Democratic ownership in the sphere of economic production is often contrasted with capitalist ownership along the lines of transferability of legal rights, such as profit and governance rights. If capitalist ownership implies full transferability of legal rights in production, democratic ownership anchors legal rights with the current generation of workers in the firm. A worker cooperative is generally considered the best practical proxy for a democratic firm (Ellerman, 2021; Erdal, 2012); however, worker cooperatives remain rare in contemporary economies, while the capitalist form of enterprise continues to dominate the markets despite contrary predictions by intellectual giants like John Stuart Mill. Why did democratic ownership fail to achieve scale?
Worker cooperatives are most commonly established from scratch or by fully converting a capitalist firm. In this chapter, we argue that cooperatives have faced challenges because they did not introduce a mechanism that would allow for the gradual conversion of capitalist ownership into democratic ownership. We introduce an alternative proposal that can help scale democratic ownership using the mechanism of leveraged gradual cooperative conversions. In the literature, this solution is described as the "Cooperative ESOP", since it uses the ESOP leveraged financing mechanism, which is attached to a cooperative vehicle (Ellerman et al., We argue that the mechanism of gradual and leveraged conversion, with the aid of institutional support, can help democratic ownership grow in our economies and become mainstream.
Slovenian 
English