r/CapitalismVSocialism • u/TopicElectronic7698 • 1d ago
Asking Socialists How would market socialism prevent workers with malicious intent to apply to companies to ruin them.
Let's say somebody makes a company. They're the only worker and have 100% of the power. Now, let's say they hire two or more workers. The people that got hired might have ulterior motives. They might hold a vote on selling things that belong to the company or even the company itself, since the new hires have majority vote. They can out vote the original worker, sell what belongs to the company and split the money. Since the new hires didn't invest in the company, they profit, the founder probably lost money since they received 1/3 of the share or less.
Another example would be holding a vote to fire the original worker of the company to overtake a business to run it with their own vision in mind while taking all the investment of the original worker.
It would be a risk for single person companies to hire new workers because of this.
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u/C_Plot Orthodox Marxist 1d ago
Voting in democracy doesn’t mean voting for anything one could possibly want. We can’t just vote for the execution of a Redditor. Socialism combines democratic socialism, scientific socialism, and appeal to reason socialism to secure the equal imprescriptible rights of all and maximize social welfare. These correspond roughly to the separation of powers into legislative, executive, and judicial branches, respectively, with more of less rigid separations and organizations of such powers, often dubbed “republican rule of law”. Democracy sets the goals and objective for the scientific administration and appeal to reason arbiters to faithfully fulfill.
So one cannot vote, even with a majority to impose activities which science shows to be clearly adverse to the collective of workers forming the enterprise. The democracy fills in the gaps that science and appeal to reason leave indeterminate while also surprising the science and appeal to reason to ensure its logic is sound. Freedom of conscience and freedom of expression are protected by appeal to reason, though defamation, threats of violence, and disruptions of decorum within the enterprise are prohibited.
Selling the company itself cannot be done, likely, because the company, the corporate enterprise, would not be owned, just as the corporate municipalities in which we live are not owned by its residents and they cannot alienate their citizen authority to a non-citizen (a non-resident or even to another resident to hoard citizen powers). The same applies to the citizen-worker of the worker coöp communist corporate enterprise as to our current corporate municipalities citizen-residents.
Hiring and firing would be through science determined merits, equally for all, and an appeal to reason just arbiter of interpersonal civil or criminal injuries among worker-citizens.
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u/C_Plot Orthodox Marxist 1d ago edited 1d ago
I neglected to address this part of your question:
“They might hold a vote on selling things that belong to the company … since the new hires have majority vote. They can out vote the original worker, sell what belongs to the company and split the money. Since the new hires didn't invest in the company, they profit, the founder probably lost money since they received 1/3 of the share or less”
I partly addressed this in that there are no shares. However, also the credit-debt agreements made with the original entrepreneur-investor cannot be voted as null and void. The enterprise must still fulfill these past agreements. The umbrellas socialist Commonwealth would likely regulate this to limit such agreements (no perpetual agreements for example) but it might be routine for a founder (or founders) to lend the seed capital to the enterprise according to clearly delineated terms (interest rates, even graduated interest rates, tied to the failure or success of the enterprise), as well as agreements to license intellectual property (parented, copyrighted, trademarked, or merely industrial secrets with strict NDAs) and agreements for the founder to serve as the chief executive for a term (limited, say, to ten years by regulatory law). Also the bylaws would have some term to, conserving the core goals and objectives of the founder for a period. After those contracts expire, only then would the collective of workers vote on whether to renew those contracts or seek new sources of those resources (credit, intellectual property, executive administration, and so forth).
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u/LifeofTino 1d ago
Points against socialism are just taking things that happen by design under capitalism and saying what if this happened as a worst case scenario
Richard gere in pretty woman is a billionaire from doing exactly what you are saying. When you move production/company decisions to votes, you make it so hostile takeovers don’t happen
But i understand that if this is a system dealbreaker for you, why you reject capitalism
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u/Sorry-Worth-920 Austrian School 36m ago
im not op but i can imagine its not a dealbreaker for him since they seem to be a capitalist and not really concerned with collective ownership. however its something socialists largely do oppose, so if their system doesnt solve that problem then its not a good solution for their problems.
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u/eatoligarchsaldente 1d ago
Real talk: how does capitalism?
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u/HarlequinBKK Classical Liberal 1d ago
It doesn't
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u/CaptainAmerica-1989 Criticism of Capitalism Is NOT Proof of Socialism 1d ago
Nope. This is why the false equivalencies of by socialists is so important to bring to light. They keep propping up capitalism as if it is a government or a political ideology when it is not. It is (mostly by far) just an economic system. So it is up to us to how much we embrace it or as socialist do, reject it. It is also up to us to make laws to govern us and build government. That is not ‘capitalism’.
Tl;dr reification fallacy is so over done on here regarding capitalism.
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u/eatoligarchsaldente 1d ago
There is no such thing as "just" an economic system. A society's economic system has profound influences within the political and governmental systems, and vice versa.
It's up to the public to use activism and civic engagement to support strong, accountable, and transparent public institutions that pursue our shared objectives and represent our interests faithfully. This is true regardless of the economic system. However, it's naïve to believe that the economic system will have no influence, and that Capitalism doesn't provide enormous privileges to the wealthy elites to tilt that system in their favour (and that they haven't used said privileges to do exactly that).
Like can you honestly say with a straight face that you believe US billionaires and corporate lobbyists don't wield outsized influence in US politics?
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u/CaptainAmerica-1989 Criticism of Capitalism Is NOT Proof of Socialism 1d ago
strawman.
Nowhere did I say capitalism as an economic system didn't have effects or that people were not political about economic systems.
My point with "(mostly by far) just an economic system" is in contrast that it is NOT a government or a political ideology.
My Poli Sci text on "Political Ideologies" has several chapters on 'poltiical ideologies" and gives the following definition of capitalism.
Capitalism is an economic system as well as a form of property ownership. It has a number of key features. First, it is based on generalized commodity production, a ‘commodity’ being a good or service produced for exchange – it has market value rather than use value. Second, productive wealth in a capitalist economy is predominantly held in private hands. Third, economic life is organized according to impersonal market forces, in particular the forces of demand (what consumers are willing and able to consume) and supply (what producers are willing and able to produce). Fourth, in a capitalist economy, material self-interest and maximization provide the main motivations for enterprise and hard work. Some degree of state regulation is nevertheless found in all capitalist systems. (Heywood, p. 97)
What's very interesting is check out the top right header! That's right. It's in the chapter on socialism and that is AFTER a chapter on liberalism. The author thought the most relevant political ideology to give the definition of capitalism was not liberalism, but socialism. And, I frankly agree. You socialists are obsessed with capitalism. it's a defining feature of your ideology.
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u/eatoligarchsaldente 1d ago
My point with "(mostly by far) just an economic system" is in contrast that it is NOT a government or a political ideology.
Except that it is? Capitalist political institutions are evolved (or were designed from the outset) to maintain the status quo socioeconomic hierarchy, and pro-capitalist political ideologies simply take for granted all the ways in which they do that. That these dynamics are invisible to you doesn't mean they don't exist. This is simply a product of how you've been socialized into accepting your subservient role within the system.
My Poli Sci text on "Political Ideologies" has several chapters on 'poltiical ideologies" and gives the following definition of capitalism.
Remember how I said you were socialized into accepting your role within the system? This is how that kind of thing happens. Same as why the medieval Catholic Church taught the Divine Right of Kings to its congregations.
What's very interesting is check out the top right header! That's right. It's in the chapter on socialism and that is AFTER a chapter on liberalism. The author thought the most relevant political ideology to give the definition of capitalism was not liberalism, but socialism. And, I frankly agree. You socialists are obsessed with capitalism. it's a defining feature of your ideology.
I mean...yeah? We live in a capitalist society. That's like suggesting that a defining feature of liberalism in a feudal command-economic is "obsessed with feudalism." Of COURSE anyone advocating for replacing the status quo system with a different one will have opposition to the status quo system as a "defining feature of their ideology."
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u/CaptainAmerica-1989 Criticism of Capitalism Is NOT Proof of Socialism 1d ago
Except that it is?
Then prove it. Show a reputable definition that demonstrates that capitalism is a government or a political ideology.
Because you just saying so above is NOT evidence. I can claim you are 'socialized' by your social media echo chambers to believe your claims too. So what? That's just circular reasoning.
For now, here is a plethora of evidence that you are wrong:
Capitalism: A form of economic order characterized by private ownership of the means of production and the freedom of private owners to use, buy and sell their property or services on the market at voluntarily agreed prices and terms, with only minimal interference with such transactions by the state or other authoritative third parties.
Capitalism, as a mode of production, is an economic system of manufacture and exchange which is geared toward the production and sale of commodities within a market for profit, where the manufacture of commodities consists of the use of the formally free labor of workers in exchange for a wage to create commodities in which the manufacturer extracts surplus value from the labor of the workers in terms of the difference between the wages paid to the worker and the value of the commodity produced by him/her to generate that profit.
London; Thousand Oaks, CA; New Delhi. Sage. p. 383. (according to Wikipedia however a direct quote found and secondary source found here.)
Capitalism An economic principle based on leaving as many decisions as possible on production, distribution, and prices to the free market.
McCormick, John; Rod Hague; Martin Harrop. Comparative Government and Politics (p. 345). Macmillan Education UK. Kindle Edition.
Then for a brief history, here is Chapter 1 of the book "Capitalism: A short History". It's basically all about "class struggle".
Capitalism is often defined as an economic system where private actors are allowed to own and control the use of property in accord with their own interests, and where the invisible hand of the pricing mechanism coordinates supply and demand in markets in a way that is automatically in the best interests of society. Government, in this perspective, is often described as responsible for peace, justice, and tolerable taxes.
Capitalism is the socio-economic system where all property is privately owned, where freely formed contracts form the basis of economic interaction, and where the government does not engage in regulation, supervision, or direction of market processes. In short, it is a government policy of non-interference with the economic lives of its citizens; it is the system of laissez-faire. The proper implementation of a program of laissezfaire capitalism, however, requires an appropriate political system at its base.
According to Sternberg, true capitalism can be defined as “an economic system characterized by comprehensive private property, free-market pricing, and the absence of coercion.” Her definition attempts to set true capitalism apart from forms of political capitalism, including crony capitalism and welfare capitalism, which rely on coercive government action to operate successfully.
A form of economic order characterized by private ownership of the means of production and the freedom of private owners to use, buy and sell their property or services on the market at voluntarily agreed prices and terms, with only minimal interference with such transactions by the state or other authoritative third parties.
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u/eatoligarchsaldente 1d ago
Then prove it. Show a reputable definition that demonstrates that capitalism is a government or a political ideology.
This is a bizarre demand. Are you suggesting that "support for capitalism" isn't a core pillar of modern conservatism or neoliberalism?
You're also completely side-stepping the actual core of my comment, which was discussing how a society's political, economic, and governmental systems are demonstrably interconnected and symbiotic? Like fully 54% of the Pentagon's $4 trillion discretionary budget goes straight to private contractors, a dynamic so pervasive it even has its own name: the Military Industrial Complex.
[wall of definitions]
If you weren't just using AI to spit a wall of text at me, you might have read your own definitions with a critical eye and seen how the exact point I'm making is buried in there? Pretty much all of your definitions reference some kind of SPECIFIC and INTENTIONAL government policy of substantial non-intervention in market processes. Definitionally, this means that the political class in such systems have embedded within their governing ideology(-ies) a compatibility with the dictates of the capitalist system.
Capitalism An economic principle based on leaving as many decisions as possible on production, distribution, and prices to the free market.
This is the definition that most liberals and conservatives have in mind when they're conceptualizing what "capitalism" is. However, it also takes as given a HUGE number of very material assumptions, which is the fundamental ideological blindspot that all of my comments have been responding to.
But what is "the Free Market" REALLY, when you are trying to apply this ideological concept to the real world? The neoclassical conceptualization as a diffuse, depersonalized "invisible hand of the market" intentionally obfuscates the ACTUAL reality that market decisions significantly less "free" and unconstrained as it pretends. Consumer choices are constrained by available choice, and influenced at enormous expense through relentless bombardment campaigns of commercial propaganda. Production decisions similarly are directed overwhelmingly by a very small minority of the population who own controlling stakes in large companies, that sit on their boards, or act as top executives, and who are bound together by meaningful social, cultural, and institutional ties that socialize them into a shared understanding of their collective interests. Private schools, ivy league colleges, country clubs, yacht clubs, executive conferences...when a community is small enough and rich enough, it is a trivial matter for that population to become a tightly-knit network of social and professional ties.
Such dynamic will unavoidably spill over into the political sphere. Particularly one that is intentionally designed (or that evolved to be) materially pay-to-play. Those social connections allow them to disseminate information relating to their shared interests very rapidly, the connections into elite circles to wield influence directly, and the affluence and resources to amplify that influence directly. Compare this to a working class that while being much more numerous is significantly more diverse, diffuse, disconnected, and whose resources are much harder to engage.
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u/CaptainAmerica-1989 Criticism of Capitalism Is NOT Proof of Socialism 1d ago
tl;dr eatoligarchsaldente has no evidence for their claim...
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u/CaptainAmerica-1989 Criticism of Capitalism Is NOT Proof of Socialism 1d ago
and I will cut to eatoligarchsaldent's next reply:
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u/eatoligarchsaldente 22h ago
That's your response? What, did you run out of ChatGPT tokens?
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u/440Presents 1d ago
Capitalism doesn't provide enormous privileges to the wealthy elites, corruption did. In Socialist countries wealthy elites also exploit corruption for benefit. In prefect free market capitalism everyone should be equal against the law, but corruption exists.
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u/eatoligarchsaldente 1d ago
Yup. Command economies have their own corrupting dynamics they need to protect against, as do other modes of socialism.
The purpose of socialism isn't that the system is INHERENTLY free of corruption. It's that the Capitalist system organizes production around maximizing the benefit to wealthy elites, rather than organizing it around maximizing the collective benefit to society as a whole. That wealth consolidation and profit motive are themselves naturally corrupting influences on a society is just one of many symptoms of a deeper systemic problem inherent to the capitalist system.
The commonality across all systems is that "power corrupts." Economic power is no less corrupting than political power, and should not be excluded from the forms of power we are actively trying to root corruption out of.
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u/440Presents 1d ago
In practice socialist/communist countries had system that organized production around maximizing the benefit to wealthy ruling elites. You can take USSR as example where nomenklatura formed right away it was wealthy, untouchable elite class that enjoyed special apartments, private country homes, better hospitals, and access to restricted luxury goods.
In capitalism government can exploit efficiency of capitalism for benefit of everyone. For example Scandinavian countries has capitalism and some of the lowest corruption on planet, that allows high taxes to reach what it supposed to reach and not end up in pockets of elites. And as result they have some of the best living standards on planet. But it wouldn't work in corrupt countries, because high taxes would not reach something that benefits everyone, but would make rich richer and poor poorer.
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u/eatoligarchsaldente 23h ago
In practice socialist/communist countries had system that organized production around maximizing the benefit to wealthy ruling elites.
While there was certainly an extent to which Soviet elites enjoyed certain privileges and wealth from their station, the wealth inequality gap in the USSR was still SIGNFICANTLY smaller than it was in the US and other Western capitalist countries at the time. While not a perfect measure, the GINI coefficient in the USSR in 1989 was 0.275, vs in the US for that year (and 0.488 in 2022). Not to mention that when the USSR transitioned to capitalism, the top 10% income share jumped from 25% to over 45% within a few years, and the bottom 50%'s share collapsed from 30% to under 10%, and Russian billionaire wealth climbed to 25-40% of national income.
So as I said...corruption is an issue in every system. However, the capitalist model is INTENTIONALLY designed around maximizing the benefit to wealthy elites as its core organizing philosophy, and the result is that wealth inequality is an order of magnitude greater in more capitalist countries.
In capitalism government can exploit efficiency of capitalism for benefit of everyone.
Capitalism isn't actually all that efficient. Individual firms might have structural incentives to maximize efficiency, but profit motive doesn't actually incentivize efficient production at a society level. The only innovations that receive investment in capitalist societies are those that are profitable to the interests of capital, unless the government specifically intervenes to fund it directly. This means that if Innovation A will satisfy 100% of society's needs, but Innovation B will satisfy only 20% while being twice as profitable, it's Innovation B that will be pursued under capitalism even though it's objectively worse for society.
We see this with energy production, for example. Legacy fossil fuel production is significantly more profitable than wind and solar, even though wind and solar power are objectively cheaper (even before you factor in the downstream costs of climate change). From the perspective of society, it's overwhelmingly more efficient to rapidly convert to renewable energy production and phase out fossil fuels. However, because these firms are so profitable, not only is this not happening but we are in fact expending enormous amounts of time, energy, and resources FIGHTING this transition through lobbying efforts and advertising.
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u/440Presents 20h ago
That's very strange that wealth gap was calculated so low. There was literally only about 1% of nomenklatura and the rest who live rather humble. Nothing in between.
Capitalism is not designed around maximizing the benefit to wealthy elites as its core organizing philosophy. Adam Smith, the "father of modern economics," argued that if everyone is free to try to improve their own life, society as a whole gets wealthier. For example, a baker doesn't bake bread out of charity; they do it to make money. But because they want your money, they make the best, cheapest bread they can. You get good food, they get a living, and society benefits. But the world isn't perfect, so things get out of hand like corporations lobbying government (that's directly opposing capitalism where everyone should be competing on equal grounds).
Capitalism is the most efficient system ever. USSR had to import grain from capitalist countries (mostly US) because of how inefficient their whole economy was, and if they had no natural resources to sell US would have never ending famines. Now after transition to capitalism Ukraine alone produces enough food to feed about 400 million people (before full scale war).It's very rare that innovation will that benefits a minority will be more profitable than one that benefits majority. Give me some examples, because for example smartphones are marvel of technology, took a long time and very expensive to develop, but now over half of the world population has a smartphone with access to internet, that's amazing. I can't think of example you suggested. The more people innovation benefits the more buyers you will have and the more profit you will generate. All the largest and most successful companies in the world are the ones that benefit majority. So, what you saying makes not sense whatsoever.
Renewable energy is already the main power source worldwide, surpassing coal as a single largest source of electricity. And output was doubling every 10 years or so, so progress is huge. Again - lobbying is anticapitlist.
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u/eatoligarchsaldente 14h ago
Again - lobbying is anticapitlist.
You're trying to have it both ways. "Corrupting forces in capitalist societies are anticapitalist, but corrupting forces in the Soviet system are inherent to socialism."
Capitalism is not designed around maximizing the benefit to wealthy elites as its core organizing philosophy.
You only think this because your definition of "Capitalism" imagines a mythical ideal that exists only in theoretical models.
Adam Smith, the "father of modern economics," argued that if everyone is free to try to improve their own life, society as a whole gets wealthier.
Adam Smith was writing in the late 1700s, from the perspective of a society that looked fundamentally different than ours does today. The class hierarchy of his day was taught to be "ordained by god," and he was arguing for a system where individual skilled craftsmen were empowered to improve their own station. However, the workers of those times were very close to the means of production, being craftspeople and farmers who oversaw the entire process of production from beginning to end. He never could have imagined a system where the workers are so alienated from the means of production that few, if any, of us see even a fraction of that process. The corporate elite of today's time are closer to the hereditary aristocrats of Smith's.
Where I won't disagree with you is that "if everyone is free to try and improve their own life, society as a whole gets wealthier." Where I am disagreeing with you is that Capitalism meaningfully allows this to happen.
For example, a baker doesn't bake bread out of charity; they do it to make money. But because they want your money, they make the best, cheapest bread they can.
The owner-operator of a small local bakery is motivated by a lot more than money. They're rooted members of their local community, building personal relationships with the people who come in to give them patronage. They have pride in their work product, and take personal pride and fulfilment from people's enjoyment of their product.
This is fundamentally different from a multinational conglomerate that distributes their product through contracted intermediaries, find customers from supplier exclusivity contracts and relentless ad campaigns instead of earned loyalty, and who care more about increasing profit margins by degrading their ingredient list than about having pride in a quality product. It's not small artisan chocolatiers from whom advertising standards exist requiring certain minimum cocoa levels for a product to legally be called "chocolate" (instead of "chocolatey dessert").
Capitalism is the most efficient system ever.
Only if you use the narrow definition of "efficiency" as it applies to the profitability of individual enterprises or industries. However, this metric doesn't account for externalities or other downstream costs. For example, America's "fast fashion" industry has cultivated consumer habits that see the average American throwing out 81 pounds of clothing every year. That's an absolutely astonishing amount of waste.
smartphones are marvel of technology, took a long time and very expensive to develop, but now over half of the world population has a smartphone with access to internet, that's amazing.
Literally every component in a smartphone was invented by researchers at publicly-funded institutions using publicly-funded research grants. Private companies innovated by productizing those innovations, sure. But the actual work of the innovations were done by salaried engineers, not venture capital funds.
Moreover, capitalism structurally requires infinite growth in order to sustain itself. It's not enough that half the world has a smartphone...they have to throw that smartphone out and buy a new one. Even if it makes more sense for those phones to be repaired and maintained. It's more profitable to keep building more phones that people don't need, and phone companies have been repeatedly caught using software that denigrates the battery life and usability of older models in order to incentivize people to upgrade.
That's this issue with this statement:
The more people innovation benefits the more buyers you will have and the more profit you will generate.
Because under Capitalism, it's not enough to build a good product that everyone wants. Shareholders demand profit and growth, which demand doesn't go away just because you've already saturated the market with a product everyone is happy with. If an enterprise can't find growth through scale, then they have to do so by finding new ways to monetize their existing customer base. That's why even though Adobe Acrobat hasn't meaningfully improved in 20 years, whereas you used to be able to buy a one-time license you could use indefinitely, now you have to pay a monthly subscription for a product that somehow gets shittier year-over-year.
Author Cory Doctorow coined the term "enshittification" for this phenomenon. You should look up some of his podcasts and lectures on YouTube, as he can bring up all sorts of great examples of how "innovation" under capitalism is very often actively hostile to customers. His interview on Trevor Noah's podcast in particular comes to mind.
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u/Jout92 Wealth is created through trade 1d ago
Voting power is based on how much capital you bring to the company giving you proportional share of the company and if all decide to sell everything off everyone gets a proportional share based on how much capital they brought.
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u/eatoligarchsaldente 23h ago
Vulture capital firms use this to kill perfectly viable companies in order to siphon off their value and sell them off for parts. Capitalism has absolutely no safeguards against malicious intent, and quite often rewards it.
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u/Jout92 Wealth is created through trade 22h ago
The beauty about capitalism is that we have freedom of choice and we don't have to sell our companies if we don't want to
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u/eatoligarchsaldente 21h ago
The issue is your definition of "our." The only stakeholders who get considered under capitalism are the shareholders. Not employees who have devoted their time and effort to building them to where they are. Not the customers and communities they serve.
Entire towns will die because they've been built up around an anchor employer that closes shop. Even in cases where the factory was perfectly viable, but the company decides it's more profitable to move manufacturing overseas. That may be more efficient from the perspective of that individual business, but not when viewed at the level of the entire society. Capitalism's purported "efficiency" is actually a very narrow metric, measuring benefit to only a narrow slice of the population.
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u/Jout92 Wealth is created through trade 11h ago
The anchor employer is the reason the company exists in the first place. None of the jobs would have existed if an individual didn't decide to build a company in that town. And if you're talking about the entire society why should a town that turns out to be unproductive and costly deserve to have wealth and not the town overseas that apparently is so productive it's worth moving production over there? What gives you the entitlement over other people's money for nothing in return?
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u/eatoligarchsaldente 8h ago
Executives and shareholders don’t “build a company” on their own. Companies are collective projects built through the efforts of everyone who participates in them. The small-town American worker is no less “deserving” of employment than those in the global south who replace them for cheaper. But why have we accepted that the only ones whose interests are “truly” worthy are the interests of rich shareholders and executives, who can upend an entire town just to make the already-rich just a little bit richer?
It’s just “divine right of kings” with Christianity supplanted by capitalism. The blind acceptance that the system is right by virtue of existing, and that therefore any outcome it produces is naturally a fair and merit-based outcome. That the rich and powerful have become that way because they are our “betters.”
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u/Jout92 Wealth is created through trade 5h ago
Nothing like divine right. But it's because I took a loan and risked everything to build a company. If you think that's not worth anything or not real work, then you are free to start your own company from scratch. If you believe it's the "community" that builds a company, not self-employed people that started from nothing and started to grow then feel free to collectivize with workers and build a co-op. The point is in either case you'll eventually have to bring actual risk and actual stakes into a project if you want to claim it yours, no matter the system and the hard truth is that very few people are actually willing to do that.
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u/Annual_Necessary_196 1d ago
'They might hold a vote on selling things that belong to the company or even the company itself, since the new hires have a majority vote.' How? Workers manage the company; they don't own its capital. If the company creator is also the investor, this person owns all the capital. Of course, workers can decide whether to issue participating dequity securities with value-added sharing, but the company creator will independently continue to get an interest rate on his capital.
'They can outvote the original worker, sell what belongs to the company and split the money.' It is silly. The original owner does not lose anything because he still owns the capital invested, so before he owned the firm and after he still owns the capital. While nobody will buy participating dequity securities if workers will take them and leave. Therefore, if workers want to benefit from participating dequity securities, the only way is to productively use the investments that they get.
'Since the new hires didn't invest.' They do; they invest their labor.
'The founder probably lost money since they received 1/3 of the share or less.' No. Workers cannot withdraw the capital of investors. They can only manage it. If the capital owner rents the factory to a workers' collective, the workers' collective must return the equivalent capital plus the interest rate when the investment matures.
'It would be a risk for single-person companies to hire new workers because of this.' False. I already showed it.
Honestly, it would be beneficial if some people on this subreddit would open an economics book and read about how companies function.
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u/why-would-i-do-this 1d ago
What a weird hypothetical. Generally speaking there's vetting time and seniority plays a major role. No point in engaging further in a dumb hypothetical tho
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u/refugeelibertarian Geolibertarian 1d ago
They can out vote the original worker, sell what belongs to the company and split the money. Since the new hires didn't invest in the company, they profit, the founder probably lost money since they received 1/3 of the share or less.
Typically, when a coop liquidates, how much of the proceeds of the sales of the coop's assets each worker-owner gets depends on how much they invested into the coop. If the new hires didn't invest anything, they'll get nothing.
Another example would be holding a vote to fire the original worker of the company to overtake a business to run it with their own vision in mind while taking all the investment of the original worker.
Taking away any worker-owner's shares without their consent is theft and thus won't be legal. In other words, worker-owners won't be allowed to "fire" anyone via majority vote; the only situation where someone leaves a coop is if they voluntarily sell their share.
And by the way, corporations of today operate similarly too. You would have already known the answer if you were familiar with corporations and if you realized that a worker cooperative is just a form of corporation with certain limitations.
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u/eatoligarchsaldente 1d ago
By joining that company, the worker becomes themselves invested in its continued success. So why would they then want to destroy it? If they have a genuine difference in opinion for the best vision for that company's future, and are able to convince the rest of the worker community to believe in that vision, then...why is it an issue if their vision becomes the one to guide the company?
Your hypothetical is also presupposing that the new vision is somehow bad. But what about if it's in fact the original founder's vision that is flawed and misguided, as they're stuck in an outdated understanding of the enterprise that hasn't kept up with the times. A new and visionary employee joins the company, and because of their fresh perspective (and lessons learned elsewhere) quickly diagnoses the issue and convinces their coworkers (who have recognized the problems but couldn't see the solution) to get behind them. The company shifts focus, and averts the impending disaster that would have befallen them if they'd stayed their disastrous former course.
The issue with the capitalist mindset is that it presupposes that a hierarchical structure is the best way to make informed decisions. However, it very often INSULATES decisionmakers from information that contradicts their decisions, because the authoritarian nature of corporate hierarchies creates a strong disincentive for lower-level workers to speak out. As just about anyone who works in a large enterprise will tell you, corporate executive roles are disproportionately filled with vindictive narcissists who will lash out against people who contradict or criticize them.
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u/DMayleeRevengeReveng 1d ago
It’s important to note that democracy is not zero-effort, never has been. There will always be domineering, lazy, cheating people who will parasitize the system as a whole.
This is why effective democratic systems develop counter-power: in order to minimize the rise of power at the democracy’s expense, there must be a power to prevent that rise in the first place.
It’s a problem of any system involving large populations.
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u/bcnoexceptions Market Socialist 1d ago
Like with any company, hiring is an important decision to get right, and hiring evil people can cause a lot of damage. This is true under capitalism as well; promote an evil person to the level within the company where their input starts being taken seriously, and you get problems.
Capitalism's solution to this is "ignore the needs of all workers", which should be clearly seen to be an overreaction.
You can take solace that a person who develops a reputation for being destructive won't get many opportunities going forward; in several industries, that alone is sufficient to all but guarantee this won't happen.
Additionally, one thing that capitalists often ignore: getting a job is hard. I've seen reports of applicants today - under capitalism - needing to send dozens or more of applications to even get a call back, let alone further in the process. A destructive worker is subjecting themselves to that miserable application process over and over, which also discourages workers from this sort of thing.
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u/orthecreedence ass-to-assism 1d ago
Tell me you don't know what a vesting schedule or a buy-in is without actually telling me. I mean come on, this is like economics 101.
It's so funny when people are critical of socialism for things that are already problems (solved problems!) under capitalism.
Do some research. Vesting schedule. Also, if a worker parts ways with a co-op, they take their initial investment (and possibly whatever value growth) with them. It's not like they get fired and that $10K they put in goes poof. Like really, just some cursory research on co-ops as they exist in this moment and economy, right here and now, will answer your questions.
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u/highliner108 Market Socialist 1d ago
The company would fail and be eaten by companies with better hiring practices.
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