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An Italian Region Where Co-Ops Produce a Third of GDP (2016) (yesmagazine.org)
206 points by danielam 5 months ago | hide | past | web | favorite | 119 comments

Interesting to see this pop up here! I'm the author, and work for a research institute looking to learn from examples like this one to build a more resilient and democratized economy in the US. While Emilia-Romagna isn't perfect, one really interesting thing it shows is that you can build a high growth, integrated industrial ecosystem using cooperative capital, with the appropriate policy supports and federation structures. In some ways it is more interesting than Mondragon (the other big proof of concept for at-scale worker cooperatives) because it is far less monolithic.

Anyway, if you are interested, check out more of our work at https://thenextsystem.org and https://democracycollaborative.org

As an Italian I would like to point out that there is a lot of political clash about this. This ecosystem has bred a lot of leftist politicians over the year and this has continuously been exploited by the right to attack the “coops” as “coperative rosse” (red coops), which - in the Right’s view - leverage political networks and contacts to gain subsidies and tax exemptions on social activities. I personally do not agree, but it is true that Emilia Romagna has historically been one of our most socialist/communist regions. Please note that in Italy “communist” is not an insult (unless you use it like that as Berlusconi does), but it technically just referred to being a voter of the historical Communist Party (recognized as one of the most important elements of our democracy until the 80s).

In regard to Retail, this has led to a long-term spat between Mr. Bernardo Caprotti, the CEO of Esselunga until 2013, and COOP, the Retail cooperative mentioned in the article. Esselunga is a large retail chain, particularly popular in the center-north. In 2007, Mr. Caprotti wrote a book called “Falce e Carrello” (literally sickle and shopping cart, a play on falce e martello, Italian for sickle and hammer) which became sort of a bestseller. In the book he accused COOP of unfair market practices to block the expansion plans of Esselunga in the so-called red regions, with Emilia Romagna as the central stage for these accusations. Although Caprotti passed away in 2016, a lawsuit brought by COOP against him is still ongoing. First and Second grade had opposite results so far. The case is now being examined by the Italian Appeal Court, which will have a final say on the case.

I’d just like to add that the COOP’s supermarkets are probably the best food shopping experience you can think of. If you’re visiting Emilia Romagna, just get into one. You’ll see that the stereotypes about Italian food quality and variety are true!

Edit: toyg’s comment, below, has a great take on the critical points of the COOP system. (Just to clarify: Caprotti’s accusations were driven by opposing ideology and personal grievances, but they weren’t completely unfactual)

Well it is true that Italian coops are very left wing as opposed to Uk coops which are mildly leftish (I a using the uk/euro definition)

Btw I was a member of a UK tech worker coop - Poptel

One amusing anecdote when one of our guys went out to Italy to try and sell the idea of the .coop domain to coops he got the view that some of them thought the internet was a CIA plot

> I’d just like to add that the COOP’s supermarkets are probably the best food shopping experience you can think of.

As an italian I am not here to deny this.

I have to point out, however, that Esselunga-branded products are usually very good in quality.

Edit: I am not affiliated with Esselunga, but I have heard a lot of cool stories from people working there.

True. As a general given: we pretend a level of quality for “normal tier” food products in big retail stores (not discount stores of course) that would make Whole Foods pale.

I would like to put you in touch with a few very interesting/influential people in Italy. Please drop me an email (my HN username @ gmail).

Funny, I grew up there.

At scale, Emilia co-ops are the same as any other business: they want to make money, screw workers. The veneer of social conscience is pretension, these days. A lot of jobs (most?) higher in the food chain are assigned through old-boys’ networks and political patronage (which is common even in the private sector, in Italy). Most large coop groups are struggling and surviving only with mergers. As the political system that allowed them to get established (stable 50-year left-wing governments across the whole region) slowly crumbled, their markets were blown open to competition, and they reacted by turning into more and more traditional businesses - or going bankrupt under clouds of political scandal.

A lot of people in the area think this type of development has fundamentally betrayed its origins and should be reformed at the very least.

EDIT: re-reading, I might have been a bit unfair. Coops had a tremendous social impact, until around the early 1980s. They were part and parcel of a development model that had little to envy to Scandinavian social democracy. It's just that they eventually changed, as all institutions do, prioritizing self-preservation and enrichment over their social role. This is particularly true for larger ones (generally in construction, food distribution, maintenance services, banking, and insurance).

These coops may be challenged by other, leaner coops. There is no indication that the problem is, by itself, the fact that these companies are run as coops, since traditional companies are plagued by the same issues you mentioned.

Absolutely. The point is, though, that the model isn’t intrinsically better than public corporations, once you reach a certain size.

Interesting to see, how perceptions differ when you're from the place. I've experienced this too when progressives from the US at home praise certain German policies as the way to go, yet they never seem to put the same effort into researching the local criticism as they put to in taking the positive claims at face-value.

I'm a fan of co-ops, but gave up on the idea of replacing the private sector with it. If there's a market for them, they can compete easily (usually through quality). I'm inclined to see them as better agents for social welfare programs [1].

I'd like to hear from the author why they focus on some (in foreign eyes) romantic region in Italy and don't look at the dryer examples of large-scale co-ops that exist throughout the rest of Europe:

Germany's and Switzerland's biggest retailers are co-ops (Rewe, Edeka and Migros, Coop). Italy's biggest retailer is also a co-op. German co-op retail-banks claim 20% market share. Austria's Reiffeisen Bank is the country's third largest bank. The world's biggest sugar-producer Südzucker is a co-op. The list of old co-ops that have scaled over time is long and studying them I think would provide much needed insight if we are to claim the "advancedness" of co-ops.

Specifically all the scandals that have popped-up, like the "co-op-Scandal" of the late 1980s, one of Germany's biggest cases of financial fraud.

[1] For example don't let the city/state build cheap housing, rather subsidize housing co-ops. Once you do that, you get political entanglement in return and in general the imbalance of the private-sector being marginalized. But I prefer that anytime over government housing. Germany is full of both (co-ops and city-run housing, with the latter being usually run-down and the former trumping median private-sector housing while being 30%++ cheaper).

I'm really curious why co-op building companies provide cheaper housing compared to regular private companies.

Public sector inefficiency is well studied. Co-ops efficiency however not so much, at least for me.

Disclaimer: I rented at two different co-ops in my life. My experience was great. Renters are „invested“ because they are: they buy shares, that spill dividends, they have a say as shareholders of private companies do.

Attempt at answering: Co-ops try to provide affordable quality housing thus gains are usually reinvested via repair work and they don’t engage in selling their housing stock on the free market. Property they built, usually stays theirs forever. I think the biggest leverage on prices comes from land allocated to them by a city. As most shareholders are also renters they push the co-op leadership into keeping rents low and over time prices can diverge quite a lot from free market rates.

I see. But that also mean the original investors - the ones that put the initial money - are getting sub par returns. Or government land subsidies play an important role here assuming that private developers have no access to it.

I don't see the lower returns as particularly damaging - there has been too much speculation in real state in recent decades. But that might not be the case once (if) returns get lower.

If the original investors are also living there (or bought in), then the cheaper housing costs make up for the lower returns, or no returns at all. The cheap housing is the return.

Now technically you could argue that the outcome would be the same if you lived more expensively and you were an investor in some other for-profit housing with high returns. But that’s usually not the case, as the cash amounts you’d need initially are too high for most people.

Answering both of you guys: Being an original investor of a co-op usually meant you were really struggling with the alternatives. That is a return itself.

There are also private housing stock examples for that behaviour: gentrification theory sees the so-called "pioneers" who move into low-quality neighbourhoods. They are doing much of the work improving quality-of-live/attractiveness that later on others will reap the benefits from like real-estate developers and long-time landlords.

Yes, land subsidies are a key engine. I'm aware of the moral problems that creates. But if I assume that within democracies a tendency persists to have some sort of social welfare, then I think it is more constructive to engage in how to organize this redistribution. Supporting co-ops seems like a very lean and non-harmful way (compared to government housing or state ordered quotas on free enterprises).

Im from that region. Coop are anti-meritocracy. Many times the coops is a way to bypass tax and rules and do unfair concurrency. Coops give low pay to workers and they can because workers are considered company members. Coops are very politically connected and many time implied in corruption cases.

> Coops are very politically connected and many time implied in corruption cases.

I don't see how this is any different from non-cooperative companies.

That's the point. They are no better, but we may have the romantic expectation they would be better than that.

I thought your point was to make coops to look worse than standard companies. If they are the same, then I prefer coops because you have more social control, rather than a company that is only interested in delivering profits to their shareholders.

Coops are the same though. The only difference is the shareholders

err no the 7th principal for coops is concern for community

Kinda hard to prove that one though. Lots of businesses also claim they are concerned about the community.

The difference is that italian non-coops avoid talking about themselves as saviours of the proletariat

All of those things could be true and coops still be preferable to the alternatives.

In America, at least, any group of workers are free to form a coop. It's perfectly legal. Why not give it a try, and report back to us how it worked out?

To be clear, I didn't say that I believe a coop was the better system. But as an American, in my experience every one of fbn79's criticisms could equally be applied to private corporations. What matters is the relative difference and the overall economic context. And if he grew up steeped in a system that was heavily oriented toward the coop, I couldn't give him the benefit of the doubt, either, in the sense that it may not have been obvious to him that a more traditional private enterprise system could have outcomes that were even worse--like greater unemployment with at least as much political corruption and wealth skimming.

Also, I spent half my childhood growing up in the heavily unionized Chicago area, and half in the vehemently anti-union Deep South. In both regions adults always complained about the corruption and inefficiency of unions. Which always perplexed me because as a naive (though arguably objective observer), both private and public works projects in the Deep South were immensely more inefficient than in the Chicago land area. They took longer and seemed of lesser quality even though often less ambitious. And while as an adult I understand the truth in the complaints about unions--there often is corruption and especially inefficiency and back-scratching--the outcomes aren't necessarily worse than in non-union systems, and sometimes much better. It depends on the larger context.

That said, there are plenty of worker-owned coops in the U.S. I recently discovered that Litehouse Foods is one such business. I wanted to know if Costco would keep selling Litehouse's awesome and reasonably priced freeze-dried herbs, so spent an evening Googling everything Litehouse related. I've been buying Litehouse freeze-dried herbs at Safeway when on sale for a couple of years. The grocery retail prices (sale or not) are competitive with online and mail-order freeze-dried manufacturers, but the Costco prices were so incredibly low-priced that I was curious how sustainable it could be. I never could figure out if Costco will continue selling those herbs, so last time I was at Costco I bought enough freeze-dried garlic, basil, parsley, oregano, thyme, dill, green onion and red onion to fill up two entire shelves in the kitchen.

So the main problem that co-ops have is that they don’t have access to traditional forms of capital. You can’t get VC funding as you can’t give out equity, obviously, and banks won’t lend to you. The co-ops that I’ve seen in recent years have been started on Kickstarter funding based on support for e.g. pop-up stalls that the co-ops ran in early days, and that only goes so far and only works for certain types of companies.

Not being able to buy or sell equity sounds like a crippling problem for coops. One coop cannot even invest in another coop.

I'm not sure why it's a crippling problem. (Most SMEs outside the tech industry do not sell equity to raise funds, and the general point of a co-op tends to be to provide a living for its workers, not to take over the world.) The crippling problem is that nobody will lend to you even where traditional businesses could borrow.

I think so too. In principle, the workers still have democratic decision-making power in the operation of the co-operative. So a functioning co-op is still better than any hierarchical corporations, which usually suffer from the same problems anyway.

Why do you think democratic decision making in a corporation is a good thing?

Prevents the grave unequal power balance between workers and owners, by doing away with the concept of "owner" entirely.

But that has nothing to do with optimal outcomes for a business or the optimal utility for society.

Also, it doesn't dispose of the concept of owner. It's exactly like a publicly traded company with shareholders. The only difference is that the shareholders are restricted.

if "optimal" outcome for a business comes at the expense of conditions for workers, then I wouldn't consider it optimal

Any particular reason you think that?

Because private, investor-owned corporations can also be

* Anti-meritocratic

* Abused as vehicles for tax avoidance

* Harm competition (indeed, avoiding, minimizing, or killing competition arguably encompasses the majority of sales and business strategies)

* Pay low wages, especially relative to management, and particularly relative to upper management.

* Rely heavily on political connections, sometimes to the point of classic quid pro quo corruption.

My point was merely that all of those characterizations not only could be made of private corporations, in some economic markets private industry can be even more abusive than other forms of organization.

You can't compare actual coops to the imaginary, Platonic ideal of free market capitalist enterprise. You have to compare it to what capitalist enterprise would actually look like in that region if it displaced the coops. The dynamics that breed corruption won't disappear. A more heavily capitalist, investor-owned system could result in any number of possible outcomes, some worse and some better, and it's not at all obvious which would be more likely.

The first thought that entered my mind when I read his criticism was that maybe he should ask migrant Mexican farmworkers in California if they'd like to swap places with the Italian coop members. I suspect that California agriculture produces more output at a lower price than in the Emilia-Romagna region, but recent political trends the world over should make it clear that maximizing short-term economic efficiency isn't politically viable, regardless of whether it objectively maximizes overall social wealth. And regardless of whether it maximizes long-term wealth equality--we'll never see those fruits if the social and political fabric disintegrate.

All of those things apply to coops.

Coops reward politically inclined members who can rally crowds. They are not meritocracies at all.

Coops compete with others in the same way any other corporation would. In fact, employees who are members are more motivated to play dirty (a.k.a. cheat) than regular employees in a corporation.

Coops are just as subject to corruption. Just look at the coop connections with the mafia in Italy.

>Coops give low pay to workers and they can because workers are considered company members.

How is this the case? I was under the impression that since workers were company members they would exert more pressure to increase wages.

No, insofar as they are cooperative members, they're assumed to have fringe benefits (of some intangible, prospective nature) that compensate for the lower pay. The assumption, I suppose (hackneyed though it may be) is that if people are willing to work for lower pay, they must have some other benefit that brings them up to par with other employment opportunities.

And no, Italian law makes desperately little sense.

So is this a case of the co-ops just not making enough to pay everyone a decent amount, or is a higher-up still taking a significant chunk of the profits? If the latter, what's preventing the workers from voting against that?

Higher ups make more money (which often helps their para-political careers), but mostly profits are going back in the business - not necessarily the same business. Some of it ends up in "friendly" political activities of every sort, some in cooperatives that are desperately unprofitable but politically convenient, some of it goes in real estate, etc etc.

This worked beautifully while managers and political directors were ideologically motivated and somewhat honest: the sectors making money were financing massive expansion everywhere else, pushing the model, and because workers were similarly motivated, overall costs were always pretty low, generating virtuous dynamics.

Then three things happened: the USSR collapsed, irreversibly killing the dream; long-term effects of bad hiring policies finally came to bear (historically, if you attempted a career in The Party and failed, someone would find you a job in a cooperative, regardless of your actual skills); and the wartime generation (people who had literally fought in the mountains and been persecuted under fascism) was naturally replaced by more cynical and greedy boomers.

Cooperatives slowly migrated towards a more traditional corporate setup, but worker compensation (unsurprisingly) was not adjusted. Coincidentally, Italy has been economically fragile since the late '80s, but because of the political implications, cooperatives tend to avoid redundancies (they do happen, but they are somewhat rarer than elsewhere); people value that security, so they kept voting with the boss. There are indications that this might have changed recently, but tbh I'm not close enough anymore to say whether that's true.

I've been an employee of a Canadian Co-op, and the union and the company were really the same thing (a captured union)... so where will you vote? Nearly the worst working conditions I've ever encountered.

I believe you, but that's just a bizarre situation because a) in a coop do you not just vote on who the management is and how salaries and working conditions are set? And b) your coop needs a union??? Representing the workers against who? We must not have the same definition of coop. Again I'm not saying you're making anything up, that's just quite astonishing.

I should have mentioned that the customers were all members of the Co-op; so that drowned out the votes of the workers.

We BADLY needed a union, management was only interested in serving themselves, which they could do well enough 'cause few members voted.

Remember that corruption and Co-ops have a long history in the U.S - early Life Insurance companies, many of which survive, were formed as Co-ops 'cause they founders knew the policy holders wouldn't show up to vote: therefore management could pay themselves very well and structure the company to serve themselves.

Well that's enlightening..

Kind of makes sense if you look at it as "(collective) self employment", in so far as minimum wages don't apply to self-employed and so on.

Then you get to this parallel in laissez faire market economy, where low end service jobs are routinely undercut using single-client subcontractors who are self-employed only in name. Interesting to see how very different paths can lead to very similar results.

concurrency = I think you mean "competition".

source: My native language is also Italian

Funny, the same confusion exists in French "concurrence" can mean either "concurrency" or "competition". Here the meaning one aimed for was indeed "competition".

German too: competition is "Konkurrenz", though concurrency would be "Gleichzeitigkeit" - literally, same-time-ness

While we're onto German, I always thought that eventually is the most confusing English word for a German speaker; an evil twin, so to speak.

While the German eventuell means possibly, the English word means that something will happen definitely, but at a later, unspecified time.

This can be confusing even to people who are well versed in both languages.

That one definitely confused me for far too long. If you've never read it, Mark Twain has an excellent little piece on German:


In Spanish, I believe it's only used to mean competition.

Interesting. What Italian word best maps to "concurrency"?

The original mistake derives from the fact that the word for "competition" is "concorrenza" in Italian.

That is the most common meaning, but "concorrenza" also has a very uncommon one, which is indeed "concurrency".

This is not much of a surprise though. The Latin origin of both words is "cum currere" which means "run together. Why it got to mean competition in Italian I don't know.

(It must be noted though that the verb "concorrere" keeps the meaning of running together and does not mean to compete. For that the verb is "competere")

But no one would use "concorrenza" for "concurrency" in Italy. The best substitutes that come to mind are "parallelismo", or, less common "concomitanza".

(Yes, I'm Italian too)

> which means "run together. Why it got to mean competition in Italian I don't know

That seems obvious? To compete, you have to "run" (perform whatever activity you compete in) "together" (same activity, same time) with the other guy? Most literal example is a (running) race, which is a competition, literally featuring people running together.

Competere then goes off to do duty as something like 'be responsible for':


Languages don't line up 1-to-1

(I'm from Oregon)

Indeed, that's another meaning. The noun "competenza" (competence) comes from this meaning.

Laungages are fun, aren't they?

But notice that in the example you linked, there is the pronoun "mi" (to me). A pronoun that indicates the recipient is required for that meaning (it would be a dative case in Latin or other langage with cases).

"To compete with someone" instead requires the preposition "con" (with)

Probably something that is close to the German "Konkurrenz"

(edit: which "maps" to concurrency, by the unwritten rules of how English and German map their respective loan words from Latin, but translates perfectly to competition, but not at all to concurrency)

The correct translation is "parallellismo", which has an obvious etymology.

Parallelism isn't concurrency, though!

You would make the distinction by prepending “fully” (parallelism) or “partially” (concurrency). Unfortunately the language of Dante doesn’t really allow for the finer points of CS :)

Well yes you might pay lower wages but make it up in more tax efficient dividends. - certainly being a member of a UK coop does have some advantages.

It is true that coops ae inherently political as all the members should be taking part in the internal democracy.

That’s one of the things that work well at small scale (no real boss! Democacy! Sensible decisions!) but tends to fail at scale: i am a coop member (UK) and even a building society member (which is basically the same thing, just dedicated to real estate and banking), but I just can’t get myself to vote, because I don’t know anything about the candidates or the dynamics.

I think co-ops are great for actual workers (i witnessed myself the best side of this), but once they grow they inevitably onboard a lot of other people and the whole concept goes a bit out of the window.

There is also the pathology of a cooperative that needs to change to survive, but it’s forbidden doing so by members. E.g. a transport coop with a lot of buggy-whip technicians will find it hard to switch to a car-based model, because “buggy-whippers” are not going to vote themselves out of a job.

As a fellow italian, I am glad to see people from Emilia Romagna pointing out that there are downsides too.

The problem isn't coops, the problem is individuals.

It's hard to have co-ops without involving at least some individuals, of course, and my experience is that sooner or later the wrong individuals get ahold of every co-op I've been a part of - perhaps because the wicked are willing to put in the time, to capture it.

Those damn, pesky humans. They tend to ruin every utopia that works great on paper.

I'm reminded that years ago I read about Barcelona during the Spanish civil war, how some factories there developed internal structures inspired by communism or anarchism, and that they were productive in that mode. As an American born in the 80s, the decade where we seemed to begin blindly accepting that such structures "cannot" work, it was a fascinating concept.

Then I got to the tech industry and found I worked best in small, decentralized teams without a lot of top-down control and decision making. Plus it doesn't hurt if everybody has some equity. It seemed like the same phenomenon at work.

There are some interesting efforts around bottom up democracy in Northern Syria, the BBC had a fascinating program about it recently.

I believe the program was called Accidental Anarchist:


That was it.

> Having “intrinsic motivations”, sometimes a true passion, for what the social service worker does is the best prerequisite to have a satisfactory relation with clients.

This. Doesn't this hold for so many professions or just so many things we do in life?

What an excellent interview and what good to see such a positive insight on (a part) of Italy's economy. In the aftermath of the financial crisis in 2008 a lot of Italy bashing (together with basically all Southern European EU countries) has been going on, most of it completely based on stereotypes.

Also makes me wonder if cooperations like these are one of the reasons why (Northern) Italian design is so damn good.

Italian design is a result of a 2000-year-old legacy of excellence in art and, sadly, has nothing to do with cooperation. The famous names (Bertone, Pininfarina, Ferrari etc) have always been regular companies, and Emilia is not really a traditional center of design activity - for that you would look at Milan, Rome, and Turin. You do have the DAMS in Bologna, aka "Umberto Eco's faculty", but it's always been more about media than design.

The somewhat-distributed coop model traditionally helped and incentivised STEM-oriented schools. Emilia has some of the best engineering schools in the country, both at university level and below, and a huge network of engineering-based companies working in industrial automation and precision instruments - including the Motor Valley of Ferrari-Lamborghini-Ducati fame. Even there, you really remember the cars designed by Bertone and Pininfarina, studios based further North.

Extract from https://thenextsystem.org/learning-from-emilia-romagna:

"The founding principle was based on common economic action as part of a general vision of society not based on individualism and self-interest".

Co-ops are just the same as guilds, oligopolies, etc. They are (usually government-sanctioned or government-protected) producer organizations that set quotas and approval processes to reduce the threat of competition and new entrants, usually relying on official government policy to enable them through import tariffs, "cultural protection" regulation and subsidies (such as tax waivers).

The result is an inefficient system that incentivizes inequality and lowers productivity, protecting the interests of the insiders in detriment to society.

And, from what I hear from Italian friends, they are usually linked to the local mafia group.

The same is true for any business or corporation. The real key factor here is that coops at least open up the possibility of workers sharing in the profits generated by their labor. A traditional capitalist corporate structure incentivizes the complete opposite: pay workers as low as you can get away with, so you can personally pocket more profits.

Furthermore, in a corporate structure, those at the bottom of the rung have absolutely zero say in what upper management does.

> The same is true for any business or corporation.

No, coops here survive because of government protection against competition.

> The real key factor here is that coops at least open up the possibility of workers sharing in the profits generated by their labor.

No, they don't. A coop can be of owners, as it is frequently the case in Italy. A coop of small farms, each employing a dozen people, doesn't necessarily bring any benefit to those employees, only to the owners.

And it leaves them vulnerable to competition from outside, which then require even more government protection, hindering trade and economic development.

Corporations can capture government just as much as coops. It depends which is relatively more effective at swaying policy, money or votes. In the U.S. contemporary social and political dynamics make money much more important as voters currently suck at tracking the relationship between their desired outcomes and actual policy. But at other times votes were more important. It depends on the dynamics in Italy. (Or maybe it just depends on the labor system--it's maybe not a coincidence that votes were more powerful in the U.S. when unions were big, and money more powerful when business interests dominated policy. In that sense, you can expect corporations or coops to slowly capture government, regardless.)

Though some of the Italian statistics were ambiguous as to whether they included non-worker-owned coops (perhaps even deceptively so!), the main thrust of the article was clearly about worker-owned coops

  While cooperatives in the United States claim about 130
  million memberships, these are by and large within consumer
  and producer-owned co-ops, not cooperative workplaces. Only
  around 7,000 people nationwide are part of worker co-ops.

If the workers and the owners are different people, then is it still a coop?

Yes, your view of a co-op is too narrow: http://ncba.coop/what-is-a-coop

Ok but one of the 7 cooperative principles in that link is "democratic member control", which is exactly what I'm referring to. If you're going to say, oh well not every employee is a "member", well, I don't think you can make the claim that because Coca Cola has employees that might be stockholders, that that makes it a coop.

Any company has democratic member control, but the "members" are the shareholders.

Coops aren't any different.

No it's not what you are referring to. The mistake you are making is thinking employees == members.

Yes a producer coop may well employ non members - though in theory a worker coop doesn't John Lewis in th Uk is looked down on by the rest of the worker coops fro employing non members as cleaners

All coops are made up of owners its what a coop is.

Your talking a producer coop which a lot of the US ones are including one that supplies KFC.

> A traditional capitalist corporate structure incentivizes the complete opposite: pay workers as low as you can get away with, so you can personally pocket more profits

That's incorrect. The Capitalist structure enables multiple avenues of labor competition, one of which is to pay more than the next company to get the workers you need, and to pay workers more, ie take better care of them, to keep them happy. These approaches are extraordinarily common.

That so many businesses offer health insurance benefits - such that half of all Americans get their health insurance from their employer - wasn't always a legal requirement (and in many cases still isn't). That happened out of labor competition. It's no different than numerous other competitive benefits that companies choose to offer.

Google, Microsoft, Netflix, et al. often pay programmers extraordinary salaries to attract the best. The competition between companies has driven salaries to the moon. See: AI talent.

The SAS Institute, as one example model, has been doing profit sharing for four decades, and it has proven to be a wildly successful Capitalist approach.

Walmart has used the over-paying approach for decades. By intentionally paying more than they absolutely have to based on state / federal minimum wage requirements, to lure labor away from smaller businesses that can't match what Walmart can pay. Walmart has had a voracious appetite for labor over the last 30 years, the sole means to keep 2.x million people on the payrolls, is to out-compete on pay.

Speaking from experience of having seen it up close across multiple decades, if the federal minimum wage is $7.25 and you pay even just $9.25 or $10.50 instead, you will attract considerably superior employees versus if you pay the minimum. And the quality gap between those two types of employee, is surprisingly vast. Even if you're running a very thin margin business with minimum ability to pay high wages, a convenience store for example, paying a few dollars more per hour is well worth it because it produces a big leap in the quality of employees you can hire.

Between 1999 and 2014 the percentage of non-elderly enrolled in employer-sponsored coverage dropped from 67% to 56%.

Healthcare coverage became popular because of unions and because of government tax policy combined with government regulations that require employers to offer workers the same healthcare plans as management (if provided at all). Moreover, the overall insured rate also declined over that time period.

What really changed between 1999 and 2014 was the continued decline of unions concomitant with accelerated overseas out-sourcing and a shift to part-time labor (where government regulations regarding benefit equity permits greater discrimination against employees).

Make of that what you will (the implications are complex), but realize that in terms of labor market dynamics and relative to what's theoretically economically optimal, the predominance of employer-sponsored healthcare is a very... odd... outcome, and hardly an exemplar of the benefits of free market enterprise. In as much as it was beneficial it required external, non-market[1] pressures, and in any event it's hardly praiseworthy.

[1] I'll assume for the sake of argument that government-enforced union arbitration is more market antagonistic than the government-enforced limited liability of corporate stockholders. But in my view I don't see how the laws which make it viable for unions to bargain collectively in the labor market are worse than laws which make capitalist financing viable.

The existence of such a thing as minimum wage, paid vacation, the 40 hr work week and so on were the results of union agitation, not the free market.

Unions are as much a part of the free market as business owners and customers.

"Free market" refers to a currency system and financial system, usually established and managed by the state, which allows the value of goods and services to be set by supply and demand. Unions use strikes to negotiate with management. Not the same thing.

Not everyone shares that definition of a free market, but fair enough.

Actually that's the commonly used definition of free market in economics.

You might be confusing it with laissez faire, which isn't necessarily a free market.

"That so many businesses offer health insurance benefits - such that half of all Americans get their health insurance from their employer"

I find it a rather sad state of affairs that you need private health insurance in the first place.

While I agree with you that competition for some skills that are in high demand tends to push wages up significantly for those who are lucky enough to possess such skills, for majority of jobs where there is ample supply of workers, companies certainly favour distributing profits to management, dividends and financial engineering like share buybacks rather than spending it on the workers.

In an employee owned organisation you would assume the worker/owners would get higher compensation, but it seems like their governance is also often corrupted and in reality they can be worse places to work at.

It is interesting to see if governance models using technology (like blockchain based equity and voting, like http://aragon.one) for organisations prove to be more resistant to corruption and can usher new ways of organising ownership and work.

That so many businesses offer health insurance benefits - such that half of all Americans get their health insurance from their employer - wasn't always a legal requirement (and in many cases still isn't). That happened out of labor competition

I thought it happened out of a tax break and things never went back to normal.


> Co-ops are just the same as guilds, oligopolies, etc

Um... no? The point of a coop is to make money, just like a joint-stack corporation. In fact, a co-op is a joint stock corporation where the owners are also workers.

> They are (usually government-sanctioned or government-protected) producer organizations

Coops have no government protection, at least no more than mega corporations. Recall that it was GM who was determined to be 'too big to fail', not Mondragon.

They do frequently have government protection, especially in Italy, but in many other countries.

Protection comes in many forms, such as special tax structures, protected denominations and excessive regulation.

I have no idea what italy does. However, special tax structures, protected denominations, and excessive regulation are basically par-for-the-course for corporations in any country.

In America, it is routine for large companies to negotiate tax deals with local governments. Many American companies pay no local tax at all. Local authorities do this as a 'gift' to make companies stay. It's wrong everywhere, but it has nothing to do with co-ops.

>They are (usually government-sanctioned or government-protected) producer organizations that set quotas and approval processes to reduce the threat of competition and new entrants, usually relying on official government policy to enable them through import tariffs, "cultural protection" regulation and subsidies (such as tax waivers).

None of the above sound bad in themselves.

In many areas we could do with less competition, more tariffs, and more cultural protection and subsidies.

> None of the above sound bad in themselves.

Actually, all of them are bad in themselves. Government-granted monopolies reduce innovation and consumer surplus, inhibit competition and stagnate an economy, leaving it weak and unable to compete internationally.

> In many areas we could do with less competition, more tariffs, and more cultural protection and subsidies.

No, we could not.

> Government-granted monopolies reduce innovation and consumer surplus

This has no basis on the real world. Many of the largest companies in the world are subsidized by the government, including in the US. For example, Boeing/Airbus is a de-facto duopoly, subsidized by taxpayers. The biggest problems of these companies is that they are owned by private individuals. Having them formed as coops solves a major issue. While not perfect, I don't see these coops as any worse than other companies.

At no point you talked about monopolies.

And it has plenty of evidence in the real world, just look at AT&T, cable companies, ISPs, mail carriers, etc.

And look at monopoly pricing.

> The biggest problems of these companies is that they are owned by private individuals. Having them formed as coops solves a major issue.

No, it doesn't. Coops are also owned by shareholders, and with government protection, they are monopolies, extracting economic rents from consumers. And economic rents are always, always bad.

So you think the stock market and 80% of the banking system is a bad thing by that definition.

Where is your pension/ 401k invested pray?

You don't seem to understand the difference between economic profit and economic rent...

Making those two companies employee-owned would do absolutely nothing to spur innovation. Changing who gets the profits doesn't change the fact that a lock on the market means the best strategy is to coast on your existing products.

>Actually, all of them are bad in themselves.

Only if one believes in the free market ideology and have no other measure of what's valuable than monetary.

And even then, it's a stretch. All the big economies (the US first and foremost) grew to what they are by using tons of subsidies, tariffs and so on. And even now they use non-economic advantages (diplomatic and military pressure for one) to maintain their status.

Private sector markets can show all those negatives, and companies can compete not on inherent efficiency of capital operation, but on who can more cheaply acquire low waged employees. Especially today, we should not believe blindly that capitalism that will automatically be better for society.

The question isn't which abstract model is better, the question is how we build some sort of conventions that work better than what is happening now.

> The question isn't which abstract model is better, the question is how we build some sort of conventions that work better than what is happening now.

Oh, sure, there's potential for improvement. But so far there hasn't been a model that works better, and every single time that government-protected monopolies were tried, they failed with disastrous results.

Every single new model tried has failed miserably.

But that also doesn't mean there aren't ways to improve the current model.

Chinese steel's gov't granted monopoly is apparently so efficient our private markets can't compete... a core support given there is long term capital investment horizons - which gov't monopolies can end up enabling. I'm not saying that always works out for the better, but there's something there in that if your viewpoint is long enough you can win in efficiency, be it steel in China, or Standard Oil in a largely unregulated industrial market.

Chinese steel? It's an interesting definition of "efficient" that is used to describe a whole sector that is kept alive and overproducing only by virtue of burning through massive subsidies.

So here's a question. If there were a cheaper way for China the nation to acquire the steel it needed during it's expansion phase why did China decide to subsidize? Is there an total system cost that they're maximizing beyond the accounting for just the balance sheet of the steel companies?

Yes, it's called dumping.

Are VC funded ventures like Uber dumping into the Taxi industry?

No, Uber says it's profitable in the US. Also, the two products aren't really interchangeable because the main reason I use Uber/Lyft is that they fix the scamming nature of cabs (lying about broken credit card reader, inefficient routes, etc).

> According to Zamagni, in the wake of a 1971 law that exempted co-ops from certain kinds of banking limitations, Coop was able to raise a lot of money in small amounts from many, many members. Coop became the Italian retail leader in part because it could tap its already sizable membership base for the loans it needed to expand.

In my opinion, we are truly shooting ourselves in the foot by giving banks a monopoly on financing.

Credit is the blood in the body economic, and by making banks an accessory to every credit transaction we greatly reduce its flow through the economy.

“About two out of every three inhabitants are co-op members, together producing around 30 percent of the region’s GDP.” - does this mean the 1/3 that isn’t a part of the co-op accounts for 70% of the GDP? Could someone clarify?

“Member” is a very light concept: if you open a savings account with them, or a fidelity store card, you become a member, even if you work in a completely different field and for a regular company. So the coop sector as a whole produce 30% of gdp, but this is not related to the gdp output of members.

I see, thanks!

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