AskProfWolff: How do worker co-ops acquire the capital needed to run the businesses?

[@knicks9899]

You share the same gift as a Chomsky and other great intellectual leaders and keep it plain and simple so that all can understand. Thanks for your work.

[@sassypuddin8226]

Thank you again, Prof, for demonstrating that an economy isn’t about money, but regular people and the relationships they build together.

[@mikolowiskamikolowiska4993]

Hope you can pay rent and feed with people and relationships

[@oceanthresher6184]

@@mikolowiskamikolowiska4993 sooo, something millions of people can’t do under the current system?

[@Robisquick]

The issue is croney capitalism and corporatism. Worker co-ops simply wouldn’t work on a grand scale despite seeming fair. What truly needs to happen is a reform in govt where there’s strong regulations from corporations so there’s not this life-sucking occurance from those at the top

[@OhKay_Bet]

@@Robisquick can’t fix croney capitalism without having a social democratic process or a direct democracy

[@Robisquick]

@@OhKay_Bet You might be right. Or some tenacious and good willed politicians.. but yeah what it might boil down to is some type of social democracy. Im not entirely opposed to certain forms of that.

[@eoswald203]

I've been wondering this for months! Until watching this video, I was under the impression that STATE BANKS would be about the only way.....but now I see there are many options! God bless the Wolff!

[@majorfallacy5926]

Also there are banks who are coops themselves

[@mohit5496]

union banks

[@jasonbishop3988]

The National Cooperative Bank probably being the most visible

[@Loserplatz]

I have heard of two examples, though I do not know the details. A neighbor who is a textile designer, the previous owner of his former employer (he is retired) sold the company to thexemployees, got a loan from a bank that the company pays off.

[@Loserplatz]

Another (semi-) example, a bunch of cheese restaurants, if they liked your work and you had risen to management, would open a restaurant where you own half and they own half. Then, you don't compete with them and you get part ownership of a business sooner that you otherwise would.

[@bt3743]

Many might point out how on average, people who work at co ops have smaller pay than people who work for private business and that's true but thats because in economic hardship, co ops tend to cut worker pay and private business tends to fire workers entirely so between having a lower pay and not having any pay at all and needing to find a new job, i'll take a 10% decrease in my paycheque thabk you very much

[@krzysztofbroda5376]

interesting, i wonder how that adds up? perhaps they invest more in their workplace in a way that doesn't necessarily help profit but helps them bear the work, or simply choose to work less hours

[@arpathia7262]

@@krzysztofbroda5376 could also be that on average the wages for coop workers is closer to the average between all the workers while the average for private businesses is a bit higher due to the huge disparity of the wages. Like this: say all the workers of a co op are payed 20€ an hour, the average will be 20€ an hour. If 9/10ths of a private company's workers gets paid 10€ an hour and the other 1/10th gets paid around 110€ an hour, the average wage of that company will also be 20€ an hour, despite that massive gap ((9*10+110)/10 = 20), and that top company percent usually gets payed waaay more and the rest a varying amount that's waaaay less, so it makes sense statistically

[@keithsim2914]

But in the liberal world, handouts are provided for joblessness. So yes... easier to be jobless than paycut

[@justinbeaver3]

This is a beautiful thing.

[@El_Rebelde_]

as they say some people can imagine the end of the world before they can imagine another world. prof wolff is the shit

[@danieljones9463]

Again, some good information and advice from Professor Wolff. Thank you. Off on a tangent: I have read quite a bit of the comments below and my interest was stimulated by comments about "Custodians" (Janitorial Services) being of less value than "skilled workers"...because less knowledge is required to do Janitorial Work, compared to, say, a "Software Engineer". The "Software Engineer", in a computer oriented business is essential, while "Custodial Services" is not? Maybe not, but it seems to me that there are certain kinds of knowledge that being a good Janitor requires. What are the best choices for cleansing agents and polishes? Some are better than others. What are the best tools for a particular cleaning, or polishing task? Some are better than others. Does the Janitor enjoy his, or her work...of keeping things clean? It seems to me, that good attitude, in this work, is important. It seems to me that dedication to the tasks, is valuable in its own way. Isn't "Cleanness" part of a successful business enterprise? The goal of Workers Wages is to enable a certain minimum of Daily Living Income...to eliminate poverty...which is that which is less than an established Daily Living Standard Minimum Level. All Worker skill levels should be compensated above this minimum standard. If We are going to use Janitorial Services in Our Work Places, then they should be Fairly Compensated and appreciated for their contribution to the Working Environment. It's ok to pay Higher Skilled and Educated Workers More. Just don't pay the "low skilled" Workers less. "More" and "Less" being established in relation to the "Standard For An Acceptable Minimum Income For Living". One Equal share for the needed "Low Skilled Worker"...two shares for the "High Skilled Worker"...the net profits permitting.

[@mikolowiskamikolowiska4993]

It's like you don't understand difference between more and less

[@mikolowiskamikolowiska4993]

Janitors are important, but not in more supply than demand

[@danieljones9463]

@@mikolowiskamikolowiska4993 I indicated that I do understand the difference between more and less, when I proposed that the needed Low Skilled Worker receive one share of the profits and the High Skilled Worker receive two shares of the profits. Of course this should be worked out and and decided by the Workers of a Worker Owned and Operated Business.

[@danieljones9463]

@@mikolowiskamikolowiska4993 I agree.

[@mikolowiskamikolowiska4993]

@@danieljones9463 it already is worked out, by the employer offering and the employee accepting the wage. This is what the free market does. It prices value at equilibrium. Socialists trying to determine the price in a room has always ended badly. This is why govt run education budgets are over bloated and govt hospitals don't have enough doctors. It sounds harsh but only free market works

[@christianandrews5704]

How do I find people to talk to about building an Employee owned company?

[@erniereyes1994]

2:23 Worker cooperatives would work well (if not better) under a free market system where government is centrally limited, regulations on businesses are pulled back, and minimal wage laws are abolished (just like in Denmark).

[@ozzitor8]

People are not talking about worker-coops from a merely efficiency standpoint. The overwhelming majority of people involved in this discussion are socialists of different stripes trying to implement a rather revolutionary idea that wants to upend capitalism and overcome its institutions (i.e. corporations). The idea of rolling back regulations to accommodate for co-ops, while an understandable intuition, is counter to the ideas of the co-op movement. We don’t care about the company, we care about the people. We are not invested in keeping capitalism alive. We want it to die. We don’t glorify competition, but cooperation. In the end, we don’t think co-ops will bring the revolution, but they will be an important component of the transition. We’re not anarcho-capitalists or “libertarians”.

[@encouraginglyauthentic43]

​@@TheWorldsStageThe bureaucrats in a socialistic society can be voted out by the people.

[@papiezpp]

@@TheWorldsStage "Socialism and capitalism both have the same problems of putting massive amounts of power in the hands of a few" NO. The definition of socialism is "economic system with collective ownership of the means of production" entire goal of it is to give everyone a say in their work. This means that socialism in wich a few people have masive amounts of power is not socialism. That also means that USSR was not socialist

[@utilitymonster8267]

If the economy was fully democratic, government regulations were indeed not necessary anymore, since they’re only necessary to correct capitalism’s mistakes. As of now, the government is necessary to guarantuee workers rights, living wages, stimulating the economy in times when the efficient demand is deficient, incentivize affordable healthcare, and so on. The reason some countries can do without minimum wage is because they have higher levels of basic incomes.

[@NathansHVAC]

In Venezuela The National Banks are required to set aside 3% Reserves for local co-ops. Of the hundred eighty thousand coops that where started under Chavez, 50000 are still in business. Maybe coops will work next time.

[@notthisuniverse]

Compared to stats in "developed" economies where 90% of new businesses fail, I know which model I have greater faith in

[@mikolowiskamikolowiska4993]

@@notthisuniverse Yet you haven't put your money where your mouth is

[@Justin-ib2iz]

@@mikolowiskamikolowiska4993 so you think a system with ceo's is better? And yet you're not a ceo! How bold of you to speak about anything you're not personally dedicating your every waking moment to

[@bt3743]

Might have something to do with the fact they based their entire economy on a single resource (oil) where other countries like America and the UK and many European countries have economies that don't depend on one products success

[@AlanRipman]

I live in what used to be rural but the city is exploding with growth and I want to establish a coop in a building in town before greedy out of state developers try to get their claws into it. I never thought of the church avenue for capital. There is probably a lot of tax bs you can avoid with them and you have a lot of built in incentive because it's humanitarian by design

[@braziliangator]

How do employees mitigate the risk? If company goes out of business, employees lives are ruined!

[@rwatertree]

I guess they'd have to pump the banks and churches for more money. If they can't let's hope they saved for a rainy day.

[@oggyreidmore]

Why would they run a company that can't stay in business? If the product they produce is no longer popular, change products. Hasbro started out as a textiles company, then they switched to making toys. Nokia was originally a pulp mill that made paper, now they make cell phones. Workers aren't going to fire themselves. They'll simply switch job duties. Much better than letting a lone, out of touch CEO decide they aren't making enough profit and firing everyone and shutting it down. How do employees who aren't in a cooperative mitigate against THAT risk?

[@AndrewIzatt]

As if top-down, capitalist firms never go out of business. Worse still, the suffering imposed by a firm going out of business (or moving production) is largely shifted to the mass of workers. What about the employees who took out a loan on a house on the income from that job but production has been shifted to impoverished Bangladeshi or Mexican workers who are easier to beat down because their labor movement is weak? Or are trying to save for their children's college on the income of that job but the rug gets pulled out on them? In those situations, the people at the top, the CEOs and shareholders are just fine. Just ask the former employees of Sears. Or GM. Or look at the formerly industrial centers of this country (I'm in the United States) have been hollowed out and are now sites of immense human misery (the opioid crisis is most accute symptom of this despair among the American working class) as companies shifted production or merged with others while the workers and the communities they built, who showed up every day on time at the mill, who sat in traffic every morning to operate those manufacturing plants, etc. were thrown to the curb. Co-operative ownership arrangements, while not foolproof, provide for a more equitable distribution of the risks and benefits of meeting the needs of production. No one does it alone. Those who work in the office, or the factory, or the mill--where we spend the majority of our waking hours--should get a say in how those businesses operate. They can decide collectively what to do when the business begins to decline rather than having the consequences of that imposed on them by their corporate masters.

[@AnonyMous-og3ct]

From what I can gather, worker co-ops are generally a bit more robust and less prone to complete failure. Job security tends to be higher. However, worker wages can actually go down if the business is doing poorly. That's one of the main reasons job security tends to be higher in a worker co-op. If the business lacks sufficient revenue for the labor costs, then labor costs are reduced in response by workers all taking a pay cut.

[@michaelgray1803]

What the difference

[@SolarPlayer]

So as an outside investor what do I receive in return for my money? Is it an investment or a donation?

[@yahwehvii6059]

The same back with interest maybe like with a bank.

[@justinbeaver3]

You get your money back with interest that's it.

[@TC-eo5eb]

There are no laws or policies prohibiting worker cooperatives from doing business in the U.S. According to the internet there are only about 500 worker cooperatives doing business today. If worker cooperatives are so successful, why don't we see more ?

[@encouraginglyauthentic43]

Because in worker coops buisness owners are equal to the workers. Also a lot of people don't know about it.

[@TC-eo5eb]

@@encouraginglyauthentic43 Obviously you do not even know what an employee owned worker cooperative is. There is no business "owner", the employees own the business.

[@encouraginglyauthentic43]

@@TC-eo5eb Right.

[@utilitymonster8267]

@@TC-eo5ebProbably because they’re not focused on growth.

[@TC-eo5eb]

@@utilitymonster8267 It was a rhetorical question. The answer is because they are ineffective. It has nothing to do with growth or lack of growth. Worker owned cooperatives sound good in theory, but in real life, as soon as one guy figures out he can contribute less than everyone else and still share equally in the goods, the bottom falls right out. There are a lot of lazy people and scammers in the world. That philosophy will never work as someone will always figure out a way to beat the system. The democracy will cease to exist when you take away from those who are willing to work and give to those who would not. Thomas Jefferson.

[@ericreingardt2504]

Imagine if a quarter of the funding and subsidies that are regularly handed to for profit corporations by the government were used to fund worker-owned start-ups instead

[@nesseq]

How about establishing a Urban Loan Guaranty Fund. 1000, and more, people put each 1000 USD, Euro in a closed bank account for 10 or even 20 years. The fund is a collateral for loans to establish Urban Co-operatives. The objective of the Urban Co-operative is to save energy. And to do so profitable. Why saving energy? Because we have to reduce our Carbon Footprint!

[@smartandumb]

you're on to something. funding something like a coop bank for the purpose of targeted investment in cooperatives in urban areas is something that is needed right now

[@zachhodgson28]

Professor Wolff, With all do respect, This is how the Capitalists have us by the balls. They have the Capital to start businesses. We do not. This is not where Worker Co-Ops are failing. This is where they have their work cut out. The need of an expanding models. Such as mandates for funding start up co-ops based on already established markets.

[@zachhodgson28]

*Co-ops are not failing, but Capital is where they have their work cut out.

[@notthisuniverse]

You collectively expropriate the expropriators and run that enterprise. Because your labour created the value that it sells and an elite profits from. Not to be offensive but people with your mentality have been socialised to be obedient and passive.

[@mikolowiskamikolowiska4993]

@@notthisuniverse You really think you can go toe to toe wit capitalists using force? Shows you don't even know what capitalism is about and are not cut out for business

[@mikolowiskamikolowiska4993]

Sure you do. But you'd rather spend it on stuff rather than invest in a coop. Talk is cheap

[@Justin-ib2iz]

@@notthisuniverse hmhmm, that's going to happen for sure, any day now. Not to be offensive but people with your mentality have reasoned themselves out of the possibility for any kind of effective action at all so that, conveniently, all that remains is to sit back and feel superior until the inevitable revolution washes over you.

[@vivalaleta]

Can we get rid of Wall Street, professor?

[@DinosaurKale]

Why are co-ops defined as “socialism”? They seem like capitalism with a different structure for property rights.

[@sharkiboi8167]

It’s because it’s worker-owned, so it’s basically the idea of the workers own the means of production. But worker co-ops are businesses which are worker-led through democratic processes that every worker enjoys

[@NS-pj8dr]

"capitalism with a different structure for property rights" is literally socialism. socialism is "social ownership of the means of production," so the primary difference is how property rights are structured.

[@bt3743]

Worker Co Ops are worker owned and managed. It's literally workers owning the means of production. Socialism is literally judt capitalism but instead of ceos and boards of directors. It's the workers deciding how the business should be run

[@TheWorldsStage]

It's not socialism. They are described as "socialist" because people don't understand what "socialism" means. Socialism is government central planning distributing resources to the population according to their needs and a co-op is a different, more efficient, and more people-oriented form of capitalism.

[@truthseekers5609]

Distributism

[@huhwah5387]

This thumb nail needs him to cross his eyes.

[@Oldscale]

Im still learning about this stuff but none of those seem as good as having a private investor buy equity in a buisness. Bank loans are extremely expensive for small companies and to get a buissness off the ground you often need large seed money that is interest free.

[@yahwehvii6059]

How big does it need to be? People looking for this advice typically aren’t looking to enrich investors who own stock in the business they want to start. Paying off the bank would be the preferable option.

[@aluisious]

But that's pointless because if some silver spoon baby fronts all the capital he will want to own it, and it won't be a coop.

[@SphincterOfDoom]

Church providing capital but not an owner? Sounds like an outside investor to me.

[@felicetanka]

The trouble with capitalism is it doesn't allow for more capitalists.

[@Huy-G-Le]

Remember folk, daily lives go on as normal under socialism or an socialistic economic projects like a worker Coops or Communes. However many coops can't compete because they literally paids their workers more. In normal capital business, most of what a coop worker would earn, go to the owner of the business.

[@abetterfuture4787]

I'm going to go out on a limb here and say that any group of people who wanted to start their co-op, but didn't have the common sense to know where they were going to get the money for it...probably isn't going to do that well.

[@clarestucki5151]

If co-ops are so great, why are there not more of them??

[@brienelwoodwashburn2839]

We live in a society where we have been conditioned into thinking about ourselves first. Capitalism promotes greed. When you tell someone that they have to take the risk of starting a business but don’t have the same chance to get fabulously wealthy as an individual it scares them off. (Nevermind the fact that worker coops have a greater chance of succeeding, thus mitigating a lot of the startup risk if managed correctly.) I predict a wave of worker coops coming soon that will change the way the US thinks about economics. America loves to fight dictators, but will fight to the death to preserve economic dictatorship (capitalism). We are the land of contradiction right now, but it can’t last. The chips will fall one way or the other, and I think the tipping point is coming within the next decade.

[@clarestucki5151]

@@brienelwoodwashburn2839 Heavy on the "if managed correctly" part. Correct management can usually make any venture thrive, Capitalism doesn't NEED to promote greed . Everybody's greedy, including you and me, but we tend to only accuse the financially successful, and we let ourselves off the hook on the greedy thing. I fear you're kidding yourself on the co-op "wave" thing, ain't gonna happen.

[@brienelwoodwashburn2839]

Clare Stucki Yes, I believe it absolutely does promote greed. It’s literally defined as “the private ownership of the means of production.” Once you make something private where they can exclude others people will hoard it. Furthermore, the old maxim “you need money to make money” is 100% true, and those who know this will once again serve their greed because the more they have the more they can get. The “correctly managed” bit is completely missing my point. It could be removed from my original comment and not change anything (which means I obviously shouldn’t have added it in). The point is that the structure of worker coops mitigate startup risk, and once people realize this they’ll understand that they can have a stable business with less risk, thus incentivizing more people to start businesses that can outcompete the standard model now. Regarding a coop wave, if the coop is structured such that no individual can make exorbitant amounts of money while at the same time treating workers better, providing a more stable job, and out competing traditional businesses, I don’t see why that couldn’t happen. I don’t understand why everyone seems to think we’ve reached the pinnacle of innovation in business. Things change all the time. New business models WILL be discovered, and they will be more profitable and higher-functioning than what we have now. I think you’re the one who is kidding themselves if you think this is it. Edit: Also, I’m a computer engineer working in the field I got my degree in, and have been for about five years. Im not a millionaire and I’m not trying to flex, but I am financially successful. I just see more potential in our future than this shitshow. I also want to clarify that I think a lot of people go into business with good intentions, but once they start making a fortune it’s easy to become corrupted. If you start with a business model that keeps you accountable from the beginning I think it’s possible to maintain your motivations and integrity from beginning to end, even with a highly successful business. If you know that screwing others over isn’t going to directly increase your resources I think you’ll be less likely to do it.

[@clarestucki5151]

@@brienelwoodwashburn2839 The bottom line for all who dislike the capitalist model is always that the owners/managers overpay themselves, while underpaying (cheating) the workers, but the truth is, the price of unskilled labor is set by the market (simple supply and demand, econ 101 stuff), and workers who feel cheated have an obligation to offer their time and talent to other employers, and/or to go into business for themselves. And don't bother saying that they can't get financial backing. There is unlimited venture capital just begging for people with a new or improved business model. Watch Shark Tank on TV.

[@brienelwoodwashburn2839]

Clare Stucki you keep trying to predict points I would never make. Obviously funding is available. I never even would have made that a concern. I also understand economics fairly well. I question whether you do, though. If you think everything is fair in the capitalist economy and there is no mechanism to cheat workers out of fair wages, then you are up in the night. You’re focusing on a single principle at a time and pretending ideal conditions for that principle exist. The world is more nuanced than “Econ 101”. Also, the way you talk makes me think you have very clear biases about the socioeconomic status and education of the people who could want worker coops. Again, I’m a computer engineer, a highly skilled position that requires a lot of education and training. I also am very heavily in favor of worker coops, and I think the software industry is an excellent sector for this particular business model. Additionally, I also think that your points are short sighted. The economy is not an isolated force; it affects everything in the world around us. Politics, culture, class, art, all of it is enmeshed with the economy (and each other). I would happily take a pay cut to put those excess resources towards social and political issues that matter to me, or to a business that can outcompete companies who exploit workers and the environment with unethical business practices, especially if my money was handled in a fully transparent manner. Currently there are no organizations that do these things in a way that I think is meaningful, and before you say “go do it yourself then”, trust me, I plan to.

[@danho2441]

I think it’s sort of hilarious that a coop takes capital but is against capitalism. 😂 I think it demonstrates the maxim “the trouble with socialism is you always run out of other peoples money” 🎉

[@truthseekers5609]

Coop is part of Distributism I believe.. it's not a Capitalism nor Socialism, it's a middle way..