Concerning Cooperatives

Thinking about how to make an economic system that is more humane, and less riven by class struggles, many thinkers have advocated for workers' cooperatives (the Distributists being one example). Cooperatives differ from the traditional capitalist firm in that workers share ownership and management of the company, as opposed to being salaried employees with no participation in the profits besides what management feels like giving them. They differ from a socialist commune in that there is still private property, and individuals can benefit directly from the success of the firm, which tends to mitigate the typical Socialist tendency of "They pretend to pay us, and we pretend to work" and lead to more creativity and enterprise.

With these advantages, why hasn't the cooperative become more popular in the United States? In part, because cooperatives come with some drawbacks. First, if workers share ownership in the company, what happens when you hire new people? Does that mean that you've just diluted the ownership of the existing employees? If so, then there will be a tendency of the owner-employees to delay hiring more people, even if it means sacrificing business opportunities. Or do different classes of employees have different shares of ownership? If so, then the cooperative differs from a typical capitalist firm only by degrees.

How much of the ownership of the firm accrues to the investors, as opposed to the employees? After all, without the initial investment, there would likely be no business in the first place. And asking employees themselves to buy in, as some cooperatives do, places a high bar in front of poor job-seekers.

Additionally, there will always be a place in a large-sized firm for experts of some kind, who will be paid more for their expertise. Should such experts, be they management or whoever, also get a disproportionate share of the company?

All of these questions have answers, and the answers will vary depending on the particular needs of each cooperative. But even if you could come up with an ideal structure for your own situation, it is far from clear that existing law could support the ownership structure you want. To my knowledge, in the United States the most common means for employee ownership of their company is the ESOP, or Employer Stock Option Plan, and these are typically structured so that employees have partial ownership without true control. While American law has well-understood prototypes for traditional capitalist firms, like the C-Corporation or the S-Corp, there are few prototypes for worker-owned cooperatives.

If such prototypes existed, then new insights could be gained as people experimented with them and figured out what works and what does not in different contexts. And cooperatives could become more accepted in modern industrial economies—which is not to say that they would displace the typical capitalist firm entirely, or even mostly. Each firm structure solves different problems. The best structure depends on your own situation, and the imperatives of your industry. Still, more options are good.

One handicap of your typical utopian social reformers is that they tend to focus on parapolitics, action outside the system, rather than trying to work within the system. True, such parapolitics often has an effect, but you only get mass adoption of your ideas in the face of total collapse of the system you are opposing. In this case, those who seek to have the cooperative form catch on in society ought to be lobbying for its inclusion in the tax code, the same way that a C-Corp or S-Corp is. With an off-the-shelf model to work with, with well-understood procedures for sharing ownership and profits, more entrepreneurs may elect the cooperative model without any political or social goal at all—which is how you win.

Those who have read my previous pieces, advocating for a populist politics based on left-anarchism (to which I am presently giving the working title of "Arcadianism"), will not be surprised to read that such reforms of the tax code ought to be a major part of such a movement's platform. Cooperatives match very well with the social mindset of the Left, and they also cut directly against the Progressive agenda of corporate titans serving as intermediaries of the state, dictating terms to their subservient workers on behalf of grand social policies. Aside from which, cooperatives or other forms of alternative organization such as sociocracy address the problem where capitalist firms become "indigestible lumps of socialism" (a quote variously attributed to David Friedman or Kevin Carson), because of internal power hierarchies that mitigate the advantages of free trade.

Those on the libertarian right ought to be pushing for such reforms as well—but I doubt they will, which is why we need Arcadianism or something like it to play the same role in the Democratic Party that the Tea Party groups have done in the Republican Party.

The Politics of Crowds

If the characteristic method of collective action for Libertarians is the free market, then I submit that the characteristic method of collective action for left-anarchists is the crowd.

By "crowd," I do not mean "mob"; I mean more in the sense of "crowdfunding," "crowdsourcing," and the like. In a mob, individuals lose their individuality, submerging themselves in an unstoppable group tidal wave that breaks the bounds of civilized behavior without any sense of responsibility. In a crowd, on the other hand—at least in the sense that I mean—actors retain their individuality, and indeed can act to further it in ways that otherwise they could not have. The crowd allows you to participate in collective endeavors that would be beyond individuals. (Burning Man, for example, is not known for its oppressive uniformity!)

Let me explain. In a free market, the actions of individuals are coordinated with each other through the pricing mechanism, so that as each individual seeks his own interest, a larger social balance is achieved in an undirected, emergent process. (For details, read practically anything by Hayek.) In the pure form, free markets do not have collective action per se, in the sense of groups of people united around a particular goal—unless you consider "making money" to be that goal, and even then individuals compete with each other to achieve that goal. While there is some cooperation in the free market, usually around shared resources and institutions, the primary focus is on the individual's interests, which "automatically" generates social optima in a meta-interaction with the surrounding economy.

In a crowd, on the other hand, people do engage in united behavior around a shared goal—but of a special kind. Take crowdfunding, where someone publicizes a project that he wants to carry out, and others choose to contribute or not to contribute, as their own desires and identities impel. The point is not to submerge your own identity in a collective, as the Progressive corporatists tend to do. Rather, by contributing to a project you like, you are expressing your own individuality by what you choose to affiliate with. Importantly, you can choose to contribute to any number of projects if you like them, even if they might seem to be expressing different values, reflecting the multifarious nature of our identities.

The crowd is not coerced. It is free behavior, but it is also group behavior—where free individuals come together to do something as a community. And it is that aspect of community that distinguishes crowd behavior from markets.

Now, to say that crowd behavior is characteristic of the anarchist left is not to say that Libertarians, or anyone else for that matter, do not use crowdfunding from time to time. And likewise, left-anarchists do not eschew the market entirely. But they are skeptical of it at best, and it seems that they take to crowd activity much more readily than do anarcho-libertarians or the Right in general. Take Open Source Software development, an example of crowd activity in that people can contribute code to projects they like in an uncompelled manner. (Indeed, most successful crowds are structured like the "Bazaar" model  of famed OSSer Eric S. Raymond.) Engineers in general tend to lean to the Right, but it appears from casual observation that the OSS subculture has a stronger left-anarchist contingent than its anarcho-libertarian one.

Or, consider that in the last week, TechCrunch went live with its new crowdsourced sight for citizen involvement in legislation, Project Madison. Despite Madison's origins in the office of the impressive Republican congressman Darrell Issa, of the websites linked in my sidebar only the relatively left-anarchist sites BoingBoing and Slashdot reported on Project Madison going live. The conservative blogs I read did not cover the story, that I noticed. (This seems to be a strategic mistake, as the tool seems a fantastic way for small-government conservatives to get more input into active lawmaking.)

I last wrote on this blog of the need to develop a left-anarchist analogue to the Tea Party, which would contest the Democratic Party and challenge the Progressive corporatists for control, much as the Tea Party is wresting control of the Republican Party from the big-government faction. Such a left-anarchist movement (and what would it be called?) needs a platform for how it would govern differently from the Progressives. I believe that the concept of crowd action is a fruitful place to start.

Suppose, for example, that a portion of tax revenues (say 10%) were allocated not by Congress, but by the choices of individuals. Suppose that Amy Taxpayer can allocate $2000 in tax revenue between any government projects she feels like. In such a system, government departments that don't get their desired funding from Congress would be compelled to appeal directly to the people, and justify their value. If they are convincing, they may get fully funded or even overfunded, for example if Amy and her friends all decide to allocate their taxes to the Department of Education. At the same time, this would be a great way for disconnected citizens to become more engaged and knowledgable in the business of government, as they can feel more control over their own political efficacy.

The funding choices that people might make could be a useful corrective to the dysfunctions of Congress, as well as being a valuable source of information on voter preferences. In short, it would appeal to the left-anarchist values of involvement, freedom of choice, and community action in a way that might actually make government run better.

Nothing stops libertarians from seizing on this idea themselves, of course, and I wish they would. I don't think they will, however, and that is why we need a left-anarchist voter bloc to correspond to them.