Alienation produces class consciousness.

Remark: I use alienation here not in the classical Marxist sense, but in a legal one. Alienation refers to workers "alienating" or transferring their legal right to govern their own activities to an employer during working hours.

This is extremely interesting research because it suggests that support for welfare, redistribution, and regulation may not simply result from being dumb or short-sightedness (as some libertarians and capitalists claim), but from workers' alienation from their work. In worker cooperatives, where alienation is eliminated, workers appear less supportive of redistributive policies/regulations and even oppose them.

The elimination of alienation also have several positive effects.

First, it reduces monitoring and agency costs. When workers are not alienated, they have a stronger incentive to monitor their own performance because their income is tied to the firm's success. Workers also have a local collective interest in ensuring that everyone works effectively. link1 | link2

Alienation can also stifle creativity by treating workers as passive order-takers. Without alienation, workers have stronger incentives to innovate and share ideas. Empirical studies suggest that producer cooperatives often have more effective training programs than capitalist firms and can function successfully with relatively fewer unskilled workers. Participation in governance and profit-sharing also encourages workers to share private information with management and each other. This reduces information costs and agency problems, as workers are more willing to share productive insights when they know those insights will not be used against them. link3 | link4

During economic crises, alienated workers have little incentive to support the firm, increasing the risk of failure. Worker-owners, by contrast, are often willing to accept temporary wage reductions or contribute their own resources to help the firm survive.

The elimination of alienation also encourages greater participation in firm activities and investment in firm-specific human capital. Labor-managed firms tend to have lower turnover and absenteeism rates, allowing them to preserve valuable skills and knowledge that would otherwise be lost in a high-turnover capitalist firm. link5 | link6 | link7

Finally, alienated capital is mobile and often indifferent to local conditions. Worker-owners generally live in the communities where production takes place, which make them more concerned about pollution and other negative externalities. link8

However, the reduction of alienation also weaken class consciousness. If workers become less supportive of welfare, redistribution, and income equalization, this challenge the collectivist foundations of many socialist theories and encourage a more individualistic outlook.

Questions for capitalists:

1. Do you accept that capitalism creates worker alienation in this legal sense?
2. Would you support institutional or governmental reforms within capitalism that reduce alienation?
3. Why or why not?

Questions for collectivist socialists:

1. How would you respond to evidence suggesting that workers in less alienated workplaces become less supportive of redistribution and welfare policies?
2. If the elimination of alienation leads workers to adopt a more individualistic outlook, does this challenge the collectivist case for socialism?
3. Would you support a socialist society built on a strongly individualist philosophy rather than a collectivist one? Why or why not?