The term “coops” or WSDEs covers many different things: collective buying institutions (e.g. food coops), collective selling institutions (individual small capitalist enterprises who get together to sell their products), collective owners (farmers who own collectively the land they farm in individual farms). We are mostly interested in yet another type or meaning of coop: when workers in an enterprise collectively function as their own board of directors, thereby not needing any separate group of people functioning as a board of directors. We call this sort of coop a Workers Self-Directed Enterprise or WSDE.

There really is little broad evidence that compares businesses that are otherwise alike (what, how and where they produce) except that some are run as top-down hierarchical capitalist enterprises whereas others are WSDEs (coops in the sense of worker self-directed enterprises). WSDEs still remain relatively few compared with capitalistically organized enterprises. In any case we don’t have grounds to say that WSDEs, for example, fail at any greater rate than capitalist enterprises. Where we do have some evidence – for example, with the huge Mondragon Cooperative Corporation in northern Spain – it is quite clear that its member coops (WSDEs) have failed at lower rates than their capitalist counterparts over the last 50 years.

Historical evidence suggests that enterprises are very complicated and complex things utterly dependent for their survival on the interplay of external conditions (over many of which they exert little or no control) and internal conditions (all the technical and interpersonal aspects of producing and distributing goods and services). Special sets of conditions bring enterprises into existence. Changing conditions change those enterprises. And new conditions often end the useful lives of many enterprises. No one aspect of a business (whether it is hierarchical/capitalist versus WSDE) ever determines success or failure; those results always depend on the interplay of many factors.

Also, we need to be careful about the word “fail.” It means different things for capitalist enterprises than for WSDEs. Capitalistically-organized enterprises focus on “bottom lines” such as profit rates or growth rates or market shares. If they don’t get those big enough, they “fail.” Quite differently, WSDE’s do not focus on one, two or three measures. They are concerned about profits and growth but also about the welfare of workers and their families, of surrounding communities where they live, of the quality of life and personal development on the job, and so on. In a word, a WSDE that did well on many of those issues even if its profit rate was low would not be viewed or treated as a failure. From the WSDE perspective, a capitalist enterprise that scored high on profits and growth but treated its workers and the surrounding community badly might well be judged a “failure.”

Capitalist enterprises and WSDEs are basically different ways of organizing production. They likely produce correspondingly different ways of working, thinking, relating to other people, and so on. They have different ways of serving people’s needs. Likewise, if and when an enterprise “fails” and disappears, the two systems differ in how they handle that failure. Capitalist enterprises typically dissolve in bankruptcy where capitalists and workers are on their own to search for alternative livelihoods. Coops – for example in the Mondragon Cooperative Corporation in northern Spain – are more likely to work out elaborate systems for finding other work in partner cooperatives for workers from a failed enterprise. If there is not enough work for all, for example, then unemployment is shared (everyone does 2 hours less work per week rather than some being completely unemployed). Secure employment is a major priority for WSDEs in ways that it is typically not for capitalist enterprises.

Economic Report about Workers Self Directed Enterprises