7 ms·

Startups don't create wealth, they concentrate it. Cooperatives are a much better wealth producing arrangement but they don't make a few people very rich.

lallysingh 7y ago
They can concentrate it inside of your country. The crux of startups is taking a risk for a potential reward. The risk is in lost career advancement and the reward is partial ownership of a business that's worth something. The hard part is in balancing those to avoid exploitation of workers or discouragement from taking the risk.
Curious42 7y ago
> Cooperatives are a much better wealth producing arrangement Why is that? > but they don't make a few people very rich. I don't think I understand what this means either. Care to explain your comment? Genuinely curious.
- Konnstann 7y ago
  With Coops, the company is owned collectively by the workers, as opposed to overwhelmingly by the founders and investors, which results in automatic profit-sharing and distributing success relatively equally amongst the people who created it. This is contrary to a traditional startup where the top few people get obscene amounts of money, and the lower level employees get little, if any, apart from their salary.
  - zozbot234 7y ago
    Co-op arrangements are only feasible for low-capital-intensity enterprises - of the sort that's sometimes ridiculed as a "lifestyle business". The moment your startup takes any external equity funding, you've basically gone beyond the "stuff that's feasible in a co-op" territory. Yes, you could self-fund organically, and maybe being a co-op opens up some more opportunities there, but it's still quite hard. No one takes external funding because they like giving up control.
    - steveklabnik 7y ago
      Mondragon is, in my understanding, in some pretty capital intensive businesses. That said they’re a huge outlier as far as I know. But it can be done.
      - severine 7y ago
        From https://www.mondragon-corporation.com/en/about-us/governance/organization/ https://www.mondragon-corporation.com/en/about-us/governance... As a co-operative enterprise, in organisational terms MONDRAGON is divided into four areas: Finance, Industry, Retail and Knowledge, which operate independently within the framework of an overall strategy, all in line with the strategic policies established at the Co-operative Congress. As far as the different areas are concerned, Finance includes banking, social welfare and insurance activities. Industry is grouped into twelve industrial divisions engaged in the production of goods and services. Retail brings together the retail and food and agriculture co-operatives and businesses. And the Knowledge area includes the network of MONDRAGON technology centres and R&D units, our university, Mondragon Unibertsitatea, as well as a number of vocational training and education centres. Co-operative bodies General Assembly. this is the supreme body in the co-operative and is the vehicle for expressing the social will of all members. Governing Council. the representative and governing body of the co-operative. Members are elected at the General Assembly. Social Council. a consultative body, which represents members as a whole internally within the co-operative. Monitoring Commission. a consultative body whose purpose is to pass judgement on correct compliance with accounting principles and any other areas which require consideration. Management Council. this is the managerial and executive team that comprises the manager and managerial members, and is responsible for the executive management of the co-operative. MONDRAGON bodies Co-operative Congress: its function is to establish the strategic criteria by which MONDRAGON is to be administered via the planning and co-ordination of its business units. It is made up of 650 members who are delegated by the co-operatives, and it meets on an annual basis. Divisions: these are associations set up within the framework of MONDRAGON between co-operatives operating in the same area, which coordinate the management of their co-operatives. Standing Committee: governed by delegation from the Co-operative Congress. Its basic function is to promote and control the implementing of policies and decisions adopted by the Congress, by monitoring the evolution of MONDRAGON on a permanent basis. General Council: it is responsible for drawing up and applying corporate strategies and objectives. It coordinates the policies pursued by the different Divisions and Co-operatives. Industrial Council: it is the co-ordinating body for the Industry area’s Divisions.
- vincent-toups 7y ago
  Others have adequately given the short form. Check out this book: https://nathanschneider.info/books/everything-for-everyone/ https://nathanschneider.info/books/everything-for-everyone/
crazygringo 7y ago
Any successful (profitable) business creates wealth, by definition. (Technicality: as long as costs aren't being externalized e.g. as environmental pollution, fraud, etc.) Whether a company is a cooperative or not has zero to do with how much wealth is being produced, only with how it's distributed. Don't conflate production with distribution -- they're different things and have very little to do with each other. Wealth production depends on product-market fit, ensuring costs are less than revenue, and business model. Wealth distribution has nothing to do with that whatsoever -- it's simply the mechanism for profit sharing.
- vincent-toups 7y ago
  I rather pointedly refuse to call the accumulation of capital in the hands of a small group of people "wealth". The fact that we use that notion of wealth as an index of how our societies are doing is part of the problem we have at the moment. If you want to get technical, I'd suggest we scale the notion of wealth by the marginal utility of the additional capital given to an individual. Wealth is giving a person living paycheck to paycheck enough money to have leisure spend time with their kids. Giving a billionaire another million dollars isn't wealth. They don't give a fuck about it except in the most abstract, brain-sick, anti-social sort of way.
  - edouard-harris 7y ago
    Wealth isn't identical with money, or with capital accumulation. If you create an app that lets 1000 people do something they couldn't do before (or that lets 1000 people do with ease something they could only do with difficulty before), then you have created wealth for those 1000 people.
    - vincent-toups 7y ago
      I don't disagree with this, of course. Some startups do create some valuable services for people. But society would be better off if those services were owned by the people using them and the surplus value was going to more people rather than a few investors.
mercutio2 7y ago
I am a huge fan of worker co-ops, but I think you’re confusing creating wealth and distributing wealth. Co-ops do an excellent job of distributing wealth, and in the case of a few such as Mondragon, they’ve been able to create wealth, also. Startups can, in the economic jargon, create wealth, if they create a product whose benefit to society is greater than its costs (including externalized costs and subsidies). But they don’t necessarily distribute much of that created wealth, it all depends on how the capitalist relationship with labor and consumption are structured in that environment.
- vincent-toups 7y ago
  I don't consider funneling money to people for whom its marginal value is small as creating wealth. If it doesn't change your life to get it, its not wealth.
ElonMuskrat 7y ago
> Startups don't create wealth, they concentrate it. What a strange and incorrect assertion. Please walk us through your mental though process so we can re-educate you.
- mantesso 7y ago
  I understand parent's point of view. Look at the top 9 richest people in the world who combined have equal wealth to the poorest 4 billion people. You will find on that list (Bezos, Bill Gates and Zuckerberg) and one could say their companies were a startup at some point. There's no doubt startups create wealth but I'd argue it also creates inequality. When the EU wants to tax bonuses I believe they're efficiently fighting inequality. This small article is an example of what I'm trying to explain. "Uber co-founder buys record-breaking LA mansion for $72.5m as drivers fight for wages" https://www.theguardian.com/us-news/2019/jul/02/los-angeles-mansion-sales-homelessness-increase https://www.theguardian.com/us-news/2019/jul/02/los-angeles-...
  - ElonMuskrat 7y ago
    Grand-parent made the absurd assertion that startups do not create wealth. Presumably they would prefer to live in a dark world without airplanes [Wright brothers], and the light bulbs [Edison], as these inventions and subsequent industries did not create "wealth". Wealth redistribution programs have their place in economic policy. Growing wealth inequality in the USA is real problem to social and political stability. [Disclaimer: I am not American] Furthermore, the US government has failed to support citizens rendered chronically unemployable through automation and globalization [e.g. especially middle-aged former auto workers]. However, I will challenge the widely held belief that wealth inequality is undesirable. Effective allocation of capital [including human capital, e.g. gainful employment] is not a given. It's not a given nor immediately obvious how to allocate 1,000,000 highly experienced software engineers into economically productive endeavors. Some individuals have proven excellence at allocating capital [Gates, Bezos, Buffet, Ma], so it makes sense that those people should have access to greater amounts of capital to efficiently allocate said capital. And for the most part, the wealth of Gates, Bezos, Buffet, and Ma is tied up into economically productive activities. When the EU taxes bonuses, in SOME instances the EU constricts SOME proven entrepreneurs [allocators of capital] from allocating greater amounts of capital into economically productive activities. Note: I'm in no way asserting that the EU should not tax bonuses, however there is a trade-off and the EU must be careful to both understand the trade-off and careful not to overly tax the wrong people [specifically highly industrious people with a knack for entrepreneurship].
mensetmanusman 7y ago
False. Wealth creation is not zero sum.
walshemj 7y ago
Speak for your self at one point the worker coop I was a member of made all of us dollar millionaires on paper - unfortunately we didn't get taken over by a bigger coop.

lallysingh 7y ago

They can concentrate it inside of your country. The crux of startups is taking a risk for a potential reward. The risk is in lost career advancement and the reward is partial ownership of a business that's worth something. The hard part is in balancing those to avoid exploitation of workers or discouragement from taking the risk.

Curious42 7y ago

> Cooperatives are a much better wealth producing arrangement Why is that? > but they don't make a few people very rich. I don't think I understand what this means either. Care to explain your comment? Genuinely curious.

Konnstann 7y ago
With Coops, the company is owned collectively by the workers, as opposed to overwhelmingly by the founders and investors, which results in automatic profit-sharing and distributing success relatively equally amongst the people who created it. This is contrary to a traditional startup where the top few people get obscene amounts of money, and the lower level employees get little, if any, apart from their salary.
- zozbot234 7y ago
  Co-op arrangements are only feasible for low-capital-intensity enterprises - of the sort that's sometimes ridiculed as a "lifestyle business". The moment your startup takes any external equity funding, you've basically gone beyond the "stuff that's feasible in a co-op" territory. Yes, you could self-fund organically, and maybe being a co-op opens up some more opportunities there, but it's still quite hard. No one takes external funding because they like giving up control.
  - steveklabnik 7y ago
    Mondragon is, in my understanding, in some pretty capital intensive businesses. That said they’re a huge outlier as far as I know. But it can be done.
    - severine 7y ago
      From https://www.mondragon-corporation.com/en/about-us/governance/organization/ https://www.mondragon-corporation.com/en/about-us/governance... As a co-operative enterprise, in organisational terms MONDRAGON is divided into four areas: Finance, Industry, Retail and Knowledge, which operate independently within the framework of an overall strategy, all in line with the strategic policies established at the Co-operative Congress. As far as the different areas are concerned, Finance includes banking, social welfare and insurance activities. Industry is grouped into twelve industrial divisions engaged in the production of goods and services. Retail brings together the retail and food and agriculture co-operatives and businesses. And the Knowledge area includes the network of MONDRAGON technology centres and R&D units, our university, Mondragon Unibertsitatea, as well as a number of vocational training and education centres. Co-operative bodies General Assembly. this is the supreme body in the co-operative and is the vehicle for expressing the social will of all members. Governing Council. the representative and governing body of the co-operative. Members are elected at the General Assembly. Social Council. a consultative body, which represents members as a whole internally within the co-operative. Monitoring Commission. a consultative body whose purpose is to pass judgement on correct compliance with accounting principles and any other areas which require consideration. Management Council. this is the managerial and executive team that comprises the manager and managerial members, and is responsible for the executive management of the co-operative. MONDRAGON bodies Co-operative Congress: its function is to establish the strategic criteria by which MONDRAGON is to be administered via the planning and co-ordination of its business units. It is made up of 650 members who are delegated by the co-operatives, and it meets on an annual basis. Divisions: these are associations set up within the framework of MONDRAGON between co-operatives operating in the same area, which coordinate the management of their co-operatives. Standing Committee: governed by delegation from the Co-operative Congress. Its basic function is to promote and control the implementing of policies and decisions adopted by the Congress, by monitoring the evolution of MONDRAGON on a permanent basis. General Council: it is responsible for drawing up and applying corporate strategies and objectives. It coordinates the policies pursued by the different Divisions and Co-operatives. Industrial Council: it is the co-ordinating body for the Industry area’s Divisions.
vincent-toups 7y ago
Others have adequately given the short form. Check out this book: https://nathanschneider.info/books/everything-for-everyone/ https://nathanschneider.info/books/everything-for-everyone/

crazygringo 7y ago

Any successful (profitable) business creates wealth, by definition. (Technicality: as long as costs aren't being externalized e.g. as environmental pollution, fraud, etc.) Whether a company is a cooperative or not has zero to do with how much wealth is being produced, only with how it's distributed. Don't conflate production with distribution -- they're different things and have very little to do with each other. Wealth production depends on product-market fit, ensuring costs are less than revenue, and business model. Wealth distribution has nothing to do with that whatsoever -- it's simply the mechanism for profit sharing.

vincent-toups 7y ago
I rather pointedly refuse to call the accumulation of capital in the hands of a small group of people "wealth". The fact that we use that notion of wealth as an index of how our societies are doing is part of the problem we have at the moment. If you want to get technical, I'd suggest we scale the notion of wealth by the marginal utility of the additional capital given to an individual. Wealth is giving a person living paycheck to paycheck enough money to have leisure spend time with their kids. Giving a billionaire another million dollars isn't wealth. They don't give a fuck about it except in the most abstract, brain-sick, anti-social sort of way.
- edouard-harris 7y ago
  Wealth isn't identical with money, or with capital accumulation. If you create an app that lets 1000 people do something they couldn't do before (or that lets 1000 people do with ease something they could only do with difficulty before), then you have created wealth for those 1000 people.
  - vincent-toups 7y ago
    I don't disagree with this, of course. Some startups do create some valuable services for people. But society would be better off if those services were owned by the people using them and the surplus value was going to more people rather than a few investors.

mercutio2 7y ago

I am a huge fan of worker co-ops, but I think you’re confusing creating wealth and distributing wealth. Co-ops do an excellent job of distributing wealth, and in the case of a few such as Mondragon, they’ve been able to create wealth, also. Startups can, in the economic jargon, create wealth, if they create a product whose benefit to society is greater than its costs (including externalized costs and subsidies). But they don’t necessarily distribute much of that created wealth, it all depends on how the capitalist relationship with labor and consumption are structured in that environment.

vincent-toups 7y ago
I don't consider funneling money to people for whom its marginal value is small as creating wealth. If it doesn't change your life to get it, its not wealth.

ElonMuskrat 7y ago

> Startups don't create wealth, they concentrate it. What a strange and incorrect assertion. Please walk us through your mental though process so we can re-educate you.

mantesso 7y ago
I understand parent's point of view. Look at the top 9 richest people in the world who combined have equal wealth to the poorest 4 billion people. You will find on that list (Bezos, Bill Gates and Zuckerberg) and one could say their companies were a startup at some point. There's no doubt startups create wealth but I'd argue it also creates inequality. When the EU wants to tax bonuses I believe they're efficiently fighting inequality. This small article is an example of what I'm trying to explain. "Uber co-founder buys record-breaking LA mansion for $72.5m as drivers fight for wages" https://www.theguardian.com/us-news/2019/jul/02/los-angeles-mansion-sales-homelessness-increase https://www.theguardian.com/us-news/2019/jul/02/los-angeles-...
- ElonMuskrat 7y ago
  Grand-parent made the absurd assertion that startups do not create wealth. Presumably they would prefer to live in a dark world without airplanes [Wright brothers], and the light bulbs [Edison], as these inventions and subsequent industries did not create "wealth". Wealth redistribution programs have their place in economic policy. Growing wealth inequality in the USA is real problem to social and political stability. [Disclaimer: I am not American] Furthermore, the US government has failed to support citizens rendered chronically unemployable through automation and globalization [e.g. especially middle-aged former auto workers]. However, I will challenge the widely held belief that wealth inequality is undesirable. Effective allocation of capital [including human capital, e.g. gainful employment] is not a given. It's not a given nor immediately obvious how to allocate 1,000,000 highly experienced software engineers into economically productive endeavors. Some individuals have proven excellence at allocating capital [Gates, Bezos, Buffet, Ma], so it makes sense that those people should have access to greater amounts of capital to efficiently allocate said capital. And for the most part, the wealth of Gates, Bezos, Buffet, and Ma is tied up into economically productive activities. When the EU taxes bonuses, in SOME instances the EU constricts SOME proven entrepreneurs [allocators of capital] from allocating greater amounts of capital into economically productive activities. Note: I'm in no way asserting that the EU should not tax bonuses, however there is a trade-off and the EU must be careful to both understand the trade-off and careful not to overly tax the wrong people [specifically highly industrious people with a knack for entrepreneurship].

mensetmanusman 7y ago

False. Wealth creation is not zero sum.

walshemj 7y ago

Speak for your self at one point the worker coop I was a member of made all of us dollar millionaires on paper - unfortunately we didn't get taken over by a bigger coop.