The Beauty of Workers Cooperatives: They’re Voluntary

Equal Exchange workers cooperative in Bridgewater, Mass.

by James A. Bacon

The Virginia Public Access Project has published a nifty list of bills that were killed in committee when Republicans controlled the General Assembly but have broken out to the House or Senate floor now that Democrats run the show. Most are dreadful, some are tolerable, and a few are even beneficial. One bill, HB 55, introduced by the General Assembly’s self-declared socialist Lee Carter, D-Manassas, is downright intriguing.

The bill would establish “worker cooperatives” as a category of cooperative associations. A worker cooperative is a stock corporation that conducts business for the mutual benefit of its employees. At least two-thirds of employees would be required to own membership shares, and members are entitled to one vote only. Profit would be allocated in proportion to the amount of work each member performed.

The House of Delegates passed the bill in a 62 to 36 vote. Yeah, it’s kind of socialist. No, it’s not my cup of tea. But if people voluntarily enter into such an association, what’s wrong with it?

That’s the beauty of a free society. People shouldn’t be forced to participate in the corporate, capitalist economy. I’m perfectly comfortable participating in such a society, but I can understand why other people wouldn’t be. And I think it’s great if we can create mechanisms —  be they hippie communes in the woods or worker cooperatives — that allow people to organize themselves to practice of business as they choose.

The great strength of the free market system is that it fosters experimentation and innovation. Corporations emerged in the early-modern era, first in Holland and then in England, as a way for investors to pool resources and limit risk. As an organizational form, the corporation represented a huge step forward from the Medieval economy dominated by merchant houses. Corporations were so dynamic that they evolved into the economic system we now call capitalism. But who’s to say that the evolution of  economic organization stops there?

Personally, I don’t think workers cooperatives are up to the big challenges of the 21st-century economy. They’ll work for small, niche enterprises that don’t require managerial hierarchy. But that’s just my supposition. I don’t know that.  Maybe cooperative somewhere will come up with innovative approaches to handle bigger, more complex challenges. We won’t know unless we give people the freedom to try.

Even if workers cooperatives remain a niche, what’s wrong with that? If the egalitarian form of business organization meets the emotional needs of the employee/owners, that’s a virtue in itself.

Bottom line: I’m in favor of freedom, and I’m in favor of allowing people to enter into voluntary associations of their own choosing.

Too bad the word “voluntary” is otherwise so alien to the current General Assembly’s way of thinking. There’s nothing voluntary about imposing a minimum wage (SB 7). There’s nothing voluntary about forcing employees to pay even partial dues to a union they don’t wish to join (HB 153). There’s nothing voluntary about compelling businesses to pay family and medical leave benefits (HB 825). There’s nothing voluntary about requiring government contractors to pay “prevailing” wages (HB 833).

Unfortunately, we now live in a commonwealth in which if the majority feels an economic issue is important, it feels no compunction about imposing its values and priorities on everyone. I’m glad to see that the sphere of economic freedom is enlarging every-so-slightly for workers cooperatives, but it appears to be shrinking everywhere else.