this post was submitted on 29 Aug 2023
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I've never quite understood co-ops. I get how they're set up, and some of the advantages (ownership stake leading to better work, no bosses to mistreat workers, allows for easier inclusion of social motives over profit), but on a practical level how do they handle people leaving or coming on after the setup?
When you leave, do you need to sell your share back to the co-op? Otherwise you end up with absentee owners who will generally only be profit motivated. If you join later, are you an employee of the co-op (making the co-op into bosses (yuck)), or do you need to buy in immediately? Maybe require buy-in after a trial period?
As far as i know, a typical coop will require members to deposit "social stake" of an arbitrary amount of money (and it doesn't have to be large, the stake for the cooperative "bank" i am a member of is 5$, for exemple). In a worker's coop, I would expect new employee to have to buy their membership right away, or to have it deduced from their first (few) paychecks. In an employee's coop, membership require being an employee; when someone leaves their employement, their stake is given back and their voting privilege rescinded.
The key in all of that, is that the cost of membership isn't tied to any sort "market valuation" for the cooperative, because the cooperative ownership isn't part of any market.
I was part of an ISP that was a customer coop. I bought a share when I signed up and then sold it when I moved away.
Another way it could be done is via dilution. Like every so often, new shares are issued to current employees based on whatever criteria they use to determine division of ownership. Existing shares remain outstanding so former employees still get dividends and voting rights, but the guy that worked there for 3 months 8 years ago isn't an equal owner to someone who joined 3 years ago and hasn't left. Though there's then the question of can people sell their shares to someone else, potentially leaving the door open for a hostile takeover when a large enough group of former employees want to cash out? If they can't sell them, what happens to the shares when an owner dies?
The first one is cleaner. Personally, I'd go with the first option but have an exception for people retiring so their shares can act as a non-transferable pension but then the shares cease to exist once they die (or exist for a limited amount of time after death for their next of kin).