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Re: [tlug] Introduction to (Tech) Worker Cooperatives, 09:00AM on Sunday, July 12th JST

On Mon, 13 Jul 2020 at 14:46, Yasuaki Kudo <> wrote:
One of the problems I heard is waning of entrepreneurial spirit, once the worker coops become so established and become like governments.

While they acknowledge the massive improvements they made over capitalist enterprises, I think the engagement of all workers in a participatory environment is a challenge especially for large worker cooperatives.

This is a kind of problem that capitalist organizations don't even consider as such - workers do the bidding of the "managers" or the "leadership" and the scope of discussions among employees are so narrowly defined by the so-called bosses.

So, I think the voluntary and lively worker participation is a kind of problem that only arose because they successfully removed the capitalist structures and they will need to solve using their creativity 😄  

This is not an issue of capitalism versus cooperative, but an issue of scale in general.

Managing scale is always a challenge under any remuneration model and any participation model.

The primary model used to manage scale is division of authority and delegation.

For that to work, a consensus needs to be formed how much authority should be delegated and where to. Under a top-down model, this consensus is reached by a very small group, usually the top-level managers, board of directors or supervisory board and this is then recursively applied at each delegation level. Under a bottom up model, this consensus has to be reached by a very large group of people, essentially all stakeholders. The latter is much more difficult and time consuming than the former.

In organisations where decision making is top-down, naturally division of authority and delegation will also be top-down.
In organisations where decision making is bottom-up, division of authority and delegation should ideally also be bottom-up.

For a capitalist enterprise, the natural model is thus the top-down model. For cooperative enterprises, the natural model should be the bottom-up model, but due to the difficulties to efficiently operate under such a model at larger scale, more often than not, they choose a top-down model instead.

Passing authority upwards and delegating up is much more difficult than passing/delegating down.

In that sense, large scale typically leads to an erosion of bottom-up decision making.

In Austria and Germany, where cooperatives have been in operation for about 150 years by now, these problems have already been identified back in the 19th century and the general consensus back then has been that cooperatives must avoid large scale. In order to get the benefits of large scale nevertheless, such as better conditions negotiating prices with suppliers or having more capital available, they developed a federation model. Individual cooperatives are organised within a federation of cooperatives through which certain assets (infrastructure, know-how, intellectual property, marketing etc) are shared. The federation is typically also a cooperative, a cooperative of cooperatives. This then helps to maintain a reasonable size for individual coops, but it also serves as a sharing of authority and delegating-up model. Certain aspects of the business are shared within and delegated to the federation in which every member coop has equal voting rights.

A good example of this are the Volksbanks and Raiffeisen banks in Austria and Germany. There are several thousand of them. Nearly every small town has got one. Yet, to the average Joe on the street, they look like branches of a very large bank. They are organised in a federation of cooperative banks and through that, they share the branding, business philosophy, policies, marketing etc. And if any business requires more capital than any individual coop can handle, they can underwrite that business through consortia of multiple coops in the region which is facilitated through the federation. The customer experience is the same as with a large commercial bank, in fact many would say it is better because unlike branches of large banks, local coops haven't lost touch with their bread and butter business and they have much more autonomy because they are independent businesses.

So, I'd say the examples in Austria and Germany show that decentralisation by federation and thereby keeping individual coops small is probably the best way to deal with scale and the problems associated with scale. I'd say, this isn't an issue of capitalism vs cooperatives.

On Jul 13, 2020, at 02:52, Kevin Sullivan <> wrote:

Care to elaborate on some of the problems cropping up with this organizational system?

On Jul 8, 2020, at 05:43, Yasuaki Kudo <> wrote:

Having said that, I have had countless interactions recently with worker cooperators in and out of Japan and yes, I have learned the kinds of problems they have.

When trying to understand a system, I like to imagine the incentives side for individuals, and the motivations at play to game that system. 

What dynamics tend to emerge in collective systems, what can split the atom so to speak of collective focus on group production of business product? Do these models work best when the company scope is rather narrow, so different work teams don’t thinking THEIR project is more worthy of resources/compensation than others? I am thinking here of Orwell’s “ Animal Farm” where in the beginning all are equal and in the end "some animals are more equal than others.”  

Hard work running a business operation where you need to simultaneously balance 4 poles with spinning plates of Customers, workers, management, and owners/providers of capital all demanding “fair shares” of the pie so to speak. Too good to the customers with low prices, not enough money for workers or company owners. Management running the company for their benefit, shorting workers and stockholders, etc. Balancing fairly equally the demands from all 4 groups is an ongoing challenge, and failing any one of them can end the business long-term viability.

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