The co-op structure is less used in the US, but there are quite a lot of significant employee owned corporations (which come with the limited liability benefits to shareholders).
There are also quite a few with mixed founder / employee ownership. Publix for instance employ 250,000 people across their supermarkets and are employee / founder owned.
Also worth noting for HN: Igalia is a workers' co-operative of open source developers, many of whom are significant contributors to browser and HTML renderer code: https://en.wikipedia.org/wiki/Igalia
I was shopping at winco a couple years back, which is employee owned, and one of the cashiers was in his 40s/50s and mentioned he had a couple million in retirement.
Very cool to hear, dude will likely be better off than me. Employee owned corporations are good.
I don't think this situation is the same thing as celebrating the success of others!
Of course in my neck of the woods (Silicon Valley) it's expected that all 50 year olds are multi millionaires, as all you need for that is have owned a house for a few decades.
I think this is already well known due to the existence of landlords, who are pre-capitalist. Although most people don't think of farmers or California retirees as belonging to this class, which they probably should.
It was indistinguishable from a normal corporation that periodically grants stock to employees, except other forms of retirement contribution were sub-par, and vesting periods for everything were LOL WTF long.
Working conditions and such were worse than many places in ways that definitely wouldn’t have been the case if it were a traditional ownership structure with a union rather than employee-owned.
They did love to put that up front when selling a job there, though. As if it actually meant something.
In that case I question the use of "employee-owned". It might be technically true, but if it comes with no actual control there is no point in using that term.
The original point is about companies where workers have actual control. That's what's important, that's what's interesting.
big ships are generally terrible places, as a rule. places that are less bad are exceptions. but most of the time you're picking your poison, yet that doesn't mean alternative models aren't worth exploring.
Which one? As with all things, there is a lot of variation. There will always be good places and bad. The question is whether they are better on average.
Yes, but note that those are typically neither worker co-ops (like Cheese Board or the components of Mondragon) nor consumer co-ops (like REI or a grocery co-op), but a cooperative association of businesses that are themselves typically very much not co-ops.
Energy cooperatives are another thing I've seen work well here in the US.
A house I lived in got our electricity from a Touchstone Energy cooperative[1] and our rate was dirt cheap and they even mailed us a dividend check every year. I've even received a few checks from them after moving out of the area and no longer being a customer of theirs. They had great customer service too. They were significantly better in every way than the regional monopolies and municipal power companies I've dealt with.
Sounds like my credit union. I call and someone picks up the phone pretty quickly and competently.
I got in as a minor, so I paid $5 for my startup share. (Adults are $25). They’ve been giving me a $5 dividend share every year for a few decades.
And charge me $0/month for a pretty full-service bank experience (not common at banks in Canada).
They’re on a North American network of ATMs (Exchange & Accel) so I have pretty good coverage out of town, can even deposit cash/cheques into CDN partner ATMs. In a lot of smaller towns, you can’t bank on every big bank having a branch, but a good chance of a partner credit union.
I wonder if it could work for public education. Perhaps even in lieu of teachers unions.
Much more narrowly, I wonder if it could work for certified flight instructors. Most CFIs are young, know little about business, marketing, tax compliance. And as a consequence are often exploited by employers who misclassify them as independent contractors only to pay them less, without benefits, and still direct their schedules, coerce them into noncompetes. A co-op would help protect their interests while raising standards, in a cost efficient way.
One of the challenges of a co-op school is that people tend to be "in the market" only whilst they have school-aged children, roughly ages 5 to 18. In much the same way that student involvement in higher education tends to focus strongly on the few years such students are actively being educated, which means that faculty, staff, and corporate influence in higher educational institutions tends to overwhelm student power.
That said, yes there are co-op schools, with the Co-Op School in Brooklyn, NY, being prominent: <https://thecoopschool.org/>
> I wonder if it could work for public education. Perhaps even in lieu of teachers unions.
In a very real sense, public schools are already customer-owned cooperatives governed by a set of trustees elected by the customer-owners.
That said, once you have a school owned by the teachers it's no longer a public school. Public schools are funded by and governed by the public. A cooperative school owned by worker-owners is by definition not a public school.
between the microschool and ESA movements going on right now, there will likely be many publicly-funded & worker-owned schools popping up over the next few years (amongst other much stranger hybrids).
In many jurisdictions, a teacher co-op can already obtain a charter to have an "open to the public, funded by the public, and accountable to the public" charter school. If we're going to be pedantic I think that would fit your funded+governed definition. owned+operatred might be closer to what you are gesturing at though, or perhaps local democratic oversight? Regardless, the old public/parochial types of school categorization is not nearly nuanced enough to be particularly useful for where things are already, let alone soon headed.
Morning Star is an example that takes it even further - there are no bosses and all pay is peer based. They do about $1B a year and have 10% of the tomato ingredient market.
Producer co-ops generally are at least somewhat prevalent.
Two notable former examples are Visa and Mastercard (they've since reverted to publicly-traded corporations, in the aughts). Both were originally formed as co-operative ventures among member banks, effectively a producer co-op.
I've looked into worker co-ops previously, and noted that most examples seem to have relatively simple organisational needs, with typical sectors being food-service (restaurants and cafes), publishers, acting troupes, and if memory serves, a political party. Mondragon is notable for being an industrial manufacturing company.
There are also worker-owned (though not necessarily co-operative) businesses, such as Bob's Red Mill (milling and cereal products).
Consumer co-ops saw popularity in the 1960s and 1970s, but have largely faded from view. A niche they had occupied, "natural food store" is now dominated by Amazon through its Whole Foods subsidiary, though there are some independent co-ops still extant, often in quite unexpected locations. Three Rivers Market in Knoxville, TN, comes to mind.
Credit Unions are another often overlooked case of co-ops --- both in terms of being neglected over commercial banks and not being recognised as co-operative businesses.
The Nonprofit Quartery ran a recent article on recent trends in co-ops in 2022:
I think Bob basically gifted the company to the employees (they bought in over 10 years, but at a valuation far lower than Bob could have got selling the company to an acquirer).
> Consumer co-ops saw popularity in the 1960s and 1970s, but have largely faded from view. A niche they had occupied, "natural food store" is now dominated by Amazon through its Whole Foods subsidiary, though there are some independent co-ops still extant,
You missed a chance to mention PCC Community Markets, the USA's largest grocery store co-op, who are also located in Seattle!
(And just like Amazon, PCC was recently in a union labor dispute!)
In the '90s/'00s I worked at the Davis Food Co-Op in Davis, CA which was one of the largest full-service (meaning not just hippie health food) consumer-owned grocery co-ops at the time. After working in the bakery I was on the Board for 3 years, a fascinating experience (we followed the Carver Policy Governance model, where the board is basically the legislative/judicial branch and the CEO is executive).
When a Whole Foods opened across town, they shut down in less than a year largely because of the strength/quality/loyalty of the Davis Food Co-Op.
One of the main challenges for co-ops is navigating the entry and exit. If you had Direct employee ownership, you have to buy in when you start and sell your stock back when you leave.
A trust with the employees as beneficiaries solves a lot of these problems. It also prevents the co-op members from taking the company public for a huge payday.
Seems to happen once the founder retires. My little brother's tile laying business is going to distribute ownership to the employees based on years + skill once the founder retires. They're already highly paid and treated well (they even have a 401k match which is surprising for a little 30 employee construction company). I think it's the way to go unless you have heirs that you want to run the company.
Worker co-ops are employee-owned companies, but not all employee owned companies are co-ops.
The point that I was highlighting was that it comes down to the Articles of Incorporation and how ownership is managed on an ongoing basis. What happens when someone retires or you hire someone new.
If I were to retire and simply give my company to my 10 employees, Nothing would stop them from hiring new employees and not sharing ownership, leaving the company and keeping ownership, or selling their ownership to a third party.
Would it be fair to say that companies like AMZN or GOOG have "employee ownership" because of the stock options? If so, it means many tech companies meet this definition.
Most people working for Amazon don't get stock options, most of Amazon's employees are doing stock management in warehouses, delivery, etc.
Beyond that, stock _options_ aren't stock, and stock _grants_ to employees are often in restricted classes... they're not meaningful employee ownership because they're structured to ensure that they don't represent any kind of employee control over the company.
In many tech companies like Microsoft and Netflix, there is only 1 stock class and SWE employees get stock grants that aren't restricted on vest. You just conveniently picked the FAANG company where most of its workforce are warehouse employees.
But the employees don't own a controlling share. For it to be a worker cooperative it really needs to be entirely owned and governed by the people working there.
The tradeoff is that requiring all shares be worker-owned devalues the shares owned by workers, due to massively reduced liquidity. This situation does not necessarily benefit the workers since they have an interest in maximizing the value of their share.
Suppose I own 0.01% of the company I work at. If that company is publicly traded, I can sell those shares to anyone.
If that company is a co-op in which only employees are allowed to own shares, the only people I can sell my shares to are other employees.
In general, more willing buyers (who in turn know they can they sell those shares unrestricted in the future to any buyer), increases the people willing to bid on those shares at any given moment in time. (It’s the same basic reason that you’d rather have $100 in cash than $100 gift card for Starbucks.)
Are you even allowed to buy/sell shares in an employee owned co-op? I understood that share ownership was part of employment with the company. It entitles you to a share in the profits and a share in the decision making, but I didn't think it was a tradable instrument itself.
> How does reduced liquidity equal lower share value?
1: Lower liquidity usually goes hand in hand with higher transaction costs, which means a bigger gap between how much the buyer pays and how much the seller walks away with.
2: Time value of money: Suppose some liquid asset can be exchanged for $X right now, and an otherwise equivalent illiquid asset can be exchanged for $X by, let's say, a month from now. $X today is more valuable than $X in a month, so no one is going to buy the illiquid asset today for $X if they could get the liquid one instead.
How do you handle companies like AMZN where Jeff Bezos still plays a role. Yes, he seems to be busy doing other things but he does seem to have a role. And the founders at all of these companies are still doing things. Even Bill Gates has some kind of role, right?
Rank and file aren't really "shareholders". We hold an utterly insignificant stake compared to funds and other corps. They can take a board of directors and bend their beaks all they way back to their rectums, force them to act against a company's best interests.
Employee ownership means the employees decide what they do with the profits derived from their labour. The company itself tends to benefit as well, in terms of stability, quality of work life, and long-term profitability.
There are a lot of different co-op structures and different aspects of the broad term co-op. Employee ownership is one aspect that could be further broken down. Profit participation, worker-led governance and decision making, formal legal & tax categorizations are other interesting aspects.
Stock options in small percentages are a form of profit participation but a weak contributor to the question on if a business is a co-op.
Not really, but technically yes. "Employee-owned" is being used in a specific way here; it's a specific form of ownership governance. Most often the shares are owned by employees via a trust, which the business funds. None (or mostly none!) of the stock options available to Amazon or Google staff are useful in terms of controlling the business. When someone is using the term "employee-owned business," they are generally referring to a business in which employees have actual control, not just a profit-sharing certificate.
Of course, any publicly-traded company can be 'employee-owned' to whatever degree the employees buy shares. But this term usually indicates something else.
Employee ownership can't exist if its a publicly traded company. The co-op model is literal ownership of direction of the company, not just financial ownership. Most publicly traded companies aren't anywhere close to employee owned even though they may grant stock to employees. Those employees have no say on the company direction (see latest news about Google firing employees for protesting).
This seems to be fairly unique in its breadth of different enterprises. Most co-ops seem to stay in a single industry e.g John Lewis with 80,000 employees in UK retail or the many agricultural/distribution co-ops owned by farmers.
The Co-operative Group in the has a group of retail businesses, including grocery retail and wholesale, legal services, funerals and insurance, and social enterprise
I must be thick, but I fail to understand how shareholders are "investors" of a publicly traded company? Yes, at some point, the company went to the market, and large sums of cash were exchanged for company shares, with the promise of a future return of part of the profit on that share. So yes, that moment could be seen as an investment.
But from that point onward, holding a share of a traded company has nothing to do with investment. Share holders are exchanging shares on the stock market, but at no point is any of that money going back to the companies they are trading shares of. They are just exchanging the "profit sharing promise" among each other, with no positive financial impact on the companies whatsoever. Quite the contrary, as they eat up a huge quantity of the available net profit, that could have been reinvested in the companies themselves.
IPO creates the “public market investment vehicle” by liquidating the assets of the private equity holders onto retail investors.
In single share class companies then, the entirety of the “value” from a financial perspective is held in stocks and corporate bonds. Whomever owns these, has voting and control rights in a way that non-voting equity holders do not.
Notably almost no public companies give voting shares to employees- I’m sure there are examples but incredibly rare.
Shareholders benefit materially from the labor of the company by holding the asset that (theoretically) accretes value with no actual labor inputs.
That means that anyone doing labor is paying the shareholders from their paycheck every month.
Why is it like this, because the contracts people sign and the egregious power disparity makes it such that capital, the voting share holders, have ALL of the value that they can turn trade or liquidate or whatever because they gave money for shares and more shares means more power in the company. The board ultimately encourages this because they are only interested in capital returns and stock price.
Totally valid question I struggled with for years.
Simply yes, the most of the investment happens when shares are issued - notably the IPO. However companies can issue new shares, or buy back/retire shares and reissue at a future date. The value from people holding shares maintains the price for which companies can cash in at a future date. So demand for shares on the market is sort of a store of value for companies.
Your question on reinvestment: a company is under no obligation to return profits to shareholders and can reinvest as much of their profit as they please. Amazon did this for years. Of course there are practical limits to this as board members often are representatives of shareholder interests. When a company no longer can make new credible investments, they are likely to return excess profits to shareholders. Different companies have different mandates from shareholders and different levels of scrutiny for what counts as credible reinvestment.
Now in practice there is the added layer of shares representing the interests of the make up of the firm. Board seats often are shareholders, creditors give preference to firms with valuable shares, Ceos are often paid in shares as sometimes employees at many firms.
Ultimately, there is no legal claim to profits from shareholders, nor is there legal claim to control. (Look at Google's multi class share obfuscating control). However giving profit and control helps stoke share price which is the store of value for firms as well, helps maintain access to credit/ financial strength, and represents the interests of the firm itself (via its board, creditors, CEO, employees etc.)
TLDR: companies issue /reissue new shares to finance their business. Maintaining share price stores value for business (and new demand builds that value)
Jamie Dimon, the CEO of JPMorgan Chase, was paid $36M in 2023. The company had, at the end of the year, 310,000 employees. So we can assume that if got paid zero, the company would've been able to distribute about $116 to each of them. Doesn't look very compelling to me, in that particular case.
I believe the idea is you replace individuals who solely manage across the board, with the idea management is really a part time job. That so many executives split their time would suggest that might very well be the case. With that in mind, there are many efficiencies imaginable beyond just the C-suite. And the employees now have ownership, so they have more of a reason to take up more responsibility than the current environment where employees are increasingly detached from their work, for good reason.
Huh, that sounds like taking yet another full-time job and smearing its workload across everyone. That already happened with quite a lot of occupations - thanks to "increased productivity" brought by computers, a typical white-collar employee is now also doing the job of a secretary (calendar, mail, setting up meetings), graphics department (PowerPoint), financial department (managing and reporting travel expenses), and couple other ones as well.
And then everyone is surprised that real productivity doesn't seem to track the theoretical increase brought by technology. Well, maybe because most of that turns out to be replacing legible expense (salaries of well-defined jobs) with larger, illegible ones (everyone else doing tiny bit of extra work). Feels to me that your proposal would end up being just another case of that.
You started the paragraph with the word "workload," but here the load is about as close to zero for the average employee as one could get without being pedantic about it.
People aren't using virtual brushes and learning color theory to digitally paint their PowerPoints, or even composing their slides effectively in the visual space provided as a graphic designer would in Photoshop. They are writing and revising their drafts in PowerPoint, often using the default templates or perhaps 2-3 minutes of trying out different themes.
That ends up smearing all the costs and benefits of default PowerPoint look-and-feel across the audience for all these boring presentations.
But I claim the cost to the employee's time and education due to them technically having taken on the responsibilities of a graphic designer are, on average, effectively zero.
Maybe I named the department wrong, but my point is, back before PowerPoint, in the era of more analog presentations, large companies had a separate group of people you would ask to prepare charts and graphics for your presentation. Nowadays, you have to do it yourself.
My point is that all of us are constantly distracted by random, intermittent tasks outside our specializations, which previously were done by dedicated specialists - people who could afford to become proficient at that work. This is a huge productivity hit for everyone.
A few corporations still have a separate department dedicated entirely to generating things like PowerPoints. McKinsey for example. The consultants are good at creating PowerPoints if they need to, but they can just outline it or flesh it out as much as they like and toss it over the fence to the "PowerPoint department" which will complete it overnight based on the instructions/outline/information/draft sent in by the requesting consultant.
OK. Let's assume that the rest of the C-suite combines to give that number a solid 5x multiplier. How accurate that is is left as an exercise to the reader, but be aware that the CEO is almost always the highest-paid member of a C-suite.
That would turn $116 into $580 per year. Spread out, that would be approximately $22.30 per paycheck if biweekly, or $24.16 if twice a month. All before taxes, of course. Real life-changing money for hundreds of thousands of people, right?
The point here is not that spreading the money from the C-suite to the workers is in any way a bad idea. The point is that it doesn't go nearly as far as we might like to think. We might want to adjust our policy preferences and goals to reflect reality instead of dreaming of us all dining endlessly on the the fat of the C-suite.
> instead of dreaming of us all dining endlessly on the the fat of the C-suite.
I thought the issue with such high/concentrated C-suite compensation isn't the envy (though that may be the case for some). The issue is that just by squeezing $116 per employee such a CEO can pay herself. Like if removing armrests from all employee chairs nets you a few additional millions of dollars, the temptation to do so exists.
If there was no such C-suite, there would be less incentives for pennypinching over basic employee wellbeing.
If you look at sibling comments, you'll find a whole discussion where users talk about the major significance to many people of a different numerical estimate. With that in mind, I think that for many people the issue is indeed greater employee income instead of avoiding pennypinching over basic employee wellbeing.
How is it an attack? What would be a more accurate descriptor for someone who appears to subscribe to the idea of an oppressed class and an oppressor class?
This has nothing to do with class warfare. We're talking about individuals who make several orders of magnitude more money than regular employees, despite the impossibility of demonstrating that they add an equivalent amount of value to the organization. The idea isn't "everyone should make the same amount", the idea is that pay should be proportional to one's value add.
Lmao this is not marxism this is much much closer to falangism and Catholic Syndicalism.
Also answering to your comment
"How is it an attack? What would be a more accurate descriptor for someone who appears to subscribe to the idea of an oppressed class and an oppressor class?"
Nobody talked about that or said that they just asked to replicate the model in more industries, and seeing the sorry state of many products, that seems wise.
As someone that escaped a socialist country, I can and will have to ask you to take five minutes to enage with people comments instead of blindly barking.
Ask the average American worker if they'd like an extra $2300 a year. And yes I understand thats pre-tax. But even so, thats a non-negligible amount for a lot of people.
For whom $2,300 / year is meaningful is, dare I say, hard to answer question. Most of the people for whom an additional $2,300 / year is meaningful pay little to no taxes. However, a large chunk of these people also get Earning Income Credit. These people would lose at least part of this credit if their income increases. This question I believe can be answered by the bi-partisan U.S. Government Accountability Office or U.S Treasury- they certainly have the income returns for all Americans.
Stepped tax thresholds are always a problem when they incentivise low-earners to keep their income below a certain, arbitrary level. However, it would be inappropriate to deny employees a raise based on the existence of tax levels - after all, wouldn't the employees pay exactly no tax at all if they weren't paid? The tax is also guaranteed in most cases to improve the economy of the local area. I don't know the specifics of how it works in the USA, but I am aware of 'buy American' policies for federal public spending and equivalent rules for local government.
Say an employee effectively gets $10 less money, but the company effectively now pays the government $1000 in the same period. That might mean new bus subsidies, legal aid, development grants... things which make everyone slightly better off in the long-term. I think that's a good trade-off.
> For whom $2,300 / year is meaningful is, dare I say, hard to answer question
There were many articles written on the impact of the 2021 Advance Child Tax Credit (up to $1,800 per child over a 6 month period). The impact was very significant on lower-income families - which makes sense because for those earning less than $40,000 per year, that amount is more than the amount in one's paystub.
Glassdoor tells me the salaries of JPMorgan tellers ranges from $38,000 - $62,000 with a median of $42,000. So without digging into salary distribution at the entire company, I can yell you with certainty that it's a non-zero fraction.
In all those countries, average salary for JP Morgan employees is significantly higher (especially if you include expats). Also I think you are significantly off with Nigeria avg salary - no way it's so high in such a poor country.
Nigeria is tricky - I've seen estimates ranging from $130-$750. World Bank classifies it as a "lower middle income" country at this point, which would suggest they at least think the median is <$4k or so per year, I think.
If we factor in not just C-suite but the entire middle to top management, then I definitely think there is something to come for.
Though, in the end, the US is extremely adversarial. So these people standing to loose out on the competition would do anything to stifle such innovations.
are you under the belief that you either earn 400k a year or 0?
what if middle management just got a reasonable compensation in line with what ordinary people earn? this is actually not even a foreign concept in the us.
just look to the 60s.
They actually have a lot of difficulty in hiring good directors for this exact reason, they have widened the gap several times and are planning to keep widening it.
C-suite compensation, especially stock-based, is often in part to ensure management loyalty to shareholders vs other things. Worker board membership means management once again has competing loyalties, but now de jure. That means it is not worth it to the share holders to pay the extra "ransom compensation", in addition to workers probably outright being against it. I would thus expect C-suite compensation to go down.
Everyone's pay is to keep them, isn't it? Nobody is loyal beyond being paid.
Do CEO's really provide so much 'extra' benefit to justify the premium? Is their loyalty in particular worth paying so much for?
I'm just not seeing how 'ransom' is needed. Isn't growing a healthy business supposed to be the goal for CEO and Board? And if employee owned, it is same.
The only reason to pay the extra 'ransom' to be loyal to shareholders, is when they want the CEO to do things that are 'not' for the benefit of the company, but only to benefit shareholders, who can sell and exit.
I think the question is who is the business healthy for, and who is the c-suite and up loyal to?
It is possible, and even likely, that a healthy business differs in some material ways for a CEO+board than its employees, though I also expect there are also overlaps
I wonder why co-ops are so comparatively rare in the US, even though everybody seems to like them (customers and employees).
It could just be tradition and the effects of history. But then why did US history create more shareholder corps while European history created more co-ops?
It could be that US investors are less willing to invest in co-ops. But then, why? Is there something about them that makes them less competitive? Why are they ostensibly worse in the US than in Europe?
>It could be that US investors are less willing to invest in co-ops. But then, why? Is there something about them that makes them less competitive?
My, admittedly uninformed, guess would be it has to do with 1) there are more worker protections in the EU than in the US and 2) Co-ops tend to pay employees better wages, have better benefits, etc.
Shareholder corps will try to drive down their labor costs as much as possible. Walmart goes so far as providing advice to how it's employees can best apply for food stamps, all the while keeping them under the 32hr/week threshold that would require them to receive benefits. This can provide a price advantage against co-ops who are not running these same practices. It the EU the labor protection laws are better so the potential difference of labor cost is diminished between sharecorp and co-op.
Co-ops are of course worse for investors. There are no voting stock in co-ops, so the stockholders can't squeeze maximum profits off workers and consumers.
Europe had very strong socialist/non-capitalist political movements in the 19th century. Co-ops were seen as one alternative to capitalism, and were a huge movement.
For example in Finland the largest bank and largest retail chain are (consumer) co-ops, and in general co-ops are big players in the economy.
My reason for asking that question in the first place is that 'investor' isn't a role I associate with a worker-owned enterprise. The workers are the owners are the investors, so the statement reads as invalid to my mind.
Big-government is also an aspect. Both the federal and state governments in the US have a tendency to form wholly-owned subsidiaries to conduct businesses that could otherwise be run by co-ops.
I guess it's because American culture is more focused on property and ownership.
The co-op movement arose as a reaction to industrialization and capitalism, which threatened many workers. You could understand it as capitalism based on membership rather than ownership, or as a third way that's neither capitalism nor socialism. But just like socialism never really took root in the US, other alternatives to capitalism didn't fare that well either.
Worker co-ops are quite concretely socialist in the sense that the workers control their means of production. Of course when embedded in largely capitalist economy, e.g. banks do still have often de-facto control over them.
Or you could say that they are co-owner of their means of production. So, as business owners, are they actually the ultimate capitalists in disguise? :-)
Business owner who doesn't have employees is not really a capitalist, but a self-employed worker. At least if they do some practical labor instead of e.g. investing.
In general, self-employment is quite a different thing from owning of means of production that other people work.
co-ops existed well before industrialization, as guilds of artisans. Guilds were quite protective of their markets and IPs. You had to inherit the menbership or pay a hefty sum to enter the guilds.
They were oligarchic rather than democratic: only masters were full members. They were monopolies rather than competing in the market: you had to be a member of the relevant guild if you wanted to do business. And they were not businesses: each master ran their own business instead of working for the guild.
It's an amazing success story (even if surely not without any bad spots), it makes me happy just knowing that it exists.
But I do wonder how much of its workability hinges on Basque nationalism rechanneled into something more useful than nationalism usually is. If that nationalism also had something like an independent state as a default outlet, the balance between cohesion and corruption creep might shift just enough across a tipping point. I'm really not sue that it can be replicated (but I'd love to be proven wrong!)
> But I do wonder how much of its workability hinges on Basque nationalism rechanneled into something more useful than nationalism usually is.
Basically none, it does not hinge on that.
If anything basque nationalism hurts the proyect more than it helps. Many of the workers in the basque country came "to disrupt" basque nationalism. So many of the old workforce in Mondragon is not basque born.
there was a civil war in spain, most of the industrial capacity was destroyed in the country but not in the basque country. There was a nationalist movement there, so the far right dictatorship thought they had a great strategy. Move people from poor spain to the basque country, you utilise the little industry that remains and you take over the nationalism with people who feel spanish.
The only bit of Basque "nationalism" that helped mondragon was that many of its competitors were kicked out. In the 70s and 80s a ton of american companies came to Spain, the far right dictator hiding his axis friends allied with america in exchange for some military bases and allowed american expansion in Spain. Basque country having some of the largest industrial network was a prime candidate for their location. Then the 80s and 90s had a ton of terrorism which scared american companies which left industrial giants like Mondragon without competition.
So basque nationalism played little part in its success, its more like the American boom of the 1950s, everyone else had a detroyed industry and they didnt so there was a boom. Basque country had the same thing but instead of building coca cola and taking over south american countries to sell cheap bananas they opened cooperatives. There is little reason other than chance that Sillicon Valley is not like that, early companies like IBM could have set up as coopearatives and their early advanatge would not have been disrupted in the sleightest.
Thanks, the part about that area being an industry hotspot after the civil war was completely new to me. From my German perspective, Spanish history with all its disconnect from the three "big stories" of the twentieth century almost feels like from a different timeline!
I just grew up there, so most of it was less books and more just personal experience. But there are no few resources, books, shows or documentaries about the area.
Man, something about Spain is truly magical. For you I imagine it’s different since you grew up there (I get it, I’m from Alaska and it’s nice but it’s not magical like tourists see it), but for me, I remember reading Homage to Catalonia as a kid and thinking “I have to go to Spain one day” then later in life when I went, I backpacked through El País Vasco (and the rest of northern Spain) and just fell in love with that country.
If I can get a remote job, my wife and I are strongly considering how we could move there. Spain is the most fascinating place I’ve ever been and the place just… feels right? I don’t know how to describe it. It’s the only place I’ve ever felt like I fit in. Eskerrik Asko / Gracias for taking me back to a series of Camino sense memories.
Funny how the world works, I must have spent most of my middle school doing book reports on the Inuit and other Native american and First Nation tribes up north. We had to read Island of the Blue Dolphins in 5th grade and I had a big "Eskimo" phase. (I know the name is no longer in use much, but it shows my age)
Well I have been out of Spain for over a decade, so now when I go back I feel a bit like a tourist and I think it gets lovelier every year. If you ever make it back, either through work or for another trip I am sure you will have a brilliant time once again.
it is partially successful because it overcame one of the difficulties with scaling cooperatives, namely being selective with membership - it outsources so much to avoid dilution through membership it might aswell be a financial trust rather than anything roughly resembling a traditional cooperative.
I'd love to see more details about the business model and corporate structure and how it works. Also, they mention that the workers are "liable for any losses." - How does that work? If I own a share of Acme stock, I'm not liable for their losses, though the value of my share may go to zero.
Pretty interesting idea. Are there other examples as well?
It maybe "liable for losses" in the way that shareholders often are - if they want the company to continue when it is losing money, they need to "pony up" and invest more.
But it may be a different type of corporation than the standard US "limited liability" type (where you can only have your shares go to zero unless you're significantly materially involved AND do criminal shit).
In the US, I'm most familiar with Equal Exchange (fair trade coffee), Nebula (creator owned YouTube for documentaries), TESA (educational board games), Alvarado St Bakery (the tiger-branded breads available in many stores).
If you run ACME as sole proprietorship S-corp in the US, you are also on the hook for the losses. If you spend 9K but spent 10k, you have 1K less in your bank at the end of the year.
I visited Bilbao a few years back and the claim then was that Basque Country had the highest average income in Spain. Today Wikipedia [0] lists it as second.
Its second only in GDP per capita because a number of big corporations moved to Madrid. There has been a slow but fairly unstopable centralisation in Spain, specially since the Catalan independence debalce a few years ago, more and more companies have moved their headquarters to Madrid. Which has raised the GDP of madrid a ton and moved many jobs there.
This is tangentially related at best but I always found it amusing that a forum for founders and populated mainly by pampered white-collar workers happens to be one of the hot-spots of revolutionary sentiment in the interweb, very ironic.
Co-ops are fascinating to me as an alternate evolutionary branch of capitalism. Like the marsupials to the placentals. Also like the marsupials, in most cases where co-ops compete with regular capitalist businesses they go extinct.
I'm afraid I don't understand. My state is chock full of co-ops that compete with their corporate counterparts.
Hell, there's (at least) 3 separate co-op grocery stores in my city, they each compete with an Aldi, and multiple local grocery chains in their respective neighborhoods.
> My state is chock full of co-ops that compete with their corporate counterparts
Same, and we’re deep red. My power company is a member-owned co-op. It’s cheap as hell (6.8¢/kWh for wind) and doesn’t enjoy burning down the state as a hobby.
That may well be what tends to happen in the large-scale economy, but in my personal experience, co-ops crowd other businesses out over time because they are far less likely to piss me off and alienate me. At this point "co-op" has become a pretty strong quality signal: it's not going to be flashy, and it might be a little inefficient, but it will always be decent.
In the short term dictatorships usually are superior to democracies because they can move fast and have less stakeholders to satisfy. So a capitalist business will usually beat out a co-op. That doesn't mean that society as a whole gains.
Co-ops are just the way that socialism can exist in a capitalist society. And while capitalist businesses can usually undermine them using all the tools of capitalism, notice that co-op workers are usually happier and paid better, co-op customers are treated better and receive better service, and the community suffers less from having a co-op in the area.
> co-op customers are treated better and receive better service
I’d argue this is because a co-op can attract higher-quality workers for less than a purely profit-minded shareholder-owned business. (Similar to companies with a unique culture.) Generalise the model and you’ll get the co-op equivalent of the 70s-era UAW running roughshod where they can.
I think alternatively/additively they may be more responsive around firing ineffective staff, and a culture of productivity. When workers/managers directly pay for their co-worker's unproductiveness, they have an incentive to replace opposed to simply hire more additional staff.
It is the worker owning the mean of production, so i don't think you can do more socialist than that to be honest, it's almost the definition of socialism (communism for fellow europeans).
You can find some differences between western co-op and the socialist ideal (mainly, you still have hierarchy and a power structure mostly determined by how much you make), but to me it seems mostly academics.
This is one of those cases where subtly different definitions of technical words are being used in contradictory ways. A very common definition for capitalism vs socialism in Leftist spaces is concerned with power and economics, with socialism being when labor has the power to dictate the allocation of capital, whereas capitalism is where capital has the power to dictate the allocation of labor.
A more political definition looking at government is "socialism is when capital is allocated for the benefit of the collective, capitalism is when individuals are granted exclusive ownership of capital to allocate how they choose".
Note that a worker's co-op meets the first definition of socialism, and the second definition of capitalism.
That's a bastardized interpretation of what socialism is.
Socialism is defined by social ownership. The society as a whole owns production, rather than individuals or groups.
A coop is a just group that divides up ownership among all the workers, not the society/community. The division isn't necessarily even. And the workers don't necessarily have 100% ownership between them. For example, there are coops with publicly traded stock.
A coop can be, and often is, still privately owned.
If you're definition of socialism is "Workers owning means of production" (which by the way, is not and never has been the definition), then every FAANG is a socialist entity for awarding their employees shares.
There is a full spectrum of left ideologies that call themselves Socialist, so your claim of "is not and never has been the definition" is flatly wrong. Collectivists and Syndicalists, in particular, are Socialist schools that are strongly onboard with worker co-ops (typically described as trade unions running their businesses).
And FAANGS are not owned by their workers, full stop. Less than 5% of Google's shares are owned by employees, and most of those shares are owned by management. Bezos personally owns more Amazon shares than everyone else in the workforce combined, Meta is well known for being in a strange situation where Zuckerberg personally owns more than half of all voting shares. Vanguard owns more shares in Netflix than the entire workforce combined. Apple has negligible employee owned shares.
Your misinterpretation comes from a willful twisting of the words "workers" (does not typically mean "the founder personally") and "owning" (which is typically understood as "having control over" rather than "maybe could break the tie between a handful of investment firms").
Maybe more precise to say "not mutually exclusive with free market exchange", 'capitalism' (as a socialist would define it) is primarily an ownership arrangement.
How are co-ops anti-capitalist? They appear to me no different than a shareholder or partnership. Are most law firms socialistic in that they have partners who work for the firm getting a share of its profits?
"capitalism" is simply a way to organize an enterprise. an enterprise can participate in a market without structuring the organization as a capitalist enterprise. free market != capitalism. american-style capitalism consists of a political system that supports the capitalist enterprise structure.
a political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole
The community is normal understood as the complete body politic.
A partnership is not socialistic. Lawyers are capitalistic in most books, but they have partnerships.
The organization of a business doesn’t matter in capitalism. Capitalism, boiled down to private property and market. A co-op competing with other companies largely without price control is just as capitalistic as IBM or Google.
your opinion about the semantics of "coop" and "socialism" is wrong. most semantic debates are worthless anyway.
every socialist i know and have read agree that a coop is a socialist organization, and we will keep creating these enterprises as an alternative to capitalism, until one day, ideally, the capitalist corporations won't be able to compete in the job market with the coops, forcing them to socialize their ownership and power structures. despite whether you think it's socialism or not.
> every socialist i know and have read agree that a coop is a socialist organization
Every unicorn I know thinks leprechauns are real.
A coop protects and upholds private ownership and distribution of profits to their shareholders. That's not semantics.
Socialism does not protect private ownership. Socialism does not distribute profits to shareholders (because there are none). That's also not semantics.
If you want to have a non-semantical conversation, the onus is on you.
ok, well you have no idea what you're talking about, so if you think that a coop is capitalism, then i'm gonna use that ignorance to my advantage, and convince everybody that coops are capitalism. psyop coops on the capitalists. thanks for the great strategic idea!
lol keep on arguing on the internet about stuff you don't know anything about, comrade. and use poor debate tactics, like "Every unicorn I know thinks leprechauns are real." will really get you far in life.
Multiple people here have told you that your understanding is incorrect. Now you've resorted to straw man so... I think deep down we all know who is talking out of their behind.
two people, you and some other guy who is also wrong and doesn't know the 7 principles of coops based on his comment (you still haven't argued about how those principles are capitalist, so pretty sure the onus is on you anyway). there are plenty of examples in the other comments on this post supporting my opinion. being a contrarian doesn't mean you're right.
and re: strawman, i just met you at your level after you used the logical fallacy: "Every unicorn I know thinks leprechauns are real." it was pretty clear at that point that you weren't going to have a reasonable conversation. i apologize for not pointing that fallacy out directly and instead i said, "well you have no idea what you're talking about". i could've been more graceful with that, or just ignored you.
anyway, thank you for sharing your (wrong) opinion about whether or not a coop is socialist.
"being a contrarian doesn't mean you're right" - oh the irony
You never had an argument beyond "I'm right and you're wrong" lmao.
I asked you to respond to specific questions like:
Explaining how a privately owned, for-profit org (a coop) can exist in a socialist world. You ignored it and have now devolved to emotional responses only.
i'm not responding to those comments because you clearly aren't informed about the definition of socialism, particularly the nuances and the debates that leftists have about this definition all of the time. nor do you understand what a cooperative is. it's not worth my time to go tit for tat in a debate if we're not operating on the same knowledge, and you're not willing to learn.
you are just somebody who argues on the internet, a natural contrarian who thinks they are right about everything, while being totally wrong. i call it the hacker news contrarian effect. it's quite amazing to witness. good day, sir.
>in most cases where co-ops compete with regular capitalist businesses they go extinct
After seeing time and time again the success of workers of bankrupted companies pulling up their compensations and unemployment benefits to rebuild the company in a co-op model, I wonder if it's not the opposite.
"Money attracts money", and I don't think it's too crazy to think that if everybody had access to low-interest credit under the same conditions as the big players, this model would be the norm, rather than the exception.
"Everyone has access to low-interest credit under the same conditions as the big players." just sounds like a fantastic (in the fantasy sense) recipe for inflation as the underlying capital and goods sought remain constant but the monetary supply increases. In addition to potentially creating something resembling another 2007 financial crisis worth of mispackaged bad debts.
Central banks fought the 2007 crisis by increasing the monetary supply of a receding economy, so I don't see how removing the intermediaries and having the central bank itself allocate the resources in a fair way could make things worse than they are now.
I'm not talking about letting people borrow at 0% to spend in food and utilities. What I'm thinking of is a system where the path from business plan to business isn't determined as much by the amount of capital one already has, which is what causes the usual corporate structures to be formed in the first place: those who assume "all" the risk in turn receive "all" the benefits.
That often doesn't reflect the real stakes at play. Investors can have a diversified portfolio (and often plenty of spare capital for more tries), while workers invest 100% of their work on the same company for years or decades. The co-op model is more natural but the dynamics of money make it more rare than it should be.
REI competes with corporates just fine in the US, a country so capitalist they still ask everyone it they ever were associated with Communism before they let them visit - more than 2 decades after the fall of the USSR.
For all the fearmongering of the Red Scare, this is what socialism looks like. Socialism is an industrial co-op like this where workers are fairly paid for their labor. Capitalism is Walmart where all profits are captured by a handful of shareholders and executives, being subsidized by the Federal government through food stamps to employees and decimating local economies to the point where they're left with dollar stores.
There's a Tiktoker who is having the Amish build a barn on the land she bought in upstate New York and she keeps calling them "capitalist". The Amish in question are entrepreneurial for sure but that's not capitalism. The Amish keep their surplus labor value. It saddens me to see how fundamentally people misunderstand what capitalism actually is.
All we've done is replace the divine right of kings and landed aristocracy with the capital-owning class of the likes of Jeff Bezos. It's sad to see how many people champion their own serfdom when examples like Mondragon show it doesn't have to be that way.
This reminds me of the yearly complaint in French politics that CAC40 companies are paying monstrous dividends, to which the answer is always: If they are so monstrous then surely you should simply buy the shares yourself?
You could just be an Amazon or a Walmart shareholder by logging into your Robinhood account, unlike the feudal regime where to become an aristocrat you would need to be some sort of famous knight, which seems much harder.
First, intended or not there is an incredible amount of privilege in the idea that “everyone can be a shareholder”. An awful lot of Americans live paycheck-to-paycheck and struggle to afford housing and food. Increasing homelessness is, first and foremost, a consequence of housing unaffordability.
Second, owning 10 shares of Amazon doesn’t make you a capital owner. If you still need your paycheck to survive, you’re a worker, subject to the whims of your employer.
The really damaging thing about retirement accounts, for example, is that it has convinced people that they are current or future capital owners. It makes workers advocate against their own best interests.
I dare say that Americans not being able to afford housing has very little to do with Walmart or Amazon, since it was neither that decided to turn housing into a very safe and investable financial asset, but rather the government.
The definition of capital owner being someone who doesn't need a paycheck to survive is weird. Your average startup founder needs a paycheck and he is clearly not a simple worker. As soon as you own shares in a company(or a bond) you are a capital owner. The question is then how much that capital is worth and what you can do to make this capital worth more.
I mean depends on if they are mature or not, but the complaints in France are about the absolute amounts in euro, not the %s paid out(for example this year the complaints are about Total making a lot of money from oil and banks making a lot of money from higher interest rates, the proximal causes of both being completely outside their control).
>Dividends (can be) just writing cheques to yourself with your own money.
Well, yes, since as a shareholder you technically "are" the company.
In my experience, people would rather be employees paid in cash whose amount is agreed ahead of time than partners where they're paid depending on the company's profits.
I think that could change if the workers are not living paycheck to paycheck. It would also probably be possible to develop some sort of middle ground. For example, workers could be paid a conservative salary and then profits could be distributed as a bonus at the end of the year.
It could with hierarchy of needs, but what would the gain really be of doing so? Mostly ideological. And that is putting aside any of the other 'competitive balance issues' vs other business structures.
If employees have no say in how the company is run, CEO & board could easily run it into the ground (but jump ship with a gold parachute), then: yeah, most people will prefer a fixed paycheck.
But if regular employees are at the helm, company is more likely to do what's in the (long-term!) interest of employees.
Surely that'll make employees more willing to share in financial risks (+rewards!) of the organization. They're more personally invested in it - literally.
I have been wondering if you could make it work in Silicon Valley for a small firm. Take 2-10 people that could be founders and give them the alternative of being the Nth partner. They’d need to bring in 1/N of the profit to earn their keep. I think it’s doable.
As you point out, the challenge is always around revenue sharing. From what I have seen, they last maybe 5 years and then break up when people feel like they are putting in more than they are getting out.
The productive difference between the top and bottom half of the N needs to be less than the extra efficiency the coop provides the top half of N. This isn't easy.
Eg top performer brings in 150k revenue, receives 100k salary, but can only make <100k without the coop.
Others have brought up this issue when I’ve discussed it with them. I wonder if there’s a solution. Perhaps something in game theory? When productivity is more easily measured then there’s little debate - like making commission on sales.
There are a lot of solutions, each with different tradeoffs. By far the most common solution seen is limited Partnerships, where those individuals with enough Revenue and Leverage become the co-owners, and those that are replaceable are not co-owners but receives the salary based on Market rates.
I'm sure commission works well in companies where individual basically Works in isolation, but it is notoriously difficult to quantify productivity in teams and larger organizations. How much value does a engineer at Google create? Does a janitor at Google create? Of course you can divide the company profit by headcount, but that number is largely meaningless. Some people will be far higher some people will provide negative value.
For a co-ops, I think the game theory solution quickly converges on something that looks like a traditional company. You pay employees a market salary, and then split the corporate dividend proportional to salary. To account for differences in performance, the employees hire management too fire workers and give out raises. This works well for large co-ops, but obviously can lead to a lot of drama for a 10-person company
I have long suspected a model like this, borrowing from lawyer shops and worker co-ops, could be pretty good for software. Since software is sort of inherently project based, could have a mix of product and contracting, and could have wins both on the co-op side and whoever the co-op is doing work for/selling product to
Doesn't that depend on how profitable the company usually is? I know plenty of people in the finance world who, if paid only their salary, would be searching for a different job.
Correct me if I'm wrong, but there's nothing actually legally preventing a Mondragon-type industrial co-op like this from existing in the US, right?
That it's not so common is an interesting question: does it get outcompeted by your standard corporation? Would people rather generally work as employees than take on risk as owners? Something else? I think in a co-op like this, employees would still be eligible for food stamps, and there's nothing preventing them from "decimating" a local economy, either.
I think this is "socialist", and it seems to be working, and everyone is happy, so more power to them. But my understanding is since there's nothing preventing people from setting this up, the "Red Scare" was not a bunch of people going, "hey, change the laws so me and my buddies can set up a co-op". Like, what's the actual policy change desired? "Let folks who want to run corporations and work for them do so, and let folks who want to operate in a co-op do so?" No, because that's our current situation.
Probably difficult at this point for enough lowly workers to pull their money and form a company, open stores, and compete with a Whole Foods.
The mega corps already dominate and can undercut anything that is starting up.
Amazon is kind of like a fiefdom where if they see someone building a castle in the distance, they can send some knights out to attack before it gets too big.
>A developing nation even thinks about nationalizing their resource extraction Suddenly there’s a coup with the CIA’s fingerprints all over it.
In the Cold War, yes, because then it was assumed (rightly in some cases, wrongly in others) that any country who would nationalize their stuff was simply a Soviet puppet state following orders from Moscow. After the Soviet collapse, that isn't what the CIA (or American policy in general) cares about.
> NATO is a foreign policy arm of the United States dedicated to crushing any leftist momentum. Hell, we recruited Nazis to run it.
Everybody used Nazis after the war. Both the US and USSR snatched up every competent Nazi scientist, engineer, and intelligence officer they could and cut deals with them not to charge them with war crimes if they'd work for them. (Operation Paperclip for the US, Operation Osoaviakhim for the USSR). And of course NATO today isn't focused on containing Communism but rather the right-wing dictator who rules Russia today, and unlike in the Cold War, the current critics of NATO are almost entirely right-wing.
The problem is that socialism doesn't scale without force. Eventually you'll run out of people who willingly go along with doing things for the greater good. Looking at history, once you get larger than a commune or coop it all falls apart. You need force to seize the means of production, and the leaders of this force never give up their "temporary" powers. You also need force to get people to do the necessary but undesirable jobs, usually resulting in a centrally planned economy, which history again tells us results in misery, famine, and failure.
It is also human nature that most of us want someone that tells us what to do. Humans consistently organize into social structures where there is a leader in charge, whether it is a patriarchal or matriarchal extended family structure, a tribe, a club, a company, or a government entity a leader always emerges.
Capitalism is very much like Democracy. It's the worst system other than all the others that have been tried.
Mondragon's example goes exactly against all of your points. It's a 70k workers company ran as a co-op. You can have co-ops running and trading between them, the only point where capital is necessary is for investments in new businesses lines (in the sense of financing capital, not all capital, financing capital from banks can also come from co-op banks).
Undesirable jobs are done either way if people are paid, there's no difference if it's run by capitalists, the government or a co-op, you need to hire people and pay them. A co-op would work the same way.
Capitalism is definitely not like Democracy, democracy has been proven since ancient Greece to be a decent system to organise power, and it has evolved over time to be more inclusive. Capitalism has only shown that if left untamed and to grow on its own it will only consume more, exploit more, and remove freedoms of being a human being in the world if you don't pay up.
Capitalism is useful but every decade it seems to be reaching the limits of what it can be, no better version of capitalism has emerged, every evolution of capitalism has only magnified its destructive power. Democracy has done the exact opposite.
To counter you, at nation scale I can list off dozens, perhaps even oven over a hundred highly successful capitalist nations, with generally happy and prosperous citizens, but I can't think of a single successful attempt at communism/socialism at that scale.
capitalism is about accountability and trust at scale compared to previous systems that worked on connections that didnt scale well across classes / countries / cultures. Bankruptcy, is probably the best idea came out capitalism.
Competition between humans can turn ugly wheter on economic or political fields and "common folks" do ends up as collateral victims. Thats unchecked human nature
Well, for what it's worth democracy doesn't scale without force either. Somebody, i.e. the state, has a monopoly on violence, to protect our property. In any case, you're just talking about state based socialism, like marxism.
But there are other forms of socialism that do just fine and are alive today, like syndicalism. They work because they don't rely on a government to exist, correctly recognizing their power in industry.
The best years of America for the middle class were when there was a good balance between decent paying, unionized manufacturing jobs and the customers who chose to pay higher prices and get American products.
There was a time when paying for US-made products was paying for better quality products (among other properties).
As offshore manufacturing got better, buying American became much higher percentage “feel good” and much lower percentage “get better product”. Right now, there are some product categories where the highest-quality product in the world is not capable of being produced in the US.
Sadly true. There are also major product categories that are literally impossible to buy US made goods in even if you're willing to pay the premium for it. Additionally, many of the "US made" products are merely assembled here from foreign made components.
The entire world was socialist from the time of the Lubang Jereji Saleh cave paintings 40,000 years ago until 10,000 years ago. Societies with different classes only sprung up 10,000 years ago. They only scaled with force, and the literature from 4000 years ago to now attests to this.
> Capitalism is very much like Democracy. It's the worst system other than all the others that have been tried.
Hunter gatherer bands in the Amazon live the way they have for 50,000 years - even prior to crossing the Bering Straits. Whereas societies where the capitalist mode of production predominant were barely even formed less than 500 years ago. Also from the time of the Paris Commune to the Cold War until now, it has been racked with threatening crises. Even in the US we see self-described socialist politicians being elected nowadays.
It's hard to make capitalism sound permanent when it has been so impermanent.
It doesn't even work that well at the local level. The Kibbutzim in Israel were socialist for like 70 years, but now are almost all mixed market capitalist in some form or another.
Do Kibbutz have highly paid CEO's that earn much more than the members, and subject them to pay cuts?
As pointed out in this thread, a Co-op is socialist internally by sharing wealth across more of the labor. But capitalist externally since it sells to a capitalist world.
> The problem is that socialism doesn't scale without force.
Eh, not a problem unique to socialism, or devoid from capitalism.
The history of labor in the United States is rife with both socialist (well, maybe anarchist) bomb-throwers and rich capitalists hiring private armies to gun down striking workers.
striking workers usually would occupy factories, property they had no right to "seize". If workers quit / stopped showing on mass, nobody would have done anything
> Capitalism is very much like Democracy. It's the worst system other than all the others that have been tried.
There are other systems that we've tried which work much better than the corporate Capitalism that we have in the United States. Most notably democratic socialism/social democracy/mixed economies (with the exact dividing lines between those three depending a lot on who you ask).
Every major capitalist society today (including US) has a percentage of Socialism sprinkled in to keep it functioning. Pure capitalism leads to a brutish tragic world, so some socialism is added to at least keep people from outright starving and rising up in revolution.
Yes you're talking about hybrids of socialism with capitalism, which are absolutely the way to go. History has shown that nation-scale "pure" socialism (which in practice nearly always results in a flavor of Marxism/Communism) is even more brutish and tragic than "pure" capitalism.
What would you say about President Julius Nyerere of Tanzania? His term in office was characterised by a peaceful transition from British colonialism to such a 'pure' form of socialism (including a full public ownership of all land and enterprise). This survived for three decades of almost completely peaceful, slow, and steady economic growth before the 90s, when it democratically voted itself into the capitalist state it is now. In fact, the only war Tanzania fought in that period was against Idi Amin's Uganda, which was widely regarded as a far more brutish and tragic country than Tanzania could ever have been accused of.
I would say that it was one of the most successful attempts at nation-scale socialism, but ultimately still a failed experiment. As you said yourself the people themselves democratically voted for capitalism.
> Julius Nyerere's leadership of Tanzania commanded international attention and attracted worldwide respect for his consistent emphasis upon ethical principles as the basis of practical policies. Tanzania under Nyerere made great strides in vital areas of social development: infant mortality was reduced from 138 per 1000 live births in 1965 to 110 in 1985; life expectancy at birth rose from 37 in 1960 to 52 in 1984; primary school enrollment was raised from 25% of age group (only 16% of females) in 1960 to 72% (85% of females) in 1985 (despite the rapidly increasing population); the adult literacy rate rose from 17% in 1960 to 63% by 1975 (much higher than in other African countries) and continued to rise.[4] However, Ujamaa decreased production, casting doubt on the project's ability to offer economic growth.
> The most prominent ecological consequence during this time in Tanzania was due to the forced settlements by the TANU government and President Nyerere. During the time of forced settlement, TANU provided more artificial means of agricultural aid while cracking down on yield results and as a result, production yield began to decrease and land became underdeveloped. Land was not being utilized to its full potential and therefore, not only were crop yields subpar, but the biodiversity also became inferior.
> There were also internal factors that led to the implosion of the Ujamaa program. The first was resistance from the public. During the 1970s there was a resistance from the peasantry to leave their individual farms and move to communal living due to the lack of personal capital that came out of the communal farms. This led President Nyerere to order forced movement to Ujamaa villages.
This is not socialism, it is syndicalism. Some argue that syndicalism is a type of socialism, but in practice, it behaves more like a type of capitalism.
Is this really socialism? It seems more like a company with lots of owners. I can imagine that the local residents who must buy from this cooperative may feel pretty excluded, especially if the cooperative overcharges. The insiders can still screw over the outsiders. It's just the proportions are a bit different.
> The Amish in question are entrepreneurial for sure but that's not capitalism.
The semantic challenge is that unlike the claimed differences between communism and socialism, Capitalism and capitalism share the same word, similar to Liberalism and liberalism.
Socialism (communism?) is usually framed as "workers earning their full worth" but the dirty truth is that it is more "workers earning their preset cut of the pie, which is independent of the work they put in".
So while the shelf-stocker might be earning $24/hr, their actual hard economic output is much less than this - $19/hr. The difference is made up by the salesperson making $26/hr, instead of $31/hr.
Many sales people might be fine with this sacrifice, but even more likely will not, and will tire of being the ones who need to sacrifice.
In a real company, it would be the shelf stocker making $13/hr vs their output of $19/hr, the sales guy making $26/hr vs their output of $31/hr, and some jackass who inherited an oil fortune making the surplus $11/hr from their economic value of $0/hr.
Socialism as practiced also implies heavy centralized planning to mandate these arrangements and then set price floors and ceilings to set production capacity.
The Amish tend to reject social ownership of land so they are not socialist or communist by any means. Distributist would probably be the best description with any mention in the literature.
To be clear, I'm usually against large corporations as well, because of this very point. Especially, when they -- as in America and many other non-socialist states -- use their lobbying power to capture the market via regulation.
However, there still is a fundamental difference between centralized corporate planning and centralized planning by the monetary authority. Corporations have to deal with market supply/demand, and we've seen enough examples of large companies simply going bankrupt to rest assured that large corporations are not invincible.
Centralized planning is only a feature of certain forms of socialism. It's generally not a feature of democratic socialism or the various anarchist forms of socialism.
well, also the modern corporation. I think the centralized planning aspect is actual orthogonal to the resource distribution/means of production aspect
Socialism is a big tent, by definition that's only one possible manifestation. Incidentally co-ops are not mutually exclusive with Capitalism (private property + market economy), for the same reason mixed-market economy (as practiced by most liberal democracies) represents not purely one thing or another. Co-ops are nothing new.
> The Amish keep their surplus labor value.
People don't want to live like the Amish.
> It saddens me to see how fundamentally people misunderstand what capitalism actually is.
> Incidentally co-ops are not mutually exclusive with Capitalism (private property + market economy),
As I just explained, that's not what capitalism is. Capitalism is a relatively new invention (~500 years) that arose from the ashes of feudalism. Exact same economic structure. Different exploiters.
Consider this: markets exist in supposedly non-capitalist countries. They existed in the Communist bloc. We've got cuneiform tablets describing markets going back 5000+ years. Capitalism didn't create markets or a market economy.
This is what I mean when I say that not only do people not know what scoaialism is, they don't know what capitalism is either. Yet the instinct to defend it is so strong, particularly in Americans. That too is relatively new. Abraham Lincoln was a Marxist, for example.
> People don't want to live like the Amish.
Who says they have to? We can point to an example of people living co-operatively in, oh I don't know, the article of this submission?
> The right to private property + market economy.
Then why did market economies exist before and outside capitalism? Private property is a core tenet of liberalism (which really means "neoliberalism" today). Private property in capitalism can be more accurately traced back to enclosures, which are really an evolution of land grants under feudalism.
Private property under feudalism wasn't available to all. There can be no capitalism without liberalism. Property rights as a matter of law and everyone being equal under the law is essential.
Earlier partial market economies were in practice more like command economies with relatively small free markets in certain sectors.
They are State Capitalist. There's no supposition about it. That the governing body is captured by Communist ideologues has no bearing. Hence there are now billionaires operating in China and Russia.
> They existed in the Communist bloc.
They were re-introduced so fast it would make your head spin when Lenin's reforms were shown to be a disaster.
> Capitalism didn't create markets or a market economy.
I did not say so, and this is perhaps where your confusion lies. I said Capitalism is the right to private property and a market economy. I did not say markets are strictly endemic to Capitalism. Although you'll find no scalable one in a liberal democracy devoid of Capitalism.
> We can point to an example of people living co-operatively in, oh I don't know, the article of this submission?
A co-op is not tantamount to a society, it's an employer. The existence of a co-op in itself does not jeopardize the right to private property, or by extension Capitalism.
This is why the quiet part the zealots eventually meander to is "see, we just have to force people to..."
> Consider this: markets exist in supposedly non-capitalist countries. They existed in the Communist bloc. We've got cuneiform tablets describing markets going back 5000+ years. Capitalism didn't create markets or a market economy.
A market economy is one where resources (commodities, labour, services) are distributed primarily via the pricing mechanism, prices can be set freely by market participants and the market is generally open. It isn't merely an economy where markets exist.
Your examples were not market economies. They heavily restricted market access through guilds, hereditary jobs, serfdom, feudal law and trading licenses. They fixed prices through price edicts and decrees. On top of that, the majority of the population were subsistence farmers who also made most of their tools themselves. This means that the vast majority of resources were not traded in a market.
> That too is relatively new. Abraham Lincoln was a Marxist, for example.
Really? You're just going to state this as a fact without any backing at all?
> The Amish in question are entrepreneurial for sure but that's not capitalism. The Amish keep their surplus labor value. It saddens me to see how fundamentally people misunderstand what capitalism actually is.
wish more people understood the historical roots of the word "entrepreneur". americans conflate business/enterprise/entrepreneurship with capitalism. i think most people would be more open to these ideas if it weren't from the misinformation dating back to the red scare.
> The salary differential between the highest and lowest paid workers in Mondragón, for example, remains about six to one; for the largest 500 listed companies in the US, the gap is closer to 272 to one. At the year end, members of Mondragón’s co-operatives also decide collectively on whether they should pay themselves bonuses and, if so, how much. This profit-sharing comes in addition to a base pay rate that, on average, is 40% above Spain’s minimum wage.
>Pursuing a co-operative model is far from plain sailing, however. Numerous hurdles exist. For one, membership does not come cheap. To join a co-operative, workers typically put up a one-off payment of about €17,000 each. Plus, just as they are entitled to a share of any profits, so, too, are they liable for any losses.
Commercial pressures can also prove acute, as Fagor Electrodomésticos’s troubled history shows. The fact that all major investment decisions have to be put to the vote can also make Mondragón’s co-operatives less agile than their conventional competitors. And finding financing can be problematic as the private capital markets are effectively closed to them, admits Fagor Arrasate’s Mendieta: “We can’t incorporate external capital into the co-operative’s share capital because we are governed by the principle of ‘one person, one vote’, which no capitalist investor would accept.”
Capital is magic numbers in a database. You're asking for folks to farm coins like an MMORPG vs simply changing labor laws and regulations, or leveraging existing laws.
https://archive.md/8y0mj
The co-op structure is less used in the US, but there are quite a lot of significant employee owned corporations (which come with the limited liability benefits to shareholders).
There are also quite a few with mixed founder / employee ownership. Publix for instance employ 250,000 people across their supermarkets and are employee / founder owned.
A recent list of the largest from Oct 2023:
https://www.nceo.org/articles/employee-ownership-100
Also worth noting for HN: Igalia is a workers' co-operative of open source developers, many of whom are significant contributors to browser and HTML renderer code: https://en.wikipedia.org/wiki/Igalia
I was shopping at winco a couple years back, which is employee owned, and one of the cashiers was in his 40s/50s and mentioned he had a couple million in retirement.
Very cool to hear, dude will likely be better off than me. Employee owned corporations are good.
Unclear why hearing that someone else is richer than you is supposed to be cool, regardless of if they're capitalist coded or cashier coded.
i dunno why you wouldn't want to celebrate the success of others, especially when they're essential workers!
I don't think this situation is the same thing as celebrating the success of others!
Of course in my neck of the woods (Silicon Valley) it's expected that all 50 year olds are multi millionaires, as all you need for that is have owned a house for a few decades.
Because it suggests non-capitalist business models can be more successful than generally imagined.
I think this is already well known due to the existence of landlords, who are pre-capitalist. Although most people don't think of farmers or California retirees as belonging to this class, which they probably should.
Co-ops are a capitalist business model.
If you can't sell your shares in a company, I think it has a good argument for not being capitalist, even though you produce market goods.
You say that like its a bad thing...
I’ve worked for an employee-owned US business.
It was indistinguishable from a normal corporation that periodically grants stock to employees, except other forms of retirement contribution were sub-par, and vesting periods for everything were LOL WTF long.
Working conditions and such were worse than many places in ways that definitely wouldn’t have been the case if it were a traditional ownership structure with a union rather than employee-owned.
They did love to put that up front when selling a job there, though. As if it actually meant something.
As an employee-owned business, you had a say in this. How did the discussion go ? What were the arguments for and against those decisions ?
This is not necessarily true depending on how the business is structured. Employee ownership doesn’t necessarily come with any actual control.
In that case I question the use of "employee-owned". It might be technically true, but if it comes with no actual control there is no point in using that term.
The original point is about companies where workers have actual control. That's what's important, that's what's interesting.
big ships are generally terrible places, as a rule. places that are less bad are exceptions. but most of the time you're picking your poison, yet that doesn't mean alternative models aren't worth exploring.
Which one? As with all things, there is a lot of variation. There will always be good places and bad. The question is whether they are better on average.
Co-ops in the US seems to be particularly popular in agriculture.
Yes, but note that those are typically neither worker co-ops (like Cheese Board or the components of Mondragon) nor consumer co-ops (like REI or a grocery co-op), but a cooperative association of businesses that are themselves typically very much not co-ops.
Energy cooperatives are another thing I've seen work well here in the US.
A house I lived in got our electricity from a Touchstone Energy cooperative[1] and our rate was dirt cheap and they even mailed us a dividend check every year. I've even received a few checks from them after moving out of the area and no longer being a customer of theirs. They had great customer service too. They were significantly better in every way than the regional monopolies and municipal power companies I've dealt with.
[1] https://www.touchstoneenergy.com
Sounds like my credit union. I call and someone picks up the phone pretty quickly and competently.
I got in as a minor, so I paid $5 for my startup share. (Adults are $25). They’ve been giving me a $5 dividend share every year for a few decades.
And charge me $0/month for a pretty full-service bank experience (not common at banks in Canada).
They’re on a North American network of ATMs (Exchange & Accel) so I have pretty good coverage out of town, can even deposit cash/cheques into CDN partner ATMs. In a lot of smaller towns, you can’t bank on every big bank having a branch, but a good chance of a partner credit union.
Which one?
Would rather not specify, but one of the bigger ones in Southern Ontario.
I wonder if it could work for public education. Perhaps even in lieu of teachers unions.
Much more narrowly, I wonder if it could work for certified flight instructors. Most CFIs are young, know little about business, marketing, tax compliance. And as a consequence are often exploited by employers who misclassify them as independent contractors only to pay them less, without benefits, and still direct their schedules, coerce them into noncompetes. A co-op would help protect their interests while raising standards, in a cost efficient way.
One of the challenges of a co-op school is that people tend to be "in the market" only whilst they have school-aged children, roughly ages 5 to 18. In much the same way that student involvement in higher education tends to focus strongly on the few years such students are actively being educated, which means that faculty, staff, and corporate influence in higher educational institutions tends to overwhelm student power.
That said, yes there are co-op schools, with the Co-Op School in Brooklyn, NY, being prominent: <https://thecoopschool.org/>
> I wonder if it could work for public education. Perhaps even in lieu of teachers unions.
In a very real sense, public schools are already customer-owned cooperatives governed by a set of trustees elected by the customer-owners.
That said, once you have a school owned by the teachers it's no longer a public school. Public schools are funded by and governed by the public. A cooperative school owned by worker-owners is by definition not a public school.
between the microschool and ESA movements going on right now, there will likely be many publicly-funded & worker-owned schools popping up over the next few years (amongst other much stranger hybrids).
In many jurisdictions, a teacher co-op can already obtain a charter to have an "open to the public, funded by the public, and accountable to the public" charter school. If we're going to be pedantic I think that would fit your funded+governed definition. owned+operatred might be closer to what you are gesturing at though, or perhaps local democratic oversight? Regardless, the old public/parochial types of school categorization is not nearly nuanced enough to be particularly useful for where things are already, let alone soon headed.
Morning Star is an example that takes it even further - there are no bosses and all pay is peer based. They do about $1B a year and have 10% of the tomato ingredient market.
I lived in Woodland for a time and I really wish I had heard about them back then so I could arrange a plant tour.
Quite, and encouraged by the USDA, see e.g., <https://www.usda.gov/topics/rural/co-ops-key-part-fabric-rur...>.
Producer co-ops generally are at least somewhat prevalent.
Two notable former examples are Visa and Mastercard (they've since reverted to publicly-traded corporations, in the aughts). Both were originally formed as co-operative ventures among member banks, effectively a producer co-op.
I've looked into worker co-ops previously, and noted that most examples seem to have relatively simple organisational needs, with typical sectors being food-service (restaurants and cafes), publishers, acting troupes, and if memory serves, a political party. Mondragon is notable for being an industrial manufacturing company.
There are also worker-owned (though not necessarily co-operative) businesses, such as Bob's Red Mill (milling and cereal products).
Consumer co-ops saw popularity in the 1960s and 1970s, but have largely faded from view. A niche they had occupied, "natural food store" is now dominated by Amazon through its Whole Foods subsidiary, though there are some independent co-ops still extant, often in quite unexpected locations. Three Rivers Market in Knoxville, TN, comes to mind.
Credit Unions are another often overlooked case of co-ops --- both in terms of being neglected over commercial banks and not being recognised as co-operative businesses.
The Nonprofit Quartery ran a recent article on recent trends in co-ops in 2022:
<https://nonprofitquarterly.org/where-are-new-co-ops-emerging...>
News of a 2015 list of the top 100 US co-ops:
<https://www.thenews.coop/list-top-100-co-ops-usa-released/>
And the 2023 listing: <https://impact.ncb.coop/hubfs/Co-op%20100%202023%20Report%20...> (PDF)
Breakout:
- Ag: 47 firms, $187.6 billion (59%)
- Finance: 17 firms, $39.1 billion (12%)
- Grocery: 8 firms, $33.1 billion (10%)
- Energy: 22 firms, $26.8 billion (8%)
- Hardware: 3 firms, $18.6 billion (6%)
- Other: 3 firms, $13.4 billion (4%)
> Bob's Red Mill
I think Bob basically gifted the company to the employees (they bought in over 10 years, but at a valuation far lower than Bob could have got selling the company to an acquirer).
Some discussion on the employee ownership here: https://news.ycombinator.com/item?id=39374158
Fair point, though that's largely a distinction of means vs. ends. BRM are employee-owned, regardless of the path traversal.
> Consumer co-ops saw popularity in the 1960s and 1970s, but have largely faded from view. A niche they had occupied, "natural food store" is now dominated by Amazon through its Whole Foods subsidiary, though there are some independent co-ops still extant,
You missed a chance to mention PCC Community Markets, the USA's largest grocery store co-op, who are also located in Seattle!
(And just like Amazon, PCC was recently in a union labor dispute!)
In the '90s/'00s I worked at the Davis Food Co-Op in Davis, CA which was one of the largest full-service (meaning not just hippie health food) consumer-owned grocery co-ops at the time. After working in the bakery I was on the Board for 3 years, a fascinating experience (we followed the Carver Policy Governance model, where the board is basically the legislative/judicial branch and the CEO is executive).
When a Whole Foods opened across town, they shut down in less than a year largely because of the strength/quality/loyalty of the Davis Food Co-Op.
And DFCO still exists, which relieves me to find:
<https://davisfood.coop/>
Customer co-ops are nothing like employee co-ops.
REI is a customer co-op, and in the past few years, hasn't exactly been a model employer.
> Customer co-ops are nothing like employee co-ops.
And agricultural co-ops are neither.
That's not what I'm taking about.
https://www.agweb.com/news/business/technology/almost-half-l...
Galois.com, pretty famous in the software correctness area, is kinda a co-op right, as it is employee owned?
Not exactly. Galois employees are beneficiaries of the ESOP trust that owns the shares, rather than direct owners as in a prototypical cooperative.
I'm pretty sure that's more or less the same structure used by WinCo as opposed to direct ownership
Sure, my understanding was that Galois is not exactly a co-op.
Why this structure? Is it more advantageous in the US?
One of the main challenges for co-ops is navigating the entry and exit. If you had Direct employee ownership, you have to buy in when you start and sell your stock back when you leave.
A trust with the employees as beneficiaries solves a lot of these problems. It also prevents the co-op members from taking the company public for a huge payday.
Quite a few construction companies too.
Seems to happen once the founder retires. My little brother's tile laying business is going to distribute ownership to the employees based on years + skill once the founder retires. They're already highly paid and treated well (they even have a 401k match which is surprising for a little 30 employee construction company). I think it's the way to go unless you have heirs that you want to run the company.
That sounds different than a co-op. The interesting and tricky part about a co-op is navigating entry and exit.
Isn't a coop just an employee owned company?
Worker co-ops are employee-owned companies, but not all employee owned companies are co-ops.
The point that I was highlighting was that it comes down to the Articles of Incorporation and how ownership is managed on an ongoing basis. What happens when someone retires or you hire someone new.
If I were to retire and simply give my company to my 10 employees, Nothing would stop them from hiring new employees and not sharing ownership, leaving the company and keeping ownership, or selling their ownership to a third party.
I appreciate the extra information and that's exactly what I was looking for with my question. Makes total sense.
Would it be fair to say that companies like AMZN or GOOG have "employee ownership" because of the stock options? If so, it means many tech companies meet this definition.
No it wouldn't, see here for example: https://www.investopedia.com/articles/markets/011516/top-5-g.... All Google employees combined own probably less than 1% of the company. They would need to own at least 50% to accurately call it employee-owned.
.. to be too pedantic, but it's only less than 1% if you exclude the founders, who are still employees.
(and possibly Sundar?)
You're right, I didn't realize they were still actively involved with the company. Sundar has 0.01% though.
Most people working for Amazon don't get stock options, most of Amazon's employees are doing stock management in warehouses, delivery, etc.
Beyond that, stock _options_ aren't stock, and stock _grants_ to employees are often in restricted classes... they're not meaningful employee ownership because they're structured to ensure that they don't represent any kind of employee control over the company.
In many tech companies like Microsoft and Netflix, there is only 1 stock class and SWE employees get stock grants that aren't restricted on vest. You just conveniently picked the FAANG company where most of its workforce are warehouse employees.
But the employees don't own a controlling share. For it to be a worker cooperative it really needs to be entirely owned and governed by the people working there.
The tradeoff is that requiring all shares be worker-owned devalues the shares owned by workers, due to massively reduced liquidity. This situation does not necessarily benefit the workers since they have an interest in maximizing the value of their share.
How does reduced liquidity equal lower share value?
Makes no sense to me.
Case in point example: SpaceX shares are very illiquid but also very very much up since SpaceX was founded.
Suppose I own 0.01% of the company I work at. If that company is publicly traded, I can sell those shares to anyone.
If that company is a co-op in which only employees are allowed to own shares, the only people I can sell my shares to are other employees.
In general, more willing buyers (who in turn know they can they sell those shares unrestricted in the future to any buyer), increases the people willing to bid on those shares at any given moment in time. (It’s the same basic reason that you’d rather have $100 in cash than $100 gift card for Starbucks.)
Are you even allowed to buy/sell shares in an employee owned co-op? I understood that share ownership was part of employment with the company. It entitles you to a share in the profits and a share in the decision making, but I didn't think it was a tradable instrument itself.
This is the answer to all the above. These shares give you a right to part of the profit, but cannot be sold.
What does it mean to own something that you cannot sell/assign?
That sounds like plain old profit sharing, not ownership.
Ownership in the sense of governance, not of property.
Worker cooperatives are organizations that are governed by their workers for their workers, not owned as property to be traded or sold.
> How does reduced liquidity equal lower share value?
1: Lower liquidity usually goes hand in hand with higher transaction costs, which means a bigger gap between how much the buyer pays and how much the seller walks away with.
2: Time value of money: Suppose some liquid asset can be exchanged for $X right now, and an otherwise equivalent illiquid asset can be exchanged for $X by, let's say, a month from now. $X today is more valuable than $X in a month, so no one is going to buy the illiquid asset today for $X if they could get the liquid one instead.
How do you handle companies like AMZN where Jeff Bezos still plays a role. Yes, he seems to be busy doing other things but he does seem to have a role. And the founders at all of these companies are still doing things. Even Bill Gates has some kind of role, right?
It's not even in the same game, forget ballpark.
Rank and file aren't really "shareholders". We hold an utterly insignificant stake compared to funds and other corps. They can take a board of directors and bend their beaks all they way back to their rectums, force them to act against a company's best interests.
Employee ownership means the employees decide what they do with the profits derived from their labour. The company itself tends to benefit as well, in terms of stability, quality of work life, and long-term profitability.
There are a lot of different co-op structures and different aspects of the broad term co-op. Employee ownership is one aspect that could be further broken down. Profit participation, worker-led governance and decision making, formal legal & tax categorizations are other interesting aspects.
Stock options in small percentages are a form of profit participation but a weak contributor to the question on if a business is a co-op.
Not really, but technically yes. "Employee-owned" is being used in a specific way here; it's a specific form of ownership governance. Most often the shares are owned by employees via a trust, which the business funds. None (or mostly none!) of the stock options available to Amazon or Google staff are useful in terms of controlling the business. When someone is using the term "employee-owned business," they are generally referring to a business in which employees have actual control, not just a profit-sharing certificate.
Of course, any publicly-traded company can be 'employee-owned' to whatever degree the employees buy shares. But this term usually indicates something else.
Employee ownership can't exist if its a publicly traded company. The co-op model is literal ownership of direction of the company, not just financial ownership. Most publicly traded companies aren't anywhere close to employee owned even though they may grant stock to employees. Those employees have no say on the company direction (see latest news about Google firing employees for protesting).
The percentage of ownership is relevant, as is where the profit goes.
Board control is probably more important than profit on this one, I'd say
Right, percentage of ownership (since board control stems from that?)
This seems to be fairly unique in its breadth of different enterprises. Most co-ops seem to stay in a single industry e.g John Lewis with 80,000 employees in UK retail or the many agricultural/distribution co-ops owned by farmers.
Wikipedia page is a clearer read: https://en.wikipedia.org/wiki/Mondragon_Corporation
The Co-operative Group in the has a group of retail businesses, including grocery retail and wholesale, legal services, funerals and insurance, and social enterprise
In the US a lot of the ag coops seem to be marketing oriented with maybe some capital equipment sharing (regional packing shipping facilities, etc).
C-suite salaries are so high in America I'm wondering if these sort of co-ops could be more competitive on that cost saving alone.
It’s really the non-employee shareholders that take the value, so instead of comparing with CEO and management, you should instead be asking:
“How to transfer ownership of all publicly traded shares such that they are owned solely by the employees and not non-employee investors”
CEOs and management are simply there to prevent the above from happening, which is why they are paid by the board so much.
The boards are the unelected non-employee owners that need to go away
> not non-employee investors
I must be thick, but I fail to understand how shareholders are "investors" of a publicly traded company? Yes, at some point, the company went to the market, and large sums of cash were exchanged for company shares, with the promise of a future return of part of the profit on that share. So yes, that moment could be seen as an investment.
But from that point onward, holding a share of a traded company has nothing to do with investment. Share holders are exchanging shares on the stock market, but at no point is any of that money going back to the companies they are trading shares of. They are just exchanging the "profit sharing promise" among each other, with no positive financial impact on the companies whatsoever. Quite the contrary, as they eat up a huge quantity of the available net profit, that could have been reinvested in the companies themselves.
IPO creates the “public market investment vehicle” by liquidating the assets of the private equity holders onto retail investors.
In single share class companies then, the entirety of the “value” from a financial perspective is held in stocks and corporate bonds. Whomever owns these, has voting and control rights in a way that non-voting equity holders do not.
Notably almost no public companies give voting shares to employees- I’m sure there are examples but incredibly rare.
Shareholders benefit materially from the labor of the company by holding the asset that (theoretically) accretes value with no actual labor inputs.
That means that anyone doing labor is paying the shareholders from their paycheck every month.
Why is it like this, because the contracts people sign and the egregious power disparity makes it such that capital, the voting share holders, have ALL of the value that they can turn trade or liquidate or whatever because they gave money for shares and more shares means more power in the company. The board ultimately encourages this because they are only interested in capital returns and stock price.
Totally valid question I struggled with for years.
Simply yes, the most of the investment happens when shares are issued - notably the IPO. However companies can issue new shares, or buy back/retire shares and reissue at a future date. The value from people holding shares maintains the price for which companies can cash in at a future date. So demand for shares on the market is sort of a store of value for companies.
Your question on reinvestment: a company is under no obligation to return profits to shareholders and can reinvest as much of their profit as they please. Amazon did this for years. Of course there are practical limits to this as board members often are representatives of shareholder interests. When a company no longer can make new credible investments, they are likely to return excess profits to shareholders. Different companies have different mandates from shareholders and different levels of scrutiny for what counts as credible reinvestment.
Now in practice there is the added layer of shares representing the interests of the make up of the firm. Board seats often are shareholders, creditors give preference to firms with valuable shares, Ceos are often paid in shares as sometimes employees at many firms.
Ultimately, there is no legal claim to profits from shareholders, nor is there legal claim to control. (Look at Google's multi class share obfuscating control). However giving profit and control helps stoke share price which is the store of value for firms as well, helps maintain access to credit/ financial strength, and represents the interests of the firm itself (via its board, creditors, CEO, employees etc.)
TLDR: companies issue /reissue new shares to finance their business. Maintaining share price stores value for business (and new demand builds that value)
Jamie Dimon, the CEO of JPMorgan Chase, was paid $36M in 2023. The company had, at the end of the year, 310,000 employees. So we can assume that if got paid zero, the company would've been able to distribute about $116 to each of them. Doesn't look very compelling to me, in that particular case.
I believe the idea is you replace individuals who solely manage across the board, with the idea management is really a part time job. That so many executives split their time would suggest that might very well be the case. With that in mind, there are many efficiencies imaginable beyond just the C-suite. And the employees now have ownership, so they have more of a reason to take up more responsibility than the current environment where employees are increasingly detached from their work, for good reason.
Huh, that sounds like taking yet another full-time job and smearing its workload across everyone. That already happened with quite a lot of occupations - thanks to "increased productivity" brought by computers, a typical white-collar employee is now also doing the job of a secretary (calendar, mail, setting up meetings), graphics department (PowerPoint), financial department (managing and reporting travel expenses), and couple other ones as well.
And then everyone is surprised that real productivity doesn't seem to track the theoretical increase brought by technology. Well, maybe because most of that turns out to be replacing legible expense (salaries of well-defined jobs) with larger, illegible ones (everyone else doing tiny bit of extra work). Feels to me that your proposal would end up being just another case of that.
> graphics department (PowerPoint)
You started the paragraph with the word "workload," but here the load is about as close to zero for the average employee as one could get without being pedantic about it.
People aren't using virtual brushes and learning color theory to digitally paint their PowerPoints, or even composing their slides effectively in the visual space provided as a graphic designer would in Photoshop. They are writing and revising their drafts in PowerPoint, often using the default templates or perhaps 2-3 minutes of trying out different themes.
That ends up smearing all the costs and benefits of default PowerPoint look-and-feel across the audience for all these boring presentations.
But I claim the cost to the employee's time and education due to them technically having taken on the responsibilities of a graphic designer are, on average, effectively zero.
Maybe I named the department wrong, but my point is, back before PowerPoint, in the era of more analog presentations, large companies had a separate group of people you would ask to prepare charts and graphics for your presentation. Nowadays, you have to do it yourself.
My point is that all of us are constantly distracted by random, intermittent tasks outside our specializations, which previously were done by dedicated specialists - people who could afford to become proficient at that work. This is a huge productivity hit for everyone.
A few corporations still have a separate department dedicated entirely to generating things like PowerPoints. McKinsey for example. The consultants are good at creating PowerPoints if they need to, but they can just outline it or flesh it out as much as they like and toss it over the fence to the "PowerPoint department" which will complete it overnight based on the instructions/outline/information/draft sent in by the requesting consultant.
Yeah but slide shows are a core competency for McKinsey.
Cool, now combine the salaries of the entire C-suite. That’s what the parent comment is referring to.
OK. Let's assume that the rest of the C-suite combines to give that number a solid 5x multiplier. How accurate that is is left as an exercise to the reader, but be aware that the CEO is almost always the highest-paid member of a C-suite.
That would turn $116 into $580 per year. Spread out, that would be approximately $22.30 per paycheck if biweekly, or $24.16 if twice a month. All before taxes, of course. Real life-changing money for hundreds of thousands of people, right?
The point here is not that spreading the money from the C-suite to the workers is in any way a bad idea. The point is that it doesn't go nearly as far as we might like to think. We might want to adjust our policy preferences and goals to reflect reality instead of dreaming of us all dining endlessly on the the fat of the C-suite.
Oh, and here's a reference for C-suite comp at JP Morgan Chase. Reliability unknown, but if accurate it means my assumption of a 5x multiplier is overly generous: https://www1.salary.com/JPMORGAN-CHASE-and-CO-Executive-Sala...
> instead of dreaming of us all dining endlessly on the the fat of the C-suite.
I thought the issue with such high/concentrated C-suite compensation isn't the envy (though that may be the case for some). The issue is that just by squeezing $116 per employee such a CEO can pay herself. Like if removing armrests from all employee chairs nets you a few additional millions of dollars, the temptation to do so exists.
If there was no such C-suite, there would be less incentives for pennypinching over basic employee wellbeing.
If you look at sibling comments, you'll find a whole discussion where users talk about the major significance to many people of a different numerical estimate. With that in mind, I think that for many people the issue is indeed greater employee income instead of avoiding pennypinching over basic employee wellbeing.
Also maybe do it across a few more industries.
Also maybe move whatever other goalposts you can find until the Marxist theory begins to make sense.
Also keep stubbornly clinging to the idea that organizing and coordinating workers is not real work.
It is, but it's not worth the massive sums some executives pay themselves.
Haha, imagine being the type of person who attacks anyone who criticizes ultra-high C-suite salaries by calling them a "Marxist".
How is it an attack? What would be a more accurate descriptor for someone who appears to subscribe to the idea of an oppressed class and an oppressor class?
This has nothing to do with class warfare. We're talking about individuals who make several orders of magnitude more money than regular employees, despite the impossibility of demonstrating that they add an equivalent amount of value to the organization. The idea isn't "everyone should make the same amount", the idea is that pay should be proportional to one's value add.
Lmao this is not marxism this is much much closer to falangism and Catholic Syndicalism. Also answering to your comment "How is it an attack? What would be a more accurate descriptor for someone who appears to subscribe to the idea of an oppressed class and an oppressor class?"
Nobody talked about that or said that they just asked to replicate the model in more industries, and seeing the sorry state of many products, that seems wise.
As someone that escaped a socialist country, I can and will have to ask you to take five minutes to enage with people comments instead of blindly barking.
You end up with ~$2300 more per employee, assuming they all get paid the same and there are 20 of them. Which still isn't much.
Ask the average American worker if they'd like an extra $2300 a year. And yes I understand thats pre-tax. But even so, thats a non-negligible amount for a lot of people.
For whom $2,300 / year is meaningful is, dare I say, hard to answer question. Most of the people for whom an additional $2,300 / year is meaningful pay little to no taxes. However, a large chunk of these people also get Earning Income Credit. These people would lose at least part of this credit if their income increases. This question I believe can be answered by the bi-partisan U.S. Government Accountability Office or U.S Treasury- they certainly have the income returns for all Americans.
Stepped tax thresholds are always a problem when they incentivise low-earners to keep their income below a certain, arbitrary level. However, it would be inappropriate to deny employees a raise based on the existence of tax levels - after all, wouldn't the employees pay exactly no tax at all if they weren't paid? The tax is also guaranteed in most cases to improve the economy of the local area. I don't know the specifics of how it works in the USA, but I am aware of 'buy American' policies for federal public spending and equivalent rules for local government.
Say an employee effectively gets $10 less money, but the company effectively now pays the government $1000 in the same period. That might mean new bus subsidies, legal aid, development grants... things which make everyone slightly better off in the long-term. I think that's a good trade-off.
> For whom $2,300 / year is meaningful is, dare I say, hard to answer question
There were many articles written on the impact of the 2021 Advance Child Tax Credit (up to $1,800 per child over a 6 month period). The impact was very significant on lower-income families - which makes sense because for those earning less than $40,000 per year, that amount is more than the amount in one's paystub.
And how many JPmorgan employees fall into that category?
Glassdoor tells me the salaries of JPMorgan tellers ranges from $38,000 - $62,000 with a median of $42,000. So without digging into salary distribution at the entire company, I can yell you with certainty that it's a non-zero fraction.
I'm not diaagreeing, but most of the people working for JPM are not average.
thats still 2000+ dollars per employee that can go into the economy, or help a family get through a rough patch no?
JP Morgan works in 65 countries, in some of them 2300 would be a year of salary.
Venezuela avg salary 230$ per month
Vietnam avg salary 277$ per month
Lebanon avg salary 190$ per month
Nigeria avg salary 730$ per month
Pakistan avg salary 293$ per month
In all those countries, average salary for JP Morgan employees is significantly higher (especially if you include expats). Also I think you are significantly off with Nigeria avg salary - no way it's so high in such a poor country.
Nigeria is tricky - I've seen estimates ranging from $130-$750. World Bank classifies it as a "lower middle income" country at this point, which would suggest they at least think the median is <$4k or so per year, I think.
If we factor in not just C-suite but the entire middle to top management, then I definitely think there is something to come for.
Though, in the end, the US is extremely adversarial. So these people standing to loose out on the competition would do anything to stifle such innovations.
So in this utopia does the organization run with no management at all or does management all work for $0?
wut? where does this comment even come from?
are you under the belief that you either earn 400k a year or 0?
what if middle management just got a reasonable compensation in line with what ordinary people earn? this is actually not even a foreign concept in the us. just look to the 60s.
Unlike some of these executives, we're not animals. We won't make them work for less than the living wage.
But there will be fewer perks.
The US reputedly has the best Democracy money can buy.
They actually have a lot of difficulty in hiring good directors for this exact reason, they have widened the gap several times and are planning to keep widening it.
Coops have a hard time hiring directors because they can get paid more in standard corporations?
What a heartwarming story of employees knowing their worth and not settling for less.
C-suite compensation, especially stock-based, is often in part to ensure management loyalty to shareholders vs other things. Worker board membership means management once again has competing loyalties, but now de jure. That means it is not worth it to the share holders to pay the extra "ransom compensation", in addition to workers probably outright being against it. I would thus expect C-suite compensation to go down.
"ensure management loyalty to shareholders"
Everyone's pay is to keep them, isn't it? Nobody is loyal beyond being paid.
Do CEO's really provide so much 'extra' benefit to justify the premium? Is their loyalty in particular worth paying so much for?
I'm just not seeing how 'ransom' is needed. Isn't growing a healthy business supposed to be the goal for CEO and Board? And if employee owned, it is same.
The only reason to pay the extra 'ransom' to be loyal to shareholders, is when they want the CEO to do things that are 'not' for the benefit of the company, but only to benefit shareholders, who can sell and exit.
I think the question is who is the business healthy for, and who is the c-suite and up loyal to?
It is possible, and even likely, that a healthy business differs in some material ways for a CEO+board than its employees, though I also expect there are also overlaps
The ways the stock price influences a business that already has gone public are subtle and not to be taken for granted
It is an interesting question why they don’t outcompete other businesses.
Most likely because growth is not really the primary goal.
If an organization has any goals besides growth at all costs it will fall behind.
The simple explanation is that the actions of C-suite executives add value, even after factoring in their compensation
shades of https://www.newyorker.com/cartoon/a16995
I wonder why co-ops are so comparatively rare in the US, even though everybody seems to like them (customers and employees).
It could just be tradition and the effects of history. But then why did US history create more shareholder corps while European history created more co-ops?
It could be that US investors are less willing to invest in co-ops. But then, why? Is there something about them that makes them less competitive? Why are they ostensibly worse in the US than in Europe?
>It could be that US investors are less willing to invest in co-ops. But then, why? Is there something about them that makes them less competitive?
My, admittedly uninformed, guess would be it has to do with 1) there are more worker protections in the EU than in the US and 2) Co-ops tend to pay employees better wages, have better benefits, etc.
Shareholder corps will try to drive down their labor costs as much as possible. Walmart goes so far as providing advice to how it's employees can best apply for food stamps, all the while keeping them under the 32hr/week threshold that would require them to receive benefits. This can provide a price advantage against co-ops who are not running these same practices. It the EU the labor protection laws are better so the potential difference of labor cost is diminished between sharecorp and co-op.
Co-ops are of course worse for investors. There are no voting stock in co-ops, so the stockholders can't squeeze maximum profits off workers and consumers.
Europe had very strong socialist/non-capitalist political movements in the 19th century. Co-ops were seen as one alternative to capitalism, and were a huge movement.
For example in Finland the largest bank and largest retail chain are (consumer) co-ops, and in general co-ops are big players in the economy.
>Co-ops are of course worse for investors.
What investors?
For example banks giving loans.
1. I wouldn't call that an investment
2. Cooperatives tend to be more resilient in times of crisis:
https://onlinelibrary.wiley.com/doi/10.1002/jsc.2393
My reason for asking that question in the first place is that 'investor' isn't a role I associate with a worker-owned enterprise. The workers are the owners are the investors, so the statement reads as invalid to my mind.
Big-government is also an aspect. Both the federal and state governments in the US have a tendency to form wholly-owned subsidiaries to conduct businesses that could otherwise be run by co-ops.
I guess it's because American culture is more focused on property and ownership.
The co-op movement arose as a reaction to industrialization and capitalism, which threatened many workers. You could understand it as capitalism based on membership rather than ownership, or as a third way that's neither capitalism nor socialism. But just like socialism never really took root in the US, other alternatives to capitalism didn't fare that well either.
Worker co-ops are quite concretely socialist in the sense that the workers control their means of production. Of course when embedded in largely capitalist economy, e.g. banks do still have often de-facto control over them.
> Worker co-ops are quite concretely socialist
Or you could say that they are co-owner of their means of production. So, as business owners, are they actually the ultimate capitalists in disguise? :-)
Business owner who doesn't have employees is not really a capitalist, but a self-employed worker. At least if they do some practical labor instead of e.g. investing.
In general, self-employment is quite a different thing from owning of means of production that other people work.
co-ops existed well before industrialization, as guilds of artisans. Guilds were quite protective of their markets and IPs. You had to inherit the menbership or pay a hefty sum to enter the guilds.
Guilds were something very different.
They were oligarchic rather than democratic: only masters were full members. They were monopolies rather than competing in the market: you had to be a member of the relevant guild if you wanted to do business. And they were not businesses: each master ran their own business instead of working for the guild.
It's an amazing success story (even if surely not without any bad spots), it makes me happy just knowing that it exists.
But I do wonder how much of its workability hinges on Basque nationalism rechanneled into something more useful than nationalism usually is. If that nationalism also had something like an independent state as a default outlet, the balance between cohesion and corruption creep might shift just enough across a tipping point. I'm really not sue that it can be replicated (but I'd love to be proven wrong!)
> But I do wonder how much of its workability hinges on Basque nationalism rechanneled into something more useful than nationalism usually is.
Basically none, it does not hinge on that.
If anything basque nationalism hurts the proyect more than it helps. Many of the workers in the basque country came "to disrupt" basque nationalism. So many of the old workforce in Mondragon is not basque born.
there was a civil war in spain, most of the industrial capacity was destroyed in the country but not in the basque country. There was a nationalist movement there, so the far right dictatorship thought they had a great strategy. Move people from poor spain to the basque country, you utilise the little industry that remains and you take over the nationalism with people who feel spanish.
The only bit of Basque "nationalism" that helped mondragon was that many of its competitors were kicked out. In the 70s and 80s a ton of american companies came to Spain, the far right dictator hiding his axis friends allied with america in exchange for some military bases and allowed american expansion in Spain. Basque country having some of the largest industrial network was a prime candidate for their location. Then the 80s and 90s had a ton of terrorism which scared american companies which left industrial giants like Mondragon without competition.
So basque nationalism played little part in its success, its more like the American boom of the 1950s, everyone else had a detroyed industry and they didnt so there was a boom. Basque country had the same thing but instead of building coca cola and taking over south american countries to sell cheap bananas they opened cooperatives. There is little reason other than chance that Sillicon Valley is not like that, early companies like IBM could have set up as coopearatives and their early advanatge would not have been disrupted in the sleightest.
Thanks, the part about that area being an industry hotspot after the civil war was completely new to me. From my German perspective, Spanish history with all its disconnect from the three "big stories" of the twentieth century almost feels like from a different timeline!
are there any books you'd recommend to learn more about this history?
Any part you would be interested in particularly?
I just grew up there, so most of it was less books and more just personal experience. But there are no few resources, books, shows or documentaries about the area.
most curious to learn more about the civil war.
There are a number of famous english speaking authors that have done pretty good work around it.
On non fiction you have "The spanish civil war" by Thomas Hugh.
On the fiction side you have "For whom the bell tolls" by Ernst hemingway and "Homage to Catalonia" by George Orwell
Man, something about Spain is truly magical. For you I imagine it’s different since you grew up there (I get it, I’m from Alaska and it’s nice but it’s not magical like tourists see it), but for me, I remember reading Homage to Catalonia as a kid and thinking “I have to go to Spain one day” then later in life when I went, I backpacked through El País Vasco (and the rest of northern Spain) and just fell in love with that country.
If I can get a remote job, my wife and I are strongly considering how we could move there. Spain is the most fascinating place I’ve ever been and the place just… feels right? I don’t know how to describe it. It’s the only place I’ve ever felt like I fit in. Eskerrik Asko / Gracias for taking me back to a series of Camino sense memories.
Funny how the world works, I must have spent most of my middle school doing book reports on the Inuit and other Native american and First Nation tribes up north. We had to read Island of the Blue Dolphins in 5th grade and I had a big "Eskimo" phase. (I know the name is no longer in use much, but it shows my age)
Well I have been out of Spain for over a decade, so now when I go back I feel a bit like a tourist and I think it gets lovelier every year. If you ever make it back, either through work or for another trip I am sure you will have a brilliant time once again.
Ghosts of Spain by Giles Tremlett is usually well regarded, although I have not read it
I think it's more based on the schooling in CST: https://en.wikipedia.org/wiki/Catholic_social_teaching
it is partially successful because it overcame one of the difficulties with scaling cooperatives, namely being selective with membership - it outsources so much to avoid dilution through membership it might aswell be a financial trust rather than anything roughly resembling a traditional cooperative.
I'd love to see more details about the business model and corporate structure and how it works. Also, they mention that the workers are "liable for any losses." - How does that work? If I own a share of Acme stock, I'm not liable for their losses, though the value of my share may go to zero.
Pretty interesting idea. Are there other examples as well?
It maybe "liable for losses" in the way that shareholders often are - if they want the company to continue when it is losing money, they need to "pony up" and invest more.
But it may be a different type of corporation than the standard US "limited liability" type (where you can only have your shares go to zero unless you're significantly materially involved AND do criminal shit).
Wikipedia has a list: https://en.wikipedia.org/wiki/List_of_worker_cooperatives?wp...
In the US, I'm most familiar with Equal Exchange (fair trade coffee), Nebula (creator owned YouTube for documentaries), TESA (educational board games), Alvarado St Bakery (the tiger-branded breads available in many stores).
If you run ACME as sole proprietorship S-corp in the US, you are also on the hook for the losses. If you spend 9K but spent 10k, you have 1K less in your bank at the end of the year.
I visited Bilbao a few years back and the claim then was that Basque Country had the highest average income in Spain. Today Wikipedia [0] lists it as second.
[0] https://en.wikipedia.org/wiki/Ranked_lists_of_Spanish_autono...
Its the highest median income in that table.
Its second only in GDP per capita because a number of big corporations moved to Madrid. There has been a slow but fairly unstopable centralisation in Spain, specially since the Catalan independence debalce a few years ago, more and more companies have moved their headquarters to Madrid. Which has raised the GDP of madrid a ton and moved many jobs there.
I might be wrong but in most unitary states, the capital region tends to have the highest GDP. I'm not aware of significant exceptions to this rule.
> “If I’d had to compete in the open job market against all the youngsters coming out of university, I’m not sure I’d have ever found another job.”
So this is the reason Spain has the highest youth unemployment rate in europe?
How is it different from a normal partnership?
Partnership can have employees who are not partners.
This is tangentially related at best but I always found it amusing that a forum for founders and populated mainly by pampered white-collar workers happens to be one of the hot-spots of revolutionary sentiment in the interweb, very ironic.
Co-ops are fascinating to me as an alternate evolutionary branch of capitalism. Like the marsupials to the placentals. Also like the marsupials, in most cases where co-ops compete with regular capitalist businesses they go extinct.
I'm afraid I don't understand. My state is chock full of co-ops that compete with their corporate counterparts.
Hell, there's (at least) 3 separate co-op grocery stores in my city, they each compete with an Aldi, and multiple local grocery chains in their respective neighborhoods.
> My state is chock full of co-ops that compete with their corporate counterparts
Same, and we’re deep red. My power company is a member-owned co-op. It’s cheap as hell (6.8¢/kWh for wind) and doesn’t enjoy burning down the state as a hobby.
oh damn, I completely forgot about utility co-ops!
I'm envious of those, they're all over the state but they're only out in the sticks.
That may well be what tends to happen in the large-scale economy, but in my personal experience, co-ops crowd other businesses out over time because they are far less likely to piss me off and alienate me. At this point "co-op" has become a pretty strong quality signal: it's not going to be flashy, and it might be a little inefficient, but it will always be decent.
In the short term dictatorships usually are superior to democracies because they can move fast and have less stakeholders to satisfy. So a capitalist business will usually beat out a co-op. That doesn't mean that society as a whole gains.
Co-ops are just the way that socialism can exist in a capitalist society. And while capitalist businesses can usually undermine them using all the tools of capitalism, notice that co-op workers are usually happier and paid better, co-op customers are treated better and receive better service, and the community suffers less from having a co-op in the area.
> co-op customers are treated better and receive better service
I’d argue this is because a co-op can attract higher-quality workers for less than a purely profit-minded shareholder-owned business. (Similar to companies with a unique culture.) Generalise the model and you’ll get the co-op equivalent of the 70s-era UAW running roughshod where they can.
I think alternatively/additively they may be more responsive around firing ineffective staff, and a culture of productivity. When workers/managers directly pay for their co-worker's unproductiveness, they have an incentive to replace opposed to simply hire more additional staff.
Co-op is not a socialist model at all. It's just an alternative corporate structure.
It is the worker owning the mean of production, so i don't think you can do more socialist than that to be honest, it's almost the definition of socialism (communism for fellow europeans).
You can find some differences between western co-op and the socialist ideal (mainly, you still have hierarchy and a power structure mostly determined by how much you make), but to me it seems mostly academics.
Workers participating in ownership is not what socialism is.
Socialism is about societal ownership. A coop is not societal ownership. It is still private ownership in practice.
How many tech workers own shares in their company? Are those companies socialist?
This is one of those cases where subtly different definitions of technical words are being used in contradictory ways. A very common definition for capitalism vs socialism in Leftist spaces is concerned with power and economics, with socialism being when labor has the power to dictate the allocation of capital, whereas capitalism is where capital has the power to dictate the allocation of labor.
A more political definition looking at government is "socialism is when capital is allocated for the benefit of the collective, capitalism is when individuals are granted exclusive ownership of capital to allocate how they choose".
Note that a worker's co-op meets the first definition of socialism, and the second definition of capitalism.
It's the workers owning the means of production, in what way is that not socialist?
That's a bastardized interpretation of what socialism is.
Socialism is defined by social ownership. The society as a whole owns production, rather than individuals or groups.
A coop is a just group that divides up ownership among all the workers, not the society/community. The division isn't necessarily even. And the workers don't necessarily have 100% ownership between them. For example, there are coops with publicly traded stock.
A coop can be, and often is, still privately owned.
If you're definition of socialism is "Workers owning means of production" (which by the way, is not and never has been the definition), then every FAANG is a socialist entity for awarding their employees shares.
There is a full spectrum of left ideologies that call themselves Socialist, so your claim of "is not and never has been the definition" is flatly wrong. Collectivists and Syndicalists, in particular, are Socialist schools that are strongly onboard with worker co-ops (typically described as trade unions running their businesses).
And FAANGS are not owned by their workers, full stop. Less than 5% of Google's shares are owned by employees, and most of those shares are owned by management. Bezos personally owns more Amazon shares than everyone else in the workforce combined, Meta is well known for being in a strange situation where Zuckerberg personally owns more than half of all voting shares. Vanguard owns more shares in Netflix than the entire workforce combined. Apple has negligible employee owned shares.
Your misinterpretation comes from a willful twisting of the words "workers" (does not typically mean "the founder personally") and "owning" (which is typically understood as "having control over" rather than "maybe could break the tie between a handful of investment firms").
It is. People don’t realize socialism isn’t mutually exclusive with capitalism.
Maybe more precise to say "not mutually exclusive with free market exchange", 'capitalism' (as a socialist would define it) is primarily an ownership arrangement.
Is a law firm socialist?
ignore him, he's got hacker news debate bro vibes.
How are co-ops anti-capitalist? They appear to me no different than a shareholder or partnership. Are most law firms socialistic in that they have partners who work for the firm getting a share of its profits?
Because labor is calling the shots and reaping the benefits, not the capital investors.
"capitalism" is simply a way to organize an enterprise. an enterprise can participate in a market without structuring the organization as a capitalist enterprise. free market != capitalism. american-style capitalism consists of a political system that supports the capitalist enterprise structure.
Definition of capitalism: an economic and political system in which a country's trade and industry are controlled by private owners for profit.
The private owner here is a co-op. Not socialist.
this is wrong. see my comment here: https://news.ycombinator.com/item?id=40145796
They're objectively not any less capitalist than a private company with restrictions on share transfers.
The workers own the means of production. That's the only thing that socialism means.
a political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole
The community is normal understood as the complete body politic.
A partnership is not socialistic. Lawyers are capitalistic in most books, but they have partnerships.
The organization of a business doesn’t matter in capitalism. Capitalism, boiled down to private property and market. A co-op competing with other companies largely without price control is just as capitalistic as IBM or Google.
This is completely incorrect.
how is "socializing" the ownership of a business not socialist?
The business ownership in a coop is not "socialized". It's still privately owned.
The definition of socialism is not, and never has been, "workers owning the means of production."
A coop still meets all the characteristics of capitalist entity:
- privately owned
- for profit, with profits going to shareholders
If you think coops are socialist, then you must also think any company that has more than 1 shareholder is socialist.
If you think private ownership (which coops protect and uphold) is allowed under socialism, then you don't understand what socialism is.
your opinion about the semantics of "coop" and "socialism" is wrong. most semantic debates are worthless anyway.
every socialist i know and have read agree that a coop is a socialist organization, and we will keep creating these enterprises as an alternative to capitalism, until one day, ideally, the capitalist corporations won't be able to compete in the job market with the coops, forcing them to socialize their ownership and power structures. despite whether you think it's socialism or not.
here are the 7 cooperative principles. please explain how this is capitalism? https://www.electric.coop/seven-cooperative-principles%E2%80...
There's no semantics.
> every socialist i know and have read agree that a coop is a socialist organization
Every unicorn I know thinks leprechauns are real.
A coop protects and upholds private ownership and distribution of profits to their shareholders. That's not semantics.
Socialism does not protect private ownership. Socialism does not distribute profits to shareholders (because there are none). That's also not semantics.
If you want to have a non-semantical conversation, the onus is on you.
ok, well you have no idea what you're talking about, so if you think that a coop is capitalism, then i'm gonna use that ignorance to my advantage, and convince everybody that coops are capitalism. psyop coops on the capitalists. thanks for the great strategic idea!
My guess is that someone who thinks private, for-profit businesses are socialist, will not gain much traction convincing anyone of anything.
But best of luck!
If you can explain to me how a co-op, which is a privately owned, and for-profit business structure, is not capitalist, I am all ears.
P.s. Definitions are important. Hand waving them away as "semantics" is a common trick of the ignorant.
lol keep on arguing on the internet about stuff you don't know anything about, comrade. and use poor debate tactics, like "Every unicorn I know thinks leprechauns are real." will really get you far in life.
Multiple people here have told you that your understanding is incorrect. Now you've resorted to straw man so... I think deep down we all know who is talking out of their behind.
two people, you and some other guy who is also wrong and doesn't know the 7 principles of coops based on his comment (you still haven't argued about how those principles are capitalist, so pretty sure the onus is on you anyway). there are plenty of examples in the other comments on this post supporting my opinion. being a contrarian doesn't mean you're right.
and re: strawman, i just met you at your level after you used the logical fallacy: "Every unicorn I know thinks leprechauns are real." it was pretty clear at that point that you weren't going to have a reasonable conversation. i apologize for not pointing that fallacy out directly and instead i said, "well you have no idea what you're talking about". i could've been more graceful with that, or just ignored you.
anyway, thank you for sharing your (wrong) opinion about whether or not a coop is socialist.
"being a contrarian doesn't mean you're right" - oh the irony
You never had an argument beyond "I'm right and you're wrong" lmao.
I asked you to respond to specific questions like: Explaining how a privately owned, for-profit org (a coop) can exist in a socialist world. You ignored it and have now devolved to emotional responses only.
i'm not responding to those comments because you clearly aren't informed about the definition of socialism, particularly the nuances and the debates that leftists have about this definition all of the time. nor do you understand what a cooperative is. it's not worth my time to go tit for tat in a debate if we're not operating on the same knowledge, and you're not willing to learn.
you are just somebody who argues on the internet, a natural contrarian who thinks they are right about everything, while being totally wrong. i call it the hacker news contrarian effect. it's quite amazing to witness. good day, sir.
You don't understand what socialism and coops are, nor do you understand the nuances and debates that leftists have.
See how easy it is to make assertions?
> you are just somebody who argues on the internet
Says, the guy arguing on the internet lol.
> a natural contrarian who thinks they are right about everything, while being totally wrong
Says the natural contrarian who thinks they are right about everything, while being totally wrong!
goodness gracious lmfao
lol
>in most cases where co-ops compete with regular capitalist businesses they go extinct
After seeing time and time again the success of workers of bankrupted companies pulling up their compensations and unemployment benefits to rebuild the company in a co-op model, I wonder if it's not the opposite.
"Money attracts money", and I don't think it's too crazy to think that if everybody had access to low-interest credit under the same conditions as the big players, this model would be the norm, rather than the exception.
"Everyone has access to low-interest credit under the same conditions as the big players." just sounds like a fantastic (in the fantasy sense) recipe for inflation as the underlying capital and goods sought remain constant but the monetary supply increases. In addition to potentially creating something resembling another 2007 financial crisis worth of mispackaged bad debts.
Central banks fought the 2007 crisis by increasing the monetary supply of a receding economy, so I don't see how removing the intermediaries and having the central bank itself allocate the resources in a fair way could make things worse than they are now.
I'm not talking about letting people borrow at 0% to spend in food and utilities. What I'm thinking of is a system where the path from business plan to business isn't determined as much by the amount of capital one already has, which is what causes the usual corporate structures to be formed in the first place: those who assume "all" the risk in turn receive "all" the benefits.
That often doesn't reflect the real stakes at play. Investors can have a diversified portfolio (and often plenty of spare capital for more tries), while workers invest 100% of their work on the same company for years or decades. The co-op model is more natural but the dynamics of money make it more rare than it should be.
REI competes with corporates just fine in the US, a country so capitalist they still ask everyone it they ever were associated with Communism before they let them visit - more than 2 decades after the fall of the USSR.
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Agreed but you could say the same thing about monopolies though right? Anti-trust legislation exists to prevent that sort of extinction.
It exists to preserve competition, which theoretically is supposed to ameliorate the negative aspects of privately owner enterprise.
> which theoretically is supposed to ameliorate the negative aspects of privately owner enterprise
It’s because non-competitive markets are a market failure [1]. Not amelioration.
[1] https://en.m.wikipedia.org/wiki/Market_failure
Important note: yes they go extinct in a market shaped by regular capitalist rules.
> they go extinct in a market shaped by regular capitalist rules
Source? Because unless America, much less Wyoming [1], are not “shaped by regular capitalist rules,” this statement is false.
[1] https://www.wyomingrea.org/about/coop-map/
Why are there so many co-ops in existence today then?
For all the fearmongering of the Red Scare, this is what socialism looks like. Socialism is an industrial co-op like this where workers are fairly paid for their labor. Capitalism is Walmart where all profits are captured by a handful of shareholders and executives, being subsidized by the Federal government through food stamps to employees and decimating local economies to the point where they're left with dollar stores.
There's a Tiktoker who is having the Amish build a barn on the land she bought in upstate New York and she keeps calling them "capitalist". The Amish in question are entrepreneurial for sure but that's not capitalism. The Amish keep their surplus labor value. It saddens me to see how fundamentally people misunderstand what capitalism actually is.
All we've done is replace the divine right of kings and landed aristocracy with the capital-owning class of the likes of Jeff Bezos. It's sad to see how many people champion their own serfdom when examples like Mondragon show it doesn't have to be that way.
This reminds me of the yearly complaint in French politics that CAC40 companies are paying monstrous dividends, to which the answer is always: If they are so monstrous then surely you should simply buy the shares yourself?
You could just be an Amazon or a Walmart shareholder by logging into your Robinhood account, unlike the feudal regime where to become an aristocrat you would need to be some sort of famous knight, which seems much harder.
First, intended or not there is an incredible amount of privilege in the idea that “everyone can be a shareholder”. An awful lot of Americans live paycheck-to-paycheck and struggle to afford housing and food. Increasing homelessness is, first and foremost, a consequence of housing unaffordability.
Second, owning 10 shares of Amazon doesn’t make you a capital owner. If you still need your paycheck to survive, you’re a worker, subject to the whims of your employer.
The really damaging thing about retirement accounts, for example, is that it has convinced people that they are current or future capital owners. It makes workers advocate against their own best interests.
I dare say that Americans not being able to afford housing has very little to do with Walmart or Amazon, since it was neither that decided to turn housing into a very safe and investable financial asset, but rather the government.
The definition of capital owner being someone who doesn't need a paycheck to survive is weird. Your average startup founder needs a paycheck and he is clearly not a simple worker. As soon as you own shares in a company(or a bond) you are a capital owner. The question is then how much that capital is worth and what you can do to make this capital worth more.
> You could just be an Amazon or a Walmart shareholder by logging into your Robinhood account
Many Walmart and Amazon employees could not, due to lack of capital.
Even if they did buy stock in their company, I think it's pretty clear that is very different from being in a co-op as described in the article.
Do the CAC40 companies have fixed-percentage-of-profit dividend yields?
Dividends (can be) just writing cheques to yourself with your own money.
I mean depends on if they are mature or not, but the complaints in France are about the absolute amounts in euro, not the %s paid out(for example this year the complaints are about Total making a lot of money from oil and banks making a lot of money from higher interest rates, the proximal causes of both being completely outside their control).
>Dividends (can be) just writing cheques to yourself with your own money.
Well, yes, since as a shareholder you technically "are" the company.
In my experience, people would rather be employees paid in cash whose amount is agreed ahead of time than partners where they're paid depending on the company's profits.
I think that could change if the workers are not living paycheck to paycheck. It would also probably be possible to develop some sort of middle ground. For example, workers could be paid a conservative salary and then profits could be distributed as a bonus at the end of the year.
It could with hierarchy of needs, but what would the gain really be of doing so? Mostly ideological. And that is putting aside any of the other 'competitive balance issues' vs other business structures.
Depends on how much say they have.
If employees have no say in how the company is run, CEO & board could easily run it into the ground (but jump ship with a gold parachute), then: yeah, most people will prefer a fixed paycheck.
But if regular employees are at the helm, company is more likely to do what's in the (long-term!) interest of employees.
Surely that'll make employees more willing to share in financial risks (+rewards!) of the organization. They're more personally invested in it - literally.
Let's hope this model gains more traction.
I have been wondering if you could make it work in Silicon Valley for a small firm. Take 2-10 people that could be founders and give them the alternative of being the Nth partner. They’d need to bring in 1/N of the profit to earn their keep. I think it’s doable.
They already exist, but aren't especially common.
As you point out, the challenge is always around revenue sharing. From what I have seen, they last maybe 5 years and then break up when people feel like they are putting in more than they are getting out.
The productive difference between the top and bottom half of the N needs to be less than the extra efficiency the coop provides the top half of N. This isn't easy.
Eg top performer brings in 150k revenue, receives 100k salary, but can only make <100k without the coop.
Others have brought up this issue when I’ve discussed it with them. I wonder if there’s a solution. Perhaps something in game theory? When productivity is more easily measured then there’s little debate - like making commission on sales.
There are a lot of solutions, each with different tradeoffs. By far the most common solution seen is limited Partnerships, where those individuals with enough Revenue and Leverage become the co-owners, and those that are replaceable are not co-owners but receives the salary based on Market rates.
I'm sure commission works well in companies where individual basically Works in isolation, but it is notoriously difficult to quantify productivity in teams and larger organizations. How much value does a engineer at Google create? Does a janitor at Google create? Of course you can divide the company profit by headcount, but that number is largely meaningless. Some people will be far higher some people will provide negative value.
For a co-ops, I think the game theory solution quickly converges on something that looks like a traditional company. You pay employees a market salary, and then split the corporate dividend proportional to salary. To account for differences in performance, the employees hire management too fire workers and give out raises. This works well for large co-ops, but obviously can lead to a lot of drama for a 10-person company
I have long suspected a model like this, borrowing from lawyer shops and worker co-ops, could be pretty good for software. Since software is sort of inherently project based, could have a mix of product and contracting, and could have wins both on the co-op side and whoever the co-op is doing work for/selling product to
Doesn't that depend on how profitable the company usually is? I know plenty of people in the finance world who, if paid only their salary, would be searching for a different job.
The upside is larger, but is longer-term and uncertain.
You don't get the offer in the first place if it is certain.
Correct me if I'm wrong, but there's nothing actually legally preventing a Mondragon-type industrial co-op like this from existing in the US, right?
That it's not so common is an interesting question: does it get outcompeted by your standard corporation? Would people rather generally work as employees than take on risk as owners? Something else? I think in a co-op like this, employees would still be eligible for food stamps, and there's nothing preventing them from "decimating" a local economy, either.
I think this is "socialist", and it seems to be working, and everyone is happy, so more power to them. But my understanding is since there's nothing preventing people from setting this up, the "Red Scare" was not a bunch of people going, "hey, change the laws so me and my buddies can set up a co-op". Like, what's the actual policy change desired? "Let folks who want to run corporations and work for them do so, and let folks who want to operate in a co-op do so?" No, because that's our current situation.
The Barrier to entry is probably capital costs.
Probably difficult at this point for enough lowly workers to pull their money and form a company, open stores, and compete with a Whole Foods.
The mega corps already dominate and can undercut anything that is starting up.
Amazon is kind of like a fiefdom where if they see someone building a castle in the distance, they can send some knights out to attack before it gets too big.
There are some large co-ops in the US. The largest iirc is CHS, a tier 2 co-op (co-op made of smaller co-ops).
Every part of our economy and government is dedicated to wiping out any form of socialism.
A developing nation even thinks about nationalizing their resource extraction? Suddenly there’s a coup with the CIA’s fingerprints all over it.
NATO is a foreign policy arm of the United States dedicated to crushing any leftist momentum. Hell, we recruited Nazis to run it.
We constantly back totalitarian regimes to crush leftists.
At a more local level we do things like make municipal broadband illegal.
Our government uses eminent domain to seize property for corporate interests.
The only non-terrorist domestic law enforcement the FBI does seems to be union busting.
We’ve started wars over communism.
We had private organizations like the Pinkertons crush collective action. Look up Homestead.
It was rumored that when the UK wanted a post-Brexit trade deal, one of our conditions was privatizing the NHS.
Every level of our society is devoted to crushing collective action.
>A developing nation even thinks about nationalizing their resource extraction Suddenly there’s a coup with the CIA’s fingerprints all over it.
In the Cold War, yes, because then it was assumed (rightly in some cases, wrongly in others) that any country who would nationalize their stuff was simply a Soviet puppet state following orders from Moscow. After the Soviet collapse, that isn't what the CIA (or American policy in general) cares about.
> NATO is a foreign policy arm of the United States dedicated to crushing any leftist momentum. Hell, we recruited Nazis to run it.
Everybody used Nazis after the war. Both the US and USSR snatched up every competent Nazi scientist, engineer, and intelligence officer they could and cut deals with them not to charge them with war crimes if they'd work for them. (Operation Paperclip for the US, Operation Osoaviakhim for the USSR). And of course NATO today isn't focused on containing Communism but rather the right-wing dictator who rules Russia today, and unlike in the Cold War, the current critics of NATO are almost entirely right-wing.
The problem is that socialism doesn't scale without force. Eventually you'll run out of people who willingly go along with doing things for the greater good. Looking at history, once you get larger than a commune or coop it all falls apart. You need force to seize the means of production, and the leaders of this force never give up their "temporary" powers. You also need force to get people to do the necessary but undesirable jobs, usually resulting in a centrally planned economy, which history again tells us results in misery, famine, and failure.
It is also human nature that most of us want someone that tells us what to do. Humans consistently organize into social structures where there is a leader in charge, whether it is a patriarchal or matriarchal extended family structure, a tribe, a club, a company, or a government entity a leader always emerges.
Capitalism is very much like Democracy. It's the worst system other than all the others that have been tried.
Mondragon's example goes exactly against all of your points. It's a 70k workers company ran as a co-op. You can have co-ops running and trading between them, the only point where capital is necessary is for investments in new businesses lines (in the sense of financing capital, not all capital, financing capital from banks can also come from co-op banks).
Undesirable jobs are done either way if people are paid, there's no difference if it's run by capitalists, the government or a co-op, you need to hire people and pay them. A co-op would work the same way.
Capitalism is definitely not like Democracy, democracy has been proven since ancient Greece to be a decent system to organise power, and it has evolved over time to be more inclusive. Capitalism has only shown that if left untamed and to grow on its own it will only consume more, exploit more, and remove freedoms of being a human being in the world if you don't pay up.
Capitalism is useful but every decade it seems to be reaching the limits of what it can be, no better version of capitalism has emerged, every evolution of capitalism has only magnified its destructive power. Democracy has done the exact opposite.
To counter you, at nation scale I can list off dozens, perhaps even oven over a hundred highly successful capitalist nations, with generally happy and prosperous citizens, but I can't think of a single successful attempt at communism/socialism at that scale.
capitalism is about accountability and trust at scale compared to previous systems that worked on connections that didnt scale well across classes / countries / cultures. Bankruptcy, is probably the best idea came out capitalism.
Competition between humans can turn ugly wheter on economic or political fields and "common folks" do ends up as collateral victims. Thats unchecked human nature
Well, for what it's worth democracy doesn't scale without force either. Somebody, i.e. the state, has a monopoly on violence, to protect our property. In any case, you're just talking about state based socialism, like marxism.
But there are other forms of socialism that do just fine and are alive today, like syndicalism. They work because they don't rely on a government to exist, correctly recognizing their power in industry.
The best years of America for the middle class were when there was a good balance between decent paying, unionized manufacturing jobs and the customers who chose to pay higher prices and get American products.
There was a time when paying for US-made products was paying for better quality products (among other properties).
As offshore manufacturing got better, buying American became much higher percentage “feel good” and much lower percentage “get better product”. Right now, there are some product categories where the highest-quality product in the world is not capable of being produced in the US.
Sadly true. There are also major product categories that are literally impossible to buy US made goods in even if you're willing to pay the premium for it. Additionally, many of the "US made" products are merely assembled here from foreign made components.
Syndicalism in practice is closer to capitalism than socialism, and the syndicates are the de facto state.
The entire world was socialist from the time of the Lubang Jereji Saleh cave paintings 40,000 years ago until 10,000 years ago. Societies with different classes only sprung up 10,000 years ago. They only scaled with force, and the literature from 4000 years ago to now attests to this.
> Capitalism is very much like Democracy. It's the worst system other than all the others that have been tried.
Hunter gatherer bands in the Amazon live the way they have for 50,000 years - even prior to crossing the Bering Straits. Whereas societies where the capitalist mode of production predominant were barely even formed less than 500 years ago. Also from the time of the Paris Commune to the Cold War until now, it has been racked with threatening crises. Even in the US we see self-described socialist politicians being elected nowadays.
It's hard to make capitalism sound permanent when it has been so impermanent.
> Hunter gatherer bands in the Amazon live the way they have for 50,000 years
As much as “noble savage” is a comforting story, the truth is likely more complicated.
https://www.bbc.com/news/science-environment-67940671
https://www.npr.org/2011/01/12/132853997/Amazon-Once-Was-Hom...
https://davidgraeber.org/books/the-dawn-of-everything-a-new-...
Technically everything is more complicated. In threads like this, people play fast and loose with terminology.
That's not scale though. Socialism works great in small loosely organized tribes, but fails at nation scale every time.
It doesn't even work that well at the local level. The Kibbutzim in Israel were socialist for like 70 years, but now are almost all mixed market capitalist in some form or another.
Capitalist internally or externally?
Do Kibbutz have highly paid CEO's that earn much more than the members, and subject them to pay cuts?
As pointed out in this thread, a Co-op is socialist internally by sharing wealth across more of the labor. But capitalist externally since it sells to a capitalist world.
> The problem is that socialism doesn't scale without force.
Eh, not a problem unique to socialism, or devoid from capitalism.
The history of labor in the United States is rife with both socialist (well, maybe anarchist) bomb-throwers and rich capitalists hiring private armies to gun down striking workers.
striking workers usually would occupy factories, property they had no right to "seize". If workers quit / stopped showing on mass, nobody would have done anything
> Capitalism is very much like Democracy. It's the worst system other than all the others that have been tried.
There are other systems that we've tried which work much better than the corporate Capitalism that we have in the United States. Most notably democratic socialism/social democracy/mixed economies (with the exact dividing lines between those three depending a lot on who you ask).
I completely agree that capitalism as we know it is highly flawed, but history has proven that socialism is not the answer.
Think you are mixing up Communism and Socialism.
Socialism is alive and well and working.
Every major capitalist society today (including US) has a percentage of Socialism sprinkled in to keep it functioning. Pure capitalism leads to a brutish tragic world, so some socialism is added to at least keep people from outright starving and rising up in revolution.
Yes you're talking about hybrids of socialism with capitalism, which are absolutely the way to go. History has shown that nation-scale "pure" socialism (which in practice nearly always results in a flavor of Marxism/Communism) is even more brutish and tragic than "pure" capitalism.
What would you say about President Julius Nyerere of Tanzania? His term in office was characterised by a peaceful transition from British colonialism to such a 'pure' form of socialism (including a full public ownership of all land and enterprise). This survived for three decades of almost completely peaceful, slow, and steady economic growth before the 90s, when it democratically voted itself into the capitalist state it is now. In fact, the only war Tanzania fought in that period was against Idi Amin's Uganda, which was widely regarded as a far more brutish and tragic country than Tanzania could ever have been accused of.
I would say that it was one of the most successful attempts at nation-scale socialism, but ultimately still a failed experiment. As you said yourself the people themselves democratically voted for capitalism.
> Julius Nyerere's leadership of Tanzania commanded international attention and attracted worldwide respect for his consistent emphasis upon ethical principles as the basis of practical policies. Tanzania under Nyerere made great strides in vital areas of social development: infant mortality was reduced from 138 per 1000 live births in 1965 to 110 in 1985; life expectancy at birth rose from 37 in 1960 to 52 in 1984; primary school enrollment was raised from 25% of age group (only 16% of females) in 1960 to 72% (85% of females) in 1985 (despite the rapidly increasing population); the adult literacy rate rose from 17% in 1960 to 63% by 1975 (much higher than in other African countries) and continued to rise.[4] However, Ujamaa decreased production, casting doubt on the project's ability to offer economic growth.
> The most prominent ecological consequence during this time in Tanzania was due to the forced settlements by the TANU government and President Nyerere. During the time of forced settlement, TANU provided more artificial means of agricultural aid while cracking down on yield results and as a result, production yield began to decrease and land became underdeveloped. Land was not being utilized to its full potential and therefore, not only were crop yields subpar, but the biodiversity also became inferior.
> There were also internal factors that led to the implosion of the Ujamaa program. The first was resistance from the public. During the 1970s there was a resistance from the peasantry to leave their individual farms and move to communal living due to the lack of personal capital that came out of the communal farms. This led President Nyerere to order forced movement to Ujamaa villages.
Above quotes were taken from https://en.wikipedia.org/wiki/Ujamaa
This is not socialism, it is syndicalism. Some argue that syndicalism is a type of socialism, but in practice, it behaves more like a type of capitalism.
Mondragon was founded by a Catholic priest and IMHO is more accurately described as Distributist than classically Socialist:
https://distributistreview.com/archive/mondragon-revisited?f...
Is this really socialism? It seems more like a company with lots of owners. I can imagine that the local residents who must buy from this cooperative may feel pretty excluded, especially if the cooperative overcharges. The insiders can still screw over the outsiders. It's just the proportions are a bit different.
> The Amish in question are entrepreneurial for sure but that's not capitalism.
The semantic challenge is that unlike the claimed differences between communism and socialism, Capitalism and capitalism share the same word, similar to Liberalism and liberalism.
Socialism (communism?) is usually framed as "workers earning their full worth" but the dirty truth is that it is more "workers earning their preset cut of the pie, which is independent of the work they put in".
So while the shelf-stocker might be earning $24/hr, their actual hard economic output is much less than this - $19/hr. The difference is made up by the salesperson making $26/hr, instead of $31/hr.
Many sales people might be fine with this sacrifice, but even more likely will not, and will tire of being the ones who need to sacrifice.
In a real company, it would be the shelf stocker making $13/hr vs their output of $19/hr, the sales guy making $26/hr vs their output of $31/hr, and some jackass who inherited an oil fortune making the surplus $11/hr from their economic value of $0/hr.
> Socialism is an industrial co-op like this where workers are fairly paid for their labor.
What is "fair pay" for labor in your eyes? Is it the entire surplus being generated? Why is that considered fair?
> Is it the entire surplus being generated?
Yes.
> Why is that considered fair?
Because there is no value without labor.
When the company takes a loss, do you agree that all of the workers should go hungry?
Socialism as practiced also implies heavy centralized planning to mandate these arrangements and then set price floors and ceilings to set production capacity.
The Amish tend to reject social ownership of land so they are not socialist or communist by any means. Distributist would probably be the best description with any mention in the literature.
What large corporation doesn't have central planning? Do you think every factory just makes up their own schedule and makes what they want?
To be clear, I'm usually against large corporations as well, because of this very point. Especially, when they -- as in America and many other non-socialist states -- use their lobbying power to capture the market via regulation.
However, there still is a fundamental difference between centralized corporate planning and centralized planning by the monetary authority. Corporations have to deal with market supply/demand, and we've seen enough examples of large companies simply going bankrupt to rest assured that large corporations are not invincible.
Centralized planning is only a feature of certain forms of socialism. It's generally not a feature of democratic socialism or the various anarchist forms of socialism.
Heavily centralised economic planning is a feature of Marxism-Leninism, not of Socialism.
well, also the modern corporation. I think the centralized planning aspect is actual orthogonal to the resource distribution/means of production aspect
The modern corporation is in no way able to mandate the corporate structure of other corporations.
Socialism is a big tent, by definition that's only one possible manifestation. Incidentally co-ops are not mutually exclusive with Capitalism (private property + market economy), for the same reason mixed-market economy (as practiced by most liberal democracies) represents not purely one thing or another. Co-ops are nothing new.
> The Amish keep their surplus labor value.
People don't want to live like the Amish.
> It saddens me to see how fundamentally people misunderstand what capitalism actually is.
The right to private property + market economy.
>People don't want to live like the Amish.
To the OP's point, do you think living like the Amish is necessary to keeping surplus labor value?
Labor theory of value is bunk.
Gotcha. That makes your above point somewhat confusing, since it makes it a moot point whether people want to live like the Amish or not.
> Incidentally co-ops are not mutually exclusive with Capitalism (private property + market economy),
As I just explained, that's not what capitalism is. Capitalism is a relatively new invention (~500 years) that arose from the ashes of feudalism. Exact same economic structure. Different exploiters.
Consider this: markets exist in supposedly non-capitalist countries. They existed in the Communist bloc. We've got cuneiform tablets describing markets going back 5000+ years. Capitalism didn't create markets or a market economy.
This is what I mean when I say that not only do people not know what scoaialism is, they don't know what capitalism is either. Yet the instinct to defend it is so strong, particularly in Americans. That too is relatively new. Abraham Lincoln was a Marxist, for example.
> People don't want to live like the Amish.
Who says they have to? We can point to an example of people living co-operatively in, oh I don't know, the article of this submission?
> The right to private property + market economy.
Then why did market economies exist before and outside capitalism? Private property is a core tenet of liberalism (which really means "neoliberalism" today). Private property in capitalism can be more accurately traced back to enclosures, which are really an evolution of land grants under feudalism.
Private property under feudalism wasn't available to all. There can be no capitalism without liberalism. Property rights as a matter of law and everyone being equal under the law is essential.
Earlier partial market economies were in practice more like command economies with relatively small free markets in certain sectors.
Monarchs and nobles having estates is functionally indistinguishable from private property.
They key difference is that only nobles could have private property.
>Abraham Lincoln was a Marxist, for example.
Is this widely accepted by historians or is this a fringe theory? Marx's Capital wasn't published until after Lincoln's death, so I'm a bit skeptical.
Capitalism has a definition, and you don't get to change it. https://en.wikipedia.org/wiki/Capitalism
> supposedly non-capitalist countries.
They are State Capitalist. There's no supposition about it. That the governing body is captured by Communist ideologues has no bearing. Hence there are now billionaires operating in China and Russia.
> They existed in the Communist bloc.
They were re-introduced so fast it would make your head spin when Lenin's reforms were shown to be a disaster.
> Capitalism didn't create markets or a market economy.
I did not say so, and this is perhaps where your confusion lies. I said Capitalism is the right to private property and a market economy. I did not say markets are strictly endemic to Capitalism. Although you'll find no scalable one in a liberal democracy devoid of Capitalism.
> We can point to an example of people living co-operatively in, oh I don't know, the article of this submission?
A co-op is not tantamount to a society, it's an employer. The existence of a co-op in itself does not jeopardize the right to private property, or by extension Capitalism.
This is why the quiet part the zealots eventually meander to is "see, we just have to force people to..."
> Consider this: markets exist in supposedly non-capitalist countries. They existed in the Communist bloc. We've got cuneiform tablets describing markets going back 5000+ years. Capitalism didn't create markets or a market economy.
A market economy is one where resources (commodities, labour, services) are distributed primarily via the pricing mechanism, prices can be set freely by market participants and the market is generally open. It isn't merely an economy where markets exist.
Your examples were not market economies. They heavily restricted market access through guilds, hereditary jobs, serfdom, feudal law and trading licenses. They fixed prices through price edicts and decrees. On top of that, the majority of the population were subsistence farmers who also made most of their tools themselves. This means that the vast majority of resources were not traded in a market.
> That too is relatively new. Abraham Lincoln was a Marxist, for example.
Really? You're just going to state this as a fact without any backing at all?
> The Amish in question are entrepreneurial for sure but that's not capitalism. The Amish keep their surplus labor value. It saddens me to see how fundamentally people misunderstand what capitalism actually is.
wish more people understood the historical roots of the word "entrepreneur". americans conflate business/enterprise/entrepreneurship with capitalism. i think most people would be more open to these ideas if it weren't from the misinformation dating back to the red scare.
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For German speaking folks, there is a free book about Mondragón:
http://www.weisenbacher.de/mondragon/Mondragon_von_Hans_Nerg...
But after 45 pages or so Nerge drifts to communist Blabla.
> The salary differential between the highest and lowest paid workers in Mondragón, for example, remains about six to one; for the largest 500 listed companies in the US, the gap is closer to 272 to one. At the year end, members of Mondragón’s co-operatives also decide collectively on whether they should pay themselves bonuses and, if so, how much. This profit-sharing comes in addition to a base pay rate that, on average, is 40% above Spain’s minimum wage.
Workers are better off.
>Pursuing a co-operative model is far from plain sailing, however. Numerous hurdles exist. For one, membership does not come cheap. To join a co-operative, workers typically put up a one-off payment of about €17,000 each. Plus, just as they are entitled to a share of any profits, so, too, are they liable for any losses. Commercial pressures can also prove acute, as Fagor Electrodomésticos’s troubled history shows. The fact that all major investment decisions have to be put to the vote can also make Mondragón’s co-operatives less agile than their conventional competitors. And finding financing can be problematic as the private capital markets are effectively closed to them, admits Fagor Arrasate’s Mendieta: “We can’t incorporate external capital into the co-operative’s share capital because we are governed by the principle of ‘one person, one vote’, which no capitalist investor would accept.”
As with any system, there are tradeoffs.
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Capital is magic numbers in a database. You're asking for folks to farm coins like an MMORPG vs simply changing labor laws and regulations, or leveraging existing laws.
If it's so easy to accumulate capital, why aren't you a billionaire?
> Mondragón Corporation is the globe’s largest industrial co-operative, with workers paying for the right to share in its profits
> That sentiment is echoed by Mondragón’s 70,000 other workers.
According to SCMP [1], Huawei has over 130,000 shareholding employees 3 years ago. So the "globe's largest" claim seems factually incorrect.
[1] - https://www.scmp.com/business/article/3173121/huawei-pays-ou...