"Mutualism" by Sara Horowitz was an interesting book that discussed some of the history of this style of worker owned businesses. She traces some of it's history, and points out other examples of this style of worker or member governance showing up in other organizations: https://www.porchlightbooks.com/products/mutualism-sara-horo...
Employee ownership is not a silver bullet to every problem. The governance model and governing body of employee-owners has to be well constructed as with anything. As a philosophy generally, it has a lot of potential to avoid certain common problems with more traditional business models.
Credit Unions tend to be a more commonplace example of member/worker governance, though in my experience it's somewhat rare for the average member to engage much with the governance.
Worth noting that is completely legal in the USA and even encouraged by the tax code. They are called ESOPs (Employee Stock Ownership Program). An ESOP configured as an S-Corp that is 100% employee owned pays no federal business tax. Some examples of well known ESOPs in the US are Wawa, Bob's Red Mill, and W. L. Gore & Associates (makers of Gore-Tex).
Well, sort of. Technically speaking, S-Corps by definition pay no federal income tax since they're pass-through entities. If the sole shareholder of an S-Corp was an ESOP, the income is passing through to it. The ESOP has beneficiaries (the employees) whose shares sit in a trust. Income to the ESOP isn't taxed at the moment of filing, it's deferred: when the beneficiaries take distributions according to their shares, they pay ordinary income tax in that year.
Because the workers are also shareholders, and shareholders like money either way. Some of their business units were becoming extremely uncompetitive. So they ship a bunch of the manufacturing away to subsidiaries where you are not really a member of the coop: You aren't getting shares if you are in many of those other subsidiaries. They still managed to build a class system anyway. If you work at their retailers, you aren't the same as if you work at their Basque factories.
As for workers that were part of the coop in uncompetitive jobs, they moved them around as they could, but ultimately no amount of union or coop-like behavior is going to help if you are getting outcompeted.
A lot of people think it's all wine and roses when you get more worker input, but then you realize quite a few of the warts come straight from having a bunch of people with different amounts of power, and you still have power differentials even if everyone votes.
Worker cooperatives are fully compatible with capitalism. Only mentioning it because sometimes this idea gets unfairly maligned due to some mistaken association with socialism or even communism. There should be more of these sorts of entities in the USA and Europe, and frankly everywhere. It's an assured route towards better conditions for the working class, by making them owners and stakeholders in a more substantial way than merely holding some stock equity (which is kind of a superficial ownership that's sometimes presented as this same type of worker cooperative ownership).
Kim Stanley Robinson's Mars Trilogy, especially Green and Blue Mars, provide a nice fictional exploration of this idea. I think Mondragon may even be name dropped.
Capitalism is not simply free markers - it means "control by people with capital." People control society proportionally to how much capital they have, and those who control vast boards of capital are very uninterested in allowing capital to be spread around more equitably.
I would say that capitalism is not only characterized by private ownership of capital, but also by free market for labor, which could be almost considered a complementary feature (other side of the same coin).
On the other hand, socialism primarily rejects free market for labour in favor of worker emancipation and participation in decision-making. So both socialism and capitalism are compatible with free markets; it's the labor market where the opinion differs.
(As a socialist, I would add, salaries cannot be treated in economics the same way as e.g. price of apples, because apple doesn't care what its price is.)
Socialism is completely incompatible with free markets. Free markets typically stop being opinionated beyond the concept of enforcing contracts/consent, i.e. people are allowed to structure their economic relationships with one another however they want, they just have to respect their agreements.
Socialism is a prescriptive ideology, it is concerned precisely with the nature of the economic relationships people make. Labor theory of value. "From each according to their abilities, to each according to their needs." Workers own the means of production. To the degree that people are able to freely structure their economic relationships with one another, then the vast majority of those relationships will look nothing like the prescriptions of socialism. To the degree that the economic relationships are made to look like the prescriptions of socialism, then the economic model would fail to be described as a free market.
This is why in a free market/"capitalist" economy, communes can exist, Mondragon can exist...because you can structure your relationships with one another however you want. It's just that most people don't like that structure. "Capitalism" itself doesn't care at all if that's the way people want to distribute equity and control of the corporation. Now, if you want to structure an arbitrary economic relationship in a socialist communist country...good luck.
I often wonder if these classifications have long outlived their usefulness, and only lead to endless, often heated, ideological discussions about their definition. To the extent that those benefiting most from observably-broken-form-of-global-capitalism can use that as a tool to sow division and strife and ensure nothing changes. The gist of your and parent's comment is the interesting bit, where new systems and mechanisms are discussed.
It is quintessential socialism: collective ownership (of the “means of production”).
It is just embedded in a market system, just as, say, USSR or Cuba was embedded in the global economy.
That doesn’t make it not socialist.
And not all socialism is “bad”. It has to do with whether it is voluntary or not. I am a libertarian, and I fully support communes, housing cooperatives, credit unions and the like. I consider the lack of a superfluous extractive landlord or shareholder class a feature.
It is not a mistaken association. Socialism traditionally meant workers control over production. Work councils in Germany originally pursued direct workers control over respective businesses. Unions in Germany pursued some version of this well into the 1950s. Most socialist movements in Europe understood this to _be_ Socialism until the Soviet counter-revolution swept it all away.
And there is another forgotten truth. Before the Soviet counter-revolution, liberals advocated for this type of Socialism.
The form of association, however, which if mankind continue to improve, must be expected in the end to predominate, is not that which can exist between a capitalist as chief, and work-people without a voice in the management, but the association of the labourers themselves on terms of equality, collectively owning the capital with which they carry on their operations, and working under managers elected and removable by themselves.
It remains confusing that, after centuries of profiting off capital generally being a much better strategic choice than profiting off labour, workers insist and persist in trying to make labour work.
If the unions had dumped their efforts into co-ops instead of trying to fight their own companies then they might have managed to have a positive impact. They've been at it for long enough for capital accumulation to have kicked in even at pathetic rates of saving.
You may be surprised to learn that if one does not have capital, yet does have the capacity to labour, then one may seek to make labour work rather than profiting from capital.
"Mutualism" by Sara Horowitz was an interesting book that discussed some of the history of this style of worker owned businesses. She traces some of it's history, and points out other examples of this style of worker or member governance showing up in other organizations: https://www.porchlightbooks.com/products/mutualism-sara-horo...
Great read, highly recommend.
The National Center for Employee Ownership also maintains a list of 100 employee owned businesses in the USA: https://www.nceo.org/research/employee-ownership-100-largest...
Employee ownership is not a silver bullet to every problem. The governance model and governing body of employee-owners has to be well constructed as with anything. As a philosophy generally, it has a lot of potential to avoid certain common problems with more traditional business models.
In this space it's also important to understand the difference between cooperatives and collectives: https://institute.coop/about-worker-co-ops/worker-cooperativ...
Credit Unions tend to be a more commonplace example of member/worker governance, though in my experience it's somewhat rare for the average member to engage much with the governance.
Why don't cooperatives of IT professionals exist? It's a business with low capital entry and high dividends.
Workers should prefer to own their company as risks are really low (in contrast to other industries).
AFAIK, Galois is 100% employee owned: https://www.galois.com/life-at-galois
I know people working both at Galois and Mondragón, and they seem to be relatively similar in spirit.
They might be rare, but they do exist: https://en.wikipedia.org/wiki/Igalia
Worth noting that is completely legal in the USA and even encouraged by the tax code. They are called ESOPs (Employee Stock Ownership Program). An ESOP configured as an S-Corp that is 100% employee owned pays no federal business tax. Some examples of well known ESOPs in the US are Wawa, Bob's Red Mill, and W. L. Gore & Associates (makers of Gore-Tex).
Employee stock ownership is a leap forward and studies consistently highlight its economic benefits.
However, Mondragon, and co-ops like it, go further. They are industrial democracies: one worker, one vote.
Well, sort of. Technically speaking, S-Corps by definition pay no federal income tax since they're pass-through entities. If the sole shareholder of an S-Corp was an ESOP, the income is passing through to it. The ESOP has beneficiaries (the employees) whose shares sit in a trust. Income to the ESOP isn't taxed at the moment of filing, it's deferred: when the beneficiaries take distributions according to their shares, they pay ordinary income tax in that year.
They moved most production work to factories in China, which ironically aren't cooperative.
How'd that happen if it's one worker, one vote?
Because the workers are also shareholders, and shareholders like money either way. Some of their business units were becoming extremely uncompetitive. So they ship a bunch of the manufacturing away to subsidiaries where you are not really a member of the coop: You aren't getting shares if you are in many of those other subsidiaries. They still managed to build a class system anyway. If you work at their retailers, you aren't the same as if you work at their Basque factories.
As for workers that were part of the coop in uncompetitive jobs, they moved them around as they could, but ultimately no amount of union or coop-like behavior is going to help if you are getting outcompeted.
A lot of people think it's all wine and roses when you get more worker input, but then you realize quite a few of the warts come straight from having a bunch of people with different amounts of power, and you still have power differentials even if everyone votes.
Worker cooperatives are fully compatible with capitalism. Only mentioning it because sometimes this idea gets unfairly maligned due to some mistaken association with socialism or even communism. There should be more of these sorts of entities in the USA and Europe, and frankly everywhere. It's an assured route towards better conditions for the working class, by making them owners and stakeholders in a more substantial way than merely holding some stock equity (which is kind of a superficial ownership that's sometimes presented as this same type of worker cooperative ownership).
Kim Stanley Robinson's Mars Trilogy, especially Green and Blue Mars, provide a nice fictional exploration of this idea. I think Mondragon may even be name dropped.
Yes it is! the Mondragon Accords. my first thought when seeing the title :) had no idea the name was based on something real!
Have been listening to an audio-book of 2312 when I have the time to be fully attentive
Capitalism is not simply free markers - it means "control by people with capital." People control society proportionally to how much capital they have, and those who control vast boards of capital are very uninterested in allowing capital to be spread around more equitably.
The parent post is not even the worst offender. In his (otherwise good) https://en.wikipedia.org/wiki/23_Things_They_Don%27t_Tell_Yo..., Ha-Joon Chang completely flips the meaning between free markets and capitalism.
I would say that capitalism is not only characterized by private ownership of capital, but also by free market for labor, which could be almost considered a complementary feature (other side of the same coin).
On the other hand, socialism primarily rejects free market for labour in favor of worker emancipation and participation in decision-making. So both socialism and capitalism are compatible with free markets; it's the labor market where the opinion differs.
(As a socialist, I would add, salaries cannot be treated in economics the same way as e.g. price of apples, because apple doesn't care what its price is.)
Socialism is completely incompatible with free markets. Free markets typically stop being opinionated beyond the concept of enforcing contracts/consent, i.e. people are allowed to structure their economic relationships with one another however they want, they just have to respect their agreements.
Socialism is a prescriptive ideology, it is concerned precisely with the nature of the economic relationships people make. Labor theory of value. "From each according to their abilities, to each according to their needs." Workers own the means of production. To the degree that people are able to freely structure their economic relationships with one another, then the vast majority of those relationships will look nothing like the prescriptions of socialism. To the degree that the economic relationships are made to look like the prescriptions of socialism, then the economic model would fail to be described as a free market.
This is why in a free market/"capitalist" economy, communes can exist, Mondragon can exist...because you can structure your relationships with one another however you want. It's just that most people don't like that structure. "Capitalism" itself doesn't care at all if that's the way people want to distribute equity and control of the corporation. Now, if you want to structure an arbitrary economic relationship in a socialist communist country...good luck.
>> Capitalism is ... OTOH socialism ...
> No, socialism is not ... and capitalism is ...
I often wonder if these classifications have long outlived their usefulness, and only lead to endless, often heated, ideological discussions about their definition. To the extent that those benefiting most from observably-broken-form-of-global-capitalism can use that as a tool to sow division and strife and ensure nothing changes. The gist of your and parent's comment is the interesting bit, where new systems and mechanisms are discussed.
It is quintessential socialism: collective ownership (of the “means of production”).
It is just embedded in a market system, just as, say, USSR or Cuba was embedded in the global economy.
That doesn’t make it not socialist.
And not all socialism is “bad”. It has to do with whether it is voluntary or not. I am a libertarian, and I fully support communes, housing cooperatives, credit unions and the like. I consider the lack of a superfluous extractive landlord or shareholder class a feature.
It is not a mistaken association. Socialism traditionally meant workers control over production. Work councils in Germany originally pursued direct workers control over respective businesses. Unions in Germany pursued some version of this well into the 1950s. Most socialist movements in Europe understood this to _be_ Socialism until the Soviet counter-revolution swept it all away.
And there is another forgotten truth. Before the Soviet counter-revolution, liberals advocated for this type of Socialism.
- John Stuart MillIt remains confusing that, after centuries of profiting off capital generally being a much better strategic choice than profiting off labour, workers insist and persist in trying to make labour work.
If the unions had dumped their efforts into co-ops instead of trying to fight their own companies then they might have managed to have a positive impact. They've been at it for long enough for capital accumulation to have kicked in even at pathetic rates of saving.
You can’t profit off capital if nobody does the labor. We need both roles and both deserve respect.
What would Musk do if nobody worked for him? He is probably not going to be able to develop rockets alone in his basement.
You may be surprised to learn that if one does not have capital, yet does have the capacity to labour, then one may seek to make labour work rather than profiting from capital.
I call free weekends, 40 hours work week, no children work all positive impacts of the unions. And there are for sure more of these.
capitalists profit of labour, it's just other people's labour.