The Basque Mondragon Corporation [0] is actually very impressive:
It is the seventh-largest Spanish company in terms of asset
turnover and the leading business group in the Basque
Country. At the end of 2012, it employed 80,321 people in
289 companies and organizations in four areas of activity:
finance, industry, retail and knowledge.
Long term I have wondered if co-op will end up dominating less capital intensive businesses. The downside is an inability to raise outside capital however they don't need to fund profits which allows them to operate on leaner margins which could presumably push out traditional businesses and simply grow.
If you look at the semiconductor industry as a whole, it will eventually start to become less capital intensive because (at some point in the future) the vast majority of chips produced will be old generation technology that is "good enough".
There will still be companies trying to push miniscule improvements, but eventually those incremental improvements won't be enough to justify using them over older cheaper technology (for most use cases). We're already getting there by the way-- just look at the number of cheap embedded CPUs with relatively large transistors produced each years.
Say we get to the point, call it x nanometers, where we can't really get any smaller because we've reached physical limitations. 50 years after what will the cost to produce an x nm chip be compared to 50 years before--even if we've moved beyond silicon 50 years later there will still be countless applications capable of being performed by older cheaper technology.
You are singling out the one thing that allows everything else to shift to software (ie, non-capital). Rock's Aphorism is currently true, but always? I measly mortal can still get chips made at said plants.
Without someone to have all the ideas, how could I build anything? It's a question for the ages
Answer: the boss isn't for the employee, the boss is for the people who are spending the money on employees they don't trust. Putting in a boss is the first of many measures to protect capital. Most of these measures are very flawed.
But even in a cooperative scenario, protecting capital is still a concern because an employee of a cooperative can also fuck off rather than working, thereby squandering jointly-owned capital. Big difference, not really.
Only if you have ways of doing business without requiring any capital, or where the worker puts their own capital on the line, is it going to stop being a need
My "boss" (Tech Manager, really) is there to take care of the things that would be a waste of my time...
* Sitting in on meetings of things that might be, and calling me in when he feels my input would be useful
* Being a first point of contact for the "customer" when they want to find something out but don't want to poke dev directly (they do poke me directly on occasion when they know it's appropriate)
* Being a first point of contact when I need some information (Who should I talk to to get more information about X? Can you schedule a meeting with the folks from Y so that we can discuss the technical details of something? etc)
He's there because he knows enough about my work and the work of everyone else we interact with that he can handle the management of non-technical details. I, for one, am very thankful that he is there.
Honestly, it runs similar to the argument for an Administrative Assistant. Sure, I could schedule my own trips, and order my own <stuff>, and such. But having someone there that does such things on a regular basis is a huge benefit. The AA(s) at every company I've worked for have always been someone I am very thankful to have, even if we could get by without them. It's all about efficiency.
* Sending random IMs to the entire team throughout the day about funny stuff he finds on the Internet "to maintain team cohesion."
* Regularly interrupting individual team members and asking them about their projects "to make sure things are getting done and nothing is falling through the cracks."
* Nitpicking on small, often inconsequential details as a way of giving "constructive feedback" while insisting that everyone should be able to think "big picture."
* Occasionally saying racist/sexist stuff in weekly meetings "as a joke"
* Claiming that there is nothing wrong with asking an interviewee about their personal life because "culture fit is an extremely important part of the hiring process."
* Dismissing complicated front-end customizations as "just scripting" and insisting that "real programming" is done by our software developers (most of whom are fresh out of college).
Do any of those things really require the person to be hierarchically above you though?
I'm all for AA's, and I see the value of managers, but is it not possible to have a structure where they have some power where required, but not so much that they basically 'own' you (as is usually the case)?
I'd love to work in a place where managers are not formally 'in charge', but mostly serve the purposes you describe. I might be missing something though, so I'd love to hear arguments why this is not done or not possible.
I certainly wasn't trying to suggest anything Marxist, certainly not that capitalism is stupid. It's just a state of nature.
To make each worker personally absorb 100% of the risk involved in their production has a certain upside... but also a pretty obvious downside.
Say I'm a weaver, I buy supplies and I rent coworking space and I take whatever hours I want, I have full creative control and I get 100% of my own profit to work with. Yay no boss. But if my supplies or product get stolen, or eaten by moths, or are just bad, or become unfashionable, or cashflow kinks prevent me from selling... pay-to-work sounds less attractive when put that way, to lots of people.
>Meanwhile, credit unions — another form of cooperative — face stringent regulations on business lending.
This was thrown as an aside, but I'm wondering what they exactly mean by that. What are these regulations? Are they government imposed or member imposed? What exactly do the regulations say? I wish the article didn't just throw out "there's regulations" without explaining what said regulations are and how they effect co-op lending.
That being said, I'm a pretty big fan of credit unions and they usually rank higher in customer satisfaction,[1][2] and tend to have better rates. They tend to be more community oriented. Though some credit unions can suck too.
Credit unions are nonprofit organizations that benefit from tax exemptions and not having to comply with a number of banking regulations, including CRA and FDIC coverage. (Most, but not all, CUs are covered by NCUSIF.)
Due to their community charters and nonprofit statuses, CUs have regulatory and statutory limits to the amount of business loans they can hand out (12% of total loan portfolio, with loans up to $50,000 or SBA-backed loans not counting against the cap). Bankers and smaller credit unions argue, I believe reasonably, that increasing commercial portfolios by CUs would create an unfair playing field (the bankers' argument) and increase CU accountholders' risks (the smaller CUs, which generally aren't going for large commercial portfolios and see this as a way for the largest CUs to reduce the smaller competition).
Lending restrictions on CUs work well -- post-2008, credit unions were considerably more stable than commercial banks, with the exception of CUs that took on outsized commercial portfolios. For example, Texans Credit Union had a waiver that allowed up to 20% of its portfolio to be commercial (and then bought a subsidiary that had billions of dollars in CRE loans that didn't count towards its cap). Even before the crash, its bad debt ate up a majority of its equity, and consumed the rest in the 2008 meltdown. As a result, the board and executive leadership were summarily canned in 2011, after three years of steady deterioration, and the NCUA took over running the institution.
Credit unions are intended to be individually focused. I believe regulations limit total business lending to 10-15% of the credit union's assets.
I think the intention there is to avoid a "company store" situation when a bunch of employees fund a credit union, and end up loaning their money to their employer or favored business. If the employer goes bust, the Federal government is left holding the bag of paying back the depositors.
My children attended a charter high school run as a teacher's co-op - no principal or formal administration. It works very well, although I'm not sure it would scale as a model. Certainly, I've never seen such high levels of teacher satisfaction anywhere else, and I'm sure the cost of a principal and assistant principal easily funds three more teachers - a big deal at a small school.
Interesting, was this a primary or a secondary school?
I ask because teachers in secondary schools seem to be under much more pressure to ensure their students pass standardised exams to enter higher education, whereas there's much more wiggle-room for alternative methodologies at younger ages. It'd be good to see some innovation at the secondary level, rather than just attempting to keep up with what examiners require.
Secondary. Grades 7-12 (the school has since added 6th grade).
Minnesota's charter system is (or should be) a model for other states. There's lots of interesting education innovation going on here. Lots of failures too, but that's what happens when you open the doors to innovation.
Besides being a co-op, Avalon is a project-based learning environment. This requires a great deal more personal responsibility on the part of students for their own educations. It wouldn't work for most students, but for those who do well there, it shines gloriously. That's what I love about charters, really - the opportunity for educational diversity, and finding models that work well for different kinds of students and different kinds of teachers.
I, for one, need a boss. I don't necessarily need that person to tell me what to do, but I do need someone to remind me that the things that I do, whatever they may be, should be in the best interests of our company and its revenue stream. And I need someone to give me positive and negative feedback on my work, so I can improve my own productivity.
What I really don't need is owners that are not personally involved in the business, yet can somehow tell those who are involved how to operate. Those guys are the ones that merge sick leave with vacation, slice off 6 days from the total, and then pay themselves an extra dividend.
> I, for one, need a boss. I don't necessarily need that person to tell me what to do, but I do need someone to remind me that the things that I do, whatever they may be, should be in the best interests of our company and its revenue stream. And I need someone to give me positive and negative feedback on my work, so I can improve my own productivity.
They can. But when acting in that capacity, they become a boss. For psychological reasons I cannot adequately explain, two people can be effective bosses of each other when they cannot be effective bosses of themselves. I think this is probably part of the basis for pair programming.
On a completely unrelated note, does anyone else find media sites remapping left/right arrow keys to mean "move to previous/next article" completely annoying?
No. I guess it's annoying if you accidentally hit them but I don't use them for anything else so giving them a useful function makes sense. Is there something else you use them to do that the change in function screws up?
A worker co-operative seems like the ideal corporate structure for the typical consulting software shop. It can be set up to be very corporate-like or it can be set up as a loose group of freelancers who pooled together to share a health insurance plan, or anything in between.
My company (http://nomad.coop/) operates in a similar fashion. We all work under the Nomad umbrella, are equal partners in the company (a requirement for being a coop) and work together on freelance projects as we need to. We've been together for around four years and it's worked incredibly well for us.
Another success story of commercially successful cooperative society is Amul which is a cooperative dairy society. With 2 million + milk farmers as owners and is one of the forces that revolutionized milk production and distribution in India. Making India the largest producer of milk in the world [1].
The beauty is that, majority of these farmers own one or two cows and that is their main means of income for their whole family.
I don't know how it works in other countries, but I can give some more detailed info about the requirements in France, if anyone's interested :
- A partner can own 50% max. of the company.
- Whether you own 1% or 50%, every partner has the same voting power.
- You can have a maximum of 1/3 non-employed partners, and the combined non-employed partners cannot own a majority of shares (49% max). This assures that the "power" stays within the people that actually work in the company.
- This also means that 2/3 of the partners must be employed with a contract and a salary. This can be quite difficult when you build the company as you must, technically, start paying yourself and your partner (since you must be 2 partners minimum) on day 1.
- You need a minimum of 2 partners, but can also have as many employees as you want. This means you can technically be a co-op even if your company has 2 partners and 1000 employees.
- There are rules as to how you distribute your benefits : a maximum of 33% can be distributed as dividends to the partners, a minimum of 16% must be kept in the company for investment (reserves), and a minimum of 33% has to be distributed amongst all employees (following a calculation the employees can decide upon, like according to time worked, salaries, how long one's been in the company, or a custom calculation...). This tends to lead to high employee motivation and better ensure long-term health.
- Co-operatives have a few tax deductions that other companies don't. If you don't distribute any dividends and distribute it all to your employees + keep some for investments, and follow a certain number of other rules, you can practically be exempted of taxes on the company's benefits.
- On the other hand, you must go through a bunch of red tape to prove every year that you follow the rules of a co-operative, which costs time and a bit of money.
We built the company 2 years ago, and right now we're only 3 partner/employees so our day-to-day life is basically the same as any other similar-sized company, but we liked the philosophy, and it has actually been an interesting marketing feature.
Unfortunate Title. It's worth looking at some counter-examples, as Capital Structure (often) has precious little to do with management structure. Most non profits mimic the for-profit in organizational structure (ie, run by a CEO, with a staff of VPs...). On the other hand, many for-profit partnerships are quite flat and more egalitarian than their corporate cousins. Also, many co-ops still have a CEO (eg: REI, the outdoor goods store). The outgoing CEO for REI was in fact a banker previously and is now a government "boss" (a/k/a secretary of the interior).
If by purchaser you mean consumer (not producer), yes. Many types of org structures use hier-archical managaement, independent of the capital structure (legal strucure). That's my point. Even in the co-op space there are multiple structures that don't imply everything is flat-org.
One of the strengths of capitalism is that it does not philosophically insist that the macroeconomic system must match all microeconomic systems, enabling local adaptations to changing conditions without global-level upheavals. It is not part of the capitalistic ethos that all organizations must be run on the same principles. Contrast this with philosophies like Communism that claims to have The One Answer To All Problems.
If, for instance, technology shifts over time such that a large-scale corporate system becomes optimal, the capitalistic society can shift with it. And if technology changes so that the optimal situation becomes a much large set of smaller, nimbler competitors, which is probably where we're currently going, we don't have to have a bloody revolution to permit new organizations to be adopted. And at no time is there a contradiction between a co-op, a centrally-managed company, a hierarchy-less Valve-style company, and a non-profit all operating in the same space.
On the other hand; I think that a solid foundation of co-ops and similarly worker-owned workplaces would be required for the abolishment of capitalism altogether.
Part of my point is that it is not at all clear that a structure which works at a relatively small scale (hundreds, thousands tops) necessarily works at a national scale. There is no a priori reason to assume the two sets would be the same. There is no practical evidence to suggest they are the same. There is a lot of evidence they aren't the same.
Except in communism it'd be the community (or, commune) that'd own the business. Since this is worker-owned, it's closer to syndicalism than communism (or socialism).
Lovely bit of history... the anarcho-syndicalists were the third element of the Spanish Civil War. And if there's one thing the fascists and communists could agree on, it was that both hated the anarchists more than they hated each other. Unfortunately, when you organize at the level of a farm or a factory, you're no match for an enemy that can throw 1000 troops at you in order to crush you. Noam Chomsky's history of the Spanish Civil War is an insightful and depressing read. :(
I worry about coops in the business world for the same reason. They have limited defense against massive corporations that decide they are enemies. But that's true of any small business.
Instead of reading Noam Chomsky's propaganda written from great distance (knowing that Chomsky has been an apologist for e.g. the Khmer Rouge), just read Orwell's Homage to Catalonia where he relates direct experience. Or any other primary source.
"(knowing that Chomsky has been an apologist for e.g. the Khmer Rouge)"
By my reading, this is an overstatement. My understanding, having dug into the issue a bit some years back, is that he was skeptical of the reporting; arguably overly skeptical, and certainly incorrect in retrospect, but that's not quite the same thing as supporting or condoning.
Some employee-owned companies are pretty big - the John Lewis Partnership here in the UK has revenue of ~£10 billion and 91,000 employees.
What I find amusing about John Lewis is that although they are employee owned they are actually a key part of respectable middle class life - even more so their upscale Waitrose supermarket chain which has close links to the Royals (the Duchy Originals brand was started by the Prince of Wales and is now exclusive to Waitrose).
How about something that is a cross between an insurance company an a law firm. A bunch of co-ops could pay in for counsel, the firm would audit each co-op on their legal exposure and set rates.
These places still have bosses, the question really is, "Who needs an owner?" If a business can get by with sweat equity rather than external financing, why not? I suspect there are limits to both scale and growth, but those aren't deal breakers.
It's one of those rare stories that doesn't claim to take cutting edge technology to make it successful. Just people working together and owning a business, together deciding on their next move. And it has proven to work well. Wow, very inspiring.
I was just going to post about Bob's Red Mill. Bob Moore built a multimillion dollar company and then he transferred ownership of the company (in the form of employee stock) to his employees.
>Moore said he's gotten countless buy-out offers over the years, but he couldn't envision selling the business to a stranger.
>"It's the only business decision that I could make," he said. "I don't think there's anybody worthy to run this company but the people who built it. I have employees with me right now that have been with me for 30 years. They just were committed to staying with me now and they're going to own the company."
> "There's a lot of negative stuff going into business today," he said. "It's a good old basic Bible lesson -- love of money is the root of all evil. And unfortunately, our entire philosophy today is get all the money you can and whatever way you can. It's caused many corporations to bite off more than they can chew. And it causes people to do a lot of things just for money that they feel in their hearts is not the right thing to do."
>With his own company, Moore has tried to do just the opposite. In a refreshing twist to the typical tenets of corporate America, Moore thinks of his employees and customers first and foremost.
He also believes that there isn't a secret for building a successful business, it is just hard work and luck.
While I think co-ops can work very well in some cases, I wonder how well they cope with significant change for the worse in their environment. If you need to lose a third of the workforce suddenly, can a co-op decide on that kind of thing or will it lead to some unproductive compromise, or even worse, denial?
It's true that coops are less likely to choose to respond to change by radical workforce reductions, but that's rather the point -- the "need" for such a response isn't an objective fact of circumstance, it's a particular valance of the interest of equity owners vs. those of workers. When the equity owners are the workers, those interests are balanced differently.
It is certainly true that workforce reduction is just one possibility, but what I still wonder is when coops work and when they don't. Somehow it seems to me that they only work when the business is not too scalable, but profit is directly related to work input.
The majority (by number) of worker co-operatives are places like coffee shops, where revenue is more closely related with the number of customers than work input.
Co-ops are a great structure when profit is directly related to work input, but that's not a requirement.
Since co-ops vary so widely, there's no single answer to that question, but it's obviously something that co-ops take into account in their articles of incorporation or equivalent. In some co-ops its exactly like a corporation (ie, your boss fires you). Others have more involved procedures, but there's always a procedure. In some it will be a moot question, since worker pay is often set up as a formula based on net income. If net income goes negative, nobody gets paid.
A worker coop would strive hard to avoid taking that action. In NA corps, this is among the first actions to take. The actual historical case, I reference is Mondragon, who has virtually no layoffs in its entire history.
What they do is shift workers from non performing sectors to performing ones.
They have economic cycles in Spain, and within the org itself, like the rest of the world but they deal with it more equitably.
We had a hard working Taiwanese family that the locals would disparage as, "taking our jobs" because they all worked, saved their money and bought a restaurant together.
It's important to make the distinction between a boss-owner and a boss-manager. There are many employee-owned businesses that still utilize some leadership structure. The difference is that the leadership structure has been decided on by the employee-owners.
This is not a new thing, Yugoslavia had something similar some 30-40 years ago, it was called self-governing socialism. The difference is it was forced by government and it was the only form of ownership, there were no private companies, all of them were self-governed. It works if you have a small company but it didn't show so well in companies with few hundred workers.
I work for myself and am my own boss. I have tried starting businesses over the years with many friends and co-workers. None of them worked out.
Most people just don't have the discipline to work on something for 8 hours/day without being told what to do.
I have also joined many meetup groups for various activities /meeting new people. When a group doesn't have a leader, it pretty much doesn't go anywhere until someone takes up the lead and keeps everyone on track.
If you ran a company this way, you would either vote on all decisions (which would be painful and slow) or you have a group of people make these decisions on your behalf (IE: leadership).
It's a small example of human nature and why we still need bosses.
Completely agree with your observations. But there's a certain nice quality to the leaders being people who provide genuine energy and guidance rather than people who just claim control and demand things.
In addition to the passive masses, things like meetup groups tend to attract people who want titles or to boss people around or to take credit for things, but at the same time are really not offering anything that is of value to members. (demanders, not providers)
And unfortunately lots of companies are run this way too; the nominal leadership is parasitic and the majority of the constructive force is provided by people who have lower titles, less authority, less control of the environment and don't get credit for anything.
Leaderless isn't great but parasitic "leadership" by demanders isn't either.
