Worker Cooperatives and WSDEs

1. How do coops of all types actually work in the real world? Don't they frequently fail because the workers are too inclined to put up with poor business practices?
2. How could a large company possibly work if all workers ran it together?
3. Has any research been done on the various ways in which the worker co-ops/ WSDEs can distribute surplus in different ways than the capitalist firms and change the wealth distribution of the society as a whole?

1. The term “coops” covers many different things: collective buying institutions (e.g. food coops), collective selling institutions (individual small capitalist enterprises who get together to sell their products), collective owners (farmers who own collectively the land they farm in individual farms). We are mostly interested in yet another type or meaning of coop: when workers in an enterprise collectively function as their own board of directors, thereby not needing any separate group of people functioning as a board of directors. We call this sort of coop a Workers Self-Directed Enterprise or WSDE. There really is little broad evidence that compares businesses that are otherwise alike (what, how and where they produce) except that some are run as top-down hierarchical capitalist enterprises whereas others are WSDEs (coops in the sense of worker self-directed enterprises). WSDEs still remain relatively few compared with capitalistically organized enterprises. In any case we don’t have grounds to say that WSDEs, for example, fail at any greater rate than capitalist enterprises. Where we do have some evidence – for example, with the huge Mondragon Cooperative Corporation in northern Spain – it is quite clear that its member coops (WSDEs) have failed at lower rates than their capitalist counterparts over the last 50 years. Historical evidence suggests that enterprises are very complicated and complex things utterly dependent for their survival on the interplay of external conditions (over many of which they exert little or no control) and internal conditions (all the technical and interpersonal aspects of producing and distributing goods and services). Special sets of conditions bring enterprises into existence. Changing conditions change those enterprises. And new conditions often end the useful lives of many enterprises. No one aspect of a business (whether it is hierarchical/capitalist versus WSDE) ever determines success or failure; those results always depend on the interplay of many factors. Also, we need to be careful about the word “fail.” It means different things for capitalist enterprises than for WSDEs. Capitalistically-organized enterprises focus on “bottom lines” such as profit rates or growth rates or market shares. If they don’t get those big enough, they “fail.” Quite differently, WSDE’s do not focus on one, two or three measures. They are concerned about profits and growth but also about the welfare of workers and their families, of surrounding communities where they live, of the quality of life and personal development on the job, and so on. In a word, a WSDE that did well on many of those issues even if its profit rate was low would not be viewed or treated as a failure. From the WSDE perspective, a capitalist enterprise that scored high on profits and growth but treated its workers and the surrounding community badly might well be judged a “failure.” Capitalist enterprises and WSDEs are basically different ways of organizing production. They likely produce correspondingly different ways of working, thinking, relating to other people, and so on. They have different ways of serving people’s needs. Likewise, if and when an enterprise “fails” and disappears, the two systems differ in how they handle that failure. Capitalist enterprises typically dissolve in bankruptcy where capitalists and workers are on their own to search for alternative livelihoods. Coops – for example in the Mondragon Cooperative Corporation in northern Spain – are more likely to work out elaborate systems for finding other work in partner cooperatives for workers from a failed enterprise. If there is not enough work for all, for example, then unemployment is shared (everyone does 2 hours less work per week rather than some being completely unemployed). Secure employment is a major priority for WSDEs in ways that it is typically not for capitalist enterprises.

2. It would certainly be a major social change/transition to move from the traditional, top-down, hierarchical capitalist organization of corporate enterprise to the very different model of workers functioning democratically as their own enterprises' boards of directors. As with all social changes of such magnitude, there would need to be all sorts of adjustments along the way. The same was true of the social transition from monarchy to parliamentary democracy in Europe, from slavery to free labor in the US south, and so on. In this case, there would need to be education and training for workers so they could properly carry out their new duties as directors alongside their traditional duties as hired workers. Nowadays, a tiny minority of citizens are trained in colleges and business schools to become directors of capitalist enterprises. In the new system, a majority would have to be similarly trained. Just as once only a tiny minority of people attended any school - when kings ruled everything - so now we require public education of everyone in what we like to call a democratic political system. Well, the proposed transition to a democratic economic system inside each enterprise can and will require comparable education and preparation for all. Mass public education and preparation were worth it to support political democracy. I have no doubt that the parallel education and preparation will be worth it to support economic democracy.

3. Yes, some UMass students investigated alternative distributions of the surplus from those normally chosen by capitalists, alternatives that would be available to WSDEs. No direct examination of impacts on income and/or wealth distribution were undertaken. That would be an important theoretical inquiry and in places like Mondragon would also be possible empirical inquiries as well. In all likely scenarios, a collective/democratic distribution of the surpluse as in a WSDE would never consider or enact the sorts of unequal distributions of the surplus to some workers vis-a-vis others that have become the capitalist norm...hence WSDEs mean at least significantly less inequality in income and wealth distributions than in capitalism. Indeed, given the stunning long-term failure of capitalist societies to reduce inequality (except when surges of populist political rage from below forces it temporarily), WSDEs emerge as the only serious mechanism to structurally do something lasting about capitalist inequalities.

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  • commented 2016-12-01 16:08:28 -0500
    Auto mechanics, techies or engineers wanted for racecar rebuilding workers’ coop project near Oklahoma City. Contact me at
  • published this page in FAQ 2015-12-03 11:00:05 -0500


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