Startups don't create wealth, they concentrate it. Cooperatives are a much better wealth producing arrangement but they don't make a few people very rich.
(Technicality: as long as costs aren't being externalized e.g. as environmental pollution, fraud, etc.)
Whether a company is a cooperative or not has zero to do with how much wealth is being produced, only with how it's distributed.
Don't conflate production with distribution -- they're different things and have very little to do with each other.
Wealth production depends on product-market fit, ensuring costs are less than revenue, and business model.
Wealth distribution has nothing to do with that whatsoever -- it's simply the mechanism for profit sharing.
If you want to get technical, I'd suggest we scale the notion of wealth by the marginal utility of the additional capital given to an individual. Wealth is giving a person living paycheck to paycheck enough money to have leisure spend time with their kids.
Giving a billionaire another million dollars isn't wealth. They don't give a fuck about it except in the most abstract, brain-sick, anti-social sort of way.
Wealth means money or equivalent value (goods, conveniences, etc).
Marginal utility means marginal utility.
They're both tremendously useful concepts, but trying to confuse the two means nobody will understand what you're talking about.
Wealth and power distributions are relative, and if you're saying that moving towards a more even distribution from where we are now would be a good thing, I agree. However, I don't think a perfectly even distribution is desirable or even possible.
Also, large amounts of wealth in the hands of a small number of individuals is far from useless (it's not buried underground or stored in a vault), and whether it's bad or not depends on the context.
I, like you I suspect, disagree with that framing.
Nevertheless, I think trying to redefine wealth (which has a pretty clear economic meaning, regardless of your beliefs about appropriate distribution) isn’t really a good conversational gambit.
The accumulation of wealth can be destructive, no doubt. But defining away liquid societal resources with broad based utility, because they happen to be too expensive for the general populous, doesn’t strike me as a way to convince people of the merits of a different distribution.
That's despite the fact that some of them are phenomenally successful.
Why is that?
> but they don't make a few people very rich.
I don't think I understand what this means either.
Care to explain your comment? Genuinely curious.
That said, debt financing is typically harder and scarier than equity for start-ups.
That said they’re a huge outlier as far as I know. But it can be done.
As a co-operative enterprise, in organisational terms MONDRAGON is divided into four areas: Finance, Industry, Retail and Knowledge, which operate independently within the framework of an overall strategy, all in line with the strategic policies established at the Co-operative Congress.
As far as the different areas are concerned, Finance includes banking, social welfare and insurance activities. Industry is grouped into twelve industrial divisions engaged in the production of goods and services. Retail brings together the retail and food and agriculture co-operatives and businesses. And the Knowledge area includes the network of MONDRAGON technology centres and R&D units, our university, Mondragon Unibertsitatea, as well as a number of vocational training and education centres.
Co-operative bodies
General Assembly. this is the supreme body in the co-operative and is the vehicle for expressing the social will of all members.
Governing Council. the representative and governing body of the co-operative. Members are elected at the General Assembly.
Social Council. a consultative body, which represents members as a whole internally within the co-operative. Monitoring Commission. a consultative body whose purpose is to pass judgement on correct compliance with accounting principles and any other areas which require consideration.
Management Council. this is the managerial and executive team that comprises the manager and managerial members, and is responsible for the executive management of the co-operative.
MONDRAGON bodies
Co-operative Congress: its function is to establish the strategic criteria by which MONDRAGON is to be administered via the planning and co-ordination of its business units. It is made up of 650 members who are delegated by the co-operatives, and it meets on an annual basis.
Divisions: these are associations set up within the framework of MONDRAGON between co-operatives operating in the same area, which coordinate the management of their co-operatives.
Standing Committee: governed by delegation from the Co-operative Congress. Its basic function is to promote and control the implementing of policies and decisions adopted by the Congress, by monitoring the evolution of MONDRAGON on a permanent basis.
General Council: it is responsible for drawing up and applying corporate strategies and objectives. It coordinates the policies pursued by the different Divisions and Co-operatives.
Industrial Council: it is the co-ordinating body for the Industry area’s Divisions.
The crux of startups is taking a risk for a potential reward. The risk is in lost career advancement and the reward is partial ownership of a business that's worth something. The hard part is in balancing those to avoid exploitation of workers or discouragement from taking the risk.
Co-ops do an excellent job of distributing wealth, and in the case of a few such as Mondragon, they’ve been able to create wealth, also.
Startups can, in the economic jargon, create wealth, if they create a product whose benefit to society is greater than its costs (including externalized costs and subsidies). But they don’t necessarily distribute much of that created wealth, it all depends on how the capitalist relationship with labor and consumption are structured in that environment.
What a strange and incorrect assertion. Please walk us through your mental though process so we can re-educate you.
There's no doubt startups create wealth but I'd argue it also creates inequality. When the EU wants to tax bonuses I believe they're efficiently fighting inequality.
This small article is an example of what I'm trying to explain. "Uber co-founder buys record-breaking LA mansion for $72.5m as drivers fight for wages" https://www.theguardian.com/us-news/2019/jul/02/los-angeles-...
Wealth redistribution programs have their place in economic policy. Growing wealth inequality in the USA is real problem to social and political stability. [Disclaimer: I am not American] Furthermore, the US government has failed to support citizens rendered chronically unemployable through automation and globalization [e.g. especially middle-aged former auto workers].
However, I will challenge the widely held belief that wealth inequality is undesirable. Effective allocation of capital [including human capital, e.g. gainful employment] is not a given. It's not a given nor immediately obvious how to allocate 1,000,000 highly experienced software engineers into economically productive endeavors. Some individuals have proven excellence at allocating capital [Gates, Bezos, Buffet, Ma], so it makes sense that those people should have access to greater amounts of capital to efficiently allocate said capital.
And for the most part, the wealth of Gates, Bezos, Buffet, and Ma is tied up into economically productive activities.
When the EU taxes bonuses, in SOME instances the EU constricts SOME proven entrepreneurs [allocators of capital] from allocating greater amounts of capital into economically productive activities. Note: I'm in no way asserting that the EU should not tax bonuses, however there is a trade-off and the EU must be careful to both understand the trade-off and careful not to overly tax the wrong people [specifically highly industrious people with a knack for entrepreneurship].