The Cooperativist Manifesto

CHAPTER 9: MODELS OF WORKER OWNERSHIP MUST BE FLEXIBLE AND FAIR

If workers are to increasingly share in the distribution of residual profits through capital ownership or otherwise, it is necessary that worker ownership plans be flexible and equitable. Cooperative arrangements must respond to the objectives of risk-averse employees as well as the interests of individuals and households that prefer current consumption over future consumption.

Cooperative enterprises can take a variety of forms. Worker cooperatives constitute an inherently equitable form of organization for production. Such cooperatives are typically wholly-owned by its worker members and the residual profits are allocated or distributed amongst the workers. A supply cooperative is usually organizationally limited to providing supplies to the cooperative's patrons. A marketing cooperative is organized to market the goods and services of the cooperative. A productive cooperative may allow its patrons to create and/or sell products for the benefit of the group. There is no single model favoured by cooperativism.

Whereas the raison d'etre of a regular corporation is to earn a profit for the corporation's shareholders, the overriding purpose of a cooperative is to realize earnings for the suppliers of the products and services. Mechanically, the cooperative replaces the notion of capital stock with cooperative worker-ownership requirements. The cooperative periodically allocates its earnings or residual margins to its patrons based on the respective contributions of the patron to the cooperative during the period.

Our economic system requires that productive organizations be flexible and responsive to market demand. Cooperative arrangements must be structured in a manner that permits and reimburses contributions of firms or persons external to the cooperative. Even worker-owned enterprises need to conceptually allow the hire of non-owning workers, particularly for part-time or seasonal work. Flexible mechanisms should be adopted to effectively respond to efficiency demands and fluctuations within the human resources market.

Workers are not an homogeneous group. Initiatives and arrangements designed to encourage the broad ownership of capital instruments must be adaptable to the diverse interests of labour. Worker cooperatives constitute an ideal form of workplace democracy, however, such cooperatives cannot be expected to serve as the most appropriate productive organization for all workers. Some workers may not wish to be owners of capital.

One of the basic tenets of economic democracy is that individuals and households should have the right to participate in material decisions that affect their economic well-being. Accordingly, workers should have the right to choose whether or not to add the role of capital owner or residual claimant as a conjunct to the workers' other responsibilities. Capital and labour each have their own risks and rewards.

Cooperative arrangements need to be flexible and equitable in order to respond to the personal attributes of the cooperative's patrons. Cooperative arrangements should utilize the effectiveness of market forces. Markets will adjust normative rates of return for dividends, rents and interest in an efficient manner. For instance, it is easy to envision risk-averse workers that do not want to be exposed to changes in the value of his or her ownership share of the cooperative enterprise; such employees will typically require additional compensation if they are exposed to risks beyond their control. There will also be some employees that express a strong preference for current consumption over future consumption. Such an employee would discount the value of a share ownership arrangement that defers receipt of financial rewards so in order for the cooperative to retain such an employee, it would be necessary to provide the employee with a relatively higher level of current remuneration relative to the deferred gains.

In summary, there are various models for promoting the broad ownership of capital resources and the distribution of residual profits to labourers. The design of the mechanisms and rules utilized for the attainment of the cooperative's objectives is of secondary importance. The underlying rationale of the Cooperativist movement is that cooperative arrangements are required to ensure economic justice within modern societies. In order to further the objective of economic justice, employment ownership schemes must respect the rights of workers who do not wish to participate in the distribution of productive wealth beyond basic labour remuneration as well as those workers who wish to participate in the ownership of capital in varying degrees.