Economic Democracy: The Cooperative Alternative

Could a cooperative market economy, in which firms are owned and controlled by their workers, be a viable and efficient alternative to capitalism?
This course is archived
Estimated 6 weeks
2–3 hours per week
Self-paced
Progress at your own speed

About this course

Skip About this course

What would happen if workers ran their own businesses? Would worker-managed firms make the same decisions as their capitalist counterparts? Could such an economy be efficient? What policies could be deployed to promote a cooperative sector?

This course will focus on these central questions as we discuss the internal impact of employee ownership; productivity, governance and management, as well as the external impact of employee ownership; spillovers for health, democracy, and the local economy.

We will also discuss the simple economic theory of the labour-managed firm. Cooperatives have many attractive features, including high productivity. But they account for a relatively small proportion of GDP in most economies. We analyse possible reasons for this apparent paradox. There is widespread interest around the world in cooperatives as an alternative to the capitalist corporation, particularly since the financial crash of 2008. Economics and other social sciences sharpen the debate on cooperatives. After taking this course, you will be better prepared to participate in public discussion on cooperatives, join a cooperative, or even start a new one.

At a glance

  • Institution: EdinburghX
  • Subject: Economics & Finance
  • Level: Introductory
  • Prerequisites:
    Basic high school maths.
    Some basic knowledge of economics would be helpful but not essential.
  • Language: English

What you'll learn

Skip What you'll learn
  • Basic economics of firms owned or controlled by their workers
  • The main issues relating to the long-term viability of cooperatives
  • Policies to promote a cooperative sector in a market economy

"The form of association ... which if mankind continue to improve, must be expect­ed in the end to predominate, is not that which can exist with capitalist as chief, and workpeople without a voice in the management, but the association of the labourers themselves on terms of equality, collectively owning the capital with which they carry on their operations, and working under managers elected and removable by themselves.”
- John Stuart Mill, Principles of Political Economy, 1848

  • Block 1. The internal impact of employee ownership: productivity, governance and management.
  • Block 2. The external impact of employee ownership: spillovers for health, democracy, and the local economy.
  • Block 3. Simple economic theory of the labour-managed firm. The “Pangloss Theorem” (if cooperatives are so wonderful, why aren’t there more of them?). Internal v. external financing.
  • Block 4. Long-term viability. Degeneration thesis and policies to counter it. Kibbutzim, Pacific plywood cooperatives, Mondragon. Performance bonds and wage-earner investment funds.
  • Block 5. Cooperativism in the finance sector (with a comparative international focus): building societies, credit unions, etc.
  • Block 6. Community renewables: economic democracy in action.

About the instructors