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I get the way a (worker) cooperative works in an imaginary world. The real thorny issue is that in this world where there is nothing else, it becomes almost imp
by thworp 3y ago
I get the way a (worker) cooperative works in an imaginary world. The real thorny issue is that in this world where there is nothing else, it becomes almost impossible to start a business that requires real capital investment. Corporate Paper and bank loans are pretty much impossible since you have almost no revenue and not even a history of revenue. If you can get a loan, it will have a double-digit interest rate. You could impose a capital requirement on your first employees, but then you wouldn't find many. The way new companies in the primary and secondary sector start is always with an investment by passive partners. It has been this way since before the industrial revolution.
The worker board will also have the same perverse incentives current boards do to a lesser degree. Why wouldn't they make terrible decisions in the name of short-term shareholder value? What is the crucial difference between a company who sells shares on the public market (where anyone could get a profit share) and a worker cooperative (where employees [re-]invest their wages to get a profit share)?
- Spivak 3y ago> Corporate Paper and bank loans are pretty much impossible since you have almost no revenue and not even a history of revenue. If you can get a loan, it will have a double-digit interest rate. These two things can't really jive in the same world. There can't be a bunch of investors willing to blow huge sums of money on a business with no revenue in exchange for equity in pursuit of above average returns but no investors willing to buy corporate bonds or a new to be determined IOU structure from a business with no revenue in pursuit of above average returns. The only necessary condition in my view for this kind of investment to not shaft workers in the long run is that the amount paid to fulfill the IOU can't be indefinite or unbounded.