Learning from Cooperatives to Strengthen Economic Bicameralism *

Abstract

Bicameral firms can generate societal benefits both directly, by granting representatives of labor investors voice in shaping firm decision-making, and more indirectly, by serving as a transition phase from capital investor–owned firms to worker cooperatives. However, there is room to augment these benefits by leveraging insights from research on cooperatives. This article draws lessons from three types of cooperatives—traditional worker cooperatives, multistakeholder cooperatives, and union cooperatives—to help refine Ferreras's proposal for bicameral firms. First, bicameral firms should offer labor investors more opportunities to participate in firm governance and hold their representatives to account. Second, they should create robust channels for other stakeholders to influence firm decision-making. Third, they should carefully delineate the role of labor unions vis-à-vis the Chamber of Representatives of the Labour Investors. These refinements will better position bicameral firms to achieve their direct benefits and facilitate subsequent transitions to worker cooperatives.

Ferreras's proposed bicameral firms have the potential to generate wide-ranging societal benefits. ¹ These benefits come in two main forms. First, myriad direct benefits are anticipated to arise from the bicameral firms’ Chamber of Representatives of the Labour Investors, which governs the firm alongside the Chamber of Representatives of Capital Investors. This institutional design grants representatives of labor investors formal voice in shaping firm decision-making and, in so doing, better positions these firms to tackle a host of pressing social and environmental issues like climate change and inequality.

Second, bicameral firms can generate more indirect benefits by serving as a transition phase from large capital investor–owned firms to worker cooperatives. Like other types of cooperatives, worker cooperatives have a number of distinguishing characteristics, perhaps most notably members’ ownership and democratic control of the organization. ² Thus, in contrast with bicameral firms, worker-members are the sole constituency with formal decision-making authority in worker cooperatives. Many have long espoused worker cooperatives as a compelling alternative to conventional firms because of the myriad benefits they can offer for workers, their communities, and society at large. ³ However, with some limited exceptions like Italy and Spain, worker cooperatives are marginal players in most countries. ⁴ While the lion's share of cooperatives are created from scratch, they can also be created through conversions of existing firms through mechanisms like worker takeovers. ⁵ Ferreras argues that we lack sufficient mechanisms to convert large capital investor–owned firms into worker cooperatives, particularly those in which capital investors wish to remain invested, at least initially. She highlights two important ways in which economic bicameralism could facilitate this transition over time. First, the institutionalization of bicameral firms is likely to increase labor investors’ access to capital by connecting them to a broader array of financing mechanisms. Second, it provides labor investors with the opportunity to progressively develop their governance capacities ahead of their efforts to attain exclusive control rights of their firms. In this vein, Ferreras's proposal serves as a crucial complement to ongoing efforts to incubate worker cooperatives and facilitate the conversion of smaller firms into worker cooperatives.

In light of these benefits, there is much to like about Ferreras's proposal. At the same time, I believe there are some specific ways in which bicameral firms could be strengthened to augment both types of benefits. In this article, inspired by Ferreras's identification of worker cooperatives as a regulative ideal, I seek to distill relevant insights from research and practice on three types of cooperatives—traditional worker cooperatives, multistakeholder cooperatives, and union cooperatives—with the ultimate aim of identifying potential refinements to the proposed bicameral firm. Ultimately, I identify three core sets of refinements: (a) increasing the opportunities for labor investors to participate in firm governance and hold their representatives to account, (b) creating robust channels for other stakeholders to influence firm decision-making, and (c) carefully delineating the role of labor unions vis-à-vis the Chamber of Representatives of the Labour Investors. All of these refinements are feasible and tailored to the unique features of the proposed bicameral firm, particularly its granting of formal decision-making authority to representatives of both labor and capital investors. As I elaborate below, each of these refinements strengthens economic bicameralism in different ways. Collectively, they will strengthen bicameral firms’ direct benefits by positioning them to be more responsive to labor investors’ and other stakeholders’ needs while also increasing the likelihood that those bicameral firms that are interested in transitioning into worker cooperatives are able to successfully do so by granting labor investors additional opportunities to develop their governance skills. I develop my arguments in three main sections, each of which focuses on one of the abovementioned types of cooperatives.

Learning from Worker Cooperatives: Strengthening Labor Investors’ Participation and Control

I begin by discussing potential learnings from traditional worker cooperatives. In Ferreras's proposal, the primary way in which labor investors, as one of the firm's two core constituencies, participate in decision-making is through electing representatives to negotiate and deliberate on their behalf with representatives of capital investors. While no doubt a major improvement over capital investor–owned firms, this proposal could go further in terms of creating opportunities for labor investors to participate in firm decision-making more actively and hold their representatives to account more effectively. Research on worker cooperatives suggests that there is the risk that power may become centralized in an oligarchic manner, ⁶ particularly when elections are used as the primary selection method used to select representatives. ⁷ Worker representatives are not always descriptively representative of the broader workforce, ⁸ and they may not be responsive to the diverse needs of the broader membership, ⁹ including those of racial minorities. ¹⁰ Furthermore, despite their synergies, representative and direct voice structures are fundamentally distinct, and having access to the former does not mean that workers have access to the latter. ¹¹ There is, therefore, the risk that labor investors that only have access to representative voice structures may lack the ability to influence decision-making in a more regular and unmediated way. What can we learn from worker cooperatives about fostering greater accountability and labor investor participation?

Member Participation in Worker Cooperatives

As the ultimate owners of their cooperatives, worker members are often afforded a wide range of opportunities to shape decision-making. Beyond their role in representative structures, whether as candidates or electors, members often have the opportunity to directly participate in cooperative decision-making in general assemblies. For instance, in individual worker cooperatives that comprise the Mondragón Corporación Cooperativa (Mondragón), the General Assembly is among the central governance organs—“the supreme authority expressing the social will of all the members.” ¹² It has responsibilities that include selecting workers’ representatives on the governing council, approving major strategic plans, and in some cases, considering a broader range of decisions. ¹³ Worker members have the power to call for an extraordinary general meeting to discuss decisions made by the governing council and, if necessary, elect a new one. ¹⁴ Yet, as with their representative structures, direct structures for member participation face important challenges. The level of member participation in annual general meetings tends to be low. ¹⁵ Among those who attend, critical and informed engagement on the part of attendees is often lacking. ¹⁶

Many worker cooperatives and researchers studying worker cooperatives have thus put a major emphasis on identifying practices and interventions to foster greater member participation and influence in the governance of their cooperatives. I highlight some salient examples here, though the literature is vast and practices vary widely across worker cooperatives. One set of practices focuses on how to boost member participation in general meetings. In this vein, Hernandez notes how Pascual, the worker cooperative she studied, sought to increase participation in general assemblies by tying the receipt of food vouchers to attendance. ¹⁷ Some of the worker cooperatives Ng and Ng studied in Hong Kong try to boost participation in membership meetings by requiring members to attend a minimum number of meetings to remain in good standing and offering members a small financial incentive to attend. ¹⁸ Another set of practices focuses on creating additional opportunities for members to deliberate together and inform cooperative decision-making. For example, some of the worker cooperatives that are a part of Mondragón have increased the use of mini-councils as a means of sharing information and including more perspectives in decision-making. ¹⁹ It is also possible to boost participation by leveraging innovations from political science like deliberative mini-publics, which are increasingly being explored in various organizational contexts like universities. ²⁰ In this vein, I recently proposed a framework of four deliberative mini-publics that large cooperatives could use to engage a broader array of members to engage in tasks like monitoring the performance of representatives and providing feedback on proposed resolutions to inform members’ voting decisions. ²¹ Additional practices that can directly or indirectly improve member participation include paying careful attention to cultivating and maintaining a supportive organizational culture, ²² disseminating information widely to members while ensuring members have the capacity to interpret it, ²³ reducing power and skill asymmetries through practices like job and task rotation, ²⁴ and offering members the opportunity to recall their representatives. ²⁵

Implications for Economic Bicameralism

We can draw important implications from these practices and experiences for the design of bicameral firms that will increase labor members’ opportunities to meaningfully shape firm decision-making and develop their governance skills. In a general sense, they point to the importance of paying careful attention to how labor investors will be able to participate in firm decision-making and hold their representatives in the Chamber of Representatives of the Labour Investors to account. When it comes to participation, bicameral firms should include extensive opportunities for labor investors to meet and deliberate together about their shared concerns and interests to be able to provide their representatives more inclusive and refined input and cultivate a sense of solidarity. While these interactions could take place in regular general assemblies for the entire workforce, they could also take place in various topic-specific working groups and committees, department-wide subcommittees, or specific applications of deliberative mini-publics. As an example of the latter suggestion, building off the framework I introduced above, bicameral firms could institute issue appraisal panels of randomly selected labor investors to openly deliberate about topics they deem to be important but that do not get enough attention in the Chamber of the Representatives of Labour Investors. Opportunities for labor investors to deliberate online through platforms like Loomio would be particularly helpful for larger and more geographically dispersed bicameral firms. ²⁶ Bicameral firms should also consider granting labor investors the opportunity to ratify major decisions made by their representatives, such as major strategic reorientations and changes to labor policies. In terms of enabling labor investors to hold their representatives to account, bicameral firms should provide opportunities for members to recall their representatives, receive comprehensive updates about their representatives’ deliberations and decision-making processes, and engage in dialogue with their representatives in case labor investors wish to receive an account and explanation about certain decisions. Additionally, it will be crucial for bicameral firms to prioritize the development of an inclusive and democratic culture among labor investors, offer training and support for labor investors to better engage in firm-level decision-making, disseminate information widely and accessibly, and pay careful attention to inequalities and power asymmetries among labor investors.

Learning from Multistakeholder Cooperatives: A More Prominent Role for Other Stakeholders

How should bicameral firms engage with nonlabor and non-capital-investor stakeholders like local communities, suppliers, and customers? To consider this, I now turn to identifying potential learnings from multistakeholder cooperatives. Ferreras's current proposal focuses on two crucial constituencies—labor and capital—which stakeholder theorists view as stakeholders of the firm. ²⁷ While the debate over which stakeholders ought to be prioritized remains unsettled, ²⁸ there is no doubt that bicameral firms—like any other firm—will affect and be affected by a wide range of other stakeholders. Ferreras acknowledges this, arguing that they can channel their claims in three ways: shaping the context in which firms operate through the broader democratic process, shaping firm policy through having their concerns raised by labor investors (who are expected to have more regular and deeper connection with a variety of stakeholders), and shaping firm decisions through participating in consultation schemes. All three have important merits but also come with limitations.

First, in terms of stakeholder interest protection through regulations, one conceptualization of the role of governments in stakeholder theory focuses on how they can use their regulatory and enforcement powers to create a “framework” that, ideally, fosters an environment for responsible conduct on the part of firms and stakeholders. ²⁹ While this role has merits including the ability to leverage governments’ unique enforcement powers, Dahan and colleagues highlight two important limitations. ³⁰ The first is that governments’ powers are jurisdictionally circumscribed, resulting in firms being able to shift their business activities to more favorable contexts. These jurisdictions may be less interested in or able to provide the same protections for stakeholders. ³¹ The second is that firms may also engage in lobbying or other forms of political influence to shape the nature of regulations and enforcement mechanisms for their own benefit. Beyond its more direct effects on regulations and, by extension, the extent to which stakeholders’ interests can be protected, such actions can have major repercussions on the broader democratic system, including reducing citizens’ voice in societal deliberations and their influence in policymaking. ³² To these two limitations, we can add the risk that governments’ increased adoption of this role may result in firms reducing their sense of responsibility for addressing stakeholders’ interests over time. ³³ Overall, while governments (particularly more responsive ones) will likely be able to help some other stakeholders advance their interests, this channel is unlikely to be sufficient and consistently effective.

Second, while labor investors may at times advocate for other stakeholders’ interests or share those same interests, this should not be assumed. Research suggests that members of worker cooperatives do not always take into account broader social issues when making decisions. Harnecker's study of Venezuelan worker cooperatives highlights that, despite expectations that workers in cooperatives would internalize the interests of the communities within which they are embedded, the workers are not necessarily aware of these broader interests, do not necessarily internalize those interests, and do not necessarily advocate for them even if they do internalize them. ³⁴ This concern is echoed in other research on worker cooperatives, particularly on Mondragón, where scholars have documented how concerns about efficiency have threatened key social values. ³⁵ In terms of labor advocacy through unions, in the context of the former Canadian Auto Workers union, their advocacy for the greater production and sale of personal transport vehicles was counter to the interests of other stakeholders, notably environmentalists and supporters of public transport. ³⁶ Thus, we cannot expect that labor investors in a bicameral firm will be a reliable and consistent advocate for other stakeholders’ interests.

Finally, bicameral firms’ establishment of consultative bodies to engage with stakeholders is a very important step, particularly when the previous two approaches fail to live up to their potential. At the same time, granting them merely a consultative role may leave their interests insufficiently protected while denying the firm access to important benefits. While labor investors undoubtedly have a strong claim for involvement in firm decision-making, in some circumstances other stakeholders may also. For instance, Moriarty points out that some of the core arguments used to advocate for employee participation in firm decision-making—for example, that it is crucial for protecting employees’ interests and promoting their autonomy—can often apply to other stakeholders too. ³⁷ He provides the example of a local community heavily dependent on a major local employer; the community may have more at stake than some employees, particularly those who have good job prospects elsewhere. While this debate is very much unresolved, even if we were to assume that labor investors’ investments and claims are greater than those of other stakeholders, it is important to consider whether granting other stakeholders more formal participation rights in firm governance is attainable and worthwhile.

One approach to doing so that is rare in practice but has received attention from researchers for some time entails placing representatives from a broader array of stakeholder groups on corporate boards. An overarching argument for such stakeholder representation is that it allows for greater consideration and balancing of stakeholders’ interests. ³⁸ It can also have important benefits for firms including increasing stakeholders’ commitment. ³⁹ An argument gaining increasing attention draws on the notion of property rights. Stakeholders, including employees, often provide firms with valuable firm-specific investments (e.g., a supplier co-locating with one of its customers or purchasing highly customized production systems) that would be costly to reinvest elsewhere. ⁴⁰ While these investments can be very valuable for firms, stakeholders may be less willing to provide them, as they are difficult to fully protect through explicit contracts. ⁴¹ Granting these stakeholders formal involvement in firm governance can be a powerful way of reducing this concern. ⁴² At the same time, the presence of multiple stakeholder representatives on boards can impose important costs, including intra- and interstakeholder conflict, delayed decision-making, and reduced responsiveness. ⁴³ Despite these arguments, empirical research on the benefits of stakeholder representation is very limited and inconclusive. ⁴⁴ Research on the effects of outside directors—which may in some cases be stakeholder representatives—finds a positive relationship with corporate social responsibility performance. ⁴⁵ More research is clearly needed on this topic.

The Governance of Multistakeholder Cooperatives

Let us now turn to research on multistakeholder cooperatives to identify potential refinements for economic bicameralism. Multistakeholder cooperatives are gaining increased research and practitioner interest, particularly in Québec and Italy. ⁴⁶ Traditionally, cooperatives have been centered on a single category of members who own, control, and benefit from the cooperative. ⁴⁷ Multistakeholder cooperatives, in contrast, involve multiple categories of members (typically two to eight) who share the same mission but do not necessarily have the same interests. ⁴⁸ While it is difficult to attribute this growing interest to a single cause, promising candidates include growing concerns about meeting the needs of a broader range of stakeholders, the ability to access more capital and resources, and a desire to overcome the limitations of pure forms of producer and worker cooperatives. ⁴⁹

In multistakeholder cooperatives, crucial decisions include which stakeholders should be a member, how the cooperative will be governed, and how surpluses are to be allocated. ⁵⁰ In terms of who can be a member, the list of potential stakeholders is long, and choices vary across organizations and contexts. Lund grouped potential members into three categories: cooperative users (e.g., consumers, producers, institutional purchasers, distributors), producers (e.g., workers, professional employees), and support members (e.g., community members, investor members). ⁵¹ Different jurisdictions may emphasize different stakeholders. Québec, for instance, allows for up to a third of board seats to be granted to a category of stakeholders called “supporting members.” ⁵² In terms of their governance, as with single-stakeholder cooperatives, a common approach is to follow a “one member, one vote” principle with a twist, in that each member from each stakeholder group votes for a predefined number of seats. ⁵³ In terms of allocating their surplus, approaches vary widely, and as with governance rights, these decisions are made democratically by the cooperative. Weaver Street Market, a retail multistakeholder cooperative, as an example, distributes the surplus to worker-members based on the number of hours worked. ⁵⁴

Multistakeholder cooperatives have many important benefits relevant to economic bicameralism. One broad category of benefits relates to how they can foster greater attention to relevant stakeholders’ needs. They “offer potential for broadening democratic voice beyond the immediate member-users of cooperatives,” enabling them to address a broader range of social and environmental issues. ⁵⁵ They are premised on a longer-term horizon: “multi-stakeholder cooperators are not interested in single transaction or even season of transactions, but rather in building a long term relationship based upon on a stable foundation of fair pricing, fair wages and fair treatment for all parties.” ⁵⁶ This focus on the development of longer-term networks of relationships can be a critical source of these cooperatives’ resilience. ⁵⁷ They can be particularly useful in helping address the interests of traditionally marginalized and excluded stakeholders in a manner that can “produce a social surplus that goes beyond the simple sum of the parts.” ⁵⁸ At a minimum, including a broader array of stakeholders can serve as a signal that “embod[ies] and formalize[s] their desire to include the community in their collective project and to reaffirm their commitment toward their community.” ⁵⁹

The second broad category pertains to more instrumental benefits. Bringing together a broad range of interests can help generate greater social capital and increase access to diverse information sources, ⁶⁰ while also reducing the costs associated with managing market transactions. ⁶¹ Formal inclusion in governance systems can encourage stakeholders to make a range of contributions to the broader cooperative. For instance, in Québec's multistakeholder cooperatives, those who support the cooperative and its social mission can provide a variety of resources, including volunteer work, materials, access to their networks, and financial investments (which, when totaled, can be significant) without receiving the same direct benefits that user members would. ⁶² Multistakeholder cooperatives’ governance structures also help proactively address the disagreements among stakeholders and foster closer ties to them. ⁶³

Despite these benefits, scholars and practitioners have emphasized that multistakeholder cooperatives come with important challenges that warrant attention. Perhaps the most oft-repeated concern relates to the increased complexities and transaction costs that accompany efforts to reconcile the diverse perspectives of multiple stakeholders. ⁶⁴ Multistakeholder cooperatives create new areas for potential conflict, including how to distribute surpluses, who ought to be a member, how the cooperative ought to be governed, and what objectives should be prioritized. ⁶⁵ This conflict, though, need not be a fair fight, as it is possible for a single member class of members to dominate decision-making because of their greater power and access to information. ⁶⁶ These challenges can become more salient as multistakeholder cooperatives grow and age. ⁶⁷

While these are important challenges, Leviten-Reid and Fairbairn's review of the research finds that many multistakeholder cooperatives are able to avoid them and achieve effective and democratic governance. ⁶⁸ Practices that can help mitigate these risks include creating spaces and processes for deliberation among different stakeholder representatives, developing clear decision-making processes, disseminating information widely and in an accessible manner, maintaining a focus on the overall objectives of the cooperative, and having a commitment to continuous learning and improvement. ⁶⁹

Implications for Economic Bicameralism

Economic bicameralism's emphasis on parity between the representatives of labor investors and capital investors is sensible given that the model serves as a transition phase from capital investor–owned firms to worker cooperatives. However, our brief foray into the still relatively nascent literature on multistakeholder cooperatives suggests that such governance structures are becoming increasingly common, they can have important benefits for both stakeholders and the cooperative, and their costs and challenges can be surmounted. Collectively, these insights suggest that bicameral firms would benefit from going beyond consultative bodies to granting nonlabor and non-capital-investor stakeholders more comprehensive opportunities to shape firm decision-making.

There is a range of ways in which this could be accomplished as part of Ferreras's model, each with its pros and cons. First, either the Chamber of Representatives of the Labour Investors or the Chamber of Representatives of Capital Investors could be broadened to include representatives from other stakeholder groups. This approach would likely come with the greatest potential transaction costs and would inevitably grant the remaining chamber with only one stakeholder group (labor or capital investors) disproportionate influence over firm decision-making, which goes against economic bicameralism's emphasis on parity between these two constituencies. At the same time, it would grant other stakeholders an institutionalized means to influence firm decision-making within the existing bicameral model. Second, bicameral firms could adopt a tricameral system of governance, whereby a Chamber of the Representatives of Non-Labour and Non-Capital Stakeholders would be created to complement the two existing chambers. ⁷⁰ Depending on the circumstances, it could have the same power as the two existing chambers, requiring a majority of representatives from all three chambers to approve major firm policies, or it could be given a consultative role. As in the case of Zeitoun and colleagues’ proposal for a second board composed of randomly selected stakeholder representatives, ⁷¹ a tricameral approach would offer other stakeholders broader protections, though without the same decision-making costs as might occur with multiple stakeholder representatives on a single board. Third, building off Ferreras's proposal of consultative bodies, bicameral firms could institute more formalized stakeholder advisory panels in which stakeholder representatives offer their advice or recommendations on a particular topic that the firm has committed to consider and respond to in some way. ⁷² Lafarge's Stakeholder Panels provide one such model, whereby a select group of stakeholder representatives meets biannually with the CEO and executive committee to critically review the company's sustainability performance and jointly develop an action plan that the company commits to carry out. ⁷³ While this approach would grant stakeholders less overall influence, it is less likely to generate significant increases in transaction costs. It is also the most straightforward approach for subsequent transitions to worker cooperatives.

Granting a broader range of stakeholders—including local communities, suppliers, customers—a more significant role in firm governance through these and other strategies will help ensure that bicameral firms operate in a manner that genuinely takes into account their concerns and interests and will enable firm management to leverage the unique resources these stakeholders can bring to firm governance. These benefits will help bicameral firms augment their contributions to addressing social and environmental sustainability challenges. The effects of these strategies on facilitating eventual transitions to worker cooperatives are more difficult to discern and warrant further research. They all have the potential to help labor investors develop their governance and stakeholder management skills. At the same time, particularly in the case of strategies that grant other stakeholders formal decision-making authority in bicameral firms’ governance bodies, the process of labor investors purchasing the firm from capital investors may become more complex if other stakeholders are opposed to the transaction.

Regardless of which strategy is ultimately chosen, it will be important for each bicameral firm to carefully reflect on which stakeholders ought to be prioritized in different ways given limited resources and transaction costs. Bicameral firms could draw on various tools when approaching this vexing challenge with their particular context, including the stakeholder salience model and stakeholder mapping techniques. ⁷⁴

Learning from Union Cooperatives: A Clearer Delineation of Responsibilities

Finally, I turn to the role of labor unions in the bicameral firm. Ferreras grants them an important place in her proposal, describing how they can perform a range of functions, including training labor investors to run for elections, collectively representing the interests of labor investors, helping foster deliberation among groups with competing interests within bicameral firms, and advocating for labor investors in the political realm. This portion of her proposal connects to research on union cooperatives. At their core, union cooperatives are “worker co-op[eratives] where at least some of the employees are represented by a union.” ⁷⁵ Examples include Cooperative Homecare Associates, a Bronx-based home care agency whose workers are represented by the Service Employees International Union. ⁷⁶ While they can take on a range of different forms, they tend to take on a similar structure to traditional worker cooperatives—with a general assembly, board of directors, and management—with the addition of a labor union committee that has the authority to represent workers as workers in domains including collective bargaining and handling grievances. ⁷⁷ In this section, drawing on the small but growing body of research on this phenomenon, along with other conceptual work on the role of unions in worker-owned firms, notably Ellerman's analysis of the unions’ or union-like bodies’ role as a “legitimate opposition” in democratic firms, ⁷⁸ I seek to distill implications for economic bicameralism. This exercise leads me to advocate for a somewhat more nuanced role for labor unions in economic bicameralism.

The Dynamics of Worker Representation in Union Cooperatives

Union cooperatives sit at the nexus of longstanding movements advocating for labor unions and worker cooperatives, respectively. Monaco and Pastrorelli argue that despite some important differences and tensions, “both movements share similar historical roots, common values and aims, and a methodology based on dialogue and workers’ involvement.” ⁷⁹ Indeed, during the nineteenth century, some unions, including the Knights of Labor, were strong advocates of worker cooperatives. ⁸⁰ Yet, the relationship between these two movements is complex. ⁸¹ It has at times been characterized by divergent approaches and limited mutual support that stems from considerations like unions’ desire to protect their own interests and core competencies and broader concerns that firm-level interventions might come at the expense of the broader labor movement. ⁸² The recent growth in interest in union cooperatives from both movements, which is well illustrated by Mondragón's and the United Steelworkers commitment to pursue them in 2009, ⁸³ shows promise in increasing mutual synergies between them.

Union cooperatives have several benefits. At their core, they can help overcome the challenges facing both movements: overall declines in unionization and union bargaining power for labor unions; and difficulties accessing resources and investment, difficulties scaling up, and frequent negative perceptions of their viability for worker cooperatives. ⁸⁴ Both cooperatives and labor unions can learn a lot from each other's dominant logic. ⁸⁵ For workers, despite being represented as owners on the board of directors, they may lack robust representation as workers, particularly in large worker cooperatives. In this way, union representation can overcome the limitations of bodies such as Mondragón's Social Council, which only had an advisory role that was seen as insufficient by many workers. ⁸⁶ While the need for unionization in worker cooperatives may not be apparent, Huertas-Noble notes that

conflicts between worker-owners and their selected management can mirror conflicts in other workplaces and conflicts may also arise among worker-owners in non-management roles. In one rarely occurring but conceivable example, individual worker-owners can lose their membership by a vote of a majority of other worker-owners and thus lose their ownership interest. ⁸⁷

Representation through a labor union can help ensure that workers’ interests are captured in collective bargaining agreements, rules and terms of employment are transparent and applied fairly, and grievances can be filed and resolved in a professional manner. ⁸⁸ Additionally, it can also result in more productive conflict management and a more integrative approach to bargaining. ⁸⁹ Furthermore, union cooperatives have the potential to increase overall solidarity between worker owners and broader struggles over labor rights and economic justice. ⁹⁰ Finally, affiliating with labor unions can increase worker cooperatives’ ability to organize and can grant them access to crucial resources including support networks, political connections, and financing. ⁹¹

At the same time, union cooperatives come with important challenges. First, there is the possibility that unionization may threaten the autonomy of worker cooperatives. In contrast with worker cooperatives, labor unions tend to be more centralized in order to gain power and may use industry-wide master agreements to ensure consistency across organizations. ⁹² Ultimately, this may threaten worker cooperatives’ ability to make autonomous decisions, such as changing pay and benefits to match their specific circumstances like periods of economic hardship. ⁹³ Second, there is a risk that labor unions may inadvertently or, in some cases, deliberately, come to dominate workers’ governance structures, such as the board of directors. Union leaders may perceive other institutions of worker representation as a threat to them and their legitimacy. ⁹⁴ This may give rise to the risk of “competition over labor representativity” ⁹⁵ or, in some situations, union attempts to dominate other representation bodies. ⁹⁶ Barnes and MacMillan document how a union was able to secure over 85 percent of the positions on a non-union employee representation body. ⁹⁷ One participant in their study who serves as an elected, non-union representative reflected:

I probably felt more frustrated than constrained because I did feel as though it was union dominated, and I have nothing against unions. . . . I just felt it was a very biased representation because it was union heavy and discussion was quite union focused. ⁹⁸

Third, there is a risk that the presence of unions and their leadership in collective bargaining may lead to antagonism. ⁹⁹ This was among the most significant sources of tension when the potential role of unions was discussed at Mondragón. ¹⁰⁰ Finally, there is a risk that labor unions may not adequately represent the diverse interests of the union membership, ¹⁰¹ which is important to the success of unionized ESOPs. ¹⁰²

These challenges highlight the importance of carefully delineating the role and responsibilities of labor unions in worker cooperatives to avoid unintended consequences. Levinson makes a compelling case for the separation of powers between labor unions and the worker cooperative and the implementation of policies to avoid potential conflicts of interest. ¹⁰³ The bankruptcy of Fagor Electrodomésticos points to the problems that can arise when the roles and responsibilities of the Social Council vis-à-vis the Governing Council become blurred, notably delayed and less effective decision-making. ¹⁰⁴ Importantly, the delineation of roles ought to take into account the broader interests of both movements to increase the likelihood that each one will be willing to support and collaborate with the other. ¹⁰⁵

Implications for Economic Bicameralism

In sum, the research on union cooperatives suggests that labor unions can make important contributions to bicameral firms (and would likely benefit from them in turn). At the same time, we must be sensitive to the importance of carefully delineating their roles and responsibilities so that the partnership will be as fruitful as possible. While a full analysis of what this delineation ought to look like in practice is beyond the scope of this article, I outline my main suggestions for what the role of unions in bicameral firms ought to be, which are somewhat more muted than those put forward by Ellerman and Ferreras in her proposal. ¹⁰⁶ I begin by highlighting two roles for labor unions that I see as congruent with Ferreras's proposal. First, they should be deployed to provide consistent and high-quality training and education to labor investors and their representatives across bicameral firms about the broader labor movement, contemporary labor issues and trends, and how to exercise their democratic rights and responsibilities. As an example, they could organize workshops and dialogues about trends in pay, benefits, and grievances across firms in similar industries. Second, they should continue their crucial advocacy for workers’ rights and promising initiatives like the bicameral firm in the political realm.

At the same time, I propose two modifications to Ferreras's proposal. First, in terms of the role of labor unions in collective labor investor representation, labor unions should not play a direct role in representing labor investors in formal negotiations or collective bargaining with the executive committee or capital investors. In a bicameral firm, particularly one with robust participatory and accountability practices I discussed earlier, the Chamber of Representatives of the Labour Investors would already be able to collect and synthesize the interests of labor investors and advocate for them as part of their broader representative role. Adding a labor union as another form of collective interest representation for labor investors in this context would likely lead to antagonism and fracturing among labor investors and their representatives as they undertake their delicate work. If, as I suggested above, labor unions were to use their expertise in bringing forward robust information about contemporary pay and benefits trends in the industry, labor investors would be well placed to consider these as they channel their broader interests to their representatives for negotiations. Such a clear division of labor would also have a single entity that labor investors could hold accountable if they felt their interests were not sufficiently advocated for. At the same time, labor unions should be deployed to represent labor investors in grievances in order to ensure that the benefits, working conditions, and voice mechanisms they negotiated are respected. They are well suited for this role given their extensive expertise in this domain and their independence from both management and labor investors’ representatives. Second, given my earlier arguments about the importance of empowering labor investors as a constituency and the risk that labor unions may inadvertently co-opt elections for worker representatives, I do not think they should play a role in advocating for or providing special assistance to specific labor investors running for election to avoid unduly influencing the process. Providing this type of support to preferred labor investors may lead to a dynamic in which the interests of labor unions dominate the Chamber of Representatives of the Labour Investors, which may not be the same interests as those of labor investors. As noted above, though, they should be available to provide general education and training to all interested labor investors. Collectively, these refinements will enable labor investors to influence firm decision-making in a more streamlined and effective manner, while also providing labor investors in a particular firm with more direct opportunities to develop their governance skills.

Conclusion

In this article, I explored the possibility of strengthening economic bicameralism by learning from research and practice on traditional worker cooperatives, multistakeholder cooperatives, and union cooperatives. Through this exercise, I identified three core sets of refinements: strengthening labor investors’ opportunities to participate in firm governance and more effectively hold their representatives accountable, creating robust channels for other stakeholders to influence firm decision-making, and carefully delineating the role of labor unions vis-à-vis the Chamber of Representatives of the Labour Investors. When taken together, I argue that these refinements will help strengthen bicameral firms’ direct contributions to tackling pressing social and environmental issues by making them more responsive to labor investors’ and other stakeholders’ priorities. Additionally, for those bicameral firms interested in subsequent transitions into worker cooperatives, these refinements will increase the likelihood of a successful transition by enabling labor investors to develop their governance skills in more ways. My hope is that these ideas will help spur further research, reflection, and experimentation on how economic bicameralism and other promising alternatives to capital investor–owned firms can be continuously refined and improved over time.