> all enterprises competing on the market would be co-ops, where workers democratically decide how the company is run and get to share the profits (and losses), instead of getting a pre-determined (sometimes negotiated) wage.
The problem with co-ops, partnerships and the like as a firm structure is that (1) they can't easily provide access to outside capital. Maybe they can issue debt, but that comes with a lot of drawbacks wrt. equity investment. (2) most workers have their job as their main source of income, so they don't actually want to incur the excess risk that's inherent in "sharing in the profit (and losses!) of their firm" because that literally means putting all your eggs in one basket. Outside investors can incur that risk more easily, whether by diversifying it away or by investing only part of their assets in a risky endeavor.
"All enterprises as co-ops" is a nice idea but doesn't actually work in the real world. Co-ops and partnerships are totally fine for very low capital intensity businesses like law firms, but quite unsuitable elsewhere.
I've been poking around the cooperative space. They would seem to be a way to keep more wealth in the hands of the labor that creates it.
They seem like they could develop like an business/economic version of what the GPL was in software - a way to form a community space using the rules of an unfriendly/indifferent system itself to maintain the space. But I think they need some better supporting spark. It feels to me like coop organizations are at a pre-growth period right now and need better ways to capitalize, coordinate, and compensate organizations.
Largely the reason so few businesses are cooperatives is because if you are an active participant in the founding of a business its in your own self interest to retain as much power over it as possible
There is no reason a software company couldn’t operate like a law firm or architecture firm with “partners”. It just doesn’t because software developers are too focused to the technical aspects and ignore the bigger picture.
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.
Great point. We can start more cooperative enterprises. Are there good templates and software for the founding and unique management issues of a cooperative enterprise?
If you or anyone else has ideas on that, please share them :)
Cooperatives still require everyone to pitch in and some way of dividing the labor and building accountability for performing the tedious tasks that are essential to maintain a legal entity. Unless you have the funds to pay everyone a living wage and in return some form of sustainable sizable income it is difficult to get the same level of contribution from people. In my experience with cooperatives they aren't the magical solution they are imagined to be. Many people are comfortable not bring in charge or arguing about how the people in charge are doing it wrong but they don't have the skills or background ideology to manage decision making cooperatively.
As a legal structure there isn't a ton of support, you are basically creating a member managed LLC or corporation and then transplanting a cooperative agreement on top of it. Getting the same level of commitment from a large number of people is the difficult thing. But if there is a small sense of joint ownership and a shared vision then perhaps it could work but as the article mentioned rotation of leadership and task assignment is a good idea lest one person be stuck holding the bag.
I shop at a couple of co-ops, and they're excellent.
Ideally I'd like to chat with a lawyer knowledgeable about co-op formation to create an open template for a version designed to leverage a long term lease from a nonprofit land trust. The structure could be mixed use to include housing; resident owned, appreciation moderated, with support from the trust for affordability.
I've seen a few organizations that might help in a generic way, but lawyers haven't been interested in the 'open' aspect.
I wish more software companies — or, indeed, any software companies — followed the cooperative model. It just seems like such a healthier and fairer way to run a business.
That's really great! I've been rooting for the cooperative model to take off a bit more. Seems like a more humane and societally friendlier way of running things, especially if it helps ensure a more equitable distribution of wealth and power among the working ranks.
FWIW, farming co-ops are often more similar to the lawyer model, in practice: A small number of owners who hire out lots of manual labor.
You could certainly have a similar model for software co-ops, using contracts for various non-central parts of the work.
Most worker co-ops also include a probationary period for new hires before they become part owners (because to do otherwise would be a bit insane). A really long probationary period with a low chance of conversion starts looking a lot like the lawyer model...
relatedly:
not sure why we don't create 'partner firms' a-la attorneys - the model seems a good fit.
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