Cooperative

A cooperative is a business venture owned by its customers or employees. An example would be a credit union owned by its account holders, or an apartment complex owned by its tenants. Not many businesses of this type have fared well, and when they have, it has usually been due to preferential treatment by government, such as tax exemptions for nonprofit organizations. These businesses suffer from some of the same problems, such as rational ignorance, that afflict other one-person, one-vote democratically-organized groups.

In large cooperatives, turnout in elections tends to be low, because each voter can only cast one vote and therefore has little chance of tipping the result. This is enough of a problem in democratic governments, but is even worse in a situation where the stakes are far lower because the organization lacks the power to make arrests, impose taxes, declare war, etc. For example, each depositor of $25 in a credit union is considered a member who gets to cast one vote, but few members are likely to bother attending the shareholder meeting. The people who do show up are likely to be those whose opportunity costs are low, perhaps because they are retired or otherwise unemployed and lack other hobbies. As is the case with trial juries, which are largely made up of those who did not struggle hard enough to get exempted from the civic obligation, the benefits of leaving the governance of an organization in the hands of such people are questionable. Cooperatives are unfavorably presented in Ayn Rand's novels as hobbyhorses of unpragmatic leftist dreamers.