Public policy interest in worker cooperatives has focused primarily on their potential for retaining and creating jobs. Cooperatives are thought to lead to increased productivity and worker satisfaction, better job quality and security, and greater control of the local economy. This article surveys the literature on the performance of worker cooperatives in capitalist countries and the barriers to their development. It also examines factors contributing to their success, as demonstrated in the highly successful Mondragon cooperatives. The article concludes with the lessons arising from existing cooperative experience and policy directions for developing worker cooperatives.