Worker Cooperatives
Even though there is no universally accepted definition of a Workers’ Cooperative, they can be considered to be businesses that make a product or offer a service to sell for profit where the workers are members or worker-owners. Worker-owners work in the business, govern it and manage it. Unlike with conventional firms, ownership and decision-making power of a worker cooperative should be vested solely with the worker-owners and ultimate authority rests with the worker-owners as a whole. Worker-owners control the resources of the cooperative and the work process, such as wages or hours of work.
The Industrial Revolution
The Industrial Revolution played a significant role in the creation and development of worker cooperatives in several ways. While the Industrial Revolution brought about significant changes in the nature of work and employment, it also created the conditions that led workers to seek alternatives like cooperatives.
As factory workers endured grueling hours, meager wages, and unsafe workplaces, they began to demand better treatment and collectively organize for improved labor rights.
Rochdale Society of Equitable Pioneers
The Rochdale Society of Equitable Pioneers, founded in 1844, was an early consumers’ co-operative, and one of the first to pay a patronage dividend, forming the basis for the modern co-operative movement. Although other co-operatives preceded it, the Rochdale Pioneers Co-operative became the prototype for societies in Great Britain. The Rochdale Pioneers are most famous for designing the Rochdale Principles, a set of principles of co-operation, which provide the foundation for the principles on which co-ops around the world operate to this day.
The 7 Cooperative Principles
The Rochdale Principles are a set of ideals for the operation of cooperatives. They were first set out in 1844 by the Rochdale Society of Equitable Pioneers in Rochdale, England, and have formed the basis for the principles on which co-operatives around the world continue to operate. The implications of the Rochdale Principles are a focus of study in co-operative economics.
The original Rochdale Principles were officially adopted by the International Co-operative Alliance (ICA) in 1937 as the Rochdale Principles of Co-operation. Updated versions of the principles were adopted by the ICA in 1966 as the Co-operative Principles and in 1995 as part of the Statement on the Co-operative Identity.
- Voluntary and Open Membership
- Democratic Member Control
- Member Economic Participation
- Autonomy and Independence
- Education, Training & Information
- Cooperation Among Cooperatives
- Concern for Community
“Building a cooperative economy is one small step on the journey to reclaiming the wealth we all collectively create.”
Movement of Worker Cooperatives within the United States
Worker Cooperatives gained significant momentum in the 1960s and 1970s, driven by by social and cultural upheaval, with movements for civil rights, women’s rights, and anti-war activism. This climate of social change extended to economic and workplace issues, leading to an increased interest in alternative economic models, including worker cooperatives.
Benefits of worker Cooperatives
Employee ownership can improve company performance, increase firm stability, increase survival rates and reduce layoffs during a crisis. Workers at cooperatives tend to report higher levels of involvement in their tasks, more positive evaluations of supervisors and greater fairness in their perception of the amount of wages they received and methods of payment.
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Comparison between For-Profit Corporations VS Worker Cooperatives |
For-Profit Corporations | Worker Cooperatives |
| Purpose |
To earn profit for owners, to increase the value of shares. |
To maximize net and real worth of all owners. |
| Organization |
Organized and controlled by investors Incorporated under relevant incorporation laws – varies by country Except for closely held companies anyone may buy stock Stock may be traded in the public market |
Organized and controlled by worker-members Incorporated under relevant incorporation laws – varies by country Only worker-members may own stock, one share per member No public sale of stock |
| Ownership |
Stockholders |
Worker members |
| Control |
By Investors Policies set by stockholders or board of directors. Voting on basis of shares held Proxy voting permitted |
By worker-members Policy set by directors elected by worker-members, or by assembly of worker-members One person, one vote |
| Sources of Capital |
Investors, banks, pension funds, the public From profitable subsidiaries or by retaining all or part of the profits |
By members or by lenders who have no equity or vote From net earnings, a portion of which are set aside for reinvestment |
| Ditribution of Net Margin |
To stockholders on the basis of the number of shares owned |
To members after funds are set aside for reserves and allocated to a collective account |
| Captial Dividends |
No limit, amount set by owner or Board of Directors |
Limited to an interest-like percentage set by policy |
| Operating Practices |
Owners or managers order production schedules and set wages and hours, sometimes with union participation Working conditions determined by labor law and collective bargaining. |
Workers set production schedules either through elected boards and appointed managers or directly through assemblies Working conditions determined by labor law and assembly of worker-members, or internal dialogue between members and managers. |