[ikurei]

I had a couple of eye-opening conversations about this the last time I was in San Sebastian. Not everyone there loves Mondragon as much as we think, some see it as a closed club that makes it arbitrarily hard to get a job with them depending on your connections. I met some workers unhappy of their hiring practices and I think their starting working conditions. No idea if they were fair or just resentful.

I still admire Mondragon and wish there were more companies like it, but now I try to remind myself that most characterizations from the outside are surely lacking in nuance.

[0xDEAFBEAD]

Yeah the problem with co-ops is that every new employee means reduced profit-sharing for existing employees. Ironically, companies in SV actually have a nice solution to this problem: Employees get equity, but newer employees get less than older employees. So from the perspective of old employees, it still makes financial sense to hire new employees, because the old employee equity becomes more valuable.

In technical econ terms, the marginal profit of new employees is typically below the average profit of existing employees. A profit-maximizing business only cares that the marginal profit is positive, and will hire until there is no additional profit to be made. A co-op is incentivized to keep average profit per employee high, which can mean reducing headcount in order to keep the average strong. So that's why co-ops can have a sort of exclusive club feel to them.

SV is actually an interesting example which proves how employee ownership can drive prosperity, but the typical co-op crowd doesn't want to talk about it because it's too capitalist-coded. In a way, SV companies show that employee ownership is not some sort of instant cure for everything which ails capitalism.

[Jolter]

What is ”SV” in this context? Silicon Valley? (Not a US resident, and I’ve never heard of any software cooperatives from there.)

[0xDEAFBEAD]

Yes, SV=Silicon Valley. Startups aren't co-ops (the term "co-op" implies employee governance for example). But employee compensation is heavily loaded towards equity or stock in the employing firm. If you're an early hire at a unicorn, you can make serious money off your ownership share in the company. It helps align the incentives of the employees and management. Press coverage of Silicon Valley doesn't usually mention it, but employee ownership is a huge part of the culture.