Making New Worker-Owned Businesses

After all the conferences, talks, books, and theory, the single thing that offers the best defense against the excesses of capitalism is the worker-owned business. That’s because profit goes to the owners, who are the workers themselves.

It’s not easy to establish a worker-owned business. It can be done if the original owner retires and sells the business to his employees. This is a very attractive option, and more retiring owners should consider it. It can be done if a corporate owner legally turns the corporation into a worker-owned business, rather than simply selling it. It can be done if a group of people decides to do it from scratch.

The Mondragón Corporation of Basque Spain was started from scratch in 1956 by four recent graduates, and now has about 84,000 worker-owners. In the US, Publix Supermarkets has 156,000 employee-owners. It was founded by George W. Jenkins in 1930. The John Lewis Partnership in England, which has clothing and food markets, has 81,000 personnel. John Lewis converted it to worker-ownership when he retired. There are numerous worker-owned businesses throughout the world. However, even the largest ones are dwarfed by the large corporations. Most worker-owned companies are considerably smaller. Moreover, many companies listed in this category are not, in fact, worker-owned, but are capitalist stock-sharing companies.

The distinguishing feature of worker-owned companies
is that workers actually do own the company.

The primary feature of capitalism is that the owner of a company takes all the profit as his own. The distinguishing feature of worker-owned companies is that workers actually do own the company, and nobody else can own any part of it. When the workers are the owners, it is the workers who take home the distributed profit.

But not all companies listed as “employee-owned” are actually owned by the employees. More common is the Employee Stock Option Plan (ESOP), in which employees can opt to buy stock in the company, sometimes with a matching contribution by the corporation. These companies function like any capitalist corporation, in which the workers have limited rights, can be fired by management without warning or reason, and gain profit only for the stock they have bought. But they do give workers an interest in the success of the company, and their investment can be beneficial to the worker, especially if the company kicks in a matching investment.

There are few negatives to worker-owned companies,
but they can be hard to start.

A US News article by David Browdwin notes that worker-owned companies are nimble, the workers highly motivated. They suffer from far less employee disgruntlement and strikes. Richard Wolff’s book, Democracy at Work: A Cure for Capitalism, treats the topic in more detail, as does Gar Alperovitz’ book, What Then Must We Do? If there were more worker-owned companies, far more, the general economic effect on the country would be strongly positive. Wages would be higher, and as a consequence so would tax revenue. There are almost no negatives.

But worker-owned companies are hard to start, and no profit is made until they are profitable. The federal government is in a position to encourage them, but to date there is no effort to do so. The political climate is such that any such effort is unlikely, in spite of the benefit it would bring to the country, because helping the worker-owner would be seen by Republicans as aiding the enemy, the non-capitalists.

The reason for this is that worker-owned companies are true democracies, and do not result in great wealth for a few owners. This goes against the fundamentals of conservatism, which says that there is a natural social order, with rich people at the top because of their presumed natural superiority. As a result of belief in this circular argument, conservatives are likely to oppose anything that would encourage worker-owned organizations.

But they cannot forbid it, and every worker who possibly can should find a way to be part of a worker-owned business.


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One CommentLeave a comment

  1. Worker owned companies are a great idea, but getting them set up is a major stumbling block.


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