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Mondragon Corporation (wikipedia.org)
442 points by taurath on Feb 10, 2020 | hide | past | favorite | 283 comments

There's a really inspiring federation of 40-ish tech worker co-ops in Argentina called FACTTIC[1], who have been developing a neat process called FIT[2] by which they share work amongst themselves via regular check-in calls. It's almost like they're part of a big meta-company together that shared opportunities based on their needs (e.g., who needs the money the most, etc.)

Here's a video of a presentation they gave on the format: https://agaric.coop/blog/show-and-tell-agaric-sharing-work-o...

The most exciting part is that they're now trying to share the model with tech worker co-ops abroad, and maybe even figure out how to build similar trust between international co-ops.

Disclaimer: I'm a member of a new tech worker co-op in Toronto, Canada (Hypha[3]), and have a big crush on FACTTIC.

[1]: https://facttic.org.ar/ [2]: https://facttic.org.ar/fit/ [3]: https://hypha.coop

Could coops constitute, at least, a partial solution to ageism? Many of the US commenters have expressed their frustration and experiences in this regard, perhaps cooperatives can serve as a good quality alternative. Perhaps the problem is that it seems a model that fits more with consulting than with a product company.

Hm. Interesting. I mean, I'm biased, but I believe it could.

An analogy I'm trying with friends is that a worker co-op is less like a company that does a specific thing, and more like a ship that sails where it's members wish it to go. It might present as a solid "WE ARE A COMPANY THAT DOES X", but it only does that so long as that serves its members. If the destination doesn't serve the crew, they create a new destination, they don't necessarily ditch crew members.

Also, the crew doesn't worry about the ship sailing away without them :)

We've been working with Hypha for the past few months mentioned above and it's been a good experience. My understanding is they're pretty selective about what sort of projects they take, but it's worth a shot.

I thought Chomsky's quote was interesting.

"Take the most advanced case: Mondragon. It’s worker owned, it’s not worker managed, although the management does come from the workforce often, but it’s in a market system and they still exploit workers in South America, and they do things that are harmful to the society as a whole and they have no choice. If you’re in a system where you must make profit in order to survive, you're compelled to ignore negative externalities, effects on others."

This quote without context might give impression that Chomsky is critical of Mondragon. A bit of context around it helps to understand his point. From [1]:

“LF: So it sounds as if you might support something like the Cleveland model where the ownership of the company is actually held by members of the community as well as the workers…

NC: That’s a step forward but you also have to get beyond that to dismantle the system of production for profit rather than production for use. That means dismantling at least large parts of market systems. <<here this quote about Mondragon>>

Markets also have a very bad psychological effect. They drive people to a conception of themselves and society in which you’re only after your own good, not the good of others and that’s extremely harmful.

LF: Have you ever had a taste of a non market system — had a flash of optimism –– oh this is how we could live?

NC: A functioning family for example, and there are bigger groups, cooperatives are a case in point. It certainly can be done. The biggest I know is Mondragon but there are many in between and a lot more could be done.”

1 - https://www.counterpunch.org/2012/04/30/talking-with-chomsky...

Is the alternative 100% top-down central-managed solution to ensure no externalization happens ever? In theory that's appealing (especial from the view from Chomsky's academic ivory tower), but then in practice every time it's been tried it hasn't worked well at all.

Chomsky is smart, but not very useful because "In theory there's no difference between theory and practice, but in practice there is" - Yogi Berra

Chomsky is anti-centralization, he is an anarchist (anarcho-syndicalist).

In general, his ideal end-goal world would include smaller states with more direct control by the populace, with worker-owned and worker-managed corporations, with free markets of goods and services between different corporations and different states, and of course freedom of movement. Strong environmental control would be almost implied if the people doing an economic activity were in charge of decisions and were also directly impacted by the effects of those decisions. Localizing and letting corporations be small would also put a natural cap on inequality, though democratically run states could impose additional safeguards where needed (minimum wages, estate taxes, non-discrimination clauses etc.)

I thought the workers in Mondragon could vote to have the CEO removed. Hence mgmt being under worker's control, ultimately.

I understand that workers also, at times, vote to externalize some costs, as their jobs may depend on it.

> In general, his ideal end-goal world would include smaller states with more direct control by the populace

That's certainly not Anarchism, in which there are no states and no commercial corporations. And of course - no markets.

Now, as for what Chomsky supports personally - that's more difficult to say, since he's been known to support Democrats in US politics, to support a two-state arrangement in Palestine etc.

Surely you would need a lot of rules and enforcement to prevent things simply aggregating?

That's where it falls apart. Systems tend to aggregate to seek efficiencies of scale.

I tend to not agree with this line of thinking. This may be the case when you subject a company to financial market pressures by listing it on the stock exchange, but I don't think it's a natural imperative.

Many companies do just fine without growing to enormous proportions, being acquired, acquiring others etc.

In a world of low-friction exchange of information and goods, small firms are competing with every large firm that can touch their market. What you're describing (companies doing just fine without growing to enormous proportions) is the status quo until a Wal-Mart rolls into their market, in which case they tend to be consumed by the mega-firm that leverages economies of scale (and occasionally monopoly) to drive prices down.

A free market, lacking counter-pressure to maximizing firm size, favors large firms, and large firms becoming larger is a positive feedback loop. Note that this is an idealized model and there's plenty of room for counter-pressure in reality (can the large firm actually pull demand away from the smaller firm, or does the smaller firm have a leg-up in e.g. customer relations that the larger firm can't compete with?).

Nations don't just aggregate like free market corporations. If there are many large bellicose empires in history, it's because taking things by force of arms is a successful strategy. In a world of many micro states, it only takes one to begin expanding aggressively for everything to fall apart

It has nothing to do with stock exchanges. There have been plenty of giant growth oriented corporations that are private.

How do you account for that?

Well, there's nothing to say that private corporations can't behave in the same way. I'm just saying that once you list these pressures are almost guaranteed to appear.

I also strongly suspect that they're less present, on average, in unlisted companies.

Sure - but how does that matter? It only takes a few percent to be this way to create the ultra-competitive aggregating behavior we see in practice.

I do wonder sometimes how different Chomsky's career and his academic work would have been if he'd been required to take a course in game theory while he was an undergraduate.

I guarantee you Chomsky knows more about game theory than you.

what is your point?

That Chomsky's ideal end-goal is unrealistic because it is inherently dynamically unstable. Small worker-owned cooperatives plus a free market is an ecosystem ripe for larger worker-owned cooperatives to create incentive structures that let them dominate the market, which lets them grow, which is a positive feedback loop in that incentive structure.

I think we have very little experience with how democratically-controlled organizations would behave and interact in the long term.

You may be right that centralization is inevitable for game-theoretic reasons.

On the other hand, I'm not sure how well game theory can model the decisions of large groups of people who participate in multiple organizations at the same time.

Definitely though, there are no examples from history of a society of democratic societies and how it might behave. Perhaps the closest examples are the ancient Greek cities and post-WW2 Europe (looking only at the state level, democratic corporations have not been tried to any large extent that I know of). In both those cases, there was no spontaneous centralization from within (i.e. one entity conquering the others), though for Europe it is still very early to tell, and there are future signs which may point to more centralization.

Tbh I do not think Chomsky has written on his ideals the way others have, much of his positions are extrapolated from his critiques on other states (please correct me if I am wrong). However he has positively identified himself as an anarchy-syndicalist.

There are multiple ways an anarchist society might respond to a corporation growing too large: convincing its workers to split or find work elsewhere to avoid economic collapse, seizing its assets and forcibly splitting or shuttering its operations, denying it use of supply chains, of debt if the market has currency, etc. a critical aspect of anarchist societies is lack of private property and capital.

Trade unions can hold much of the power; I can’t speak to the concepts of anarchist states. In fact the idea of anarchist currency (anarchy-capitalism or market socialism, I guess?) is something I am unfamiliar with, in part because it obscures the cost in man time and effort it takes to produce a good or service—rather easy too, just consider subscription services where you pay a flat rate, or the labor it takes to get you chocolate or coffee vs how much it is valued in terms of your wages (presumably in a post-industrialization service economy if you’re on this forum). Similarly I do not know what an anarchist state is.

Regardless, the idea is founded in large part on the concept of mutual aid. There is certainly plenty of research into how mutual aid tends towards or away from stability. A quick google search turns up this, for instance: https://halshs.archives-ouvertes.fr/halshs-00275386/document

> There are multiple ways an anarchist society might respond to a corporation growing too large

I agree, but I believe a firm past a critical mass of size can defend against all of them, and defense breeds the resources for further defense.

> convincing its workers to split or find work elsewhere to avoid economic collapse

Unlikely if the firm's size lets it offer better life than alternatives

> seizing its assets and forcibly splitting or shuttering its operations

Hard if a firm's size grants it the ability to challenge monopoly on violence

> denying it use of supply chains, of debt if the market has currency, etc.

No longer possible if the firm is large enough to have vertical integration

> Unlikely if the firm's size lets it offer better life than alternatives

How do you figure? This implies the compensation is different from other "firm"s.

> Hard if a firm's size grants it the ability to challenge monopoly on violence.

How do you figure? Monopoly typically implies private property.

> No longer possible if the firm is large enough to have vertical integration.

How do you figure? Monopoly typically implies private property.

How does one seize a firm's assets if a firm has no private property? That implies the firm has nothing to seize because it has nothing.

> How does one seize a firm's assets if a firm has no private property? That implies the firm has nothing to seize because it has nothing.

Well the traditional linguistic connotations of possession certainly persist. Here "seize" simply means take control of.

As opposed to the current US system where large shareholder-owned corporations dominate the market, which lets them grow, which is a positive feedback loop in that incentive structure?

Yes. The system that currently exists is very realistic, by definition.

To be clear, I'm criticizing the notion that small worker-owned / worker-managed corporations and a free market are an inherently stable structure (because free markets will favor consolidation). I'm not against large worker-owned / worker-managed corporations, and I think they could be a significant improvement on the ecosystem of shareholder-owned corps we find in the US.

I would agree. I think overall big picture analysis is good too. But if we can agree that there's an improvement to be made we should start to work iteratively towards that improvement keeping an eye out for further improvements and lessons. For starters we could make it easier to start and run worker coops. Next step would be to implement some small incentives (even getting the money from cutting currently awful subsidies in corporate welfare!).

Thank you. So often when I talk about solutions people say “it won’t work” because of some problem they’ve identified. They completely miss whether the current system also has that problem and whether the proposed situation at least represents an improvement. I can’t solve every problem nor do I claim to! All human systems will have difficulties. But some systems are set up structurally to be more exploitative than others.

I know Chomsky. I went to meet him in MIT several years ago, when I was looking for advisors to Qbix. (Also met Tim Berners-Lee and his team at what was then known as Solid - a similar project to Qbix). The guy responds to email at 2am btw, quite cool for an 85 year old.

As I see it, open source technology IS the great decentralized of power. We just need people to build Good open source software.

My personal passion (which I poured a lot of money into) was qbix.com and intercoin.org . That’s also why I reached out to Andrew Yang back in early 2018 when he announced running and met him in May 2018. We agreed my company would build https://yang2020.app to support his campaign, and he would help introduce us to mayors of cities that want UBI locally (he knew a few dozen, like Michael Tubbs of Stockton, although since then Michael has not been a fan of Yang’s approach for various reasons).

I believe in UBI + Gift Economies / Collaboration as the best system, better than socialism or capitalism. But we have a while to get there.

Yang is trying to boil the ocean by going for UBI on a national level. I believe the future is in decentralization, and I talk about it extensively. I think UBI can be done via cryptocurrency on a local level. We can also do voting this way. I’m writing a piece about this at the moment, very apropos of the recent fiascos.

Printers, Email, Blogs, the Internet have replaced large corporate and state gatekeepers we used to have (newspapers, cable channels, telephone companies, printing presses etc) and costs went down to near zero. Technology decentralizes power.

We can have towns and cities run decentralized:

Solar power networks (resilient to EMPs and carrington events)

Mesh networks (better than cellphone networks)

Social networks (chat, events, appointments, everything that fb does but w local servers)

I’m trying to build the software to run on these networks (https://m.youtube.com/watch?v=pZ1O_gmPneI)

PS: sorry for all the links but honestly I am passionate about this stuff and need to illustrate it instead of talking. A video is worth a thousand words. To mitigate the shilling I will say that TimBL’s solid and MaidSAFE * IPFS and others are also working on decentralizing power

Technology decentralizes power.

I would have agreed with that statement at one time. Now I'd qualify it to read "Technology can decentralize power." Unfortunately, it can also do the opposite. I'm at a point now where I'm torn on the question of whether or not technology inherently tends one way or the other. But in either case, I'm now convinced that human nature is much more a factor in the centralization / decentralization of power than technology.

No, that's not the alternative. The alternative is a system that isn't profit driven, where all the companies are worker cooperatives.

In that system, there are no stock holders demanding ever greater returns, those doing the work are always completely in control. They can choose to do "just enough" to live a good life. Or they can choose to focus on the more fulfilling aspects of their work, and not on the profit.

In that system, it's easier to pass regulations that prevent the worker cooperatives from externalizing, because the survival pressures aren't nearly as intense.

But it's not top-down centrally managed.

“ The alternative is a system that isn't profit driven, where all the companies are worker cooperatives.”

Enforced by a central top-down bureaucratic organization.

In this hypothetical world would you let foreign companies motivated by profit compete in your country that only has worker co-ops? Or would you have a closed down market, similar to North Korea that only Approved Co-ops would be allowed to work in?

This is unnecessarily dismissive. The USG routinely enforces regulations and tariffs on companies and imports that fail to comply with US regulations. If this was extended to company structure or labor standards, so what?

Under your standard, all regulation is "top down bureaucratic driven". In practice this has not proven to be incompatible with market driven economics. Not that libertarians don't scream about it anyway.

The current structures we allow today are "top down bureaucratic". How do you think the C-corp and S-corp got defined? The LLC, the partnership, the sole-proprietorship are all organizational forms defined and allowed by the government. The government defines the shape of the market, and then actors are free to operate with in that shape.

This is the same thing, just a different shape.

> Enforced by a central top-down bureaucratic organization.

The comment you selectively quoted ends with "But it's not top-down centrally managed.".

Forcing no profits is central management at it's very worst - Setting prices causes many downstream derangements to markets.

A complex interconnected system will adapt in unforeseeable ways, causing novel externalities for which we have no built up immunity. Ask a soviet.

"not profit driven" does not mean "forcing no profits". The former means that your highest driving purpose and governing logic is not oriented around the accumulation of profit. The latter means you make it impossible to accumulate profit.

We can pursue self-organization that pursues escape from the pathological patterns of profit driven production without advocating for, striving for, or tolerating a totalitarian, bureaucratic nightmare. See, e.g., https://thenextsystem.org/start-with-worker-self-directed-en...

Forcing profits is bad too. Just look at Boeing to see where the naked pursuit of profits can lead. It literally kills people.

If they had pursued profits harder and more effectively, they would not have had the accidents whose effect was to reduce their profits. Although there are some examples of outright malice or criminality out there, Boeing is closer to an example of an ineffective management culture than an evilly effective one.

> If they had pursued profits harder and more effectively, they would not have had the accidents

I think this is a bit simplistic or at least too optimistic. The pressures of being listed on the stock market are such that management is more or less compelled to pursue short-term goals.

Indeed in the very long run a lot of corporations are harming themselves by harming the environment, impeding innovation etc. but in the short run firing people, cutting R&D budgets, digging up more coal, oil etc. can be very effective. And shareholders really only care about what your profits are gonna be in the next few quarters, not so much about what's gonna happen decades down the line.

If you buy a stock and then use your influence to destroy its value, you're punishing yourself for your own bad decision. A lot of real human tragedy is caused by self-destructive behavior.

Now, here's an interesting thing to consider. You bring up coal and oil - both industries that are on the way out in the long term. Would it be wise for shareholders to push these companies to invest in R&D to improve their long-term capabilities? No, if coal and oil are on the way out, then the best financial strategy would be to run the companies into the ground as you slowly liquidate them, ideally so that there's nothing left on the very day that fossil fuels are no longer needed. In that case, short-termism is the best strategy.

No. Whatever effect the 737 MAX grounding has had on Boeing's profits pales in comparison to the benefit gained by rushing the plane out the door to get in front of Airbus and thus making billions in sales contracts. There has been virtually no effect on Boeing's stock price, and the plane will probably be back in service within the year.

All in all, putting lives at risk was a good move for Boeing, and they'll surely do it again.

I'm assuming by "more effectively" you mean "less shortsightedly"?

In any case, such judgement is only clear in hindsight (that is, calculating effectiveness implies a time window over which effects are to be tabulated).

Most charitably, the executives perhaps felt they were making judicious, acceptable tradeoffs that would maximize business outcomes over the time horizon they were concerned with - periods measured in quarters or years or even decades.

How would we incentivize people to only take profits over an arbitrarily long (and ever-widening) window? What happens when a black swan occurs and significantly drives down the effectiveness of prior decisions (which until then had been deemed quite effective)? Are profits clawed back?

>In any case, such judgement is only clear in hindsight (that is, calculating effectiveness implies a time window over which effects are to be tabulated).

If the judgment was really only clear in hindsight then no power structure could have altered it. What's clear only in hindsight to a CEO is clear only in hindsight to a union boss, or a collective, anyone else.

>How would we incentivize people to only take profits over an arbitrarily long (and ever-widening) window?

The corporation is already incentivized: in exchange for thinking about long-term profits, it is rewarded with long-term profits. However, executives often have different goals than the corporation they're supposed to represent. If you could figure out how to better align the interests of executives with their corporations, you would see more effective profit-seeking, which would include less killing due to blunders but more killing due to tobacco-industry style exploitation. Giving executives the freedom to put their own interests first (the source of next-quarterism and next-bonusism) is necessary if you want to give them the freedom to pursue ethical goals. You either trust them to make the right decisions or you don't.

>Are profits clawed back?

Yes! That's what happens when something causes you to lose money.

Some people will argue the issue there is time-horizons. If Boeing was worried about profitability indefinitely into the future, these sorts of repetitional disasters would factor in. But if everyone is looking quarter-to-quarter or year-to-year they won't.

The project timeline for the 737 MAX was at least 6 years. It was announced in 2011 and entered service in 2017. So you can run into this problem even when thinking 5+ years ahead.

Nobody is forcing profits. If you want to start a non-profit aerospace company, nobody is stopping you.

> Nobody is forcing profits.


> If you want to start a non-profit aerospace company, nobody is stopping you.

Yeah, just found an aerospace company. You don't need anything beyond hard-work and a can-do attitude. Definitely don't need decades worth of relationships, unimaginable capital, or readily hirable talent. You just gotta believe in yourself.

> Shareholders?

The system doesn't force anyone to make a profit. If you borrow capital from people, your investors may demand a profit. But that's between you and your investors. Nobody is forcing you to take investment or sell equity in your company on the public markets.

> Yeah, just found an aerospace company. You don't need anything beyond hard-work and a can-do attitude. Definitely don't need decades worth of relationships, unimaginable capital, or readily hirable talent. You just gotta believe in yourself.

My point is to contrast a system where everyone is forced to be a non-profit or co-op (@jp555's hypothetical), and our system, where you are free to be a non-profit or co-op, if you want to. If you can't raise capital or hire top-notch employees under that structure, then that's a problem with the non-profit/co-op organization, not a shortcoming of our economic system.

> The system doesn't force anyone to make a profit. If you borrow capital from people, your investors may demand a profit. But that's between you and your investors. Nobody is forcing you to take investment or sell equity in your company on the public markets.


You're begging the question. His point is that shareholder demands aren't relevant if you simply don't accept random shareholders, which is something a number of large firms have successfully done.

> The system doesn't force anyone to make a profit. If you borrow capital from people, your investors may demand a profit. But that's between you and your investors. Nobody is forcing you to take investment or sell equity in your company on the public markets.

If you want to just completely change the conversation, and hyperfocus on the individual, then you're free to do so, but I don't want to be brought along for the ride. You responded to a comment concerning Boeing, not some fresh-faced up-and-comer of your own creation.

We're not talking about Boeing, we're talking about economic systems, with Boeing being an example. @jp555's comment addressed economic systems that "force no profits." @spamizbad then states "forcing profits is bad too," using Boeing as an example. My comment clarified that our system (in which Boeing exists) does not "force profits" (as distinguished from @jp555's example of a system that "forces no profits"). Our system allows profit-seeking companies as well as non-profit-seeking companies. The fact that Boeing feels compelled to earn a profit is a by-product of the financing arrangement by which Boeing was created. Nothing about our system would have prevented Boeing from having been founded as a non-profit.

That's my bad, I did misread the chain.

Is the alternative to bank robbing a top-down central-managed solution? No, we simply penalize the behavior. We could do the same and penalize exploitation by corporations. Hold individuals accountable. Extreme fines. You may argue this would be complicated, but so is a lot of existing legislation surrounding international trade.

I won't say it would be 'complicated', because in theory that sounds very simple.

In practice, powerful corporations have enough influence over the government that regulating them in that manner isn't possible without flipping the whole system on its head (i.e. removing the profit motive that drives monopolization and cost externalization).

Doesn't Tort do that already?

I actually don't know. This is based off my own observation of the set of things for which one can end up in jail. Once you really think about the things in that set (shoplifting vs. wage theft) it's impossible to believe the system isn't rigged. To be fair, governments and militaries have always been used to protect the interests of the wealthy. But evidence suggests things have changed radically for the worse since the 70s (in my US-centric view).

>Is the alternative to bank robbing a top-down central-managed solution? No, we simply penalize the behavior.

Penalizing the behavior sounds like a top-down solution to me. Government decides it's bad, then government sends the police to come get you if you do it.

Then that describes all regulation and "top down" is a meaningless standard.

I dump some chromium waste on my property, pretty soon this "government" is saying it's bad and sending police to come get me saying that "the green goo is making people sick". I hate that top-down big gubmint telling me what I can and can't do!

I refuse to employ black people, pretty soon there's a top-down big gubmint telling me that's "discriminatory" and "violates labor laws"! What's next, telling a man what he can and can't do with his own business!?

>Then that describes all regulation and "top down" is a meaningless standard.

Yes. Regulation from a central source of authority is what a top-down model is. I'm not sure what your contention is here.

Then "top down" is a widely deployed and not particularly notable model, such that it's not worth throwing a fit over.

> especial from the view from Chomsky's academic ivory tower

"I don't like Erik Satie or any of that stuffy, high falutin' classical stuff."

In both cases, the writer is unwittingly saying very little about the subject and very much about their ignorance.

Have you ever noticed that once you pierce the walls of "big corp", you find a command economy that's driven dictatorially from the c-suite? Capitalism and "free" markets are great for everyone else. Dictatorship is de rigueur inside the company.

That's not a novel observation. Ronald Coase addressed this more than 80 years ago in the context of neo-liberal economics: https://en.wikipedia.org/wiki/Theory_of_the_firm

Thankfully dictators of a company are less likely to use violence to coerce me to buy their products/services.

Governments on the other hand have a monopoly on violence, so I am more wary of handing them power over the choices I can make in my life.

They are less likely but that does not mean it hasn't happened. The first air strike on united states ground was the national guard striking miners at the behest of the company.


If you're in another country working for a U.S. corp you're in much worse shape. Coca-Cola can murder you for forming a union in another country and get away with it!


No, Corporations absolutely do do violance to their employees. Contrariwise, dictators seldom use violence outside their borders unless they are powerful enough.

In both cases, borders matter.

Wait a minute, you state something that Chomsky never said (the "alternative 100% top-down central-managed solution") , and then call him "not very useful" for this fake statement? He's not saying Mondragon is bad, just that within capitalism, these solutions are still fucked on the long term.

If you really want to judge him on his real-world solutions, then take at look at Michael Albert's Participatory economics that he's been supporting for a while : https://en.wikipedia.org/wiki/Participatory_economics

But according to me, what Chomsky lacks in his analysis is some hegelian stuff, so I'd recommend to go further and dig some Slavoj Zizek and Deleuze and so on..

I questioned, not stated.

I mean that I find him too theoretical - His thinking is all very smart and appealing but useless in practice.

Considering that no solution exist anywhere to the global problem we face, I'd reconsider the value of "useful/useless".

Fake easy-solutions are good to make you feel better before work, but it prevents you from going into deep thinking from which real solutions may emerge.

"Why are you being so dense?" is an example of a question that includes a statement.

While of course companies that operate in a non-market system and could take into account negative externalities, such as systemically important PRC or NorK SOEs, would never exploit workers or create bad working conditions - at home or in South America...

Exploiting workers is a negative externality.

No. A negative externality is a cost to a transaction that's not borne by one of the parties to the transaction (and thus cannot be priced into the transaction). "This job really sucks" is not an externality -- that fact is priced into what the worker demands in payment for performing that job. "Building this factory will incerase the risk of Terry down the street getting cancer" is an externality -- Terry is not a party to the transaction and cannot demand payment as compensation for the increased risk.

This textbook response doesn't address what often happens in reality.

Wages don't always capture the true costs of production. The public burden of the coal miner who gets lung cancer can be viewed as a negative externality.

Indeed, many labor protections in the US seek to specifically address this type of externality.

No, it doesn't address the phenomenon that the grandparent comment was concerned with (worker exploitation). But it doesn't claim to. It simply, and correctly, establishes that worker treatment isn't an externality. "Textbook" definitions have nothing to do with it.

> it doesn't address [worker exploitation]

This is my point. Ignoring concerns of worker exploitation and focusing on textbook definitions comes off as dismissive, even if that wasn't the intent.

Similarly, your comment comes off as dismissive which highlights the importance of the context that I added.

Worker exploitation does result in negative externalities, even if the exploitation itself is not an externality.

All 'rayiner said was that worker exploitation isn't an externality. The comment to which he was responding said literally nothing other than that worker exploitation was an externality. Worker exploitation is not an externality. I'm not sure how you're finding a way to object to this.

I've not objected to the definition. I'm adding nuance that you're still trying to dismiss.

Worker exploitation does result in negative externalities, even if the exploitation itself is not an externality.

Capitalism itself cannot solve the problem of externalities. That's what the government is for.

I don't understand why would anyone think that it can. This is not just my opinion but an opinion of famous capitalists (for example Buffett or Soros).

The classical argument is that when trying to address externalities you can turn to either regulation or strong property rights (if your factory pollutes a lake the citizens using it for drinking water will sue). Regulation can sometimes lead to inefficiency.

Free-market evangelists tend to strongly favor the property rights solution. But one of the interesting things about the property rights case is that it seems to fall apart when both the responsibility and cost are diffuse. Probably the best example would be climate change. It's impossible to address with property rights because there would be so many plaintiffs and so many defendants that attributing who did what would be impossible. Climate change is the ultimate externality.

Right, ancaps argue for privatization of everything because that will eliminate externalities, but I see absolutely no way to prove that the carbon being pumped into the atmosphere is derived by some company/individual at some percentage, and then of course you don't actually have courts or a legal system but silly things like Dispute Resolution Organizations that are somehow supposed to enforce the decision of some court case across the globe?

It's all kind of insane.

> Capitalism itself cannot solve the problem of externalities.


> That's what the government is for.

False. Government can't solve the problem of externalities either, because government is even more at the mercy of the perverse incentives that create them than free market participants are.

There is no "solution" to the problem of externalities, if by "solution" you mean some system we can put in place that will magically prevent them from happening or from doing harm. The only way to deal with externalities in general is to remove them wherever possible, by enforcing property rights and minimizing transaction costs.

> Government can't solve the problem of externalities

Do you enjoy the the benefits of the Clean Water Act and the Clean Air Act?

In your view, does government at least partially solve the problem of some negative externalities?

(Based on your bio, I assume you're in the US.)

> Do you enjoy the the benefits of the Clean Water Act and the Clean Air Act?

I like having clean water and clean air. That's why I have air filters in my house and don't drink tap water.

> does government at least partially solve the problem of some negative externalities?

Government can certainly change incentives in ways that will, at least temporarily, reduce particular negative externalities. But to say that "solves the problem" implies that, once that particular government solution is put in place, we can stop worrying about that particular negative externality and move on to ther things. I do not think that is the case.

> That's why I have air filters in my house and don't drink tap water.

I'll assume this is a joke.

> we can stop worrying about that particular negative externality

I'm not sure who said this. In any case, we're all in agreement that the government plays a key role in addressing negative externalities.

> I'll assume this is a joke.

It's not.

> I'm not sure who said this.

I'm not sure what "solved" means if you still have to keep worrying about the negative externality.

> we're all in agreement that the government plays a key role in addressing negative externalities.

I don't think our agreement is as broad as you seem to think it is.

Maybe it's up to the servants to shop around for new filters and facemasks?

I've been enjoying this quote for a week:

"If you think the economy is more important than the environment, try holding your breath while counting your money. - Guy McPherson"

> if by "solution", you mean some system we can put in place that will magically prevent them

Only a distributed system like capitalism rises to your bar of "magically prevent[ing]". Centralization is not magic, but when it works, it works. I prefer distributed systems too, but when it's hard to make the right incentivizes, we shouldn't throw in the towel.

Surely the parent post doesn't use a definition of "solution" that trivially invalidates their point. I think you are projecting your own preference for distributed systems as an inevitability.

In fact, I've thought of a "'race to the top' tariffs" system, which does at least create the right incentives between nations. If you are big market (e.g. US) put tariff on the difference between the manufacturing country's externalizes tax, and your own. This holds the total punitive disincentive constant, no matter who receives the revenue. The exporting country is now incentivized to raise their externalities tax so the tax revenue goes to them rather than the importing country. So simple!!

> a distributed system like capitalism

How is capitalism a distributed system? It concentrates capital in the hands of a small minority.

A free market is a distributed system, but "free market" is not a synonym for "capitalism".

> Centralization is not magic, but when it works, it works.

I guess we have very different definitions of "works".

Revenue is dictated by the various consumer demands of mainly individuals and families.

In a free market, yes. Again, "free market" is not the same as "capitalism". The robber barons who got the US government to grant them monopolies of railroad routes in the late 19th century were capitalists; but their revenue was not "dictated by the various consumer demands of mainly individuals and families".

Robber barons are not part of 'capitalism' either. If you have a free market of goods and a free market of labor, then you inevitably have capitalism, since someone will acquire enough money to hire labor to operate his productive goods.

It's easy for anyone to take potshots from the sidelines, but surely Chomsky sees the economic, and humanitarian disasters that non-market based systems ALWAYS result in. What's the alternative here?

The quote there seems to have issues with the profit motive, not market systems.

In my mind a "market systems" implicitly includes prices which means there would then be profit and loss. I could imagine a market of 100% barter and no generally accepted currency but I do not think that is what most people mean when they use the term "market systems."

There is a lot I'm unaware of, possibly market systems without prices is one of those things?

>I could imagine a market of 100% barter and no generally accepted currency

Even under a barter system, there is an intrinsic profit. If you're a farmer, after you feed your family, what's leftover is the surplus (i.e. profit) that you use to trade for other essentials. The difference that matters between a currency system and a barter system is that bartering is less flexible (if someone doesn't want your apples for their furniture, you're not getting that furniture) - but the same forces apply.

Profit is what's left over after all costs are taken out from the price, including labour costs. Profit, by definition, is what the capitalist gets to keep for having done nothing but owning the capital that was used to generate the profit.

So like when Bezos makes $4M+ per hour, it's not a wage because he is not working for it, he could be sleeping or shitting and he would make the same money. He gets that just because it's his name on all of the capital that generates this profit. The actual work is being done by the many people working for amazon, peeing in bottles in fulfillment centres because of lack of breaks and whatnot. They get paid very little, so there are low costs, so there is great profit to line Bezos' pockets.

Since co-ops like Mondragon need to compete with companies that are run like Bezos' in order to survive, they are under pressure to do similar things in their management structure, even though they want to share all "profit" with all workers, since all workers are owners (which is why it's not really "profit" for co-ops, since there are no non-working capitalists that earn it). Therefore, it is the profit motive, rather than the market system, which forces co-ops to act in ways that are inconsistent with their mission statements (worker control, fair pay, etc.)

And laborers generate a profit when their cost of living is below their total wage. At that point the cost of producing their labor (food, water, shelter) is below their revenue.

That is not a profit because it is not generated from capital. "Cost of producing labour" is not just food/water/shelter/etc. it is the literal time you have to give up in order to perform the labour. Someone who owns capital gets the profit which the capital generates at zero cost or time spent.

>Profit, by definition, is what the capitalist gets to keep for having done nothing but owning the capital that was used to generate the profit.

No. That is a dishonest distortion.

If providing and owning capital is such a nothing, why don't you try it and see how easy it is. Capitalization carries with it immense risk, which Communists conveniently ignore. Whereas the labourer gets a salary regardless of how the business performs, the one who capitalizes does not have this privilege. I've seen first hand how much work and how difficult it is to start and run a business. You only need to look at bankruptcy stats to see how many businesses fail and take down all the capital that was invested. It's not very pleasant to run a business, sink your life savings into it, only for it to go under with your savings and years of life.

>So like when Bezos makes $4M+ per hour,

That is another dishonest distortion.

Bezos does not make $4M+ per hour. He holds stock in Amazon that rises in value at that rate (Amazon's actual profit is on the order of 2% after close to two decades of 0 profit). The value of stocks stems from the fact that there are people who are willing to buy it at that price. This carries risk, because this willingness by others to buy the stock is subject to many factors, and it can go down to zero. Again, if you think it's easy, feel free to dump your savings into Amazon stock and see how easy it is for you to live of that or even make a good return - though I'm sure in your fictitious communist reality this would mean you would make millions without doing anything!

> In my mind a "market systems" implicitly includes prices which means there would then be profit and loss.

Why does a price necessarily include a profit or a loss? This is a self-referential belief: my price includes a profit or loss because a prior price includes a profit or loss which would earlier ... etc, etc.

>Why does a price necessarily include a profit or a loss

It includes a profit or a loss because you need to eat and provide for yourself. If you're making chairs but the cost of materials is larger than what you sell those chairs for, how are you going to provide for your family? If you want to save up for a house or a car, or family vacation, how are you going to do that if you don't sell your chairs with a surplus (i.e. a profit)? A market-based system necessarily implies a profit motive.

> If you're making chairs but the cost of materials is larger than what you sell those chairs for, how are you going to provide for your family?

This is the "self-referential" thing I was referring to. You're entering into this thought experiment with a pre-defined conception of how an economic mode of production must operate. You're presupposing the profit motive.

Feel free to suggest an alternative.

The one that comes to mind is Communism (and its many flavours), and we've seen what a humanitarian and economic disaster that turns out to be.

Political economy is a wide field with something for everyone. Consider it a choose your own adventure.

Right. So no actual alternative.

> What's the alternative here?

Look into libertarian socialism if you're actually interested.

In my early 20s I got really into all those boutique political theories. Our world is big and complicated, and these marginal and fringe ideas have never been actually tested at any reasonable scale. Anarachism-flavours tend to be universally terrible because they pre-suppose unnatural behaviour on people and in practice will devolve into some flavour of top-down collectivism.

You think capitalism is natural? And is top-down "individualism" better than top-down collectivism?

Also, there are real-world examples of libertarian socialism, like the Zapatistas and Rojova. Not ideologically pure, no, but certainly not authoritarian shitholes or capitalist dystopias.

In France, in the game industry, there is Motion Twin: https://en.wikipedia.org/wiki/Motion_Twin

"Motion Twin is run as an anarcho-syndicalist workers cooperative with equal salary and decision-making power between its members."

Also, this is where the Haxe programming language was created.

> In August 2019, Motion Twin spun off a new studio, Evil Empire, composed of Dead Cells developers who wanted to continue its development while Motion Twin moved to a new project. Evil Empire is run by Motion Twin's former head of marketing and is not run as a cooperative, particularly because the company wanted to scale beyond ten employees. Motion Twin continues to participate in Dead Cells decisions.

Spawning more small cooperatives when faced with financial success is a pretty nice alternative to a traditional growth strategy.

The quote clearly says that the new company is "not run as a cooperative".

You're right. Not sure how I managed to completely misread that.

That's a lot more boring then.

Even large corporations work in small teams and collections of small teams. There is a long tradition of management experiments in classical capitalist corporations, we need to see what works for coops and what needs to be reinvented. But by the looks much is already working out.

I didn't know thats where Haxe came from! Pretty cool.

On that subject, Haxe has been interesting me more and more lately. Does anyone have any thoughts on it they care to share?

Also, they made the awesome rougelike Dead Cells.

There are lots of small tech worker coops in the U.S. and Canada. See https://techworker.coop.

I co-founded one, Sassafras Tech Collective, in Ann Arbor. It's been an amazing journey. I don't think I could ever go back to working in a non-democratic workplace.

> It's been an amazing journey.

So you sold it, eh?

Heh, you can't sell a worker coop. One of the key defining features is a "de-mutualization" provision in the founding documents. You can only sell your own share, which has, in our coop, a fixed value of $1,000. And you can only sell that share back to the coop.

interesting, does the value ever change? did you pay that $1.000 at any moment or was discounted from work at any moment? what about new members?

This used to confuse me: don't co-op rules like this distort the value of the firm? But then I realized that I was missing the big picture: the ownership of the firm isn't valued! Worker-owners own a portion of the revenue during their time as worker-owners, and there is no need to put a price on the expected future revenue or profit of the company.

It's not co-ops that distort the value of the firm, it's that permanent ownership necessitates complicated and opinionated financial/statistical reasoning to put a number on what is fundamentally a weird social relation.

No, it deliberately stays fixed to reduce barriers to entry for new member-owners.

Can I apply to be a member from abroad?

As of now we're only U.S. based, unfortunately. Adding international members adds a lot of complications that we don't have the scale to deal with.

So any part of a journey can't be deemed amazing until the entire journey is over?


I've found this list of tech-coops useful as well: https://github.com/hng/tech-coops

Cool, thanks for chiming in here.

> I don't think I could ever go back to working in a non-democratic workplace.

I would love to read a bit more about that sometime.

We are about to roll out a blog! Check https://sassafras.coop in a month or two...

Where did you register your .coop domain?

First at Gaiahost, which has since gone out of business. Now at gandi.net.

Can you speak to the downsides of a democratic workplace? How do you avoid the pitfalls of a union where people end up getting compensated for things like seniority instead of skill?

A union is not a coop, so the forces are not the same at all.

Furthermore, it's not clear that "seniority" would trump "skill" in a co-op, either. Or that the opposite is true of a more "traditional" workplace.

The job of each worker-owner is, in part, to help other worker owners developer their strengths to their fullest for the benefit of co-op.

An employee-owned co-operative corporation (EOCC) governs as form of direct democracy. In my experience, your biggest obstacle is going to be collective decision-making. How well you do that is a test of the people in the co-op. Consider: management is just another skill, not a rank. You don't have a boss. You have people who are counting on you. Management serves at the pleasure of the worker-owners.

> You don't have a boss.

Unless everyone can make equally large payments on behalf of the company, you most certainly have bosses.

Find those people. They are the bosses. Everything else is theatre.

SamBam nailed it. For us, any large expenses must be approved by consensus of the whole group. For larger coops, they would need approval of a democratically elected and recallable board of directors.

Or large payments are approved democratically.

We are developing a "thrivable" payscale that rewards each of the following:

- relevant prior experience (before joining the coop) - longevity (aka seniority) - dependent care responsibilities - membership (a small raise once you become a member)

The prior experience piece is determined with a points system, designed to take as much of the self-advocacy (with all of its race/gender/class pitfalls) out of the process as possible.

The system also includes annual cost of living adjustments.

Hmm, how do you score people qualitatively, if you're using YoE as a factor? Whats the solution to someone having the same year of experience for 10 years?

In my experience, this is a common misconception. In the union contracts I've worked with and under (entertainment industry), seniority is not a factor in compensation. More senior work roles generally earn more, but individual employees do not earn more by being in the job longer. It can be hard to restructure, demote or terminate employees in senior roles, but there is always a mechanism to do so. The one place where longer-serving employees generally cost the company more is severance obligations, but from a management perspective this is usually a good thing. The presence of a severance clause generally gives management the ability to terminate the employee under more permissive terms.

There are some in the UK: https://www.coops.tech/#members (I don't know much about them).

hey fellow arborite


greetings from a worker that work at Ikerlan (a research/technological center part of the corporation). We are a second degree cooperative. Formed by workers and companies that we work for. You can see things that we do at https://www.ikerlan.es/en/

Happy to answer to questions if I can :)


I've just started a worker coop last year with some colleagues. We serve for-profit traditional businesses in the cannabis industry, helping them build data and analytics capabilities.

I've wanted to do something like your "second degree" approach, with the goal of creating closer relationships to help guarantee a sustainable long-term lifestyle business.

Do you think you could have gone the "second degree" route if you had served for-profit clients? How did early conversations about this ownership model unfold?

Do you have any advice for others who want to follow your model?

Can new customer-owners join? How does that work with existing customer-owners?

Thank you! Much respect.

Seems to be many open positions for IT staff:


Yes, We have some IT positions right now. My current position is Artificial Intelligence team leader on the ICT area and we are seeking for Full Stack engineers/researchers and Data Scientists.

Moreover, we also offer always the possibility to do a PhD in different domains. (power converters, batteries, embedded electronics, safety critical systems, wireless technologies, IoT , AI, etc). In my team we have 4 PhD students right now in collaboration with different universities.

Second degree? how does that work ?

Hi, a second degree cooperative is owned by 50% by workers and the other 50% from other cooperatives that are usually our clients. As we are a research center, is a way to have a "close relationship" with those companies and to focus our research into their areas of interest or develop new prototypes for them.

50% plus 1 I hope on the worker side.

You do pass the ALL Rochdale principals?

Hi from a Lagun Aro contractor! Were you as surprised as I was to see this in top of HN?

There's another interesting (but way smaller) cooperative in Spain: Igalia https://www.igalia.com/

They work in open source projects and are big contributors to Chromium/blink, WebKit, V8, Vulkan, etc...

They look small-ish though. I wonder if there's any big coop software company out there.

My suspicion is that the worker-owned cooperative model, especially if it emphasizes the more important worker self-directed part, will tend towards much smaller units of self-organization. I predict we will see confederations and networks of smallish coops, and I suspect this is for the best.

From the article:

    At Mondragon, there are agreed-upon wage ratios
    between executive work and field or factory work
    which earns a minimum wage. These ratios range
    from 3:1 to 9:1 in different cooperatives and
    average 5:1. That is, the general manager of an
    average Mondragon cooperative earns no more than
    5 times as much as the theoretical minimum wage
    paid in their cooperative. For most workers, this
    ratio is smaller because there are few Mondragon
    worker-owners that earn minimum wages, because
    most jobs are somewhat specialized and are
    classified at higher wage levels. The wage ratio
    of a cooperative is decided periodically by its
    worker-owners through a democratic vote.
Afaik this is the biggest worker coop in existence. Does anyone know of any sizable examples of this ownership-model in tech?

edit: added "worker" to "coop" (as I'm not interested in non-worker coops)

The interesting thing about this wage ratio is they had to increase it in the beginning of the cooperative because very few people were willing to take more responsibility for little more pay.

So maybe there is a study to be done about what could be the optimum wage ratio that allows a company to attract top talent for management positions and at the same time is not perceived as injust and exploitative by the lower workers.

There is a difference between pay so poor no one is willing to take the job and pay good enough to get top talent. Clearing the first hurdle doesn't say anything about the second.

But the same is true for all the lower ranks. It's one thing to pay enough to get someone to do the job and another to get the best for the role. A believable promise that the employer won't suppress low end wages for the benefit of C-suite compensation can be very attractive, even if the initial offer has exactly the same numbers on it.

A weak CEO with strong people beneath him can still very much succeed, but the best CEO in the world won't help a company with otherwise sub-par employees.

And it's not just hiring: a company where people are not financially punished for sticking to what they are best at can have a huge advantage over a competitor ravaged by the Peter Principle because that's the only way to get a party of the pie.

The myth of top talent is overrated, especially in managerial positions for companies where the workers have more say in decisions.

And in those cases you'd certainly be more concerned about getting top talent and passion out of workers anyway.

top talent +/- makes far beyond what regular workers would perceive as unjust.

It's nothing compared to Amul - a dairy behemoth in India which employs about 3.6 MILLION people.

They brought in the "White Revolution" making India the largest milk producer in the world!


This Amul a worker coop? I'm only interested in worker coops, should have specified that.

> Formed in 1946, it is a cooperative brand managed by a cooperative body, the Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by 3.6 million milk producers in Gujarat.[4]

I mean, kind of? idk if India has the concept of a worker's cooperative company but this is not super far away from it

This is a producer coop and its not a worker coop

I guess so.

> It is important to note that Amul Federation passes on 80-85% of consumer rupee back to milk producer members thus encouraging them to produce more milk.


Yup producer coops are quite commonplace for milk production in other places too.

A great resource on this is Nathan Schneider's book Everything for Everyone: https://nathanschneider.info/books/everything-for-everyone/

Backlogged this, I'm highly interested in this considering the old rat race seems out of style to me.

Found these two lists, from the top of my mind i know the developers of Loomio are a coop https://softwareengineering.stackexchange.com/questions/2564... https://news.ycombinator.com/item?id=7634152

Does it matter if it's large? I was just talking to a friend who started a small company, merged with a bigger company and thought he had done everything right. After a few years, he regretted selling the company. Small is beautiful. We learned this as children. Challenge the mantra of size and growth.

it matters but not in the sense that everybody should aim for a super large corporation.

It matters because it validates that cooperatives can grow very large, and refutes the claims such as "yes it's nice, but of course it works only for small ventures and could never grow)

But the answer to that shouldn't be "here's an example of a large one" but "why do you care so much for growth, it's fine to be small".

No it shouldn't (even if I agree with your sentiment about company, growth and probably life in general). People interested in coop model have a legitimate interest in proving that it can work for various business size

I agree but let's also understand the damaging dynamics we see on HN everyday where some people consider a multi million dollar operation a "lifestyle business".

"Lifestyle business" is generally not a very good term. On the one hand there's a small company that isn't very growth-oriented, throws off a modest amount of cash, and is very full-time job for the owner/operator. (Think a lot of franchise/retail or solo consulting.)

On the other hand, you have a business that generates a decent largely passive income that lets the owner take lots of time off and basically not work any harder than they want to.

I consider the latter a lot more lifestyle-businessy than the former.

I think from an aesthetic perspective, there's no difference between large and small, but from an efficiency perspective, sometimes it's important for things to be large.

And this isn't heartless, capitalist efficiency, sometimes there's a large environmental cost to distributing work across a population, like if everyone dumps a little bit of waste into the sewer because it's too expensive to treat (or burns their own coal for cooking), where a much larger entity has the efficiencies to treat the waste properly (or generate electricity much more cleanly) and the government can actually monitor the single entity.

Additionally, a lot of things are only affordable to most people because they are mass produced. There's a very good argument that a lot things that are produced are just utterly unnecessary, but that doesn't invalidate the point that some very necessary things are only affordable to the poor because they are made by the million.

Fixing the quote format so people can read it:

> At Mondragon, there are agreed-upon wage ratios between executive work and field or factory work which earns a minimum wage. These ratios range from 3:1 to 9:1 in different cooperatives and average 5:1. That is, the general manager of an average Mondragon cooperative earns no more than 5 times as much as the theoretical minimum wage paid in their cooperative. For most workers, this ratio is smaller because there are few Mondragon worker-owners that earn minimum wages, because most jobs are somewhat specialized and are classified at higher wage levels. The wage ratio of a cooperative is decided periodically by its worker-owners through a democratic vote.

Wait, what most here are not discussing is the true nature of this organization. Historically, this cooperative was designe as a system to pay out the Basque cause, a separative movement with is Spain. This cooperative has/will be discriminatory based on your political views. Also, it’s imperative to say that most of it’s financing has at times come into question as they have received strong and at time ilegal funding from the Basque government, creating an unfair compete climate where other business could not thrive and where forced to concede to go into the group or just fail. Their business practices come from a captive market (with a strong political pressure to be in the status quo or else) which keeps competition on the sidelines. If you are a serious contender with in the Basque region of Spain, you wake up to pickets, and your factory on fire, so it might sound good at first, but there is nothing but smoke and mirrors in this organization. So, sure with a favorable financing, wage control, and captive market, you can really build a corporation that can then expand and compete outside of their core “captive” markets. Anybody know of a good dictatorial nations to start another model company like this?

> Does anyone know of any sizable examples of this ownership-model in tech?

There is a tech-aligned version of the worker co-op called a platform co-op, with some examples at https://en.wikipedia.org/wiki/Platform_cooperative#Examples .

That is a producer coop not a worker - part of KFC I structured that way

The John Lewis Partnership in the UK employs about 83,000 so perhaps a bit bigger. Not strictly a co-op, but very close.

there's also The Co-op in the UK - https://en.wikipedia.org/wiki/The_Co-operative_Group

Im not sure if this is a worker-coop. I'm actually only interested in worker coops. Should have clarified that.

I am a former coop member in the UK

The Main Uk coop is both a worker and consumer coop.

John Lewis is a bit of an edge case is sort of a worker coop its doesn't call its self a coop for branding purposes and its governance has some diferesnce form what a real worker coop does.

The Size of Mondragon? No. But https://www.coops.tech/ lists some small ones.

I know a handful of them in Galicia, but they look small-ish. Mondragon had a tech consultancy company but I can't find them.

We have a software cooperative in Austin Texas (vulk.coop). We also have a monthly virtual (using zoom) and in-person meetup group https://www.meetup.com/Austin-Software-Co-operatives if you want to know more about software cooperatives. There are papers on cooperatives found here: https://www.meetup.com/Austin-Software-Co-operatives/about/. If you want more information (or even if you just want to rigorously debate) about organic entities, worker owned entities, cooperatives, etc., I would join that group.

I am a member of the meetup and like the fact that most of the discussions are held online to enable remote attendance.

I did some freelance work for their University's Engineering Faculty in ~2014 and it was pretty cool, reading up on them here now I can see how their coop nature influenced their research, as a lot of it was about making sure that workers and management both felt important and appreciated.

My work was on some "business simulators" for a management course they were preparing.You would first pick what kind of response you'd like from your employees or clients (i.e. "passion" - they would consider their project worthwhile, back the vision, realize that people are key... ) and then you'd be able to control 15 management parameters (like job security, management transparency, salary range, leadership style, training... ) then you'd see a chart with the output and even see "thoughts" that your employees would probably have.

In the UK there is Suma wholefoods being notable for being the largest equal pay cooperative in Europe with a turn over of £40 million. https://en.wikipedia.org/wiki/Suma_(co-operative)

Also in UK Food, https://www.unicorn-grocery.coop/ in Manchester is pretty cool.

equal pay for all 200+ workers, not only between genders.

They even run their own university. https://www.mondragon.edu/en/home for people who want to do their degree there and then I guess have a path into the company itself ?

If you study on the university by itself I would say that is easier to have a "first contact" with the companies that form the Corporation. However, were I work, more than 70% of the work force have studied outside Mondragon university.

General Motors used to run a university as well (they split in 1982, and renamed from General Motors Institute in 1998): https://en.wikipedia.org/wiki/Kettering_University

The reason why Mondragon was able to grow to its current size is their credit union Caja Laboral. Under the dictatorship of Francisco Franco "people's savings banks" were allowed to offer higher interest rates than competing banks. Therefore local citizens would deposit their funds in Caja Laboral, which would fund more cooperative businesses.

There's nothing special about the region or the culture, if you artificially favor a certain type of business structure then you will get more it. Mondragon is a classic case of incentives at work.

And what about the rest of the country where credit unions also exist but we didn’t get more (at least not that much) of that type of artificially favoured business structure?

I would argue that you did get more across the country, but the question is why is Mondragon more successful.

The other benfit they had was the isolation of the Basque region in Spain during the 1950s. They weren't served by railroads and the region itself is quite mountainous, so for regular people they tended to be the only game in town. In fact, their slogan at the time was "savings or suitcases". In other places credit unions would compete with each other so you couldn't establish a dominant position in the way that Caja Laboral did. Liberalization of the banking industry in Spain during the 1970s tended to level the playing field further. So you have the right mixture for a single dominant cooperative in Mondragon.

There are more around the country. It's very successful model in certain sectors like agriculture.

Went to a talk given by them once. They have cool things like a maximum ratio between the highest and lowest salary. They've done some huge projects in the past like energy turbines and the likes.

I am from Bizkaia and I'd love to work there, but as I had no luck on Derio/Zamudio neither, I am skeptical.

I've visited Mondragon, both the city (and the region) as well as many of the co-ops themselves.

I did a small slideshow/presentation for those interested: https://docs.google.com/presentation/d/1EFgwKNLgRgQQf8Kv236_...

It’s worth noting that only 40% of the group employees are owners.

The number of non owner employees is also growing. The numbers used to be much higher when they had Fagor but they fired most of the work force when it went bankrupt in 2013 and the buying company only opened 700 jobs to replace the old plant. Now a ton of their business is their supermarket branch in Eroski and most are temp workers with obviously no owner rights.

I always see the same faces in all the Eroskis in my city, are you sure most of them are temp workers?

By contract many are. At least in Bizkaia last time I asked is kinda how they got around giving them voting rights. I wonder if now they are giving them contratos indefinidios (full contracts) with no voting rights. But I do know most still cannot vote, and now only 40% have voting rights since Fagor went broke in 2013

I think this is more related to each company status (and laws). Eroski almost broke and is in "survival mode" right now.

As I know the general objective is to be around 60-70%.

In general retail has razor-thin margins. If I remember well Carrefour and Mercadona were under 2-3%.

If you are a retail operating in Spain both rental and energy are the key factors that might take you out of business.

Just having a way to 'detect' your energy consumption is going to peak and act before it happens is a huge competitive advantage.

For instance, knowing X% your fridges at a location might have a problem and beign able to either cancel/reroute orders in transit is a huge improvement on the P&L.

So if they get rid of eroski and just privatise it, you think they can go back to 70%? I think lagun aro still not up there in terms of people with vote rights, no?

But you work there so you probably know better

Well I think the main idea is sanitize it first (at least they are trying) then I suppose that they will be able to "add" more people to the cooperative. From Lagun Aro I do not have exact numbers sorry but I know that the main idea is to have +-60%. For example, right now in my company we are at 50% of people with vote rights because an unprecedented grow in last years (went from 250 to 340 workers in 4 years) with the idea to go back to 60% little by little depending on market conditions.

Here are some positive links about Eroski from spanish newpapers.

- https://cincodias.elpais.com/cincodias/2019/05/23/companias/...

- https://www.larazon.es/economia/eroski-cierra-2018-con-benef...

According to their FAQs: “En las cooperativas del área Industria el porcentaje de socios supera el 80%.”

That excludes the other areas (Finance, Retail and Knowledge) and the non-coop companies in the Industry area.

Yeh Mondragon is known for some stuff that goes against the coop principals

I'm surprised that more disaffected tech folk aren't starting their own coops. People in companies like

Especially in places like Seattle and San Francisco, where there are strong lefty communities. I wonder if we'll see the folks who get frustrated with the policies of Google/Amazon/etc splinter off to form coops.

Yeah. I had been trying to do it for awhile but there's surprisingly little activity around here in our sector (Oakland/SF tech)

My partners of the consultancy we founded last year decided to go this route. There aren't many great local examples to learn from so we're kind of figuring it out as we go. Obviously B2B tech/software/consulting is very different than for example Arizmendi, a local cooperative bakery.

If anyone else is interested or involved in coops in the Bay Area, please let me know and I'd be happy to meet up.

Right? I look at Seattle and think "There should totally be a thriving tech coop scene here".

But I think it's because of risk -- leaving a FAANG to found a tech coop is a risk. Why give up $400k/year for a moonshot?

I recommend checking out the annual Nonprofit Software Dev Summit in Oakland if you're interested in this. There are numerous folks from tech cooperatives who attend. Last year was amazing https://devsummit.aspirationtech.org/

Shameless plug :-)

Democracy at Work Institute: https://institute.coop/

Does anyone know the best state(s) in which to base a cooperative? Delaware, Nevada and Wyoming are the best for corporations, the main goal being to avoid corporate income taxes:


Related to that, is there something to be said for basing a cooperative/corporation in your home city/state specifically to bring in tax income for schools, infrastructure, police, firefighters, etc? What about nonprofit corporations, is this a nonissue for them?

In Boise, ID (where I live), HP and Micron/Crucial have enjoyed tax breaks for years as an incentive to be based here. But people have speculated that those breaks made it harder for other tech companies to compete here, because their tax burden lowered the wages they could offer. That may have set back the startup scene here for many years. It also potentially raises residential property taxes since someone has to pay for those incentives, and that's become a major issue as more people move here.

I worked at HP for a year as a contractor 15 years ago and it was wonderful, so I'm not disparaging them. I'm just curious to see what others think of this issue.

There's a "sister" concept of this called steward-ownership, promoted by this German organization:


They have a lot of interesting materials and case studies (Bosch, Zeiss and others).

Basically you can form an LLC the majority of which will be owned by the employees and will also guarantee that the company can never be acquired. There are a few schemes that can attract investments on special fixed terms, such as redeemable shares with 3x return.

This type of companies live much longer on average, according to some studies, and are also more stable and less prone to economic crises.

Anyway, fascinating stuff. I'm seriously considering steward ownership for my next company now.

This is another form of cooperative, especially in early stage. Once the cooperative gets established, you eventually want to become a C Corp to be able to manage investments for your employees and plan on an orderly succession.

Your confusing the coop with the company here - worker coop structures can get complex.

eg abc.coop may 100% own abc.com, the employees of abc.com will be members of abc.coop

I wouldn't hold Mondragon Corporation to a very high standard. Back in 2005-06 the company I worked in was intending to acquire Mondragon's wind turbine business (Ecotecnia). This was finally acquired by Alstom.

During the due diligence we saw the high level of political corruption, and terrorism financing Mondragon was involved in. Very distrubing. Once we saw this, we stopped looking at the acquisition.

"Financing terrorism" might need a little context. Terrorist band ETA had an extortion net that they called "revolutionary tax". People that refused to pay were threatened and often beaten, kidnapped or murdered.

So a lot of companies paid. Even if they had no sympathy for the criminals.

But there were other companies that didn't need much "convincing". Was this one of that kind? I have no idea.

Edit: oh, these are the owners of Eroski. I remember they were in the news a long time ago exactly for that. I don't remember how the trial ended, but some guy was definitely charged.

Got anything I can look at regarding the financing of terrorism? Wouldn’t that be extremely illegal and would absolutely need to be reported to the government?

We did.

The Mondragon Group already had some history of financing terrorism(1), but we didn't know affiliates outside the Basque Country could be involved. Ecotecnia was based in Barcelona.

(1): http://www.interior.gob.es/noticias/detalle/-/journal_conten...

That link describes how a MCC worker was taken into custody, being charged with some degree of terrorism collaboration. He got out on bail 2 days after. [1]

Caja Laboral was not involved and they even fired that worker sortly after his detention (next day). [2]

I fail to see how that link proofs that the "Mondragon Group already had some historry of financing terrorism".



so one individual that works in the corp was detained, and suddenly the whole organization finances terrorism? very convincing

By that measure you shouldn't really consider any of the large Spanish companies, as all of them have extremely close ties to francoism. At least for Mondragon they are a drop in the other bucket. Still, I would be very skeptical about these "terrorism financing", since the data you acquired was very probably massaged by the Spanish authorities to look as bad as possible.

> any of the large Spanish companies, as all of them have extremely close ties to francoism

Come on dude, is this really necessary in HN? Don't you think you're stretching it a bit?

Following the same reasoning, MCC "financing terrorism" is a far bigger stretch.

Sure, comparing the basque struggle to the francoist genocide was quite a stretch of my part. Sorry about that, mate!

That has nothing to do with anything I said.

Terrorism? Edit: looking at your comment history I'm going to go with them supporting other left wing groups as your "terrorism"?

I don’t know exactly what OP is referring to, but the Basque country in Spain is a region with certain separatist political actors that advocate/push for the independence of the Basque Country.

In the past this included ETA which was a separatist terrorist group from the Basque region. https://en.m.wikipedia.org/wiki/ETA_(separatist_group)

ETA was most definitely a terrorist group, infamously known worldwide for their use of car bombs.

ETA was a terrorist group, but they publicly announced an end to violence in 2011. They began the process of deescalation after 9/11.

It should also be mentioned that the UN had said that the Spanish occupation of the Basque region violated human rights.

UN has never said that Spain is occupying the Basque Country.

Comment history? Left wing groups terrorists? Please enlighten us with your research.

I didn't say that they were left wing terrorist, but I assumed (perhaps wrongly) that you were referring to their support of left wing political parties.

Again, I assumed that you are a conservative or libertarian. I apologise. I'm sorry that I just assumed you were a right winger.

You're an investor, it says so in your profile. Most of your comments have a fairly standard pro-markets anti-regulation view point. I was extrapolating that to be conservative but you could also be a liberal pro-markets type. So, my bad.

After doing some cursory googling, it looks like you were probably referring to the ETA. I would like to hear more about the terrorism and corruption, if you feel like going into it.

I have to admit, though, as an investor you and I see the world very very differently. If you don't mind me disagreeing with you I will try not to make any more assumptions.

You're mixing your views and opinions with facts.

All I can tell you is that our legal/compliance team did reach out to authorities.

As you can imagine, I won't entertain your ideology discussion when I'm refering to facts.

You're coming across in a axe-to-grind uninformed manner.

You make a claim like "Mondragon invests in terrorism" and you had better back that up.

What a weak and low effort post. This is not reddit. If you didn't find anything then that's were you should stop, otherwise you're only trying to entertain your biases and push them onto us.

I love how everyone here thinks they are above bias. It's precious. I'm just honest about mine.

Nobody said any of that, just told you to not accuse people of BS without proof.

They are the Spanish strike force! Largely irrelevant around here, until their fragile national unity is bruised and they all jump crying foul. Pretty funny when you see them for what they are.

I found out about Mondragon after watching http://ownershipeconomy.net/ and learning more about distributism.

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