11 N.Y.U. Rev. L. & Soc. Change 441 (1982-1983)
Democratic Coporation: The New Worker Cooperative Statute in Massachusetts, The; Ellerman, David; Pitegoff, Peter

handle is hein.journals/nyuls11 and id is 449 raw text is: THE DEMOCRATIC CORPORATION: THE NEW
WORKER COOPERATIVE STATUTE IN
MASSACHUSETTS
DAVID ELLERMAN AND PETER PITEGOFF*
I
INTRODUCTION
The worker cooperative corporation law recently enacted' in Massachu-
setts presents a democratic corporate form new to American law. On a
practical level, the law adopts the legal structure of the successful industrial
cooperatives of Mondragon, Spain and adapts it to the American context.2
On a theoretical level, the law brings into the workplace two related norma-
tive principles which are absent in the conventional corporate form: the
democratic principle of self-government and the principle of basing prop-
erty acquisition on the fruits of one's labor.
In the short run, the law facilitates the emerging worker ownership
movement in the United States. Worker ownership has emerged as a stopgap
job preservation tactic in potential plant closings and as a structural form of
local ownership which can play a strategic role in the reindustrialization of
America.3 Given the destructive effects of the hypermobility of capital in
today's economy, worker ownership is a much needed alternative form of
organization.
* Peter Pitegoff and David Ellerman were the principal drafters of the new Massachu-
setts worker cooperative legislation. Peter Pitegoff is staff attorney at the Industrial Cooper-
ative Association (ICA), an organization which assists democratic worker-owned businesses.
Mr. Pitegoff is a graduate of the New York University School of Law, a member of the
Massachusetts Bar, and a former community organizer.
David Ellerman, Ph.D., is cofounder and staff economist of the ICA, and has worked in
the field of workplace democracy for fifteen years. Dr. Ellerman has received graduate
degrees in Philosophy, Economics, and Mathematics, and has taught mathematics, computer
science, accounting, and economics in several universities. He is currently teaching in the
School of Management at Boston College.
1. The Employee Cooperative Corporations Act, MASS. GEN. LAws ANN. ch. 157A
(West 1982) [hereinafter cited as MGL ch. 157A]; see infra Appendix for complete text of the
Act; a complete legislative history appears in INDUSTRIAL COOPERATIVE ASSOCtATiON, THE
NEW MASSACHUSETTS LAW FOR WORKER COOPERATIVES: MGL CHAPTER 157A (1982) (avail-
able from ICA, 249 Elm Street, Somerville, MA 02144 as are all other ICA publications cited
infra; on April 11, 1983, the State of Maine enacted a statute almost identical to MGL ch.
157A, see infra note 93.)
2. See infra Part II.B.1. See generally D. EaE M N, THE SocLIzATION OF ENTEvPRI-
NEuRsmsp (1982); H. THomAs & C. LOGAN, MONDRAGON: AN ECoNoMsic ANALYsIS (1982).
3. See infra Part II.B.3. See also B. BLUESTONE & B. HARRISON, THE DEINDUSTRIAUtZA-
TION OF AmERiCA 231-64 (1982); Pitegoff, Worker Ownership: Is It a Strategy for Labor?,
LABOR UPDATE, July-August 1982 at 9ff.
441

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