4.1.4 All the Difference

However, there are two major differences between the publicly held corporation and the coöperative-type enterprises.

The first is that the coöperative enterprise (like the privately held corporation) has no liquid, transferrable equity and cannot raise capital on the public markets. This places constraints on its ability to grow. It means that the mutual enterprise can only expand by bringing in more members (who often have less disposable cash than capital investors) or by borrowing or issuing obligations. Naturally, this places financial constraints on the coöperative. It makes it all the more important to cultivate symbiotic relations with credit unions and coöperative banks—as, for instance, Mondragon has done with the Caja Laboral Popular.²⁵³

The second is that the decision-makers in a coöperative are themselves members of the ongoing enterprise and accountable to the other members, rather than to outside investors. And this latter distinction makes all the difference. It means that the decision-makers care about the sustainability of the enterprise and the welfare of the members, rather than its immediate or short-term value. It means that the members in management positions have the members themselves—whether workers or consumers or producers—as their foremost interest. The coöperatives exist to benefit their members.

This has dramatic implications. It should not come as a surprise, then, that at the member coöperatives of Mondragon, for instance, the disparity between the salary of the highest-paid directors and that of the lowest-paid workers cannot exceed 4.5 to 1.²⁵⁴ When the members are the decision-makers, the results are likely to be more equitable and just. Compare this to the average disparity in wages in enterprises in the United States today—what is often called the “wage ratio” between CEO pay and average worker pay. The average disparity stood at 303 to 1 in 2014.²⁵⁵ At McDonald’s, the wage ratio in 2018 was 3,101 to 1.²⁵⁶

Après moi, le déluge. Dardot and Laval refer to this as “the true ‘spirit of capitalism.’”²⁵⁷ They are entirely right. The fact is, capital investors have little reason to care about the welfare of the company’s employees while they are invested, and they have absolutely no reason to care about the company itself or its employees after they have sold their shareholdings. If anything, schadenfreude will make them secretly wish that the company’s value decreases; in fact, that expectation is often what leads to the sale of stock.

What this means, naturally, is that the capital investors do not have an ongoing interest (or incentive) to pay attention to the long-term welfare of workers or employees or really anyone else touched by the enterprise. The profit motive is the only direct interest that the shareholder has. This is a recipe for disaster. Especially given that the business model of the publicly traded corporation depends on continued capital investment by future shareholders, whereas the models of coöperatives and non-profits do not.