vanek model begins with the same assumptions as the standard neoclassical -- maximization, methodological individualism, substitution (choice theoretic), and market clearing equilibrium, plus (of course) a measurable marginal product of labour and capital. If you do not accept these axioms, then there is no reason to expect the Ward-Vanek results. If, on the other hand, you begin with institutional economics axioms, then you would get the expectations that appear in reality. Horvat's point all along has been that people do not behave in the way postulated by Ward-Vanek. If one looks at the Yugoslav experience or the Mondragon experience, Horvat is right. Behaviour is not determined by individual maximization in theory or practice. Paul Phillips Economics, University of Manitoba
