diff --git a/RFD0001.adoc b/RFD0001.adoc new file mode 100644 index 0000000..1bc274c --- /dev/null +++ b/RFD0001.adoc @@ -0,0 +1,2569 @@ +*Why a Worker-First Software Cooperative?* + +*(RFD #1, Untitled Co-op)* + +“[T]he political realm rises directly out of acting together, the +‘sharing of words and deeds.’” Hannah Arendt, The Human Condition, p. +198 + +[arabic] +. {blank} ++ +____ +Introduction +____ + +A small group of founders develops some groundbreaking technology in a +garage. They attract investors who provide funds to scale the business +in return for significant ownership stakes. This revolutionary +enterprise then upends established incumbents, dominates the market, and +becomes enormously profitable. The investors reap huge gains upon exit, +and the founders, while not as enriched as the investors in absolute +terms, still do extremely well — perhaps even well enough to retire +early. Early employees also fare quite well. + +For those concerned about the immense wealth inequalities in the U.S., a +problem with this model is that everyone else does not share in this +prosperity. While tech workers _tend_ to be on the high__ish__ end of +the income distribution, it is often argued that the original vision was +not theirs, they did not risk much at the beginning, and so later +workers should not expect payouts comparable to those of the founders +and very early hires. The system is working, one might say. + +[arabic, start=2] +. {blank} ++ +____ +The Critical Importance of Integrated Decision-Making +____ + +Before getting into why the system is actually _not_ working, and how +maybe to fix some of it, we highlight a lesson from early American +business history: the principle of integrated decision-making. This +means that the same people who will execute decisions must be deeply +involved in making them.footnote:[Kenneth Hopper and William Hopper, The +Puritan Gift: Reclaiming the American Dream Amidst Global Financial +Chaos. I.B. Tauris, 2007 at 25.] This is not the same as democratic +voting. The Puritan settlers of Massachusetts Bay succeeded because they +spent months meticulously planning their migration before deciding +whether to proceed, with those who would implement plans being integral +to their development. They studied past failures, conducted pilot +projects, and made detailed contingency plans. Their success contrasted +sharply with failed settlements that made high-level decisions first and +worked out details later. This means: + +* {blank} ++ +____ +Decisions cannot be made "in principle" and handed off to others for +implementation +____ +* {blank} ++ +____ +Democratic voting is preceded by detailed planning by those who would +execute +____ +* {blank} ++ +____ +Every major initiative needs pilot testing before full deployment +____ +* {blank} ++ +____ +Study both successes and failures in similar efforts +____ +* {blank} ++ +____ +Maintain adequate reserves for contingencies +____ + +For a software organization, integrated decision-making could manifest +as "mob programming" (also known as ensemble programming or software +teaming), which is an engineering method explored by the Mob Mentality +Show (and +others).footnote:[. +See also Woody Zuill & Kevin Meadows, Software Teaming: A Mob +Programming, Whole-Team Approach. 2022.] This method involves the entire +team working together at a single workstation (physical or virtual), by +rotating through specific roles, primarily the 'typer' (or 'driver') who +operates the keyboard and the 'talker' (or 'navigator') who guides the +implementation. Other team members actively participate through +observation and discussion, creating a fluid, collaborative environment. +(We will explore in Sections 17 and 18 how the mob/ensemble practice +might extend beyond code to diverse aspects of business operations.) + +Consider a team implementing a feature to import data from Excel files. +During a session, team members cycle through different roles: typing, +talking, watching what the typer is doing, or listening to what the +talker is saying to the typer. The team includes people who regularly +work across different aspects of software development - testing, +operations, architecture, coding - as these aren't separate roles but +different facets of the work that any team member might engage in. + +While the session is happening, each person focuses intently on their +current role rather than trying to actively contribute from their +specialty. Yet their diverse perspectives - architectural design, +security, database optimization, systems operations - subtly inform how +they engage with the code, often in ways that aren't verbalized in the +moment. + +For instance, a security specialist probably would _not_ point out +vulnerabilities while typing, navigating, or listening (because their +attention would be on the task at hand). Instead, their security mindset +influences how they understand and work with the code. These different +perspectives and their influence on the work might only become apparent +during the end-of-day retrospective, or even the next day after team +members have had time to process what they learned. + +The mob programming practice could become particularly powerful when +applied to new initiatives through a two-stage Minimum Viable Product +(MVP) process. If workers were to propose a new system or process, they +would first secure democratic approval to allocate hours for MVP +development. These hours would come from their existing work time - no +specialized positions would be created. The same people proposing the +system would build it, ensuring that those who conceive an idea are also +those who will implement it. After MVP development, they would +demonstrate the working system to the general membership for a second +vote on whether to scale it. This pattern of concrete demonstration +followed by collective evaluation provides a reality-check against +unnecessary complexity. When people must show rather than just tell, and +when they must implement their own proposals rather than hand them off +to others, potential sources of bureaucratic bloat are naturally +prevented. And when questions about security, usability, or performance +arose, the relevant experts would have been immersed in the code's +evolution. + +The ensemble work pattern may be a way to restore the primacy of clear +communication, explainability, and dependability. The “Great Engine” +companies - DuPont, General Motors, AT&T, IBM and others that dominated +mid-20th century American industry - achieved this through hierarchical +structures, but modern communication technologies enable new +possibilities. Tools like Zulip's threaded discussions and Oxide's +Request for Discussion (RFD) system can create persistent, searchable +channels for decision-making and organizational memory, while mob +programming sessions provide real-time integration of knowledge and +capability. Together, these can potentially achieve what hierarchy +historically provided - clear information flow, effective coordination, +dependability, and explainability - but in a more democratic and +distributed way. + +However, such a project should avoid McCallum's error at the Erie +Railroad of trying to engineer human judgment out of the system. The +goal is not to create a perfect system that runs automatically, but +rather to enable human judgment to function effectively at scale. We are +trying to describe a plausible future, and our first guess at how to +achieve it, in light of the facts. When the facts change, we try to +realize that they changed, and change our beliefs. The technology, or at +very least the technology primitives, in principle already enable new +forms of organization; the bigger challenge is probably social. + +The ensemble/mob practice emerged from experimental work at Hunter +Industries in the early 2010s, where teams discovered that working +together continuously led to better design, better code, fewer defects, +and more engaged developers.footnote:[Zuill, Woody, and Kevin Meadows. +"Mob programming: A whole team approach." Agile 2014 Conference, +Orlando, Florida. Vol. 3. 2016. +] +Rather than the traditional cycle of individual work followed by code +review, mob programming enables continuous review and improvement. This +real-time collaboration often prevents problems that would be costly to +fix later. It also encourages a state of "team flow", where a group +works smoothly togetherfootnote:[Zuill & Meadows, 2022 at 163.], +addressing issues as they arise and making decisions in real-time. + +Mob programming directly implements the principles of integrated +decision-making: + +* {blank} ++ +____ +Decisions cannot be separated from implementation - they happen +simultaneously +____ +* {blank} ++ +____ +Every major initiative undergoes continuous pilot testing as the team +works (e.g. via “Test Driven Development”) +____ +* {blank} ++ +____ +The ensemble studies both successes and failures in real-time +____ +* {blank} ++ +____ +The team maintains shared context about decisions and their implications +____ + +This practice could form the foundation for many aspects of enterprise +operations, from software development to financial planning to +governance. + +[arabic, start=3] +. {blank} ++ +____ +The Problem with Wealth Super-Inequality in Tech +____ + +The insiders who became extraordinarily wealthy in the Introduction were +not proportionately instrumental to the business's success. To be fair, +they were _somewhat_ more responsible. And if not for their founding, +the business probably would not exist, nor, quite possibly, would any +analog. But this historical contingency does not mean the +founders/insiders are infinitely more responsible than employee number +11,781. They are not even 20-fold more (pro rata) responsible. It is not +that the insiders' remuneration is unearned, but rather that their +_exorbitant_ remuneration is unearned. Not all, but _most_ of their +excess fortune has no justification other than them having been in the +right place at the right time. Early-life decisions — whether of a +company, a career, or a mammal — are generally more consequential than +later ones; timing often outweighs who is making the decision or the +singular flair with which they made it. + +Some argue that without the lure of huge rewards and the taking of huge +risks, the economy would not be as successful and productive as it is. I +do not buy this. Why should we incentivize anyone to risk personal +bankruptcy? There are more humane ways to encourage people to +experiment.footnote:[Such as funding more five-year graduate +fellowships. Their humaneness is a mixed bag, depending greatly on the +local academic environs, but their stipends typically cover basic living +expenses. Stipulating and enforcing portability for such fellowships +could significantly improve working conditions for early-career +researchers.] Without exorbitant rewards, people might pull fewer +all-nighters, yes. We might have fewer celebrity CEOs. "Shark Tank" +might have a smaller viewership. But these are not meaningful proxies +for, or contributors to, success or productivity or innovation. There is +nothing wrong with occasionally staying up all night, but making it a +habit is almost always unwise — and pressuring others to do so, even +indirectly through cultural norms that celebrate such behavior, is +thoroughly stupid. Grinding boosts short-term productivity — but harms +it in the long term.footnote:[Unless, of course, we expand our +definition of 'productivity' to include the medical goods and services +employed to treat the chronic and acute health issues caused by the +"grind culture" imposed upon workers. More concretely, if a worker has a +heart attack, that is easily an extra $10,000 of 'productivity' due to +the medevac alone!] Exorbitant rewards both exacerbate inequality and +encourage overwork. + +[arabic, start=4] +. {blank} ++ +____ +Challenging the Winner-Take-All Mindset +____ + +The problem with this __uber-capitalist__footnote:[See It’s OK to be +Angry About Capitalism by Bernie Sanders, 2023] bias is not only that +disproportionately rewarding first movers is unnecessary, unfair, and +unhealthy. This incentive structure also perpetuates cults of +personality and authoritarian dynamics. It normalizes a +_winner-take-all_ mindset, which in turn drives a _win-at-all-costs_ +mindset. For if the winner takes all, the losers are left with nothing. +As Peter Thiel infamously observed, competition is the last thing +capitalists wantfootnote:[Peter Thiel, Competition is for Losers, Wall +Street Journal. 12 Sept 2014. +https://www.wsj.com/articles/peter-thiel-competition-is-for-losers-1410535536]. +They seek moats, monopolies, monopsonies, and chokepointsfootnote:[Cory +Doctorow & Rebecca Giblin, Chokepoint Capitalism: How Big Tech and Big +Content Captured Creative Labor Markets and How We'll Win Them Back. +2022, Beacon Press.] — maximizing profit and minimizing +effort.footnote:[That said, as Frederic S. Lee demonstrates in Heterodox +Microeconomics (2017), a fine line often exists between predatory or +abusive pricing behavior and the practices firms use in reasonable +market governance to sustain themselves as going concerns — a topic we +will revisit in sections 6, 8, 18, and 19.] + +Relentless winner-take-all growth is unhealthy. Meanwhile, immense +wealth is not even a great incentive for the next big thing. The +possibility of immense wealth might have helped give us our tech +darlings, but it also gave us our tech deplorables, like Theranos and +FTX. Good ideas are not a finite resource, nor do people get bored of +creating them. Winner-take-all might have summoned impressive individual +efforts in the past, but that does not mean it was the only or best way. +Think, for example, of separate clinical and preclinical tests in +separate corporate silos proceeding and failing — independently, in +isolation, and in ignorance.[multiblock footnote omitted] This +inefficiency is exacerbated by the current patent system and +financialization of the pharmaceutical industry, which often prioritize +short-term financial gains over long-term innovation and public health +outcomes. These systemic inefficiencies in pharmaceutical innovation are +signs of deeper and broader pathologies in how we approach complex +global issues. With 1.5 °C of warming baked into the climate cake, we +must today rise to an occasion piled far higher with difficulty than we +have been past accustomed to. + +We see evidence of the winner-take-all mentality in, e.g., the Microsoft +portfolio of companies and their business models, as well as in the +licensing and trademark-related behavior of other software companies and +cloud providers such as[multiblock footnote omitted] HashiCorp, MongoDB, +Amazon AWS, Elastic, and Redis. In the case of Microsoft, the bare facts +of (1) a large ownership stake in OpenAI, (2) full ownership of GitHub, +and (3) what seems an unfathomably large subscriber base for Office 365 +from US Federal agencies (not to mention the private sector) should be +sufficient to dismay any advocate of software freedom, individual +privacy, and healthy competition. More explicitly: if you are bothered +that companies like Google and Amazon use your browsing, searching, and +purchasing habits to try to sell you more stuff, just wait until +companies start deploying Large Language Models (LLMs) for similar (or +worse) purposes. Have you seen how quickly ChatGPT can generate an +accurate summary of a book-length document? Imagine this capability +deployed at scale and pointed at not just analyses of keywords and URL +visit patterns, but rather the actual semantic content of the sites we +visit and the ideas we type. + +GitHub is a fabulous and extremely useful tool. And currently, it plays +a valuable societal role in affording software commons. However, +anything that gets publicly committed to GitHub is fair game for OpenAI +to leverage in improving its LLMs; when combined with OpenAI’s formal +partnership with GitHub Copilot, it is difficult to regard OpenAI’s +relationship to GitHub data as anything less than one of privilege. This +is the sort of “moat” or “flywheel” that venture capitalists love. It is +a self-reinforcing process that situates GitHub and OpenAI as the +platforms of choice due to their superior adoption and training data. +However, with apologies to George R. R. Martin, this particular +flywheel, which answers mostly to oligarchs and their sycophants, needs +breaking rather than turning.footnote:[In the hybridized spirit of +idealism and pragmatism that this RFD hopefully embodies, the PR for +this RFD is a “cross-post” of the one hosted in the Codeberg repo. The +idealist part is that the primary repo is with Codeberg; the pragmatic +part is that I have made no attempt at some sort of automated +integration of the two separate discussion spaces.] + +[arabic, start=5] +. {blank} ++ +____ +A Hypothetical Software Cooperative +____ + +A new software cooperative could initially organize itself around +principles of a worker-first second-degree cooperativefootnote:[Also +known as a _second-order_ cooperative, a _second-tier_ cooperative, or a +_multistakeholder (MSC)_ cooperative.], while remaining open to +structures and relationships that may arise through its operations, to +the extent that they do not diminish worker primacy.footnote:[Rather +than prescribing specific complementary organizations, educational +initiatives, and mutual aid funds, the cooperative could create +conditions for such elements to grow organically with members' +interests.] This approach, although inspired by Mondragón's +evolutionfootnote:[Ramon Flecha & Ignacio Santa Cruz, Cooperation for +Economic Success: The Mondragón Case. Analyse & Kritik, pp 157–170. Jan +2011.]^,^footnote:[Imaz, Freundlich, and Kanpandegi; chapter 10 in S. +Novkovic et al. (eds.), Humanistic Governance in Democratic +Organizations, Humanism in Business Series, 2023.], recognizes that the +cooperative's true form and function will develop through complex +interactions among membersfootnote:[Ralph D. Stacey and Chris Mowles, +Strategic Management and Organisational Dynamics: The challenge of +complexity to ways of thinking about organisations, 7th ed. 2016. At +189.] and with a broader (and sometimes hostile) environment. + +An example of the second-degree structure in Mondragón is Ikerlan, a +technology research and development cooperative founded in 1974. +Ikerlan's governing membership comprised both workers and +user-customers. Initially, the user-customer members were other +Mondragón cooperative firms, “though later, conventional firms were also +admitted into this stakeholder group.”footnote:[Imaz, Freundlich, and +Kanpandegi, 2023 at 300.] + +Adopting a second-degree cooperative structure similar to Ikerlan's +could allow the cooperative to establish formal relationships with other +organizations from the outset, potentially including other tech +cooperatives, ethical tech companies, or non-profit organizations that +could benefit from the cooperative's software. These organizations would +become members of the cooperative (alongside the electorally-prioritized +worker-members), providing, potentially, market access, +structurally-constrained financial support, and a built-in user base for +the software being developed. + +The cooperative's financial structure should be designed from inception +to support both democratic principles and operational resilience through +multiple mechanisms: initial worker-owners would contribute capital +according to their means (subject to a ceiling), while ongoing capital +accumulation would be linked to hours worked rather than initial buy-in; +mandatory contributions to indivisible reserves would be built into +cost-plus pricing methods to provide buffers against market pressures; +and transparent systems would track both collective and individual +capital accounts, with workers accumulating withdrawable equity through +hours worked while a portion of surplus goes to collective reserves. + +To incentivize user-member participation, the cooperative could offer +(necessarily constrained) voting rights, as well as patronage dividends +based on usage or a special class of membership shares.footnote:[One +idea for aligning individual member incentives with a cooperative +network's long-term success is implementing a single utility token +system. In this system, members would exchange (e.g.) dollars for tokens +at a centrally determined rate, using these tokens to purchase equity in +any affiliated cooperative. Dividends would be calculated based on +percent equity and paid out in dollars. The token could also be used to +purchase products or services from member cooperatives, at their +discretion. The idea here would be to create a semi-closed micro-economy +that reinforces cooperative principles while providing an attenuated +sort of internal liquidity. The token's price, being centrally managed, +would be insulated from external market volatility. Members could only +"cash out" by selling tokens back to a network-operated agent, and +subject to various constraints. While not offering direct price +discovery, this system could provide insights into cooperative health +through metrics like equity demand, dividend yields, and token +velocity.] This approach, after Arizmendiarrieta, seeks to align user +interests with the cooperative's long-term success while maintaining +worker control.footnote:[While transparency can help identify conflicts +of interest and external influences, complete transparency may not +always be desirable, as Buterin (2022 at 319) argues. Cooperatives could +implement sufficient transparency for accountability while protecting +individual privacy where needed. This might involve using cryptographic +techniques similar to those used in some blockchain systems, allowing +verification of important information without revealing all details.] +This structure could be fortified by embedding protections against +service degradationfootnote:[The technical term for this is +_enshittification_. It is vividly exemplified by the Muskification of +Twitter/X. See Cory Doctorow, Pluralistic: Leaving Twitter had no effect +on NPR's traffic, 14 Oct 2023. +] and user +exploitation in the cooperative's founding documents. These would +establish legally binding user rights, including privacy, quality of +service, and fair treatment, making it constitutionally challenging for +the cooperative to engage in practices that undermine user interests or +platform quality. + +Alongside this structure, the cooperative could develop educational +programs in their software niche. This reflects Mondragon's origins, +which began with Arizmendiarrieta's vocational training school in 1943. +The software cooperative could hold regular skill-sharing sessions or +develop online courses. The goal would be to foster a community of +skilled individuals and cultivate a shared vision and set of values. + +Education is a key interface to democracy. And just as the User +Experience of software is enormously important for its adoption, the +Developer Experience is crucial to the adoption of a tech stack. A +software cooperative ought to be keenly attuned to the user/developer +experience of its members as they interact with the cooperative in all +senses. In software development, long cycle times (e.g. the time between +coding a feature and finishing the automated test suite, or +alternatively, the time between merging to main and being live in +production) are a red flag suggesting a subpar developer experience. +Maintaining a vibrant cooperativist spirit will probably involve an +analogous sensitivity to the developer-practitioner-user experience of +democracy. There are many different ways to have a meeting or +deliberative session (e.g. asynchronous vs. synchronous). *Finding the +right formats for the situation will probably be important. And the +situation will often be different from “last time”.* + +The experiences of Mondragón — and recent events at OpenAI — highlight +the importance of informed and critical thinking in organizational +culture. In Mondragón, shifts in managerial ideology towards +'efficiency' (in parallel with the broader advent of neoliberalism) +created tensions with the cooperative's founding principles. In their +1996 book, Kasmirfootnote:[Sharryn Kasmir, The Myth of Mondragón: +Cooperatives, Politics, and Working-Class Life in a Basque Town. June C. +Nash, Editor. State University of New York Press, Albany, 1996.] notes +that "managers [had] shed their cooperativist ideology in favor of an +'efficiency' ideology," arguing for more "economistic or capitalistic +changes." This ideological shift undermined the cooperativist spirit, +and had it not been challenged, could have been devastating. + +Complementarily, recent OpenAI leadership drama demonstrates the +potential pitfalls when workers lack the full context for major +decisions. When OpenAI's board of directors briefly removed Sam Altman +from his role as CEO in November of 2023, most employees reacted based +on immediate concerns and personal +loyaltiesfootnote:[https://web.archive.org/web/20241006075739/https://www.wired.com/story/openai-staff-walk-protest-sam-altman/], +potentially overlooking deeper +ethicalfootnote:[https://perma.cc/M8FZ-2BET]^,^footnote:[https://perma.cc/8BCR-6XKJ] +or strategic issues that might have motivated the board's actions. + +The cooperative could establish or join a mutual aid fund among its +network of member organizations and independent developers. This fund, +inspired by Mondragón’s Lagun Aro social welfare systemfootnote:[Flecha +& Santa Cruz, 2011], could serve as a partial financial safety net. Each +member would contribute a small percentage of their monthly revenue or a +fixed amount, and the fund would be cooperatively managed. It could be +used for providing short-term loans or covering unexpected expenses. + +In addition to these formal structures, the cooperative could develop +'unwritten rules' to guide decision-making processes, particularly when +dealing with complex multi-stakeholder issues. These informal practices +could help balance the interests of different stakeholder +groupsfootnote:[Imaz, Freundlich, and Kanpandegi, 2023]. For example, +when a decision primarily affects one group of members (such as workers +or users), other stakeholders could voluntarily step back from the +decision-making process, allowing those most impacted to have a stronger +voice. This flexible approach, as seen in Mondragón cooperatives like +Ederlan Tafalla, Eroski, and Caja Laboral (now Laboral Kutxa), can help +maintain democratic principles while addressing practical challenges +that arise in multi-stakeholder organizations. These unwritten rules +would not replace formal governance structures but would complement +them, providing a cultural framework for collaborative decision-making. + +Financially, this structure could provide a foundation for the new +cooperative. Member organizations could contribute capital, either +through membership fees or by purchasing shares. + +As these various components matured and proved their value, they could +become more comprehensive. The educational initiative could become a +recognized training program or even partner with existing institutions, +the mutual aid fund could develop into a chartered +bank[multiblock footnote omitted]^,^footnote:[The transformative +potential of cooperative banking extends beyond software. Consider +semiconductor manufacturing: while conventional wisdom suggests that the +capital intensity of semiconductor foundries (>$20B for a leading-edge +fab) necessitates corporate ownership structures, this assumption +reflects current financial constraints rather than technical or economic +laws. A state-chartered cooperative bank could provide +non-self-amortizing loans to a worker-owned semiconductor foundry, +treating it as critical infrastructure rather than requiring commercial +returns. Such a foundry could achieve TSMC-level technical excellence +and economies of scale while operating under democratic ownership. This +isn't purely theoretical - the Tennessee Valley Authority demonstrates +how public financing can sustain technically sophisticated, +capital-intensive operations. The key limitation isn't technical +capability or economic efficiency, but rather our institutional +imagination regarding how to finance public goods. The same principles +could apply to other capital-intensive infrastructure like data centers, +telecommunications networks, or energy systems.], and the second-degree +cooperative structure could expand to include a wider network of +organizations. + +[arabic, start=6] +. {blank} ++ +____ +The Case for Worker-First Software Cooperatives +____ + +To address concerns about technology concentration and the potential +misuse of advanced technologies like LLMs, +cooperativesfootnote:[Worker-owned cooperatives are not new. From the +early Christian communities described in the Book of Acts, through +medieval guilds and monasteries, to the Rochdale Pioneers of the 19th +century, cooperative models have a rich history of providing +alternatives to dominant economic structures (Schneider, 2018). The +International Cooperative Alliance (ICA) traces the modern cooperative +movement back to 1844 (ICA, 2015, , p ix). +Software cooperatives can build upon this legacy.] could develop +open-source technological infrastructure, while understanding Frederic +S. Lee's concepts of market governancefootnote:[Frederic S. Lee, Ed. +Tae-Hee Jo, Microeconomic Theory: A Heterodox Approach. London and New +York: Routledge, 2017 at 66.]. As outlined above, a multi-stakeholder +approach provides a model — combining a second-degree cooperative +structure with educational initiatives and a mutual aid fund. However, +the complexity of balancing multiple stakeholder interests, maintaining +democratic processes at scale and longitude, and competing in a market +dominated by traditional corporate structures could present significant +hurdles. While cooperatives can offer promising alternatives, they are +not a panacea and will require ongoing adaptation and reflexive +operationfootnote:[Stacey & Mowles at 500]. + +The potential market for such cooperative ventures is significant; +platforms like GitHub boast over 100 million usersfootnote:[James +Governor, State of Open: 100m and counting. A UK conference that +matters. RedMonk, February 6, 2023.] as of 2023. We should also note +that enterprise adoption is often key to long-term success.footnote:[See +generally James Governor, Open Source Foundations Considered Helpful, +RedMonk, September 13, 2024. This article’s emphasis on enterprise trust +and adoption (via CNCF as described therein) implies that it is a key +factor in the long-term success and sustainability of open source +projects.] Alongside individuals and other worker-first cooperatives, +software cooperatives could market to larger enterprises with +sympathetic values, e.g., B Corporations. + +For example, a federation of software cooperatives could collaboratively +create and maintain open-source platforms analogous to GitHub. (Some +GitHub alternatives, such as Codeberg, already exist.) These platforms +would be designed to better accommodate collaborative ownership models. +Or, cooperatives could unite to develop artificial intelligence +technologies that prioritize explainability, dependability, and +alignment with public interest over corporate profit motives. By +applying production analysis techniques, and inter-cooperative +governance structures, cooperatives can ensure these technological +projects are economically viable and competitive with traditional +alternatives. + +This approach both addresses practical concerns and challenges +fundamental economic assumptions. By questioning assumptions such as +perfect information in markets and profit maximization as the path to +optimal social outcomes, cooperatives can articulate a vision of +economic value that includes social and environmental factors. This +critical perspective enables cooperatives to justify their alternative +approaches not just as ethical choices, but as economically sound +strategies for creating sustainable, democratic workplaces. In doing so, +they can advocate for federal and state policy changes that recognize +and support their structures. + +Even within a cooperative organization, dynamics will remain complex, +and will require adaptability and responsiveness to the often unplanned +realities of day-to-day operations. This means setting the stage(s) for +ongoing reflection and adjustment, where members are attuned to the +evolving patterns of their interactions and ready to modify structures +and practices as needed.footnote:[Stacey and Mowles at 447] At the +ensemble/shop/small-team level, a post-session retrospective may be +useful.footnote:[In a retrospective, the ensemble asks itself questions +such as "’Should we do more of what went well? Should we change what +didn't go well?’" Zuill & Meadows, 2022 at 25.] At the same time +(particularly in a remote work context): “Prefer action over endless +debate. We try it as soon as we have an idea instead of continuing to +debate it.”footnote:[Zuill & Meadows, 2022 at 110.] This nuanced posture +toward deliberation could build resilience and avoid the pitfalls of +rigid thinking and fixed mindsets. + +As software cooperatives develop alternative economic structures, they +should also recognize the current shift towards higher-level +abstractions, integrated developer experiences, and +Platform-as-a-Service (PaaS) in cloud offeringsfootnote:[Stephen +O'Grady, What AWS Tells Us About Heroku 2.0. RedMonk, June 23, 2021]. By +focusing on PaaS solutions, the cooperative could foreground user +experience while implementing a transparent, cost-plus pricing model. + +[arabic, start=7] +. {blank} ++ +____ +Imagine ubiquitous self-awareness, attention to detail, curiosity, and +cognitive flexibility +____ + +The evolution of Mondragón's structure illustrates why education and +continuous learning and exploration must be core to a software +cooperative. As Kasmir details, Mondragón grew from individual +cooperatives into a complex network with a Cooperative Congress. This +centralization was driven by the need to respond to economic crises and +increased competition from Spain's entry into the European Economic +Community. However, some workers perceived this shift as a "dissolution +of democracy," feeling that decision-making power was moving further +away from the shop floor. This (arguably context-specific) tension +between organizational efficiency and grassroots democratic control +parallels challenges in modern tech companies. At OpenAI, for instance, +the rapid growth of the company and the high-stakes nature of AI +development led to a governance crisis that the majority of employees +were ill-equipped to critically evaluate. + +Critical thinking is not just about developing individual skills, but +about creating organizational cultures and structures that encourage +healthy skepticism and thorough analysis. In Mondragón, workers +mobilized against attempts to widen salary disparities, demonstrating +the potential power of an engaged and thoughtful workforce. However, the +OpenAI situation reminds us that collective action, while powerful, +needs to be grounded in comprehensive understanding and careful +deliberation. In both cases, we see the need for organizational +structures that not only allow for democratic participation but also +ensure that participants have the knowledge and presence of mind to make +informed decisions about complex issues. + +These examples underscore the need for transparency, continuous +learning, and robust mechanisms for debate and dissent. They challenge +us to think about how to balance expertise with broad participation, how +to cultivate leadership that facilitates rather than dominates, and how +to ensure that democracy and solidarity can withstand rapid changes in +technological and animal spirits. + +Understanding how and why to build alternative economic structures +requires understanding the mutually reinforcing processes of capitalism +and racism - from the transatlantic slave trade to modern-day labor +market segmentation. Any attempt to create a more equitable economic +model must learn this history and its ongoing damages. For a software +cooperative, this could mean a journal or book club during work hours. +Such a forum could provide a space for members to engage with +contemporary scholarship that analyzes issues of racial justice through +a lens of racial capitalism. It might begin with Part One of +[.underline]#Resisting Borders and Technologies of +Violence#.footnote:[Mizue Aizeki, Matt Mahmoudi, and Coline Schupfer, +eds., Resisting Borders and Technologies of Violence, New York, NY: +Haymarket, 2024] Through readings and discussions, members could learn +how racism continues to shape the tech industry and the broader +political economy. + +[arabic, start=8] +. {blank} ++ +____ +Economic Analysis of Cooperative Models +____ + +While working to actualize alternative economic models, cooperatives +navigate existing market realities. Lee's (2017) market analysis reveals +why enterprises cannot survive through price competition alone - they +must develop governance mechanisms to ensure stable sequential +production.footnote:[Lee at 142] In other words: to stay in business, an +enterprise must continuously advance funds to buy inputs and pay +workers, then recover these costs through sales, only to advance funds +again for the next production period. This cycle must generate enough +revenue to not only cover costs but also maintain necessary reserves and +fund growth. If prices fall too low, or if the cycle is interrupted, the +enterprise cannot continue operating. Traditional firms develop +governance mechanisms like trade associations to prevent destructive +price competition from breaking this cycle. The second-degree +cooperative structure proposed earlier could enable similar market +stabilization while democratizing its implementation. It could help +reveal the complex dynamicsfootnote:[An examination of market governance +could involve studying pricing mechanisms, entry barriers, and control +structures within the industry. It could analyze how changes in pricing +affect the quantity of products or services sold (studying market demand +curves). It could use tools like the Herfindahl-Hirschman Index (Lee at +156) to assess the level of competition and identify potential +collaborators or competitors.] and structures shaped by established +players without replicating their monopolistic practices. In developing +such structures, cooperatives could find strategies to operate within +them and potentially reshape themfootnote:[Tankus, Nathan and Herrine, +Luke, Competition Law as Collective Bargaining Law (May 5, 2022). +Cambridge Handbook of Labour in Competition Law, Cambridge University +Press (2022), Available at SSRN: https://ssrn.com/abstract=3847377.]. + +This perspective aligns with Zhang et al.'s (2024) +findingsfootnote:[Zhang, J., Zamani, E. D., Gerli, P., & Mora, L. +(2024). Co-constructing cooperative value ecosystems: A critical realist +perspective. Information Systems Journal, 1–41. +https://doi.org/10.1111/isj.12549] on digital platform cooperatives +(DPCs). Their study identifies "co-constructing cooperative value +ecosystems" as a core category, emphasizing how DPCs are actively +creating new economic structures rather than simply operating within +existing ones.footnote:[Zhang et al.'s study identifies generative +mechanisms such as "collective identity and empowerment" and +"government-community symbiosis," illustrating how cooperatives can +foster change through both internal dynamics and external relationships. +Their focus on contextual conditions, including "grassroots mobilization +and advocacy" and "legislative frameworks for cooperative integration," +underscores the role of human agency and institutional structures in +shaping economic change.]^,^footnote:[The cooperative model could +potentially offer slower and steadier growth by maintaining strong +open-source principles. This approach could be particularly attractive +in the "Post-Valkey World," (Stephen O'Grady, +) where +there's increasing concern about the stability of open-source licenses.] +However, these structures must enable the cooperative to maintain +sequential production - generating sufficient revenue to cover costs and +fund continued operations while building necessary reserves. + +Cooperatives are not immune to external pressures and influences. In the +late 1980s, the impact of neoliberal and technocratic impulses was +tangible on the Mondragón shop floor. As one worker in Clima recounted: +"They said they were coming to organize the factory. They said Clima +would get seventy-five million pesetas more [a year] just by +reorganizing. They said that, on average, people had to increase +productivity by 18 percent. Some people had to increase 30 percent. They +said they were not going to make us work faster, just cut out dead +times." The pursuit of efficiency could lead to increased work +intensity, potentially undermining the cooperative's original goals of +worker empowerment and wellbeing. + +Kasmir (1996) describes how Arizmendiarrieta saw education as key to +"the emancipation of a class or of a people." However, in light of +recent experiences, we might expand this vision of education beyond +technical skills to include critical analysis of organizational +structures, ethical implications of technology, and the complexities of +governance. + +While cooperatives aim to advance social democracy, complex economic +systems cannot be fully controlled or predicted. Cooperatives could +adopt flexible approaches like cost-plus pricingfootnote:[A cost-plus +pricing approach could use the formula: p = EATC~B~ × (1 + r), where p +is the price, EATC~B~ is the enterprise average total cost at budgeted +capacity utilization, and r is the markup rate collectively determined +by the cooperative (see Lee at 159). The markup r would be established +through democratic processes, considering factors such as desired +reinvestment, community contributions, and fair worker compensation.]. +This approach aims to cover costs and generate profits for reinvestment, +worker benefits, and community initiatives.footnote:[The International +Cooperative Alliance (ICA) provides guidance on how cooperatives handle +financial matters, including raising capital, dealing with surpluses, +and managing reserves (ICA, +, +p 29, 2015). Software cooperatives could adapt these principles; they +might establish indivisible reserves to ensure long-term stability, or +develop innovative ways to raise capital, such as member investment +accounts or community shares. While engaging with larger tech ecosystems +and seeking funding, software cooperatives must vigilantly maintain +their autonomy (ICA, p 46, 2015). This might mean carefully structuring +partnerships with tech giants, ensuring that any external investments +come without voting rights, and maintaining majority member ownership +and control in all circumstances.] + +Cooperatives could form (or join preexisting) inter-cooperative +associations or federations inspired by traditional trade associations. +These structures could facilitate knowledge sharing, enhance market +influence, and promote ethical practices[multiblock footnote omitted]. +Unlike traditional trade associations that often prioritize profit +maximization, cooperative federations could balance economic viability +with societal goals.footnote:[This vision for inter-cooperative networks +builds upon a long tradition of cooperative federations. From medieval +guilds that set standards across towns to the International Cooperative +Alliance (ICA) formed in 1895, cooperatives have long recognized the +power of collaboration (Schneider, 2018). The ICA provides examples of +how cooperatives work together through federations and apex +organizations (ICA, 2015, , p 25). +Inter-cooperative governance structures could help address challenges of +coordination and competition. In the tech industry, this could manifest +as collaborative software development platforms.] + +While cooperatives offer promising alternatives to traditional business +structures, they operate within a broader economic and environmental +context that presents challenges. Since combustion engines became +widespread ~ 265 years ago, humans have sunk ~ 145 ppm-worth of CO~2~ +into the Earth’s atmosphere. Beneath these dry numbers is breathtaking +damage. Taking stock of the damage reveals that our individual +arrangements — e.g., our 401(k) accounts — intertwine with the global +infrastructure of fossil fuel extraction and combustion. + +The venture capitalist — anyone with a 401(k) — is perpetually in search +of their exit. There is no exit, and there is no outside. We are always +already part of an interconnected web of social, economic, and power +relationships.footnote:[Michel Foucault, _The History of Sexuality, +Volume 1_. See also Ballerinas on the Dole with Colleen Hooper, Money on +the Left. +https://moneyontheleft.org/2022/02/08/ballerinas-on-the-dole-with-colleen-hooper/]^,^footnote:[Worker-owners +should have a mechanism to “cash out” their equity, albeit through much +more constrained transaction volumes than the NYSE. In other words there +could be limits on transaction volume, size, timing, counterparty, +counterparty reserve level, and so on. Counterparties could be +restricted to affiliated cooperatives, or a single agent representing +the full cooperative membership.] Thinking that we can opt out of the +consequences of our choices — even the ones long ago made by “others” — +is delusional. + +Worker-owned cooperatives could be part of a reinvigorated public sphere +and civil society. As macroeconomists have pointed out,footnote:[William +Mitchell, “There is no need to issue public debt”, Blog post, 3 Sept +2015. +. +See also William Mitchell, L. Randall Wray, and Martin Watts, +Macroeconomics. Red Globe Press, 2019 at 499. See also ibid. at 533.] +monetary sovereigns can fund public programs like Social Security +without relying on debt issuance or the whims of financial markets. +Social Security (or an analogous public mechanism) could, therefore, +provide for retirees everything that the 401(k) does — even if every +publicly-traded company decided to go private and IPOs stopped +happening. Relying on speculative investments for retirement security is +both precarious and unnecessary when public solutions are +available.footnote:[To illustrate how this scenario is more plausible +than you might think, consider TreasuryDirect. This national institution +serves retail customers on a daily basis. TreasuryDirect could +automatically set up an account for every US person who does not already +have one. Similar to how it did for the Consumer Financial Protection +Bureau, Congress could authorize sufficient dollar transfers from the +Board of Governors of the Federal Reserve System in perpetuity for +TreasuryDirect to match savings deposits at 1:1, 2:1, 3:1, or any +multiple necessary for that saver to have a dignified retirement. (This +would involve amending Title 31 [Treasury], Title 26 [IRS data sharing], +and the Federal Reserve Act.)] + +Cooperatives present an alternative to traditional business structures +by distributing ownership among those who contribute their labor (and +there are far more types of labor than are typically acknowledged). This +distribution could influence, but would hardly control, complex +macroeconomic outcomes! Cooperatives should aim to equitably distribute +wealth in a constitutively high-demand, tight-full-employment, +guaranteed-jobs economy,footnote:[Pavlina R. Tcherneva, The Case for a +Job Guarantee. Polity, 2020.] and contribute to a green “just +transition”footnote:[Analogously during World War 2 in the US, labor +unions were important to keeping profit margins and executive +compensation in check; this is why the benefits of running the economy +hot did not all accrue to the already-wealthy.]. However, the actual +results cannot be precisely engineered; they will emerge from countless +local interactions, against a Federal Government fiscal policy backdrop +of formidable influence. + +Reimagining economic structures through cooperatives and other forms of +public power challenges the idea that current configurations are +inevitable or optimal.footnote:[Following is another example of a +suboptimal status quo. Given all that needs repair, the idea that +_involuntary_ unemployment is sometimes _necessary_ for the greater good +of inflation control seems more than a little preposterous. In other +words, people eager to work are being turned away because, supposedly +and incomprehensibly, nobody in their community can find anything for +them to do (or they could, but if they did, it would blow up the price +of gasoline and eggs).] The historical approach of critical +realist-grounded theory supports this challenge; the approach recognizes +that economic structures are historically contingent and shaped by human +decisions and actions. As Lee argues, historical change is not +predetermined or cyclical, nor does it follow any grand narrative or +inevitable path. Instead, it is open-ended and can take various forms; +it “can just only be change.”footnote:[Lee, 2017, p 30.] + +[arabic, start=9] +. {blank} ++ +____ +Maintaining Solidarity and Labor Connections +____ + +Mondragón's history underscores the importance of maintaining +connections with broader labor movements and fostering internal +solidarity, even as organizations grow and evolve. As Kasmir notes, +"After the [1974] Ulgor strike [leaders were fired via a majority vote], +cooperators had the reputation of not expressing solidarity with the +rest of Mondragón's working class, and they were seen as increasingly +isolated in their own privileged work world." + +The 2013 collapse of Fagor Electrodomésticos provides crucial lessons +about how solidarity mechanisms can become disconnected from effective +decision-making. While the cooperative maintained formal democratic +structures and inter-cooperative support systems, there emerged what +Ortega and Uriartefootnote:[Ortega Sunsundegi, I., & Uriarte Zabala, L. +(2015). Reios y dilemas del cooperativismo de Mondragón tras la crisis +de Fagor Electrodomésticos. LANKI, Instituto de Estudios Cooperativos, +Mondragon Unibertsitatea. Retrieved from http://www.lanki.coop] (2015) +describe as a growing divide between workers and what was nominally +their own enterprise. This organizational separation reflected deeper +ideological transformations: + +Las influencias de lo que algunos han The influences of what some + +llamado "la izquierda fordista" son have called "the Fordist left" + +palpables en este sentido. Es esta are palpable in this regard. + +una cultura de la izquierda que se This is a leftist culture that + +expande en la fase del capitalismo expands in the phase of welfare + +del bienestar, para quien los capitalism, for whom the factors + +factores del desarrollo económico of economic development are + +son un hecho dado al que no merece considered a given that does not + +la pena prestar demasiada atención, merit much attention. It focuses + +y que centra su acción en una instead on a dynamic of demands, + +dinámica reivindicativa en pos de pursuing greater gains and + +mayores conquistas y derechos para rights for the working class in + +la clase trabajadora en la lucha the struggle for a fairer + +por el reparto de la riqueza distribution of the economic + +económica generada. wealth generated. + +This pattern implies a breakdown of integrated decision-making. The +authors reveal how deeply this separation has been naturalized when +discussing challenges on the Governing Council, which is composed of +worker-members who maintain their regular jobs while serving on the +council: + +En estas circunstancias no es In these circumstances, it is + +extraño oír voces que explicitan not unusual to hear voices + +la falta de conocimientos highlighting the lack of + +y de competencias suficientes knowledge and adequate skills + +de los miembros de este órgano, of the members of this body, + +cuando en situaciones muy who, in very complicated + +complicadas, tienen que tomar situations, are required to + +decisiones muy difíciles sobre make very difficult decisions + +temas que en ocasiones tienen on issues that sometimes + +una dimensión técnica no fácil involve a technical dimension + +de comprender that is not easy to understand + +While Ortega and Uriarte propose giving council members more time and +support - reasonable tactical solutions - their framing implicitly +accepts a problematic division between technical and social expertise +that should never have existed in the first place. Instead of workers +participating meaningfully in strategic choices about their enterprise's +future, and seeing themselves as responsible for the enterprise's +sustainability, they increasingly related to management as traditional +labor, focused on defending benefits from an apparently separate +management structure, rather than engaging with fundamental business +challenges. + +This ideological separation reinforced and was reinforced by the growing +operational divide between technical and social governance. This +disconnect became particularly problematic during the 2007-8 financial +crisis, when: + +la caída del 65% the 65% drop + +del mercado español [provocó] in the Spanish market + +una reducción en la facturación [had] led to a reduction + +de FED de 800 millones de euros in FED's turnover of + +(de los 1.800 millones de euros 800 million euros (from + +en ventas alcanzados en el 2006 1.8 billion euros in sales + +a los 1.000 millones de euros in 2006 to 1 billion euros + +en 2008). in 2008). + +The global financial crisis not only devastated sales but exposed the +deeper cultural transformations within the cooperative. As Ortega and +Uriarte explain: + +Este proceso coincide, a su vez, This process coincides, in turn, + +con el relevo de la primera with the transition from the first + +generación de directores por una generation of directors to a new + +nueva generación de perfil "más generation with a "more technocratic" + +tecnócrata" y en el que el carisma profile, where the charisma and + +y la capacidad de liderazgo que leadership qualities attributed to + +se atribuyen a las generaciones previous generations are gradually + +anteriores se van diluyendo. fading. + +This transition led to what some veteran members characterized as +"cooperativismo neoliberal": + +En estas nuevas condiciones se afirma In these new conditions, it is + +que el pensamiento cooperativista said that cooperative thinking + +entra en declive y se abre paso "un is in decline, and a "neoliberal + +sistema cooperativista neoliberal" cooperative system" is emerging, + +en el que la gente empieza a pensar in which people begin to think + +más "en la cartilla, en los dineros, more "about their accounts, about + +en los intereses y no en la money, about personal interests, + +cooperativa". and not about the cooperative." + +This transformation might parallel what Hopper & Hopper term +'(so-called) Experts' - MBA-trained managers who prioritize financial +metrics over operational knowledge and integrated +decision-making.footnote:[While Ortega and Uriarte's description of the +'more technocratic' new generation of directors and the subsequent +decline of cooperative thinking in favor of financial considerations +suggests similar patterns, we would need more detail about these +managers' backgrounds, training, and specific approaches to be confident +of such an equivalence.] The shift Ortega and Uriarte document aligns +with broader patterns Hopper & Hopper identify in the degradation of +managerial practice. + +The solidarity mechanisms of the broader Mondragón network, while +well-intentioned, may have inadvertently exacerbated this dysfunction. +According to some interviewees, inter-cooperative monetary aid may have +had + +un efecto anestésico, an "anaesthetic" effect — + +en el sentido de que meaning it may have + +han evitado una reacción más prevented a stronger response + +contundente por parte de la from the cooperative. They + +cooperativa, y el pensamiento also think that if there had + +de que si hubiera habido hace been a little less solidarity + +años algo menos de solidaridad years ago, perhaps Fagor + +se hubiera actuado, quizá, de Electrodomésticos would have + +una manera más responsable acted more responsibly by + +empujando a Fagor being "pushed to do its + +Electrodomésticos "a hacer homework." + +sus deberes". + +These challenges culminated in a profound disconnect between workers and +what was nominally their own enterprise. The authors note: + +Uno de los hechos que especialmente One of the facts that was + +llamaba la atención en el contexto especially striking in the + +de las manifestaciones, las context of the demonstrations, + +declaraciones públicas y entrevistas public statements, and media + +en los medios de comunicación de interviews of Fagor + +socios de Fagor Electrodomésticos, Electrodomésticos partners was + +era la gran distancia que reflejaban the noticeable distance that + +los socios respecto a lo que, en the partners displayed regarding + +cuanto a la propiedad por lo menos, what, at least in terms of + +era su propio proyecto de empresa. ownership, was their own + +business project. + +This pattern, where workers react to decisions rather than participating +in their formation, continues to manifest in contemporary tech +organizations. Like Fagor's workers, OpenAI employees lacked the +integrated context needed for genuine strategic participation when +OpenAI's board briefly removed Sam Altman as CEO in 2023. As suggested +earlier in section 5, workers' immediate solidarity with the Altman +seems to have prevented deeper consideration of governance issues. Both +cases demonstrate how formal deliberative structures, when separated +from day-to-day operational integration, can lead to strategic +blunders.footnote:[Admittedly, 2007-era consumer appliance manufacturing +at the world's largest industrial worker cooperative is a different +context from a 2023 GenAI Silicon Valley startup.] + +Our proposed ensemble programming and rotation practices aim to address +these failure modes directly by preventing the separation of technical +and social governance, and maintaining radically-integrated +decision-making to prevent class formation. However, these practices +would probably need be complemented by robust mechanisms for solidarity +during crisis. The Fagor experience shows that formal democratic +structures alone are insufficient. + +The goal is not just to prevent class formation but to create conditions +where genuine strategic thinking emerges from collective practice rather +than being imposed from above. As Stacey and Mowles remind us, +organizational patterns emerge from countless local interactions. The +Fagor case shows how these patterns can gradually shift toward +separation and hierarchy even within formally democratic structures. Our +challenge is to create patterns that consistently regenerate integration +and collective capability instead. + +[arabic, start=10] +. {blank} ++ +____ +Problematizing the Lone Genius Myth +____ + +Software development demands collaborative effort, yet the tech industry +clings to organizational structures that privilege individual authority +over collective wisdom. In 2024, the U.S. tech sector remains enthralled +by the "genius founder in a garage" narrative, despite evidence that +this mythology undermines both innovation and productivity. + +Consider a software development team: Their work is not just coding. +Instead, they engage in what Lee identifies as an integrated production +process characterized by: + +* {blank} ++ +____ +Real-time synthesis of diverse knowledge domains (technical, financial, +user experience, business logic) +____ +* {blank} ++ +____ +Inseparability of individual contributions from the collective output +____ +* {blank} ++ +____ +Self-reinforcing generation of social relationships and knowledge +capital +____ + +Lee's analysis of production's social dimension challenges both the myth +of the solitary programmer and the false technical/non-technical +dichotomy. Even a seemingly straightforward feature implementation +requires simultaneous consideration of business requirements, +infrastructure constraints, security architecture, user experience +design, and financial parameters. Each decision point involves multiple +domains of expertise working in concert, making artificial +organizational divisions particularly destructive in software +development. + +Leslie et al. show how fields that prize “innate” talent systematically +exclude women and minorities.footnote:[Leslie et al., "Expectations of +brilliance underlie gender distributions across academic disciplines," +Science, 2015] Gould demonstrates that such beliefs about natural +ability serve to disguise and reinforce existing social +hierarchies.footnote:[Gould, The Mismeasure of Man, 1996] When the +software industry worships individual genius, it therefore does more +than perpetuate a false narrative — it actively undermines innovation, +inclusion, and democratic values. + +[arabic, start=11] +. {blank} ++ +____ +The Two-Track Trap +____ + +The persistent separation between "specialist" and "traditional +consulting" tracks at major firms (as of 2023) exposes a fundamentally +Taylorist view of technical work - treating it as labor to be exploited +rather than a core capability to be cultivated. This mindset is evident +at "Big Four" consulting firms, where "specialists" face higher billable +hours yet lower compensation than their "traditional" colleagues. Until +COVID-19, population-scale changes in consumption, and unprecedented +federal macroeconomic intervention disrupted this pattern, the message +was clear: technical expertise was a resource to extract, not develop. + +Combined with "up or out" advancement policies, this two-track model +produces a toxic dynamic: technical staff face overwork without paths to +influence, while managers lose technical competence. This squanders +human potential and undermines organizational performance. + +Today's U.S. political economy fundamentally weakens democratic +participation by elevating individual tech oligarchs and venture +capitalists above collaborative decision-making processes. The +Jobs-Wozniak garage origin story has transcended myth to become a +destructive organizational template that distorts power relationships +throughout the industry. While individual contributions matter, our +current legal frameworks and institutional norms uncritically prioritize +them, creating a systematic bias against the collective nature of +technological innovation and production. We should think of +__all__footnote:[There is a small percentage of individuals, less than +2% I would hazard, who are straight-up assholes (see generally Robert I. +Sutton, The No Asshole Rule, Balance, 2010). More formally, we might say +that some people score highly on all three of the “socially aversive” +personality traits - psychopathy, Machiavellianism, and narcissism (see +e.g. Daniel N. Jones and Delroy L. Paulhus, Introducing the Short Dark +Triad (SD3): A Brief Measure of Dark Personality Traits, 2014). Spotting +someone like this can be tricky, and misidentifying them (false positive +or false negative) is unfair and costly. My point, without going too far +down this rabbit hole, is that although we should always work to bring +out the best in others, it would be naive to fight every single battle. +I think that people with a pattern of toxic behavior are an important +reason why new businesses fail. The best approach that I know of is to +build a robust culture of skillful communication, and practice +thoughtful, interdisciplinary research and development.] working people +— _not_ just the founders — as rockstars. Not everyone has fully +articulated their rock-stardom, but everyone has it in them (caveated by +footnote 64). Leadership co-creates the stage.footnote:[One way to +counteract structural biases towards commons enclosure by capital would +be to prevent potential 'rug pulls' in open-source projects. A software +cooperative could (a) adopt the Mozilla Public License (MPL) or Affero +General Public License (AGPL) for its open-source software; and (b) +assign the copyright to an outside open-source advocacy organization. +This approach could provide legal protection for the cooperative's +open-source commitments. This is not to suggest that all software should +be open-source all of the time. The point is that if you are going to +build a healthy community, then you should be intentional, deliberate, +and clear about what you truly value.] + +[arabic, start=12] +. {blank} ++ +____ +Important Side Note on Professionalism, Propriety, and Profanity +____ + +If you read footnote 64, you encountered the word _asshole_. We used +this word because we believe it is the best tool for the job. Later, in +section 16, we use the word _bullshit_, referencing David Graeber’s +brilliant formulation “bullshit jobs.” Our philosophy on profane words +in the workplace is that (1) a little goes a long way; and (2) when used +carefully, they can prevent or curtail profane *deeds*. Moreover, there +is a *big* difference between discussing _assholery_ as a personality +trait we observe in a subset of people generally, on the one hand, and +on the other, associating this word even indirectly with *particular* +people with whom *we personally* have some form of relationship. We make +the same caution for _bullshit_; it is one thing to talk about the +sociological phenomenon of _bullshit jobs_; it is quite another to +associate aloud this word with particular positions or roles already +existing in our workplace! + +[arabic, start=13] +. {blank} ++ +____ +Learning from the Great Engines +____ + +The Great Engine companies, before falling prey to what Hopper & Hopper +call "the Cult of the (so-called) Expert",footnote:[Hopper & Hopper, The +Puritan Gift, 2007] demonstrated how organizations can balance clear +authority with broad participation and initiative. Our rotation system +aims to recreate this balance in an explicitly democratic framework. + +Current organizational divisions create harmful silos that prevent +natural integration across functions: technical insights don't shape +strategy, client needs fail to guide technical direction, operations +remain disconnected from architecture, and financial considerations +poorly inform development. This fragmentation contradicts the Great +Engine companies' successful model of organically interconnected +work.footnote:[Hopper & Hopper, The Puritan Gift, 2007] + +Organizations artificially separate capabilities that naturally +reinforce each other: technical mastery from coordination skills, client +engagement from systems expertise, and operational knowledge from +strategic planning. This fragmentation produces what Gregor Hohpe calls +an "hourglass shape" of organizational understanding.footnote:[Gregor +Hohpe, The Software Architect Elevator, 2020] Yet his suggestion to add +an "architect" role would at worst be another artificial silo, and at +best be a restoration of the middle manager to their former glory - that +is, the glory at the pre-1970 “Great Engine” companies documented by +Hopper & Hopper, before MBA programs ruined what it means to be a middle +manager. Either way, a class hierarchy is left intact. + +[arabic, start=14] +. {blank} ++ +____ +The Rhythm of Work +____ + +Treating technical work as an isolated specialty separate from core +business functions creates artificial barriers that undermine both +technical and organizational excellence. However, not all functions +benefit equally from rotation. While ensemble programming may thrive on +frequent rotation, client-facing roles demand stability. Client +relationships depend on trust, shared context, and dependability - areas +where rotation would be more limited. + +Recognizing that distinct types of work have distinct natural +requirements differs fundamentally from imposing artificial divisions. +While some work thrives on frequent rotation and fresh perspectives, +other work needs deep relationship continuity. The challenge lies in +understanding these natural shapes while preventing them from enabling +class stratification. For example, the next section explains why the +rhythm of client relationship management is fundamentally different from +the rhythm of a mob programming session. And below, in section 16, we +categorize various functions into “suitable for rotation” versus +“suitable for voting” - however, this exercise is firstly meant as a +demonstration; different practitioners would probably arrive at slightly +different breakdowns (perhaps an opportunity to employ an aggregative +mechanism). + +[arabic, start=15] +. {blank} ++ +____ +Crafting Client Connections +____ + +While many technical functions would benefit from rotation, client +relationships need continuity. Trust and shared understanding develop +over time, making frequent transitions counterproductive. Yet this +necessary stability creates risks: in traditional organizations, client +relationships often become exclusive channels where key contacts +accumulate concentrations of knowledge and power. When these individuals +depart or change roles, valuable institutional memory vanishes, harming +both client service and organizational effectiveness. + +The "Single External Contact Approach" would organize client +relationships such that: + +* {blank} ++ +____ +One member-worker serves as “single contact” for at most one client +contact +____ +* {blank} ++ +____ +A dedicated-yet-rotating support team of worker-members backs each +single contact-external counterpart pair +____ +* {blank} ++ +____ +Team members rotate secondary roles to share knowledge +____ + +In addition to decentralization, the purpose of this system is not to +enforce mathematically precise one-to-one relationships - which would be +neither practical nor desirable - but rather to protect worker wellbeing +by preventing client communications from becoming overwhelming. The +'single contact' designation is primarily about establishing clear +channels and boundaries. Technical tools like email filtering would +support this - for example, routing emails from non-designated client +contacts to separate queues rather than directly to a member's inbox. +While members may naturally interact with multiple external contacts in +various ways, having designated primary relationships may help maintain +sustainable patterns of client engagement while preventing it from +becoming all-consuming. + +This system could afford both stability and adaptability in client +relationships. Small, consistent teams would support each client while +role rotation enabled knowledge transfer. For example: Alice serves as +single contact for Contact Y at Client X, supported by Bob and Charlie. +The team maintains relationship continuity through: + +* {blank} ++ +____ +Rotating support roles +____ +* {blank} ++ +____ +Documented client information and meeting minutes +____ +* {blank} ++ +____ +Skill transfer (e.g., Alex shadowing Bob before transition) +____ + +With Alice as single contact for Contact Y at Client X, she builds +consistent trust while Bob and Charlie provide active support. The +support team structure enables smooth transitions - for instance, Bob +may shift to single contact for Contact W at New Client Q, with new +worker-member Alex taking his previous role. Clear, simple protocols +guide all transitions, whether planned or circumstantial. + +Documentation, knowledge-sharing sessions, collaborative support work +(pairing and mobbing), and informal networks would hopefully ensure +information flows through the organization such that everyone feels like +they know what they need to know (and that those feelings are not +misleading). This organizational structure could balance relationship +stability with distributed knowledge and power. The idea is that +everyone is connected to the clients, but because the connection is +constrained to a single contact per person, everyone also has plenty of +bandwidth for other types of work. Democratic principles would guide +operations while celebrating normal human connections. + +[arabic, start=16] +. {blank} ++ +____ +Democracy in Action +____ + +The cooperative could manage its diverse work patterns through several +mechanisms, which might include: + +* {blank} ++ +____ +Every member does ensemble programming +____ +* {blank} ++ +____ +All contribute to strategic discussions +____ +* {blank} ++ +____ +Each maintains _just one_ relationship with an external contact who is a +single natural person (if there are not enough client contacts, then a +perhaps a prospect, or perhaps a colleague at another firm) +____ + +* {blank} ++ +____ +Collective decisions on major changes +____ + +The cooperative should distinguish between two aspects of democracy: +decision-making and reality-testing. Democratic decision-making involves +collectively choosing courses of action - for instance, voting to +allocate hours for developing a new documentation system. But democratic +reality-testing is about maintaining the collective ability to honestly +evaluate whether that system is serving any real purpose or has become +mere ritual. Concretely, democratic decision-making could look like: + +* {blank} ++ +____ +Voting on resource allocation for new initiatives +____ +* {blank} ++ +____ +Setting parameters for rotation schedules +____ +* {blank} ++ +____ +Establishing or updating the compensation structure +____ + +Democratic reality-testing could look like: + +* {blank} ++ +____ +Mob programming sessions where impractical processes are immediately +exposed +____ +* {blank} ++ +____ +Regular opportunities for members to question whether established +systems still serve their purpose +____ +* {blank} ++ +____ +MVP demonstrations where proposed solutions must prove their value +through working implementations +____ +* {blank} ++ +____ +Protected spaces for discussing gaps between stated and actual value of +work - while mindful of human cognitive bias to presume criticism and +skepticism is more authoritative than constructive and positive +proposals — and the underappreciated value of negative results +____ + +The mob programming pattern may be powerful for reality-testing because +it is harder to maintain self-deception when working together in +real-time. When six people are implementing a process at the same +keyboard at the same time, its actual value (or lack thereof) would +become quickly apparent. + +The two-track trap introduced earlier, in section 11, tends to generate +what Graeber calls "bullshit jobs" - roles that exist primarily to +manage other managers.footnote:[Graeber, Bullshit Jobs: A Theory, 2018] +This happens through a predictable pattern: + +[arabic] +. {blank} ++ +____ +Management becomes separated from technical work +____ +. {blank} ++ +____ +This separation creates communication problems +____ +. {blank} ++ +____ +New roles are created to address these problems +____ +. {blank} ++ +____ +These new roles create further separation and communication issues +____ +. {blank} ++ +____ +The cycle continues, creating layers of bureaucracy +____ + +As Graeber notes, many people in such roles privately question whether +their jobs need to exist at all.footnote:[Graeber, 2018] This isn't +because coordination itself is unnecessary, but because the separation +of coordination from work creates the need for additional coordination +of coordination. + +The Springfield Armory demonstrates that organizational effectiveness +requires balancing structured coordination with inclusive +participation.footnote:[HH at 50] While strategic decisions warrant +democratic processes, routine operations often function better through +streamlined methods like rotation. Success depends on aligning decision +mechanisms with decision types. In other words, rather than +micromanaging daily operations, democratic oversight would focus on +establishing and updating protocols. This approach mirrors both +Springfield's operational efficiency and the emergent leadership model +seen in ensemble programming, where authority flows from active +participation rather than formal appointment. + +Rotation challenges the false dichotomy between technical and managerial +work. Instead of isolating technical expertise as a resource to exploit, +rotation develops both technical and leadership capabilities across the +organization, creating more effective operations by recognizing these +skills as complementary rather than separate domains. + +*Rotation examples (short-term decisions):* on-call duties, +documentation curation tasks, regular maintenance work, coordinating +Single External Contact Approach + +Rotating as a way of preventing bureaucratic accumulation: + +* {blank} ++ +____ +No permanent coordination roles to defend +____ +* {blank} ++ +____ +Direct experience prevents unnecessary processes +____ +* {blank} ++ +____ +Fresh perspectives through regular changes +____ +* {blank} ++ +____ +Natural simplification of procedures +____ +* {blank} ++ +____ +Immediate feedback on process effectiveness +____ +* {blank} ++ +____ +Integration of technical and managerial capabilities +____ + +*Voting examples (long-term decisions):* significant process changes, +resource allocation principles, long-term strategic plans + +Voting as a way of preventing bureaucratic accumulation: + +* {blank} ++ +____ +Deeply and broadly understood legislative process +____ +* {blank} ++ +____ +Auditable (within reason) decision-making processes +____ +* {blank} ++ +____ +Tunable rotation patterns +____ +* {blank} ++ +____ +Power to modify coordination protocols +____ + +The two-track antipattern is not new. Taylor's attempt to separate +planning from execution led to similar proliferation of coordinators +coordinating coordinators. As we saw in the Great Engine companies, the +solution is not to eliminate coordination but to integrate it with the +work being coordinated.footnote:[Hopper & Hopper, The Puritan Gift, +2007] + +The Japanese _kacho_ system offered one approach to this integration, +creating section heads who maintained both technical competence and +coordination responsibilities.footnote:[Ibid., discussion of Japanese +management practices at 115] However, the cooperative rotation system +democratizes this integration across overlapping sets of members, +encouraging leadership capabilities to develop naturally alongside +technical skills throughout the organization. This management philosophy +strengthens both personal and organizational capabilities. Individual +workers develop hands-on expertise alongside strategic thinking skills. +While maintaining their technical proficiency, they contribute to +operational and strategic decisions. + +Flattened hierarchies and dispersed expertise could yield agile +responses to market changes while reducing administrative overhead. This +approach aims to preserve technical excellence by harmonizing individual +contributions with collective judgment. The outcome could be an +efficient organization that maintains essential coordination without +succumbing to bureaucratic excess. Beyond its democratic merit, this +model might deliver superior results. + +[arabic, start=17] +. {blank} ++ +____ +Expertise Without Empire +____ + +Developing deep expertise is crucial for any organization. However, +certain types of expertise, finance and auditing among them, can become +chokepoints for democratic control.footnote:[Michael Power, The Audit +Society; Townley, Reframing Human Resource Management; Jackall, Moral +Mazes: The World of Corporate Managers; Rose & Miller, Governing the +Present: Administering Economic, Social and Personal Life] The challenge +is to develop expertise while preventing it from becoming a basis for +class-like divisions or inappropriate authority. + +Financial expertise can become a power base through several mechanisms: +control over resource allocation, monopolistic interpretation of +financial metrics, and the mystification of operations behind +mathematical complexity. A cooperative might addresses these risks by +pioneering "finance mobs," where non-financial workers participate +directly in financial operations. However, some finance operations lack +collaborative tools that would be needed for regulatory compliance (the +need for a designated accountable person). The cooperative could begin +experimenting with collaborative financial work in limited, low-risk +contexts. Like the early mob programming experiments at Hunter +Industries, it would start small. + +As we discussed above in section 15, client relationship management +requires special consideration. Unlike purely technical functions, +client relationships involve deep trust, shared context, and emotional +investment that make frequent rotation counterproductive. As we +understand from clinicians in the field of healthcare, particularly +mental healthcare, having to repeatedly rebuild trust relationships +creates unnecessary strain for both parties. + +A cooperative could address these challenges through a system of +dispersed responsibility. At its core is the Single External Contact +Approach, where each member serves as the single contact for at most one +contact at _at most_ one client. This arrangement maintains relationship +continuity as the default. + +Worker-members could request relationship reassignments, subject to some +review mechanism. Support roles would enable new members to gain client +relationship experience before taking on single contact +responsibilities. + +Financial operations have regulatory requirements for clear +accountabilityfootnote:[Allen Holub problematizes the emphasis placed on +accountability in workplace and corporate culture (#NoAccountability, 11 +July 2022, +). +It stands in some tension with Hopper & Hopper’s approving quotation of +Florence Nightingale: “someone has to be in charge”. What they and she +mean are that someone needs to be dependable and able to explain the +situation. What they perhaps underappreciate are the power dynamics that +Holub criticizes.]; effective collaboration would require supporting +tools that don't yet exist. Rather than trying to specify these tools up +front, a cooperative could follow the pattern that worked for mob +programming: let practitioners experiment with existing tools, observe +what works, and gradually develop purpose-built tools that support +emerging good practices. Perhaps look to models like surgical teams and +aircraft cockpit crews, which successfully combine clear individual +accountability with intensive real-time collaboration. Instead of trying +to mob everything immediately, the cooperative could identify specific +financial activities that could benefit most from real-time +collaboration, such as: + +* {blank} ++ +____ +Complex financial modeling where multiple perspectives could catch +errors +____ +* {blank} ++ +____ +Budget planning sessions where diverse input is valuable +____ +* {blank} ++ +____ +Risk assessment activities where different viewpoints are crucial +____ + +Successful financial collaboration requires more than just structural +changes. The cooperative could develop a culture where questions are +welcomed, mistakes are treated as learning opportunities, knowledge +sharing is appreciated, and clear accountability coexists with +collective responsibility. + +Progress toward more collaborative financial practices could be +evaluated based on outcomes such as error reduction, regulatory +compliance, and audit performance. This approach is intended to account +for the evolutionary nature of successful organizational innovations, +the need for tools and practices to co-evolve, the reality of regulatory +requirements, the importance of starting small and learning from +experience, and the critical role of cultural development. + +Following Lee's analysis of production as inherently +interconnected,footnote:[Lee., p. 41] rotation could develop expertise +throughout the organization while democratic processes could ensure it +serves collective needs. This could create "distributed expertise" - +where deep knowledge enriches the collective without creating +overpowering chokepoints. + +This integrated understanding might manifest as: + +* {blank} ++ +____ +Financial workers rotating through software development +____ +* {blank} ++ +____ +Developers participating in financial operations as tooling capabilities +mature +____ +* {blank} ++ +____ +Everyone communicating with a client sooner or later +____ +* {blank} ++ +____ +Deep knowledge sharing +____ +* {blank} ++ +____ +Major decisions combining expertise with democratic process +____ +* {blank} ++ +____ +Democratic oversight ensuring expertise serves collective needs +____ + +The mechanics of rotation should be structured to prevent both +bureaucratic accumulation and institutional amnesia. When individuals +monopolize technical direction or weaponize code standards as barriers +to entry, they create de facto authority. This problem compounds when +system complexity or historical codebase knowledge becomes a source of +unchecked influence. + +Once a system or process has been approved for scaling beyond its MVP, +rotation could become mandatory but gradual (e.g. “no less than 10% and +no more than 40% of the team may rotate out in any given quarter”), +ensuring continuity of knowledge while preventing entrenchment. Original +creators would all eventually rotate to other work, but not +simultaneously - and they could still come back later. New members must +overlap with existing team members for effective knowledge transfer. + +This pattern may help ensure that: + +* {blank} ++ +____ +No one builds permanent fiefdoms or power trips around particular +systems +____ +* {blank} ++ +____ +Knowledge is constantly distributed throughout the cooperative +____ +* {blank} ++ +____ +Fresh perspectives regularly question existing processes +____ +* {blank} ++ +____ +Systems remain comprehensible to new people or risk elimination +____ + +In traditional organizations, Infrastructure & Operations expertise +often consolidates into informal power centers. This manifests through +privileged control of deployments, exclusive production access, and +crisis response authority. Most concerning is when feelings of +employment precarity motivate accumulating technical debt for added job +security—where critical systems are understood by only select +individuals. Cooperatives could prevent such power accumulation through +structured responsibility-sharing: rotating on-call duties and +infrastructure roles. + +The prevention of power concentration may require multiple reinforcing +mechanisms. In addition to the cooperative deliberately maintaining zero +permanent roles, every worker-member could receive an equal budget for +research, development, learning, and teaching - preventing financial +resources from becoming a source of power imbalance. + +[arabic, start=18] +. {blank} ++ +____ +Building the Collaborative Space +____ + +Drawing on Arendt's concept of "spaces of appearance" - where +individuals reveal themselves through speech and action - we seek to +enable self-expression while meeting operational needs, by recognizing +that different work modes benefit from different environments. + +The cooperative could greatly benefit from a continuously refined +physical and digital workspace. The layout could integrate focused quiet +zones with collaborative open areas, supporting diverse work modes, from +real-time ensemble programming to independent research. Both physical +and virtual spaces could be configured to enable formal and informal +knowledge exchange. Digital systems could maintain clear, accessible +engineering documentation, complemented by scheduling tools for rotation +management. + +Financial Collaboration Spaces. The cooperative's physical and digital +infrastructure could also support the gradual development of +collaborative financial practices. This means: + +* {blank} ++ +____ +Dedicated areas equipped for financial ensemble work with appropriate +privacy and security +____ +* {blank} ++ +____ +Digital tools that maintain clear audit trails while enabling real-time +collaboration +____ +* {blank} ++ +____ +Infrastructure for maintaining parallel traditional and experimental +accounting processes during transition periods +____ + +Client relationship spaces could serve a different but equally vital +function. These areas would support the development of deep +understanding between each single contact and their external +counterpart, while providing opportunities for support team members to +contribute fresh perspectives without disrupting established +relationships. + +Coordination spaces might connect these different work modes. Meeting +facilitation roles could rotate regularly, while the composition of +meeting attendees could evolve gradually to maintain both continuity and +fresh input. + +We should note that perennial changes in team/committee/meeting +composition does not _have_ to mean a constant sense of instability +(although that does seem like a very important risk to beware of). +People could rotate amongst a limited pool of other people. Thus someone +rolling off a team would not be saying “Sayonara” but rather “See you +soon!” + +Modulating these different patterns of work while maintaining a positive +culture implies several mechanisms. For example, if an ensemble isn't +working - maybe people are talking over each other, or someone's +consistently dominating discussion - the members involved could discuss +it in their end-of-day retrospective. These short sessions might focus +on what went well that day and how to “turn up the good” as Woody Zuill +says. Issues that affect multiple teams might need broader discussion, +perhaps via asynchronous chat. + +A software cooperative faces exciting territory in expanding ensemble +practices beyond programming. Many tasks have never been attempted as +ensemble work. When encountering a new type of work, members could try +it first as an ensemble, document the experience, and then adjust based +on what was learned. It's perfectly sensible to use traditional methods +after genuine experimentation (try it the weird way first). + +[arabic, start=19] +. {blank} ++ +____ +Beyond Our Walls +____ + +While the ensemble can embody democratic values in daily small-team +(shop-level) operations, these principles could also be reflected in the +cooperative's overall (enterprise-level) governance mechanisms. Firstly, +there are intriguing possibilities for quite large ensembles (e.g. 30+ +persons). Secondly, in the less experimental realm, overall governance +mechanisms can draw from cooperative practices, such as electoral +committees to oversee free and fair elections, board skills audits to +ensure competent leadership, and governance codes. As the International +Cooperative Alliance emphasizesfootnote:[International Cooperative +Alliance, Guidance Notes to the Co-operative Principles, p 19. 2015. +https://perma.cc/Y2RE-3MUA], “Democratic member control is protected and +enhanced by effective co-operative legislation.” Software cooperatives +should establish bylaws that detail voting procedures, term limits for +elected positions, and mechanisms for member proposals and +decision-making. + +The cooperative's commitment to democratic values could extend beyond +its internal practices, shaping its interactions with the broader tech +ecosystem and informing its approach to competition and innovation. +While leveraging adversarial interoperability to compete in the tech +landscape, the cooperative should respect user privacy. It should +observe fair competition practices, advocacy for open standards, and a +commitment to transparency. The cooperative should ensure its +interoperability practices genuinely promote competition and user choice +rather than inadvertently consolidating power.footnote:[See Cory +Doctorow, The Internet Con: How to Seize the Means of Computation, 2023, +at 55.] By maintaining a long-term vision of a more open and fair tech +ecosystem, the cooperative could demonstrate that it is possible to +compete effectively without resorting to the monopolistic practices it +aims to challenge. This stance could differentiate the cooperative in +the long run. + +[arabic, start=20] +. {blank} ++ +____ +Engaging with Policy and Financial Institutions +____ + +While cooperatives aim to create alternative economic structures, they +can also engage strategically with government policy. Cooperatives could +advocate for supportive policies, such as preferential tax treatment, +access to public contracts, or legal recognition of cooperative +governance structures. Cooperatives could push for antitrust policy that +recognizes the value of smaller, democratically-owned enterprises in +maintaining competitive markets.footnote:[Governments also sometimes +attempt to co-opt or control cooperative movements. For example, in the +United States during the McCarthy era, some rural electric cooperatives +were pressured to prove their 'American' credentials and distance +themselves from leftist ideologies (Schneider, 2018).] + +Cooperatives navigate a financial landscape shaped by _as-is_ fiscal and +monetary policy. Some recently-unearthed history of the Federal +Reservefootnote:[Nathan Tankus, Revealed: The Federal Reserve's Secret +1973 Plan to Bailout the Saving & Loan Industry That Very Nearly +Happened. Notes on the Crises Blog, 24 Sept 2024. +] +inspires us to suggest inclusive emergency lending. The Federal +Reserve's 1973 plan to provide emergency liquidity support to the entire +Savings & Loan industry via the Federal Home Loan Banks^80^ demonstrates +the potential for central banks to support specific economic sectors. +Cooperatives could advocate for the inclusion of worker-owned +enterprises in such emergency lending programs, ensuring they have +access to crucial liquidity during economic crises. + +Beyond engaging with central bank policy, cooperatives could proactively +establish relationships with cooperative-friendly financial institutions +from inception. Creating mutual aid agreements with other cooperatives +for emergency lending and shared resources could provide an alternative +to traditional financial power structures. These relationships should be +built before they're needed - the time to establish credit lines is +before facing potential predatory pricing from competitors. + +Cooperatives could also work to create cooperative-centered financial +institutions (also suggested earlier, in Section 5, and in footnote 29). +Many essential social services (like kindergartens, elder care, and +Linux) cannot generate sufficient revenue for conventional loan +repayment, even with cross-subsidization from more profitable +cooperative ventures. This is not a flaw in these goods and services - +it reflects their fundamental nature as public goods that shouldn't be +subject to market logic. + +Rather than treating this as a problem to be solved through creative +financial engineering or alternative currencies, cooperative banks could +embrace their potential role as interfaces between public funding and +social provisioning. A cooperative bank could: + +[arabic] +. {blank} ++ +____ +Act as a conduit for public funding, using its chartered status and +regulatory compliance infrastructure to efficiently channel public +resources toward social needs +____ +. {blank} ++ +____ +Provide transparent accounting and democratic oversight of how public +resources and funds are used, ensuring accountability to both government +agencies and local communities +____ +. {blank} ++ +____ +Document the real economic value created by social services, without +requiring them to meet impossible profitability targets +____ +. {blank} ++ +____ +Structure the financial flows to maximize social benefit rather than +financial return +____ +. {blank} ++ +____ +Complement rather than replace public funding, while improving its +democratic character +____ + +This approach recognizes that the real constraints on social services +are not financial but material - the availability of skilled workers, +suitable facilities, and necessary supplies. When these real resources +exist, the role of a cooperative bank is not to make social services +"profitable" but to facilitate their provision through a combination of +public funding and democratic governance. + +Rather than trying to replicate traditional banking's focus on +self-amortizing loans and profit generation, cooperative banks could +pioneer new forms of hybrid public-cooperative finance. By interfacing +between public funding sources and cooperative service providers, they +can help build a more democratic economy that truly serves social +needs.footnote:[Just as William Edwards Deming in Japan showed how +letting workers stop the production line to address defects led to +better manufacturing processes (Steve Keen & Phil Dobbie, Co-ops change +the game, Debunking Economics Podcast, Oct 19, 2024), cooperative banks +could empower their workers to identify and address systemic issues in +banking practices. As Keen notes, when workers in Japanese factories +could stop the line, "The worker explains what's failing... and then the +idea gets implemented, the worker gets a bonus out of it, and even +people working in a production line found their jobs interesting." This +principle of worker empowerment and process improvement could be adapted +to banking operations.] + +Software cooperatives might leverage international recognition and +support when advocating nationally. The United Nations and the +International Labour Organization (ILO) recognize cooperatives. ILO +Recommendation 193 on the Promotion of Cooperatives provides a framework +for governments to develop supportive policies for +cooperativesfootnote:[ICA, Guidance Notes to the Co-operative +Principles, +, +p 49, 2015.]. + +Cooperatives should also engage proactively with antitrust policy to +ensure a level playing field and recognition of their unique structure. +They should advocate for antitrust frameworks that distinguish between +coordination among workers or small producers and anticompetitive +behavior by large corporations. This could involve pushing for safe +harbor provisions that allow cooperatives to engage in certain forms of +coordination without triggering antitrust scrutiny, provided they meet +specific criteria for democratic ownership and control. (We will revisit +this idea below in section 21.) Cooperatives could also advocate for a +more nuanced approach to vertical integrationfootnote:[The cooperative +could approach vertical integration differently from traditional tech +giants, emphasizing openness, transparency, and democratic control. This +could involve creating federations of specialized cooperatives across +the tech stack, using open standards and protocols for all integrations, +and ensuring major integration decisions involve the entire membership. +The cooperative could maintain a modular architecture to prevent +lock-in. This approach could transform vertical integration from a tool +of monopolistic control into a means of building a resilient, efficient, +accountable, and mutually supportive technological ecosystem.] in +democratically-owned entities, arguing that traditional concerns about +market power may not apply in the same way to cooperative structures. +Furthermore, they could propose new metrics for assessing market +competition that go beyond consumer prices to consider factors like +worker welfare, community impact, and long-term innovation. Cooperatives +could help shape an antitrust regime that fosters a more diverse and +democratic economy. + +[arabic, start=21] +. {blank} ++ +____ +Market Governance, Legal Framework, and Enterprise Survival +____ + +A viable software cooperative needs three foundational elements. First, +it needs market governance mechanisms that enable stable operations +without monopolistic practices. Second, it needs technical +implementations that support democratic control and federation. Third, +it needs legal frameworks that protect cooperative structures while +ensuring compliance. How could these elements work together to create a +resilient democratic organization? + +First, consider price stability. Lee (2017) identifies price competition +as the "most important form of potential instability in a +market."footnote:[Lee at 154] When prices fall below costs, enterprises +fail. Yet price coordination can violate antitrust law. The cooperative +must therefore create legitimate, transparent mechanisms for stable +price formation. This means documenting internal costing methodology, +implementing democratic processes for determining profit margins, and +establishing clear price adjustment procedures. + +The cooperative must also maintain itself as a "going concern" through +continuous cycles of production. This requires three key financial +practices: working capital management, cost structure analysis, and +growth planning. The cooperative needs sufficient reserves, +relationships with cooperative financial institutions, and buffer funds +for market fluctuations. Regular review of enterprise average total +costs at budgeted capacity (EATC~B~) informs both operational decisions +and long-term technology investments. + +External market pressures incentivize market management through two core +strategies: institutional relationships and technical federation. To +understand these strategies, we must first understand market governance. +As Tankus & Herrine (2022) explain, "markets must develop and +maintain—they must reproduce—institutions to manage quotidian threats to +stability." When a software cooperative participates in ForgeFed or +similar federation protocols, it is not just making a technical choice. +It is helping build market governance institutions that support +democratic enterprises. + +The first core strategy, institutional relationships, involves +participating in what Lee terms "market governance organizations" - +particularly software industry trade associations and technical +standards bodies. The cooperative could engage with these organizations +to maintain space for democratic approaches. For example, when HashiCorp +changed Terraform's license, they demonstrated how market or investor +pressures can force changes that harm the software commons. To resist +such pressures, a cooperative can work with open source advocacy +organizations in three ways: (a) assigning copyright to them as a +mechanism of self-restraint; (b) leveraging their legal teams to defend, +e.g., AGPL implementations; and (c) participating in standard-setting to +ensure democratic values are represented. + +The second core strategy involves technical federation through open +protocols and shared infrastructure. This requires directing profits +toward developing independent tools and infrastructure. ForgeFed +exemplifies this approach. As an ActivityPub extension for software +forges, it enables federation between different code collaboration +platforms. Users can interact across different hosting sites without +creating multiple accounts. This transcends the traditional dichotomy +between centralization on profit-oriented platforms and isolated +independent hosting. + +These cooperative structures must operate within specific legal +frameworks that both constrain and enable democratic governance. The +Capper-Volstead Act of 1922 provides an instructive historical +precedent: just as farmers needed collective power to avoid being +crushed between powerful railroads and processors, today's software +workers need collective power to avoid being squeezed between various +platform monopolies. + +These mechanisms must operate within the "firm exemption" identified by +legal scholar Sanjukta Paul - coordinating economic activity within the +cooperative structure while avoiding illegal price fixing across firm +boundaries. The pricing reflects direct labor costs, infrastructure, +professional development, buffer fund contributions, and research +allocations. + +Unlike traditional tech firms chasing exponential growth and +monopolistic positions, the cooperative could structure its finances for +sustainable steady-state operation with moderate surpluses. This reduces +capital requirements while building long-term resilience. + +The strategy balances immediate survival needs with long-term +transformation goals. This requires clear documentation of internal +price formation, transparent governance processes, and regular (or +perhaps real-time, via the ensemble pattern) legal review of practices. +We aim to demonstrate that enterprises can compete effectively while +building toward a more democratic economy. + +[arabic, start=22] +. {blank} ++ +____ +Challenges +____ + +While mob programming and rotating leadership roles can help maintain +democratic values in a software cooperative, dilution or co-optation of +cooperative principles will probably be a persistent +threat.footnote:[Schneider (2018) discusses examples of cooperatives +facing such challenges, from rural electric cooperatives becoming +increasingly detached from their member-owners to credit unions +operating more like traditional banks.] Moreover, the software +cooperative faces fundamental market challenges when competing with +established tech giants, particularly regarding sequential production +and capital requirements. Traditional firms can sustain losses during +market downturns using reserves accumulated through earlier monopolistic +practices. A cooperative must build comparable resilience through +inter-cooperative networks and buffer funds. + +Lee's (2017) production analysis techniques offer ways to refine our +processes while maintaining democratic principles. However, Goodhart's +law warns that "When a measure becomes a target, it ceases to be a good +measure." Over-reliance on specific metrics like pricing formulas or +productivity measures could undermine cooperative values. To mitigate +these risks, cooperatives could develop flexible evaluation systems that +consider multiple factors and are less susceptible to manipulation - +looking beyond traditional financial metrics. The ICA emphasizes that +cooperatives work for the “sustainable development of their +communities.”footnote:[ICA, Statement on the Co-operative Identity, +, +p ii, 2015.] + +Developing effective collaborative financial practices presents unique +challenges. Moving toward more collaborative financial work requires +understanding both democratic ideals and practical constraints. + +Tool Development Challenges: + +* {blank} ++ +____ +Existing financial software assumes individual rather than collaborative +work +____ +* {blank} ++ +____ +Financial tools must maintain clear audit trails +____ +* {blank} ++ +____ +Regulatory compliance features need to support rather than hinder +teamwork +____ +* {blank} ++ +____ +New tools must evolve based on actual practice rather than theoretical +design +____ + +Regulatory Compliance Challenges: + +* {blank} ++ +____ +Individual accountability requirements must be maintained +____ +* {blank} ++ +____ +Audit trails must clearly show decision ownership +____ +* {blank} ++ +____ +Regulatory bodies may be skeptical of novel approaches +____ +* {blank} ++ +____ +Compliance documentation must adapt to collaborative work +____ +* {blank} ++ +____ +Professional liability considerations must be addressed +____ + +Cultural Development Challenges: + +* {blank} ++ +____ +Traditional financial roles may resist collaborative approaches +____ +* {blank} ++ +____ +Teaching/learning must be balanced with operational needs +____ +* {blank} ++ +____ +Clear accountability must coexist with collective responsibility +____ +* {blank} ++ +____ +Trust must be built gradually through demonstrated success +____ + +These challenges suggest an incremental approach, grounded in Lee's +analysis of how accounting procedures are “relatively enduring +structure[s]”footnote:[Lee at 81] essential to enterprise survival. They +provide “an important way of representing economic facts to +management”footnote:[Id.] and “give social coherence and meaning to +organizational behavior.”footnote:[Id.] As we also discussed earlier in +section X, by experimenting incrementally while maintaining traditional +methods, the cooperative could develop new collaborative practices +without endangering its status as a going concern. + +The experience of surgical teams and aircraft crews shows that intensive +real-time collaboration can coexist with clear individual accountability +in high-stakes environments. However, these models evolved over decades +of practical experience. We expect collaborative financial practices to +require patience and persistence in development. The key is maintaining +democratic principles while acknowledging that effective implementations +must emerge from practical experience rather than theoretical design. + +With these practical challenges in mind, participatory decision-making +in cooperatives could manifest as a system of rotating leadership roles, +fostering skill development and power distribution among members. +Supermajority-based approaches for major decisions could ensure all +voices are heard, while clear processes for proposal development and +implementation could maintain efficiency.footnote:[To protect against +potential manipulation of democratic processes, implementing cooling-off +periods could be beneficial. These would involve waiting periods between +joining the cooperative and gaining full voting rights, as well as +between proposing a change and voting on it. Such measures can prevent +"raid" scenarios where threat actors might coordinate to force through a +particular decision. This approach, inspired by blockchain governance +mechanisms, (e.g. Vitalik Buterin, Proof of Stake: The Making of +Ethereum and the Philosophy of Blockchains. Seven Stories Press, 2022 at +275) balances the cooperative's commitment to democratic participation +with the need to ensure that decision-making power is held by those with +a genuine, long-term stake in the cooperative's success.] + +Tension between cooperative ideals and practical compromises is a +recurring theme in cooperative historyfootnote:[Schneider, 2018], +although the definition of “practicality” is debatable.footnote:[From +the vantage point of this relatively affluent US worker in the year +2024, concerns on the part of Mondragón managers in 1988 about the +impracticality of the 4.5:1 pay ratio maximum seem outlandish. +Educational resources in my admittedly privileged context are so +abundant that professional skill development is limited only by +imagination — and so vacancies should be fillable via internal hiring.] +The key seems to be in making these decisions transparently and +democratically, always with an eye towards preserving the cooperative's +core mission and values. The ICA notes that larger cooperatives often +develop multi-tiered democratic structures.footnote:[ICA, Guidance Notes +to the Co-operative Principles, +, +p 62, 2015.] In addition, digital tools might facilitate democratic +participation at scale. + +Software cooperatives should conduct production analysis by examining +their methods, cost structures, and efficiency - both at the +shop/team/ensemble level and at more-general enterprise levels. This +could include analyzing collective productivity, assessing development +methodologies, and evaluating costs of tools and infrastructure. By +tracking metrics like the EATC~B~, cooperatives can make informed +decisions about pricing, resource allocation, and investments in +research and development. + +Although it would be a mistake to scale immediately, keeping scale in +mind seems prudent. This could involve developing modular architectures, +implementing clear processes for onboarding new worker-owners, and +creating standardized but flexible governance models. + +[arabic, start=23] +. {blank} ++ +____ +Unpredictability +____ + +Despite its democratic structure, the cooperative will probably face +internal conflicts and power imbalances. Complex responsive processes +theoryfootnote:[Stacey & Mowles at 402. Power imbalances might arise +from differences in nationality, wealth, gender, race, expertise, +tenure, or personal charisma (Ibid at 349).] recognizes that power is a +structural characteristic of all relationships and argues that conflict +is an inherent part of organizational life. Within such complex patterns +of interaction, bureaucratic accumulation - as Graeber +arguedfootnote:[Bullshit Jobs at xxi] - often emerges as both a response +to and generator of organizational challenges. The following strategies +could help make the best of such challenges: + +[arabic] +. {blank} ++ +____ +Power audits: Conduct periodic assessments of informal power structures +within the cooperative, identifying emerging centers of disproportionate +influence. +____ +. {blank} ++ +____ +MVP requirement to prevent bureaucratic bloat: new systems would prove +their value through working demonstrations; the same people proposing +must implement; no specialized positions are created for new +initiatives; and resources come from existing work time, making it +difficult to ignore the trade-offs. +____ +. {blank} ++ +____ +Mandatory inter-ensemble rotation to prevent bureaucratic entrenchment: +no system can survive solely through its creators' advocacy; fresh +perspectives regularly challenge assumptions; knowledge distribution +prevents expertise-hoarding; and status would not accumulate around +system "ownership" +____ +. {blank} ++ +____ +Ensemble Programming to enable continuous reality-testing: impractical +processes become immediately apparent; multiple perspectives catch +unnecessary complexity; and knowledge transfers naturally through +collaboration +____ +. {blank} ++ +____ +Rotating facilitation: In addition to rotating between source code +teams, implement a system of rotating facilitation roles in meetings and +decision-making processes to prevent the consolidation of procedural +power. +____ +. {blank} ++ +____ +Anonymous feedback: Implement secure, anonymous channels for members to +voice concerns about power imbalances or conflicts without fear of +repercussion. +____ +. {blank} ++ +____ +Transparency: Maintain access to all decision-making processes and +financial information for all members. +____ +. {blank} ++ +____ +Journal club for interdisciplinary articles of interest, with a +Starbucks™ gift card for whenever somebody finds an article with at +least 1 citation to Foucault _and_ everybody reads that article ahead of +time. +____ + +These mechanisms create what we might call "institutional impermanence" +- nothing can become permanent unless it repeatedly proves its value to +new groups of people over time. When organizational structures must +constantly rejustify their existence to fresh eyes, bureaucratic +accumulation finds few footholds. + +The key is that these aren't just policies - they're structural +safeguards that make bureaucratic accumulation physically difficult. +Just as a well-designed building naturally guides foot traffic in +certain directions, our goal is structures that naturally guide +organizational evolution away from unnecessary complexity. + +Cooperative culture should tend to treat unexpected developments as +opportunities rather than threats.footnote:[Stacey & Mowles at 191: “For +Mintzberg, learning is trial-and-error…”] This could involve: + +[arabic] +. {blank} ++ +____ +Flexible governance structures. +____ +. {blank} ++ +____ +Encouraging experimentation and viewing 'failures' as valuable learning +experiences. +____ +. {blank} ++ +____ +Maintaining loose boundaries between the cooperative and _friendly and +kindred elements_ of its environment, allowing for co-evolution with +broader ecosystems. +____ + +Democratic ideals will face ongoing challenges in practice. Actively +engaging with these issues could create a more resilient and democratic +organization that sublimates emerging power dynamics rather than ignores +them. + +[arabic, start=24] +. {blank} ++ +____ +Determination +____ + +*Untitled Co-Op is going to be primarily worker-owned and +worker-controlled, and it is going to do a lot of remote mob +programming.* + +We should remunerate workers based on how many hours they worked (within +health and safety limits), not when in the “hype cycle” they worked +them.footnote:[This compensation policy would apply specifically to +worker-members. For worker-members, everyone would receive the same +hourly wage and the same rate of equity distribution (although any +dividend payouts would be proportional to equity held). User-members +would have a different incentive structure, potentially including +patronage dividends, usage-based benefits, or a distinct class of +membership shares. This approach aims to balance fair compensation for +workers with meaningful engagement for users, while maintaining the +cooperative's core principles. This policy draws partial inspiration +from Mondragón and partial inspiration from Oxide Computer Company +(https://web.archive.org/web/20240927021311/https://oxide.computer/blog/compensation-as-a-reflection-of-values/).] +(And managers are workers too - no more and no less!) Business ownership +should be distributed according to each worker’s contribution of time, +provided it is made in good faith. This approach is both more fair and +more fun. It incentivizes the success of the team, not just atomized +individuals. By limiting ownership of first-class shares to natural +persons and stake size to only what could be accrued by the hours +contributed by a natural person, we avoid overly-powerful actors that +would undermine democracy.footnote:[Like the 'unMonastery' experiment +that sought to apply monastic principles to modern tech challenges +(Schneider, 2018), we seek to bridge past and present in creating a more +democratic future.] We should study network effects and how to use them +to facilitate widespread human flourishing. Cooperatives need to +explicitly and constitutively reflect on how their formal and informal +structures and patterns affect behavior, ideas, and engagement of their +members. Cooperatives can embody democratic values, encourage care, and +build a sense of shared destiny — a plurality of commons where together +we shape our worlds through words and deeds.