Home Business The Problem With Worker Ownership Is The Lack Of Capitalists

The Problem With Worker Ownership Is The Lack Of Capitalists

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Sure and there are benefits to there being a lack of capitalists around. They don;t, by their absence, take off the profit margin just for the mere allowing of the use of their money.

The downside of worker ownership is the lack of capitalists and their money:

The employee-owned model of John Lewis and Waitrose was fêted by politicians for years as an alternative to capitalist businesses, with ministers rushing to be photographed with its bosses. Now that model is putting the retail brands at a disadvantage to public and privately owned rivals. Unlike the quoted companies that have tapped markets to raise billions of pounds to weather the coronavirus outbreak, John Lewis and Waitrose cannot turn to investors to boost the coffers.

There is nothing wrong – or particularly right – with either ownership model. Each will work better in some circumstances, less well in others. But the point about what it is that capitalists actually do does need to be understood. They provide capital from outside the resources of the workforce.

So, a low capital business like, say, being a lawyer, the capital can come from the group of people who are lawyers. Which is how it works too, they are all partnerships. An employee owned blast furnace is going to be problematic because where are 5,000 workers going to find a $ billion in capital? If they had it they’d not really be workers and if they get it from elsewhere then that’s from the capitalists and it ain’t, any more, worker owned.

Yep, sure, Mondragon. But do note the industries that covers – light industry. Which is, pretty much by definition, capital light as opposed to heavy industry.

The capitalists don;t suck the profits away in the exploitation of the workers when they’re not there, that’s entirely true. But they also don’t supply capital when they’re not there.

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3 COMMENTS

  1. Leaving aside the idea that the workers are actually incentivised by the prospect of the bonus that they get from the profits made in good years, is retail a capital intensive industry? Arguably you’ve got your property portfolio which has to be acquired to build outlets, potentially in prestigious locations, but at the other end is potentially a network of cheap, out of town retail park developments and vast warehouses a la, Amazon or Walmart. The rest of the business, staff wages, utilities, stock distribution and such, is all cashflow.

    Besides, privately owned companies categorically can get finance, the number of “owners” being immaterial to wether the proposal for what the money is to be spent upon is sensible. Richard Branson didn’t start Virgin Atlantic with his own money, it was done with a loan from a Japanese Bank, because his UK bank, Coutts, asked the question of why a record producer was doing this, and said no. Virgin Group was privately owned at that point.

  2. Whenever anyone starts complaining about capitalism, I always ask them how they propose we get new computers. The latest, state of the art fab line is costing $25 billion and will employ less than 10,000 people (can’t remember the exact number, it’s middle 1000s). If this is going to be a workers’ cooperative, everyone is going to have to find over $2.5 million up front, which is a hell of a lot to find down the back of a sofa. Even a bread and butter fab line using (and producing) 10-15 year old technology would require ~100 k$ per worker.

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