Comment by Spivak | Hacker News Reader

Comment by Spivak | Hacker News Reader

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I think it was a mistake to use the word shareholders to try and explain it in terms people are familiar with because in this world what would even be the point of stock? What would market cap even mean? How you divide up ownership among employees I'm sure would be the source of much bike-shedding but let's just say it's 100% split weighted by salary.

(I'm using the numbers for AT&T) Say you work for a big company so at your salary it translates to 0.0004% ownership. Just as before fiduciary duty and all that the company as a whole has the solemn duty to make it's owners as much money as possible and you make record profits to the tune of $72B. Great job really fantastic. Now instead of a $4B stock buyback it's a dividend paid to the owners (which is you) and you just made a cool $1.6 mil. Sure as hell beats that 2% bonus.

You can't sell ownership as a way of raising money anymore and you have to get loans or issue corporate bonds like all those plebeian small businesses do but the value of your work is returned right back to you as an employee/owner. And you're the board -- let's go (representative) democracy at the workplace! It's gonna make it really hard to push through truly unpopular decisions.

This kind of thing isn't without downsides or a magic solution to all of our problems, but like, employee ownership of business / labor owning the means of production that doesn't require state controlled industry, gulags, or whatever, and roughly lines up with current corporate governance.

I get the way a (worker) cooperative works in an imaginary world. The real thorny issue is that in this world where there is nothing else, it becomes almost impossible to start a business that requires real capital investment. Corporate Paper and bank loans are pretty much impossible since you have almost no revenue and not even a history of revenue. If you can get a loan, it will have a double-digit interest rate. You could impose a capital requirement on your first employees, but then you wouldn't find many. The way new companies in the primary and secondary sector start is always with an investment by passive partners. It has been this way since before the industrial revolution.

The worker board will also have the same perverse incentives current boards do to a lesser degree. Why wouldn't they make terrible decisions in the name of short-term shareholder value? What is the crucial difference between a company who sells shares on the public market (where anyone could get a profit share) and a worker cooperative (where employees [re-]invest their wages to get a profit share)?

> Corporate Paper and bank loans are pretty much impossible since you have almost no revenue and not even a history of revenue. If you can get a loan, it will have a double-digit interest rate.

These two things can't really jive in the same world. There can't be a bunch of investors willing to blow huge sums of money on a business with no revenue in exchange for equity in pursuit of above average returns but no investors willing to buy corporate bonds or a new to be determined IOU structure from a business with no revenue in pursuit of above average returns. The only necessary condition in my view for this kind of investment to not shaft workers in the long run is that the amount paid to fulfill the IOU can't be indefinite or unbounded.

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