Will Co-ops and Social Enterprise Increase Inequality and Hurt Growth?

A blog about business and economics.
March 13 2012 12:52 PM

Will Co-ops and Social Enterprise Increase Inequality and Hurt Growth?

Freelancers' Union founder Sara Horowitz writes on behalf of co-ops and social purpose enterprises, arguing that "We need a complete reorientation of workers' relationship to business and government's relationship to workers."

I've been thinking a lot about this lately. In our personal lives, we're well aware that people make tradeoffs between income and non-income goods. Choosing to launch or work for a co-op or social purpose enterprise could easily fit that kind of bill. As society grows wealthier and wealthier, it makes more and more sense for people at the margin to decline income-maximizing job opportunities in favor of greater autonomy or work they feel good about. That would tend to create situations in which job creation outpaces GDP growth, and would also imply higher inequality of market wages. After all, a very hardworking and talented person who's spending his time and energy to trying to help manage a worker-owned socially conscious cooperative just has no chance of earning nearly as much money as an equally hardworking and talented person who's actually trying to maximize his income as CEO of a for-profit drug-store chain. But while slower growth and more inequality sound bad, if they were to come about in the future by more people choosing autonomy and self-respect over money there wouldn't really be a problem. The challenge for advocates of this sort of approach would be to sell the country as a whole on that different way of looking at things.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.