Comment by abeppu
2 years ago
A thing that is kind of glossed over is: what is "ownership" when we talk about worker-owners at cooperatives?
> The profits generated by each cooperative are put to work for the benefit of the greater whole. Each cooperative gives 14-40% of their gross profits to their division (depending on the division), and another 14% to their parent company. The rest are invested back in the cooperative (60% of net profits), distributed among their employees (30% of net profits), and donated to social organizations in their communities (10% of net profits).
> Workers buy into their cooperative when they become employees, investing up to €16,000 into a personal equity account. They pay 30% of that investment upfront, with the remainder taken out of their paychecks over following 2 to 7 years. After two years with the organization, workers become “members” and start earning interest on their investment at a rate of at least 7.5% annually. If the cooperative does well, they might earn much more than that. Workers can pull this money out of their accounts when they leave the cooperative or retire.
... so it's not ownership, right? It's profit-sharing while you're an employee (the "interest" the worker gets is out of that 30% of net profits discussed previously), but you don't own shares in the company that you can then sell, like an employee who receives an RSU or receives and exercises an option.
In some sense, corporate employees that get some form of equity as part of their compensation are more literally worker-owners. I think the problem with American companies that have an employee stock plan is that the employee stock pool is a small slice of the total ownership, and employees don't participate in any real democratic governance. Despite being shareholders, they get far less information about the financial health or strategic position of the company than investors with board seats. Real partial ownership doesn't lead to real power or access to information. And the aim of the company is still to serve the larger investors, not the workers.
> In some sense, corporate employees that get some form of equity as part of their compensation are more literally worker-owners.
As soon as a worker leaves or sells their shares, these shares aren't worker-owned anymore and the interests of their owner can quickly diverge from the ones of a worker. That's roughly what a coop fixes I think.
I can kinda see how one can argue that this is a feature rather than a bug, but I still think this points to the more distinctive feature in these coops being democratic governance of workers rather than ownership.
I own shares of past companies I've worked at, but I don't have any representation in how the company is run. It doesn't matter if my interests have diverged from current workers, because I have no influence.
If a company compensates its employees partially with RSUs, and those employees own and can eventually transfer those shares freely, and the company was also democratically governed by its workers ... could you not have "real" ownership (by current and past workers) and still protect current workers' democratic governance?
> democratic governance rather than ownership
yes and no, i’d call the distinction collective ownership. you can sell your shares (by quitting), or you can stay and participate democratically. but you can’t do both, and that protects your say in the company, preventing investors from overruling worker-owners.
> i have no influence
neither do the current workers. the issue isn’t retail investors, but the ones with board seats. if boards only had one seat for an investor, that’d be one thing, but usually workers only get a single seat, if any.
> protect current workers’ democratic governance
you could do this with preferred shares, voting shares, etc. investor shares are non voting, voting shares can only be owned by workers, etc. you still have to counter their concentration though.
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> ...these coops being democratic governance of workers rather than ownership.
So who are the owners if not the workers?
Not all that different from shares in a private company, or an interest in a partnership or multi-member LLC. Many corporate shareholders cannot freely sell; the idea of being able to sell stock for cash whenever you want to is unique to public companies.
And yes, the real problem is information asymmetry. This is always the real problem. Arguably the secretary who knows everything that's going on with the company via watercooler talk has more power than the CEO whose underlings tell him only what he wants to hear. A lot of corporate owners, even powerful shareholders like the Crown Prince of Saudi Arabia, have been bilked by unscrupulous but savvy management who knows how to control information flow.
A workers cooperative is owned by its current workers. Are you going to argue that consultancies and law firms are not really owned by their current partners, either?
Profits belong to the people who create them, not to people who used to work at the same company in the past. Expecting future employees of a company to work for ex-employees in the future is unfair. Having worked for a company, doesn’t entitle anyone to remain on the paycheck until death, despite not working there anymore.
> Having worked for a company, doesn’t entitle anyone to remain on the paycheck until death, despite not working there anymore
This arrangement is called a pension, and is still quite popular in areas of the world with strong workers rights.
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I think that more important than ownership is the purpose of the company. Most companies have the purpose of making money. Few have a purpose which includes contributing to quality of life, unless that’s something which can be sold for a profit.
Not just making money, but making more money than they did last year, forever.
Like a company can't just be cool with the fact that they serve a profitable market niche and gainfully employ people. Investors need capital gains and won't just be satisfied with getting reliable dividends!
Stock buy backs ruined corporate governance...
What different effects do stock buybacks have on corporate governance compared to dividends?
My understanding is both return $X/share of capital to shareholders, buybacks are just more tax efficient, flexible, and a little more difficult to see the direct effect of.
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> ... so it's not ownership, right?
"Ownership" as in: You control it, and you ought to control it, too.
Control is exercised by means of the democratic process (the worst type of process except for all others).
When they leave or retire how are the earnings taxed?