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>>How can all companies be employee owned if you need to invest a lot of capital to start a car factory. You go to a bank (or credit union in this instance) wi

>>How can all companies be employee owned if you need to invest a lot of capital to start a car factory. You go to a bank (or credit union in this instance) with a compelling business plan and a history of success and get a loan. If the company at some point can't make the payments they declare bankruptcy, the company dissolves and the credit union takes ownership of the company's assets (or what ever was used as collateral) which it then sells off. Same as real estate deals the people who take the loan legally own the property unless they fail to pay off the loan, then and only then does the property change hands to the loaner.

dalbasal 9y ago
Interesting point, considering a lot of modern finance, where there is often very little investor "risk capital" in the sense implied by the OP. A lot of large infrastructure projects, for example, are funded by loans with very little (or none) equity capital. Risk is borne by the firm, its lenders, or the state. The "owners" are basically they guys who get the deals made. I have no idea if employee-owned companies will be any good. There were examples (eg Egged) in the past that didn't work well. But it's curious to see them taken as an impossibility for reasons like this, that they don't fit inside of a textbook free market example, with all incentives perfectly aligned. Half the companies in the world weren't started this way. How did Russian oligarchs buy all those state companies? Leveraged buyouts. IE, the banks (does this count as the state?) gave them money to buy (or start) them. The more interesting questions are around management. How does an employee owned company work well? Answer that with confidence, and I think everything else is solvable.
- Avshalom 9y ago
  I don't actually think "how" is even a question at this point. If you poke around wikipedia's (clearly incomplete) list of cooperatives and employee-owned* companies the answer is/has-always-been pretty clearly: just like any other form of company works. *coops however aren't necessarily employee owned-- there's a several models-- and ESOP style employee ownership can be pretty weak from an ownership perspective so in addition to being woefully incomplete the lists should also not be taken at face value.

dalbasal 9y ago

Interesting point, considering a lot of modern finance, where there is often very little investor "risk capital" in the sense implied by the OP. A lot of large infrastructure projects, for example, are funded by loans with very little (or none) equity capital. Risk is borne by the firm, its lenders, or the state. The "owners" are basically they guys who get the deals made. I have no idea if employee-owned companies will be any good. There were examples (eg Egged) in the past that didn't work well. But it's curious to see them taken as an impossibility for reasons like this, that they don't fit inside of a textbook free market example, with all incentives perfectly aligned. Half the companies in the world weren't started this way. How did Russian oligarchs buy all those state companies? Leveraged buyouts. IE, the banks (does this count as the state?) gave them money to buy (or start) them. The more interesting questions are around management. How does an employee owned company work well? Answer that with confidence, and I think everything else is solvable.

Avshalom 9y ago
I don't actually think "how" is even a question at this point. If you poke around wikipedia's (clearly incomplete) list of cooperatives and employee-owned* companies the answer is/has-always-been pretty clearly: just like any other form of company works. *coops however aren't necessarily employee owned-- there's a several models-- and ESOP style employee ownership can be pretty weak from an ownership perspective so in addition to being woefully incomplete the lists should also not be taken at face value.