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This is called a cooperative, and it is completely legal. However, they tend not to be very successful in the marketplace, outside of a few outliers. If you se

by woah 2y ago

This is called a cooperative, and it is completely legal. However, they tend not to be very successful in the marketplace, outside of a few outliers. If you separate revenue and control (employees get to vote on decisions, but investors get the revenue), then employees will be incentivized to maintain the status quo instead making decisions to make the company successful. The employees have almost no incentive to make difficult decisions like cutting unsuccessful lines of business etc. I would be very uneasy about investing anyone's retirement savings into such an organization. If you keep revenue and control combined (a simple share structure, where each share gets a piece of the revenue and a vote, and employees get shares when they join), then you have other paradoxes. To make this work, you need to prohibit employees from selling their shares to investors, otherwise you're back to a conventional corporation. You also need to take the shares away from employees when they leave the company, otherwise former employees become a de facto investor class that you wanted to avoid. As an employee, I would prefer to work at a company where my equity does not have these restrictions placed on it. You may say "but if we all just tried a little harder to believe in a better world it could be possible". But it is possible now. Cooperatives work easily under existing corporate law, and are even incentivized in some places. They just aren't very successful for the reasons above. The only widespread form of cooperative is doctor's and lawyer's practices, which are legally required to be organized as cooperatives through a limited liability partnership structure. To make cooperatives work in the broader marketplace, you'd have to force employees to accept restrictions on their equity or force savers to put their money into cooperatives managed by employees who are not incentivized to invest it well.

Hasu 2y ago
All of your points are premised on the idea that the only purpose of a corporation is to make as much money for its shareholders as possible. But that isn't true, especially in the case of a cooperative. Most companies make decisions based on a list of priorities: they care about their shareholders/investors first, upper management second (upper management is usually bribed by the investors with equity, aligning their interests with the shareholders, so this is maybe a distinction without a difference), rank-and-file employees third, customers fourth, and anyone not involved with the company last. The point of a cooperative is to flip this incentive structure on its head: the customers or workers are owners, so they get prioritized. The purpose of the company isn't to dominate the markets and become the biggest company ever, it's to make a better life for the people working for and patronizing the company, instead of just the people who own it. > As an employee, I would prefer to work at a company where my equity does not have these restrictions placed on it. Well obviously, if you're talking about equity in a company as something you can own and profit from without ongoing labor, you are definitionally a capitalist and you will be opposed to cooperatives. > I would be very uneasy about investing anyone's retirement savings into such an organization. The primary purpose of a cooperative is not to make profits for passive investors. This is like judging a fish on its ability to climb a tree.
- woah 2y ago
  > The purpose of the company isn't to dominate the markets and become the biggest company ever, it's to make a better life for the people working for and patronizing the company, instead of just the people who own it. That's perfectly fine, and also the reason why cooperatives are a pretty niche thing: they don't prioritize growth.
  - Hasu 2y ago
    They don't prioritize growth for the same reason healthy cells don't prioritize growth. You need to be cancer or a public corporation to think growth is the most important thing.
    - woah 2y ago
      There isn't any value judgement here. There are not more cooperatives because they don't prioritize growth. Who are you angry at?
    - satvikpendem 2y ago
      This oft-repeated analogy to biological systems doesn't make much sense, human individuals biologically stay homeostatic with nature, but human groups have grown exponentially, building civilization as you know it. If we didn't prioritize growth, we'd still be hunter gatherers.
  - Miraste 2y ago
    This is only half the answer. Cooperatives are niche in the US because they don't prioritize growth, and they exist in a legal and financial framework that does. If conventional corporations didn't receive massive amounts of investor cash and preferential government treatment to stay unprofitable for years or decades while scaling, one imagines coops would be more competitive.
    - satvikpendem 2y ago
      They are investors for a reason, they expect a return. If a coop does not produce good returns, especially as compared to standard corporations, why would one expect investors to invest?
BarryMilo 2y ago
I've been part of a few (Canadian) cooperatives. The incentive structure is completely different, it's akin to admitting you prefer great working conditions than having a chance to chance it rich. If a company is startup-sized, anything else is a sucker's bet.
- woah 2y ago
  If I didn't like my working conditions, I would look for a different job.
  - psychoslave 2y ago
    Of course, but being in such a choice position is already being very privileged if we take things at their global level.
  - Herring 2y ago
    Sometimes the bad jobs are crowding out the good. Like gig work crowding out traditional full-time positions with benefits, as companies prefer cheaper, on-demand labor. Slave labor needs to be outlawed at the society level, not at the individual level "why dont you just find another job".
    - chii 2y ago
      gig work is not slave labour - slaves had no choice. gig work is popular because the people doing it are finding that it is the best of all alternatives available to them.
      - kilna 2y ago
        "slaves had no choice"... Um, do you think most people can choose not to work? Gig work is "popular" because wealth-driven systemic pressure is replacing FTE with gig jobs in order to fatten the bottom line.
        2y ago
zelon88 2y ago
> then employees will be incentivized to maintain the status quo instead making decisions to make the company successful. Therein lies the problem. Capitalists believe these two things are exclusionary to one another. They believe that you cannot have an unsuccessful product line, or "status quo" and still be successful. They want to see comfy upward trending lines on their charts and graphs. But nobody stopped to consider that; 1) If the business is operating with positive cashflow, and, 2) If the business is meeting it's commitment to consumers, shareholders, and employees, and, 3) If the business has no direct existential threat to it's market share, then; That business is successful. By your own definition. Stop trying to take over the world. It's selfish, unsustainable, and pedantic. Support your workers. Well. Put value back into the economy. Stop being a greedy POS.
- woah 2y ago
  There is no secret conspiracy stopping cooperatives from working. They simply do not supply a large portion of the products and services that people want, due to the fact that they are by definition not set up to do so. Who are you angry at? You are yelling into the wind.
- panstromek 2y ago
  If all these 3 are true, then that seems to me like a definition of a monopoly. Specifically the condition 3 is practically never true in well functioning market. If you're successful, you'll be copied and you'll have competitors, so you always have to be a step ahead. Maintaining the status quo is how you slowly become irrelevant
  - t-writescode 2y ago
    Some people just like going to their favorite chain restaurant, bar, corner store, etc. Not everything is a fight.
    - panstromek 2y ago
      It seems pretty bizarre to pick restaurants and bars as an example, that's insanely competitive market. It's quite literally a fight for survival, restaurants go out of business all the time here. (Central Europe). I currently watch the exact case from the comment above in our street - new coffee place showed up, and the old one, which kept the status quo for very long time is now left empty as people go to the new one instead. It's also a good example of how growing and merging into larger chains is a working defense strategy for the market share threat.
psychoslave 2y ago
>However, they tend not to be very successful in the marketplace, outside of a few outliers. What would you consider to be successful, and what is marketplace naming here? Cooperatives are going to be the main thriving organizational structure when the political agenda in place favors them, and the very same statement apply for resource omni-capture oligopolies. Look at who have hands on the political schedule, and that’s all nailed. Living in France, I never worked for any structure that would provide any equity (not saying this doesn’t exist at all). But France still has a very different non-wage labour costs compared to US (or common-law in general I guess), so employment tradeoffs are very different.
- eitally 2y ago
  There are a few food companies that are partially or completely employee owned that I'd consider "very successful". But this business model is not typical and examples are rare. https://inequality.org/article/5-workerowned-food-firms-rival-chobani/ https://inequality.org/article/5-workerowned-food-firms-riva...
  - ghaff 2y ago
    And most of those companies are low three-digit employee counts. I mean, I like King Arthur and tend to visit their store when I'm in the area, but it's only a relatively significant employer by the standards of Norwich, VT.
  - hn_throwaway_99 2y ago
    Why do folks think that is? Are there some US-specifics that make them less likely? For example, the Mondragon Corporation, https://en.wikipedia.org/wiki/Mondragon_Corporation https://en.wikipedia.org/wiki/Mondragon_Corporation, in the Basque region of Spain is pretty huge (70,000 employees) and I watched a short news documentary about Mondragon and in general the employees there sounded legions happier than corporate drones in other companies.
Scoundreller 2y ago
> If you keep revenue and control combined (a simple share structure, where each share gets a piece of the revenue and a vote, and employees get shares when they join), then you have other paradoxes. To make this work, you need to prohibit employees from selling their shares to investors, otherwise you're back to a conventional corporation. You also need to take the shares away from employees when they leave the company, otherwise former employees become a de facto investor class that you wanted to avoid This describes most “partnerships” to a varying degree. Lots of professional firms operate that way, e.g. law firms, accounting firms, engineering firms, consulting
- mox1 2y ago
  Yes, a large percentage of of the consulting / services business that you would know the name of are organized like this. For services / consulting it makes a lot of sense.
goodpoint 2y ago
> they tend not to be very successful in the marketplace ...because other companies boycott coops.

by woah 2y ago

Hasu 2y ago

All of your points are premised on the idea that the only purpose of a corporation is to make as much money for its shareholders as possible. But that isn't true, especially in the case of a cooperative. Most companies make decisions based on a list of priorities: they care about their shareholders/investors first, upper management second (upper management is usually bribed by the investors with equity, aligning their interests with the shareholders, so this is maybe a distinction without a difference), rank-and-file employees third, customers fourth, and anyone not involved with the company last. The point of a cooperative is to flip this incentive structure on its head: the customers or workers are owners, so they get prioritized. The purpose of the company isn't to dominate the markets and become the biggest company ever, it's to make a better life for the people working for and patronizing the company, instead of just the people who own it. > As an employee, I would prefer to work at a company where my equity does not have these restrictions placed on it. Well obviously, if you're talking about equity in a company as something you can own and profit from without ongoing labor, you are definitionally a capitalist and you will be opposed to cooperatives. > I would be very uneasy about investing anyone's retirement savings into such an organization. The primary purpose of a cooperative is not to make profits for passive investors. This is like judging a fish on its ability to climb a tree.

woah 2y ago
> The purpose of the company isn't to dominate the markets and become the biggest company ever, it's to make a better life for the people working for and patronizing the company, instead of just the people who own it. That's perfectly fine, and also the reason why cooperatives are a pretty niche thing: they don't prioritize growth.
- Hasu 2y ago
  They don't prioritize growth for the same reason healthy cells don't prioritize growth. You need to be cancer or a public corporation to think growth is the most important thing.
  - woah 2y ago
    There isn't any value judgement here. There are not more cooperatives because they don't prioritize growth. Who are you angry at?
  - satvikpendem 2y ago
    This oft-repeated analogy to biological systems doesn't make much sense, human individuals biologically stay homeostatic with nature, but human groups have grown exponentially, building civilization as you know it. If we didn't prioritize growth, we'd still be hunter gatherers.
- Miraste 2y ago
  This is only half the answer. Cooperatives are niche in the US because they don't prioritize growth, and they exist in a legal and financial framework that does. If conventional corporations didn't receive massive amounts of investor cash and preferential government treatment to stay unprofitable for years or decades while scaling, one imagines coops would be more competitive.
  - satvikpendem 2y ago
    They are investors for a reason, they expect a return. If a coop does not produce good returns, especially as compared to standard corporations, why would one expect investors to invest?

BarryMilo 2y ago

I've been part of a few (Canadian) cooperatives. The incentive structure is completely different, it's akin to admitting you prefer great working conditions than having a chance to chance it rich. If a company is startup-sized, anything else is a sucker's bet.

woah 2y ago
If I didn't like my working conditions, I would look for a different job.
- psychoslave 2y ago
  Of course, but being in such a choice position is already being very privileged if we take things at their global level.
- Herring 2y ago
  Sometimes the bad jobs are crowding out the good. Like gig work crowding out traditional full-time positions with benefits, as companies prefer cheaper, on-demand labor. Slave labor needs to be outlawed at the society level, not at the individual level "why dont you just find another job".
  - chii 2y ago
    gig work is not slave labour - slaves had no choice. gig work is popular because the people doing it are finding that it is the best of all alternatives available to them.
    - kilna 2y ago
      "slaves had no choice"... Um, do you think most people can choose not to work? Gig work is "popular" because wealth-driven systemic pressure is replacing FTE with gig jobs in order to fatten the bottom line.
      - 2y ago

zelon88 2y ago

> then employees will be incentivized to maintain the status quo instead making decisions to make the company successful. Therein lies the problem. Capitalists believe these two things are exclusionary to one another. They believe that you cannot have an unsuccessful product line, or "status quo" and still be successful. They want to see comfy upward trending lines on their charts and graphs. But nobody stopped to consider that; 1) If the business is operating with positive cashflow, and, 2) If the business is meeting it's commitment to consumers, shareholders, and employees, and, 3) If the business has no direct existential threat to it's market share, then; That business is successful. By your own definition. Stop trying to take over the world. It's selfish, unsustainable, and pedantic. Support your workers. Well. Put value back into the economy. Stop being a greedy POS.

woah 2y ago
There is no secret conspiracy stopping cooperatives from working. They simply do not supply a large portion of the products and services that people want, due to the fact that they are by definition not set up to do so. Who are you angry at? You are yelling into the wind.
panstromek 2y ago
If all these 3 are true, then that seems to me like a definition of a monopoly. Specifically the condition 3 is practically never true in well functioning market. If you're successful, you'll be copied and you'll have competitors, so you always have to be a step ahead. Maintaining the status quo is how you slowly become irrelevant
- t-writescode 2y ago
  Some people just like going to their favorite chain restaurant, bar, corner store, etc. Not everything is a fight.
  - panstromek 2y ago
    It seems pretty bizarre to pick restaurants and bars as an example, that's insanely competitive market. It's quite literally a fight for survival, restaurants go out of business all the time here. (Central Europe). I currently watch the exact case from the comment above in our street - new coffee place showed up, and the old one, which kept the status quo for very long time is now left empty as people go to the new one instead. It's also a good example of how growing and merging into larger chains is a working defense strategy for the market share threat.

psychoslave 2y ago

>However, they tend not to be very successful in the marketplace, outside of a few outliers. What would you consider to be successful, and what is marketplace naming here? Cooperatives are going to be the main thriving organizational structure when the political agenda in place favors them, and the very same statement apply for resource omni-capture oligopolies. Look at who have hands on the political schedule, and that’s all nailed. Living in France, I never worked for any structure that would provide any equity (not saying this doesn’t exist at all). But France still has a very different non-wage labour costs compared to US (or common-law in general I guess), so employment tradeoffs are very different.

eitally 2y ago
There are a few food companies that are partially or completely employee owned that I'd consider "very successful". But this business model is not typical and examples are rare. https://inequality.org/article/5-workerowned-food-firms-rival-chobani/ https://inequality.org/article/5-workerowned-food-firms-riva...
- ghaff 2y ago
  And most of those companies are low three-digit employee counts. I mean, I like King Arthur and tend to visit their store when I'm in the area, but it's only a relatively significant employer by the standards of Norwich, VT.
- hn_throwaway_99 2y ago
  Why do folks think that is? Are there some US-specifics that make them less likely? For example, the Mondragon Corporation, https://en.wikipedia.org/wiki/Mondragon_Corporation https://en.wikipedia.org/wiki/Mondragon_Corporation, in the Basque region of Spain is pretty huge (70,000 employees) and I watched a short news documentary about Mondragon and in general the employees there sounded legions happier than corporate drones in other companies.

Scoundreller 2y ago

> If you keep revenue and control combined (a simple share structure, where each share gets a piece of the revenue and a vote, and employees get shares when they join), then you have other paradoxes. To make this work, you need to prohibit employees from selling their shares to investors, otherwise you're back to a conventional corporation. You also need to take the shares away from employees when they leave the company, otherwise former employees become a de facto investor class that you wanted to avoid This describes most “partnerships” to a varying degree. Lots of professional firms operate that way, e.g. law firms, accounting firms, engineering firms, consulting

mox1 2y ago
Yes, a large percentage of of the consulting / services business that you would know the name of are organized like this. For services / consulting it makes a lot of sense.

goodpoint 2y ago

> they tend not to be very successful in the marketplace ...because other companies boycott coops.