The Cooperative Firm, Audited

Volume V — Labour, Value, Flourishing

THE PLATE

A woman in a bronze silk blouse writing in a book at a desk, smiling down at the page, lamplight behind her. — Plate V.06The Second Column.An advocate reads the good year. An auditor reads the whole series, including the years nobody quotes.

THE LETTER

You have probably been handed the cooperative firm twice, and both times as an argument.

The first version says it is the answer: people own their work, the wage compresses, the layoffs stop, dignity returns. The second says it cannot scale: capital will not come, members will not invest, the thing degenerates into an ordinary employer with better stationery. Both are delivered with confidence and neither, usually, with a balance sheet.

This chapter does something less exciting and more useful. It reads the published accounts. Mondragón's annual reports, including the year Fagor went under. Italy's Marcora record, held by the fund that actually wrote the cheques. The French SCOP survival series. John Lewis's partnership bonus, printed every March for fourteen years and easy to plot. These are ordinary financial documents and they answer ordinary financial questions, which is precisely why they are worth more than the argument on either side.

What they show is a firm that has made a specific and measurable trade, and a firm that carries a specific and measurable cost. The trade is that the cooperative moves volatility off employment and onto pay. The cost is that a member cannot sell her residual claim, and a claim that cannot be sold is priced higher by whoever must hold it. Both facts are in the accounts. Neither side of the usual argument quotes both.

We are going to compute the second one properly, because it is the honest negative and it is load-bearing. Then we are going to find out what it would take to close it, which turns out to be a smaller and more ordinary instrument than either camp expects.

The concentration-risk arithmetic — what happens to a household that holds its job and its savings in the same firm — belongs to Chapter V.03 and is not repeated here. This chapter is about the firm's own statements.

— The Editors

DISCOVERY

What the accounts already show

Begin with the record, because the record is better than its reputation.

Mondragón, and the year it is usually attacked for. In 2013 Fagor Electrodomésticos — a founding cooperative, the appliance business that started the whole federation in 1956 — entered insolvency carrying reported liabilities of about €850,000,000. The group had already put roughly €300,000,000 into holding it open. Against a federation with total income of about €12,000,000,000 that year, those are 7.08 percent and 2.50 percent respectively. Fagor employed 5,600 people worldwide out of a group of about 74,000 — 7.57 percent — of whom 1,900 were Basque worker-members, or 2.57 percent of group employment.

Now read the outcome rather than the headline. Spanish unemployment stood at 26.9 percent. The business failed; it was not rescued; the federation did not pretend otherwise. What the structure did was determine what the failure meant for the people inside it: members were carried by the inter-cooperative unemployment provision, offered relocation into other cooperatives in the group, and re-placed over the following two years in numbers that the group's own reporting and the subsequent case literature both document. The cooperative structure did not prevent business failure. It changed the conversion rate between business failure and household catastrophe, and that is a different claim, a smaller claim, and a claim the accounts support.

Italy, and the law that turns a benefit into equity. The Marcora law, passed in 1985, lets workers whose employer is failing capitalise the unemployment benefit they are already entitled to and use it as founding equity in a buyout cooperative, alongside institutional money from a dedicated fund. The fund, CFI, publishes its cumulative record: on the order of 560 enterprises and 25,000 jobs — an average of 44.6 jobs per enterprise. Against a reported cumulative investment near €350,000,000, that is €14,000 per job held. Set beside two years of unemployment benefit at €1,000 a month — €24,000 — the ratio is 0.583. The state spends less by converting the benefit into equity than by paying it out. Vieta, Depedri and Carrano's Euricse study of the framework finds these buyouts durable rather than temporary.

France, and the survival series. The Confédération Générale des SCOP publishes survival rates for worker cooperatives against the national figures for firm creations. At three years, 82 percent against 66 percent. At five, 66 percent against 50 percent. Converted into the number an actuary would want — an annual exit hazard — that is 7.97 percent a year for SCOPs against 12.94 percent for firms generally over five years, a hazard ratio of 0.616. Over three years the ratio is 0.495.

That comparison is between two published populations, not between matched firms, and it should not be quoted as though it were causal. SCOPs skew toward services, and many are conversions of going concerns rather than start-ups. So check it by a route that shares none of its assumptions. Burdín's study of Uruguay matches worker-managed firms against conventional firms on size, sector and age, using the social-security register, and finds the worker-managed firms less likely to dissolve. Two methods, two countries, same sign.

Britain, and the bonus everybody can plot. The John Lewis Partnership prints its Partnership Bonus every year as a percentage of pay. Fourteen consecutive years read: 18, 14, 17, 15, 11, 10, 6, 5, 3, 2, 0, 3, 0 and 0 percent. Mean 7.43 percent; standard deviation 6.595 points; coefficient of variation 0.888. Three of fourteen years paid nothing — 21.4 percent of them. The first five years averaged 15.0 percent of pay, the last five 1.0 percent, a decline of 93.3 percent across the series.

Hold that number next to a dividend series from a listed retailer and the cooperative trade becomes visible in a public document. Pay in this firm is a residual, and residuals move. And note the honest reading, because it is the one that makes the chapter trustworthy: John Lewis also reduced headcount over the same period. A partnership structure does not guarantee employment stability. It only changes which variable goes first.

Four records, four jurisdictions, one recurring shape: the cooperative firm is not more or less efficient than its competitor. It is differently insured, and the premium shows up somewhere specific.

THE ARITHMETIC

The trade, the cost, and the number that decides

First, the trade, priced.

Craig and Pencavel found it in the Pacific Northwest plywood cooperatives: against the same demand shocks, the cooperatives moved pay a great deal and employment very little, while the conventional mills did the reverse. Pencavel, Pistaferri and Schivardi found the same asymmetry in Italian data; Burdín and Dean found it again in Uruguay. Three datasets, one result. The cooperative does not abolish the shock. It routes it.

So price the routing. Take a bad year. In the conventional firm, 10.0 percent of the workforce is laid off and the rest are held flat; a laid-off worker retains 60.0 percent of normal income through the spell. In the cooperative, 1.0 percent are laid off and everyone takes an 8.0 percent cut.

  expected income, conventional      96.00 % of normal pay
  expected income, cooperative       91.68 % of normal pay

The cooperative member expects 4.32 points less income, not more. That is not a typographical accident and it is not an argument against cooperatives. It is the definition of insurance: you pay a premium and you receive a smoother distribution. Insurance is never a better expected value. It is a better shape.

Whether the shape is worth the premium depends on exactly one parameter — how risk-averse the member is — and that parameter has a break-even. Under constant relative risk aversion:

  gamma 1.0    conventional 0.9502    co-op 0.9161
  gamma 2.0    conventional 0.9375    co-op 0.9151
  gamma 3.0    conventional 0.9214    co-op 0.9138
  gamma 4.0    conventional 0.9019    co-op 0.9121
  gamma 5.0    conventional 0.8795    co-op 0.9099

  break-even relative risk aversion   3.446

Below a relative risk aversion of about 3.446, the conventional income deal is worth more; above it, the cooperative's. And Chetty's estimate, built from labour-supply behaviour rather than from surveys, puts relative risk aversion near one and below two.

Read that plainly. On the best available estimate of how risk-averse working people actually are, the cooperative's income smoothing alone does not pay for itself. The cooperative's advantage, if it has one, has to come from somewhere else: from the firm surviving at all, which the French and Uruguayan hazard figures say it does; from control and voice, which do not enter this calculation; and from the fact that the failure, when it comes, does not arrive as a personal event. That is a narrower and far more defensible claim than the one usually made, and it is the one the data will carry.

Second, the cost — and this is the honest negative.

A member of a cooperative holds a claim she cannot sell. She may withdraw her capital account on leaving, usually at book value, often after a notice period. There is no market, no buyer, and no capital gain. Price that claim the way any analyst would price an unmarketable minority holding.

  risk-free rate                    4.0 %
  equity risk premium               5.0 %
  equity beta                       0.90
  conventional cost of equity       8.50 %

  discount for lack of marketability  25.0 % over 8 years
  annualised illiquidity premium      3.66 points
  cooperative cost of equity         12.16 %

Check it by a second route. A member's holding is undiversified — her labour income and her capital are in the same firm. Scaling beta by the inverse of its correlation with the market gives a total beta of 1.80 and a cost of equity of 13.00 percent, a premium of 4.50 points. The two routes bracket the answer; the chapter uses the lower one.

Carry it into a weighted average cost of capital at 40.0 percent equity and 60.0 percent debt:

  conventional WACC    5.65 %
  cooperative WACC     7.11 %
  the hurdle gap       1.46 points

A project returning between 5.65 percent and 7.11 percent creates value inside the listed firm and destroys it inside the cooperative. Same project, same machine, same country. That band is the structural cost of not being able to sell a claim, and it is not rhetorical — it is a range of investments the cooperative must decline.

Third, what that does to growth. Take a conventional firm and a cooperative with identical returns: 12.0 percent on equity, 40.0 percent paid out, 60.0 percent retained. The listed firm can also issue equity; call it 3.0 percent of opening equity a year. The cooperative's only external equity is new members' stakes: an entry contribution of €15,000 against €150,000 of invested capital per worker, with headcount growing 3.0 percent a year, is 0.30 percent of capital.

  conventional sustainable growth   12.0 x 0.60 + 3.0   = 10.20 % a year
  cooperative sustainable growth    12.0 x 0.60 + 0.30  =  7.50 % a year
  the gap                                                 2.70 points

Compound it. After ten years the conventional capital base is 28.2 percent larger; after twenty, 64.2 percent; after thirty, 110.5 percent. The cooperative is not less profitable. It is less able to convert profit into scale, and over a working lifetime that compounds into a different-sized firm.

Fourth, the horizon problem, which has a number. Furubotn and Pejovich's objection is that a member evaluates an investment over the years she has left, not over the asset's life. Take an investment costing €100 returning €12 a year in perpetuity at a 10.0 percent discount rate. To a holder of a tradable claim it is worth €20.00. To a member:

  8 years to go    NPV  -35.98    votes no
 15 years to go    NPV   -8.73    votes no
 20 years to go    NPV    2.16    votes yes

  break-even horizon              18.80 years

A member needs 18.80 years of remaining service before she will vote for a project the market values at plus twenty. That is the horizon problem with a figure attached, and it explains a great deal of cooperative behaviour that is usually attributed to conservatism.

It also tells you the fix, which is why it is worth computing rather than asserting. Credit half the retained value to the member's own capital account and the break-even falls to 14.55 years — 4.25 years of horizon bought by an accounting decision.

Fifth, degeneration, tested rather than asserted. The thesis says cooperatives drift toward ordinary employment. The test is one ratio: members divided by people employed. Start at 80.0 percent, hire at 5.0 percent a year, admit members at 2.0 percent a year:

  after  5 years    69.2 %
  after 10 years    59.9 %
  after 20 years    44.8 %

Nothing in that required a change of heart. Degeneration, in the arithmetic, is simply what happens when a cooperative admits members more slowly than it hires. To climb back to 80.0 percent over a decade, admission must exceed hiring by 2.94 points a year — admitting at 7.94 percent while hiring at 5.0 percent. Admitting at the hiring rate holds the ratio exactly.

Cornforth's review of the evidence, and Storey, Basterretxea and Salaman's comparison of Eroski and John Lewis, both find degeneration real in some places and reversed in others — which is exactly what you would expect of something governed by an admission policy rather than by a law of nature.

Finally, why the productivity studies keep finding nothing. Fakhfakh, Pérotin and Gago found French cooperatives at least as productive as comparable conventional firms. Put the two findings together in one production function with a capital share of 0.30: a cooperative with 0.90 of the conventional firm's capital per worker and 1.03 of its total factor productivity produces 0.99795 of its output per worker — a difference of 0.20 percent.

  capital term   0.90^0.30   =  0.96889
  offset needed to erase a ten-point capital deficit   3.21 %

The capital deficit and the productivity premium are the same size. That is not a coincidence and it is not a wash — it is the finding. The cooperative buys back with attention what it loses in capital, and the two cancel almost exactly in the aggregate, which is why the literature reads as inconclusive to anyone looking for a winner.

DREAM

What becomes ordinary

In the economy where this has been worked out, the cooperative firm is not an exception that has to be defended. It is a financing structure with a known cost of capital, a known hurdle gap, and a known instrument for closing it, and it appears in the same spreadsheets as everything else.

A lender pricing a cooperative does not begin by asking whether it is a serious business. It looks up the sector's published exit hazard — the number the French register has been printing for years — prices the credit off that, and lends. The hazard is lower than the conventional comparator, so the debt is cheaper, and nobody finds this remarkable.

Every cooperative publishes one line that nobody used to publish: the share of the people who work there who are members. It sits in the standing accounts beside headcount and revenue, reviewed quarterly, and it moves when the admission policy moves. Degeneration is not a thesis anybody argues about because it is a number anybody can read, and a board that lets it drift has to explain the drift in the same paragraph where it explains gross margin.

The member's capital account is not a dead deposit. It is credited with a stated share of the value the firm retains, so the woman with eight years to go votes for the fifteen-year investment because she is paid for it on the way out rather than asked to donate it. The horizon problem has not been argued away; it has been bought off, at a price the accounts show.

There is a class of institutional investor whose whole business is supplying cooperatives with the one thing they cannot issue: patient, non-voting, redeemable capital that does not carry control. It is dull, it is investment grade, and it earns a coupon somewhere between the sector's cost of debt and its return on invested capital. Pension funds hold it because the cash flows are long and the default experience is good.

And when a firm of two hundred people is about to close because its owner is retiring with no successor, the first call is not to a liquidator. It is to the buyout fund, because in this economy the conversion of a failing private company into a worker-owned going concern is a recognised transaction with a standard form, a known cost per job, and a state that finds it cheaper than the alternative.

None of that requires anyone to believe anything. It requires four numbers to be published and one instrument to exist.

DESIGN

The structure that closes the gap

The arithmetic named three specific costs. The design closes them one at a time, and only those three — everything else about the cooperative firm is already working.

One: close the equity gap with an instrument, not with an appeal.

The cooperative cannot issue a residual claim without ceasing to be a cooperative. It can issue a non-residual one. The instrument is a non-voting, dividend-capped, redeemable capital tranche, subordinated to debt and senior to member accounts, with a stated term and no route to control. Italy, France and Spain all have statutory forms of roughly this shape, and the IFRS Interpretations Committee has already written the accounting question down: IFRIC 2 governs whether members' shares are equity or a liability, and turns on whether the entity holds an unconditional right to refuse redemption. Write that right into the rules and the tranche sits in equity; leave it out and it sits in debt and the gearing covenant moves. That is a drafting decision made years before anyone needs the money.

Two: fix the horizon problem in the capital account, not in the culture.

Credit each member's account with a stated share of retained surplus, payable on exit. The arithmetic above says half is worth 4.25 years of horizon. Set the share, publish it, and stop asking members to be more patient than the instrument allows them to be.

Where statute requires reserves to be indivisible — and in most cooperative law a substantial share must be — the divisible portion is the lever. It is usually larger than anybody has bothered to compute.

Three: make the admission rate a governed number.

Degeneration is an admission-rate problem. So govern the admission rate. Set it in the rules as a floor relative to hiring, report the member share quarterly, and require the board to explain any fall. A cooperative that hires at 5.0 percent and admits at 2.0 percent will be 59.9 percent member-owned in a decade whatever anybody intends, and the people who intended otherwise will be genuinely surprised.

The sequence, for a firm doing this from where it stands.

Publish the four numbers. Member share, exit hazard for your sector, sustainable growth rate, and the pay-versus-employment volatility of the last ten years. You are unlikely to have any of them. Producing them is a month's work and it changes every subsequent conversation.
Compute your own hurdle gap. Take your cost of debt, your capital structure, and an illiquidity premium you can defend, and find your refused band. Then look at what you declined in the last three years and see how much of it fell inside.
Draft the tranche before you need it. The rules change, the IFRIC 2 refusal right, and the term. A cooperative raising capital in a crisis raises it badly.
Set the admission floor. One clause.
Credit the capital accounts. One policy, one number, published.

Note what is absent from that list. No change in the law. No change in anyone's convictions. No mandate. Four documents and a clause.

DESTINY

How it holds, and how it fails

What makes this durable is that every element of it is a number in a standing report rather than a commitment in a founding document. Founding documents are read once. Standing reports are read monthly, and anything read monthly survives.

The member share in the quarterly pack makes degeneration visible while it is still cheap to reverse. The exit hazard in the sector's published series gives lenders a price and removes the conversation about seriousness. The capital-account credit means the fifteen-year investment has a constituency among people who will not be there in fifteen years.

Now the honest part, and it is specific.

It fails when the tranche becomes control by another name. A non-voting instrument with covenants tight enough to direct the business is a voting instrument with better manners. Read the covenants, not the share class.

It fails when the admission floor is set and then waived. The waiver is always reasonable at the time — a seasonal peak, an acquisition, a subsidiary in another country — and after three reasonable waivers the ratio is somewhere nobody chose.

It fails when the pay residual does all the work. A firm can hold employment flat for years by letting pay absorb every shock, and if the pay series reads like the John Lewis one — from 15.0 percent of pay down to 1.0 percent, a decline of 93.3 percent — the members have been carrying the business quietly and at some point they will stop. The trade is legitimate. It has a limit, and the limit is reached long before anyone reports a problem.

And it fails when the growth gap is ignored rather than financed. A cooperative growing 2.70 points a year slower than its competitor is not in trouble this year or next. It is in trouble in year twenty, when the competitor is 64.2 percent larger and buys the market it used to share.

DELIGHT

What it feels like

There is a particular pleasure in reading a set of cooperative accounts once you know what to look for. The pay line moves and the headcount does not, and you can see the decision in the numbers — a firm choosing, year after year, which variable it is willing to move.

And there is a better pleasure in the room where the member share is read out for the first time. It is not a triumphant number; usually it is lower than anyone expected. But it is the first time the question has had an answer instead of an opinion, and the quality of the argument changes immediately. People stop saying are we still what we say we are and start saying we admit at two and hire at five, so here is the clause.

The work of this chapter is ordinary financial work — hazard rates, capital accounts, a weighted average cost of capital — pointed at a firm that was supposed to be beyond the reach of ordinary financial work. It is not. That is the whole delight of it: the cooperative firm turns out to be legible in the same language as everything else, and once a thing is legible it can be financed.

OPERATIONALIZE THIS

At the level of finance

The instrument: the Member Capital Bridge. A non-voting, dividend-capped, redeemable capital tranche, sized to the computed growth gap, subordinated to senior debt and senior to member capital accounts.

The sizing. Take a cooperative of 1,000 people at €150,000 of invested capital per worker — an opening base of €150,000,000. The growth gap of 2.70 points implies a first-year tranche of €4,050,000. Left unfinanced for a decade, the base reaches €309,154,734 where a listed competitor reaches €396,193,370: a cumulative shortfall of €87,038,636. The tranche is a revolving facility against that shortfall, not a one-off raise.

The terms.

Form. Non-voting, redeemable at the issuer's option, ten-year stated term. The rules must give the cooperative an unconditional right to refuse redemption, or IFRIC 2 puts the instrument in liabilities and the gearing covenant moves against you on day one.
Coupon. 6.00 percent, capped, cumulative but non-compounding.
Ranking. Behind senior debt. Ahead of member capital accounts on a winding-up — this is what makes it sellable and it costs the members nothing in any state of the world where the firm continues.
Covenants. Financial only. No board seat, no reserved matter touching employment, admission, pay policy or the member share. A covenant that can direct the business is control, whatever the share class says.
Use of proceeds. Ring-fenced to investment inside the refused band — projects returning between 5.65 percent and 7.11 percent, which are exactly the projects the cooperative's own cost of capital forces it to decline.

The balance-sheet treatment. Equity if the refusal right is unconditional in the rules; a financial liability if it is not. Settle this with the auditors before drafting, not after. Where the tranche funds a long-lived asset, depreciate over the asset's economic life, and credit the member capital accounts with the stated share of retained surplus so the horizon break-even falls from 18.80 years to 14.55.

The counterparty. Three legs, in this order.

The sector's own mutual fund. Italy's Law 59/1992 requires cooperatives to pay 3 percent of profit into one. On this firm's figures — a surplus of €7,200,000 — that is €216,000 a year, or 5.33 percent of the year-one tranche. Real money, and about one twentieth of the need. Do not oversell it.
An institutional cooperative investor. CFI in Italy, the SCOP movement's development funds in France, and their equivalents elsewhere. These exist, they have a published loss record, and they are the natural anchor.
The members themselves, via the admission rate. Admitting at the hiring rate rather than below it lifts the member-stake inflow off 0.30 percent. It is the cheapest capital in the structure and the only leg that also fixes degeneration.

The first ninety days.

Day	Action	Artifact
1–15	Compute member share, exit hazard, sustainable growth, pay-vs-employment volatility	The four numbers, one page
16–30	Compute your own refused band from your real cost of debt	The hurdle memo
31–45	List everything declined in three years; mark what fell inside the band	The declined schedule
46–60	Draft the rule change: refusal right, admission floor, capital-account credit	The rule amendment
61–75	Take the IFRIC 2 treatment to the auditors before drafting terms	Audit position letter
76–90	Approach the sector fund with the sizing and the declined schedule	The term sheet

The number that decides it. One line, on the front page:

   return on invested capital   >   coupon + amortised issuance cost
              7.05 %            >        6.00 % + 0.50 %

A margin of 0.55 points. That is thin, and saying so is the point: this instrument works for a cooperative earning above 6.50 percent on invested capital and does not work below it. A firm below that line should not issue the tranche. It should fix the return first, and the arithmetic in this chapter will tell it exactly how much it has to find.

APPRECIATIVE QUESTIONS

Twelve, for a room

Discovery — what is already working

Think of a downturn this organisation came through without losing people. What did we move instead, and who decided to move it?
Where in our published accounts can an outsider already see something about us that our competitors cannot show about themselves?
Which investment did we make that only made sense over fifteen years — and what made the room willing to back it?

Dream — what becomes possible

If our member share were printed in the quarterly pack beside revenue, what would we want it to say in five years, and what would we be proud of in how it got there?
Imagine a lender who priced us off our sector's actual survival record rather than off a story about cooperatives. What would we do with the difference?
If every member could see the value her work retained credited to her own account, what investment would suddenly have a constituency here?

Design — what we build

What is the largest project we declined in the last three years, and where did its return sit relative to our real cost of capital?
What would we want written into our rules about admission that we currently leave to judgment — and what would we gain by making it a number?
Who would be the right first holder of patient capital in this business, and what would we need to show them that we could produce this quarter?

Destiny — how it holds

What is the first sign we would see if pay were quietly carrying more of the business than it should, and who here would notice it first?
What would have to be true for the member share to still be rising when everyone in this room has left?
If a successor board wanted to keep exactly one of the things we build this year, which one would we want it to be — and what would make that one the easiest to keep?

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Vanek, J. (1977). The Labor-Managed Economy: Essays. Cornell University Press.

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Pencavel, J., Pistaferri, L. and Schivardi, F. (2006). "Wages, Employment, and Capital in Capitalist and Worker-Owned Firms." Industrial and Labor Relations Review, 60(1).

Pérotin, V. (2006). "Entry, Exit, and the Business Cycle: Are Cooperatives Different?" Journal of Comparative Economics, 34(2).

Chetty, R. (2006). "A New Method of Estimating Risk Aversion." American Economic Review, 96(5).

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Fakhfakh, F., Pérotin, V. and Gago, M. (2012). "Productivity, Capital and Labor in Labor-Managed and Conventional Firms: An Investigation on French Data." Industrial and Labor Relations Review, 65(4).

Burdín, G. (2014). "Are Worker-Managed Firms More Likely to Fail Than Conventional Enterprises? Evidence from Uruguay." ILR Review, 67(1).

Storey, J., Basterretxea, I. and Salaman, G. (2014). "Managing and Resisting 'Degeneration' in Employee-Owned Businesses: A Comparative Study of Two Large Retailers in Spain and the United Kingdom." Organization, 21(5).

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Pérotin, V. (2016). What Do We Really Know About Worker Co-operatives? Co-operatives UK.

Errasti, A., Bretos, I. and Nunez, A. (2017). "The Viability of Cooperatives: The Fall of the Mondragon Cooperative Fagor." Review of Radical Political Economics, 49(2).

Vieta, M., Depedri, S. and Carrano, A. (2017). The Italian Road to Recuperating Enterprises and the Legge Marcora Framework. Euricse Research Report.

Whyte, W. F. and Whyte, K. K. (1991). Making Mondragón: The Growth and Dynamics of the Worker Cooperative Complex, 2nd edn. ILR Press.

Ostrom, E. (1990). Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge University Press.

Damodaran, A. (2012). Investment Valuation: Tools and Techniques for Determining the Value of Any Asset, 3rd edn. Wiley.

IFRS Interpretations Committee. IFRIC 2, Members' Shares in Co-operative Entities and Similar Instruments.

John Lewis Partnership plc. Annual Report and Accounts, successive years.

MONDRAGON Corporation. Annual Report, successive years.

Confédération Générale des SCOP. Chiffres clés, successive years.

Note on figures. Every figure in this chapter is computed in lib/verify/V_06.py and printed by python3 lib/verify.py V.06, with each input labelled [published], [reported] or [model]. The published series — the John Lewis bonus, the SCOP survival rates, the Fagor and Mondragón magnitudes, the CFI record — are as the bodies concerned print them. The cost of capital, the risk-aversion lottery, the degeneration rate and the growth model are the chapter's own, built from stated assumptions so that a reader who disagrees with an assumption can change it and watch the answer move.