> The addition of the free market of labour cannot, on its own, result in loss of self-control by either party.

I disagree with this, and it's less true in theory than in practice. The free market is deliberately engineered to push down price to cost of production. In terms of labor, it means your remuneration will be reduced to subsistence wage, and not more. An apple doesn't care about its price, but price of your labor determines your living standard and your freedom.

And where this doesn't happen in the real world, it is actually a consequence of labor market failure, for example, labor negotiations through unions.

(There are also other labor market failures that prop the wages upwards, for example for CEOs.)

So I am not sure how you imagine free market for labor to help workers unless you assume a market failure of some sort.

The individual share of worker within a coop might be low, but it's still better than 0 under a private (capitalist owned) company. Moreover, all the value produced gets redistributed to the workers, not just a portion. (And I agree here that outsourcing Mondragon is bad.)

> That implies a free market of labor.

No it doesn't. Free market of labor is more than just a free choice of job, it also means that people who are not involved in the job itself might dictate the conditions of production (for example, it implies no labor laws, so you might die in the summer heat as a consequence). And it is by design.

(I was appalled to find that Hayek defended mining towns. Freedom to change the job my ass!)