In some of my previous blog posts, I mentioned cooperative businesses and a cooperative-based economy as an alternative to Capitalism and conventional-style corporations. But because cooperatives as a business form are not really well-known, I’d like to briefly explain them.
To begin, a very basic and broad definition of a cooperative business is where the workers own the business and make decisions about its operation. It is democracy in the workplace, democracy in the economic sphere. This cooperative model directly challenges the ownership model in our current capitalist system.
In a worker cooperative, the ownership is moved from CEOs and shareholders to the workers themselves. They become the shareholders. The profits of the business go to the workers. But the responsibilities in running it as well fall to them. In most worker-owned cooperatives, each member gets one vote in the decision making process. The worker-owners make decisions through a democratic process, which can vary from company to company.
In order to help ensure that the business is profitable and tasks are being completed, the workers can elect a supervisor or even a management team, depending on the size of the cooperative. So it is not completely non-hierarchical, it is just that the decisions about the hierarchy are made democratically among the workers.
This bottom-up control has many advantages. One is efficiency. Workers that directly benefit from hard work and figuring out ways to save time and money will usually do just that. Having hands-on experience in the decision making process helps avoid the dumb decisions that we all know comes from the top, wherever we work.
Workers cooperatives also help pull wealth down from the upper tier of the economic system – from the wealthy – to the worker-owners who often live in or near the communities in which they work. Worker ownership helps anchor wealth in communities, instead of it being extracted by large corporations such as Walmart.
Many worker cooperatives have a specified ratio between the highest paid worker and the lowest paid worker. It can be 9 to 1, 7 to 1, or 5 to 1 depending on what the workers in the company decide. This helps wealth to not be concentrated among the top tiers of the company, while still allowing for some upward mobility and incentives for career growth.
Here are a couple examples of worker-owned cooperatives operating in the United States in a range of industries.
This worker-owned cooperative based in Chicago sells energy-efficient windows throughout the United States. They formed after an abrupt closure of the plant in 2008, eventually purchasing the company in 2012. By 2015 they had 20 employees and were generating around 1 million in revenue per year. They are still going strong today.
Namaste is a major solar installation company in Colorado that has been operating for over 20 years. It currently has over 60 worker-owners, and is a top rated solar company.
This machining shop was sold by the retiring owner to the workers, becoming a cooperative in 2010. It is located in northeastern Ohio, and it currently has 11 worker-owners. It specializes in metal applications for construction projects.
Palante Technology Cooperative
Palante Tech Cooperative formed in 2010, and provides technological services to non-profit corporations and other similar organizations. There are currently 8 worker-owners at the company.
These are all examples of worker cooperatives around the United States. A current estimate of the total number of American cooperatives, though, is only around 612. Compared to the rest of the world, worker cooperatives represent a small slice of the business landscape here in the United States. Increasing that number could result in a ground shift in our economy and society.
To see an economy composed of cooperative businesses at a larger scale, we can look at the Mondragon Corporation in the Basque Region of Spain. Mondragon is a federation of ninety-five cooperatives that make a wide range of products. Mondragon operates in four economic sectors, Manufacturing, Retail, Finance, and Education, and is the seventh largest corporation in Spain. It employs about 70,000 people, 80% of whom are worker-owners.
The impact that this corporation has had on the community around it is enormous. In the town of Mondragon where it was founded, it has been noted that there is not extreme wealth, but there is not any poverty. A majority of the townspeople have shares in the company. This extends to the communities around Mondragon where many of the cooperative businesses are themselves located. This has helped the overall Basque Region, which historically has been a less economically developed area, turn into a more prosperous one.
All in all, cooperative businesses provide more wealth and stability for the workers and communities where they are located. During the economic downturn in 2008, Mondragon as a federation of cooperatives spanning multiple industries, was able to avoid mass layoffs by shifting workers from impacted industries to ones that were affected less. This took sacrifice on the part of all the workers in the company, and it was a very different decision than the executives and shareholders in capitalist corporations made.
Cooperative businesses still operate under the same forces of competition and the need for innovation just like any other business. So a cooperative economy still has those same forces just like our current capitalist system.
The primary difference is who owns the company, who makes the decisions, and who profits from it. It makes so much more sense that the workers in the business should be the ones in charge. What do most shareholders really know about the day to day operations of a specific company? Almost nothing.
I want to make it clear that I am not selling a utopian dream. Cooperatives are difficult, they take time and effort. It entails making business decisions with your coworkers. Not all cooperatives are successful, just like any business. And working in a cooperative is not for everyone. That’s okay.
But for those of who want something different, who want to make an impact with our work, cooperatives are the way to go. They are the ultimate team ball, we’re just playing a different game than Capitalism.
Additional Reading:
Building the Future Now 