No Stupid Questions

Many of these profits aren't liquid so they can't turn into money right away

They tend to get out competed by companies with enough investment funds to undercut them without making a profit until they have a stranglehold on the market and can jack up prices.

They don’t have access to capital (means of production). Consider the following scenario:

All of the employees at a car manufacturing plant are sick of being paid a fraction of the total sale price of the cars they make. They decide, in solidarity, to quit en masse and start a worker co-op car plant instead so that they can all enjoy sharing 100% of the profits themselves.

So they quit. Now what? Well, knowledge isn’t an issue because they already knew how to operate all the machines in a car plant. The problem is that they don’t have the money (or the land) to build a new car plant. We’re talking billions of dollars and a huge piece of land which ideally should be located on a railroad line so that parts (which are very large and heavy) can be delivered affordably by rail.

So where are they gonna get the money? Not from private investors, of course, since that nixes the worker only profit sharing arrangement. Not from banks either because these workers, while highly knowledgeable and motivated, don’t have any collateral to put up for the bank loans. The banks do not want to be in the position of repossessing a bunch of specialized manufacturing equipment and trying to resell it at a loss.

The common response to this is: the government. But think about that. Do you want your government giving billions of dollars to a few hundred people so they can start a car plant and then keep all the profits?

co-ops don't get loans. It's hard to start a business without loans.

People who would start co-ops are usually decent and don't care about profits that much. They wouldn't exploit their workers or other obvious strategies that would put profit more important than wellbeing.

All the companies that don't care about this have much less costs. Thus the companies that don't care about morality can offer lower prices than the co-ops, and since most customers care about that more than anything else, the co-ops are driven out of business much more often.

I actually tried to do this with a bar I owned back in the day. It was exciting / hopeful.

It went into effect January 1st, 2020. January for bars is rough because people do "dry January" so we hoped February and March would be good.

We all know what happened. It didn't survive. Spent a good year or so continuing to pay wages and healthcare out of my own pocket, but I hit a point where I had to call it (mostly because I ran out of money and couldn't get any more loans).

I plan to try again in the future, once I have the loans paid off and some padding saved again.

I also dream of a day where somewhat self-sustaining communes become more prevalent. Everyone living together on a shared plot and exchanging goods & services instead of money. Maybe it's a pipe dream? I don't know. I feel like it'll become necessary over the next 4 years though.

The kind of people who would start a business (to enrich themselves) and the kind of people who value co-ops and employee-owned businesses (to enrich others) does not have much overlap. I love the idea of coops, but I do not have the skills or ambition to start any kind of business.

If I share profits, then how do I, a lowly CEO, keep all of the profits for myself?

I think a lot of people don't know what co-ops are. I have been pretty left leaning my whole life and I only found out co-ops in my late 20s and the majority of people I talked to in real life have no idea what coops are. And from that few that do know, many dont know how big cooperatives can be.

For the uninitiated, I am sharing the [International Cooperative Alliances definition of coops here: https://ica.coop/en/cooperatives/what-is-a-cooperative

and the list of largest coops in 2023 here: https://ica.coop/en/media/library/research-and-reviews-world-cooperative-monitor/world-cooperative-monitor-2023

Screenshot of the top 10 coops based on turnover in USD from the report here:

Poor communities already do this to support each other. They watch each other's kids. They run errands for each other. They don't keep track and charge cash and create an LLC. But community support is real.

They are run out of business, most simply.

The operation that does not focus their profits on building further capital and establishing monopoly will fail in the arms race of those that do.

For example: there are countless community and public efforts establishing childcare and pre-k through pooled resources. They are in direct competition with things like Bezos' childcare academies. (Personal anecdote: they bought out my kids' building for public pre-k and evicted them.)

And a successful co-op will get pressure to be bought out like a start-up. (Often starts as a great way to expand! Then the expansion changes the culture, the new location feels corporate and the original location is later shut down and left vacant. -Also personal anecdotes for a grocery co-op and an employee owned operation I once worked at.)

Rei says it's a coop.

I can't afford it and it's hard to get people to agree on things, especially where their money is concerned.

In short, co-ops are the closest socialist/communist business model that’s actually implemented in the U.S., so why are more leftists not doing this?

Starting a business (that is based on a sound and viable business plan that has even a snowball's chance of surviving its formative early years) is really REALLY hard. It takes massive amounts of money or debt, the early years promise years of having no income for yourself (or paying yourself below minimum wage), it means a staggering amount of hours you need to put in to keep it going, forgoing vacations and important family events, loss of friendships because you're having to put all your time and energy into the business without socializing, having to work when you're incredibly ill, incredible amounts of stress (which increases by 10 times when you have employees that now depend on you for their livelihood) and even if you do everything perfect your business can fail leaving you with nothing for the years that you put into it, and potentially also with tens of thousands or millions of dollars in debt. It means many times being force to make decisions that massively affect other people's lives (your employees or your customers). It can be versions of the Trolley Problem time and time again.

"According to the U.S. Bureau of Labor Statistics (BLS), approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more." source

So ask yourself if you want to go through all of that, and instead of wealth you can live on and support your family with at the end of it, you get simply a "thank you" for building a co-op.

Because corporations will sweep in and take all the business by taking a loss just long enough to put the others out of business.

Maybe people won’t become billionaires doing this

And that's exactly why. Even if the founder wants to be altruistic, the venture capitalists he depends on to get his business off the ground sure as Hell don't.

Starting a business requires resources and coordination. It is easier for one individual with many resources to get the ball rolling than for many people with few resources to do the same. Even if you need to take out a loan, it's simpler to do as an individual than as a group. Most people who front all the resources for a business are going to want creative control over the structure and operation, and consequentially claim to the profit. It's much easier, logistically, for one person to roll existing capital into a new business than to coordinate a board of founders. Democracies are much slower at making decisions than dictatorships, obviously.

I am 100% pro co-op. I'd love to see credit unions offering start-up loans to groups of founding members, specifically designed to develop co-ops. It's just currently uncommon, so the infrastructure isn't there. Without that financial infrastructure, you're relying in everyone fronting a portion of the start-up funding.

So, in short: it's more complicated, financially and logistically. I'm all for it, but before we see co-ops carve out a more significant market share, we'll need to see some chipping away at these barriers to entry.

Its really hard. People who start businesses put a shit ton of work into it for a time but if it takes off as long as they make a profit they can expand their way to wealth. Does not always happen but it is the motivation. coops do get started when there are enough folks to share the load but it takes a good enough group. Like I was part of a condo of 12 units and getting a board when half the units had to do it was tough as hell. Now im in one with eighty plus units and its easier but you still get uncontested elections. This is from a group that is probably pretty competent overall and motivated for their own good. So I would say you have to get together a group that is like two standard deviations more responsible and competent than average to get something like this going.

Look into Germany's co-determination laws for an example of this being required to a certain degree, in every corporation.

Lots of people have ideas, few people actually want to implement ideas. This is why there's more workers than business owners.

They're extremely popular in the US, especially in banking (credit unions). I have yet to find any country in Europe or South America with US-style credit unions and it drives me crazy

It’s a good question OP. I think about this too.