Worker Cooperatives & Socialism?
Worker cooperatives have existed in America for about the past 150 years. They started in rural agricultural regions and expanded into urban industrial industries as an alternative to stagnating wages, a widening gap between the rich and the poor, and an attitude toward a sharing economy to meet basic needs. According to Truthout.org “In the past decade, the number of worker-owned cooperatives in the United States has almost doubled from roughly 350 companies to nearly 600. This growth has primarily taken place in communities of color and immigrant communities. As a result, worker cooperatives now exist in diverse sectors across the country, including in the taxi industry, elder care, home cleaning, tech, construction and more.” According to the Democracy at Work Institute of the US Federation of Worker Cooperatives “A worker co-op is a values-driven business that puts worker and community benefit at the core of its purpose, with two central characteristics:
- Workers own the business and participate in its financial success on the basis of their labor contribution to the co-op.
- Workers control the governance of the co-op; they have representation on and vote for the board of directors, adhering to the principle of one vote per worker-owner.
In addition to their economic and governance participation, worker-owners often manage the day-to-day operations through various democratic management structures.”
The preface of the Socialist Party USA 2018–2019 Platform states “. . . Socialism will establish a new social and economic order in which workers and community members will take responsibility for and control of their interpersonal relationships, their neighborhoods, their local government, and the production and distribution of all goods and services. . .” which on the surface seems to conform with the goals of the typical worker cooperative.
So why aren’t socialists enthusiastically joining together to form worker cooperatives? Perhaps they worry about not being competitive with profit motivated companies. Socialists deride overcompensated high level managers and share holders who are responsible for minimal labor wages and benefits. But with worker managed cooperatives there wouldn’t be any overcompensated high level managers and share holders are the workers. A Rutgers study found that converting a business to employee ownership boosts profits by as much as 14%, and doing so does not come at a detriment to wages.
Another concern may be the availability of capital to purchase a company and convert it to employee owned. It is unlikely that traditional profit motivated financial institutions will be interested. Potential sources are philanthropists or employee loans. Both houses of Congress have authored bills to make it easier for the Small Business Administration to help employee stock ownership plans (ESOPs) by allowing the SBA to make loans to intermediaries that can turn around and make smaller loans available to ESOPs or worker cooperatives.
I suspect the main reason socialists aren’t very interested in worker cooperatives is because they don’t want to form or purchase one. Instead, they want the government to plunder one and then bestow it to them.
