[StudentStuff]

Most US unions have been heavily neutered and de-politicized, and rarely have the ability to force management to change course. Outside the US, its not uncommon for unions to own a good share of the company, holding board seats which let it affect who manages the company, and in some cases with the business becoming entirely worker owned.

[mlillie]

This is what I was thinking. I know a big complaint especially of the larger US unions is that they just end up mirroring the bureaucracy & power structure of management anyway

[barry-cotter]

That’s not how unions get board seats in countries where they’re on the board; they don’t own significant parts of the company. They have board seats because that’s legally mandated. This can help with short and long term planning but it’s not a free lunch.

A worker owned business is either a partnership or a co-op. The forms have been around for centuries. They’re not generally competitive with firms where ownership and employment are separated or they’d be far more common.

[dragonwriter]

> They’re not generally competitive with firms where ownership and employment are separated or they’d be far more common.

That logic doesn't actually follow; even if they performed equally, capital owners get more return in conventional firms (because they get all the returns, not just partial returns from lending capital), so they will favor conventional firms. So, all other things being equal, employee-owned firms have a disadvantage in access to capital and so can be expected to be less common than traditional firm unless they outperform enough to negate the return disadvantage for capital providers.

[barry-cotter]

That’s a consequence of the fact that diversification is good. You don’t want your investments and your employment in the same place unless the greater productivity is enough to offset the added risk.

I don’t see any disagreement between what you wrote and I did outside of companies with explosive growth trying to dominate an industry, i.e. VC.

If your aim is to build a cooperative supermarket chain like the Coop in the U.K. banks will happily lend once you have a proven business plan. So someone does need to put up the initial capital but once you have a proven business model you’ll be able to borrow from banks and capital markets in the same way as conventional firms.

Your argument fails to address the sectors where partnerships and cooperatives dominate, law, accounting and management consulting. I’m sure there are others but the fact that every twenty years or so the Big 4 all spit out a giant services company but they don’t change their own corporate structure is suggestive that a partnership model works. And McKinsey, Bain or BCG would have no trouble accessing capital if they wanted to stop being a partnership.