i've always wondered why someone hasn't started a non-profit business to start selling goods and services, in which they should be able to out-compete the for-profit enterprises, since they can sell at cost just to break even, or sell at less of a markup.
you could get one going, then use what would be the "profits" (since you can't keep them) as seed funding a second similar non-profit in a different industry, then a third, by then the 2nd one could seed fund a fourth, and so on and so on until eventually, you would have expanded into every industry. and over time, since you can always out-compete the capitalist, you would have monopolized every industry with non-profit enterprises.
depending on how you structured it, you could stipulate some kind of collective social ownership, or each industry could be run as a non-profit worker cooperative with workplace democracy.
i am sure there are a thousand little reasons why this might fail, but i don't see any big gotcha? it seems like a sound idea. i guess maybe the capitalists would be willing to run at a loss to try and stop you, but that's still a good outcome? maybe try to make it illegal? i am not sure how you could make it illegal to sell good and services at break-even prices. price controls, ok fine, we will just have more money for seed funding.
i guess TLDR the ability to run a not-for-profit business seems like a pretty big weakness for capitalism.
I'm not sure if you're serious but the system is entirely geared towards rewarding profit motivated businesses. Business owners aren't just charging an extra 5 cents and pocketing the money, that's a naïve understanding of the way they exploit and abuse their employees and their customers.
Say you wanted to start selling affordable clothes to working class people. You start by designing a simple, durable T-shirt with quality (but not extravagant) material. Maybe you produce it in a few colors or maybe just in blue to save on the extra unnecessary costs. You find you can produce it at cost for $10, not bad for a shirt that will last 5-10 years of heavy use. You've also got to account for more than just your workers pay, you've got to cover support staff (accounting, customer service, lawyer fees for setting up the new business), they might cost a big company with full departments of support staff a few cents per item but for you, a small business, it's going to take hiring someone externally and set you back about $2 a shirt. Since you're already at cost and refuse to produce a lower-quality product, you have to pass that onto the buyer, $12 a shirt now, still not bad. Eventually you find a retailer willing to sell your blue shirt, and they want a cut of $3 per shirt. Again you have to pass that on to the customer so ultimately they'll be selling for $15 retail.
Did I mention the retailer also sells its own brand of blue shirts? They won't have to pay the extra $3 of course, and they likely save money on support staff as well since they're such a big company. They also use the same material as your shirt but decided that they could make the same sizes for half the amount of material you do. Yes, these shirts will be too thin and fall apart within a year or two, and the environmental cost of producing a bunch of cheap shirts instead of one quality shirt will be horrible in the long run but hey, they don't have to pay for that part anyway! So now you're competing with the retailer owned brand of blue shirts, produced at literally half the cost, but hey you trust the customers to act rationally and buy your quality shirt instead of the cheap one. But wait, the retailer will see that your shirt is higher quality, marked as $15, and then decide to list their own shirt at $15 and decide to have it perpetually "on sale" to 50% off to the original price of $7.50. Now customers see two blue shirts, both marked as $15 so probably identical in quality, and they'll pick the $7.50 shirt every single time because it hurts a little less on the wallet. In the time it would've taken your shirt to wear out the customer will have come back three or four times, paying $30 for 4 shirts because the cheaper ones just keep falling apart. Yes, they could research some reviews and discover that your shirt won't fall apart after a year, but whose really got time or energy to do that when your customer base is the same group of people working for the type of company crushing your shirt business, overworking and underpaying their employees at every turn.
I think this example illustrates a few points well, a few not so well, but ultimately I want you to take away the fact that capitalism will not play fair, it will not think of the people, the environment, or the product. I didn't even begin to cover any of the ways giant corporations use their influence and connections to stifle smaller businesses or the role that equity and acquisitions play in padding the pockets of capital owners. Even in a more even playing ground it would take loads of labor, environmental, and consumer protections that simply don't exist in the united states (where I'm writing this, I'm sorry if its not where you're from but I think the general idea still applies everywhere). There are exceptions to the rule but at its core competition in capitalism is a race to the bottom , its an inefficient horrible means of resource allocation, and its certainly not designed to bring the best for everyone.
Great analysis. Also, OP should be aware that the retailer's shirts are probably manufactured in a place where they can get away with paying cents-per-hour of labor.
It'd be a lot like trying to start a cotton business in 1800s Georgia while competing against slave plantations. It's just not going to be scalable until you've freed the slaves and raised their standard of living to the same as everyone else.
That particular thing is easily avoided by selling products directly online. Or you appeal to some niche of consumers (like socialists) who might be willing to pay a few dollars more for a product to know it was made by a worker cooperative. At least until you could establish a successful model, and start accumulating surpluses to expand.
I understand you are saying these kinds challenges would exist for any market, but my main response is that you haven't really described a challenge that would be unique to a non-profit worker cooperative. Any business that comes along to sell shirts is going to face the same issues. But it is clearly not an impenetrable barrier, because we do see new enterprises successfully selling shirts from time to time. And we see new successful capitalist enterprises of all different kinds.
And sure, even as a worker cooperative, you would still be a capitalist enterprise operating under capitalism, so you would not be able to avoid all the ethical problems that go along with that, including sourcing materials or environment harms, and so on. There is no ethical consumption under capitalism, a non-profit worker cooperative model can't change that.
The only idea I have really presented here different from starting any new business, is to use some accounting tricks that would build seed funding for more worker cooperatives rather than profits for capitalists. Capitalists will not play fair, but we don't have to play fair, either. If you could get one enterprise established, say based on the goodwill of a certain market segment, then there is nothing stopping you from using these same methods of capitalism to undermine other capitalists enterprises, except you would be able to undercut any expectations for profitability (if they expect 4% margins, you can settle on 2% surpluses for your fund). You should be able to produce better products and/or at a lower cost. If you open a new chain of merchandisers called The Leftorium, where all the zoomers want to do their shopping, you might use the same kind of markups to gouge the capitalists, since you bring in a certain demographic they really want to sell to.
That said, I think producing shirts would not be the right place to start. You would need to get going with something with low capital costs and high labor costs, since in the worker cooperative model, labor is easy to come by capital is not. So you wouldn't want to build or buy a shirt factory, or anything brick and mortar. I know you were just picking an arbitrary example, but the shirts, you might say, are just not a good fit.
I just wrote out a whole long response to your comment that somehow got deleted so I apologize that you'll get a shorter one.
First, yes worker coops and new businesses exist and survive. But the OP is talking about taking over entire industries, right? Niche markets won't do that and certainly won't build up enough capital to expand fast enough either
Basically the big issue with your idea comes down to taking less of a profit to undercut and hopefully drive out competition. When you say I'm going to only ask for two percent instead of my competitions four percent, you're implying that you both operate at the same margin, which assumes the same costs. Even in a dream scenario where you pay your employees a fair wage and come out with the exact same bottom line as the competition (labor is the leading cost of any business, good luck with that), youve now got to divide that 2% by every single employee (worker owned, they're getting a cut too remember?) and you'll end up with a fraction of a percent left to contribute to a seed Fund.
Theres no "accounting trick" that can multiply your liquid cash, the word you're looking for is alchemy.
In a non-profit this is not possible. Employees only make their salaries. What makes it a worker cooperative would be workplace democracy, all the workers would be able to vote, basically as board members. No one truly "owns" a non-profit.
Not sure what I said that could be construed as 'multiplying liquid cash'. That doesn't even make sense.
Actually a cooperative is one of the few nonprofit structures where you can distribute surplus margins back to members.
The alchemy comment was in reference to where you said you would use accounting tricks to accumulate seed funding for the next venture. There's no "trick" that can help you save money faster, you'll still be operating at for-profit margins likely worse because again, your system is designed to put employees in control of how much they are earning. (and of course you've accepted a profit margin of half your closest competitor)
It sounds nice for one company but won't be earning enough to spawn others as quickly or effectively as you believe it will. Cute little neighborhood coop? sure. Titan of industry crushing giant corporations changing the landscape of capitalism? Never.
Unless otherwise indicated a worker cooperative is a for-profit institution, with the profit going to the worker-owners. A nonprofit is a completely different kind of institution, which cannot redistribute surpluses as profits under any conditions. But a nonprofit can be structured as a cooperative. "Nonprofit cooperative" is a very tiny category of businesses, as far as I can tell. If you want to be really technical, a nonprofit can't be a true worker cooperative because it's not "owned" by anyone, including the workers. But it can be structured to be governed by the workers collectively.
https://cdi.coop/how-are-nonprofits-and-co-ops-different/
The only mechanism the workers would have to distribute surpluses would be through bonuses, but that is pretty thin ice. Total compensation for nonprofit employees must be "reasonable" and "not excessive" so that would possibly allow for bonuses, but not to a degree beyond the typical range of total compensation for the type of employees receiving the bonus.
A for-profit cooperative, on the other hand, would be doing this as a standard practice.