Can a worker owned and managed economy work?

[Jerrymander]

It has been proposed in libertarian socialist and anarchist circles that industry and factories should be completely worker owned and any leaders of a company should be elected by them. Can it work? Could it eventually work in the future?

 

[superfreddy]

How would such factory finance operations? Who would risk capital?

 

[The Great Zaganza]

How would such factory finance operations? Who would risk capital?

Bonds, like all companies used to do.

 

[Spindrift]

It has been proposed in libertarian socialist and anarchist circles that industry and factories should be completely worker owned and any leaders of a company should be elected by them. Can it work? Could it eventually work in the future?

Election? I guess the idea is that all the best leaders will rise to the top, just like unions.

 

[superfreddy]

Bonds, like all companies used to do.

I wonder what kind of yield they would need to offer in order to place such bonds. Junk status?

 

[3point14]

This seems to work. It's not quite what you describe, but a little closer towards it.

I don't think they have elections though, I don't know.


https://en.wikipedia.org/wiki/John_Lewis_Partnership

 

[The Don]

It has been proposed in libertarian socialist and anarchist circles that industry and factories should be completely worker owned and any leaders of a company should be elected by them. Can it work? Could it eventually work in the future?

In theory, probably - in practice almost certainly not. Also not sure how it would scale. There may be room for one or two employee-owned organisations of each type but whether all could be is debatable.

There are examples of successful employee-owned partnerships, the John Lewis Partnership is one but it is run very much on a commercial basis with the employees sharing in the profits but delegating responsibility for running the business to the board.

I'd be concerned that the sort of people who would be elected by employees to lead a company may not necessarily be the right people to run the company. Effective and successful boards that I've been involved with have a range of different people on them and the tension between these people and the differing perspectives they bring means that the board is flexible and responsive. If all positions were employee selected then I'd be concerned that too many people of the same type would be on the board and that as a result it wouldn't perform well.

The thing I'd worry about is that this approach would tend to stifle entrepreneurs. Why would I bust my ***** building up a company with my original ideas if as soon as I take on my first employee (or at some other arbitrary threshold) that business is taken out of my hands and handed to a workers co-operative to run as they see fit.

I don't see this as a path to innovation but I suppose it could just about work in a stable company in a mature industry (like, say, a water utility). Then again wouldn't it be better if factories were owned by their customers and in that way would be run (in theory at least) for the benefit of the public at large as opposed to the employees or the shareholders ?


edited to add....

Ninja'd on the JLP by 3point14

 

[3point14]

I'd be concerned that the sort of people who would be elected by employees to lead a company may not necessarily be the right people to run the company. Effective and successful boards that I've been involved with have a range of different people on them and the tension between these people and the differing perspectives they bring means that the board is flexible and responsive. If all positions were employee selected then I'd be concerned that too many people of the same type would be on the board and that as a result it wouldn't perform well.

I don't know if that holds. I think that's very dependent on the owner-staff makeup. Given the performance of some boards selected in the usual way, I don't know that it'd give the worst results.

 

[Dr. Keith]

It has been proposed in libertarian socialist and anarchist circles that industry and factories should be completely worker owned and any leaders of a company should be elected by them. Can it work? Could it eventually work in the future?

Of course. Every company can be owned by it employees as soon as the employees can afford to buy it. One of my favorite restaurants is employee owned. The family that owned it sold it to the employees because they offered the best deal long term.

For me, I would not want to have a large portion of my portfolio tied to the same entity that supplied the majority of my income. All the eggs in one basket is not a very good plan for long term success.

Any attempt to force ownership from one party to another will stifle commerce and innovation.

 

[Puppycow]

This is the closest thing I've heard of:

https://en.wikipedia.org/wiki/Oneida_Limited

The company arose out of the utopian Oneida Community, which was established in Oneida, NY in 1848.[4] The Oneida Association (later Oneida Community) was founded by a small group of Christian Perfectionists led by John Humphrey Noyes, Jonathan Burt, George W. Cragin, Harriet A.Noyes, George W. Noyes, John L. Skinner and a few others.[5] In 1880, after more than 30 years operating as a commune, the Oneida Community voted to transfer much of the common property to a joint-stock company to be known as Oneida Community Ltd. effective January 1, 1881.[6]

Oneida Community Ltd. was one of the earliest joint-stock companies in the United States. Its founders' religious philosophy helped inform the early development of the company, in which members of the former Oneida Community became shareholders in the company. Its progressive nature also allowed for a woman, Harriet Joselyn, to sit on the board of directors — a departure from the norm for the time.[7]

Oneida Community started production of silver-plated flatware and hollow-ware in 1899 using the "Community Plate" mark. Oneida Community purchased the Wm A. Rogers and 1881 Rogers companies in 1929 and started producing a somewhat lower-quality line of products using those companies’ marks. In 1935, Oneida Community changed its name to Oneida Ltd.[8]

 

[Tippit]

It has been proposed in libertarian socialist and anarchist circles that industry and factories should be completely worker owned and any leaders of a company should be elected by them. Can it work? Could it eventually work in the future?

The problem with workers is that as stakeholders they don't have balanced claims, unlike shareholders. If workers were in charge of making decisions, they would quickly increase their salaries to amounts which would make the business uncompetitive, and the business would quickly fail. Shareholders-as-owners make decisions in order to maximize shareholder value, but they have to balance their claim with a number of other stakeholders, such as workers, suppliers, and customers, all of whom are required to make the business competitive and successful, and all of whom will revolt if their particular claims aren't satisfied.

But that isn't exactly what you proposed, which is requiring all owners to be workers, presumably by force of government. There is nothing preventing workers now from becoming owners in publicly traded companies, by simply buying stock in the companies they work for. If your proposal is driven by what I would agree is the highly unethical disconnect between the exorbitant salaries of CEOs versus other non-executive workers, then you need to investigate that aspect of finance which has consolidated the ownership of equity assets into fewer and fewer hands - monetary and bank policy.

You would also have to forcibly dispossess equity shares held by passive shareholders, which amounts to wealth confiscation/asset forfeiture. You would need a very good reason and a lot of political support to do this. Better to focus on the reason why assets like shares are concentrated into fewer and fewer people's hands - control of the money supply.

 

[Francesca R]

From any libertarian standpoint it would seem problematic to have to forcibly prevent any worker from selling her ownership stake to someone else. Similarly to preventing someone from retiring if she is rich enough (or is supported by others) but continuing to own controlling equity in the business and/or other businesses. So what happens if purely voluntary arrangements distill capital ownership and labour supply right back into the strata that the situation was supposedly designed to move away from?

Executive control is almost everywhere delegated to a small group (certainly including the John Lewis folks), the apparent conclusion being it is sub optimal to have mass participation in this side of running a business.

 

[psionl0]

From any libertarian standpoint it would seem problematic to have to forcibly prevent any worker from selling her ownership stake to someone else. Similarly to preventing someone from retiring if she is rich enough (or is supported by others) but continuing to own controlling equity in the business and/or other businesses. So what happens if purely voluntary arrangements distill capital ownership and labour supply right back into the strata that the situation was supposedly designed to move away from?

Employee ownership of companies is neither libertarian nor authoritarian.

The way a company operates is generally governed by its constitution (plus whatever laws the government makes up). There is nothing to prevent a company from having different classes of shares such as "ordinary", "non-voting", "employee", "retirement" etc. And each class of share can have different conditions attached.

Offering each employee a number of "employee" shares (under the condition that the employee pays for the shares from the dividends from the shares and that if they resign then they have to sell back to the company any fully paid shares they have) could be a powerful motivator for employee loyalty.

Executive control is almost everywhere delegated to a small group (certainly including the John Lewis folks), the apparent conclusion being it is sub optimal to have mass participation in this side of running a business.

That is generally the case and would presumably apply to companies (partly) owned by employees. What executive decisions need to be ratified by the shareholders is again specified by the company's constitution.

 

[caveman1917]

It has been proposed in libertarian socialist and anarchist circles that industry and factories should be completely worker owned and any leaders of a company should be elected by them. Can it work? Could it eventually work in the future?

Of course it can work. You also shouldn't forget that libsoc and anarchist proposals constitute more than just worker-owned workplaces, but for example also a cooperative instead of competitive economy. You can't just pick one aspect and present it in isolation. Well, I guess you could and that would leave you with what's called "market socialism" - but nobody really supports that particular one.

More importantly, before a meaningful answer can be given to your questions, answer this: does capitalism work? The concept of "works" here (as in: capitalism works, socialism works, etc) is nothing more than a proxy for ideological preference until you actually define the term.

 

[caveman1917]

The thing I'd worry about is that this approach would tend to stifle entrepreneurs.

Good. Anything that stifles the ravaging of society and the environment by so-called "entrepreneurs" can only be applauded.

Why would I bust my ***** building up a company with my original ideas if as soon as I take on my first employee (or at some other arbitrary threshold) that business is taken out of my hands and handed to a workers co-operative to run as they see fit.

Nobody's forcing you to exploit workers, and there's nothing stopping you from keeping your one-man company for as long as you want. If your only complaint is that you can't exploit workers, and society and the environment in general, for your private profit then you deserve as much consideration as the plantation owner whining about not being able to use slaves anymore - ie none.

 

[caveman1917]

Employee ownership of companies is neither libertarian nor authoritarian.

How is it not? There's almost nothing more authoritarian than the relation between the private owner of a company and the workers. Manual workers have the most basic autonomy over their own body made subservient to their master, while "brain workers" (I don't know the correct term for this) have their autonomy over their own thoughts made subservient to their master.[*] If this master called himself "government" rather than "workplace owner" liberals would be all over screaming about authoritarianism.

* Huh, maybe this is why manual workers tend to be the less stupid of the two, at least they still retain their freedom to think for themselves.

 

[Francesca R]

[ . . . ] the ravaging of society and the environment by so-called "entrepreneurs" [ . . . ]. Nobody's forcing you to exploit workers [ . . . ] If your only complaint is that you can't exploit workers.

These seem to be nothing more than proxies for your ideological preference, since you did not define the terms.

 

[caveman1917]

These seem to be nothing more than proxies for your ideological preference, since you did not define the terms.

Exploiting workers can be defined in terms of surplus value. Ravaging of society and the environment by so-called "entrepreneurs" can be defined by the profit of the operations being private to the "entrepreneurs" whereas the (long-term) costs are put on society as a whole. If the costs for making the operations environmentally sustainable were factored in there would be no profit - it'd be about break-even.

Your turn: define "voluntary arrangements" - is giving into the threat of "obey my commands or starve to death" a "voluntary arrangement"? Or is it just a proxy for your ideological preference?

 

[Francesca R]

Exploiting workers can be defined in terms of surplus value.

Does not help really. There is typically surplus value on both sides of an employment arrangement otherwise the arrangement may not get made. So what is "exploiting workers" to you?

Ravaging of society and the environment by so-called "entrepreneurs" can be defined by the profit of the operations being private to the "entrepreneurs" whereas the (long-term) costs are put on society as a whole.

How about if the long term externality on society as a whole is also a net benefit? Something other than ideological preference proxies should be used to measure that rather than ideological preference being used to declare it as fact.

Is "ravaging society" when there are nothing but negative externalities to the operation of a business? Or when there are net negative ones? Or when there are any negative ones at all? Seems possible to classify all entrepreneurial activity or none of it or anything in between as "ravaging society". Do you just know it when you see it?

If the costs for making the operations environmentally sustainable were factored in there would be no profit - it'd be about break-even.

What?

Your turn: define "voluntary arrangements"

I already did fairly specifically. A worker selling her ownership stake to someone else, another worker retiring because for one reason or another she could afford to.

 

[caveman1917]

Does not help really. There is typically surplus value on both sides of an employment arrangement otherwise the arrangement may not get made.

No there isn't.

How about if the long term externality on society as a whole is also a net benefit? Something other than ideological preference proxies should be used to measure that rather than ideological preference being used to declare it as fact.

Are you claiming environmental degradation is a net benefit to society? And that's why society, rather than use available resources so as to stop it, donates these resources to so-called "entrepreneurs" instead?

Is "ravaging society" when there are nothing but negative externalities to the operation of a business?

Can you define "externalities"? Just to make sure that it isn't an ideological category used for nothing more than the justification of placing the burden of some costs of the operation on society as a whole, whilst keeping the profit private.

Seems possible to classify all entrepreneurial activity or none of it or anything in between as "ravaging society".

Free-riding does not constitute activity.

Do you just know it when you see it?

I just gave you a definition, try using it.

What?

What what?

I already did fairly specifically. A worker selling her ownership stake to someone else, another worker retiring because for one reason or another she could afford to.

How would you know if any of those were voluntary? In the early 1990s in Russia services got defunded and everyone got shares in the newly privatized workplaces. As society practically collapsed (for example life expectancy dropped by 5 years) there were those "entrepreneurs" willing to buy these shares at low prices, which people of course did given their circumstances. You have a peculiar notion of "voluntary".

Oh look! The share price of the company you work for just went up, good thing I just bought me some. Now work even harder you slave! That new yacht I need isn't going to buy itself, you know. ...Yeah I like this "entrepreneural activity" actually.