Property and Contract in Economics: The Case for Economic Democracy is a 1992 book by David P. Ellerman. Ellerman argues that the twentieth-century debate between capitalism and state socialism was misconceived, as both systems share the institution of employment whereby workers are hired by an external party. The author draws an analogy with slavery. He contends that the substantive question is not whether slaves should be privately or publicly owned, but whether people should be slaves at all; similarly, the relevant question in economics is not whether workers should be employed by private firms or state enterprises, but whether they should be employed by others at all. The book develops a "labor theory of property," distinguished from the Marxian labor theory of value, which applies the juridical principle of imputation—that legal responsibility should follow factual responsibility—to economic production. Because only persons and not things can be responsible agents, Ellerman argues that workers should appropriate the positive and negative results of their labor. Human agency, he argues, cannot actually be transferred—which makes the employment contract, like the voluntary slavery contract, inherently invalid. He traces this claim through an intellectual history of inalienable rights theory. Ellerman terms his proposed alternative "economic democracy," understood as universal individual or joint self-employment in enterprises such as worker cooperatives and partnerships.
Background Ellerman's interest in worker self-management and cooperative enterprise developed over decades before the publication of the book. In the late 1970s, he co-founded the Industrial Cooperative Association, an organization devoted to promoting worker cooperatives in the United States. The book is based on his earlier work, including The Democratic Worker-Owned Firm (1990), which addressed the practical structure and governance of labor-managed enterprises. Ellerman critiques both Marxist and neoclassical economic thought, charging that they share what he calls a 'fundamental myth': the assumption that the right to the product and the right to govern workers are inherent in ownership of capital. He traces this error to Marx's acceptance of the medieval concept of 'Dominion,' in which control over workers and appropriation of the product were understood as attributes of landownership. Marx, on Ellerman's reading, simply substituted capital for land. This framing, Ellerman argues, obscures what he sees as the defining institution of modern economic systems: the employment contract, which operates the same way whether enterprises are privately or publicly owned. The book appeared shortly after the collapse of the Soviet Union, and Ellerman intended it partly as an intervention in debates over economic restructuring in the former Eastern Bloc, offering an alternative to both state socialism and conventional capitalist privatization.
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