Question

Assignment:

Watch the following PBS Newshour video that details the New Belgium Brewery Company which is owned by its workers:

http://www.pbs.org/newshour/bb/brewery-workers-pour-hearts-business-given-stake/ (Links to an external site.)Links to an external site.

1. Write about whether or not you believe productivity would go up, down, or stay the same in an enterprise where the workers are owners versus a traditional workplace. How would this affect GDP, inflation, and other macroeconomic variables?

Answer 1

We know that it is the manpower of any organization which can make a significant difference in the profit and revenue generated along with the production level. All these factors greatly depend on the fact that how motivated the manpower is. In a traditional organizational set up where the workers are merely the means of producing the product and no communication is made by the management, it has been observed that the manpower is not motivated to put their best effort in the operations of the organization and thus the actual production potential is never met.

On the other hand, if the management involves these employees in the normal and operational decision making, it develops a sense of responsibility, participation, accountability and they become the stakeholder in the organization. All these factors will create a positive motivation, dedication, and accountability towards their job and thus they will put their best effort. As a result, the organization will have a better production level with lesser defects. This will improve the overall productivity of the organization and helping the GDP to grow.

Due to improved productivity, wages will also be increased and it can have the danger of increased inflation. But this will depend on the rate of the wage rise. If nominal wages increase at the same rate as the increase in labor productivity, we will not have either inflation or deflation in the economy. If nominal wages increase faster than an increase in labor productivity, we will have inflation in the economy, equal to that differential. The reverse will also be true. If nominal wages increase slower than the increase in labor productivity, we will not have inflation (possibly deflation) in the economy.

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