Worker Owned Businesses Point to New Forms of Ownership

With public companies fixated on quarterly profits, which results in underinvestment and treatment of employees as disposables, companies who (gasp) pursue a long-term strategy and invest in their workforce should have a real competitive advantage. Thus worked owned enterprises aren’t simply a way to contend with the program to disempower labor; it’s also a way to take advantage of the inefficiencies of rentier capitalism.

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  1. j.s.nightingale

    “If a capitalist manager is justified in demanding a big salary for his services of management, the worker and the consumer are justified in getting another capitalist or another manager at a lower price, if they can. Robert Blatchford,Clarion Press.”

    A good read, written in 1902 though it has to be said that Blatchford is not so good on pointing out the violence that starts off the whole unequal system, and Socialism does not seem to offer well thought out solutions to how to kep the violence and attendant expropriation in check.

    (Try to ignore the jingoistic sounding title. It could well be generalized to “The World for the Worker” if you want to keep the alliteration).

    Considering the evils of the academic publication racket and the “tenure for the few, tenuous for the many” employment practices of all universities, I have a strong feeling that education organized by the teachers and researchers can have a bright future – were it not for the fact that “a degree” is the currency required to get you a corporate job. The more co-operatives there are, the more co-operative education will flourish.

    1. JGordon

      Well, thanks to the crumbling economy, not even a degree has a reasonable chance of getting you a decent job these days. So traditional high ed, with all it’s corruption and high-cost structure will be going away relatively soon. And good riddance.

  2. JGordon

    Yeah, worker co-ops is the way to go. If you don’t like someone else’s system, don’t whine about it and beg them to change for you; start your own better system.

    1. j.s.nightingale

      The Co-operative Movement (1844) predated Karl Marx’s publication of the Communist Manifesto (1848) and proceeded quite robustly independent of his doctrinal support. There’s really no need to mention him at all when discussing equitable solutions to public problems.

      1. Paul P

        The classical economists big threat to the neoliberal mind was their “labor theory of value.” When you think about it… all that we have is the result of past labor. Our cultural inheritance is the collective work of generations. This common sense observation, available to anyone who looks out of their window, is the reason so much effort is made to poo-poo the work of Karl Marx, whose analysis of capitalism emphasized that the economic surplus of society comes from labor and labor alone. So, if you want to think of equitable solutions, you would want to include Marx in your discussion. Why have the Koch brothers frame the debate for you?

      2. Stick

        The Manifesto? Really? In your effort to shut someone else down you’ve demonstrated that you know very little about the subject.

      3. readerOfTeaLeaves

        I once read an interesting article about how co-ops tended to originate in the US in regions that had been settled by a high proportion of Scandanavians, particularly Minnesota, the Dakotas, and Western Washington.

        In Washington State, the Boeing Employees Credit Union appears to be gaining increasing members and branches. But there are other forms of employee owned organizations in Washington and Oregon. Kaiser Permanente (originally set up by Kaiser Shipyards in Vancouver-Portland to ensure its employees were in good health to be productive) is very large, and based on the co-op concept in its structure. Similarly, health care provided through Group Health (based in Seattle) provides a co-op model for health care to members — the employees don’t own it, but it is at the forefront of changing health care provision in the U.S. The board and organizational structures are based on a co-op concept.

        In the grocery sector, Puget Sound Consumer Cooperative is a grocery chain that emphasizes quality produce and healthy food options. Arguably, Whole Foods took a lot of their ideas from PCC. Anyone can shop there, but members get a discount.

        The idea of community supported agriculture (CSA’s) is also beginning to take root, as ‘member-supporters’ pay small-scale, local agriculture producers (beef, produce, eggs) a weekly sum and then have a box of fresh, seasonal foods delivered to their doorsteps weekly. This provides the ag producers with reliable income, and a ‘member base’, while providing consumers with extremely fresh, high quality food.

        Finally, Recreational Equipment Cooperative (REI), whose CEO has just been nominated to be Interior Dept Sec., has been economically viable and a great way for members to learn about the outdoors, and buy the necessary camping, skiing, etc equipment.

        So the co-op model has sustained itself through several generations now, and in my region versions of co-ops provide medical care, camping equipment, great food, and with the emergence of CSAs, some hope of renewing the economic viability of small scale ag production.

        1. anyone

          But we NewMericans are ‘hardwired’ toward “free-markets” aren’t we? Even if we don’t even understand the term. We’re nothing if not stupid in our arrogance. Hence the term world-wide recognized term of derision “Stupid American” I guess. Go figure.

  3. Joe

    The Mondragon co-op looked fascinating so I followed up on it. And, since I have an interest in bikes, I googled a bit about Orbea bicycles, which is part of the Mondragon co-op.

    Well, the cynic in me shouldn’t have been surprised. Turns out that they’ve been outsourcing the manufacturing to China since 1998.

    Sure, they get to slap a “made in Spain” sticker on it by turning a couple bolts in the onsite “factory,” but all the frames and parts are made by Chinese factory workers.

    Pretty sure those Chinese workers’ wages aren’t part of the equation when they calculate the 5:1 salary ratio for company executives….

      1. AbyNormal

        sounds like another bike …the hog
        mfg & assemblies in china, mexico, inda
        u.s plants are for MADE IN USA sticker slappin

    1. diptherio

      Well, nothing’s perfect. It is disappointing, but one firm’s actions don’t define the whole possibility set. Mondragon may end up being an example of how not to run a co-op, but there are plenty of other examples out there. Gore-tex is also co-operatively owned and managed (although I don’t know the details of their production process).

  4. jake chase

    Worker owned manufacturing may eliminate executive bloat, but it still suffers a severe cost disadvantage in competing against Asian coolie labor. Ultimately, the rentier corporations are safe, because ‘consumers’ demand the lowest prices and flock eagerly to Walmart drek. The Walmart model has infected everything from kitchen equipment, to housewares, to clothing, to shoes, to furniture, etc.

    What exactly can one manufacture and sell in the US while employing American labor? I admit to being not particularly creative, but the only thing I have ever been able to think of is food.

    The best domestic businesses provide services to the rich.

    1. Carla

      “The best domestic businesses provide services to the rich.”

      “Best” in what sense?

      You know, the states charter corporations. It used to be that corporate charters were granted for a specific purpose that provided some public good, and were for a limited period of time.

      Since corporations got their nose under the big tent of constitutional rights starting in 1886, the idea of a “public good” has practically disappeared. But we could bring it back.

    2. diptherio

      Why are we restricting ourselves to just manufacturing? The service sector is where I see this taking off. Institutional support services (doing hospital laundry, for instance), health care and construction are all areas where the co-op model could be effective.

      And then there are possible feed-back effects. The more workers working at co-ops, the higher the average wage (one would assume). The higher the average wage, the more leeway people have in their budget and the less likely they are to shop at Walmart. Anecdotally, I have noticed that people who work for local businesses also tend to shop at local businesses. I would guess that people who work at democratically-run businesses would be less likely to buy from non-democratic businesses.

  5. diptherio

    It is intuitively obvious that worker-owned enterprises should be able to operate at lower costs than standard, capitalist enterprises. The reason is simple: the capitalist must cover all the fixed and variable costs of production, plus have revenue left over to provide dividends to stockholders that meet or exceed returns from other possible investments. Thus, capitalist companies (GM, to take but one example) will close up shop or move production facilities to low-wage countries not because the business isn’t profitable, but because it isn’t profitable enough.

    Worker-owned co-ops, on the other hand, only need to cover their fixed and variable costs in order to make the business sustainable. Because workers don’t have owners demanding a pound of flesh from the production process, they should be able to run on much thinner margins.

    Co-ops also have the benefit of being geographically anchored. Worker-owners are unlikely to out-source their own jobs (to say the least). Environmentally damaging practices will not seem nearly so lucrative to worker-owners who live in the same area they would be polluting. Extortionist tax-breaks (which capitalist enterprises often demand and receive from municipalities and states in return for locating there) are another deleterious aspect of our modern economy that one would expect to see disappear as capitalist businesses are replaced by worker-owned ones.

    And that’s just the economics. Consider the psychological fall-out of spending 8-10 hours per day, 5 days per week, for 40 years, being treated like an idiot child. Consider what a lifetime of being forced to keep your mouth shut and your lips puckered (so as to be able to kiss an ass at a moment’s notice) does to a person. The sad facts are that many, perhaps most, people in our society have essentially no say in the work that they do or in the way that they do it. Most of us are competent to think for ourselves; few of us are allowed to actually do it. Can it come as any surprise then, that epidemic levels of depression, anger and low-self esteem are the results, to name just a few?

    It is my intuition and educated-guess that the authoritarian, non-democratic organization of capitalist businesses is directly linked to such things as domestic violence, drug abuse, workplace shootings, etc. Transitioning to worker-owned businesses could well, imho, lead to many other unintended benefits for both individuals and for society as a whole.

    What we need now is a better way to fund co-ops. Currently, credit unions (which would be the obvious place to look for co-op funding) are not allowed to make commercial loans (thank you Mr. Reagan!…not). Lifting this restriction might be a good place to start.

    However, an easier way to go might be to use the existence of the unregulated shadow banking industry to our advantage, by creating some kind of co-op funding mechanism that avoids interference from TPTB. I’ve also thought that municipalities could create bond issues to fund the purchase of shuttered plants/businesses by local employees through low-interest loans.

    I’m glad to see this issue is getting some play here at NC. Personally, I think this is one of the few strategies that has the potential to be a real game changer. The ownership structure of business enterprises, and the resulting control over business revenues and decision making, forms an “initial condition” in the complex system of our economy. Adjusting this initial condition is sure to lead to cascading changes throughout the rest of the system. And, as an added bonus, this is something that we can actually start working on without requiring some scum-bag national politicians to go along.

    Naomi Klein produced a great documentary called The Take (la Toma) about workers in Argentina who took over a shuttered plant and reopened it and started running it profitably for themselves. I never cry at movies, but this one got me. Definitely a three-hanky picture, if social and economic justice make you feel all fuzzy inside.

    The Take (la Toma)

    1. readerOfTeaLeaves

      Interesting comment.

      I’ve also thought that municipalities could create bond issues to fund the purchase of shuttered plants/businesses by local employees through low-interest loans.

      I think you are on to something with this suggestion. Now, what ambitious, smart mayor or council is going to implement it? it makes a lot of sense, and local governments could put their own criteria on the loan purpose and repayment.

      1. diptherio

        My initial thought was that muni bond issues could be used to, say, allow the laid-off mill workers in Bonner, MT to purchase the now-shuttered lumber mill and run it as a co-op. Plum Creek couldn’t make enough money on the mill to make it pay (them), but I’m not convinced that the employees couldn’t make it work well enough to cover wages and materials. The workers would, of course, need to have a legit business plan with a good chance of success, but that shouldn’t be a huge obstacle.

        Or, a bond could be issued to create a co-op investment pool. Groups of people with viable business plans could then get low-interest loans from the pool to start their own businesses. Nursing Homes (and health care in general) are one sector where I think this could work really well.

      1. diptherio

        Thanks for that. I was in a hurry this morning (work, yeah!) and forgot the State Bank angle. Pretty bad since I’ve worked with Marc Armstrong at the PBI a good bit on implementing this idea in Montana.

        My personal addition to the discussion has been to encourage the use of State Banks (once we’ve got a few more) to fund worker-owned co-ops here in MT. Glad to see I’m not the only one thinking on these lines.

  6. Susan the other

    And another irony of capitalism is that competition kills competition. Even without inside help. But co-ops are at another disadvantage in today’s manufacturing world because the government promotes big corporations and big private investors with tax dodges and guaranteed trade deals. Obama wants private capital to join with the government to set up 20 experimental factories (?) to do 3-D printing manufacturing. Obama is giving them a head start in a new age process. Why isn’t the government partnering with co-ops? So many questions, so little time. The fact is that 3-D manufacturing, unless it is broadly disbursed, will cause even worse unemployment.

  7. Massinissa

    One of the major problems of coops at this point is that banks simply dont like them. It is MUCH harder to get a loan for a coop than for a traditional stock corporation.

  8. Eric Smith

    The cold hard fact is since the “Glorius Revolution” installed Calvinist trained William lll in England and he in turn approved the creation of the Bank of England ( “The bank hath the benefit of interest on all monies it creates from nothing.”- William Patterson) we have been ruled by by a criminal cartel or gang. It is little better, or perhaps even worse than the feudalism it replaced. It is indeed an invisible monarchy of sorts. Humans are such a deeply flawed species.

  9. LillithMc

    My neighborhood has strong competition between the family owned grocery where I shopped for 30 years that became unaffordable when Safeway, Wal-Mart and Save-Mart moved in. The grocery I now prefer has the lowest prices and is also employee-owned, Winco. It may not really be the best for the employees, but when there is labor unrest at the other stores, I hope Winco may be the model for the future.

    1. Carla

      Thanks for this. I looked up Winco, which is FAR from where I live –in Ohio — read evaluations and employee reviews. Looks like it has potential, and like all of us, needs a little more work!

  10. ProNewerDeal

    worker-owned companies are good. So are customer-owned “at-cost pricing” companies like Vanguard for consumer investment fund & investment custodian/broker services, & credit unions.

    Too often, the false binary choice between private rentier capitalist v government service is discussed, without mentioning worker-owned & customer-owned orgs as 3rd/4th alternatives.

    It has been said that the US Post Office’s existence provides vital competition, to keep the oligopoly of FedEx/UPS prices to be somewhat competitive. IMHO Vanguard plays this role for consumer investment funds & brokerage services. I suspect that if Vanguard didn’t exist, Fidelity/Schwab/TD Ameritrade/etc would not be focusing on selling non-index “active” funds with atrocious ~1+% annual expense ratios that underperform index funds; Vanguard’s existence & focus on ~0.05-0.20% exp ratio index funds forces the private providers to try to match Vanguard.

    I wish some experienced Vanguard staff would try to replicate new orgs in other industries using a Vanguard-ish approach, especially in health care. Imagine a Vanguard-esque health insurer ala Medicare, or health insurer + health provider org ala the Veterans Affairs system, that emphasized “preventative maintenance” by offering say once per year consulting from pros on nutrition, exercise, & stress management. Heck, just the ability to know I had access to an at-actuarial-cost Vanguard-esque health insurer would give me peace of mind to lower my stress by 10%!

    A group of US physicians, if a subset exists that has a heart for social justice + a brain for economics, could set up such a customer or worker-owned Veteran Affairs-type system. If such an org could cut the pharma, hospital, med device, & insurer costs in half to match civilized nation/OECD/Canada levels, heck they could keep their cartel 2X civilized/OECD/Canada salaries & still be considered social entrepreneurial heros. The US physicians certainly have significant personal net worth, & even more significant ownership of many DC politicians via their AMA union/lobby/cartel, to be able to attempt creating such an org.

  11. grass mud horse covering the middle

    Talk to most any lower echelon worker at any workplace and they could probably tell you 100 ways the business could be run smarter and more efficiently in useful detail. This applies to almost any business. Hubris, hierarchical entitlement and classism prevent most businesses from taking advantage of this.

    We laud and enshrine democracy as the axiomatically best system for formulating policy for public institutions yet in a gob smacking display of cognitive dissonance we deem it completely inappropriate for private institutions.

    Non-hierarchical worker owned, democratically run businesses, all else being close to equal, should handily outperform their rigidly hierarchical competitors–just as they do in the public sphere.

  12. Kelly

    These have more info about worker owned businesses and organizations. Rainbow Grocery, Network of Bay Area Worker Cooperatives and United Federation of Worker Cooperatives

    Being worker/owner for the last 12.5 years, I can say my co-op is a very stable structure, change can be difficult but our inclusive decision making process leads to better outcomes. Are we on the margins, maybe so, but I think these small changes are more important than trying to hit a home run.

  13. Bernard Marszalek

    Congrats to NC for promoting worker co-ops.

    The comments here, given that none (but one?) are in worker co-ops, are perceptive and encouraging to those of us who support workers’ control (I am re-leisured from a worker-run printshop).

    The rub with concentration on “ownership” related to worker co-ops is that it deflects from the more significant relationship – membership. If we want to think of a transformative agency to create change, no better one comes to mind (for me) than a radically democratic one based on commons-like management.

    To focus on membership (or civic life) addresses the thorniest issue re the future where jobs will exist for only the most highly skilled or the craft-like. Instead of (economic) control based on the job, it would then be based on (shared) rights to resources. We have come round to that old quest for “economic democracy” but transformed into a subset of social democracy – where membership in society is all that you need to guarantee life, liberty and the pursuit of happiness.

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