Chapter 8 - The Performance of Workers’ Cooperatives1

Summary

This chapter gives an overview of the key findings of international economics studies on labor-managed firms' performance and examines some of the implications for cooperative practice. It looks at total factor productivity, which takes into account both labor and capital inputs. The chapter discusses the institutional sustainability, and explains studies investigating factors that increase the productivity of workers' cooperatives and estimations of the comparative productivity of labor-managed and conventional firms. It also discusses the job preservation and survival, and outlines institutional sustainability issues, including underinvestment and degeneration to the capitalist form. The worker cooperatives are found to adjust pay rather than employment to demand shocks, whereas conventional firms adjust employment both in response to wage changes and to demand shocks. In Italy, as in the U.S. plywood cooperatives, employment is more stable in the cooperatives. The chapter also presents evidence regarding employment and firm survival.