Worker cooperatives

The Rochdale Society of Equitable Pioneers, founded in 1844 by twenty-eight weavers and other artisans in Rochdale, England, is widely considered the prototype for modern cooperatives. The Rochdale Principles, including open membership, democratic control with one member one vote, and distribution of surplus to members, became the foundational framework adopted by cooperative movements worldwide. The International Co-operative Alliance, founded in 1895, continues to maintain these principles.

Mondragon was founded in 1956 by Jose Maria Arizmendiarrieta, a Catholic priest who had established a technical school in the Basque town of Mondragon in 1943. Five graduates of the school started a small cooperative factory. The enterprise grew by founding new cooperatives rather than expanding existing ones, and by creating supporting institutions: a cooperative bank, a social security system, and a university. Pay ratios between the highest and lowest earners in Mondragon cooperatives have historically been limited, in contrast to the widening executive-to-worker pay gaps in conventional corporations.

In Italy, cooperatives account for a significant portion of the economy, particularly in the Emilia-Romagna region, where they operate in sectors including manufacturing, construction, agriculture, retail, and social services. The Legacoop federation represents thousands of cooperatives employing hundreds of thousands of workers. In the United States, the number of worker cooperatives has grown steadily, with organizations like the Democracy at Work Institute tracking roughly six hundred verified worker cooperatives as of the early 2020s.

Employee Stock Ownership Plans, which share some structural features with cooperatives, cover roughly fourteen million American workers. However, ESOPs differ from worker cooperatives in a critical respect: ESOP participants own shares but do not necessarily govern. In a worker cooperative, ownership and governance are unified. Each worker-owner has one vote regardless of the capital they have contributed.