Alchian and Allen

February 25, 2010

Exchange and Production, 2nd Edition, p. 206:

Is there, then, no difference between Macy’s hiring clerks as employees or the clerks renting Macy’s building and facilities and paying rents (and inventory-use costs) to the owners out of the total daily sales — leaving the clerks with the same income in either case? No difference, if there is certainty about the output performance. But someone must bear the consequences of mistaken estimates of the catch, and that does make a difference. For the moment, the important point is the identity between the two payment methods, renting and hiring — assuming certainty about performance.


2 Responses to “Alchian and Allen”

  1. Rrrobert! Says:

    Workers of the world unite! Own your production! But make sure you get together to pool your risk … and you’ll probably want some sort of centralized administrative structure to manage that … also for making inventory decisions and doing research … hell, you probably just want to go work for Macy’s.

  2. How dare you suggest that the Macy’s corporation is engaging in anything but pure exploitation of its workers!

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