The Marxist economist Richard D. Wolff thinks that a new form of economic organization, the worker self-directed enterprise, can gradually replace the for-profit corporation.
I hope he is right because the world needs something better than predatory corporations or oppressive government bureaucracies, which are the main choices on offer now.
But successful worker-owned enterprises have been around for a long time, and yet have never reached the critical mass that would enable them to become an important part of the economy.
Advocates of worker-owned businesses cite the example of the Mondragon Corporation, which originated in the Basque country in Spain in 1956 with a half dozen people and now is a federation of 257 businesses and co-ops employing 76,000 people in 31 countries. But why is there only one Mondragon Corporation? Why hasn’t it become a template for other successful efforts?
One of the things that limit worker-owned businesses, as I see it, is precisely this lack of critical mass. There is a societal infrastructure of business schools, business services and business finance to serve the new for-profit business. Worker-owners would have to learn as they go. This takes a level of commitment of which many people aren’t capable, unless they are in dire straits.
One of Wolff’s ideas is to provide seed money for WSDEs by giving the unemployed their compensation in a lump sum rather than weekly checks. This shows how he underestimates the difficulty of implementing his program.
To begin with, starting a successful small business is not something everybody can do, although many people think they can. If you wanted a pool of people with the ability to succeed in business, you probably wouldn’t choose them from among the unemployed. You’d be more likely to find them among people who have good jobs and money in the bank.
Then again, the American Dream is to own your own business. Generally speaking, it is not to be part of a community of comrades who share and share alike. We Americans think of ourselves as individualists, no matter how subservient to authority we may be in practice, and we only abandon the dream of self-sufficiency for compelling reasons.
Farmers’ marketing co-ops came into existence because farmers thought they were being cheated by middle-men. Electric power co-ops came into existence because the investor-owned utilities weren’t interested in serving them. Savings and loan associations, and later credit unions, were formed because people were dissatisfied with banks.
Workers have been known to take over factories from bankrupt employers and restart the businesses. Some co-ops are formed around political and social movements, such as selling organic food. But worker-owned and cooperative businesses are not the norm. There has to be a compelling reason to commit to starting one.
The commitment tends to fade when the compelling reason fades. Even the successful cooperatives tend to wither away, or be bought out, or to incorporate. Even the successful utopian communities, the Oneida community in New York state and the Amana community in Iowa, wound up as corporations.