Abstract
The chapter examines the economics literature on worker cooperatives, with discrepancies between the theory and empirical evidence, as well as practice. The economic theory of worker cooperatives has been built on the assumptions of neoclassical economics and new institutional economics, which include self-interest, maximization of income per worker as a goal, and ill-defined property rights. These assumptions give rise to hypotheses that a worker cooperative is a transitory and unstable form of organization, with workers who free ride, shirk, and have no incentive to invest in the enterprise. Empirical evidence in economics and evidence from other fields of inquiry do not support these hypotheses. We suggest humanistic theoretical approaches for future research in worker cooperation.
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