I’m very interested in this but also want to understand a stark reality: Co-ops have existed in concept and practice for 100+ years but haven’t gone mainstream (representing <<1% of employers with no clear exponential growth)
Why? Are there lessons we need to carry forward when creating new ones?
I want to say a lot of it is that legal and financial structures don't support it very well, it could also be said that since it's such a small minority of businesses (I want to say <1%) that education resources on it are also scarce.
For example getting funding to turn a business into a coop, let's say it's a one man owned business who is going to retire and has no family, so he offeres to sell it to the employees so they can turn it into a coop. Financially almost no investors would take that bet, the banks wouldn't really give a loan to 10+ people who make salaries, really the main way this could happen is if the owner took a hit and did something like a persona loan and let them pay him back from the profits over the course of 10 years.
I've also heard that there isn't much information on how to start or run one, like looking for books in the library can often fall short or you will only find something outdated. I think the lack of information is part of it as well as it's been so disincentivized for so long that most we can find are either run in a hippie commune style, or created by a small town government to provide services a corporation wouldn't (Best internet I've had was due to them having set up a coop), on top of that I can only think of one college that even teaches coop structure and that's Mondragon in spain[1] but on searching deep enough I also found U of Wisconsin[2] has something too, that's still not a lot.
From my perspective as someone currently forming a startup co-op: It simply takes longer. You cannot go it alone and it requires a community effort. Democracy is harder than autocracy (which most companies are, by default). Bank loans and more require collateral from an individual, which a co-operative by design deflects against (so there's co-operative friendly lenders).
I'm hoping the trend goes in a different direction for tech companies and they see that there's an alternative - but the fundamentals of co-operatives won't (and shouldn't!) change.
I think Main reason is that coops so do not fit Well in our profit maximizing Economy. We do produce profits but due to the Nature of our organization there is no incentive for Investors that seek high margins. ( In fact we dont allow external Capital in to remain in Control of our decisions). So linear growth it is.
I think a lot more growth than you Like is Made by exploitation of the workforce. Without doing that you have a Harder time prooving yourself in the Market.
Private companies and banks see coops as the devil [for very obvious reasons] and fight them using regulatory capture and not engaging in business with them. It's pretty well-known in the coop world.
Coops sometimes mitigate this disadvantages by networking with each other.
Coops and startups are in different categories. It doesn't make sense to lump them in to the same group here, though I understand we are on a very techie-oriented forum.
From what I've read it's mostly that it's more difficult for coops to access capital. Banks and investors are extremely hesitant to provide capital to an organization where the employees can just vote to use the money to give themselves all raises.
They'd much rather extend loans to traditional businesses with owners who are willing make cutthroat, unpopular decisions and fire employees if it's necessary to defend and preserve their capital.
> All worker cooperatives have two common characteristics: 1) member-owners invest in and own the business together, and share the enterprise’s profits, and 2) decision-making is democratic, with each member having one vote.
I think you’d have to find examples of companies that only do #1 or only do #2 and look at their outcomes versus companies that do both.
My guess is the root cause of what you’ve observed is the distributed decision making and the attendant latency and diffusion of responsibility it brings.
If you're founding a coop, you're probably more interested in organizational theory than doing the work. There are cost savings when it comes to group buying or trade; so works well for farmers. But to do this for software is not about building better software IMO.
You can kinda see a hint of this in the spelling of Toronto as Tkaronto. I don't think this benefits the list. It's a kind of meta work, a convenient distraction from doing something of value.
If you're a builder you'll preoccupy yourself with the thing you're building. If you're driving by an ideology, you'll spend most of your time there, and legal frameworks will be of secondary concern, a means to an end.
> If you're a builder you'll preoccupy yourself with the thing you're building.
If you're one person building a thing that one person can build, that might be true.
If you're building a thing that needs or merely benefits from having more people doing the building, you almost certainly need to think about how to structure and coordinate what people do. That's true even if your decision is "no structure and no coordination".
Sometimes, that process will be implicit (and likely a more or less direct reflection of the personality of the initial builder). But for the most, once you start involving other people (or they involve themselves), organizational structure and behavior starts to become a thing you have to start paying attention to. Getting it wrong can destroy whatever you're trying to build.
I don't think this is the book parent was referring to, but Developer Hegemony by Erik Dietrich describes an almost law parnership-like model for developer shops.
One of the more interesting articles I've read about talks about the fact that there are a lot of domains that you need to work all at once together to form a coop. And they were experimenting with ways to "franchise" coops into structures that help that.
Co-ops and partnerships can work well for businesses that are very low capital intensity. A law firm is the typical example, but software development can also be very similar.
I think one of the reasons is that there can be too many people implied in taking decisions.
Another reason might be that if somebody is a co-owner with many others in an enterprise, he might not feel motivated to work.
In socialist countries the quality of most products and services was poor because no one cared and no one fel obligated to do a good job, since the enterprise was owned by all the people. Instead there were many small thefts from the workplace.
In normal stock companies all (voting) stocks vote, and those can be distributed globally to all sorts of people and institutions who have no idea about the reality on the ground.
By comparison the decision-making in cooperatives is much better grounded in reality and has fewer disinterested and uninformed participants.
Yes, that's how it works for larger cooperatives where direct democracy can become problematic. Even in direct democracies in societal level, presidents are typically elected, and there are ministers and managers by necessity. The same goes for cooperatives.
It's one person one vote applied to the corporation. In principle there's no reason why we should demand any less democracy inside corporations than what we demand in societies at large.
It's curious how many of these comments in this post could be reframed to be basically: "democracy can never work" or "democracy is clearly an inferior system to feudalism".
One of the largerst supermarket chains in Spain (Eroski) is a Coop and IMO they have the best service overall. Maybe not the chapest but cheap, their white label brand has very good stuff plus very clear and well though nutritional information, good variety, etc.
Brando Milanovic wrote up a pretty clear-eyed description of the problems with worker-owned enterprises, even in states that market socialists look to as better examples such as the former Yugoslavia [1]. He speaks with some authority, as both an economist and someone who worked in one of those. To me, it seems like there are important unsolved problems with worker-managed enterprises at scale (exceptions like Mondragon notwithstanding), but I’m speaking as an armchair observer. I agree with the aims involved (workers should enjoy the full fruits of their labor and have control over their working conditions), but it seems there are still challenges to scaling this sort of organization up.
Why? Are there lessons we need to carry forward when creating new ones?