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I’m very interested in this but also want to understand a stark reality: Co-ops have existed in concept and practice for 100+ years but haven’t gone mainstream

by orzig 4y ago

I’m very interested in this but also want to understand a stark reality: Co-ops have existed in concept and practice for 100+ years but haven’t gone mainstream (representing <<1% of employers with no clear exponential growth) Why? Are there lessons we need to carry forward when creating new ones?

qrush 4y ago
From my perspective as someone currently forming a startup co-op: It simply takes longer. You cannot go it alone and it requires a community effort. Democracy is harder than autocracy (which most companies are, by default). Bank loans and more require collateral from an individual, which a co-operative by design deflects against (so there's co-operative friendly lenders). I'm hoping the trend goes in a different direction for tech companies and they see that there's an alternative - but the fundamentals of co-operatives won't (and shouldn't!) change.
jcims 4y ago
> All worker cooperatives have two common characteristics: 1) member-owners invest in and own the business together, and share the enterprise’s profits, and 2) decision-making is democratic, with each member having one vote. I think you’d have to find examples of companies that only do #1 or only do #2 and look at their outcomes versus companies that do both. My guess is the root cause of what you’ve observed is the distributed decision making and the attendant latency and diffusion of responsibility it brings.
michaelbrave 4y ago
I want to say a lot of it is that legal and financial structures don't support it very well, it could also be said that since it's such a small minority of businesses (I want to say <1%) that education resources on it are also scarce. For example getting funding to turn a business into a coop, let's say it's a one man owned business who is going to retire and has no family, so he offeres to sell it to the employees so they can turn it into a coop. Financially almost no investors would take that bet, the banks wouldn't really give a loan to 10+ people who make salaries, really the main way this could happen is if the owner took a hit and did something like a persona loan and let them pay him back from the profits over the course of 10 years. I've also heard that there isn't much information on how to start or run one, like looking for books in the library can often fall short or you will only find something outdated. I think the lack of information is part of it as well as it's been so disincentivized for so long that most we can find are either run in a hippie commune style, or created by a small town government to provide services a corporation wouldn't (Best internet I've had was due to them having set up a coop), on top of that I can only think of one college that even teaches coop structure and that's Mondragon in spain[1] but on searching deep enough I also found U of Wisconsin[2] has something too, that's still not a lot. [1] https://www.mondragon.edu/en/international-mobility/mondragon-university-cooperative-university https://www.mondragon.edu/en/international-mobility/mondrago... [2] https://uwcc.wisc.edu/ https://uwcc.wisc.edu/
ex_amazon_sde 4y ago
Private companies and banks see coops as the devil [for very obvious reasons] and fight them using regulatory capture and not engaging in business with them. It's pretty well-known in the coop world. Coops sometimes mitigate this disadvantages by networking with each other.
- cuteboy19 4y ago
  Bold claim but i don't think there are enough budding coops to even bother with such behaviour. Regulatory capture hurts all new startups and is unlikely to be aimed specifically at coops
  - uoaei 4y ago
    Coops and startups are in different categories. It doesn't make sense to lump them in to the same group here, though I understand we are on a very techie-oriented forum.
- gruez 4y ago
  >fight them using regulatory capture and refusing to engage in business with them Can you provide concrete examples?
- zasdffaa 4y ago
  you have a few examples of this?
- sitkack 4y ago
  Same with credit unions. In fact if I were a coop going for a loan, I'd first to go a credit union.
DeathArrow 4y ago
I think one of the reasons is that there can be too many people implied in taking decisions. Another reason might be that if somebody is a co-owner with many others in an enterprise, he might not feel motivated to work. In socialist countries the quality of most products and services was poor because no one cared and no one fel obligated to do a good job, since the enterprise was owned by all the people. Instead there were many small thefts from the workplace.
- keskival 4y ago
  In normal stock companies all (voting) stocks vote, and those can be distributed globally to all sorts of people and institutions who have no idea about the reality on the ground. By comparison the decision-making in cooperatives is much better grounded in reality and has fewer disinterested and uninformed participants.
  - DeathArrow 4y ago
    It's not about voting, it's about vision and taking decisions to accomplish it. That's why companies have a CEO, CFO, CTO and many managers.
    - wardedVibe 4y ago
      What if I told you you could have the CEO elected by the workers, rather than randos whose only interest in the business is making money off of it?
    - keskival 4y ago
      Yes, that's how it works for larger cooperatives where direct democracy can become problematic. Even in direct democracies in societal level, presidents are typically elected, and there are ministers and managers by necessity. The same goes for cooperatives. It's one person one vote applied to the corporation. In principle there's no reason why we should demand any less democracy inside corporations than what we demand in societies at large. It's curious how many of these comments in this post could be reframed to be basically: "democracy can never work" or "democracy is clearly an inferior system to feudalism".
k__ 4y ago
I'm currently reading a book about coops, and the author said, the main problem is missing know-how. Most skilled people will go were the money is, so coops are usually filled with low to mediocre workers.
- jtr1 4y ago
  Would you mind sharing the name of the book?
  - rowanajmarshall 4y ago
    I don't think this is the book parent was referring to, but Developer Hegemony by Erik Dietrich describes an almost law parnership-like model for developer shops.
    - jtr1 4y ago
      I’ll check it out!
  - k__ 4y ago
    Oh, yes. "Produktivgenossenschaft als fortschrittsfähige Organisation: Theorie, Fallbeispiele, Handlungshilfen" by Burghard Flieger I think, it's only available in German. The translated title would be: "Workers cooperative as organization capable of progress: Theory, case studies, and procedural guidelines"
    - jtr1 4y ago
      Ah okay, thanks! I wish I read German, or that there was a cooperative for translating books about cooperatives into English XD
l0rn 4y ago
Co founder of ctrl.alt.coop Here. I think Main reason is that coops so do not fit Well in our profit maximizing Economy. We do produce profits but due to the Nature of our organization there is no incentive for Investors that seek high margins. ( In fact we dont allow external Capital in to remain in Control of our decisions). So linear growth it is. I think a lot more growth than you Like is Made by exploitation of the workforce. Without doing that you have a Harder time prooving yourself in the Market.
rrrrrrrrrrrryan 4y ago
From what I've read it's mostly that it's more difficult for coops to access capital. Banks and investors are extremely hesitant to provide capital to an organization where the employees can just vote to use the money to give themselves all raises. They'd much rather extend loans to traditional businesses with owners who are willing make cutthroat, unpopular decisions and fire employees if it's necessary to defend and preserve their capital.
interfaced 4y ago
If you're founding a coop, you're probably more interested in organizational theory than doing the work. There are cost savings when it comes to group buying or trade; so works well for farmers. But to do this for software is not about building better software IMO. You can kinda see a hint of this in the spelling of Toronto as Tkaronto. I don't think this benefits the list. It's a kind of meta work, a convenient distraction from doing something of value. If you're a builder you'll preoccupy yourself with the thing you're building. If you're driving by an ideology, you'll spend most of your time there, and legal frameworks will be of secondary concern, a means to an end.
- PaulDavisThe1st 4y ago
  > If you're a builder you'll preoccupy yourself with the thing you're building. If you're one person building a thing that one person can build, that might be true. If you're building a thing that needs or merely benefits from having more people doing the building, you almost certainly need to think about how to structure and coordinate what people do. That's true even if your decision is "no structure and no coordination". Sometimes, that process will be implicit (and likely a more or less direct reflection of the personality of the initial builder). But for the most, once you start involving other people (or they involve themselves), organizational structure and behavior starts to become a thing you have to start paying attention to. Getting it wrong can destroy whatever you're trying to build.
zozbot234 4y ago
Co-ops and partnerships can work well for businesses that are very low capital intensity. A law firm is the typical example, but software development can also be very similar.
deleted 4y ago
[deleted]
dv_dt 4y ago
One of the more interesting articles I've read about talks about the fact that there are a lot of domains that you need to work all at once together to form a coop. And they were experimenting with ways to "franchise" coops into structures that help that. https://ownershipmatters.net/newsletter-item/tim-huet-arizmendi-association-cooperatives-turning-franchise-model-upside-down https://ownershipmatters.net/newsletter-item/tim-huet-arizme...

by orzig 4y ago

qrush 4y ago

From my perspective as someone currently forming a startup co-op: It simply takes longer. You cannot go it alone and it requires a community effort. Democracy is harder than autocracy (which most companies are, by default). Bank loans and more require collateral from an individual, which a co-operative by design deflects against (so there's co-operative friendly lenders). I'm hoping the trend goes in a different direction for tech companies and they see that there's an alternative - but the fundamentals of co-operatives won't (and shouldn't!) change.

jcims 4y ago

> All worker cooperatives have two common characteristics: 1) member-owners invest in and own the business together, and share the enterprise’s profits, and 2) decision-making is democratic, with each member having one vote. I think you’d have to find examples of companies that only do #1 or only do #2 and look at their outcomes versus companies that do both. My guess is the root cause of what you’ve observed is the distributed decision making and the attendant latency and diffusion of responsibility it brings.

michaelbrave 4y ago

I want to say a lot of it is that legal and financial structures don't support it very well, it could also be said that since it's such a small minority of businesses (I want to say <1%) that education resources on it are also scarce. For example getting funding to turn a business into a coop, let's say it's a one man owned business who is going to retire and has no family, so he offeres to sell it to the employees so they can turn it into a coop. Financially almost no investors would take that bet, the banks wouldn't really give a loan to 10+ people who make salaries, really the main way this could happen is if the owner took a hit and did something like a persona loan and let them pay him back from the profits over the course of 10 years. I've also heard that there isn't much information on how to start or run one, like looking for books in the library can often fall short or you will only find something outdated. I think the lack of information is part of it as well as it's been so disincentivized for so long that most we can find are either run in a hippie commune style, or created by a small town government to provide services a corporation wouldn't (Best internet I've had was due to them having set up a coop), on top of that I can only think of one college that even teaches coop structure and that's Mondragon in spain[1] but on searching deep enough I also found U of Wisconsin[2] has something too, that's still not a lot. [1] https://www.mondragon.edu/en/international-mobility/mondragon-university-cooperative-university https://www.mondragon.edu/en/international-mobility/mondrago... [2] https://uwcc.wisc.edu/ https://uwcc.wisc.edu/

ex_amazon_sde 4y ago

Private companies and banks see coops as the devil [for very obvious reasons] and fight them using regulatory capture and not engaging in business with them. It's pretty well-known in the coop world. Coops sometimes mitigate this disadvantages by networking with each other.

cuteboy19 4y ago
Bold claim but i don't think there are enough budding coops to even bother with such behaviour. Regulatory capture hurts all new startups and is unlikely to be aimed specifically at coops
- uoaei 4y ago
  Coops and startups are in different categories. It doesn't make sense to lump them in to the same group here, though I understand we are on a very techie-oriented forum.
gruez 4y ago
>fight them using regulatory capture and refusing to engage in business with them Can you provide concrete examples?
zasdffaa 4y ago
you have a few examples of this?
sitkack 4y ago
Same with credit unions. In fact if I were a coop going for a loan, I'd first to go a credit union.

DeathArrow 4y ago

I think one of the reasons is that there can be too many people implied in taking decisions. Another reason might be that if somebody is a co-owner with many others in an enterprise, he might not feel motivated to work. In socialist countries the quality of most products and services was poor because no one cared and no one fel obligated to do a good job, since the enterprise was owned by all the people. Instead there were many small thefts from the workplace.

keskival 4y ago
In normal stock companies all (voting) stocks vote, and those can be distributed globally to all sorts of people and institutions who have no idea about the reality on the ground. By comparison the decision-making in cooperatives is much better grounded in reality and has fewer disinterested and uninformed participants.
- DeathArrow 4y ago
  It's not about voting, it's about vision and taking decisions to accomplish it. That's why companies have a CEO, CFO, CTO and many managers.
  - wardedVibe 4y ago
    What if I told you you could have the CEO elected by the workers, rather than randos whose only interest in the business is making money off of it?
  - keskival 4y ago
    Yes, that's how it works for larger cooperatives where direct democracy can become problematic. Even in direct democracies in societal level, presidents are typically elected, and there are ministers and managers by necessity. The same goes for cooperatives. It's one person one vote applied to the corporation. In principle there's no reason why we should demand any less democracy inside corporations than what we demand in societies at large. It's curious how many of these comments in this post could be reframed to be basically: "democracy can never work" or "democracy is clearly an inferior system to feudalism".

k__ 4y ago

I'm currently reading a book about coops, and the author said, the main problem is missing know-how. Most skilled people will go were the money is, so coops are usually filled with low to mediocre workers.

jtr1 4y ago
Would you mind sharing the name of the book?
- rowanajmarshall 4y ago
  I don't think this is the book parent was referring to, but Developer Hegemony by Erik Dietrich describes an almost law parnership-like model for developer shops.
  - jtr1 4y ago
    I’ll check it out!
- k__ 4y ago
  Oh, yes. "Produktivgenossenschaft als fortschrittsfähige Organisation: Theorie, Fallbeispiele, Handlungshilfen" by Burghard Flieger I think, it's only available in German. The translated title would be: "Workers cooperative as organization capable of progress: Theory, case studies, and procedural guidelines"
  - jtr1 4y ago
    Ah okay, thanks! I wish I read German, or that there was a cooperative for translating books about cooperatives into English XD

l0rn 4y ago

Co founder of ctrl.alt.coop Here. I think Main reason is that coops so do not fit Well in our profit maximizing Economy. We do produce profits but due to the Nature of our organization there is no incentive for Investors that seek high margins. ( In fact we dont allow external Capital in to remain in Control of our decisions). So linear growth it is. I think a lot more growth than you Like is Made by exploitation of the workforce. Without doing that you have a Harder time prooving yourself in the Market.

rrrrrrrrrrrryan 4y ago

From what I've read it's mostly that it's more difficult for coops to access capital. Banks and investors are extremely hesitant to provide capital to an organization where the employees can just vote to use the money to give themselves all raises. They'd much rather extend loans to traditional businesses with owners who are willing make cutthroat, unpopular decisions and fire employees if it's necessary to defend and preserve their capital.

interfaced 4y ago

If you're founding a coop, you're probably more interested in organizational theory than doing the work. There are cost savings when it comes to group buying or trade; so works well for farmers. But to do this for software is not about building better software IMO. You can kinda see a hint of this in the spelling of Toronto as Tkaronto. I don't think this benefits the list. It's a kind of meta work, a convenient distraction from doing something of value. If you're a builder you'll preoccupy yourself with the thing you're building. If you're driving by an ideology, you'll spend most of your time there, and legal frameworks will be of secondary concern, a means to an end.

PaulDavisThe1st 4y ago
> If you're a builder you'll preoccupy yourself with the thing you're building. If you're one person building a thing that one person can build, that might be true. If you're building a thing that needs or merely benefits from having more people doing the building, you almost certainly need to think about how to structure and coordinate what people do. That's true even if your decision is "no structure and no coordination". Sometimes, that process will be implicit (and likely a more or less direct reflection of the personality of the initial builder). But for the most, once you start involving other people (or they involve themselves), organizational structure and behavior starts to become a thing you have to start paying attention to. Getting it wrong can destroy whatever you're trying to build.

zozbot234 4y ago

Co-ops and partnerships can work well for businesses that are very low capital intensity. A law firm is the typical example, but software development can also be very similar.

deleted 4y ago

[deleted]

dv_dt 4y ago

One of the more interesting articles I've read about talks about the fact that there are a lot of domains that you need to work all at once together to form a coop. And they were experimenting with ways to "franchise" coops into structures that help that. https://ownershipmatters.net/newsletter-item/tim-huet-arizmendi-association-cooperatives-turning-franchise-model-upside-down https://ownershipmatters.net/newsletter-item/tim-huet-arizme...