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On July 10 2019 02:17 Ryzel wrote:Show nested quote +On July 10 2019 02:12 KwarK wrote:On July 10 2019 02:03 Ryzel wrote:
OK, let's take two hypothetical examples of a thing-a-ma-jig business. This business creates thing-a-ma-jigs from base materials, and sells them to the market. Creating thing-a-ma-jigs requires skilled labor; employees require at least a couple years of specialized schooling and an apprenticeship of several months before getting an entry-level position.
In one, we have a worker-owned co-op-style business consisting of 50 employees; they all play a role in making the thing-a-ma-jigs and they all have equal say in decisions affecting the business, with the intent of maximizing profits of course. They are in agreement that each employee is vital to the process, and that each should receive the same share of the profits as any other. They're currently receiving $1000/month in profits, meaning each employee is receiving $20/month.
In the other, we have a capitalist-style business consisting of 1 CEO, 4 managers, and 45 employees. The CEO is in charge of all the decisions that affect the business, and his sole role is to do whatever it takes to ensure the business creates as much profit as possible. He has gone to school for this specifically. He delegates responsibilities to the managers, whose role is to both enforce and assist the 45 employees in following the CEO's vision of the business. The CEO has no idea how to make thing-a-ma-jigs, and the managers have some knowledge but are not experts. They are also receiving $1000/month in profits; the CEO takes a ridiculous share of $205/month, the managers each get $30/month, and the employees make $15/month.
First issue comes up for both businesses; profits are down for some reason and we need to figure out why. The co-op business has several employees that notice sales are down, and have some ideas as to why. The employees all have various levels of marketing and business experience, and have conflicting ideas as to how to solve the problem. Maybe 5-10 have had a bit of formal education/experience in the area of concern are in agreement on the correct course of action, but the other 35-40 have spent their lives making thing-a-ma-jigs and don't really know what to do. Some trust the 5-10, others go off their instinct, others don't like how the 5-10 are trying to assert themselves as “right” and resent their “superiority”. It takes some time, and in the end a compromise of sorts is reached where the correct solution is partially implemented and profits go back up a bit, but slightly. The business now is making $875/month in profit, and the employees are each making $17.50/month.
The CEO of the capitalist business identifies the problem quickly and reaches out to the right people to fix it. Profits bounce back to where they were before and everyone's wages remain unchanged.
Second issue: the contracted suppliers of the base materials for both businesses have suffered issues and are no longer able to deliver. The co-op business has several of its employees reach out to different suppliers and attempt to negotiate new deals. Unfortunately, there is more disagreement between the employees regarding what the rate should be for the base materials, as some have believed for a while that the rate with the previous suppliers was too high to begin with. Negotiations take a while since it takes so long to achieve consensus, and some potential suppliers get frustrated and drop out. Eventually they get a new deal, but its not as good as before and cuts into profits. They're now at $750/month, with employees each getting $15/month.
The CEO of the capitalist business quickly identifies new suppliers and begins negotiations. His training has led him to be a shrewd negotiator, and he ends up getting a slightly better deal than previously. Profits are now $1100/month; increasing the CEO's wage to $305/month (for a job well done of course).
Eventually, the two businesses begin competing directly in the same market. The capitalist business utilizes its greater revenue and decisiveness to implement strategies that direct sales away from the co-op business. The co-op business loses more profits, and worker morale begins to plummet. Eventually, the capitalist business buys out the co-op business, giving each employee a one-time decent chunk of change. However, the lack of competition lets the CEO feel safe reducing the wages of the employees a bit, since there's no more competition and nowhere for the employees to go. There's now one business making $2000/month, with 85 employees making $14/month, 10 managers making $30/month, and the CEO making a whopping $510/month.
And the CEO lived happily ever after.
...after going through with this thought experiment, it seems like the best thing to do would be for the workers themselves to hire CEOs/managers for their business, and they would require annual majority votes from the workers in order to keep their jobs. Basically if the workers/producers of value were the sole shareholders of their own business. It sucks financially though because the businesses have to cut into profits to keep the workers happy and get no extra investment from them. Making the public shareholders, on the other hand, will result in gobs of money being invested into you and you don't even have to give anything back (except dividends sometimes I guess). This basically means any company that makes workers shareholders will have less resources, and probably be less successful, then an otherwise equal company that makes the public shareholders. This entire thought experiment can be summarized as “Imagine two scenarios. One is better. Which one is better? Why, the better one of course. Therefore socialism is bad”. It’s not an argument, it’s just you telling us your preconceived conclusion through a story. If you reverse the numbers then the worker owned business succeeds. Why would the numbers be reversed? I'm having trouble coming up with a scenario where a business run by 50 people of varying levels of business experience coming to a consensus, is more successful than a business run by 1 person who has nothing but business experience. By all means I'd love to be proved wrong, as I don't really like the idea of workers being screwed over.
One first step can be the equivalent of representative democracy. You still have a "management" that can react as quickly as the CEO to the issue, but this management is also accountable to the workers, and as such it can't decide to fuck them over in the name of profits. The way things are today it's going to be very hard to have "direct democracy" in large companies just in terms of logistics.
I do think direct democracy is better overall and the closer you can get to it the better (that goes for the state as well). But that can be an objective, that doesn't have to be the start.
The start is just the standard social democracy that JimmiC is comfortable with, but instead of staying there and pretending we've saved the world, we do stuff like what Bernie Sanders has on his platform: incentives for worker co-ops. I think that's an excellent way of transitioning.
There's an interview of Bhaskar Sunkara from the Jacobin that is relevant here, for anyone interested. He doesn't really go into details a lot more than I did, but it can help give a better picture of what we're starting with and where we're going.
+ Show Spoiler +
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4713 Posts
I think socialism is utopic and impossible to implement without it breaking down.
Almost always the redistribution of wealth will involve a mechanism which inevitably gets corrupted to the detriment of the many.
I also think socialism actually promotes a toxic long term mindset, if you know you don't get to keep the majority of the wealth you create then you'll be encouraged to just be lazy and just do the minimum of what you need. And if the vast majority of people become lazy then the system breaks down. To actually achieve socialism you'd have to change the way humans thing so they continue striving despite the wealth redistribution, and I don't think its possible to socially engineer humanity like that.
I believe in meritocracy, the more or harder you work the better off you should be. If you do have what it takes to work 80 hours a week until you're 40 you deserve better than someone who's only worked 40 hours/week till he was 40. I think that's fundamentally a healthy mindset as it promotes self discipline, self reliance and leads to self respect.
So in that regard I think capitalism has done better as it many ways it does promote a sort of meritocracy. But I won't say capitalism is perfect, all systems have problems and its looking more and more like capitalism has the same problem of concentrating wealth into the hands of a few, albeit much, much more slowly than in socialism.
From my limited point of view it feels like there are two problems:
1. Certain activities or commodities are valued disproportionately high or low to each other.
2. The difference between those quantified values just keeps getting bigger and bigger.
I'm not sure how you stop or limit this, especially in today's global economics where you have tax havens, outsorcing etc. I think a bigger deep dive into this and how the entire system operatives would be more useful.
On just a philosophical level I think promoting personal responsibility, self reliance and meritocracy in a economic system is just going to have better results than promoting laziness.
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On July 10 2019 02:36 Destructicon wrote:
I think socialism is utopic and impossible to implement without it breaking down.
Almost always the redistribution of wealth will involve a mechanism which inevitably gets corrupted to the detriment of the many.
I also think socialism actually promotes a toxic long term mindset, if you know you don't get to keep the majority of the wealth you create then you'll be encouraged to just be lazy and just do the minimum of what you need. And if the vast majority of people become lazy then the system breaks down. To actually achieve socialism you'd have to change the way humans thing so they continue striving despite the wealth redistribution, and I don't think its possible to socially engineer humanity like that.
I believe in meritocracy, the more or harder you work the better off you should be. If you do have what it takes to work 80 hours a week until you're 40 you deserve better than someone who's only worked 40 hours/week till he was 40. I think that's fundamentally a healthy mindset as it promotes self discipline, self reliance and leads to self respect.
So in that regard I think capitalism has done better as it many ways it does promote a sort of meritocracy. But I won't say capitalism is perfect, all systems have problems and its looking more and more like capitalism has the same problem of concentrating wealth into the hands of a few, albeit much, much more slowly than in socialism.
From my limited point of view it feels like there are two problems:
1. Certain activities or commodities are valued disproportionately high or low to each other.
2. The difference between those quantified values just keeps getting bigger and bigger.
I'm not sure how you stop or limit this, especially in today's global economics where you have tax havens, outsorcing etc. I think a bigger deep dive into this and how the entire system operatives would be more useful.
On just a philosophical level I think promoting personal responsibility, self reliance and meritocracy in a economic system is just going to have better results than promoting laziness.
Why would workers in a worker-owned enterprise be lazier than employees hired at an hourly wage? Have you never worked in retail?
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Capitalism literally destroys any chance of meritocracy.
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On July 10 2019 02:26 KwarK wrote:Show nested quote +On July 10 2019 02:17 Ryzel wrote:On July 10 2019 02:12 KwarK wrote:On July 10 2019 02:03 Ryzel wrote:
OK, let's take two hypothetical examples of a thing-a-ma-jig business. This business creates thing-a-ma-jigs from base materials, and sells them to the market. Creating thing-a-ma-jigs requires skilled labor; employees require at least a couple years of specialized schooling and an apprenticeship of several months before getting an entry-level position.
In one, we have a worker-owned co-op-style business consisting of 50 employees; they all play a role in making the thing-a-ma-jigs and they all have equal say in decisions affecting the business, with the intent of maximizing profits of course. They are in agreement that each employee is vital to the process, and that each should receive the same share of the profits as any other. They're currently receiving $1000/month in profits, meaning each employee is receiving $20/month.
In the other, we have a capitalist-style business consisting of 1 CEO, 4 managers, and 45 employees. The CEO is in charge of all the decisions that affect the business, and his sole role is to do whatever it takes to ensure the business creates as much profit as possible. He has gone to school for this specifically. He delegates responsibilities to the managers, whose role is to both enforce and assist the 45 employees in following the CEO's vision of the business. The CEO has no idea how to make thing-a-ma-jigs, and the managers have some knowledge but are not experts. They are also receiving $1000/month in profits; the CEO takes a ridiculous share of $205/month, the managers each get $30/month, and the employees make $15/month.
First issue comes up for both businesses; profits are down for some reason and we need to figure out why. The co-op business has several employees that notice sales are down, and have some ideas as to why. The employees all have various levels of marketing and business experience, and have conflicting ideas as to how to solve the problem. Maybe 5-10 have had a bit of formal education/experience in the area of concern are in agreement on the correct course of action, but the other 35-40 have spent their lives making thing-a-ma-jigs and don't really know what to do. Some trust the 5-10, others go off their instinct, others don't like how the 5-10 are trying to assert themselves as “right” and resent their “superiority”. It takes some time, and in the end a compromise of sorts is reached where the correct solution is partially implemented and profits go back up a bit, but slightly. The business now is making $875/month in profit, and the employees are each making $17.50/month.
The CEO of the capitalist business identifies the problem quickly and reaches out to the right people to fix it. Profits bounce back to where they were before and everyone's wages remain unchanged.
Second issue: the contracted suppliers of the base materials for both businesses have suffered issues and are no longer able to deliver. The co-op business has several of its employees reach out to different suppliers and attempt to negotiate new deals. Unfortunately, there is more disagreement between the employees regarding what the rate should be for the base materials, as some have believed for a while that the rate with the previous suppliers was too high to begin with. Negotiations take a while since it takes so long to achieve consensus, and some potential suppliers get frustrated and drop out. Eventually they get a new deal, but its not as good as before and cuts into profits. They're now at $750/month, with employees each getting $15/month.
The CEO of the capitalist business quickly identifies new suppliers and begins negotiations. His training has led him to be a shrewd negotiator, and he ends up getting a slightly better deal than previously. Profits are now $1100/month; increasing the CEO's wage to $305/month (for a job well done of course).
Eventually, the two businesses begin competing directly in the same market. The capitalist business utilizes its greater revenue and decisiveness to implement strategies that direct sales away from the co-op business. The co-op business loses more profits, and worker morale begins to plummet. Eventually, the capitalist business buys out the co-op business, giving each employee a one-time decent chunk of change. However, the lack of competition lets the CEO feel safe reducing the wages of the employees a bit, since there's no more competition and nowhere for the employees to go. There's now one business making $2000/month, with 85 employees making $14/month, 10 managers making $30/month, and the CEO making a whopping $510/month.
And the CEO lived happily ever after.
...after going through with this thought experiment, it seems like the best thing to do would be for the workers themselves to hire CEOs/managers for their business, and they would require annual majority votes from the workers in order to keep their jobs. Basically if the workers/producers of value were the sole shareholders of their own business. It sucks financially though because the businesses have to cut into profits to keep the workers happy and get no extra investment from them. Making the public shareholders, on the other hand, will result in gobs of money being invested into you and you don't even have to give anything back (except dividends sometimes I guess). This basically means any company that makes workers shareholders will have less resources, and probably be less successful, then an otherwise equal company that makes the public shareholders. This entire thought experiment can be summarized as “Imagine two scenarios. One is better. Which one is better? Why, the better one of course. Therefore socialism is bad”. It’s not an argument, it’s just you telling us your preconceived conclusion through a story. If you reverse the numbers then the worker owned business succeeds. Why would the numbers be reversed? I'm having trouble coming up with a scenario where a business run by 50 people of varying levels of business experience coming to a consensus, is more successful than a business run by 1 person who has nothing but business experience. By all means I'd love to be proved wrong, as I don't really like the idea of workers being screwed over. EDIT - On July 10 2019 02:12 KwarK wrote:
One of the more successful British grocery chains, Waitrose, is a worker owner cooperative but they still have managers and they still pay market rates for executives. They just also distribute profits to employees because the employees are the shareholders. I address this in my last paragraph. I assume this grocery chain has been established for quite some time and has lots of name recognition, probably not an awful lot of local big name competition. Do you think the company would be less profitable if they changed to a public shareholder dynamic instead? If so, why? Why would you assume that there isn’t competition in the grocery store market? That’s a very weird assumption to have. Your hypothetical is just a convoluted way of stating your conclusions. Hell, when Microsoft was a small business they gave out equity as compensation to workers. It’s a great way of stabilizing small businesses by reducing costs and distributing both risks and incentives across the workforce. It creates corporate alignment. Your idea of what worker owned businesses look like and what they actually look like are completely different.
I didn't say Waitrose doesn't have any competition. I tried describing exactly what I meant by competition, I'll clarify. Local means originated in Britain and not another country (i.e. not WalMart or American superstores), and big name means not mom-and-pop chains that only have 1-3 locations. Specifically, I meant competition that is otherwise similar to Waitrose but is publicly owned instead of the workers-as-shareholders situation that you've described.
Your example of Microsoft also seems to imply that I think having workers-as-shareholders in any situation is a bad idea. I didn't say that. I said that it seems to be ineffective compared to going public as a means of making a company profitable when given a choice between the two. Microsoft eventually went public, and got much larger than it did before; presumably as a result of going public.
Here's the TLDR; I think solely-workers-as-shareholders types of business would maximize the fairness of reimbursement towards the workers, and I like this a lot. When a business goes public, it takes away the previous dynamic from the business to some degree. This is bad. Unfortunately, it seems to result in good things for the business, so they are incentivized to do so. How do we make a solely-workers-as-shareholders type of business competitive with one that goes public?
EDIT - On July 10 2019 02:29 Nebuchad wrote:Show nested quote +On July 10 2019 02:17 Ryzel wrote:On July 10 2019 02:12 KwarK wrote:On July 10 2019 02:03 Ryzel wrote:
OK, let's take two hypothetical examples of a thing-a-ma-jig business. This business creates thing-a-ma-jigs from base materials, and sells them to the market. Creating thing-a-ma-jigs requires skilled labor; employees require at least a couple years of specialized schooling and an apprenticeship of several months before getting an entry-level position.
In one, we have a worker-owned co-op-style business consisting of 50 employees; they all play a role in making the thing-a-ma-jigs and they all have equal say in decisions affecting the business, with the intent of maximizing profits of course. They are in agreement that each employee is vital to the process, and that each should receive the same share of the profits as any other. They're currently receiving $1000/month in profits, meaning each employee is receiving $20/month.
In the other, we have a capitalist-style business consisting of 1 CEO, 4 managers, and 45 employees. The CEO is in charge of all the decisions that affect the business, and his sole role is to do whatever it takes to ensure the business creates as much profit as possible. He has gone to school for this specifically. He delegates responsibilities to the managers, whose role is to both enforce and assist the 45 employees in following the CEO's vision of the business. The CEO has no idea how to make thing-a-ma-jigs, and the managers have some knowledge but are not experts. They are also receiving $1000/month in profits; the CEO takes a ridiculous share of $205/month, the managers each get $30/month, and the employees make $15/month.
First issue comes up for both businesses; profits are down for some reason and we need to figure out why. The co-op business has several employees that notice sales are down, and have some ideas as to why. The employees all have various levels of marketing and business experience, and have conflicting ideas as to how to solve the problem. Maybe 5-10 have had a bit of formal education/experience in the area of concern are in agreement on the correct course of action, but the other 35-40 have spent their lives making thing-a-ma-jigs and don't really know what to do. Some trust the 5-10, others go off their instinct, others don't like how the 5-10 are trying to assert themselves as “right” and resent their “superiority”. It takes some time, and in the end a compromise of sorts is reached where the correct solution is partially implemented and profits go back up a bit, but slightly. The business now is making $875/month in profit, and the employees are each making $17.50/month.
The CEO of the capitalist business identifies the problem quickly and reaches out to the right people to fix it. Profits bounce back to where they were before and everyone's wages remain unchanged.
Second issue: the contracted suppliers of the base materials for both businesses have suffered issues and are no longer able to deliver. The co-op business has several of its employees reach out to different suppliers and attempt to negotiate new deals. Unfortunately, there is more disagreement between the employees regarding what the rate should be for the base materials, as some have believed for a while that the rate with the previous suppliers was too high to begin with. Negotiations take a while since it takes so long to achieve consensus, and some potential suppliers get frustrated and drop out. Eventually they get a new deal, but its not as good as before and cuts into profits. They're now at $750/month, with employees each getting $15/month.
The CEO of the capitalist business quickly identifies new suppliers and begins negotiations. His training has led him to be a shrewd negotiator, and he ends up getting a slightly better deal than previously. Profits are now $1100/month; increasing the CEO's wage to $305/month (for a job well done of course).
Eventually, the two businesses begin competing directly in the same market. The capitalist business utilizes its greater revenue and decisiveness to implement strategies that direct sales away from the co-op business. The co-op business loses more profits, and worker morale begins to plummet. Eventually, the capitalist business buys out the co-op business, giving each employee a one-time decent chunk of change. However, the lack of competition lets the CEO feel safe reducing the wages of the employees a bit, since there's no more competition and nowhere for the employees to go. There's now one business making $2000/month, with 85 employees making $14/month, 10 managers making $30/month, and the CEO making a whopping $510/month.
And the CEO lived happily ever after.
...after going through with this thought experiment, it seems like the best thing to do would be for the workers themselves to hire CEOs/managers for their business, and they would require annual majority votes from the workers in order to keep their jobs. Basically if the workers/producers of value were the sole shareholders of their own business. It sucks financially though because the businesses have to cut into profits to keep the workers happy and get no extra investment from them. Making the public shareholders, on the other hand, will result in gobs of money being invested into you and you don't even have to give anything back (except dividends sometimes I guess). This basically means any company that makes workers shareholders will have less resources, and probably be less successful, then an otherwise equal company that makes the public shareholders. This entire thought experiment can be summarized as “Imagine two scenarios. One is better. Which one is better? Why, the better one of course. Therefore socialism is bad”. It’s not an argument, it’s just you telling us your preconceived conclusion through a story. If you reverse the numbers then the worker owned business succeeds. Why would the numbers be reversed? I'm having trouble coming up with a scenario where a business run by 50 people of varying levels of business experience coming to a consensus, is more successful than a business run by 1 person who has nothing but business experience. By all means I'd love to be proved wrong, as I don't really like the idea of workers being screwed over. One first step can be the equivalent of representative democracy. You still have a "management" that can react as quickly as the CEO to the issue, but this management is also accountable to the workers, and as such it can't decide to fuck them over in the name of profits. The way things are today it's going to be very hard to have "direct democracy" in large companies just in terms of logistics. I do think direct democracy is better overall and the closer you can get to it the better (that goes for the state as well). But that can be an objective, that doesn't have to be the start. The start is just the standard social democracy that JimmiC is comfortable with, but instead of staying there and pretending we've saved the world, we do stuff like what Bernie Sanders has on his platform: incentives for worker co-ops. I think that's an excellent way of transitioning. There's an interview of Bhaskar Sunkara from the Jacobin that is relevant here, for anyone interested. He doesn't really go into details a lot more than I did, but it can help give a better picture of what we're starting with and where we're going. + Show Spoiler +https://www.youtube.com/watch?v=vK4fHQb2BQk
Thank you for this. I'll give it a look later.
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On July 10 2019 02:28 Acrofales wrote:Show nested quote +On July 10 2019 02:03 Nebuchad wrote:On July 10 2019 01:52 Velr wrote:
If your worker owned company is doing great, what stopps the workers from selling it and buy a cheaper factory in a poorer place and live of the earnings of that company?
I guess you would say that wouldn't be allowed but what do you do then if a workforce decides to really profit of the work they did? Disallow them from ever invest/buy another company? So why even have money or ownership rights at that point?
I'm all for paying the average worker much more, companies like Amazon, Starbucks, Walmart and so on are a disgrace, but there has to be a better way than inserting some stately oversight with jnlimited power locking employes in their self iwned company forever. Simple rules about average worker pay would solve this much easier whiteout totally restructuring basically the whole economic and political system from the ground up. As you expect it wouldn't be allowed, when the companies are owned by workers you can't "buy another company" like this, it wouldn't mean anything. I don't advocate for state oversight but for workplace democracy. The workers directly own the means of production, they don't do it through state ownership. I'm not an anarchist, I do think having a state matters and is overall a good idea, but on this specifically I tend more towards anarchism than authoritarian forms of socialism. It just doesn't make sense to ban ownership in a market-based economy though. What about ownership of ideas (IP)? What about the risk that is involved in starting a new business?
What about the risk? Silicon Valley startups have a notorious history of offering ownership (shares) to their first couple rounds of employees.
IP? That’s easy. You can’t really own ideas.
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On July 10 2019 02:40 Ryzel wrote:Show nested quote +On July 10 2019 02:26 KwarK wrote:On July 10 2019 02:17 Ryzel wrote:On July 10 2019 02:12 KwarK wrote:On July 10 2019 02:03 Ryzel wrote:
OK, let's take two hypothetical examples of a thing-a-ma-jig business. This business creates thing-a-ma-jigs from base materials, and sells them to the market. Creating thing-a-ma-jigs requires skilled labor; employees require at least a couple years of specialized schooling and an apprenticeship of several months before getting an entry-level position.
In one, we have a worker-owned co-op-style business consisting of 50 employees; they all play a role in making the thing-a-ma-jigs and they all have equal say in decisions affecting the business, with the intent of maximizing profits of course. They are in agreement that each employee is vital to the process, and that each should receive the same share of the profits as any other. They're currently receiving $1000/month in profits, meaning each employee is receiving $20/month.
In the other, we have a capitalist-style business consisting of 1 CEO, 4 managers, and 45 employees. The CEO is in charge of all the decisions that affect the business, and his sole role is to do whatever it takes to ensure the business creates as much profit as possible. He has gone to school for this specifically. He delegates responsibilities to the managers, whose role is to both enforce and assist the 45 employees in following the CEO's vision of the business. The CEO has no idea how to make thing-a-ma-jigs, and the managers have some knowledge but are not experts. They are also receiving $1000/month in profits; the CEO takes a ridiculous share of $205/month, the managers each get $30/month, and the employees make $15/month.
First issue comes up for both businesses; profits are down for some reason and we need to figure out why. The co-op business has several employees that notice sales are down, and have some ideas as to why. The employees all have various levels of marketing and business experience, and have conflicting ideas as to how to solve the problem. Maybe 5-10 have had a bit of formal education/experience in the area of concern are in agreement on the correct course of action, but the other 35-40 have spent their lives making thing-a-ma-jigs and don't really know what to do. Some trust the 5-10, others go off their instinct, others don't like how the 5-10 are trying to assert themselves as “right” and resent their “superiority”. It takes some time, and in the end a compromise of sorts is reached where the correct solution is partially implemented and profits go back up a bit, but slightly. The business now is making $875/month in profit, and the employees are each making $17.50/month.
The CEO of the capitalist business identifies the problem quickly and reaches out to the right people to fix it. Profits bounce back to where they were before and everyone's wages remain unchanged.
Second issue: the contracted suppliers of the base materials for both businesses have suffered issues and are no longer able to deliver. The co-op business has several of its employees reach out to different suppliers and attempt to negotiate new deals. Unfortunately, there is more disagreement between the employees regarding what the rate should be for the base materials, as some have believed for a while that the rate with the previous suppliers was too high to begin with. Negotiations take a while since it takes so long to achieve consensus, and some potential suppliers get frustrated and drop out. Eventually they get a new deal, but its not as good as before and cuts into profits. They're now at $750/month, with employees each getting $15/month.
The CEO of the capitalist business quickly identifies new suppliers and begins negotiations. His training has led him to be a shrewd negotiator, and he ends up getting a slightly better deal than previously. Profits are now $1100/month; increasing the CEO's wage to $305/month (for a job well done of course).
Eventually, the two businesses begin competing directly in the same market. The capitalist business utilizes its greater revenue and decisiveness to implement strategies that direct sales away from the co-op business. The co-op business loses more profits, and worker morale begins to plummet. Eventually, the capitalist business buys out the co-op business, giving each employee a one-time decent chunk of change. However, the lack of competition lets the CEO feel safe reducing the wages of the employees a bit, since there's no more competition and nowhere for the employees to go. There's now one business making $2000/month, with 85 employees making $14/month, 10 managers making $30/month, and the CEO making a whopping $510/month.
And the CEO lived happily ever after.
...after going through with this thought experiment, it seems like the best thing to do would be for the workers themselves to hire CEOs/managers for their business, and they would require annual majority votes from the workers in order to keep their jobs. Basically if the workers/producers of value were the sole shareholders of their own business. It sucks financially though because the businesses have to cut into profits to keep the workers happy and get no extra investment from them. Making the public shareholders, on the other hand, will result in gobs of money being invested into you and you don't even have to give anything back (except dividends sometimes I guess). This basically means any company that makes workers shareholders will have less resources, and probably be less successful, then an otherwise equal company that makes the public shareholders. This entire thought experiment can be summarized as “Imagine two scenarios. One is better. Which one is better? Why, the better one of course. Therefore socialism is bad”. It’s not an argument, it’s just you telling us your preconceived conclusion through a story. If you reverse the numbers then the worker owned business succeeds. Why would the numbers be reversed? I'm having trouble coming up with a scenario where a business run by 50 people of varying levels of business experience coming to a consensus, is more successful than a business run by 1 person who has nothing but business experience. By all means I'd love to be proved wrong, as I don't really like the idea of workers being screwed over. EDIT - On July 10 2019 02:12 KwarK wrote:
One of the more successful British grocery chains, Waitrose, is a worker owner cooperative but they still have managers and they still pay market rates for executives. They just also distribute profits to employees because the employees are the shareholders. I address this in my last paragraph. I assume this grocery chain has been established for quite some time and has lots of name recognition, probably not an awful lot of local big name competition. Do you think the company would be less profitable if they changed to a public shareholder dynamic instead? If so, why? Why would you assume that there isn’t competition in the grocery store market? That’s a very weird assumption to have. Your hypothetical is just a convoluted way of stating your conclusions. Hell, when Microsoft was a small business they gave out equity as compensation to workers. It’s a great way of stabilizing small businesses by reducing costs and distributing both risks and incentives across the workforce. It creates corporate alignment. Your idea of what worker owned businesses look like and what they actually look like are completely different. I didn't say Waitrose doesn't have any competition. I tried describing exactly what I meant by competition, I'll clarify. Local means originated in Britain and not another country (i.e. not WalMart or American superstores), and big name means not mom-and-pop chains that only have 1-3 locations. Specifically, I meant competition that is otherwise similar to Waitrose but is publicly owned instead of the workers-as-shareholders situation that you've described. Your example of Microsoft also seems to imply that I think having workers-as-shareholders in any situation is a bad idea. I didn't say that. I said that it seems to be ineffective compared to going public as a means of making a company profitable when given a choice between the two. Microsoft eventually went public, and got much larger than it did before; presumably as a result of going public. Here's the TLDR; I think solely-workers-as-shareholders types of business would maximize the fairness of reimbursement towards the workers, and I like this a lot. When a business goes public, it takes away the previous dynamic from the business to some degree. This is bad. Unfortunately, it seems to result in good things for the business, so they are incentivized to do so. How do we make a solely-workers-as-shareholders type of business competitive with one that goes public?
I am confused as to why you think going public matters at all in the “thought experiment” you conducted. Why wouldn’t a closely held corporation have all the same advantages (ie dictatorial CEO power)?
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On July 10 2019 02:21 Dan HH wrote:Show nested quote +On July 10 2019 02:17 Ryzel wrote:On July 10 2019 02:12 KwarK wrote:On July 10 2019 02:03 Ryzel wrote:
OK, let's take two hypothetical examples of a thing-a-ma-jig business. This business creates thing-a-ma-jigs from base materials, and sells them to the market. Creating thing-a-ma-jigs requires skilled labor; employees require at least a couple years of specialized schooling and an apprenticeship of several months before getting an entry-level position.
In one, we have a worker-owned co-op-style business consisting of 50 employees; they all play a role in making the thing-a-ma-jigs and they all have equal say in decisions affecting the business, with the intent of maximizing profits of course. They are in agreement that each employee is vital to the process, and that each should receive the same share of the profits as any other. They're currently receiving $1000/month in profits, meaning each employee is receiving $20/month.
In the other, we have a capitalist-style business consisting of 1 CEO, 4 managers, and 45 employees. The CEO is in charge of all the decisions that affect the business, and his sole role is to do whatever it takes to ensure the business creates as much profit as possible. He has gone to school for this specifically. He delegates responsibilities to the managers, whose role is to both enforce and assist the 45 employees in following the CEO's vision of the business. The CEO has no idea how to make thing-a-ma-jigs, and the managers have some knowledge but are not experts. They are also receiving $1000/month in profits; the CEO takes a ridiculous share of $205/month, the managers each get $30/month, and the employees make $15/month.
First issue comes up for both businesses; profits are down for some reason and we need to figure out why. The co-op business has several employees that notice sales are down, and have some ideas as to why. The employees all have various levels of marketing and business experience, and have conflicting ideas as to how to solve the problem. Maybe 5-10 have had a bit of formal education/experience in the area of concern are in agreement on the correct course of action, but the other 35-40 have spent their lives making thing-a-ma-jigs and don't really know what to do. Some trust the 5-10, others go off their instinct, others don't like how the 5-10 are trying to assert themselves as “right” and resent their “superiority”. It takes some time, and in the end a compromise of sorts is reached where the correct solution is partially implemented and profits go back up a bit, but slightly. The business now is making $875/month in profit, and the employees are each making $17.50/month.
The CEO of the capitalist business identifies the problem quickly and reaches out to the right people to fix it. Profits bounce back to where they were before and everyone's wages remain unchanged.
Second issue: the contracted suppliers of the base materials for both businesses have suffered issues and are no longer able to deliver. The co-op business has several of its employees reach out to different suppliers and attempt to negotiate new deals. Unfortunately, there is more disagreement between the employees regarding what the rate should be for the base materials, as some have believed for a while that the rate with the previous suppliers was too high to begin with. Negotiations take a while since it takes so long to achieve consensus, and some potential suppliers get frustrated and drop out. Eventually they get a new deal, but its not as good as before and cuts into profits. They're now at $750/month, with employees each getting $15/month.
The CEO of the capitalist business quickly identifies new suppliers and begins negotiations. His training has led him to be a shrewd negotiator, and he ends up getting a slightly better deal than previously. Profits are now $1100/month; increasing the CEO's wage to $305/month (for a job well done of course).
Eventually, the two businesses begin competing directly in the same market. The capitalist business utilizes its greater revenue and decisiveness to implement strategies that direct sales away from the co-op business. The co-op business loses more profits, and worker morale begins to plummet. Eventually, the capitalist business buys out the co-op business, giving each employee a one-time decent chunk of change. However, the lack of competition lets the CEO feel safe reducing the wages of the employees a bit, since there's no more competition and nowhere for the employees to go. There's now one business making $2000/month, with 85 employees making $14/month, 10 managers making $30/month, and the CEO making a whopping $510/month.
And the CEO lived happily ever after.
...after going through with this thought experiment, it seems like the best thing to do would be for the workers themselves to hire CEOs/managers for their business, and they would require annual majority votes from the workers in order to keep their jobs. Basically if the workers/producers of value were the sole shareholders of their own business. It sucks financially though because the businesses have to cut into profits to keep the workers happy and get no extra investment from them. Making the public shareholders, on the other hand, will result in gobs of money being invested into you and you don't even have to give anything back (except dividends sometimes I guess). This basically means any company that makes workers shareholders will have less resources, and probably be less successful, then an otherwise equal company that makes the public shareholders. This entire thought experiment can be summarized as “Imagine two scenarios. One is better. Which one is better? Why, the better one of course. Therefore socialism is bad”. It’s not an argument, it’s just you telling us your preconceived conclusion through a story. If you reverse the numbers then the worker owned business succeeds. Why would the numbers be reversed? I'm having trouble coming up with a scenario where a business run by 50 people of varying levels of business experience coming to a consensus, is more successful than a business run by 1 person who has nothing but business experience. By all means I'd love to be proved wrong, as I don't really like the idea of workers being screwed over. You seem to be confusing socialism with the lack of a division of labour. You would still have an engineer doing engineering decisions under socialism rather than all workers having a vote on every individual's job.
It's both refreshing and weird to me people are learning what socialism is (not the capitalist propaganda) here of all places. I appreciate folks like Neb doing the leg work too.
On July 10 2019 02:40 Jockmcplop wrote:
Capitalism literally destroys any chance of meritocracy.
I thought one of the few things we begrudgingly agreed on as a thread was this.
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On July 10 2019 02:46 IgnE wrote:Show nested quote +On July 10 2019 02:40 Ryzel wrote:On July 10 2019 02:26 KwarK wrote:On July 10 2019 02:17 Ryzel wrote:On July 10 2019 02:12 KwarK wrote:On July 10 2019 02:03 Ryzel wrote:
OK, let's take two hypothetical examples of a thing-a-ma-jig business. This business creates thing-a-ma-jigs from base materials, and sells them to the market. Creating thing-a-ma-jigs requires skilled labor; employees require at least a couple years of specialized schooling and an apprenticeship of several months before getting an entry-level position.
In one, we have a worker-owned co-op-style business consisting of 50 employees; they all play a role in making the thing-a-ma-jigs and they all have equal say in decisions affecting the business, with the intent of maximizing profits of course. They are in agreement that each employee is vital to the process, and that each should receive the same share of the profits as any other. They're currently receiving $1000/month in profits, meaning each employee is receiving $20/month.
In the other, we have a capitalist-style business consisting of 1 CEO, 4 managers, and 45 employees. The CEO is in charge of all the decisions that affect the business, and his sole role is to do whatever it takes to ensure the business creates as much profit as possible. He has gone to school for this specifically. He delegates responsibilities to the managers, whose role is to both enforce and assist the 45 employees in following the CEO's vision of the business. The CEO has no idea how to make thing-a-ma-jigs, and the managers have some knowledge but are not experts. They are also receiving $1000/month in profits; the CEO takes a ridiculous share of $205/month, the managers each get $30/month, and the employees make $15/month.
First issue comes up for both businesses; profits are down for some reason and we need to figure out why. The co-op business has several employees that notice sales are down, and have some ideas as to why. The employees all have various levels of marketing and business experience, and have conflicting ideas as to how to solve the problem. Maybe 5-10 have had a bit of formal education/experience in the area of concern are in agreement on the correct course of action, but the other 35-40 have spent their lives making thing-a-ma-jigs and don't really know what to do. Some trust the 5-10, others go off their instinct, others don't like how the 5-10 are trying to assert themselves as “right” and resent their “superiority”. It takes some time, and in the end a compromise of sorts is reached where the correct solution is partially implemented and profits go back up a bit, but slightly. The business now is making $875/month in profit, and the employees are each making $17.50/month.
The CEO of the capitalist business identifies the problem quickly and reaches out to the right people to fix it. Profits bounce back to where they were before and everyone's wages remain unchanged.
Second issue: the contracted suppliers of the base materials for both businesses have suffered issues and are no longer able to deliver. The co-op business has several of its employees reach out to different suppliers and attempt to negotiate new deals. Unfortunately, there is more disagreement between the employees regarding what the rate should be for the base materials, as some have believed for a while that the rate with the previous suppliers was too high to begin with. Negotiations take a while since it takes so long to achieve consensus, and some potential suppliers get frustrated and drop out. Eventually they get a new deal, but its not as good as before and cuts into profits. They're now at $750/month, with employees each getting $15/month.
The CEO of the capitalist business quickly identifies new suppliers and begins negotiations. His training has led him to be a shrewd negotiator, and he ends up getting a slightly better deal than previously. Profits are now $1100/month; increasing the CEO's wage to $305/month (for a job well done of course).
Eventually, the two businesses begin competing directly in the same market. The capitalist business utilizes its greater revenue and decisiveness to implement strategies that direct sales away from the co-op business. The co-op business loses more profits, and worker morale begins to plummet. Eventually, the capitalist business buys out the co-op business, giving each employee a one-time decent chunk of change. However, the lack of competition lets the CEO feel safe reducing the wages of the employees a bit, since there's no more competition and nowhere for the employees to go. There's now one business making $2000/month, with 85 employees making $14/month, 10 managers making $30/month, and the CEO making a whopping $510/month.
And the CEO lived happily ever after.
...after going through with this thought experiment, it seems like the best thing to do would be for the workers themselves to hire CEOs/managers for their business, and they would require annual majority votes from the workers in order to keep their jobs. Basically if the workers/producers of value were the sole shareholders of their own business. It sucks financially though because the businesses have to cut into profits to keep the workers happy and get no extra investment from them. Making the public shareholders, on the other hand, will result in gobs of money being invested into you and you don't even have to give anything back (except dividends sometimes I guess). This basically means any company that makes workers shareholders will have less resources, and probably be less successful, then an otherwise equal company that makes the public shareholders. This entire thought experiment can be summarized as “Imagine two scenarios. One is better. Which one is better? Why, the better one of course. Therefore socialism is bad”. It’s not an argument, it’s just you telling us your preconceived conclusion through a story. If you reverse the numbers then the worker owned business succeeds. Why would the numbers be reversed? I'm having trouble coming up with a scenario where a business run by 50 people of varying levels of business experience coming to a consensus, is more successful than a business run by 1 person who has nothing but business experience. By all means I'd love to be proved wrong, as I don't really like the idea of workers being screwed over. EDIT - On July 10 2019 02:12 KwarK wrote:
One of the more successful British grocery chains, Waitrose, is a worker owner cooperative but they still have managers and they still pay market rates for executives. They just also distribute profits to employees because the employees are the shareholders. I address this in my last paragraph. I assume this grocery chain has been established for quite some time and has lots of name recognition, probably not an awful lot of local big name competition. Do you think the company would be less profitable if they changed to a public shareholder dynamic instead? If so, why? Why would you assume that there isn’t competition in the grocery store market? That’s a very weird assumption to have. Your hypothetical is just a convoluted way of stating your conclusions. Hell, when Microsoft was a small business they gave out equity as compensation to workers. It’s a great way of stabilizing small businesses by reducing costs and distributing both risks and incentives across the workforce. It creates corporate alignment. Your idea of what worker owned businesses look like and what they actually look like are completely different. I didn't say Waitrose doesn't have any competition. I tried describing exactly what I meant by competition, I'll clarify. Local means originated in Britain and not another country (i.e. not WalMart or American superstores), and big name means not mom-and-pop chains that only have 1-3 locations. Specifically, I meant competition that is otherwise similar to Waitrose but is publicly owned instead of the workers-as-shareholders situation that you've described. Your example of Microsoft also seems to imply that I think having workers-as-shareholders in any situation is a bad idea. I didn't say that. I said that it seems to be ineffective compared to going public as a means of making a company profitable when given a choice between the two. Microsoft eventually went public, and got much larger than it did before; presumably as a result of going public. Here's the TLDR; I think solely-workers-as-shareholders types of business would maximize the fairness of reimbursement towards the workers, and I like this a lot. When a business goes public, it takes away the previous dynamic from the business to some degree. This is bad. Unfortunately, it seems to result in good things for the business, so they are incentivized to do so. How do we make a solely-workers-as-shareholders type of business competitive with one that goes public? I am confused as to why you think going public matters at all in the “thought experiment” you conducted. Why wouldn’t a closely held corporation have all the same advantages (ie dictatorial CEO power)?
Because the one that goes public gets gobs of investment money from the public, and one that doesn't is denied that funding. Is there something I'm missing?
I apologize for the confusion, the thought experiment is more towards direct-democracy style of decision making vs. executive. Only the last paragraph in that post deals with what we're discussing now about going public.
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United States42646 Posts
On July 10 2019 02:36 Destructicon wrote:
I think socialism is utopic and impossible to implement without it breaking down.
Almost always the redistribution of wealth will involve a mechanism which inevitably gets corrupted to the detriment of the many.
I also think socialism actually promotes a toxic long term mindset, if you know you don't get to keep the majority of the wealth you create then you'll be encouraged to just be lazy and just do the minimum of what you need. And if the vast majority of people become lazy then the system breaks down. To actually achieve socialism you'd have to change the way humans thing so they continue striving despite the wealth redistribution, and I don't think its possible to socially engineer humanity like that.
I believe in meritocracy, the more or harder you work the better off you should be. If you do have what it takes to work 80 hours a week until you're 40 you deserve better than someone who's only worked 40 hours/week till he was 40. I think that's fundamentally a healthy mindset as it promotes self discipline, self reliance and leads to self respect.
So in that regard I think capitalism has done better as it many ways it does promote a sort of meritocracy. But I won't say capitalism is perfect, all systems have problems and its looking more and more like capitalism has the same problem of concentrating wealth into the hands of a few, albeit much, much more slowly than in socialism.
From my limited point of view it feels like there are two problems:
1. Certain activities or commodities are valued disproportionately high or low to each other.
2. The difference between those quantified values just keeps getting bigger and bigger.
I'm not sure how you stop or limit this, especially in today's global economics where you have tax havens, outsorcing etc. I think a bigger deep dive into this and how the entire system operatives would be more useful.
On just a philosophical level I think promoting personal responsibility, self reliance and meritocracy in a economic system is just going to have better results than promoting laziness.
Your theory of laziness being bad is groundbreaking. I think we can pretty much wrap up economics now. Thanks for sharing that insight. If I can offer but one suggestion to your thesis, you’ve confused capitalism and socialism. In socialism the proceeds of the labour are divided between the labourers, rewarding them for their hard work directly. The harder they work, the more they get. In capitalism the proceeds of labour are given to the capitalist class, such as landowners, renters, shareholders, banks etc. who performed no labour in the activity that created value. The labourers are awarded a flat amount, regardless of profits, calculated as the amount so low that nobody else would do the job. It is capitalism that is incentivizing me to lazily explain this to you while at work because I am not rewarded for generating additional value.
Consider the feudal landowner. He can grant the use of the land to whomever he wishes, rent is therefore set at the highest rate that someone would still be willing to farm the land and pay. If the land gets more productive the farmer gets no greater share, his share is dictated by the supply of labour. If anything the farmer gets a greater proportion of the total yield as productivity goes down due to rent varying with productivity while the amount allocated to the farmer for his efforts remains tied to labour forces.
The landowner performs no farming but he owns the land and collects rent from the farmers which he uses to draw labour from the surrounding area for a team of servants, groundskeepers, cooks, maids, footmen, etc. Consider the amount of man hours wasted in the manor. If all the farmers got together one night and burned him alive in his manor the entire affair would be far more productive for everyone involved. Now consider the absentee shareholders of today. Consider the amount of man hours wasted feeding their vanity. Consider how few labourers in the modern economy are actually involved in value generating activities, as opposed to feeding the needs of the capitalist class. The manors of old are a paragon of efficiency in comparison.
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On July 10 2019 02:49 Ryzel wrote:Show nested quote +On July 10 2019 02:46 IgnE wrote:On July 10 2019 02:40 Ryzel wrote:On July 10 2019 02:26 KwarK wrote:On July 10 2019 02:17 Ryzel wrote:On July 10 2019 02:12 KwarK wrote:On July 10 2019 02:03 Ryzel wrote:
OK, let's take two hypothetical examples of a thing-a-ma-jig business. This business creates thing-a-ma-jigs from base materials, and sells them to the market. Creating thing-a-ma-jigs requires skilled labor; employees require at least a couple years of specialized schooling and an apprenticeship of several months before getting an entry-level position.
In one, we have a worker-owned co-op-style business consisting of 50 employees; they all play a role in making the thing-a-ma-jigs and they all have equal say in decisions affecting the business, with the intent of maximizing profits of course. They are in agreement that each employee is vital to the process, and that each should receive the same share of the profits as any other. They're currently receiving $1000/month in profits, meaning each employee is receiving $20/month.
In the other, we have a capitalist-style business consisting of 1 CEO, 4 managers, and 45 employees. The CEO is in charge of all the decisions that affect the business, and his sole role is to do whatever it takes to ensure the business creates as much profit as possible. He has gone to school for this specifically. He delegates responsibilities to the managers, whose role is to both enforce and assist the 45 employees in following the CEO's vision of the business. The CEO has no idea how to make thing-a-ma-jigs, and the managers have some knowledge but are not experts. They are also receiving $1000/month in profits; the CEO takes a ridiculous share of $205/month, the managers each get $30/month, and the employees make $15/month.
First issue comes up for both businesses; profits are down for some reason and we need to figure out why. The co-op business has several employees that notice sales are down, and have some ideas as to why. The employees all have various levels of marketing and business experience, and have conflicting ideas as to how to solve the problem. Maybe 5-10 have had a bit of formal education/experience in the area of concern are in agreement on the correct course of action, but the other 35-40 have spent their lives making thing-a-ma-jigs and don't really know what to do. Some trust the 5-10, others go off their instinct, others don't like how the 5-10 are trying to assert themselves as “right” and resent their “superiority”. It takes some time, and in the end a compromise of sorts is reached where the correct solution is partially implemented and profits go back up a bit, but slightly. The business now is making $875/month in profit, and the employees are each making $17.50/month.
The CEO of the capitalist business identifies the problem quickly and reaches out to the right people to fix it. Profits bounce back to where they were before and everyone's wages remain unchanged.
Second issue: the contracted suppliers of the base materials for both businesses have suffered issues and are no longer able to deliver. The co-op business has several of its employees reach out to different suppliers and attempt to negotiate new deals. Unfortunately, there is more disagreement between the employees regarding what the rate should be for the base materials, as some have believed for a while that the rate with the previous suppliers was too high to begin with. Negotiations take a while since it takes so long to achieve consensus, and some potential suppliers get frustrated and drop out. Eventually they get a new deal, but its not as good as before and cuts into profits. They're now at $750/month, with employees each getting $15/month.
The CEO of the capitalist business quickly identifies new suppliers and begins negotiations. His training has led him to be a shrewd negotiator, and he ends up getting a slightly better deal than previously. Profits are now $1100/month; increasing the CEO's wage to $305/month (for a job well done of course).
Eventually, the two businesses begin competing directly in the same market. The capitalist business utilizes its greater revenue and decisiveness to implement strategies that direct sales away from the co-op business. The co-op business loses more profits, and worker morale begins to plummet. Eventually, the capitalist business buys out the co-op business, giving each employee a one-time decent chunk of change. However, the lack of competition lets the CEO feel safe reducing the wages of the employees a bit, since there's no more competition and nowhere for the employees to go. There's now one business making $2000/month, with 85 employees making $14/month, 10 managers making $30/month, and the CEO making a whopping $510/month.
And the CEO lived happily ever after.
...after going through with this thought experiment, it seems like the best thing to do would be for the workers themselves to hire CEOs/managers for their business, and they would require annual majority votes from the workers in order to keep their jobs. Basically if the workers/producers of value were the sole shareholders of their own business. It sucks financially though because the businesses have to cut into profits to keep the workers happy and get no extra investment from them. Making the public shareholders, on the other hand, will result in gobs of money being invested into you and you don't even have to give anything back (except dividends sometimes I guess). This basically means any company that makes workers shareholders will have less resources, and probably be less successful, then an otherwise equal company that makes the public shareholders. This entire thought experiment can be summarized as “Imagine two scenarios. One is better. Which one is better? Why, the better one of course. Therefore socialism is bad”. It’s not an argument, it’s just you telling us your preconceived conclusion through a story. If you reverse the numbers then the worker owned business succeeds. Why would the numbers be reversed? I'm having trouble coming up with a scenario where a business run by 50 people of varying levels of business experience coming to a consensus, is more successful than a business run by 1 person who has nothing but business experience. By all means I'd love to be proved wrong, as I don't really like the idea of workers being screwed over. EDIT - On July 10 2019 02:12 KwarK wrote:
One of the more successful British grocery chains, Waitrose, is a worker owner cooperative but they still have managers and they still pay market rates for executives. They just also distribute profits to employees because the employees are the shareholders. I address this in my last paragraph. I assume this grocery chain has been established for quite some time and has lots of name recognition, probably not an awful lot of local big name competition. Do you think the company would be less profitable if they changed to a public shareholder dynamic instead? If so, why? Why would you assume that there isn’t competition in the grocery store market? That’s a very weird assumption to have. Your hypothetical is just a convoluted way of stating your conclusions. Hell, when Microsoft was a small business they gave out equity as compensation to workers. It’s a great way of stabilizing small businesses by reducing costs and distributing both risks and incentives across the workforce. It creates corporate alignment. Your idea of what worker owned businesses look like and what they actually look like are completely different. I didn't say Waitrose doesn't have any competition. I tried describing exactly what I meant by competition, I'll clarify. Local means originated in Britain and not another country (i.e. not WalMart or American superstores), and big name means not mom-and-pop chains that only have 1-3 locations. Specifically, I meant competition that is otherwise similar to Waitrose but is publicly owned instead of the workers-as-shareholders situation that you've described. Your example of Microsoft also seems to imply that I think having workers-as-shareholders in any situation is a bad idea. I didn't say that. I said that it seems to be ineffective compared to going public as a means of making a company profitable when given a choice between the two. Microsoft eventually went public, and got much larger than it did before; presumably as a result of going public. Here's the TLDR; I think solely-workers-as-shareholders types of business would maximize the fairness of reimbursement towards the workers, and I like this a lot. When a business goes public, it takes away the previous dynamic from the business to some degree. This is bad. Unfortunately, it seems to result in good things for the business, so they are incentivized to do so. How do we make a solely-workers-as-shareholders type of business competitive with one that goes public? I am confused as to why you think going public matters at all in the “thought experiment” you conducted. Why wouldn’t a closely held corporation have all the same advantages (ie dictatorial CEO power)? Because the one that goes public gets gobs of investment money from the public, and one that doesn't is denied that funding. Is there something I'm missing? I apologize for the confusion, the thought experiment is more towards direct-democracy style of decision making vs. executive. Only the last paragraph in that post deals with what we're discussing now about going public.
Oh so you are worried about how to get capital if you don’t pay the capital owners interest on their capital. Who will decide where society’s capital goes? How will we get 10x billion dollar companies?
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On July 10 2019 02:52 KwarK wrote:Show nested quote +On July 10 2019 02:36 Destructicon wrote:
I think socialism is utopic and impossible to implement without it breaking down.
Almost always the redistribution of wealth will involve a mechanism which inevitably gets corrupted to the detriment of the many.
I also think socialism actually promotes a toxic long term mindset, if you know you don't get to keep the majority of the wealth you create then you'll be encouraged to just be lazy and just do the minimum of what you need. And if the vast majority of people become lazy then the system breaks down. To actually achieve socialism you'd have to change the way humans thing so they continue striving despite the wealth redistribution, and I don't think its possible to socially engineer humanity like that.
I believe in meritocracy, the more or harder you work the better off you should be. If you do have what it takes to work 80 hours a week until you're 40 you deserve better than someone who's only worked 40 hours/week till he was 40. I think that's fundamentally a healthy mindset as it promotes self discipline, self reliance and leads to self respect.
So in that regard I think capitalism has done better as it many ways it does promote a sort of meritocracy. But I won't say capitalism is perfect, all systems have problems and its looking more and more like capitalism has the same problem of concentrating wealth into the hands of a few, albeit much, much more slowly than in socialism.
From my limited point of view it feels like there are two problems:
1. Certain activities or commodities are valued disproportionately high or low to each other.
2. The difference between those quantified values just keeps getting bigger and bigger.
I'm not sure how you stop or limit this, especially in today's global economics where you have tax havens, outsorcing etc. I think a bigger deep dive into this and how the entire system operatives would be more useful.
On just a philosophical level I think promoting personal responsibility, self reliance and meritocracy in a economic system is just going to have better results than promoting laziness. It is capitalism that is incentivizing me to lazily explain this to you while at work because I am not rewarded for generating additional value.
Same, and also, thanks for this excellent quote
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United States42646 Posts
On July 10 2019 02:40 Ryzel wrote:Show nested quote +On July 10 2019 02:26 KwarK wrote:On July 10 2019 02:17 Ryzel wrote:On July 10 2019 02:12 KwarK wrote:On July 10 2019 02:03 Ryzel wrote:
OK, let's take two hypothetical examples of a thing-a-ma-jig business. This business creates thing-a-ma-jigs from base materials, and sells them to the market. Creating thing-a-ma-jigs requires skilled labor; employees require at least a couple years of specialized schooling and an apprenticeship of several months before getting an entry-level position.
In one, we have a worker-owned co-op-style business consisting of 50 employees; they all play a role in making the thing-a-ma-jigs and they all have equal say in decisions affecting the business, with the intent of maximizing profits of course. They are in agreement that each employee is vital to the process, and that each should receive the same share of the profits as any other. They're currently receiving $1000/month in profits, meaning each employee is receiving $20/month.
In the other, we have a capitalist-style business consisting of 1 CEO, 4 managers, and 45 employees. The CEO is in charge of all the decisions that affect the business, and his sole role is to do whatever it takes to ensure the business creates as much profit as possible. He has gone to school for this specifically. He delegates responsibilities to the managers, whose role is to both enforce and assist the 45 employees in following the CEO's vision of the business. The CEO has no idea how to make thing-a-ma-jigs, and the managers have some knowledge but are not experts. They are also receiving $1000/month in profits; the CEO takes a ridiculous share of $205/month, the managers each get $30/month, and the employees make $15/month.
First issue comes up for both businesses; profits are down for some reason and we need to figure out why. The co-op business has several employees that notice sales are down, and have some ideas as to why. The employees all have various levels of marketing and business experience, and have conflicting ideas as to how to solve the problem. Maybe 5-10 have had a bit of formal education/experience in the area of concern are in agreement on the correct course of action, but the other 35-40 have spent their lives making thing-a-ma-jigs and don't really know what to do. Some trust the 5-10, others go off their instinct, others don't like how the 5-10 are trying to assert themselves as “right” and resent their “superiority”. It takes some time, and in the end a compromise of sorts is reached where the correct solution is partially implemented and profits go back up a bit, but slightly. The business now is making $875/month in profit, and the employees are each making $17.50/month.
The CEO of the capitalist business identifies the problem quickly and reaches out to the right people to fix it. Profits bounce back to where they were before and everyone's wages remain unchanged.
Second issue: the contracted suppliers of the base materials for both businesses have suffered issues and are no longer able to deliver. The co-op business has several of its employees reach out to different suppliers and attempt to negotiate new deals. Unfortunately, there is more disagreement between the employees regarding what the rate should be for the base materials, as some have believed for a while that the rate with the previous suppliers was too high to begin with. Negotiations take a while since it takes so long to achieve consensus, and some potential suppliers get frustrated and drop out. Eventually they get a new deal, but its not as good as before and cuts into profits. They're now at $750/month, with employees each getting $15/month.
The CEO of the capitalist business quickly identifies new suppliers and begins negotiations. His training has led him to be a shrewd negotiator, and he ends up getting a slightly better deal than previously. Profits are now $1100/month; increasing the CEO's wage to $305/month (for a job well done of course).
Eventually, the two businesses begin competing directly in the same market. The capitalist business utilizes its greater revenue and decisiveness to implement strategies that direct sales away from the co-op business. The co-op business loses more profits, and worker morale begins to plummet. Eventually, the capitalist business buys out the co-op business, giving each employee a one-time decent chunk of change. However, the lack of competition lets the CEO feel safe reducing the wages of the employees a bit, since there's no more competition and nowhere for the employees to go. There's now one business making $2000/month, with 85 employees making $14/month, 10 managers making $30/month, and the CEO making a whopping $510/month.
And the CEO lived happily ever after.
...after going through with this thought experiment, it seems like the best thing to do would be for the workers themselves to hire CEOs/managers for their business, and they would require annual majority votes from the workers in order to keep their jobs. Basically if the workers/producers of value were the sole shareholders of their own business. It sucks financially though because the businesses have to cut into profits to keep the workers happy and get no extra investment from them. Making the public shareholders, on the other hand, will result in gobs of money being invested into you and you don't even have to give anything back (except dividends sometimes I guess). This basically means any company that makes workers shareholders will have less resources, and probably be less successful, then an otherwise equal company that makes the public shareholders. This entire thought experiment can be summarized as “Imagine two scenarios. One is better. Which one is better? Why, the better one of course. Therefore socialism is bad”. It’s not an argument, it’s just you telling us your preconceived conclusion through a story. If you reverse the numbers then the worker owned business succeeds. Why would the numbers be reversed? I'm having trouble coming up with a scenario where a business run by 50 people of varying levels of business experience coming to a consensus, is more successful than a business run by 1 person who has nothing but business experience. By all means I'd love to be proved wrong, as I don't really like the idea of workers being screwed over. EDIT - On July 10 2019 02:12 KwarK wrote:
One of the more successful British grocery chains, Waitrose, is a worker owner cooperative but they still have managers and they still pay market rates for executives. They just also distribute profits to employees because the employees are the shareholders. I address this in my last paragraph. I assume this grocery chain has been established for quite some time and has lots of name recognition, probably not an awful lot of local big name competition. Do you think the company would be less profitable if they changed to a public shareholder dynamic instead? If so, why? Why would you assume that there isn’t competition in the grocery store market? That’s a very weird assumption to have. Your hypothetical is just a convoluted way of stating your conclusions. Hell, when Microsoft was a small business they gave out equity as compensation to workers. It’s a great way of stabilizing small businesses by reducing costs and distributing both risks and incentives across the workforce. It creates corporate alignment. Your idea of what worker owned businesses look like and what they actually look like are completely different. I didn't say Waitrose doesn't have any competition. I tried describing exactly what I meant by competition, I'll clarify. Local means originated in Britain and not another country (i.e. not WalMart or American superstores), and big name means not mom-and-pop chains that only have 1-3 locations. Specifically, I meant competition that is otherwise similar to Waitrose but is publicly owned instead of the workers-as-shareholders situation that you've described. Your example of Microsoft also seems to imply that I think having workers-as-shareholders in any situation is a bad idea. I didn't say that. I said that it seems to be ineffective compared to going public as a means of making a company profitable when given a choice between the two. Microsoft eventually went public, and got much larger than it did before; presumably as a result of going public. Here's the TLDR; I think solely-workers-as-shareholders types of business would maximize the fairness of reimbursement towards the workers, and I like this a lot. When a business goes public, it takes away the previous dynamic from the business to some degree. This is bad. Unfortunately, it seems to result in good things for the business, so they are incentivized to do so. How do we make a solely-workers-as-shareholders type of business competitive with one that goes public? EDIT - Show nested quote +On July 10 2019 02:29 Nebuchad wrote:On July 10 2019 02:17 Ryzel wrote:On July 10 2019 02:12 KwarK wrote:On July 10 2019 02:03 Ryzel wrote:
OK, let's take two hypothetical examples of a thing-a-ma-jig business. This business creates thing-a-ma-jigs from base materials, and sells them to the market. Creating thing-a-ma-jigs requires skilled labor; employees require at least a couple years of specialized schooling and an apprenticeship of several months before getting an entry-level position.
In one, we have a worker-owned co-op-style business consisting of 50 employees; they all play a role in making the thing-a-ma-jigs and they all have equal say in decisions affecting the business, with the intent of maximizing profits of course. They are in agreement that each employee is vital to the process, and that each should receive the same share of the profits as any other. They're currently receiving $1000/month in profits, meaning each employee is receiving $20/month.
In the other, we have a capitalist-style business consisting of 1 CEO, 4 managers, and 45 employees. The CEO is in charge of all the decisions that affect the business, and his sole role is to do whatever it takes to ensure the business creates as much profit as possible. He has gone to school for this specifically. He delegates responsibilities to the managers, whose role is to both enforce and assist the 45 employees in following the CEO's vision of the business. The CEO has no idea how to make thing-a-ma-jigs, and the managers have some knowledge but are not experts. They are also receiving $1000/month in profits; the CEO takes a ridiculous share of $205/month, the managers each get $30/month, and the employees make $15/month.
First issue comes up for both businesses; profits are down for some reason and we need to figure out why. The co-op business has several employees that notice sales are down, and have some ideas as to why. The employees all have various levels of marketing and business experience, and have conflicting ideas as to how to solve the problem. Maybe 5-10 have had a bit of formal education/experience in the area of concern are in agreement on the correct course of action, but the other 35-40 have spent their lives making thing-a-ma-jigs and don't really know what to do. Some trust the 5-10, others go off their instinct, others don't like how the 5-10 are trying to assert themselves as “right” and resent their “superiority”. It takes some time, and in the end a compromise of sorts is reached where the correct solution is partially implemented and profits go back up a bit, but slightly. The business now is making $875/month in profit, and the employees are each making $17.50/month.
The CEO of the capitalist business identifies the problem quickly and reaches out to the right people to fix it. Profits bounce back to where they were before and everyone's wages remain unchanged.
Second issue: the contracted suppliers of the base materials for both businesses have suffered issues and are no longer able to deliver. The co-op business has several of its employees reach out to different suppliers and attempt to negotiate new deals. Unfortunately, there is more disagreement between the employees regarding what the rate should be for the base materials, as some have believed for a while that the rate with the previous suppliers was too high to begin with. Negotiations take a while since it takes so long to achieve consensus, and some potential suppliers get frustrated and drop out. Eventually they get a new deal, but its not as good as before and cuts into profits. They're now at $750/month, with employees each getting $15/month.
The CEO of the capitalist business quickly identifies new suppliers and begins negotiations. His training has led him to be a shrewd negotiator, and he ends up getting a slightly better deal than previously. Profits are now $1100/month; increasing the CEO's wage to $305/month (for a job well done of course).
Eventually, the two businesses begin competing directly in the same market. The capitalist business utilizes its greater revenue and decisiveness to implement strategies that direct sales away from the co-op business. The co-op business loses more profits, and worker morale begins to plummet. Eventually, the capitalist business buys out the co-op business, giving each employee a one-time decent chunk of change. However, the lack of competition lets the CEO feel safe reducing the wages of the employees a bit, since there's no more competition and nowhere for the employees to go. There's now one business making $2000/month, with 85 employees making $14/month, 10 managers making $30/month, and the CEO making a whopping $510/month.
And the CEO lived happily ever after.
...after going through with this thought experiment, it seems like the best thing to do would be for the workers themselves to hire CEOs/managers for their business, and they would require annual majority votes from the workers in order to keep their jobs. Basically if the workers/producers of value were the sole shareholders of their own business. It sucks financially though because the businesses have to cut into profits to keep the workers happy and get no extra investment from them. Making the public shareholders, on the other hand, will result in gobs of money being invested into you and you don't even have to give anything back (except dividends sometimes I guess). This basically means any company that makes workers shareholders will have less resources, and probably be less successful, then an otherwise equal company that makes the public shareholders. This entire thought experiment can be summarized as “Imagine two scenarios. One is better. Which one is better? Why, the better one of course. Therefore socialism is bad”. It’s not an argument, it’s just you telling us your preconceived conclusion through a story. If you reverse the numbers then the worker owned business succeeds. Why would the numbers be reversed? I'm having trouble coming up with a scenario where a business run by 50 people of varying levels of business experience coming to a consensus, is more successful than a business run by 1 person who has nothing but business experience. By all means I'd love to be proved wrong, as I don't really like the idea of workers being screwed over. One first step can be the equivalent of representative democracy. You still have a "management" that can react as quickly as the CEO to the issue, but this management is also accountable to the workers, and as such it can't decide to fuck them over in the name of profits. The way things are today it's going to be very hard to have "direct democracy" in large companies just in terms of logistics. I do think direct democracy is better overall and the closer you can get to it the better (that goes for the state as well). But that can be an objective, that doesn't have to be the start. The start is just the standard social democracy that JimmiC is comfortable with, but instead of staying there and pretending we've saved the world, we do stuff like what Bernie Sanders has on his platform: incentives for worker co-ops. I think that's an excellent way of transitioning. There's an interview of Bhaskar Sunkara from the Jacobin that is relevant here, for anyone interested. He doesn't really go into details a lot more than I did, but it can help give a better picture of what we're starting with and where we're going. + Show Spoiler +https://www.youtube.com/watch?v=vK4fHQb2BQk Thank you for this. I'll give it a look later.
Waitrose does have competition. We’re a nation of 70,000,000. We have grocery store chains. Sainsburys for example.
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@Ryzel and anyone else who is interested: just google Richard Wolff if you want to hear a guy talk for hours and hours and hours about why worker-owned enterprises are the greatest thing ever
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Norway28665 Posts
My brother works for an employee-owned IT company. They have 150 employees, are highly successful, all employees must own stock - but they still have a board of directors - where two are hired externally and four are democratically elected. I am not sure how those are paid, but I know that there is some differentiation in pay depending on what your specific job is, however I don't think any worker makes more than twice any other worker, and because every worker has stock, they all profit from the company profiting.
It being worker-owned does not mean there is no hierarchy or no people with decisive power - it means that the people with decisive power are democratically elected which can be presumed to make them factor in workers more when they answer to the workers than if they answer to the shareholders. It might also be presumed that it will then also yield lesser profits (as this will be the primary focus of the shareholders) but I think that's a good tradeoff. I'm also not sure it actually is less profitable; but I do think the democratization of processes makes the company more risk-averse, which I assume makes them less likely to get incredible % payoffs.
(As a sidenote, them hiring external expertise indicates that they are aware that they might have knowledge gaps - however outnumbering the external board members 4 to 2 means they end up having more of an advisory role, which to me seems ideal.)
The company has frequented some 'best work places in norway' and 'top 100 workplaces in europe' lists and frankly looks like an absolutely fantastic place to work, with a tightly knit community, a lot of worker activities and real democracy in action.
However, while I think this company is a great example of worker ownership in practice, there might be a legit counter-argument in the form of 'this can only function for highly skilled jobs where this job represents a pinnacle in the respective careers of the people working there' - meaning the turnover is very low and motivation is very high.. But then I don't actually know if this is the case, I mean I imagine that fast food stores have high turnovers because they have young people working them, but warehouses? I could certainly picture warehouses having less turnover than your average IT company, that's for sure. (Motivation? I'm damn sure owning part of your profits would increase it anyway. )
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On July 10 2019 02:54 IgnE wrote:Show nested quote +On July 10 2019 02:49 Ryzel wrote:On July 10 2019 02:46 IgnE wrote:On July 10 2019 02:40 Ryzel wrote:On July 10 2019 02:26 KwarK wrote:On July 10 2019 02:17 Ryzel wrote:On July 10 2019 02:12 KwarK wrote:On July 10 2019 02:03 Ryzel wrote:
OK, let's take two hypothetical examples of a thing-a-ma-jig business. This business creates thing-a-ma-jigs from base materials, and sells them to the market. Creating thing-a-ma-jigs requires skilled labor; employees require at least a couple years of specialized schooling and an apprenticeship of several months before getting an entry-level position.
In one, we have a worker-owned co-op-style business consisting of 50 employees; they all play a role in making the thing-a-ma-jigs and they all have equal say in decisions affecting the business, with the intent of maximizing profits of course. They are in agreement that each employee is vital to the process, and that each should receive the same share of the profits as any other. They're currently receiving $1000/month in profits, meaning each employee is receiving $20/month.
In the other, we have a capitalist-style business consisting of 1 CEO, 4 managers, and 45 employees. The CEO is in charge of all the decisions that affect the business, and his sole role is to do whatever it takes to ensure the business creates as much profit as possible. He has gone to school for this specifically. He delegates responsibilities to the managers, whose role is to both enforce and assist the 45 employees in following the CEO's vision of the business. The CEO has no idea how to make thing-a-ma-jigs, and the managers have some knowledge but are not experts. They are also receiving $1000/month in profits; the CEO takes a ridiculous share of $205/month, the managers each get $30/month, and the employees make $15/month.
First issue comes up for both businesses; profits are down for some reason and we need to figure out why. The co-op business has several employees that notice sales are down, and have some ideas as to why. The employees all have various levels of marketing and business experience, and have conflicting ideas as to how to solve the problem. Maybe 5-10 have had a bit of formal education/experience in the area of concern are in agreement on the correct course of action, but the other 35-40 have spent their lives making thing-a-ma-jigs and don't really know what to do. Some trust the 5-10, others go off their instinct, others don't like how the 5-10 are trying to assert themselves as “right” and resent their “superiority”. It takes some time, and in the end a compromise of sorts is reached where the correct solution is partially implemented and profits go back up a bit, but slightly. The business now is making $875/month in profit, and the employees are each making $17.50/month.
The CEO of the capitalist business identifies the problem quickly and reaches out to the right people to fix it. Profits bounce back to where they were before and everyone's wages remain unchanged.
Second issue: the contracted suppliers of the base materials for both businesses have suffered issues and are no longer able to deliver. The co-op business has several of its employees reach out to different suppliers and attempt to negotiate new deals. Unfortunately, there is more disagreement between the employees regarding what the rate should be for the base materials, as some have believed for a while that the rate with the previous suppliers was too high to begin with. Negotiations take a while since it takes so long to achieve consensus, and some potential suppliers get frustrated and drop out. Eventually they get a new deal, but its not as good as before and cuts into profits. They're now at $750/month, with employees each getting $15/month.
The CEO of the capitalist business quickly identifies new suppliers and begins negotiations. His training has led him to be a shrewd negotiator, and he ends up getting a slightly better deal than previously. Profits are now $1100/month; increasing the CEO's wage to $305/month (for a job well done of course).
Eventually, the two businesses begin competing directly in the same market. The capitalist business utilizes its greater revenue and decisiveness to implement strategies that direct sales away from the co-op business. The co-op business loses more profits, and worker morale begins to plummet. Eventually, the capitalist business buys out the co-op business, giving each employee a one-time decent chunk of change. However, the lack of competition lets the CEO feel safe reducing the wages of the employees a bit, since there's no more competition and nowhere for the employees to go. There's now one business making $2000/month, with 85 employees making $14/month, 10 managers making $30/month, and the CEO making a whopping $510/month.
And the CEO lived happily ever after.
...after going through with this thought experiment, it seems like the best thing to do would be for the workers themselves to hire CEOs/managers for their business, and they would require annual majority votes from the workers in order to keep their jobs. Basically if the workers/producers of value were the sole shareholders of their own business. It sucks financially though because the businesses have to cut into profits to keep the workers happy and get no extra investment from them. Making the public shareholders, on the other hand, will result in gobs of money being invested into you and you don't even have to give anything back (except dividends sometimes I guess). This basically means any company that makes workers shareholders will have less resources, and probably be less successful, then an otherwise equal company that makes the public shareholders. This entire thought experiment can be summarized as “Imagine two scenarios. One is better. Which one is better? Why, the better one of course. Therefore socialism is bad”. It’s not an argument, it’s just you telling us your preconceived conclusion through a story. If you reverse the numbers then the worker owned business succeeds. Why would the numbers be reversed? I'm having trouble coming up with a scenario where a business run by 50 people of varying levels of business experience coming to a consensus, is more successful than a business run by 1 person who has nothing but business experience. By all means I'd love to be proved wrong, as I don't really like the idea of workers being screwed over. EDIT - On July 10 2019 02:12 KwarK wrote:
One of the more successful British grocery chains, Waitrose, is a worker owner cooperative but they still have managers and they still pay market rates for executives. They just also distribute profits to employees because the employees are the shareholders. I address this in my last paragraph. I assume this grocery chain has been established for quite some time and has lots of name recognition, probably not an awful lot of local big name competition. Do you think the company would be less profitable if they changed to a public shareholder dynamic instead? If so, why? Why would you assume that there isn’t competition in the grocery store market? That’s a very weird assumption to have. Your hypothetical is just a convoluted way of stating your conclusions. Hell, when Microsoft was a small business they gave out equity as compensation to workers. It’s a great way of stabilizing small businesses by reducing costs and distributing both risks and incentives across the workforce. It creates corporate alignment. Your idea of what worker owned businesses look like and what they actually look like are completely different. I didn't say Waitrose doesn't have any competition. I tried describing exactly what I meant by competition, I'll clarify. Local means originated in Britain and not another country (i.e. not WalMart or American superstores), and big name means not mom-and-pop chains that only have 1-3 locations. Specifically, I meant competition that is otherwise similar to Waitrose but is publicly owned instead of the workers-as-shareholders situation that you've described. Your example of Microsoft also seems to imply that I think having workers-as-shareholders in any situation is a bad idea. I didn't say that. I said that it seems to be ineffective compared to going public as a means of making a company profitable when given a choice between the two. Microsoft eventually went public, and got much larger than it did before; presumably as a result of going public. Here's the TLDR; I think solely-workers-as-shareholders types of business would maximize the fairness of reimbursement towards the workers, and I like this a lot. When a business goes public, it takes away the previous dynamic from the business to some degree. This is bad. Unfortunately, it seems to result in good things for the business, so they are incentivized to do so. How do we make a solely-workers-as-shareholders type of business competitive with one that goes public? I am confused as to why you think going public matters at all in the “thought experiment” you conducted. Why wouldn’t a closely held corporation have all the same advantages (ie dictatorial CEO power)? Because the one that goes public gets gobs of investment money from the public, and one that doesn't is denied that funding. Is there something I'm missing? I apologize for the confusion, the thought experiment is more towards direct-democracy style of decision making vs. executive. Only the last paragraph in that post deals with what we're discussing now about going public. Oh so you are worried about how to get capital if you don’t pay the capital owners interest on their capital. Who will decide where society’s capital goes? How will we get 10x billion dollar companies?
Sorry this is confusing me a bit. When you say paying them interest on their capital are you referring to dividends? Those are the only types of payments I know of that public shareholders get directly from companies that they invest in, if there are more could you briefly let me know about them?
You asked me what advantage a public company would have vs. a private one and I said more funding, are you refuting this? If so, why?
I'm not attached to the idea of 10x billion dollar companies and don't mind if they'd be taken down a peg. I would like for a solely-workers-as-shareholders to not have to worry about competing with public companies and getting drowned out by competition, but that isn't the world we live in. What can we do about it given the current circumstances? Are there any that thrive against this kind of competition, and if so why? By thrive I don't mean 10x billion, but enough for everyone working at the company to live comfortably.
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On July 10 2019 02:46 GreenHorizons wrote:Show nested quote +On July 10 2019 02:21 Dan HH wrote:On July 10 2019 02:17 Ryzel wrote:On July 10 2019 02:12 KwarK wrote:On July 10 2019 02:03 Ryzel wrote:
OK, let's take two hypothetical examples of a thing-a-ma-jig business. This business creates thing-a-ma-jigs from base materials, and sells them to the market. Creating thing-a-ma-jigs requires skilled labor; employees require at least a couple years of specialized schooling and an apprenticeship of several months before getting an entry-level position.
In one, we have a worker-owned co-op-style business consisting of 50 employees; they all play a role in making the thing-a-ma-jigs and they all have equal say in decisions affecting the business, with the intent of maximizing profits of course. They are in agreement that each employee is vital to the process, and that each should receive the same share of the profits as any other. They're currently receiving $1000/month in profits, meaning each employee is receiving $20/month.
In the other, we have a capitalist-style business consisting of 1 CEO, 4 managers, and 45 employees. The CEO is in charge of all the decisions that affect the business, and his sole role is to do whatever it takes to ensure the business creates as much profit as possible. He has gone to school for this specifically. He delegates responsibilities to the managers, whose role is to both enforce and assist the 45 employees in following the CEO's vision of the business. The CEO has no idea how to make thing-a-ma-jigs, and the managers have some knowledge but are not experts. They are also receiving $1000/month in profits; the CEO takes a ridiculous share of $205/month, the managers each get $30/month, and the employees make $15/month.
First issue comes up for both businesses; profits are down for some reason and we need to figure out why. The co-op business has several employees that notice sales are down, and have some ideas as to why. The employees all have various levels of marketing and business experience, and have conflicting ideas as to how to solve the problem. Maybe 5-10 have had a bit of formal education/experience in the area of concern are in agreement on the correct course of action, but the other 35-40 have spent their lives making thing-a-ma-jigs and don't really know what to do. Some trust the 5-10, others go off their instinct, others don't like how the 5-10 are trying to assert themselves as “right” and resent their “superiority”. It takes some time, and in the end a compromise of sorts is reached where the correct solution is partially implemented and profits go back up a bit, but slightly. The business now is making $875/month in profit, and the employees are each making $17.50/month.
The CEO of the capitalist business identifies the problem quickly and reaches out to the right people to fix it. Profits bounce back to where they were before and everyone's wages remain unchanged.
Second issue: the contracted suppliers of the base materials for both businesses have suffered issues and are no longer able to deliver. The co-op business has several of its employees reach out to different suppliers and attempt to negotiate new deals. Unfortunately, there is more disagreement between the employees regarding what the rate should be for the base materials, as some have believed for a while that the rate with the previous suppliers was too high to begin with. Negotiations take a while since it takes so long to achieve consensus, and some potential suppliers get frustrated and drop out. Eventually they get a new deal, but its not as good as before and cuts into profits. They're now at $750/month, with employees each getting $15/month.
The CEO of the capitalist business quickly identifies new suppliers and begins negotiations. His training has led him to be a shrewd negotiator, and he ends up getting a slightly better deal than previously. Profits are now $1100/month; increasing the CEO's wage to $305/month (for a job well done of course).
Eventually, the two businesses begin competing directly in the same market. The capitalist business utilizes its greater revenue and decisiveness to implement strategies that direct sales away from the co-op business. The co-op business loses more profits, and worker morale begins to plummet. Eventually, the capitalist business buys out the co-op business, giving each employee a one-time decent chunk of change. However, the lack of competition lets the CEO feel safe reducing the wages of the employees a bit, since there's no more competition and nowhere for the employees to go. There's now one business making $2000/month, with 85 employees making $14/month, 10 managers making $30/month, and the CEO making a whopping $510/month.
And the CEO lived happily ever after.
...after going through with this thought experiment, it seems like the best thing to do would be for the workers themselves to hire CEOs/managers for their business, and they would require annual majority votes from the workers in order to keep their jobs. Basically if the workers/producers of value were the sole shareholders of their own business. It sucks financially though because the businesses have to cut into profits to keep the workers happy and get no extra investment from them. Making the public shareholders, on the other hand, will result in gobs of money being invested into you and you don't even have to give anything back (except dividends sometimes I guess). This basically means any company that makes workers shareholders will have less resources, and probably be less successful, then an otherwise equal company that makes the public shareholders. This entire thought experiment can be summarized as “Imagine two scenarios. One is better. Which one is better? Why, the better one of course. Therefore socialism is bad”. It’s not an argument, it’s just you telling us your preconceived conclusion through a story. If you reverse the numbers then the worker owned business succeeds. Why would the numbers be reversed? I'm having trouble coming up with a scenario where a business run by 50 people of varying levels of business experience coming to a consensus, is more successful than a business run by 1 person who has nothing but business experience. By all means I'd love to be proved wrong, as I don't really like the idea of workers being screwed over. You seem to be confusing socialism with the lack of a division of labour. You would still have an engineer doing engineering decisions under socialism rather than all workers having a vote on every individual's job. It's both refreshing and weird to me people are learning what socialism is (not the capitalist propaganda) here of all places. I appreciate folks like Neb doing the leg work too.
Not sure what my quote has to do with this, I was into socialism many years before I joined this forum.
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@KwarK
OK great, thank you. That's good that Waitrose is thriving. What do you think about the chain allows it to compete with Sainsburys (a presumably publicly owned, larger chain)? And I'd genuinely like to hear your thoughts on the question at the bottom of that post, if you want.
@IgnE
Thanks, if you think he's worth checking out I will, although you don't sound too enthusiastic about him lol. Are his ideas worth listening to?
@Dan HH
He's probably referring to me.
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United States42646 Posts
On July 10 2019 02:59 Liquid`Drone wrote:
My brother works for an employee-owned IT company. They have 150 employees, are highly successful, all employees must own stock - but they still have a board of directors - where two are hired externally and four are democratically elected. I am not sure how those are paid, but I know that there is some differentiation in pay depending on what your specific job is, however I don't think any worker makes more than twice any other worker, and because every worker has stock, they all profit from the company profiting.
It being worker-owned does not mean there is no hierarchy or no people with decisive power - it means that the people with decisive power are democratically elected which can be presumed to make them factor in workers more when they answer to the workers than if they answer to the shareholders. It might also be presumed that it will then also yield lesser profits (as this will be the primary focus of the shareholders) but I think that's a good tradeoff. I'm also not sure it actually is less profitable; but I do think the democratization of processes makes the company more risk-averse, which I assume makes them less likely to get incredible % payoffs.
(As a sidenote, them hiring external expertise indicates that they are aware that they might have knowledge gaps - however outnumbering the external board members 4 to 2 means they end up having more of an advisory role, which to me seems ideal.)
The company has frequented some 'best work places in norway' and 'top 100 workplaces in europe' lists and frankly looks like an absolutely fantastic place to work, with a tightly knit community, a lot of worker activities and real democracy in action.
However, while I think this company is a great example of worker ownership in practice, there might be a legit counter-argument in the form of 'this can only function for highly skilled jobs where this job represents a pinnacle in the respective careers of the people working there' - meaning the turnover is very low and motivation is very high.. But then I don't actually know if this is the case, I mean I imagine that fast food stores have high turnovers because they have young people working them, but warehouses? I could certainly picture warehouses having less turnover than your average IT company, that's for sure. (Motivation? I'm damn sure owning part of your profits would increase it anyway. )
Waitrose is again a great example of this working in low skill businesses. I remember a school friend of mine working there after school at 17 as a cashier and they had a great Christmas season. The cooperative paid out a cash bonus to all employees and my buddy promptly gave it back to them to buy booze. We all got very drunk over New Years and I immediately applied for a job there myself. The model works, this was 13 years ago and they’re thriving.
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EPT
