Demutualization

In the current environment the financial incentive to demutualize cannot be eliminated. For any profitable worker cooperative there will be a positive financial gain that can be realized by selling out. This results from the contradiction between a valuation system for investor owned businesses that attributes all future profits to the current owners, and a cooperative system where profits must be earned with labor. In a cooperative members have a right to their internal capital account which is exactly what they invested in their coop. They have the right to future profits for only as long as they continue their membership. If they demutualize they get paid for all future profits immediately, whether or not they continue working. Because of this situation demutualization must fundamentally be fought by building culture that demands worker sovereignty.

In the absence of external legislation, the collective reserve account adds an incentive to demutualize worker cooperatives. This is because the current members would be able to realize the value of the collective reserve account by selling the cooperative. The purchaser would pay for the collective reserve account since they would view it as an asset of the business to be acquired. Without selling, current members would be able to use the collective reserve account as an asset, but not receive cash for its value.