sector. Particular policies on their own are insuffi- cient; a policy package is needed if optimal results are to be obtained. This argument is skilfully and forcefully put.

By its nature a paper like this is controversial - it deliberately sets out to question longheld beliefs. This should, however, enhance rather than diminish its value both in the transport sector itself and in academic study of the sector. Restrictions on the length of the paper mean that many of the argu- ments cannot be set out in full. A number of assertions are made which cannot be justified in full. This should not imply that they cannot be justified and the paper is a welcome contribution to the debate on transport policy which is now begin- ning almost by default with the 1982 Transport Bill on subsidies and the Serpell Report on British Rail. It deserves a wide audience and a constructively critical reception.

W. T. Tyson -University of Manchester, UK

D O N E GEORGE Reviews The Economics of Labour Managed Enterprises N. J. Ireland and P. J. Law, The Eeonomics of Labour Managed Enterprises, Croom Helm, London, 1982, pp, 218, €13.95 (hard- back).

Ireland and Law have written an extremely useful textbook on labour-managed economies. There is nothing original in their book but it nevertheless draws together, in a coherent and well presented way, a now substantial body of economic theory. The subject has advanced considerably since Ward’s famous (1958) paper. The analysis is centred on the labour-managed firm and extensions to the industry and economy levels are relatively rudimentary. This is a reflection of the literature and is in no sense a fault with the book.

The first four chapters deal with standard prob- lems of the labour-managed enterprise; member- ship adjustment, finance of accumulation, and indi- vidual labour supply. Chapter 5 deals with the Pareto-efficiency properties of the labour-managed economy in general equilibrium. The absence of any real ‘labour market’ is clearly a central problem here. Attention is given, in this chapter, to the important Jensen/Meckling argument concerning purchase, as against renting of capital. Other argu- ments concerning monitoring costs and work condi- tions (advanced, for example, by Reich and Devine) are integrated into the analysis. Chapters 6 and 7 cover market power and uncertainty respectively, though the literature dealt with here is somewhat sketchy. Chapter 8 deals with empirical work and is particularly weak, probably owing to shortage of space. A serious omission is any mention of worker participation and workers’ co-operatives in Scandinavia.

Overall the book reflects an inherent weakness in the existing literature, namely its tendency to be couched within a largely neoclassical general equilibrium framework. This is particularly evident in Chapter 5, on Pareto-efficiency, where the au- thors themselves remark:

That we can conceive of an LM-economy as having a long-run equilibrium which is Pareto- efficient and a copy of the competitive PM economy in long-run equilibrium is neither sur- prising nor very interesting.

This framework tends to bias the literature away from certain important issues. Firstly, dynamic as- pects of the labour-managed economy are inade- quately dealt with. Atkinson’s (1973) paper on the growth of labour-managed firms is briefly men- tioned in the book, but aside from that the question of growth is largely ignored, despite a whole chap- ter on the important question of financing accumu- lation. Secondly, there is little mention of the role of government in the labour-managed economy, aside from the regulation of market power. One would expect some discussion of the macro- economic policies of government as well as policies on microeconomic planning in a labour-managed economy. Finally, one would have liked some dis- cussion of the connections between labour managed firms and participatory schemes in capitalist firms. Certain aspects of capitalist enterprises, such as worker participation, profit-sharing, co- determination, etc. are clearly related to labour- management proper. Despite a good Chapter 4 on internal structure and incentives in the labour- managed firm, these connections are not drawn out.

That the book reflects these shortcomings of the literature is no fault of the authors, though perhaps one would have liked more speculative discussion, looking forward to future research. As it stands, the book leaves the reader with an impression of a potentially interesting subject, rendered lifeless by the cold hand of neoclassical theory. Nevertheless, the book is recommended, both as an under- graduate text and as a means for any professional economist to become acquainted with an interesting and relatively new branch of economics.

Donald A. R. George - University of Edinburgh, UK

68 MANAGERIAL AND DECISION ECONOMICS, VOL. 6, NO. 1, 1985