I agree with you that there’s probably a firm size for cooperatives beyond which management would be insulated from genuine democratic control to a considerable extent. Workers would probably wind up voting up or down on an agenda presented by the permanent staff of technocrats (this is sort of what happened to the syndicalist planning bodies in LeGuin’s The Dispossessed). The threshold is probably crossed somewhere into the low hundreds of workers; studies of employee-managed enterprises in the old Yugoslavia found that worker democracy became almost entirely theoretical beyond a few hundred workers.

But I think there’s probably a middle ground between this upper threshold and the small, face-to-face groups you describe; and that even if representation is necessary for firms large enough to meet efficiency requirements, in most cases efficienciency requirements won’t translate into sizes large enough to trigger the “Iron Law of Oligarchy.”

The last post should read:

I just don’t think “democracy” and “efficiency ” scale together as the size increases.

I do think in a stateless society(no taxation of labor), a worker cooperative would be an ideal structure within a certain size constraint. I just think “democracy” and “efficiency ” scale together as the size increases.

However, I do think you make a valid point that in a true, stateless free market, there would likely be an upper bound beyond which it will likely be counter-efficient to scale beyond.

But your experience with a worker cooperative takes place *within* an overall framework designed to favor large corporations. So I’m not sure whether it reflects on the efficiency and scalability of co-ops as such, or only when they are forced to survive as islands in a corporate sea. You yourself mention tax law as a factor in limiting your organizational choices.

And the specific form of organization you describe isn’t the only possible form cooperative ownership can take. On a larger scale of organization, there’s no reason the management of a worker-owned enterprise couldn’t be a standing body accountable to the work force, but with direct self-management carried out only in the primary production units.

I’d also argue that the predominant scale of organizations in the economy as a whole would be a lot smaller in a genuinely free market, with all the subsidies and protections to large size removed. So a much smaller percentage of firms in the economy would *need* to be indefinitely scalable in the first place.

My primary critique with this post is that, in the context of the State, the same issues are going to arise whether the principal organizational structure is the corporation or the worker cooperative.

Although I’m not going to pretend to match your theoretical knowledge of libertarian theory, I have actually lived out the last 8 years of my life deriving my livelihood from a pure worker cooperative model. Profits are shared equally among the workers, decisions are made democratically, revenues are largely derived from billable labor hours. The space we compete in is in an almost pure competitive global internet space(high-end web design, programming, integration and custom web hosting).

Trust me, I am a loser when it comes to the state. We are forced to technically organize around a Schedule S Corp, purely for tax reasons.

The worker cooperation is a nice ideal on a small scale, but in my case, you better be young, no family, a lot smarter than the average bear, and live to work and compete. That doesn’t scale. The Worker cooperative model simply won’t scale efficiently.

Isn’t that something like what Mises criticized in the Lange model of market socialism with state-owned enterprises: the enterprise manager wasn’t really an entrepreneur because he was risking capital that didn’t cost him anything.

Seriously, Kinsella and I were bogged down in debating the technicalities of legal liability standards, but it took someone with a greater understanding of economics to point out how Kinsella threw the baby out with the bath water. Your extended post on this subject a while back should be required reading for anyone who wants to discuss corporations as they actually exist in comparison to corporations in a free market.