I’ve known a few in the U.S., and even worked at one. Maybe people won’t become billionaires doing this, but why wait for a complete overhaul of society to implement more of what are good ideas.
I’d also like to see more childcare co-ops, or community shared pre-k schools. Wheres the movement to build communities and pool resources around these business models in the US? In short, co-ops are the closest socialist/communist business model that’s actually implemented in the U.S., so why are more leftists not doing this?
Many of these profits aren’t liquid so they can’t turn into money right away
They tend to get out competed by companies with enough investment funds to undercut them without making a profit until they have a stranglehold on the market and can jack up prices.
They don’t have access to capital (means of production). Consider the following scenario:
All of the employees at a car manufacturing plant are sick of being paid a fraction of the total sale price of the cars they make. They decide, in solidarity, to quit en masse and start a worker co-op car plant instead so that they can all enjoy sharing 100% of the profits themselves.
So they quit. Now what? Well, knowledge isn’t an issue because they already knew how to operate all the machines in a car plant. The problem is that they don’t have the money (or the land) to build a new car plant. We’re talking billions of dollars and a huge piece of land which ideally should be located on a railroad line so that parts (which are very large and heavy) can be delivered affordably by rail.
So where are they gonna get the money? Not from private investors, of course, since that nixes the worker only profit sharing arrangement. Not from banks either because these workers, while highly knowledgeable and motivated, don’t have any collateral to put up for the bank loans. The banks do not want to be in the position of repossessing a bunch of specialized manufacturing equipment and trying to resell it at a loss.
The common response to this is: the government. But think about that. Do you want your government giving billions of dollars to a few hundred people so they can start a car plant and then keep all the profits?
And they’d have to buy parts and materials from the same suppliers feeding the major automakers who have already streamlined their logistics and costs from the smelter to the finished product - and you know they’d exploit those efficiencies and supplier connections to create financial hardship on the upstart automaker. Same way airlines use fare wars to undercut competitors to pressure them out of a market.
There’s nothing the business world hates more than a well treated and well paid workforce. They’ll band together to crush the idea.
And even if you don’t need billions in startup capital for land and buildings and machinery, you’ve still got cash flow concerns.
Say you want to make software, and you know you can make it in 3 years with 20 people. What are you going to use to pay the bills until you’ve finished making whatever it is? Where are you going to find people who will go without money for that time? What if there’s no market for it by the time you’ve done?
Even for software there’s still equipment needed to host it, whether that be your own or rented from AWS or Azure etc. unless you’re looking to sell it as an on prem solution(but that’s not what most customers will be expecting in the current year so probably won’t sell very well). One way around that would be to only rent the hosting as needed once you have a paying customer.
Even something very simple like a coffee shop is difficult to run as a co-op.
Yes, if you have a few friends who are all passionate about coffee it’s possible for you all to get loans / mortgages to pool together enough money to buy/lease a small commercial property and open a coffee shop together. The only really significant pieces of equipment are the espresso machine and coffee grinder, both of which can be bought used for a few thousand dollars.
But here comes the issue: suppose it’s you and 4 friends who started the coffee co-op with $200k each (total $1 million) to buy the real estate and all of the furniture and machinery. Now the 5 of you work in the coffee shop and it starts growing more successful so that you need to hire more baristas (or pastry chefs or sandwich artists) to work there. How many baristas can you find who can afford to put up $200k to buy into a share of the co-op?
Or even more fundamentally: what if 2 out of the starting 5 decide that working in a coffee shop is too exhausting and they don’t want to do it anymore so they quit? Now the other 3 need to put together a total of $400k to buy them out? Or do you have a clause in the contract which says they forfeit their investment if they quit? Now I dunno about you, but as much as I love using my espresso machine I would never want to enter a contract like that! I’d much rather keep my $200k in the bank and work as a regular employee barista knowing I could quit any time I want.
co-ops don’t get loans. It’s hard to start a business without loans.
Loans are also the reason houses are usually so expensive.
If I share profits, then how do I, a lowly CEO, keep all of the profits for myself?
People who would start co-ops are usually decent and don’t care about profits that much. They wouldn’t exploit their workers or other obvious strategies that would put profit more important than wellbeing.
All the companies that don’t care about this have much less costs. Thus the companies that don’t care about morality can offer lower prices than the co-ops, and since most customers care about that more than anything else, the co-ops are driven out of business much more often.
I actually tried to do this with a bar I owned back in the day. It was exciting / hopeful.
It went into effect January 1st, 2020. January for bars is rough because people do “dry January” so we hoped February and March would be good.
We all know what happened. It didn’t survive. Spent a good year or so continuing to pay wages and healthcare out of my own pocket, but I hit a point where I had to call it (mostly because I ran out of money and couldn’t get any more loans).
I plan to try again in the future, once I have the loans paid off and some padding saved again.
I also dream of a day where somewhat self-sustaining communes become more prevalent. Everyone living together on a shared plot and exchanging goods & services instead of money. Maybe it’s a pipe dream? I don’t know. I feel like it’ll become necessary over the next 4 years though.
This is what I’d want to do (the bar not the commune) if I won the lottery.
So yes I agree with the top post here, it’s lack of access to capital that limits this. Farm cooperatives happen because people own farms. It’s very difficult to grow these from the bottom. You would have to buy your share, with money or work.
We need more co-op businesses and also more entrepreneurship from the bottom and small business grants can help with that. You can’t only yank wealth from the top, they got it from us, we can make more and keep it in our communities.
Hippie 1: Right now we’re proving we don’t need corporations. We don’t need money. This can become a commune where everyone just helps each other.
Hippie 2: Yeah, we’ll have one guy who like, who like, makes bread. A-and one guy who like, l-looks out for other people’s safety.
Kyle: You mean like a baker and a cop?
Hippie 1: No no, can’t you imagine a place where people live together and like, provide services for each other in exchange for their services?
Kyle: Yeah, it’s called a town.
Hippie 1: You kids just haven’t been to college yet. But just you wait, this thing is about to get HUGE.
We’ve gotten so far away from that communal living spirit, culturally. Look at the way people get into snits with their neighbors over little things like fence repair or whatever. It’s been a long time since people depended on the folks next door for survival, and we’ve forgotten how to give a shit. It can be relearned, and there are little candles of that spirit burning here and there still. But it ain’t the old days in the farming village anymore.
That’s damn bad timing. Wishing you luck for the next one.
Everyone living together on a shared plot and exchanging goods & services instead of money.
Can’t imagine looking for an alcoholic shoemaker willing to exchange a pair of shoes for 10 liters of vodka.
The kind of people who would start a business (to enrich themselves) and the kind of people who value co-ops and employee-owned businesses (to enrich others) does not have much overlap. I love the idea of coops, but I do not have the skills or ambition to start any kind of business.
Human greed is the common point of failure in any of societal systems. In any system … capitalism, socialism, religious, commune, authoritarian … the common thing that holds it together is concentration of power. The problem that it suffers from is … concentration of power.
No matter what group you create, power eventually gets concentrated to smaller groups of people and it only attracts a certain group of individuals who only understand the need to want power and control over everyone and everything to the detriment of everything else.
Once we find a way to build a societal system that is able to distribute power and keep any one or group of people from dominating everyone else, then we might have a chance of developing a sustainable civilization. In the meantime, no matter what you want to call it or do with it, if the end process just concentrates power to a small group of fallible ignorant humans, nothing will ever work.
Do you think it would be viable to make it law for a business to slowly start becoming a coop once the founder had made a fixed amount of money (say, mil.s of dollars) from it?
only if it were global. otherwise those with money would start a business elsewhere.
I think a lot of people don’t know what co-ops are. I have been pretty left leaning my whole life and I only found out co-ops in my late 20s and the majority of people I talked to in real life have no idea what coops are. And from that few that do know, many dont know how big cooperatives can be.
For the uninitiated, I am sharing the [International Cooperative Alliances definition of coops here: https://ica.coop/en/cooperatives/what-is-a-cooperative
and the list of largest coops in 2023 here: https://ica.coop/en/media/library/research-and-reviews-world-cooperative-monitor/world-cooperative-monitor-2023
Screenshot of the top 10 coops based on turnover in USD from the report here:
FWIW, according to this site, 24% of Germans are co-op members. The number of co-op employees is only a fraction of this, however.
I’m currently educating myself on how to create a co-op shares portfolio for some long-term investment.
They are run out of business, most simply.
The operation that does not focus their profits on building further capital and establishing monopoly will fail in the arms race of those that do.
For example: there are countless community and public efforts establishing childcare and pre-k through pooled resources. They are in direct competition with things like Bezos’ childcare academies. (Personal anecdote: they bought out my kids’ building for public pre-k and evicted them.)
And a successful co-op will get pressure to be bought out like a start-up. (Often starts as a great way to expand! Then the expansion changes the culture, the new location feels corporate and the original location is later shut down and left vacant. -Also personal anecdotes for a grocery co-op and an employee owned operation I once worked at.)
I am sorry, but what does bought out mean? The person running it simply didn’t have to sell. If you’re saying “money was too tempting”, then isn’t that an inherent flaw in any Marxist Leninist theory in practice? So let’s say, the business wasn’t run by someone who cared enough about others and got greedy, so why not start one where you pick the right people? If you can’t do that, then why should any state ever cede over production to workers? How would we ensure greed doesn’t take over then?
If you’re saying “money was too tempting”, then isn’t that an inherent flaw in any Marxist Leninist theory in practice?
HA, yes, yes it is. Marxist Leninist works most effectively when everyone is moralistic and considers the larger picture. It doesn’t work when you have a world of selfish money grubbers. Notice which system is winning today?
I’d like to see you own a small business and get offered 10x its value by a large corp. Then you can see whether you want to maintain your praxis or retire on a nice beach somewhere the rest of your life.
Marxist Leninist works most effectively when everyone is moralistic and considers the larger picture.
Which is why it can never work
That’s one of the most dangerous myths about marxism and similar ideologies.
It wouldn’t work even if everybody had their best intentions in mind, and did their absolute best to contribute.
Which is why it can never work
That’s right. OP had an amazing moment of self-awareness.
In the one example with the grocery co-op: I can assure you, few if any, of the people involved with the co-op were Marxist-Leninists, let alone comfortable with Marxism or the ‘S’ word. So that was kind of a critical flaw in any Marxist-Leninist theory in practice.
A lot of people practice forms of community action without having any sort of class consciousness. A wealthy philanthropist can offer a bunch of money with strings attached and people will jump at the promises without second thought and rarely keep up with the follow-through.
Point I was making nonetheless was these operations tend to exist under seige from competing and profiteering interests. If I remember correctly the grocery co-op was having issues making the skyrocketing rent payments for the commercial lot. That was the problem the money solved: the one created by the landlord.
So in a sense I was saying ‘the pressures of capital tend to be too great’ than money being tempting or greed from the community.
In that model they wouldn’t be able to sell without the workers agreement.
Not every business needs to expand, though. There are quite constrained markets for very specialized goods or services. I know several B2B companies that have 10-20 employees, serve several dozens up to few hundred rather small, regional customers, and they’re perfectly happy with that.
Poor communities already do this to support each other. They watch each other’s kids. They run errands for each other. They don’t keep track and charge cash and create an LLC. But community support is real.
Maybe people won’t become billionaires doing this
And that’s exactly why. Even if the founder wants to be altruistic, the venture capitalists he depends on to get his business off the ground sure as Hell don’t.
People upvoting this have no idea, VCs aren’t the only way to fund a business
True, but if it’s not a traditional business but a coop, you’d probably prefer to have the original investors bee the members. Guess it really depends on if they can scratch up enough to cover startup costs.
In short, co-ops are the closest socialist/communist business model that’s actually implemented in the U.S., so why are more leftists not doing this?
Starting a business (that is based on a sound and viable business plan that has even a snowball’s chance of surviving its formative early years) is really REALLY hard. It takes massive amounts of money or debt, the early years promise years of having no income for yourself (or paying yourself below minimum wage), it means a staggering amount of hours you need to put in to keep it going, forgoing vacations and important family events, loss of friendships because you’re having to put all your time and energy into the business without socializing, having to work when you’re incredibly ill, incredible amounts of stress (which increases by 10 times when you have employees that now depend on you for their livelihood) and even if you do everything perfect your business can fail leaving you with nothing for the years that you put into it, and potentially also with tens of thousands or millions of dollars in debt. It means many times being force to make decisions that massively affect other people’s lives (your employees or your customers). It can be versions of the Trolley Problem time and time again.
“According to the U.S. Bureau of Labor Statistics (BLS), approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more.” source
So ask yourself if you want to go through all of that, and instead of wealth you can live on and support your family with at the end of it, you get simply a “thank you” for building a co-op.
Yes, I agree, it is very hard. I’ve talked to a lot of founders and was working on getting a company off the ground myself.
The perspective and the idea of a co-op however is completely different from what you describe: to distribute the hardships, the risks and rewards right from the start onto many shoulders. There’s no more “my company, my sacrifices” etc. It’s all we.The perspective and the idea of a co-op however is completely different from what you describe: to distribute the hardships, the risks and rewards right from the start onto many shoulders. There’s no more “my company, my sacrifices” etc. It’s all we.
That sounds great, but how does that translate into real-world scenarios that organizations experience? As an example:
How do co-ops decide who needs to be fired when there isn’t enough money to cover payroll?
These are great points, and looking at some of the other responses I get the sense that it’s a time and skills issue. So, what exactly do communists and socialists imagine will happen when “workers seize the means of production”?
I don’t want to discourage anyone from pursuing these ideas, I think at least in the U.S. it might be cool to have a consultancy or non-profit which helps connect such founders and provides them with education, training and startup resources.
Edit oh and some of the other points are that one wouldn’t get rich doing this. So what? I’ve already seen people look down on wealth accumulation, so I think it’s fair to say that the motives for someone who’d start such a business venture are different, which is valid and reasonable.
Secondly, I don’t think market forces will impact such businesses because if you’re creating communities around them, then people will choose what they know and trust.
These are great points, and looking at some of the other responses I get the sense that it’s a time and skills issue. So, what exactly do communists and socialists imagine will happen when “workers seize the means of production”?
I admit I’m not a scholar in this area, but my college reading of Marx and Engels they were taking about nation-state levels of “seizing the means of production”. As in, the entire nation’s ability to produce goods, grow and transport food, facilitate communications, etc. Doing so on such a grand scale that the elites/bourgeois would be forced to cede control of the levers of power because society effectively halts with the means of production in the hands of the working class (proletariat).
Marx wasn’t talking about a socialist group starting up a competing grocery store to the entrenched established players in that market space.
I don’t want to discourage anyone from pursuing these ideas, I think at least in the U.S. it might be cool to have a consultancy or non-profit which helps connect such founders and provides them with education, training and startup resources.
There are educational resources for starting non-profits organizations (and I’m assuming co-ops). The real resource any org (for-profit or nonprofit) needs to start up is: large amounts of money. In for-profit ventures (assuming your business plan is respectable) you can get bank loans or outside investors. Both of these groups expect a return on the money they’re giving you to get started up.
With a co-op, I’m guessing the only sources of startup capital are: government grants, philanthropic donations, or a founder that already has amassed their own fortune.
Edit oh and some of the other points are that one wouldn’t get rich doing this. So what?
At those really dark times for your business you ask yourself “why the hell am I even doing this?” for most business owners the answer is “so that at some point in the future my life will be much easier”. For a co-op, there has to be a very deeply held belief that what you’re doing is extremely meaningful and your sacrifice will be “worth it” somehow. While those people exist with almost a religious level of obligation to their cause or their community, I think they are extremely rare.
I don’t envy the leadership in a struggling co-op. Running an organization is hard enough at the best times as a single owner. Having to run it by committee when it is crumbling sounds like a painful death.
I’ve already seen people look down on wealth accumulation, so I think it’s fair to say that the motives for someone who’d start such a business venture are different, which is valid and reasonable.
You may already have your answer. In your first post you said: “I’d also like to see more childcare co-ops, or community shared pre-k schools.”
What is stopping you from you creating a child-care co-op?
Secondly, I don’t think market forces will impact such businesses because if you’re creating communities around them, then people will choose what they know and trust.
This is naive. Market forces (and other externalities) can have massive impacts on your organization irrespective if you’re a for-profit or co-op. Just think of what COVID did to many organizations. Though nothing change in the business model or service offering, thousands of companies went under because the conditions of the market changed through no fault of the organization owners/leaders.
I don’t know, it seems the whole argument seems to boil down to “there’s not enough time, money or skill”. I guess my question is why do ML theorists think workers can organize enough to run a state when they can’t organize enough to run a business?
I guess my question is why do ML theorists think workers can organize enough to run a state when they can’t organize enough to run a business?
I’m not a Marxist, but my understanding of the theory is the difference between having all the the resources available to a nation-state to re-organize the state vs having to work with the meager resources provided by the existing state while working side that state’s existing restrictive system.
I don’t know, it seems the whole argument seems to boil down to “there’s not enough time, money or skill”.
“money” - what does money mean after you’ve toppled the state? Do you need money for rent? No. There’s no rule of law that will evict you from your home if you don’t pay your rent. Do you need money for food? No (in the short term). You break open the stores to take what food you need and is needed to feed the populous. The “money” problem can also be for required material resources the specific service you’re trying to set up. If you need something to carry out the will of the new state, you take it from whoever has it (which under Marxism usually means from the ruling elite), so that’s not a problem under this system.
“time” - The nation-state has been toppled. You don’t need to go to your wage job anymore for your life essentials. You’ve got all the time in the day you can dedicate to setting up the new state.
“skill” - If you have the skill to do the job but couldn’t do that job before because it didn’t pay you a living wage, that problem is now gone. The state will provide for your means, and you will do job X which the state needs done. If the state doesn’t have someone with a skill, the state will provide free education to train up citizens who will then be skilled enough to do job X needed by the state.
So none of those are actual problems on paper under Marxist because its generally applied to the nation-state level, not working in micro within an existing oppressive regime.
I say “on paper” because Marxist itself is flawed because it requires humans to act purely altruistically forever, and frankly thats beyond the capacity for humanity. Or said another way, Marxism would work great if there were no humans involved, which defeats the purpose of Marxism.
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Sorry, in retrospect that was entirely too flippant and answer for a pretty good discussion and question. Deleted.
Because corporations will sweep in and take all the business by taking a loss just long enough to put the others out of business.
Lots of people have ideas, few people actually want to implement ideas. This is why there’s more workers than business owners.
