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DonQuigleone · 2012-12-18, 11:04

Sorry for not replying to earlier posts, I got derailed by real life concerns for a bit, and forgot to come back.

I realised what I wrote below is rather long, so I spoilered it for length.

Spoiler for A rumination on worker democracy:

I've been thinking that the core dissatisfaction that workers feel in large corporations stem from the "supremacy" of "capital". IE in most companies it's the money that is what determines the direction of the company, and not "labor".

If you think about, companies have two distinct kinds of assets that have "productivity", and they are assets (machinery, buildings etc.) and labor (workers earning a wage).

Now in industrial era companies it made sense that decision making lay with Capital. The cost of the companies assets were far larger then the cost of labor. But today, many large companies are primarily labor based, and have very little actual capital. For instance, if you wanted to do IT work, the cost of the assets (computers, internet connections) is very small compared to the wage you'd have to pay an experienced set of programmers. Furthermore it's the programmers who are "producing value", and not the machinery they are operating(unlike a traditional manufacturing operation). Having the same governance as a conventional car plant (with extremely expensive equipment, but far less labor), doesn't really make sense.

Recently I came across the concept of Worker Cooperatives, a corporation owned by it's own workers, each with an equal vote (though most have a class of recent hires who have not "buyed in" yet). The concept doesn't get much attention in the English speaking world, with most of the North American worker cooperatives being hippy restaurants, shops and small farming communes. Rarely is the membership higher then 100 employees.

However, if we look to other parts of Europe, the concept is more common. For instance in the Basque country there's the Mondragon corporation, employing 84,000 people and having annual revenue of 15 billion euro in 2011, which beats the revenue to employee ratio of many fortune 500 companies. Perhaps the model could work more widely?

As I see it the cooperative structure defeats certain key problems of modern corporate governance, which is basically plundering behavior, be it by workers (using their unions to extract unreasonable pay terms to the detriment of the companies future growth), or by senior management and shareholders (extracting high pay/bonuses and dividends from the company to the detriment of it's future growth). Because the shareholders and workers are the same people, and the senior management are responsible to their own workers, you won't get one group plundering the company at the expense of the other.

A corporation is something like a state in miniature, and so the conventional "autocratic" structure shares all the strengths and weaknesses that such a structures have in real life, in that they tend to work well in the first generation(the people who made the corporation in the first place tend to be good leaders) and at small sizes(when the leaders have more regular contact with their workers/customers). But when you look at older larger corporations the leadership quickly deteriorates as the entity gets hijacked by more nepotistic or plutocratic interests, and loses sight of what made the company great in the first place (being an efficient company providing the best service to it's customers).

A more democratic structure has all the weaknesses of democracies in real life, but also the strengths, in that the "populace" is more committed to the interests of the state due to their views having representation, that the organization is more pluralistic with more diverse viewpoints, and that the organization is more stable in the long term with leadership less likely to plunder the entity to the detriment of all it's other members. In an autocracy corruption is the rule and is ubiquitous. In democracies, it is the exception (though by how much this is depends on how cynical you are) and it receives censure. The weakness of democracy is that without strong institutions and traditions the whole thing is likely to collapse into anarchy, or devolve into the kind of autocracy from whence it came...

Now let it be said, I don't think a cooperative model is universally applicable. For instance a shopping mall, where the building is far more valuable then any of the staff maintaining it, is not something that would really fit a cooperative model. Likewise most small businesses might have little to gain from being run cooperatively. At small sizes the democratic process is unnecessary (and it should be run by consensus). Furthermore, it's not such a loss if the business collapses due to poor leadership, compared to the devastation that can occur in communities when a large employer collapses(or moves away...).

TL; DR: Perhaps corporations would be less shitty if they were owned and run by their own workers, rather then disinterested distant shareholders.

2012-12-18, 11:04	Link #80
DonQuigleone Knight Errant Join Date: Dec 2007 Location: Dublin, Ireland Age: 35	Sorry for not replying to earlier posts, I got derailed by real life concerns for a bit, and forgot to come back. I realised what I wrote below is rather long, so I spoilered it for length. Spoiler for A rumination on worker democracy: I've been thinking that the core dissatisfaction that workers feel in large corporations stem from the "supremacy" of "capital". IE in most companies it's the money that is what determines the direction of the company, and not "labor". If you think about, companies have two distinct kinds of assets that have "productivity", and they are assets (machinery, buildings etc.) and labor (workers earning a wage). Now in industrial era companies it made sense that decision making lay with Capital. The cost of the companies assets were far larger then the cost of labor. But today, many large companies are primarily labor based, and have very little actual capital. For instance, if you wanted to do IT work, the cost of the assets (computers, internet connections) is very small compared to the wage you'd have to pay an experienced set of programmers. Furthermore it's the programmers who are "producing value", and not the machinery they are operating(unlike a traditional manufacturing operation). Having the same governance as a conventional car plant (with extremely expensive equipment, but far less labor), doesn't really make sense. Recently I came across the concept of Worker Cooperatives, a corporation owned by it's own workers, each with an equal vote (though most have a class of recent hires who have not "buyed in" yet). The concept doesn't get much attention in the English speaking world, with most of the North American worker cooperatives being hippy restaurants, shops and small farming communes. Rarely is the membership higher then 100 employees. However, if we look to other parts of Europe, the concept is more common. For instance in the Basque country there's the Mondragon corporation, employing 84,000 people and having annual revenue of 15 billion euro in 2011, which beats the revenue to employee ratio of many fortune 500 companies. Perhaps the model could work more widely? As I see it the cooperative structure defeats certain key problems of modern corporate governance, which is basically plundering behavior, be it by workers (using their unions to extract unreasonable pay terms to the detriment of the companies future growth), or by senior management and shareholders (extracting high pay/bonuses and dividends from the company to the detriment of it's future growth). Because the shareholders and workers are the same people, and the senior management are responsible to their own workers, you won't get one group plundering the company at the expense of the other. A corporation is something like a state in miniature, and so the conventional "autocratic" structure shares all the strengths and weaknesses that such a structures have in real life, in that they tend to work well in the first generation(the people who made the corporation in the first place tend to be good leaders) and at small sizes(when the leaders have more regular contact with their workers/customers). But when you look at older larger corporations the leadership quickly deteriorates as the entity gets hijacked by more nepotistic or plutocratic interests, and loses sight of what made the company great in the first place (being an efficient company providing the best service to it's customers). A more democratic structure has all the weaknesses of democracies in real life, but also the strengths, in that the "populace" is more committed to the interests of the state due to their views having representation, that the organization is more pluralistic with more diverse viewpoints, and that the organization is more stable in the long term with leadership less likely to plunder the entity to the detriment of all it's other members. In an autocracy corruption is the rule and is ubiquitous. In democracies, it is the exception (though by how much this is depends on how cynical you are) and it receives censure. The weakness of democracy is that without strong institutions and traditions the whole thing is likely to collapse into anarchy, or devolve into the kind of autocracy from whence it came... Now let it be said, I don't think a cooperative model is universally applicable. For instance a shopping mall, where the building is far more valuable then any of the staff maintaining it, is not something that would really fit a cooperative model. Likewise most small businesses might have little to gain from being run cooperatively. At small sizes the democratic process is unnecessary (and it should be run by consensus). Furthermore, it's not such a loss if the business collapses due to poor leadership, compared to the devastation that can occur in communities when a large employer collapses(or moves away...). TL; DR: Perhaps corporations would be less shitty if they were owned and run by their own workers, rather then disinterested distant shareholders.