ss 1,2

prout.econ

Converting State Enterprises

March 25, 1995

Q: What is the best process for converting state-owned enterprises to cooperative enterprises? Should the state sell its factories and shops to the workers of those enterprises? Or should the enterprises be given directly to the workers? Or should some other system be used?

This is a very good question. State-owned industries will have to be divided amongst those people who have the greatest involvement. But this transition must be done in a logical fashion. If a man is given responsibility for the running of a key industry in that region, or even if they are given the responsibility for a particular task to be done, they must be trained in the task. They must be examined to make sure they have the ability to do the task, then slowly they are given responsibility to see how they can do. And then and only then they are given the full responsibility, so that suddenly a heavy load is not thrust upon a man who is either untrained or unfit for the task.

Likewise, when this abdication of authority is done by the state, and the decentralization is taking place giving the responsibility to those people who provide the service, there must be careful consideration: Are those people able to take the responsibility? What training do they require in order to execute the responsibility in a proper fashion? So those people must be trained in management skills. They must be trained to handle the money, they must be given incentives for good work, and then carefully, over five years perhaps, step by step, the responsibility is given to them to manage. Then, finally, all profits, first 25 percent, then 50 percent, then 75 percent, then 100 percent, are handed over. Like this, a gradual transition takes place ensuring first that the people are trained and educated to the task and second that they may be able to carry it out in a responsible fashion, that they have the skill and ability to do the task.

Leaders among the workers should be identified and those people trained and brought forward so they may take managerial control. Those people who have competencies must be identified. Then they may separate relations within their working group. They may poll the people, they may organize, they may establish themselves as leaders and begin to take the weight of responsibility. Then slowly, slowly as they take the work, they also take the financial burden of ownership, and they distribute among the employees and set up the new system. But this must be done step by step. It is very important that training take place, that these competent leaders be identified, trained and begin to implement so that there is smooth transition.