Replace Corporations with Cooperatives

Brandon Blackmoor drew my attention to Matt Bai’s editorial about the impact of the Citizens United ruling.

In a comment, he suggested that we should just abolish corporations, but downplayed his suggestion as “crackpot.” Well, maybe I’m a crackpot, too, but I would love to see their end (or rather death, since they’re apparently people). However, I wanted to make a slightly longer response:Maybe independent entities (that is, distinct from, not completely divorced from, their constituent members) are ok, but the modern corporate structure isn’t. The problem is absentee owners, i.e., investors. Investment is good. Telling your investors what you’re going to do, and listening to what they want you to do is good. Being legally beholden to their desires, and to putting their profits ahead of any other consideration, is where the problem starts. Person-like status is also bad–it’s not being able to separate business liability from individual liability that is the problem, it’s treating this as a wholly separate entity, rather than a legal construct, that is the problem.

I personally think that the cooperative model is the solution to all our corporate ills. A cooperative can raise money from outside investors if it wants, but isn’t beholden to them in the same way that a corporation legally is. And don’t tell me that no one would invest in a co-op—plenty of businesses get investment right now without incorporating. A cooperative only has the internal business structure that the participants want it to have—there can be no exploitation of workers, or [sustained] bad management when it is the workers who are in charge. (OK, that’s an overly-strong statement. It is certainly possible, just far less likely, and takes a larger number of people either colluding or turning a blind eye for it to happen.)

And, apropos of politics, a cooperative has the check of its inherent structure against massive political spending–if it occurs, it is due to, at worst, the apathetic acceptance of its members. I have yet to figure out why a union should be required to get affirmative approval of political spending from its membership, but a corporation shouldn’t. Both are work-related large organizations composed largely of workers, and which wouldn’t exist without those workers.

And, best of all in my eyes, I’m not sure a really large cooperative can function, therefore they would necessarily remain smaller organizations. Instead of a massive corporation, you’d have a number of smaller cooperatives working together, breaking the tasks up amongst themselves.

I’m sure this isn’t as simple as I make it out to be—there are a lot of hurdles that would have to be overcome to make a complete switch. But I’m also confident that we’ve reached a point where we have the technological and financial tools to make this possible, if we wanted to and really worked at it. But would it be any worse than things are now?


3 comments on “Replace Corporations with Cooperatives

  1. bblackmoor says:

    This is interesting. I am not familiar enough with cooperatives to venture an informed opinion (although I depend on one for my electricity), but I would like to hear more.

    • woodelf says:

      Well, the basic principle is that the employees are the owners, and, in some cases, the customers are the members, too. So, in the case of your electricity, likely you are technically not a customer buying from the co-op, but a member of the co-op, either pooling your purchasing power to buy from elsewhere, or pooling your resources to create and operate the generation of power–or both. How, exactly, it all plays out varies from co-op to co-op. There’s a printing co-op I know where all the employees/printers/producers are part owners–to use the facilities, you join, rather than paying outright. But that doesn’t mean that one or more of the members couldn’t be selling their services to an outside customer.

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