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This question inquires about private ownership vs. state ownership. However, there is a 3rd category that may or may not be considered as private ownership: Worker cooperatives.

In the model of private or public ownership, where would worker cooperatives fit in? Is this ownership model closer to socialism, closer to capitalism, or is it its own category entirely? What political movements promote this form of ownership?

Bonus question that is probably off-topic on this site: Do worker cooperatives make up a significant (>5%) share of the economy anywhere in the world?

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  • It makes up 100% of the Worker-Cooperative Demographic. How many points to do I get? Dec 12 '12 at 0:13
  • I'll probably have to wait for the Economics site for the bonus question.
    – gerrit
    Dec 12 '12 at 10:55
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    I think your descibing a different economic system called distributionism.arent their different types of coops. For example i heard their was a consumers coop or retail coop
    – user4295
    Aug 2 '14 at 5:56
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    I would say it is capitalist because there is no coercion involved. It is free individuals cooperating willingly with each other for mutual benefit. Mar 6 '16 at 19:31
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    Coercion is not relevant as it is not relevant for the distinction between socialism and capitalism, which is about ownership models and sources of income, not about where the mandate to take decisions is originating.
    – gerrit
    Mar 7 '16 at 9:14

10 Answers 10

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One could argue that cooperatives are not private ownership, but that would be futile. Such an argument would mean that owning stock could also not be private ownership.

Worker cooperatives are in effect private ownership as they belong to the members of the cooperative. They are closer to capitalism than to socialism because in a pure socialist world everything would be needed to be controlled by the government. A pure socialist world could not allow for cooperatives to exist as they are a step in the direction of capitalism.

The model is thus closer to capitalism as there are no rules that prohibit cooperatives from making revenue and that revenue increases the capital stock which in turn belongs to the members of the cooperative (or the stock holders). A cooperative is thus only a simpler form of a stock company.

Still mostly socialist parties promote this form of ownership as they see it as a first step of giving up parts of control over a company from a simple board to a wider population of members. Yet as has been shown above this is simply a question about how a company or a cooperative is governed and not about whom it belongs to.

Regarding the bonus question, I can't tell and a quick google search did not turn anything up either.

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    Interesting bit of history - when the socialist economy of the USSR started crumbling in the 80's, the first private enterprises allowed were so called "cooperatives" - which in fact were limited private companies. They paved the way to the full private companies. But for a while, most private enterprises were "cooperatives", at least formally.
    – StasM
    Dec 10 '12 at 10:00
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    I think by "pure socialist world" you mean state-socialism. There are plenty of variants of socialism where this isn't true - market socialism, for instance, and pretty much any libertarian socialist system.
    – naught101
    Mar 2 '15 at 0:51
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    Socialist would include cooperatives because in a cooperative it is the workers that control the means of their production. Your entire thought process on this is flawed based on that. Examine anarcho-syndicalism or libertarian socialism in order to dig deeper in to the idea of socialist approaches that aren't focused on giving power to the government.
    – Aviose
    Dec 8 '20 at 19:51
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I'm marketing the idea of the worker cooperative under the label "Free Market Socialism," simply because the word socialism was NEVER intended to be all about government control. The fact is that a group of workers deciding for themselves, how to run the business and how to divvy up the profits - that is what, according to Marxist class analysis, would be considered a "libertarian socialist mode of production."

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Worker cooperatives are independent of socialist/capitalist classification.

What matters to being socialist/capitalist is whether the workers in the cooperative:

  1. Can retain the profit from selling whatever they produce (no matter how it's divided internally)

  2. Can decide what and how to produce

  3. Can elect (assuming they have 100% internal agreement) to sell the cooperative to ANOTHER owner, who will then be deciding how the place is run and getting the profits.

    • If the answers to all 3 are "yes", it's typical capitalism.

    • If the answers to all 3 are "no", it's typical hardline socialism.

    • Please note that in may nominally "socialist" countries, small cooperatives would have freedom to do one of the 3 (usually #1 only, or #1 and #2, but NOT #3).

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    Socialism can be defined as "socially owned means of production", or is in any case characterised as that the workers own the means of production, as opposed to capitalist shareholders. I agree with your division regarding #3, but I don't agree regarding #2. If #1 and #2 are "yes" and #3 is "no", where would you place it?
    – gerrit
    Dec 10 '12 at 16:08
  • @gerrit - market oriented socialism. China would be a possible example (post-Deng-Xiaoping). Or post-Perestroyka USSR. Or (as far as I know) some eastern European socialist countries.
    – user4012
    Dec 10 '12 at 17:13
  • really? Are those economies heavy on cooperatives?
    – gerrit
    Dec 10 '12 at 17:15
  • @gerrit - Post-perestroyka USSR was, for sure. China and Eastern Europe, I'm less sure.
    – user4012
    Dec 10 '12 at 17:28
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Appealing to the dictionary we find: "Market socialism is a type of economic system where the means of production are either publicly owned or socially owned as cooperatives and operated in a market economy."

Cooperatives are neither capitalist nor state socialist. Rather, a form of grassroots market socialism.

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socialism is simply an economy where workers own the means of production. I see worker cooperatives fitting that mold, however, with globalization, it is impossible/not at all considered for workers in mines and sweatshops abroad to be a part of the worker cooperative. If they were, and profits are divided equally without hierarchy, then according to Marx, that would loosely be libertarian socialism.

But they likely aren't.

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They are non capitalist organization because of how the decisions are made in the firm. In a capitalist firm you have a owners, board of directors, and key employees aka top management make all the decisions of the firm and the workers have no say in what goes on. Capitalist firms appropriate the surplus value of workers.

In Worker Cooperatives the worker decides on what to produce, how to produce, where to produce, and what to do with the profits. The worker is not exploited because they decide collectively where their surplus labor goes opposed to have a boss who decides where it goes.

Worker Cooperatives are a democracy as in one member one vote while regular capitalist firms are a totalitarian environment who those who have more invested financially in the firm are the people who call the shots.

Worker Cooperatives in the industrial era were started by socialist who were following of Robert Owen. Robert Owen was a pre Marxian socialist.

The Mondragon corporation in the Basque region of Spain were started by a priest named Arizmendierreta who convinced everyone that if they wait for capitalists to come into the area to create jobs they would die of old age so they went about creating worker cooperatives. They have a distinct anti capitalist attitude when they compare them selves to other kinds of businesses.

Many of the hardcore leftists, communists, of Italy were the ones creating laws that would help worker cooperatives grow and flourish.

So if you don't agree that they socialist... one thing is for sure... they are not capitalist. They are not privately owned but collectively owned by a private group of people.
They are fundamentally different other than they both can exist in a market system where goods and services are given to the higher bidder.

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    Sorry, what you describe in the first paragraph has absolutely nothing to do with capitalism. Yes, most corporations in capitalism gravitate to that structure. No, it doesn't mean that any other structure is NOT capitalist. Very small family businesses/early startups/partnerships work pretty much the way a worker cooperative would, with flat egalitarian structure; and no "workers" to appropriate the surplas value of. That does not make them "not capitalist".
    – user4012
    Apr 11 '14 at 3:44
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    technically it does, they are sole proprietorships, their is nothing inherently capitalistic. The market existed before capitalism, and has nothing to do with the change from Feudalism. Capitalism is about private ownership over the means of production, a family in question would be personal ownership over the means of production. Better stated their is nothing 'not socialist' about sole-proprietors either. However it's moot, as they cannot compete in the market very long in such a form. Sep 8 '16 at 19:52
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This question inquires about private ownership vs. state ownership. However, there is a 3rd category that may or may not be considered as private ownership: Worker cooperatives.

And a fourth, and a fifth, and so on. Who owns property is not a distinguishing feature. States run market capital all the time. Private companies run sheltered workshops. Workers coops maximise value and circulate it in the expanded form. Public, private or cooperative ownership is not a predictive indicator of capitalism, socialism, firm structure, market conduct or any other differentiator.

In the model of private or public ownership, where would worker cooperatives fit in?

They're good evidence the model is faulty.

Is this ownership model closer to socialism, closer to capitalism, or is it its own category entirely?

Neither. Again it is a faulty model. Mondragon produces capital in an expanded form. The Rochdale Coops did too, the divvy was a distribution of capital. What is important about workers coops is the increase in power for workers within capitalism, the possibility of different firm structures by a potential to offer more diverse management values than maximisation of shareholder profit, and the presence of non-capital expanding economic conducts. But these can happen in other ways, local entrepreneurs often devote personal income to local interests, because of the latent threat of local consumers and workers against them.

What political movements promote this form of ownership?

Social democracy does in some areas. Anarchism, as in class struggle anarchism, does also. Revolutionary social democracy, your classic Leninisms tend to avoid the issue. As do labourisms (Australian Labor Party, Labour in the UK, etc).

For the bonus, 22% of Swedish housing stock is provided cooperatively. http://www.housinginternational.coop/co-ops/sweden

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  • The Labor party in the UK has renewed its support for worker co-ops. ibtimes.co.uk/…
    – rapt
    Aug 10 '17 at 20:44
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I believe the Mondragon network of Basque Spain employs just shy of 100,000 workers. Not sure if that's a full 5% of the Basque labor force, but Mondragon is a big regional economic player either way.

And in the cooperative chain's 60-year history, Basque Spain has gone from one of the poorest Spanish provinces, to one of the country's richest. I don't think that's a lucky coincidence.

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  • My first thought.
    – ohwilleke
    Mar 16 at 3:27
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There are industries in which cooperatives have a very significant share of the U.S. economy, especially in rural areas, although not always worker cooperatives.

During the U.S. Great Depression, many cooperatives were established to provide rural electric service, to provide banking (a customer owned banking cooperative is called a credit union), to market and sell crops, and to sell farm supplies. This encompasses both producer and consumer cooperatives, although the member farm businesses are typically self-employed business people rather than employees.

Many insurance companies are organized as mutual companies owned by their insureds, which are a form of cooperative (e.g. Mutual Of Omaha, Northwest Mutual, and Amica). Professional malpractice insurance firms and health insurance firms have historically often been organized as mutual companies.

Homeowner's associations are resident owned, as are a variant on that theme called co-operative apartments.

College bookstores are frequently consumer cooperatives.

Many colleges have co-operative housing in which the housing and dining services is owned by the co-operative which is controlled by people who are both the predominant consumer of its housing and dining services, and the predominant employees of the co-operative. University of California - Berkley, University of Michigan - Ann Arbor, and Oberlin College all have large cooperative housing systems.

Some colleges, while officially organized as non-profits, are de facto faculty controlled and owned.

In the Pacific Northwest, the plywood industry is largely organized in the form of worker cooperatives.

Taxi companies in many cities are typically employee owned.

Law firms and accounting firms (and historically, until about a decade before the financial crisis, investment banks) are professional employee owned. So are medical practices. The New York Stock Exchange is a cooperative controlled by member brokers who work in the stock exchange.

The leading academic survey of cooperative ownership and its alternatives is "The Ownership of Enterprise" (1996) by Henry Hansmann.

Are worker cooperatives socialist, capitalist, or their own category?

A system in which worker cooperatives were the predominant form of firm organization in a country would be called "Communist". The whole point and organizing principle of communism is to replace firms owned by owners of capital with firms owned by workers. But many democratic socialist and capitalist countries have worker cooperatives in particular niches where this form of organization works well.

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  • Aren't homeowner associations just that, associations, as opposed to a business? Do associations even have owners?
    – gerrit
    Mar 16 at 16:32
  • @gerrit There are businesses organized as associations and worker's cooperatives are almost by definition businesses. I have a case right now where an HOA is organized as an LLC (I wouldn't recommend that choice, but you can do it). A significant number of non-profits have transferable ownership interests (sometimes subject to restrictions), not just HOAs, but also, NYSE seats, ditch company shares, some country clubs, some pro sports leagues, etc. An HOA can even distribute profits to owners although it rarely does. There are non-profits without owners, but not all of them lack owners.
    – ohwilleke
    Mar 16 at 19:22
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The question by and large doesn't make sense as you are asking if the particular structure of what is in essence a company fits into a description of a type of governmental system.

For sake of argument if we treat a company as if it were a government then a workers cooperative would most closely resemble Communism. All workers have equal ownership and stakes in the venture. Many successful cooperatives are evidence that a communist system works well in small groups, however as the number of people increase they become harder to manage and degenerate into a typical communist regime.

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  • Does it? The largest cooperative in the world, Mondragon, has 84000 members. Has this one degenerated into a typical communist regime, or is it still a small group?
    – gerrit
    Dec 10 '12 at 9:00
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    @gerrit I would say that is still a small group in terms of a country. I am just pointing out that when we start talking in millions then it is easier for a group of people to grab more power than would normally be afforded.
    – user117
    Dec 10 '12 at 11:54
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    but then the question is if, do we actually need any units consisting of more than 100000 members? That's as large as a (very) small country...
    – gerrit
    Dec 10 '12 at 12:26
  • @gerrit Perhaps not but it is a good question! Large countries command more economic and military power so the argument can be made they are safer from economic downturns and foreign invasion, but at the very least the national security aspect can be solved with strong alliances.
    – user117
    Dec 10 '12 at 12:45

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