[monodeldiablo]

These are great questions and it'd be impossible to answer then all here satisfactorily. I'd recommend the book "Making Mondragón" for more in depth analysis of labor relations at the company, especially during the transition to the globalized economy.

In short:

1. Underperforming workers can still be fired. Their ownership stake is bought out by the firm. Because firings are costly, hiring is a more intentional process, typically involving a "trial period" at the beginning of employment that more closely resembles traditional employment (no ownership stake, no voting rights, easy severance).

2. Successful cooperatives exist in all sectors, but there are many variables at play. A tech worker co-op today is unlikely to be able to pay its worker-owners salaries comparable to what VC can provide, due to factors ranging from tax rates (capital is taxed at negligible rates compared to labor) to investment bubbles and concentration of wealth. Long-lasting cooperatives have lasted longest in agriculture and finance because they can operate more efficiently than firms which need to retain a chunk of their margin to pay investors.

3. There is no real role for a union in a worker co-op. Surprisingly, this doesn't mean they don't exist. Mondragón actually went to war against unionizing efforts at their firm in the 80s, which led to them increasing education on what rights and privileges worker-owners already have. Generally, though, worker co-ops align the incentives of workers with the firm such that unions are unnecessary.

4. The management structure of each cooperative is up to them. Most successful ones (including Mondragón) delegate decision-making to a core group of elected executives, just like in successful modern democracies. Major structural decisions are made by general assembly -- analogous to a stockholder meeting at joint stock firms.

5. Worker co-ops differ from ESOPs (firms that grant lots of equity to workers) in that they confer decision-making, as well as equity, to workers. ESOPs usually grant workers non-voting shares. I've actually seen the ugly side of ESOPs when my startup employer diluted my stake to nearly nothing just prior to a buyout. That would be a much more difficult prospect in a worker co-op.

6. I'm unaware of any systematic studies done on the relative propensity for different types of firms to externalize costs. I'd only say that there's certainly less incentive for worker co-ops to act irresponsibly, as they are directly answerable to their community, who both work at and own the firm, and usually live nearby.

And there's no obvious way in which they seem more incentivised to bad behavior than other types of firms.

For example, Mondragón were "caught" underpaying some workers in their overseas factories, in line with how other firms abuse their outsourced workforce. However, they were caught by their own worker-owners, and unlike other companies, Mondragón's worker-owners objected to this treatment and voted to provide their outsourced employees with a path to full ownership.

7. I've responded elsewhere with what's holding worker co-ops back and won't elaborate too much here. Suffice it to say that they would be much more common if there was a standard corporate form, consistent and non-discriminatory tax treatment, and and easier access to alternative means of raising capital.

Where some or all of these structures are in place, cooperatives are surprisingly common. I'd advise looking into the Emilia-Romagna region of Italy, in addition to Basque Spain for more examples.

[hackerlight]

> 6. I'm unaware of any systematic studies done on the relative propensity for different types of firms to externalize costs. I'd only say that there's certainly less incentive for worker co-ops to act irresponsibly, as they are directly answerable to their community, who both work at and own the firm, and usually live nearby.

That makes sense. Externalities will be less. I would love to hear how anarcho-syndicalists think that any remaining externalities can be managed without a state. Like, if I'm in a co-op with 10 people, I can still see us all deciding to screw over society just a little bit for our own gain, and telling ourselves a nice story that that's not what's happening.

> 7. I've responded elsewhere with what's holding worker co-ops back and won't elaborate too much here. Suffice it to say that they would be much more common if there was a standard corporate form, consistent and non-discriminatory tax treatment, and and easier access to alternative means of raising capital.

Don't both capital and entrepreneurship require asymmetric compensation for the unusual amount of risk of starting some ventures? Even if the playing field was levelled, why would a founder or investor willingly opt-in to a corporate form that will massively reduce their upside in the 10% chance that they end up succeeding? I could see why they would do it for a traditional business -- say, they're a group of 5 plumbers that start a co-op together, where some level of success is guaranteed and they don't project needing to hire 1000 additional employees that will dilute their upside as the business matures. But what about the far more risky (both capital intensiveness and probability of success) ventures, e.g. starting a nuclear fusion company? For these sectors I can only see two viable solutions: (1) accept that co-ops can't service these particular high risk sectors properly due to a fundamentally inadequate incentives, or (2) government becomes a VC firm and the traditional corporate form is banned.

[monodeldiablo]

> That makes sense. Externalities will be less. I would love to hear how anarcho-syndicalists think that any remaining externalities can be managed without a state. Like, if I'm in a co-op with 10 people, I can still see us all deciding to screw over society just a little bit for our own gain, and telling ourselves a nice story that that's not what's happening.

States are here to stay and are, in fact, necessary for the enforcement and arbitration of business law. They're a necessary ingredient to any regulatory regime.

I look askance at any solution that pretends to completely "solve" the issue of externalities. Humans are optimizing, externalizing creatures, and our organizations will reflect that fact.

Given all that, though, an ecosystem of cooperatives actually does do a better job of policing and creatively regulating externalities in a manner more beneficial to society than many forms of government regulation.

This is because governments are susceptible to regulatory capture by private capital, and the concentration of wealth into relatively fewer hands only exacerbates this problem. Cooperatives actively fight against the unfair concentration of wealth, and an ecosystem of cooperatives forms a network of reinforcing relationships that find opportunity in waste that private capital firms might otherwise externalize to the public to deal with.

A good example might be the worker-owned retirement homes in northern Italy. Staff earn higher wages -- and care is consistently rated as far better -- than at either for-profit or public facilities.

> Don't both capital and entrepreneurship require asymmetric compensation for the unusual amount of risk of starting some ventures?

Sure, but that's not incompatible with cooperative ownership. There are forms of worker co-ops which give greater ownership stakes to workers who contribute more, take on early risk, or have seniority. It's not binary.

There are cooperatives that look indistinguishable from SV startups. The only major exception is that they grant voting stock to new hires instead of non-voting share options.

> Even if the playing field was levelled, why would a founder or investor willingly opt-in to a corporate form that will massively reduce their upside in the 10% chance that they end up succeeding?

Because the odds of a cooperative succeeding are higher than with LLCs and joint stock companies (see upthread and numerous studies). In other words, many people would be more willing to accept a 50% smaller slice of the pie if the odds of success triple.

Another minor point here: Cooperative structures also have an advantage in sustainable longevity. VC-funded companies are exit-oriented and tend to struggle to settle into enriching, viable companies post-exit. Cooperatives offer a competitive advantage to the entrepreneur who is not looking to pump-and-dump their life's work, but instead build a sustainable business in the long term. All things being equal, workers will overwhelmingly prefer to work at a mature firm for ownership than simply for wages.

> But what about the far more risky (both capital intensiveness and probability of success) ventures, e.g. starting a nuclear fusion company?

Interestingly, that's not too dissimilar from what Mondragón was at its inception -- a capital-intensive, high risk business. And there are actually lots of cooperatives that succeed at these margins around the world. They're just not easy to start in the US due to a blend of factors including culture, concentration of wealth, and hostile regulations.

But I'd like to point out that, even if the answer is "accept that co-ops can't service these particular high risk sectors properly due to a fundamentally inadequate incentives," nobody in the cooperative space is advocating the eradication of joint stock companies or other corporate forms. Cooperatives are not a one-size-fits-all solution. There will always be cases when LLCs, LLPs, JSCs, etc are a more appropriate form. We just want more choice.

I would strongly support a federal law defining a standard cooperative corporate form and giving worker cooperatives preferential treatment under the tax code. I think society could only benefit from such a change.

At worst, we'd see a bunch of new cooperatives pop up on the fringes, where they had previously been too onerous to start or operate. At best, we'd see a much more democratic economy across the board, with workers more invested in the success of their firms and firms more accountable to their workers.

[hackerlight]

Awesome response. Any thoughts on what happened with Yugoslavia's experience with co-ops?

[monodeldiablo]

I actually live in Croatia these days and have some experience with zadruge (Yugoslav cooperatives). Many of the agricultural cooperatives still survive, but the worker cooperatives were largely converted into joint stock corporations in the early 90s and then asset stripped by private equity and crooked politicians for a decade or two thereafter.

Several family members worked at zadruge and that's where I get most of my information from, so take this all with a grain of salt...

One of the key issues with zadruge was that, while nominally cooperatives, they were actually owned and managed by the state. Directors were appointed by the communist party and not elected by the workers. As a result, a culture of kleptocracy crept in, since party rank and connections were more beneficial than seniority or hard work, and resentment grew between labor and management.

This has tainted the idea of cooperatives in the former Yugoslavia, so few people are interested in reviving cooperatives today, even though the core issues that plagued zadruge have improved dramatically since 1991.

They were, however, an experiment in democracy in the workplace, albeit limited. And that was radical for its time. Most people I've spoken with say that, for all their failings, zadruge were enriching and empowering places to work and much preferred alternatives to today's jobs.