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Worker Cooperatives vs. Traditional Hierarchical Organizations

September 7, 2014

Worker cooperatives, where the workers are also owners of a company, may be an effective way to counter the trend towards large, multinational corporations which have resulted in the enormous degree of economic inequality currently plaguing our economy. The idea of continuing to follow a business model with a multinational hierarchical structure easily lends itself to greater degrees of income inequality and a sense of powerlessness on the job for many at the lower end of the hierarchy. It also tends to lead to behaviors on the part of the few at the top of the hierarchy that further exacerbate the problems of an already unequal distribution of wealth, and of tax avoidance that enables the sort of tax avoidance strategies that have become apparent and more blatant on the part of corporations and wealthy individuals in recent years.By enabling this sort of behavior, society is allowing some of its members to benefit more than they contribute to society. But they like to call us the lazy ones.

The modern capitalist model often places inordinate emphasis on return for investment for company shareholders in the way of bottom line profits with little regard to how those profits are made and the ways in which the policies in place to achieve them affect the people involved in creating the actual profits. This can be easily seen in two of the largest areas of employment in the U.S. economy in recent years – fast food and retail sales. In both cases, the people responsible for making the corporation profitable are about as far removed from actually delivering or making the goods and services sold as humanly possible. That’s not to say that the CEO of Walmart couldn’t do the job of a cashier in one of the stores, or do the job of a factory worker in Southeast Asia making clothes for sale there. But they never have and would never want to. They have no concept of what the workers at those jobs go through in performing them, or how inadequate their wages may be in terms of supplying those workers with basic needs for survival for themselves and the people dependent upon them.

The shareholders in these companies are often even more clueless than the corporate executives when it comes to being able to sympathize with the workers and wanting to ensure their pay is fair and working conditions adequate. Often, they couldn’t care less about such matters, unless it leads to lower dividends or stock prices. Workers in foreign countries are often treated as being even more insignificant than the workers in this country, due to fewer legal protections in their own countries, and the fact that their work is usually virtually invisible to the consumers buying the products of their labors. The workers are themselves a commodity under this model. Just a cost on the way to the bottom line. They usually have no say in the way their work is performed or when, or how much they are being paid. Incentive is always there for management to keep labor costs as low as possible to keep profits high without raising prices. Governments – both here and abroad – are often more than happy to accommodate them by passing laws and providing tax incentives that encourage companies to do business or manufacture products within their jurisdiction as opposed to elsewhere.

In the case of fast-food workers, excuses are made that the work is unskilled and the workers are blamed for not being ambitious enough to gain the skills necessary to obtain a better paying job (which may or may not even exist). By keeping wages low, they keep the workers employed in often mind-numbing tasks for long hours just earning enough to scrape by and little time to do anything else. Often two or three jobs may be necessary, none of which provides benefits like sick leave, healthcare, etc. – because none is fulltime, and part-time employees are not provided them by law.

This society needs to pay more attention to how business affects each and every one of its members. People are more than just machines. Treating them as mere means to an end of creating wealth for other people whose only part in the production process is providing money for others to do the work for them, without regard for the overall impact of that process on their lives is morally bankrupt. The same may be said of consumers who can buy cheap clothing because some nameless people in a sweatshop in China or Vietnam slave away for a pittance under dangerous working conditions to make them to sell in Walmart or Target or wherever. Informing consumers of such practices is a service to us all in helping us to decide whether or not to shop in certain stores or buy certain products. Corporate transparency is as important as government transparency in this regard.

Workers who have unions and or labor laws that provide some protections for worker health, safety and compensation, are better off because they have a combined ability to raise a voice with company management that can be more effective than individual complaints are by themselves. Cooperative enterprises do this one better, however. Under co-ops, workers actually own a stake in the enterprise they are working for. Worker-owners have more of a vested interest in the overall welfare of the company than someone who is only there to collect a paycheck. Sharing in the profits or losses of the enterprise would certainly be a better incentive for each worker to ensure fairness in the workplace, as well as contributing to the better performance of the company as a whole. Separating the work from the reward has contributed mightily to the increased inequality between the incomes and wealth of management/shareholders and the average worker. Giving workers more of a voice in corporate governance would be a recipe for alleviating this inequality significantly with the passage of time.

The more that globalization takes place, where the work of production becomes farther and farther removed from the consumption of the product, the more mysterious the process becomes. Items come to be for sale on store shelves and we buy them based on our knowledge of what they will do for us, but with little understanding of what went into making them or getting them to the store. The main beneficiaries of the entire system become those who control and oversee it in its entirety, along with those who have the money to invest to grease the machinery to make it all happen. For workers to become empowered to gain adequate compensation for the work they perform, they must be seen as partners in the enterprise as well. Stakeholders may be better guides to the social usefulness and productivity of an enterprise than mere shareholders of stock. They also have a better understanding of all of the ramifications of company policies on the workers who must abide by them.

If our economy was comprised more of enterprises that operate under the principles of a cooperative, many of the problems currently plaguing our economy would likely be lessened significantly. Workers would likely seek alternatives to the outsourcing and offshoring of jobs that has basically transformed what used to be a largely manufacturing economy into a primarily service sector economy paying much lower wages. Workers need to ally with their counterparts elsewhere in the world to combat the race to the bottom that globalization, greatly facilitated by the current version of capitalist management practices, has created for workers across the world. Workers need to be able to see more of the benefits of their hard labor.

Productivity gains brought about by technological innovation also need to be more equitably distributed among all the workers, rather than primarily or only appropriated by the executive and investing classes. Rather than putting workers on the streets without jobs or incomes, increased productivity should enable all of humanity to gain, not just those at the top of corporations or wealthy enough to own stock. Establishing an economy that provided for more democracy in the workplace, and not just in the election of certain government officials, is needed to achieve a more equitable society as a whole. As things stand now, very few of us have any real say in the conditions under which we work or who we work for. By providing such workplace democracy on a larger scale, perhaps we could initiate a new economy that meets the needs of all citizens of the world equitably, rather than benefitting a few greatly at the expense of far too many others.

Suggested Further Readings:

Labor Law for All Workers: Empowering Workers to Challenge Corporate Decision Making

Gar Alperovitz: The Worker-Owned Small Business Revolution

Worker-Owners Cheer Creation of $1.2 Million Co-op Development Fund in NYC

These Women-Run Co-ops Push Back Against the “Feminization of Poverty”

Is Worker Ownership a Way Forward for Market Basket?

Not your grandpa’s labor union

The Future of Work in America: Policies to Empower American Workers and Secure Prosperity for All

Will German Workers Declare Independence?

Better than Redistributing Income

Lessons From James Boggs: Capitalist Automation in the 21st Century

Shift Change: Worker Owned Cooperatives and the Movement to Create a More Just Economy

Gar Alperovitz on Why the New Economy Movement Needs to Think Big

In Sign of ‘New Economy’ Rising, Vermont Bill Champions Worker-Owned Co-ops

Leveling the Playing Field for Worker Cooperatives

Want Better Wages? Build Worker Power

Leveling the Playing Field for Worker Cooperatives

Worker-Owned Co-ops Get $1 Million in NYC Spending

Is American Capitalism in Profound Trouble?

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  1. Nice Blog, thanks for sharing this kind of information.


  2. Reblogged this on World of Values and commented:
    On Worker-Owned Co-ops (like Publix!):


  3. Agreed. An additional point on education: For the “privilege” of having a job, workers are belittled and blamed for not achieving more through schooling. Low wage jobs make it nearly impossible for the vast majority to gain new skills, by neither providing them with the time to do so nor the wealth needed to train under privatized educational systems. The rare few who manage to escape this exploitation are held up as examples of how the system works — bootstraps, people! — rather than the evidence of how crippling the system is for most.

    Liked by 1 person

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