2y ago

Why aren't there more worker co-ops?

Even when I was living in a very liberal area, there were only a small handful of stores that advertised as worker co-ops. It's funny too because those co-op stores were all incredibly popular and successful, so I don't understand why they are so comparatively rare? The organizational structure seems simple to maintain, and has a high incentive for regular workers to go above and beyond since they directly benefit from the business being successful, so what's the deal? I am speaking from a US centric view, so maybe things are different in Europe, but even with my limited knowledge I feel like they are relatively unpopular there too, but maybe not? I dunno.

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It's easier to get loans or investment if you can offer ownership of the business or its assets as collateral or equity. That's easier to do with concentrated private ownership than with a business that starts as a cooperative with shared ownership. So there is a structural¹ bias in favor of concentrated ownership and away from cooperative ownership when starting a new business.
In some successful worker-owned businesses, the business started as a traditional private endeavor and then converted to worker-owned through the deliberate choice of the founders & workers. For instance, the Cheese Board Collective here in Berkeley started as a privately owned cheese shop which was then sold to its workers a few years later. It's been a cooperative since 1971.
¹ That is, the system can have this bias, regardless of whether the individuals making up the economy have this preference.
- The loan part makes a lot of sense, much easier for a bank to deal with a single person rather than a whole cooperative. Funnily enough, the Cheeseboard and Arizmendi were the two co-ops I was thinking of when I made this post. I was just musing about how in the Bay Area practically every small business has all the trappings of progressive politics (the signs, inclusivity, supporting various causes) but so few actually put their money where there mouth is and organize into co-ops.
  
  Perhaps it's worth pointing out that progressive liberalism and worker cooperatives are not as aligned as you might believe, but that's probably too off topic. Worth doing some reading about though.

You need a lot of capital to start a business, which is usually held by people who don't have an incentive to start a business for others benefit.
Also, entrepreneurs are usually individualistic (not talking shit, that's just the nature of it).

I spent a lot of my twenties trying to get a publishing group off the ground using a worker co-op model. It became clear pretty quickly that a hierarchy of responsibility was needed simply to keep the workflow moving, as relying on the self-motivation of contributors was a recipe for disaster, especially for those doing editorial or production work.
In my estimation, it can work, but only if the workers take on the attitude that they truly own the business and are responsible for it. This requires a higher level of scrutiny on incoming members than in a traditional business structure, as bad actors can have an outsized affect on a organization with loose hierarchical controls.
Sadly, my experience led me to believe that most people are more willing to work for someone telling them what to do than they are for themselves. The ability to muster effort and energy behind effective self-motivation is a rarer trait than most of us would like to admit. For a co-op to be successful against corporate competitors, every worker has to take responsibility for the organization and its success. In a corporation, only the boss has to - the workers only have to be responsible for what their boss thinks of them, not the direction of the company.
- Co ops can have traditional chains of command, the only defining characteristic of a co op is ownership. There's no reason why a leadership hierarchy and leader ownership must go hand in hand.
  A well-functioning co op can take in any worker irrespective of work ethic and provide them with the structure and support to develop into a valuable team member. The problem is that co ops, like anything aren't guaranteed to function well.
  So no, a co op does not require all workers within in be fundamentally minded towards the business. A co op simply means that the ownership of the company and the labour force are one in the same. There are plenty of co op workers all over the world who just show up and do their job, they just also have a voice and must be considered differently as a result.
  
  There’s no reason why a leadership hierarchy and leader ownership must go hand in hand.
  They could be linked by voting rights. If you have ten equal owners, then you’ve got the equal voters in terms of board decisions.
  
  I agree with your first paragraph, and once we instituted a traditional hierarchy of responsibility in the form of editors and publishers with defined timetables and expectations, things ran more smoothly - the effort lasted 12 years in all before closing.
  However, the amount of management and moderation involved from those placed at the top was far greater than in a comparable corporate structure, in large part due to the human behavior factors I addressed above. This led to burnout, and which had a cascading effect on those with less responsibility. While I don't regret what we accomplished, I've come to the conclusion it would have been undoubtedly easier to succeed in the publishing space with a corporate structure.
  As such, I disagree with your assumption in the latter half of your comment that a co-op can take in any worker irrespective of ethic. A co-op thrives because it's a community that relies on each other. When you introduce bad actors into the mix, who are benefiting without contribution, it breeds resentment and similar behavior if not corrected quickly - especially if you're working on a profit-share basis. My experience in both the non-profit and corporate worlds has shown that the latter can absorb a much higher ratio of these bad actors than a co-op or non-profit can, as these latter organizations rely on an equitable social contract to motivate their workforce. Corporations just rely on a paycheck.
- Sadly, my experience led me to believe that most people are more willing to work for someone telling them what to do than they are for themselves.
  I might argue that most people don't really know how to handle autonomy. We're all trained to follow orders and probably have to be trained on how to work otherwise. It's a huge culture shock.
  I'm often not sure at what point my authority/autonomy ends and my boss' begins. And we have a clean top-down structure.
  
  Being part of a co-op isn’t an autonomous situation. You have the responsibility of ownership, but you aren’t free to implement decisions as you see fit. You have to get buy-in from the group for anything you do.

Survivor bias. The only ones that make it are the extraordinarily well run ones. I worked for one that feel apart. All it takes is one period where for whatever personal reasons there aren’t enough committed core members to manage the business.
- True, but small businesses fail all the time for all kinds of reasons. Lack of core members is like the co-op equivalent of the trope where the original owner of a small business sells it to some idiot who makes awful decisions and it all goes down the tubes. It doesn't really explain why for every 100+ traditional businesses that are started, only like 1 co-op is started (numbers made up, obviously, but it feels that way).
  
  You’re right that businesses fail all the time. I just think far fewer coops even start, and they have more ways to fail.

They're tricky. While they can be extremely healthy and successful, with extremely high employee morale, they can also be cumbersome and bureaucratic, as that's the power structure that replaces the traditional hierarchy. So, very much a pros and cons thing, they're not just exclusively more fun and amazing to work at.
When it works its great though.

The Mondragon Corporation is a federation of worker-owned coops in Basque, Spain that involves 81,000 people and has been running since the 1950s. They have coops for manufacturing, banking, retail and education and they all work together to support each other.
https://en.m.wikipedia.org/wiki/MondragonCorporation
The book "From Mondragon to America" (available on Kindle and elsewhere) goes into extensive detail about how it works.

Just speculating, but it’s hard to organize a thing when responsibility is diffuse. If ownership is concentrated in one person, that person is incentivized to run the place actively. If ten people pool their money to start something, it’s hard to organize and move effectively.

The resources for starting a co-op are a lot more scarce than other businesses. I’ve looked into it and it was incredibly difficult to find information about what I’d need to do. I eventually just gave up on it rather than starting a business, because I really only want to start a co-op.

From my limited experience usually it's because they implode from internal drama. To be human is to be lazy, and most people can't get past that.

Other people have given good answers in terms of the structural and financial reasons, but if you want to see an alternative there's the example of this region of Italy where there's a substantial number and % of coops. I believe this is due to preferential taxes and subsidies by their government, although I haven't looked into it nearly enough to say anything conclusive.

It’s expensive to start a business. You’d need some seed money to start the thing for rent, products, salary and more. If a bunch of people go together, pool their money, sure they might get it to work, but they also share all the risk of failure. Also, who decides if there is conflict? Who has the final say? Not everything can be solved by compromise.
- Not to mention the regulatory environment in many places is custom tailored towards traditional corporations, leaving co-ops with often unclear regulatory standing or significant material disadvantages compared to corporations. In effect, the state makes it easier to start a single or few owner business than they do a worker owned collective.
  
  Can you give examples of this?

Other people have given good answers in terms of the structural and financial reasons, but if you want to see an alternative there's the example of this region of Italy where there's a substantial number and % of coops. I believe this is due to preferential taxes and subsidies by their government, although I haven't looked into it nearly enough to say anything conclusive.

the man

Most leftists I know are absolutely Scrooges. It horrorfies me every time we come up with a brilliant plan to save the world.
The ones who aren't usually burn out trying to accommodate the rest.

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