Reaction 10 for ECO/SOC 935

How Worker-Owned Companies Work

Worker-owned businesses look like a positive alternative to profit and growth-driven private businesses and corporations. Generally, the latter type of businesses is oriented toward keeping the stockholders’ satisfaction high. Additionally, they show less loyalty to their workers and communities: should profit demand fewer workers or moving the company elsewhere, these businesses usually do not think twice about firing employees or abandoning the local community. This is not so for worker cooperatives, which exist for the workers, because of the workers, and commit to the local economy. These cooperatives cannot change headquarters unless all of the workers move with it. The great thing about these co-ops is that the workers are happy to work in and own the company. Furthermore, it is not like they are too idealistic and cannot remain in business: “it’s a real business,” says one worker in the video, “we have goals to meet. But there’s just this environment that we all love what we’re doing and it’s very meaningful to us, and we all want it to work.” Part of the reason why these co-ops work well is that “the great majority of people are more integrated and involved, and that’s why we can be more competitive and compete with the best businesses in the world.” Work makes sense and has meaning beyond profit. Work ethics assumes new and welcome heights.

Of course, the worker-owned businesses are affected by economic recessions much like privately-owned businesses. However, worker co-ops in Spain and in the United States, for example,  “have done better than other similar sized businesses in the current economic crisis. When sales and profits are down, worker owners don’t just close the doors. People take a hard look and try to figure out what they can do to make things better.” These people work hard to keep the business afloat because they view it not only as their place of employment, but also as their own company. Naturally, some co-ops are better off than others at a certain point in time. Therefore, Mondragon Cooperatives, a federation of 120 worker-owned-and-run companies in Spain, set up what they call a “rainy day fund.” Every year by means of this fund, profitable Mondragon co-ops make money available to the co-ops which are going through harder times. Additionally, if a co-op is not particularly profitable a given year, the workers “may agree to reduce their pay on a temporary basis until business picks up again. That way nobody has to lose their job.”

Worker owned businesses were not always this prosperous. Some of the businesses that started up in “a wave of optimism” in the 1970s failed because they were either not professional enough and closed or not cooperative enough and were bought by corporations. However, newer co-ops have learned from past co-op failures and work to avoid making the same mistakes. They have become “sophisticated businesses that are more agile and nimble than conventional firms while retaining their co-op purpose.”  Most co-ops manage to run rather smoothly. Co-ops make sure that potential employees are a good fit for the job by allowing them to work for a trial period to see if they are comfortable with working in a cooperative. Additionally, existing members of co-ops have the final say of whether potential employees can join, but “people who would not feel comfortable in this environment weed themselves out.” New members get an initial training in co-op management and ongoing practice in leadership development. Clearly, there are a variety of “stages of selection and development” to ensure that co-op members have the disposition and ability to work together gracefully.

Since there are no so-called “bosses” in worker-owned businesses, decisions are taken in a more democratic way. Depending on the number of people in a co-op, different co-ops may have different management structures. Some of the cooperatives on the smaller side of the spectrum operate by consensus. This is because each member can be heard when they get together to discuss issues. Since this is not very practical with larger communities, many co-ops have an employee-elected board of directors to make the necessary decisions. Regardless of which model co-ops employ, only people who work in the co-op (or stakeholders) can have a say in how the business is run so that the “co-op tends to serve the needs and wishes of its members as opposed to absentee owners [or stockholders].”

The author notes that most workplaces can take on some aspects of cooperatives. For instance, many workplaces can encourage more input and feedback from their employees in order to become more democratic: they may request “ideas and criticisms from staff without penalizing someone who challenges (constructively) how things are currently done in an effort to do things better.” Moreover, “decision making and finances can be more transparent, so every employee has an idea of the risks and limitations that the enterprise faces and their own contribution to that.”

Naomi Klein on Capitalism and Climate Change

Climate change is what should be an indisputable issue. Sadly, there is a climate denial movement. It is led in part by certain people who believe that the means of dealing with climate change that require a degree of regulation fundamentally challenge their libertarian principles. It is also led by a “very powerful” fossil fuel lobby. Despite the efforts of this movement, the majority of Americans believe that some climate change is happening (63% according to Live Science). However, the percentage of the American public that accepts that climate change is human caused has dropped significantly from 71% in 2007 to 44% in 2011, and a 2013 Yale study holds that this percentage has further dropped to 41%.

There are a few different reasons for this diminishing critical awareness dealing with climate change. Klein notes that climate change is a collective problem. Therefore, “we can only respond collectively.” The environmental movement attempted to personalize the problem and have people “recycle” and “buy a hybrid car.” Klein holds that this does not work because, although people get wound up in the short-run personal solution, in the long-run, these efforts lack the “collective social support” they so desperately need. Klein is of the opinion that we as mere citizens are not equally responsible for climate change as the fossil fuel corporations. She trusts that people would be willing to drive less, and therefore reduce their carbon emissions, if there were a “fantastic public transit system” available to them. She argues that there has been “a tremendous amount of willingness and goodwill for people to change their behavior.” However, people get demoralized when they witness emissions still rising because “the corporations aren’t changing how they do business” and feel that their personal actions are miniscule and make no significant difference. Finally, Klein argues that the “big environmental groups” are not being urgent or aggressive enough in presenting this climate crisis. Simply saying that “you can change you light bulb” and that “we’ll have this complicated piece of legislation called cap and trade that you don’t really understand, but that basically means that companies can keep polluting … and, you know, somebody else is going to plant trees on the other side of the planet” is not going to convince people of the graveness of the situation. The vital point here is that when “you hold up a supposed emergency and actually don’t ask anything of people, anything major, they actually think you might be lying, that it might not really be an emergency after all.”

Fortunately, there are a few possible solutions. Klein suggests that it would be great to have market incentives to encourage renewable energy, but that there must also be a form of government that is prepared to design and enforce boundaries to protect the environment. Nevertheless, the best solution would be to have an independent movement. There must be some type of planning to confront this situation, but it need not be centralized. Klein sustains that “there needs to be much more decentralization and a much deeper definition of democracy than we have right now.” She illustrates this notion by pointing out that efforts to build wind farms in the United States and Great Brittan have been faced by resistance from the communities. Conversely, wind farms have thrived in Germany and Denmark because communities there demand that the renewable energy be community controlled rather than centrally planned. This example demonstrates that decentralization actually encouraged change and that these people democratically decided to take matters into their own hands. Obviously, a new cultural transformation needs to ensue.

American Society and Capitalism Papers

The chapters from the two books offer a variety of suggestions to extend democracy in the United States. One I would like to mention is “massive public investment on public transportation in infrastructure.” Since the “automobile-based urban transportation system” in the States has a huge negative impact on the environment, a high-quality public transportation system with fewer externalities sounds like a good alternative and must be rendered as such. The authors suggest that “automobile drivers need to pay the true cost of driving cars” and that there should be taxes to incentivize the use of public transportation. This, they say, “should not be regarded as a way of creating artificially cheap public transportation that unfairly competes with cars, but rather as a way of embodying the true value to society of public transportation.” This approach would require a major transformation in the cultural habits of our society. Such a transformation would conflict with deeply ingrained cultural values and celebrated personal rights.

Another suggestion is to have public control over energy development. This requires a “diverse set of policies.” The one I would like to focus on is rather similar to the aforementioned notion of incentivizing energy efficient transportation. It suggests that the “price of different energy sources needs to reflect the long-term, negative externalities of their use.” If inefficient energy production and use is taxed, people are naturally incentivized to invest in energy efficient cars, buildings, etc. thereby taking a step towards reducing climate change. Corporations especially should have “excess profit” taxes to pay for their “externalized costs, or their depletion of the public-resources commons.”

An attractive idea for a measure of the societal progress the above suggestions (and the methods noted in the two previous sections of this paper) is the genuine progress indicator, or GPI. It is a more wholesome measure than simply the gross domestic product (GDP) for example, because while the GDP focuses on economic growth (and not its social or environmental side effects), the GPI also measures human and environmental costs of “uneconomic growth.” Its central objective is to include “potential negative indicators” ranging from “excessive growth, including resource depletions, ozone depletion, various forms of pollution, and loss of farmlands or wetlands or forests,” to “social dangers, such as crime, health effects, family breakdown, the effects of overcrowding,” and numerous other consequences of overdevelopment. This alternative measure would move societies’ focus from mere economic growth to a range of social aspects that should be just as important. Once people are more aware of the importance and value of these other aspects, they can adjust their priorities accordingly.

Works Cited

Klein, Naomi. Interviewed by Bill Moyers. Moyers & Company. 2012. Retrieved from:

Mander, Jerry. The Capitalism Papers: Fatal Flaws of an Obsolete System. Berkley: Counterpoint, 2012. Print.

Olin Wright, Erick, and Joel Rogers. American Society: How it Really Works. New York: Norton, 2011. Print.

Riley, Theresa. “How Worker-Owned Companies Work.” Moyers & Company. 2013. Retrieved from:

Pappas, Stephanie. “Climate Change Disbelief Rises in America.” Live Science. 2014. Retrieved from:

Marlon, J.R., Leiserowitz, A., and  Feinberg, G. (2013) Scientific and Public Perspectives on Climate Change. Yale University. New Haven, CT: Yale Project on Climate Change Communication. Retrieved from:


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