JoshHeaps.Net/JoshHeaps.Net/Content/Socialism/index.md

title, summary

title	summary
Free-Market Democratic Socialism	A working model for building an economy where the people who do the work own and govern the companies they work for. Nobody's company gets taken, and markets, wages, investment and personal property all stay.

Free-Market Democratic Socialism

The idea in one sentence

Your house, car, savings and tools are yours, and nobody touches them. But a permanent, tradeable claim on the work of thousands of strangers is a different kind of thing, so there should be companies where that claim never forms, and nothing in law or finance should stop people from building them. Read the thesis.

Nobody is forced

This model doesn't buy, seize or convert anyone's company. Instead it builds new worker-owned companies alongside existing ones, then lets customers and workers choose between them.

• Workers own their company. Every member gets one vote. A share of the profits grows with tenure until long-time members split them equally, per hour worked, which is how federal tax law lets co-ops pay tax on it only once. Salaries still exist, and hard jobs still pay more. Part of each year's profit goes into a personal account that pays it back a few years later on a fixed schedule, whether or not you've left, which is designed to keep it outside federal pension law, though courts haven't settled that; where most payouts would go to people who've left, as in high-turnover work, the share is paid in cash instead. Part goes into a permanent reserve that keeps the business investing. Members can't drain it through high pay or let the equipment quietly wear out, and big bets get an outside opinion first. An insurance pool the co-ops pay for protects workers' last paychecks and part of their savings if the co-op fails. A fair, fast process deals with members who won't do the work, with protections so it can't be turned on the wrong people. When business falls off, everyone shares the cut before anyone is laid off, and layoffs follow an order set in advance that treats members and non-members alike. Members are the co-op's employees, so they get the minimum wage, overtime and injury insurance like anyone else. Where the law leaves owners out, of unemployment insurance in some states or of union protection, the co-op's charter fills what it can. Membership comes automatically after a short probation, so co-ops in high-turnover work like home care don't end up run by the few who stay. Where Medicaid requires 80% of home care payments to go to care workers, co-ops meet it from wages alone. Equal shares give members a reason to turn down growth into lower-paying work, so co-ops can grow by starting new co-ops they invest in instead. The checks behind all this are scaled to size, so small co-ops get a yearly review and random audits instead of a full audit every year, though honest checking still costs them real money. Worker Ownership, Does Sharing the Profit Mean Less Effort?, When Work Runs Short, When People Don't Stay Long, Owners Are Still Workers, When Growing Means Sharing, Member Capital Accounts, How a Locked Co-op Is Taxed, Protecting Members' Savings, Investing for the Long Run and What the Rules Cost a Small Co-op
• A small public bank lends to worker co-ops. It charges market rates, so it only succeeds if co-ops can really compete. Its whole job is to be willing to lend to a kind of company other banks won't. Spain, Italy and the US have all tried versions of this, and the pilot is built around what went right and wrong. The Bank and Has This Been Tried?
• Owners who want to sell to their workers can. The bank lends for these sales on a separate track, with its own $100 million and its own test. Only healthy firms qualify, there's no new tax break, the price is capped at an independent appraisal, the seller shares the risk, and the whole workforce votes. It serves deals the SBA's rules shut out, which ask a co-op, unlike an ESOP, for cash up front and one worker's personal guarantee. Its results are compared with SBA-financed purchases and ESOP sales, and its pay test follows everyone who worked there at the sale. When an Owner Wants to Sell to the Workers
• Co-ops funded this way stay co-ops forever. They can't be sold to conventional owners, and members can't vote to cash out what earlier members built. An independent lock-holder can veto any attempt, including selling the business off piece by piece. If a co-op goes bankrupt, only another co-op can buy it whole, and its workers get a real chance to be that buyer. That needs an amendment to federal bankruptcy law, drafted here, and a short model state law closes the ways out that state law leaves open. The Lock, When a Locked Co-op Goes Bankrupt, The Lock in State Law
• It runs as an honest experiment. A one-time $350 million pilot aims to fund about 400 new co-ops. The success measures are published before the first loan. If, after twelve years, co-ops stay open about as well as similar conventional firms while paying their members fairly, and the bank earned at least what Treasury bonds would have, Congress votes on growing it. If not, it shuts down automatically. It's built so that a hostile government can't quietly freeze it or rig the result, though Congress can always repeal it. It also tests, by lottery, whether serious help before launch gets more co-ops started. Part of the loan money is set aside for co-ops in lower-paid work, so the bank can't drift toward only the safest co-ops, and the verdict has to say which kinds of co-ops it covers. The pilot can't show whether co-ops lift pay at other employers. Even after a pass, a sector big enough for that is decades away nationally. So growth comes in capped stages, and that effect gets its own test in a few local markets. The Test, The Pilot, in Numbers, Help Before the First Loan, Who the Bank Lends To, After a Pass: How Big, How Fast and Making It Last
• Co-ops back each other up. They pool part of their profits into a shared fund. If one fails, its workers are moved into others instead of being left with nothing. The Federation
• Nobody is left behind by low-margin work. Owning a company doesn't help much when there's barely any profit to own, so a strong floor covers the rest. A fixed formula, not lobbyists, decides which low-paid work gets public help. Ownership and the Floor and Who Decides What's Essential

What stays the same

Stays	Why
Existing companies	Nobody's company is bought or taken. Conventional firms keep conventional ownership.
Markets and competition	Co-ops and conventional firms compete for the same customers and workers.
Salaries	Hard and in-demand jobs still pay more. A surgeon still earns a surgeon's salary. Pay bands are open, and high pay needs the lower-paid half to agree. Who Sets the Pay
Personal property	Homes, cars, savings and tools are untouchable.
Investment and big returns	Investors can still fund co-ops and make 10x or 30x. Their claim just runs out and carries no vote. Capital, After

Why it matters

This isn't mainly about money. People deserve a say in governing the place where they spend most of their waking lives. Today most workers are ruled by distant owners who answer to nobody who works there. Co-ops are rare, and one likely reason is that nobody will lend to them. This model fixes the financing and lets people choose. Making the Case and, for one real company worked through, What If Conservice Had Been a Co-op?

Honest about what's unsolved

This is a working model, not a finished one. The biggest open question is whether strong founders will start companies they can never sell. In the success case, a co-op founder ends up with a fraction of what a conventional owner would, because the rest goes to the people who work there (The Founder Problem). The pilot measures founders on both sides, so if it fails, the verdict has to say how much of that was down to who applied (Co-ops or Their Founders?). The full list of what isn't solved yet is kept in the open. Open Problems