This article examines one of the most important experiments in workplace democracy in Australia, a worker buyout programme in the industrial heartland of Greater Western Sydney, which was initiated by the New South Wales Government in the economic downturn of the 1980s recession.
Here a government programme facilitated the purchase of moribund businesses by their workforce and management and set in motion an experiment in worker self-management of which Australia had little experience. After initial success and transformation, these worker buyouts disappeared. While worker co-operatives are argued to have considerable potential to restructure capitalist nature of production they are not present in large numbers in many economies arousing debate as to whether it is an entry or exit problem. This research explores the dynamics of three of these worker buyouts using a case study approach to investigate this conundrum. The study deepened our understanding of the role of the state in worker cooperative formation by using a theoretical model explaining the emergence, success and degeneration of the worker owned firm.