i was thinking today about them. aside from the fact of whether its a productive business model. let’s say that it is very productive. however there is an incentive problem is forming them to begin with. a new business owner wants to be the capitalist so he could “making a killing” not be simple remunerated by a worker’s council for his entrepreneurship. why establish a business where you cant get the lion’s share? mutualists solve this riddle by banning sticky property. however in a regime of sticky property a pizzashop owner would want to haul in the profits instead of sharing it with some pimply busboys
The problem with co-ops basically is that every worker is an entrepreneur. If the firm fails, then the workers go bankrupt.
Co-ops are business models where all of the participants must wait until the product is completed and sold to the consumers. Only then can they receive their income. All participants bear the uncertainty that comes with entrepreneurship. They are in fact, entrepreneurs and savers, for they clearly must forgo consumption until they are remunerated by the consumers. This remuneration is unknown ahead of time, therefore, their income cannot be know ahead of time either.
It is the worker’s higher time preference that makes him or her seek a job that pays a guaranteed wage and not some capitalist’s yearn to “make a kill”.
there are many other issues, such that many people simple are not willing to dedicate their lives to a job. they want to be mobile. however i’m focusing on the forming/creation part. even if the workers are willing to dedicate their lives and be entrepreneurs, why the hell would a business creator opt to hand out a majority of profits to the workers and leave for himself a entrepreneur’s salary?
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create a business where i can order around my workers and possibly hit big. or
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create a business and then play equals with the workers, be possibly voted out, and only get a salary for being a good co-entrepreneur.
garegin, the entire point of a worker co-op is that the workers are the entrepreneurs.
“garegin, the entire point of a worker co-op is that the workers are the entrepreneurs.”
in real world this is not the case. workers still “just do the work” and not make entrepreneurial decisions. correct me if i’m wrong, but workers in most co-ops just buy some stock and basically attend a few meetings and stuff.
my question is even if everything works seamlessly; why would someone create a business, bring in new people and make them co-owners and play nice.
i can think of a business where profits come pretty fast. hair salon or a computer shop doesnt invest billions in a product and then wait mounths or years for the results. you fix the computer and the costumer picks up after couple of days.
what i’m insinuating is that most co-ops are formed on idealogical grounds and not on a profit-motive. (i know value is subjective, after profits could have a psychic value, but still).
You missed the whole point. These new people are bringing capital with them. They became co-owners by the mere fact that the original owner sold them a share. Nobody forced himself on the original owner. The owner was selling shares. He was looking for partners in order to raise capital.
ah i understand. so basically the workers are business partners. although, as i said before, you don’t need fifty cooks in a kitchen. in real world workers in a co-op are not co-capitalists, they are just average joes/janes who own some shares. you simple don’t need the janitors to make business decisions or bring in capital, you just want someone to clean the floors. in real-life examples only a handful of people are doing entrepreneurial work in a co-op.
Historically co-ops have been viable only when made up only of actual entrepreneurs and only as a temporary makeshift until a full-time business is justifiable. Insurance began that way, as a merchant’s co-op and only when the business volume grew enough did normal firms spring up.