For simplicity let’s say I found a brand new co-op that sells ice cream. I use my personal money to buy an ice cream van, do all the legal paperwork to form the company, buy all of the initial product that I’m going to sell. The first week goes well and the business looks promising, but I need some help so I hire someone. Let’s say after 3 weeks we pay off all my initial investment, the van, the other start up costs. Now we’re purely in profit mode - do we split the profit half and half? If so, I have made a terrible decision to start a business. I placed myself at financial risk for future profits while my employee took no risk and gained the same exact reward.
On the other hand, if we split the profits unequally in any way, how would that be different from the status quo? As soon as a company can choose unequal splitting of profits wouldn’t self interest dictate the founder take the largest percentage as possible so long as it doesn’t lose employees? If they can find employees willing to take 0% profit for a steady wage we are back where we started.
The key missing piece is democratic participation. Anyone involved in the process of the generation of wealth should have a say in what to do with that wealth, so you and the “employee” (who would be a co-owner if we are talking about a worker co-op icecream business).
But then how do you determine how you get paid back for your initial investment?
There are many options, but if we accept that capital doesn’t do anything, then the idea of making a profit on your financial investment is moot. How are you paid for your idea then? Well, you have a business which you are in control of (at least in part), and are no longer alienated from your work.
One option would be to pay back everyone’s initial investment at some rate agreed upon by the workers, and then decide (democratically) what to do with the rest of the profits. This doesn’t mean every cone you sell you vote on, but perhaps once per week, month, quarter, etc., everyone involved in the process decides collectively what to do with the surplus money.
As a side note: every “employee” takes a risk when they join a company. There is no guarantee that the job is permanent, so any changes in their life (moving, giving up other opportunities, etc) are a great risk. And while those are similar for a small business owner, with the additional risk of losing some initial investment, the employee has no say over what happens to the profits or the operation of their workplace,and therefore has to hope the employer is generous and clever enough to keep them on. By running a company collectively, even without even initial investments, the risks are better distributed, and probably lower as well, as it’s easy to make a bad decision on your own, it’s much harder to do so when others are involved.
These are just some ideas about how a business may operate in this example, it is by no means prescriptive, and I am sure many others can fathom better methods.
So because you put in some initial effort, you’re entitled to an outsized share in perpetuity?
Also, you’re completely overlooking another key aspect of cooperatives. Democracy.
If they were so inclined, the other members could vote to give you a larger share. Or pay you back for your initial investment. But it would be different from the status quo because the workers have ownership and agency in their workplace, and can actually participate in important decisions.
There can be an internal capital account that keeps track of what the founder invested to buy all the initial product and ice cream van. This account would give the founder a recoupable claim on that value they invest.
The founder can charge new workers a membership fee.
There is nothing wrong with unequally dividing the profits, but that has to be a democratically accountable decision.
The moral difference in favor of the worker coop is that it is democratic
I don’t understand your answer.
For simplicity let’s say I found a brand new co-op that sells ice cream. I use my personal money to buy an ice cream van, do all the legal paperwork to form the company, buy all of the initial product that I’m going to sell. The first week goes well and the business looks promising, but I need some help so I hire someone. Let’s say after 3 weeks we pay off all my initial investment, the van, the other start up costs. Now we’re purely in profit mode - do we split the profit half and half? If so, I have made a terrible decision to start a business. I placed myself at financial risk for future profits while my employee took no risk and gained the same exact reward.
On the other hand, if we split the profits unequally in any way, how would that be different from the status quo? As soon as a company can choose unequal splitting of profits wouldn’t self interest dictate the founder take the largest percentage as possible so long as it doesn’t lose employees? If they can find employees willing to take 0% profit for a steady wage we are back where we started.
The key missing piece is democratic participation. Anyone involved in the process of the generation of wealth should have a say in what to do with that wealth, so you and the “employee” (who would be a co-owner if we are talking about a worker co-op icecream business).
But then how do you determine how you get paid back for your initial investment?
There are many options, but if we accept that capital doesn’t do anything, then the idea of making a profit on your financial investment is moot. How are you paid for your idea then? Well, you have a business which you are in control of (at least in part), and are no longer alienated from your work.
One option would be to pay back everyone’s initial investment at some rate agreed upon by the workers, and then decide (democratically) what to do with the rest of the profits. This doesn’t mean every cone you sell you vote on, but perhaps once per week, month, quarter, etc., everyone involved in the process decides collectively what to do with the surplus money.
As a side note: every “employee” takes a risk when they join a company. There is no guarantee that the job is permanent, so any changes in their life (moving, giving up other opportunities, etc) are a great risk. And while those are similar for a small business owner, with the additional risk of losing some initial investment, the employee has no say over what happens to the profits or the operation of their workplace,and therefore has to hope the employer is generous and clever enough to keep them on. By running a company collectively, even without even initial investments, the risks are better distributed, and probably lower as well, as it’s easy to make a bad decision on your own, it’s much harder to do so when others are involved.
These are just some ideas about how a business may operate in this example, it is by no means prescriptive, and I am sure many others can fathom better methods.
So because you put in some initial effort, you’re entitled to an outsized share in perpetuity?
Also, you’re completely overlooking another key aspect of cooperatives. Democracy.
If they were so inclined, the other members could vote to give you a larger share. Or pay you back for your initial investment. But it would be different from the status quo because the workers have ownership and agency in their workplace, and can actually participate in important decisions.
There can be an internal capital account that keeps track of what the founder invested to buy all the initial product and ice cream van. This account would give the founder a recoupable claim on that value they invest.
The founder can charge new workers a membership fee.
There is nothing wrong with unequally dividing the profits, but that has to be a democratically accountable decision.
The moral difference in favor of the worker coop is that it is democratic
Understood. Thank you for clarifying.