This blog will make the case that it would be beneficial for worker co-ops in the US to both issue preferred shares and purchase them from other co-ops. This practice would lead to a type of profit-sharing between worker co-ops across industries and geography, as well as provide an additional source of startup and expansion capital. This practice could also lead to useful networking and connections among worker-owners, serving as a sort of informal technical assistance network.
The basic idea looks like this: imagine that every worker co-op in the US issued some nominal amount of preferred shares (for details on preferred shares, see this classic article from Equal Exchange), and that these shares were purchased by other worker co-ops. The result would be that the balance sheet of each individual co-op would now be, to some small degree, interlocked with the balance sheets of other worker co-ops. Because preferred shares pay a dividend only if the co-op is operating at a surplus, co-ops would be sharing some portion of their surplus with other co-ops in good times, while receiving a cut of surplus from others in hard times. Of course, given the givens, most worker co-ops in such a system would be BOTH sharing a portion of their surplus through dividends, AND receiving a portion of other co-ops surpluses during normal times.
My expectation is that this would help smooth out the financial ups and downs for individual co-ops, if only to a small degree. Co-ops operating at a loss would be able to suspend dividend payments on their preferred shares held by others, while still receiving dividends from other co-op's preferred shares that they hold. Contrariwise, worker co-ops that are doing well would sharing some of their surplus with others in the movement.
Another potential use of such a system is for raising start-up and expansion capital. If it were the norm for worker co-ops to issue preferred shares, a nascent co-op with a reasonable business plan would have another place to look for financing, apart from loans, grants, and donations. Preferred shares, unlike standard bank loans, are naturally non-extractive -- only paying shareholders when the business is in surplus, and at the discretion of the members. And unlike grants and donations, worker co-ops buying preferred shares from other worker co-ops is a form of mutual aid and solidarity, not charity.
Finally, normalizing the practice of worker co-ops purchasing preferred shares from other worker co-ops cannot help but to strengthen the social ties between worker-owners in different co-ops. There has been much talk of ecosystem development and breaking out of silos in the co-op development world, and this practice would further both of those goals by creating ties between co-ops and cooperators that might not encounter each other otherwise. It would also create a kind of defacto communication network, as it will be obvious when a co-op is struggling because several other co-ops will not receive their dividend payments.
This dynamic could help ensure that no worker co-op ends up struggling alone, that each co-op that has sold preferred shares to other worker co-ops has a built-in peer group that is supportive not only in principle, but because they have a financial stake, however small, in the success of other cooperatives.
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